Fresh Direct Inc. v. Harvin Foods Inc. et al

Filing 172

MEMORANDUM OPINION re 163 MOTION for Summary Judgment Against Defendant Grady Keith Harvin. Signed by Judge Gregory M. Sleet on 3/30/2017. (asw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
I

FRESH DIRECT, IN ., et al.,
Plainti fs,
v.

HARVIN FOODS,

IC.,

et al.,

)
)
)
)
)
)
)

C.A. No. 10-040-GMS

~

~~~~~D_e_ri_en~f_an_t_s_·~~~~~-~
MEMORANDUM

On January 1 , 2010, Fresh Direct, Inc. ("Fresh Direct") filed suit against Harvin Foods,
Inc. and its principa officer, Grady Keith Harvin, (collectively, "Harvin Foods"). In its initial
complaint, Fresh Dir ct sought a temporary restraining order ("TRO") and preliminary injunction
to freeze Harvin Fo ds'. assets, based on that company's alleged violation of Section 5(c) of the
'.Perishable Agricul

al Commodities Act (the "PACA"), 7 U.S.C. §499e(c). Specifically, Fresh

Direct alleged that

arvin Foods failed to compensate it for produce received and accepted by

. Harvin Foods and, · so doing, violated the statutory trust ensured by PACA. (D.I. 1 at 3.)
.

On FebruJ 1, 2010, Fresh Direct filed an amended Complaint, adding Whitmore

Distributing Co. ("ltmore"), Philadelphia Produce Credit Bureau ("PPCB'), and Champion
Produce Sales Inc. (].Champion") as Plaintiffs. (D.l. 15). Plaintiffs filed an amended motion for
preliminary injuncti' n. (D.I. 16). The court granted Plaintiffs motion in part by freezing Harvin
Foods' assets in the mount allegedly owed to Plaintiffs-$170,720.57. (D.I. 53). On December
8, 2010, Foodsourc filed a motion to consolidate its case, Case No. 1:10-cv-00439-GMS, with

the present action. (DI. 66). The court granted Foodsource's motion on April 5, 2011. (D.I. 75).
After filing another jended Complaint, Plaintiffs again filed an amended ~otion for preliminary
mJunct10n. (D.I. 70)l On March 30, 2012, the court granted Plamtlffs amended motion for
preliminary injunctio , ordering that "all funds belonging or owing to Harvin Foods, Inc. . . . up
to and including $29 ,543.62, shall be immediately paid to Kate Ellis, Esq., McCarron & Diess,
attorneys for Plainti

, to be held for the benefit of Plaintiffs pending further court order." (D).

102).
A third amen ed Complaint was filed, adding Wilmington Savings Fund Society, FSB
("WSFS") as defen

t. (D.I. 111 ). Plaintiffs and Defendant WSFS came to an agreement on

November 13, 2013, whereby WSFS agreed to settle Plaintiffs' claims against WSFS for a total
payment of $300,301.47. (D. I. 164 at 1). Pursuant to the stipulation Plaintiffs and WSFS filed,
WSFS was dismisse from the case. (D.I. 147). On December 29, 2014, the court granted in-part
and denied in-part Pl intiffs' Motion for Default Judgment and for Disbursement of Trust Funds.
(D.I. 161). Plaintiffs request for default judgment was denied as to Mr. Harvin, but granted as to
Harvin Foods, Harv· Partners, Harvin Properties, and KH Foods. Id. The court ordered that
"Defendants owed Plaintiffs the aggregate sum of $214,146.64 as a trust debt under Section 5(c).
of the Perishable A.,cultural Commodities Act, 7 U.S.C. § 499e(c)(2)." (D.I. 162 at 1). Presently
before this court is Pllaintiffs' motion for summary judgment against the sole remaining Defendant,
Grady Keith Harvin ("Mr. Harvin"), filed on April 29, 2016. (D.I. 163). For the reasons that
follow, the court wilt grant Plaintiffs' motion.

II.

