FreshPack Produce, Inc., v. VM Wellington LLC, et al.,

Filing 19

ORDER granting 3 Plaintiff's Motion for TRO. A hearing on Plaintiffs Motion for Preliminary Injunction shall be held on December 20, 2012 at 3:00 p.m., Courtroom A801 of the Alfred A. Arraj United States Courthouse, 901 19th Street, Denver, Colorado 80294, at which time Defendants shall appear and show cause as to why Plaintiffs request for preliminary injunction should not be granted, by Judge William J. Martinez on 12/6/2012.(ervsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 12-cv-3157-WJM-MJW
FRESHPACK PRODUCE, INC.,
Plaintiff,
v.
VM WELLINGTON LLC, d/b/a BELLA’S MARKET WELLINGTON,
VM OPERATIONS LLC,
VILLAGE MARKETS HOLDING LTD., LLC,
SAVOY INCOME FUND I LP,
SAMUEL J. MANCINI,
RONALD S. ALLEN, and
ALAN CARMAN,
Defendants.

ORDER GRANTING PLAINTIFF’S MOTION FOR TEMPORARY RESTRAINING
ORDER AND SETTING HEARING ON PRELIMINARY INJUNCTION

Plaintiff Freshpack Produce, Inc. (“Plaintiff”) brings this action against VM
Wellington LLC, et al. (“Defendants”) alleging violations of various provisions of the
Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499 et seq. (ECF No. 1.)
Contemporaneous with the filing of the Complaint, Plaintiff filed a Motion for Temporary
Restraining Order (“Motion”). (ECF No. 3.) For the reasons set forth below, the Motion
is granted.
I. BACKGROUND
Plaintiff is a Colorado corporation engaged in the business of buying and selling
wholesale quantities of produce in interstate commerce. (Compl. ¶ 3.) Defendants are
various corporate entities who are licensed to act as dealers and commission

merchants of perishable agricultural commodities, as well shareholders, officers, and
directors of these entities. (Id. ¶¶ 4-10.)
Between January 2, 2012 and September 25, 2012, Plaintiff sold and delivered
to Defendants fresh produce worth $263,835.71. (Id. ¶ 14.) Of that amount,
$74,705.95 remains unpaid. (Id. ¶ 17.) Each of the outstanding invoices sent by
Plaintiff to Defendants contained the following language:
The Perishable Agricultural Commodities listed on this
invoice are sold subject to the statutory trust authorized by
section 5(C) of the Perishable Agricultural Commodities Act,
1930 (7 U.S.C. 499E(C)). The Seller of these Commodities
retains his trust claim over these commodities, all inventories
of food or other products derived from these commodities
and any receivables or proceeds from the sale of these
commodities until full payment is received.
(E.g., ECF No. 6 at 2.)
Plaintiff has been unsuccessful in collecting payment from Defendants.
(Sweeney Decl. (ECF No. 5) ¶ 15.) Moreover, two companies related to Defendants
have filed for bankruptcy protection. (Comp. ¶ 12.)
II. ANALYSIS
A.

Entitlement to Injunctive Relief
To prevail on a motion for injunctive relief, the movant must establish that four

