Freska Produce International, LLC v. Alejandro Produce, Inc. et al
Filing
14
DEFAULT JUDGMENT. It is hereby Ordered, Adjudged, and Decreed that Judgment is entered in favor of Freska Produce, International, LLC, and against Alejandro Produce, Inc.; Alejandro Silva; Maria Refugio Luna Ibarra; and Alejandro's Taco Sho p, jointly and severally, in the unpaid principal amount of $22,800.00, plus taxable costs of $800.31, pre-judgment interest of $5,869.00, and attorneys' fees of $6,177.00, for a total judgment of $35,646.31, plus pos t judgment interest at the rate set forth by 28 USC §1961, all of which qualifies for protection under Perishable Agricultural Commodities Act, 7 U.S.C. § 499e(c), until satisfied, for which let execution issue. Signed by Judge Thomas J. Whelan on 1/10/2019.(jao)
1
2
3
4
5
6
7
8
9
10
UNITED STATES DISTRICT COURT
11
SOUTHERN DISTRICT OF CALIFORNIA
12
13
14
FRESKA PRODUCE,
INTERNATIONAL LLC,
17
ORDER (1) GRANTING MOTION
FOR DEFAULT JUDGMENT [DOC.
13] AND (2) FOR ENTRY OF
JUDGMENT
Plaintiff,
15
16
Case No.: 3:18-CV-1205 W (BLM)
v.
ALEJANDRO PRODUCE, INC., et al.,
Defendants.
18
19
20
Pending before the Court is Plaintiff Freska Produce International, LLC’s motion
21
for default judgment against Defendants Alejandro Produce, Inc., Alejandro Silva, Maria
22
Refugio Luna Ibarra, and Alejandro’s Taco Shop. The Court decides the matter on the
23
papers submitted without oral argument. See Civil Local Rule 7.1(d.1).
24
For the reasons outlined below, the Court GRANTS the motion [Doc. 13] and
25
ORDERS entry of judgment as set forth below.
26
//
27
//
28
1
3:18-CV-1205 W (BLM)
1
2
3
4
I.
BACKGROUND
The following factual allegations are taken from the Complaint [Doc. 1] and
declarations filed in support of the motion.
On July 27, 2017, Plaintiff Freska Produce International, LLC (“Freska”) sold
5
$22,800.00 in avocados to Defendant Alejandro Produce, Inc. pursuant to an oral
6
agreement regarding quantities and price. (Compl. ¶¶ 6, 13.) The avocados were from
7
Mexico. (Id. ¶ 22.) Freska sent an invoice to Alejandro Produce for the avocados. (Id. ¶
8
8.) The invoice included a provision for payment of attorneys’ fees, costs and pre-
9
judgment interest at a rate of 18% per annum in the event of default. (Compl. ¶ 9;
10
Clevenger Decl. [Doc. 13-1] ¶ 16 and Ex. A at p. 1 of 5.) The invoice also included a
11
statement preserving Freska’s rights as a trust beneficiary of Alejandro Produce under the
12
Perishable Agricultural Commodities Act of 1930 (“PACA”), as amended, 7 U.S.C. §§
13
499a-t. (Compl. ¶ 23; Clevenger Decl. ¶ 12 and Ex. A at p. 1 of 5.)
14
At the time of the sale, Freska was licensed by the United States Department of
15
Agriculture (“USDA”) to engage in the business of buying and selling quantities of
16
perishable agricultural commodities (i.e., produce) in interstate commerce. (Id. ¶ 18.)
17
Alejandro Produce was also licensed by the USDA to engage in the business of buying
18
and selling wholesale quantities of produce in interstate commerce. (Id. ¶ 19.)
19
Defendants Alejandro Silva and Maria Refugio Luna Ibarra were officers, directors,
20
principals, or employees of Alejandro Produce, and Silva was also listed as a “principal”
21
on Alejandro Produce’s PACA license. (Id. ¶ 38.) Silva and Ibarra are also partners of
22
Defendant Alejandro’s Taco Shop (id. ¶ 64), to which Alejandro Produce transferred
23
certain PACA Trust Assets (id. ¶ 63).
24
Despite Freska’s repeated demands, Alejandro Produce failed to pay the invoice
25
for the avocados. (Id. ¶ 11.) Accordingly, on June 8, 2018, Freska filed this lawsuit.