BACKGROUND
The plaintiff: are produce dealers licensed under P ACA. (D.I. 17 at 4). Harvin Foods is a

licensed produce w olesale dealer and broker under PACA. (D.I. 9, Ex. 1). Mr. Harvin is the

2

President, (D.I. 21tj\2 , and sole owner of Harvin Foods. (D.I. 153 tj\ 5(e)). He was also the only
principalreported on Harvin Foods' PACA license. (D.I. 9, Ex. 1). The produce that Harvin
Foods receives is star din Harvin Foods' warehouse before it is sold and delivered to restaurants
and other customers fHarvin Foods. (D.I. 20 at 5-6). The plaintiffs claim that they collectively
delivered $246,901.4 worth of produce to Harvin Foods, and Harvin Foods accepted those
deliveries. (D.I. 111 tj\ 7). Harvin Foods, however, failed to pay_the amount it owed to for the
produce. Id. The p oduce delivered is subject to the P ACA and the plaintiffs note that they
preserved their rights in the statutory trust as required under PACA, 7 U.S.C. §499(e)(c), and the
relevant accompan1g regulations. 1 (D.I. l l 11MJ 8-9). The plaintiffs allege that Harvin Foods
has refused to pay

em, because of an internal dispute with former Harvin Foods' employees.

(D.I. 17 at 3-4; D.I. 0 at 2-4).
Harvin Food does not contest that its refusal to pay the plaintiffs results from a dispute

f

with former employees. (D.I. 20 at 6-7). Specifically, Harvin Foods states that the produce
purchased from the

aintiffs was ordered by two individuals, Raymond Maragni, Jr. ("Maragni")

and Vincenzo Giuf "da ("Giuffrida"), with whom Harvin Foods briefly entered into a food
brokerage business. Id. at 6. Harvin Foods notes that in or around July 2009, it agreed to enter
into a limited affilia ·an brokerage business with Maragni and Giuffrida, wherein the brokerage
business would buy roduct from vendors that would then be transported by a trucking company
from the vendor to

e customer. Id. at 2. Harvin Foods indicates that the brokerage business

initially went well, td Maragni and Giuffrida worked from Harvin Foods' office. Id. Maragni
and Giuffrida later stopped working from the Harvin Foods' office, however, and became
unresponsive when usiness began to "pick up." Id. Soon after, Harvin Foods began receiving

1

The plaintiffs preserve their rights in the statutory trust pursuant to 7 U.S.C. §499(e)(c), 7 C.F.R. Part 46, 49 Fed.
Reg. 45735 (Nov. 20, 1 84), through the invoices it sent with the produce. (D.I. 17 at 2.)

3

complaints from the b okerage business vendors that had not been paid for produce they shipped
arvin Foods notes that it had not done business with many of these vendors

to Harvin Foods. Id.
in the past. · Id.

Up n investigating the complaints, Harvin Foods learned that Maragni and

Giuffrida were fraud ently ordering produce from growers and/or vendors on Harvin Foods'
credit, but having bro erage business customers send their payment checks directly to them. Id.
Harvin Foods then t rminated its affiliation with Maragni and Giuffrida and filed a criminal
I

.

complaint with the Wilmington Police Department to alert them of the fraudulent scheme. Id. at
3.

On May 14, 1999, Harvin Foods granted WSFS, a security interest in all of its accounts,
inventory, equipmen, specific property, records, securities, and proceeds. (D.I. 164, Ex. A). On
I

.

November 13, 2013, rlaintiffs and WSFS came to an agreement to settle Plaintiffs' claims against
WSFS for a total pafnent of $300,301.47. (D. I. 164 at 1). The settlement with WSFS allowed
Plaintiffs to recoup tHe amount owed to them for their produce. Id. at 14. Plaintiffs seekto recover
only interest and

III.

STAND

atto~eys' fees from Mr. Harvin personally.