equitable factors weigh in his favor: (1) he is substantially likely to succeed on the
merits; (2) he will suffer irreparable injury if the injunction is denied; (3) his threatened
injury outweighs the injury the opposing party will suffer under the injunction; and (4) the
injunction would not be adverse to the public interest. See Westar Energy, Inc. v. Lake,
552 F.3d 1215, 1224 (10th Cir. 2009). “[B]ecause a preliminary injunction is an
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extraordinary remedy, the right to relief must be clear and unequivocal.” Greater
Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1256 (10th Cir. 2003).
The Court finds that Plaintiff has satisfied each of these four prongs. First,
Federal regulations provide that payment for perishable agricultural commodities is due
no later than 30 days after delivery. See 7 C.F.R. § 46.2(aa). Plaintiff has submitted
invoices showing that it delivered produce to Defendants through September 25, 2012
but has still yet to be paid for $74,705.95 of this delivery. (Sweeney Dec. ¶¶ 7-10.)
Plaintiff has submitted a sworn statement by its Chief Financial Officer stating that it has
been unsuccessful in collecting payment from Defendants. (Id. ¶ 15.) On this record,
the Court finds that Plaintiff has shown a substantial likelihood of success on the merits
of their claims.
Although purely monetary loss is not typically found to be an irreparable injury,
dissipation of PACA’s statutory trust is an exception to this rule. See Frio Ice v.
Sunfruit, Inc., 918 F.2d 154, 159 (11th Cir. 1990); Continental Fruit Co. V. Thomas J.
Garziolis & Co., 774 F.Supp. 449, 453 (N.D. Ill. 1991) (stating that an argument that
only monetary damages were at stake in an action to enjoin trust dissipation might be
persuasive in the absence of the PACA statute). Because it is well accepted that once
the trust is dissipated it is almost impossible for a beneficiary to obtain recovery, courts
have held that dissipation of a PACA trust’s assets is irreparable injury. Id.; Tanimura &
Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 139 (3d Cir. 2000) (“Thus, the
prevention of trust dissipation becomes essential to any meaningful remedy at all.”).
Plaintiff here has submitted evidence showing that Defendants are likely dissipating

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trust assets. (Sweeney Decl. ¶¶ 15-16.) Moreover, given the recent bankruptcy filings
of companies associated with Defendants, it is likely that recovery of monetary
damages from Defendants will be difficult. (Id. ¶ 10.) Therefore, the Court finds that
Plaintiff has shown that it is likely to suffer irreparable injury if injunctive relief is not
granted.
With respect to harm to the Defendant, PACA provides that buyers of produce
are required to hold proceeds from the sale of such produce in trust for the benefit of
the sellers. See 7 U.S.C. § 499e(c)(2). This is meant to ensure that sellers are paid in
full from the proceeds derived from the re-sale of the produce. Under the statute, the
trust is formed at the moment the produce is shipped to the buyer and remains in effect
until the seller is paid in full. See 7 C.F.R. § 46.46(c)(1). The evidence shows that
Plaintiff delivered perishable commodities to Defendants worth $263,835.71 and has
not received its full trust proceeds for this exchange. (Sweeney Decl. ¶¶ 7-10.)
Because Defendants have a legal obligation to pay the trust assets to Plaintiff, they will
not suffer harm if the Court orders them to fulfil this obligation. See Tanimura, 222 F.3d
at 140. Accordingly, the Court finds that Plaintiff has satisfied the third prong of the test
for injunctive relief.
Public interest also weighs in favor of granting an injunction. The underlying
purpose of PACA’s statutory trust provision is to protect perishable commodity
producers such as Plaintiff in situations precisely like this. See 7 U.S.C. § 499e(c)(1)
(“This subsection is intended to remedy such burden on commerce in perishable
agricultural commodities and to protect the public interest.”). In passing the statutory
trust provisions, Congress explicitly noted that reducing the burden on commerce
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associated with production of perishable commodities was in the public interest. Id.
Thus, the Court has little trouble finding that issuance of injunctive relief in this case is
in the public interest.
B.

Issuance of Relief Without Providing Defendants An Opportunity to be
Heard
Therefore, the Court finds that Plaintiff has met its burden with respect to all four