26
The Complaint lists the following Counts:
27
(I)
Breach of Contract against Alejandro Produce;
28
(II)
Declaratory Relief Validating PACA Trust Claim against all Defendants;
2
3:18-CV-1205 W (BLM)
1
(III) Enforcement of Payment from PACA Trust Assets against Alejandro
2
Produce;
3
(IV) Failure to Maintain PACA Trust Assets and Creation of Common Fund
4
against Alejandro Produce;
5
(V)
6
(VII) Conversion and Unlawful Receipt of PACA Trust Assets against Silva and
7
Ibarra; and
8
9
Breach of Fiduciary Duty against Defendants Silva and Ibarra;
(VIII) Unlawful Receipt of PACA Trust Assets against Alejandro Taco Shop.
(See Compl. 1)
10
On July 8, 2018, Freska served Ibarra with the Complaint. (Summons [Doc. 7.)
11
On August 6, 2018, Freska served Silva, Alejandro Produce, and Alejandro’s Taco Shop.
12
(Summonses [Docs. 4–6].) Defendants failed to answer or otherwise respond to the
13
Complaint, and on September 11, 2018, Freska filed a Request for Entry of Clerk Default
14
as to each Defendant. (Req. for Entry of Default [Doc. 8].) On September 12, 2018, a
15
default was entered as to each Defendant. (Clerk’s Entries of Default [Docs. 9–12].) This
16
motion for default judgment followed.
17
18
II.
19
STANDARD
Rule 55(b)(2) of the Federal Rules of Civil Procedure governs applications to the
20
court for default judgment. See Fed. R. Civ. P. 55(b)(2). Default judgment is available as
21
long as the plaintiff establishes (1) defendant has been served with the summons and
22
complaint and default was entered for their failure to appear; (2) defendant is neither a
23
minor nor an incompetent person; (3) defendant is not in military service or not otherwise
24
subject to the Soldiers and Sailors Relief Act of 1940; and (4) if defendant has appeared
25
26
27
28
1
The Complaint purports to assert eight counts, but in fact only asserts seven. There is no count six.
Count five begins at paragraph 37 and ends at paragraph 50. (Compl. ¶¶ 37–50.) Count seven then
begins at paragraph 51. (Id. ¶ 51.)
3
3:18-CV-1205 W (BLM)
1
in the action, that defendant was provided with notice of the application for default
2
judgment at least three days prior to the hearing. See, e.g., 50 U.S.C. § 521; Fed. R. Civ.
3
P. 55; Twentieth Century Fox Film Corp. v. Streeter, 438 F. Supp. 2d 1065, 1070 (D.
4
Ariz. 2006).
5
Entry of default judgment is within the trial court’s discretion. See Taylor Made
6
Golf Co. v. Carsten Sports, Ltd., 175 F.R.D. 658, 660 (S.D. Cal. 1997) (Brewster, J.)
7
(citing Lau Ah Yew v. Dulles, 236 F.2d 415, 416 (9th Cir. 1956)). In making this
8
determination, the court considers the following factors: (1) the possibility of prejudice to
9
the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the
10
complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute
11
concerning the material facts, (6) whether the default was due to excusable neglect, and
12
(7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions
13
on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
14
Upon entry of default, the factual allegations in plaintiff's complaint, except those
15
relating to damages, are deemed admitted. E.g., Televideo Sys., Inc. v. Heidenthal, 826
16
F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Group, 559 F.2d 557,
17
560 (9th Cir. 1977)). Where the amount of damages claimed is a liquidated sum or
18
capable of mathematical calculation, the court may enter a default judgment without a
19
hearing. Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981). When it is necessary for
20
the plaintiff to prove unliquidated or punitive damages, the court may require plaintiff to
21
file declarations or affidavits providing evidence for damages in lieu of a full evidentiary
22
hearing. Transportes Aereos De Angola v. Jet Traders Invest. Corp., 624 F.Supp. 264,
23
266 (D. Del. 1985).
24
25
III.
DISCUSSION
26
A.
27
As set forth above, Defendants have been served with the summons and complaint,
28
and default has been entered against them. (See summonses [Docs. 4–6]; Clerk’s Entries
Availability of Default Judgment.