OFREVIEW

Summary ju gment is appropriate "if the movant shows that there is no genuine dispute as
to any material fact nd the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a). A fact is mate ial if it "could affect the outcome" of the proceeding. Lamont v. New Jersey,

a reasonable jury to eturn a verdict for the non-moving party." Id. The moving party bears the
burden of proving th t summary judgment should be granted. Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 585 n.10 (1986). The district court must view the evidence in

4

the light most favorab e to the nonmoving party and draw inferences in that party's favor. Wishkin
v. Potter, 476 F.3d 18 , 184 (3d Cir. 2007).

The mere exi tence of some evidence in support of the nonmoving party will not be
sufficient for denial If a summary judgment motion. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249 (1986). Rat er, the nonmoving party must present enough evidence to enable a jury to
reasonabl~

find for it n that issue. Id. The party opposing summary judgment must present more

than just "mere alleg tions, general denials, or ... vague statements" to show the existence of a
genuine issue: Quirta v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991). The moving party is
entitled to judgment as a matter of law if the nonmoving party fails to make a sufficient showing
on an essential elemtt of its case for which it has the burden of proof. Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1186).
IV.

DISCUSSION

The court hJ jurisdiction under 28 U.S.C. § 1331. This matter arises under the trust
provision of the Peri hable Agricultural Commodities Act.· 7 U.S.C § 499e(c)(2). That provision
requires:
[p]erishable gricultural commodities received by a commission merchant, dealer,
or broker in dll transactions, and all inventories of food or other products derived
from perishaBle agricultural commodities, and any receivables or proceeds from the
sale of such 9ommodities of products, shall be held by such commission merchant,
dealer, or br~ker in trust for the benefit of all unpaid suppliers or sellers of such
commodities or agents involved in the transaction, until full payment of the sums
owing in co ection with such transactions has been received by such unpaid
suppliers, sel ers, or agents.
j

Id. If a merchant, ealer, or broker fails to make full payment promptly for a transaction in a

perishable agricultu al commodity, or fails to maintain the trust required by § 499e(c), that
merchant, dealer or broker is liable to the producer for "sums owing in connection with" the
commodity transact" ons. See id.
5

· The court prev ously decided that, despite Maragni and Giuffrida' s fraudulent scheme, they
were acting as agents of Harvin Foods, Plaintiffs relied in good faith on the belief that they were
authorized Harvin Fo ds buyers, and Plaintiffs preserved their interest in the P ACA trust pursuant
to 7 U.S.C. § 499e(c) 4). See (D.I. 53 at 7). While the court indicated that Plaintiffs were likely
to succeed on the me "ts of their claim that they were entitled to payment from Defendants under
PACA, (D.I. 53 at

1

),

the court never explicitly decided that Harvin Foods failed to pay for

Plaintiffs' perishable agricultural commodities or that Harvin Foods failed to maintain the trust. 2
At this stage, howeve , it is undisputed that Harvin Foods failed to pay Plaintiffs' for the perishable
commodities, and ~ft Harvin Foods failed to maintain the trust. Outside of Plaintiffs undisputed
Statement of Facts

j

their opening brief, (D.I. 164

iii! 1-12), the parties do not even brief that

issue. See Fed. R. CiiV. P. 56(e) ("If a party fails to properly support an assertion of fact or fails to
properly address ano her party's assertion of fact as required by Rule 56(c), the court may: ... (2)
consider the fact un isputed for purposes of the motion ....").
decide whether Mr.

The court, therefore, is left to

arvin is subject to personal liability for Harvin Foods failure to maintain the

trust, and whether P aintiffs can recover attorneys' fees and interest as part of their P ACA trust
claim.
A. Individu[l Liability
PACA "was 'designed primarily for the protection of the producers of perishable
agricultural product -most of whom must entrust their products to a buyer or commission
merchant who may , e thousands of miles away, and depend for their payment upon his business
acumen and fair <lea ing.' " Tom Lange Co. v. KornBlum. & Co., 81 F .3d 280, 283 (2d Cir. 1996)
(quoting H.R. Rep.

