Cut Rite Onions LLC v. Sardilli Produce & Dairy Co. Inc et al

Filing 59

ORDER: The Clerk of Court shall DISMISS this case without prejudice to re-filing. In view of the dismissal of this action, plaintiff's motion for summary judgment (Doc. # 42 ) is DENIED as moot. Please refer to accompanying order. Signed by Judge Jeffrey A. Meyer on 09/02/2014. (Steinfeld, Sarah)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
CUT RITE ONIONS LLC,
Plaintiff,

:
:
:
v.
:
:
SARDILLI PRODUCE & DAIRY CO., INC, et al., :
Defendants.
:

3:13cv-00300 (JAM)

ORDER OF DISMISSAL WITHOUT PREJUDICE PENDING MEDIATION
This is a case about an onion supply agreement gone bad. Although the parties
disagree about who owes whom, they do agree on one thing: their contract required them
to resort to specific alternative dispute resolution procedures before they could litigate
this case here in federal court. I agree and therefore will dismiss this case without
prejudice to the parties’ re-filing of their claims in the event that they cannot sensibly
resolve their dispute by means of the process they agreed to in their contract.
Background
Plaintiff Cut Rite Onions LLC (Cut Rite) and defendant Sardilli Produce & Dairy
Co., Inc. (Sardilli) were parties to a supply contract for Cut-Rite to furnish onions to
Sardilli as needed on a regular basis through the end of 2012.1 See Doc. #45 at 10-21.
One day in July 2012, however, plaintiff faxed Cut Rite a notice that in just three days’
time it would “cease operating and supplying products to your company.” Id. at 28. This
sudden termination was not only an apparent breach of the ongoing supply contract but it
also posed a practical problem for Sardilli, as Sardilli was under separate duty to furnish

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Although the contract with Sardilli is in the name of another onion supplier, it is undisputed that Cut Rite
assumed the obligations under the contract.

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onions to the Friendly’s restaurant chain, a fact that Cut Rite knew because Friendly’s
was identified in the Cut Rite/Sardilli contract as a third party beneficiary. Id. at 18.
No matter the harm to Sardilli, Cut Rite’s termination letter insisted that Sardilli
“help us in clearing up your unpaid invoices ASAP.” Id. at 28. At that point there were 48
invoices outstanding for about $45,000 from prior Cut Rite onion shipments. Almost all
of these invoices, however, were not yet due and payable at the time that Cut Rite
repudiated its duties under the contract because of a 30-day contractual grace period for
payment. Doc. #45 at 12; Doc. #42-3 at 47-94. Even when the grace period expired,
Sardilli never paid on the invoices.
In March 2013, Cut Rite filed this lawsuit against Sardilli as well as three of the
Sardilli family members. Doc. #1. The lawsuit principally alleges breach of contract for
failure to pay the outstanding invoices, as well as statutory violations of the Perishable
Agricultural Commodities Act (PACA), 7 U.S.C. § 499a et seq. The Sardilli defendants
filed an answer and counterclaims, principally alleging that Cut Rite had breached the
supply agreement and that defendants were either excused from payment or at least
entitled to an offset of any amounts due on the invoices. Doc. #25.
The Sardillis also maintained in their answer that Cut Rite had failed to resort to
the mandatory alternative dispute resolution measures agreed to by the parties in their
contract. Id. at 10. Indeed, Paragraph 18 of the contract provides as follows:

Before the parties resort to litigation, the parties agree to attempt, in good
faith, to resolve any dispute, controversy or claim arising out of this
Agreement, or the breach thereof, through discussion and negotiation
among themselves, including a mandatory meeting at a mutually agreeable
location with at least one senior manager of each party, and if
unsuccessful, through mediation with the assistance of PACA and its staff.

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Doc. #45 at 18.
Discussion
Cut Rite has moved for summary judgment seeking payment of the invoices. At
oral argument on this summary judgment motion, Cut Rite’s counsel acknowledged that
Cut Rite had not invoked the contract’s alternative dispute resolution procedures. Neither
party objected to the Court’s suggestion that it should enforce the parties’ agreement to
exhaust these procedures before allowing this case to proceed in federal court.
Accordingly, I will dismiss this case without prejudice to re-filing if the parties
are unable to resolve this dispute in accordance with their contract’s alternative dispute
resolution process. See Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635, 638 (9th Cir.
1988) (affirming dismissal of case in light of contractual agreement to arbitrate). I am
mindful that the Second Circuit has recommended that a district court in this context
consider whether to enter a stay, rather than an order of dismissal, in light of the
possibility that parties could delay alternative dispute resolution even longer by filing an
appeal from a final order of dismissal. See Salim Oleochemicals v. M/V Shropshire, 278
F. 3d 90, 93 (2d Cir. 2002) (Sotomayor, J.). Here, however, in light of the fact that both
parties in this case stated no objection to my enforcing their alternative dispute resolution
agreement, I can see no non-frivolous basis for either party to lodge an appeal of this
dismissal order.
Nor has either party raised a concern that dismissal could pose statute of
limitations problems in the event that the case is re-filed. See, e.g., Holick v. Cellular
Sales of New York, LLC, 559 F. App’x 40, 43 (2d Cir. 2014). If there are looming statuteof-limitations concerns, the parties are well positioned to address this by expeditiously

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availing themselves of their agreed-upon dispute resolution procedures or, alternatively,
by filing a motion for reconsideration of this ruling.
Ultimately, I conclude that a dismissal—rather than a stay—is most consistent
with the parties’ agreement that alternative dispute resolution procedures would be used
“[b]efore the parties resort to litigation.” I cannot see why Cut Rite should be entitled to
any benefit from having this case remain pending like the Sword of Damocles on the
federal court docket in light of Cut Rite’s undisputed failure to invoke the procedure set
forth in the agreement in the first place.
Conclusion
In accordance with the absence of objection by either party to the Court’s
enforcement of the parties’ agreement to exhaust alternative dispute resolution
procedures, the Clerk of Court shall DISMISS this case without prejudice to re-filing in
the event that the parties’ settlement efforts do not succeed. In view of the dismissal of
this action, plaintiff’s motion for summary judgment (Doc. #42) is DENIED as moot.
It is so ordered.
Dated at Bridgeport this 2nd day of September 2014.

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