4
3:18-CV-1205 W (BLM)
1
of Default [Docs. 9–12].) Additionally, there is no indication that any of the Defendants
2
are minors, incompetent persons, or that they are in military service or otherwise subject
3
to the Soldiers and Sailors Relief Act of 1940. (See Meuers Decl. [Doc. 13-2] 9–11.)
4
Accordingly, default judgment is available to Freska.
5
6
B.
7
Weighing the Eitel factors, the Court finds that default judgment is appropriate. If
Eitel Factors
8
the Court denied default judgment, Freska would likely be left without recourse against
9
Defendants. As discussed below, Freska’s allegations sufficiently plead the seven counts
10
asserted in the Complaint, and there is no apparent reason to doubt the merits of Freska’s
11
substantive claims. Additionally, Defendants have made no showing that their failure to
12
respond to the lawsuit was due to excusable neglect, nor is there any apparent possibility
13
of a dispute concerning the material facts. Because the factors weigh in Freska’s favor,
14
the Court, while recognizing the public policy favoring decisions on the merits, will grant
15
default judgment.
16
17
1.
18
Merits of Freska’s claims
(a)
19
Breach of contract against Alejandro Produce.
Freska’s first count is for breach of contract. To prevail on this count, Freska must
20
establish (1) the existence of the contract, (2) Freska’s performance under the contract,
21
(3) Alejandro Produce’s breach, and (4) the resulting damages from the breach. Oasis W.
22
Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011).
23
Based on the factual allegations discussed in Section I of this order, the Complaint
24
clearly alleges the existence of a contract for the sale of avocados, Freska’s performance,
25
and Alejandro Produce’s breach of the agreement. (See also Compl. ¶¶ 6, 13–12, 31, 32,
26
35.) Accordingly, the Court finds Freska is entitled to default judgment as to the first
27
count.
28
5
3:18-CV-1205 W (BLM)
1
(b)
2
Declaratory relief validating PACA trust claim against
Alejandro Produce.
3
In order to become a perfected PACA trust beneficiary, Freska must establish:
4
(1)
Freska sold “perishable agricultural commodities” to Alejandro Produce;
5
(2)
Alejandro Produce qualifies as a dealer;
6
(3)
Freska provided Alejandro Produce with written notice of its intent to
7
8
preserve its rights under PACA within 30 days after payment became due;
(4)
9
10
11
The transaction occurred in contemplation of interstate or foreign commerce;
and
(5)
Alejandro Produce failed to maintain sufficient assets subject to the PACA
trust.
12
Weeks v. Fresh–Pic Produce Co., Inc., 2012 WL 1815648, at *1 (S.D.Cal. May 17,
13
2012); In re Country Harvest Buffet Restaurants, Inc., 245 B.R. 650, 653 (9th Cir. BAP
14
2000) (identifying first three elements to become a perfected PACA trust beneficiary).
15
Here, the avocados sold qualify as perishable agricultural commodities. See 7
16
U.S.C. § 499a(b)(4). Next, Alejandro Produce qualified as dealer (see Clevenger Dec.
17
Ex. B) and, within 30 days after payment became due, Freska provided Alejandro
18
Produce with notice of Freska’s intent to preserve its PAGA rights (see Id. Ex. A at p. 1
19
of 5). Additionally, the avocados were a product of Mexico and, therefore, the
20
transaction occurred in contemplation of foreign commerce. (Compl. ¶ 22.) Finally,
21
Alejandro Produce failed to maintain sufficient assets. (Id. ¶ 24.) Based on these facts,
22
Freska qualifies as a perfected PACA trust beneficiary.
23
24
25
(c)
Breach of fiduciary duty against Silva and Ibarra.
Freska seeks judgment against Silva and Ibarra for breach of fiduciary duty as
26
PACA trustees. “An individual who is in the position to control the trust assets and who
27
does not preserve them for the beneficiaries has breached a fiduciary duty, and is
28
personally liable for that tortious act…. [A] PACA trust in effect imposes liability on a
6
3:18-CV-1205 W (BLM)
1
trustee, whether a corporation or a controlling person of that corporation, who uses the
2
trust assets for any purpose other than repaying of the supplier.” Sunkist Growers, Inc. v.
3
Fisher, 104 F.3d 280, 283 (9th Cir. 1997) (quoting Morris Okun, Inc. v. Harry
4
Zimmerman, Inc., 814 F. Supp. 346, 348 (S.D.N.Y. 1993)) (ellipsis and bracket in
5
original).