o. 84-1196 (1955), reprinted in 1956 U.S.C.C.A.N. 3701, 3701). Because

2

Though the court granJed Plaintiffs' motion for default judgment as to Harvin Foods, Harvin Partners, Harvin
Properties, and KH Foods, Default Judgment is not a decision on the merits of the action.

6

of the perishable na re of fresh fruits and vegetables, P ACA places a duty on buyers to "hold
sufficient PACA trus assets in trust to pay all suppliers." Consumers Produce Co. v. Volante

WholesaleProduce,L c., 16F.3d 1374, 1379(3dCir.1994). Ifabuyerbreachesthatduty,liability
will attach to the

buyir~ bu~,

"[i]fthe [buyer's] assets ar.e insufficient to satisfy the liability, others

may be found second nly hable." Shepard v. KB. Fruit & Vegetable, Inc., 868 F. Supp. 703, 706
(E.D. Pa. 1994); see , ear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 167 (3d Cir.
2010).
PACA does n t mention individual liability. The Third Circuit has, however, found PACA
buyers individually r able based on common law breach of trust principles. Weis-Buy Servs., Inc.

v. Paglia, 411 F.3d 415, 421 (3d Cir. 2005). In Weis-Buy, the Third Circuit synthesized the
precedents of other circuits that already decided the issue "and concluded that 'individual
shareholders, officer , or directors of a corporation who are in a position to control P ACA trust
assets, and who brea, h their fiduciary duty to preserve those assets, may be held personally liable
under the Act.'" Id. (quoting Sunkist Growers, Inc. v. Fisher, 104 F.3d 280, 283 (9th Cir. 1997));

see Patterson Froze Foods, Inc. v. Crown Foods Int'!, Inc., 307 F.3d 666, 669 (7th Cir. 2002)
(holding that PACA producers can recover from both the corporation and its controlling officers
when a buyer breac es PACA trust rights); Gofman-Hayden Co. v. Fresh Source Produce Inc.,
217 F.3d 348, 351 (5th Cir. 2000) ("[I]ndividual shareholders, officers, or directors of a
corporation who are in a position to control trust assets, and who breach their fiduciary duty to
preserve those asset , may be held personally liable under PACA.").
In a later pinion, the Third Circuit devised a test to determine a buyer's individual

liability under PAC
1) determin whether an individual holds a position that suggests a possible
fiduciary du y to preserve the PACA trust assets (e.g., officer, director, and/or
7

controlling sh eholder); and 2) assess whether that individual's involvement in the
corporation e tablishes that she was actually able to control the PACA trust assets
at issue.

Bear Mountain, 623 .3d at 172. In Bear Mountain, the court analyzed whether the officer at issue
was involved in the day-to-day business decisions of the corporation. Id. at 173. The court
reiterated that formal title alone is insufficient to determine if a person exercised control over the
trust assets. Id. at 172. Instead, courts must conduct a case-by-case analysis to determine the role
of the individual in 1e corporation. Id. Additionally, an individual cannot be held liable unless
that individual is r sponsible, in some way, for failing to preserve the trust assets for the
beneficiaries. Food ·earn Int'!, Ltd. v. Unilink, LLC, 595 F. App'x 146, 149 (3d Cir. 2Q14).
Normally, su ·h a fact-intensive inquiry would be inappropriate at the summary judgment
stage. Here, howev r, no reasonable jury could find that Mr. Harvin did not hold a position that
suggests a fiduciary 'uty to preserve the trust assets, or that he was not actually able to control the
trust assets at issue.
Mr. Harvin 01 ered no facts to dispute that he was the president of Harvin Foods, (D.I. 21

'if 2), he was the sole owner of Harvin Foods, (D.I.

153

'if 5(e)), he was the sole principal reported

on Harvin Foods' P CA license, (D.I. 18, Ex.2), and he granted a security interest in the assets of
Harvin Foods to Wi

ington Savings Fund Society Bank ("WSFS"). (D.I. 164, Ex. A at 7). The

court finds that Mr.