factors and are entitled to injunctive relief. The sole remaining issue is whether Plaintiff
should be granted this relief without providing Defendants an opportunity to be heard on
the Motion. A temporary restraining order, such as that requested here, may be issued
without notice (which incorporates an opportunity to be heard) to the adverse party or
its counsel only if “(A) specific facts in an affidavit or a verified complaint clearly show
that immediate and irreparable injury, loss, or damage will result to the movant before
the adverse party can be heard in opposition; and (B) the movant’s attorney certifies in
writing any efforts made to give notice and the reasons why it should not be required.”
Fed. R. Civ. P. 65(b)(1); see also D.C.COLO.LCivR 65.1(A). Where a plaintiff seeks
such relief without notice or an opportunity to be heard by the adverse party, he should
be able to show that notice would result in immediate, irreparable harm such that notice
would “render fruitless the further prosecution of the action.” Reno Air Racing Ass’n,
Inc. v. McCord, 452 F.3d 1126, 1131 (9th Cir. 2006).
Here, Plaintiff’s counsel has stated that they have furnished true and complete
copies of all pleadings and papers filed in this action to date to the presumed counsel
for Defendants. (ECF No. 3 at 2-3.) “Specifically, counsel notified Defendants’
presumed counsel by telephone, and provided him with all relevant documents in
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electronic format.” (Id.) Plaintiff’s counsel has also certified that “further conferral is
unlikely to resolve the issue given Defendants’ long history of not paying the debt at
issue.” (Id.) Given the evidence regarding Defendants’ financial state and the clear law
with respect to the impossibility of recovering trust assets after the trust has been
dissipated, the Court finds that Plaintiff has satisfied Rule 65(b)(1) and further, that it
has shown that an opportunity to be heard is not required in this case. See, e.g., S.
Katzman Produce, Inc. v. Depiero’s Farm, Inc., No. 12-1384 (ES), 2012 WL 764235, at
*2 (D.N.J. Mar. 7, 2012) (granting TRO without notice or opportunity to Defendants);
Batth v. Market 52, Inc., No. 1:11-cv-1806-AWI-SKO, 2011 WL 5240439, at *2 (E.D.
Cal. Nov. 1, 2011) (same); C&C Carriage Mushroom Co. v. Greenwood Choice, Inc.,
No. 10-62116-CIV, 2011 WL 5059557, at *1 (S.D. Fla. Nov. 24, 2010) (same).
III. CONCLUSION
For the reasons set forth above, Plaintiff’s Motion for Temporary Restraining
Order (ECF No. 3) is GRANTED in so far as it seeks a temporary restraining order and
asks that the Court set a hearing on a preliminary injunction. The Court therefore
ORDERS as follows:
1.

Defendants VM Wellington LLC d/b/a Bella’s Market Wellington, VM Operations
LLC, Village Markets Holding Ltd., LLC, Savoy Income Fund I LP, Samuel J.
Mancini, Ronald S. Allen, and Alan Carman, and their officers, agents, servants,
employees, attorneys, and financial institutions, are all hereby restrained from
dissipating and/or disbursing any and all trust funds, monies, and/or liquidated
interests of any type whatsoever now in their possession or under their control

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that are generated by or resulting from the sale of perishable agricultural
commodities, as well as any and all trust funds and/or monies hereafter received,
except for payment in full to Plaintiff’s counsel, until compliance with ¶ 2, below.
2.

Within five business days of this Order, Defendants shall pay Plaintiff’s counsel
or, should a bona fide defense exist, deposit into an interest bearing escrow
account with a federally-insured financial institution the amount of $74,705.95.
No withdrawals from this account shall be made without Court approval, except
for payment to Plaintiff’s counsel.

3.

Within five business days of this Order, Defendants shall provide Plaintiff’s
counsel and this Court with a verified and detailed accounting of business
operations, including records concerning Defendants’ assets, bank accounts,
accounts receivable, accounts payable, including a list of all PACA Trust
Creditors, operating expenses and sales.

4.

A hearing on Plaintiff’s Motion for Preliminary Injunction shall be held on
December 20, 2012 at 3:00 p.m., Courtroom A801 of the Alfred A. Arraj United
States Courthouse, 901 19th Street, Denver, Colorado 80294, at which time
Defendants shall appear and show cause as to why Plaintiff’s request for
preliminary injunction should not be granted.

5.

The $74,705.95 in PACA trust assets belonging to Plaintiff and in the possession
of Defendants shall serve as Plaintiff’s security for purposes of Fed. R. Civ. P.
65(c). No additional security need be provided.

6.

Plaintiff shall serve a copy of this Order upon Defendants by hand delivery and
electronic mail (to the extent practicable) on or before December 7, 2012.
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7.

This Order shall remain in full force and effect for fourteen days from the date of
entry or until further Order of Court.
Dated this 6th day of December, 2012.
BY THE COURT:

William J. Martínez
United States District Judge

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