6
The Complaint sufficiently alleges Silva and Ibarra were in a position of control of
7
the trust assets and failed to preserve them for Freska. (Compl. ¶¶ 38–47.) Accordingly,
8
Silva and Ibarra, individually, are jointly and severally liable to Freska for the judgment
9
entered below.
10
11
(d)
Unlawful receipt of PACA trust assets against Alejandro Taco
Shop.
12
Freska’s is suing Alejandro Taco Shop for unlawful receipt of PACA trust assets.
13
PACA creates a statutory trust for unpaid sellers of perishable agricultural
14
commodities and provides that all such commodities, as well as accounts receivable from
15
the sale of such commodities, “shall be held... in trust for the benefit of all unpaid
16
suppliers or sellers of such commodities... until full payment... has been received....” 7
17
U.S.C § 499e(c)(2); Jacobs Silver K Farms, Inc. v. Taylor Produce, LLC, 2016 WL
18
7325468, at *4 (D. Idaho Dec. 15, 2016). When a PACA trustee transfers assets to a
19
third party instead of using the assets to pay its PACA creditors, the third party may be
20
required to “disgorge those assets to the extent necessary to satisfy claims of PACA trust
21
beneficiaries.” Id. (citing Endico Potatoes, Inc. v. CIT Group Factoring, Inc., 67 F.3d
22
1063, 1069 (2nd Cir. 1995)).
23
Here, the Complaint alleges that Alejandro Produce transferred PACA trust assets
24
to Alejandro’s Taco Shop that belonged to Freska. (Compl. ¶¶ 63, 65.) At the time,
25
Freska remained unpaid for the sale of the avocados to Alejandro Produce. (Id. ¶¶ 62,
26
66.) Additionally, Silva and Ibarra were partners of Alejandro’s Taco Shop, which
27
therefore had actual or constructive knowledge of Freska’s PACA trust rights to the
28
assets. (Id. ¶¶ 64, 69.) Based on these facts, Alejandro’s Taco Shop is liable to Freska in
7
3:18-CV-1205 W (BLM)
1
the amount of $22,800.00, plus interest from the date each invoice became past due,
2
costs, and attorneys’ fees.
3
4
2.
Requested Relief
5
The sole remaining issue is the amount of the judgment. Freska seeks $22,800.00
6
in damages, plus interest accruing at the rate of 18% per year on the unpaid balance, and
7
attorneys’ fees and costs. Freska’s claim for damages and interest are supported by the
8
evidence. (See Clevenger Decl. Ex. A at p. 1 of 5.) Freska also seeks $6,177 in
9
attorneys’ fees and $800.31. (P&A [Doc. 13] 11:1–3.) Based on the Declaration of
10
Lawrence H. Meuer [Doc. 13-2], the Court finds these attorneys’ fees and costs
11
reasonable.
12
13
14
IV.
CONCLUSION & ORDER
In light of the foregoing, the Court GRANTS Plaintiff Freska Produce
15
International, LLC’s motion for default judgment [Doc. 13] against Defendants Alejandro
16
Produce, Inc., Alejandro Silva, Maria Refugio Luna Ibarra, and Alejandro’s Taco Shop,
17
and ORDERS, ADJUDGES and DECREES as follows:
18
1.
Plaintiff Freska Produce, International, LLC holds a valid trust claim under
19
the Perishable Agricultural Commodities Act, 7 U.S.C. § 499e(c) against
20
Defendant Alejandro Produce, Inc. in the total amount of $35,646.31.
21
2
Judgment is entered in favor of Freska Produce, International, LLC, and
22
against Alejandro Produce, Inc.; Alejandro Silva; Maria Refugio Luna
23
Ibarra; and Alejandro’s Taco Shop, jointly and severally, in the unpaid
24
principal amount of $22,800.00, plus taxable costs of $800.31, pre-judgment
25
interest of $5,869.00, and attorneys’ fees of $6,177.00, for a total judgment
26
of $35,646.31, plus post judgment interest at the rate set forth by 28 USC
27
§1961, all of which qualifies for protection under Perishable Agricultural
28
8
3:18-CV-1205 W (BLM)
1
Commodities Act, 7 U.S.C. § 499e(c), until satisfied, for which let execution
2
issue.
3
4
IT IS SO ORDERED.
Dated: January 10, 2019
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
9
3:18-CV-1205 W (BLM)
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?