arvin had a duty as the sole owner and president to preserve the PACA trust

:::'· The court al lo finds that Mr. Harvin was actually able to control the PACA trust assets at

This situati n is wholly dissimilar from the one presented in Bear Mountain where,
despite her title as a officer of the corporation, the defendant was not held personally liable under
PACA because she

as not involved in any of the major business decisions. Bear Mountain, 623

8
[,

F.3d at 173. Here,

. Harvin granted WSFS a security interest in all the accounts, inventory,

equipment, specific p loperty, records, additional securities, and proceeds of Harvin Foods. (D.I.
164, Ex .. A~. P ACA Tst assets are define~ as "[p]erisha~le agricultu~al co~odities received by
a comnnss10n merchrt, dealer, or broker m all transactions, and all mventones of food or oilier
products derived fro, perishable agricultural commodities, and any receivables or proceeds from
the sale of such co

odities or products."

7U.S.C § 499e(c)(2).

Because Mr. Harvin was able

to grant WSFS a sec rity interest in, among other things, Harvin Foods' inventory, and because
Harvin Foods' inven ory indisputably contained perishable agricultural products, he necessarily
exercised control

ov1

trust assets.

Mr. Harvin breached his fiduciary duty under P ACA because he failed to preserve or turn
over trust assets whe payment was due to Plaintiffs. See Morris Okun, Inc. v. Harry Zimmerman,

Inc., 814 F. Supp. 34 , 348 (S.D.N.Y) (finding that PACA imposes liability on a trustee, whether
a corporation or offi er of a corporation, who uses the trust assets for any purpose other than
repayment of the sup lier); see also 7 C.F.R. § 46.46(e)(l) (stating that merchants "are required to
maintain trust asset in a manner such that assets are freely available to satisfy outstanding
obligations to seller of perishable commodities"). Because Mr. Harvin had a :fiduciary duty to
preserve the trust as ets, the ability to actually control those assets, and he failed to turn over the
trust assets, he can b held personally liable under P ACA for "fail[ing] to maintain the trust" and
for "fail[ing] . . . to account and make full payment promptly" for Plaintiffs' perishable
commodities. 7 U.S C. § 499b(4).

B. Unpaid nterest and Attorneys' Fees
PACA requi es that merchants, dealers, and brokers create a trust for the benefit of unpaid
suppliers. 7 U.S.C. § 499e(c)(2). Failure to maintain the trust is unlawful, and PACA entitles

9

supplier's to recover "full payment of the sums owing in connection with . . . [perishable
commodity] transactions." Id. The court is asked to decide whether§ 499e(c)(2) allows suppliers
to recover attorneys'

es and interest as part of their PACA trust claims.

Attorneys' fee can be awarded if there is a statutory or contractual basis for them. In re
Fleming Companies, nc., 316 B.R. 809, 815 (D. Del. 2004). The relevant section of the statute,
7 U.S.C § 499e, ?oes ot explicitly allow for the recovery of attorneys' fees and interest as part of
a PACA trust claim. That section, however, also does not evidence any Congressional intent to
foreclose the recove1 of attorney's fees and interest. Middle Mountain Land & Produce Inc. v.
Sound Commodities nc., 307 F.3d 1220, 1224 (9th Cir. 2002). The statute's language is broad,
allowing sellers and producers to recover "full payment of sums owing in connection with"
transactions in perisl able agricultural commodities.

§ 499e(c)(2) (emphasis added).

The

legislative history fo the amendment to P ACA indicates that the Committee on Agriculture did
not intend for the am ndment to "interfere with the ability of the seller-supplier, and buyer-receiver
to set contract terms" R.R. Rep. No. 98-543, 5 (1983). As the Ninth Circuit recognized, it is
unlikely "that Congr ss, in enacting a statute to provide better insolvency remedies to perishable
agricultural commo ities sellers, wanted selectively to exclude legitimate portions of a covered
contract from the sco e of aPACA claim." Middle Mountain, 307 F.3d at 1224. PACA, therefore,
does nothing to curt il buyers' and sellers' rights to contract for payment of attorneys' fees and
interest in the event

at one party fails to pay for the commodities. See Fleming, 316 B.R. at 816.

In many oft e PACA cases where attorneys' fees and interest claims are in dispute, those

terms will be includ d on the invoice for the perishable agricultural products. See Fleming, 316

B.R. at 816; Middle

ountain, 3 07 F .3d at 1224. The Third Circuit has previously recognized that

U.C.C. § 2-207 app ies to terms on ail invoice that accompany or follow the delivery of goods.

10

Altronics ofBethlehe , Inc. v. Repco, Inc., 957 F.2d 1102, 1107 (3d Cir. 1992) (citing Herzog Oil
Field Serv., Inc. v. Ot

f Torpedo Co., 391 Pa. Super. 133, 570 A.2d 549 (1990)). Under U.C.C. §

2-207 3, "[a] definite abd seasonable expression of acceptance or a written confirmation which is
sent within a reasonJle time operates as an acceptance even though it states terms additional to
or different from thosl offered or agreed upon." Viewing the invoice as a written confirmation of
an oral agreement,

y additional terms on the invoice will become part of a contract between

· merchants unless: "( ) the offer expressly limits acceptance to the terms of the offer; (b) they
materially alter it; or c) notification of objection to them has already been given or is given within
a reasonable time aft r notice of them is received." § 2-207(2). Accordingly, courts in PACA
cases are typically t sked with analyzing whether the terms on the invoice effected a material
alteration to the oral ontract. See Fleming, 316 B.R. at 816.
The core of tle dispute here is whether the attorneys' fees and interest terms became part
of Harvin Foods' cbntracts with Fresh Direct, Whitmore, and PPCB, or whether the terms
I

.

constituted a materia alteration. Champion also contends that, although attorneys' fees were not
part of its contract

"th Harvin Foods, it is still entitled to interest payments. Mr. Harvin argues

that the "unilateral i suance of invoices that contain attorneys['] fees and interest provisions that
were never agreed to by [Harvin Foods] cannot be a basis" for summary judgment. (D.I 169 at 6).

Mr. Harvin also co tends that inclusion of the attorneys' fees and interest terms in a contract
between Plaintiffs a, d Harvin Foods would result in surprise and undue hardship. Id. at 10. The
court will address each of Mr. Harvin's arguments in turn.

The court uses U.C.C. ~ 2-207 instead of any specific state commercial code because any state's law that could
po~sibly be relevant to *s actio_n adopts the U.C.~. § 2-207 in~o its own commercial co~e verbatim. See generally
3

Ariz. Rev. Stat. Ann.§ j?-2207, Del. Code Ann. tit. 6, § 2-207, Cal. Com. Code§ 2207, 13 Pa. Stat. and Cons. Stat.
Ann. § 2207; Idaho Co e Ann. § 28-2-207.
·

11

Mr. Harvin sta es that Plaintiffs' argument relies "solely on unilateral invoices, not bilateral

contracts" to establis their entitlement to attorneys' fees an interest. (D.I. 169 at 7). According
to Mr. Harvin, those erms cannot be the basis for judgment against him because Harvin Foods
never agreed to them. Id. Mr. Harvin cites no case law for either proposition, however. In fact, a
number of cases have found the opposite-invoices are properly analyzed under § 2-207 as written
confirmation of a con act. See Fleming, 316 B.R. at 816; Coosemans Specialties, Inc. v. Gargiulo,
485 F.3d 701, 708 (f2d Cir. 2007) (finding defendant's argument unpersuasive because, even
though the attorneys'! fees provisions on the invoices were never discussed or agreed upon, they
were properly analyzld as proposals for addition to the contract under § 2-207).
In contrast to

. Harvin's original statement that there was no bilateral contract, he states

later in his brief that 'under the circumstances here present, a 'definite and seasonable expression
of acceptance' was erbally provided when the orders were placed by [Harvin Foods] with the
Plaintiffs." Id. at 9. Plaintiffs contend that "Mr. Harvin presents no evidence that Plaintiffs and
Harvin Foods had p eviously existing contracts which Plaintiffs sought to modify by issuing
invoices:" (D.I. 170 at 9). Regardless of whether the invoice served as acceptance of an offer or
whether the invoice erved as a proposal for additional terms, U.C.C. 2-207 still demands the same
outcome.
The comme]nts to U.C.C. § 2-207 explain the circumstances that the section was drafted to
address:
where an a ~ement has been reached either orally or by informal correspond.ence
between the arties and is followed by one or both of the parties sending formal
memoranda mbodying the terms so far as agreed upon and adding terms not
discussed. he other situation is offer and acceptance, in which a wire or letter
expressed an intended as an acceptance or the closing of an agreement adds further
minor sugge tions or proposals ....
1

12

§ 2-207, comment 1. Under§ 2-207, "a proposed deal which in commercial understanding has in
fact been closed is rec gnized as a contract." Id. at comment 2. Accordingly, any additional terms
contained in the coJfirmation or acceptance are considered as proposals for addition to the
contract, under§ 2-207(2).

There can be no genuine issue as to a material fact when the different

factual scenarios ne essitate the same conclusion-any additional terms to contracts between
merchants will beco e part of the contract unless they materially alter it. Findi?g that there is no
genuine dispute over he existence of a contract, and finding § 2-207 applicable to the inquiry here,
the court advances to the material alteration analysis.
The court
comments to§

~ds

that there is no genuine dispute over the award of interest fees. The

2-201 explicitly state that "a clause providing for interest on overdue invoices" is

an example of a cla1e that "involve[s] no element of unreasonable surprise and which therefore

[is] to be incorporate)Cl in the contract." § 2-207, comment 5. Additionally, it is within the courts
discretion to award rejudgm.ent interest to PACA claimants under 7 U.S.C. § 499(c)(2). See
Middle Mountain,

07 F.3d at 1226 (holding that district courts can award "reasonable

prejudgment interest to P ACA claimants" to effectuate the purpose of the statute and protect the
interests of claimant ); Endico Potatoes, Inc. v. CIT Grp./Factoring, Inc., 67 F.3d 1063, 1071 (2d
Cir. 1995) (finding

at the decision to award prejudgment interest in PACA cases lies within the

"broad discretion" olthe district court); Morris Okun, L.nc. v. Harry.Zimmerman, Inc., 814 F.Supp.
346, 351 (S.D.N.Y. 1993) (awarding prejudgment interest even when it was not in the contract
because failing to make the award could "create a disincentive to prompt payment to suppliers and
encourage collectioJ litigation," contrary to congressional intent). The court will therefore award
prejudgment interesl at 18% per annum for Plaintiffs that included that term in their contract. For
Plaintiffs that had nd contractual interest term, or for Plaintiffs that included a term for prejudgment

13

interest on their invoi es, but-failed to state a rate, the court will award prejudgment interest at the
statutory rate under 6 Del. C. § 2301.
The court also finds that Mr. Harvin has failed to demonstrate that a provision for attorneys'
fees on Plaintiffs' inrices materially altered the contract for the perishable commodities. The

issue of attorneys' fees can be decided as a matter of law. The undisputed facts of this case

esta~lish that a provJ.lion for attorneys' fees was clearly stated at the bottom of every invoice sent

by eighteen of the

enty Plamtlffs. (D.I. 18, Ex. 3); (D.I. 19, Ex. 3); (D.I. 60, Ex. 1); (D.I. 73,

Ex. 3). By the co

's count, Harvin Foods received around one hundred invoices containing

attorneys' fees provis ons. 4 Id. Every attorneys' fee provision included almost identical language.
Id.

Given those un isputed facts, the court finds that the attorneys·' fee provisions are more

analogous to interes on past-due invoices than they are to any of the. examples of material
alteration listed in co ment 4 to§ 2-207. See Rocheux Int'! of NJ., Inc. v. U.S. Merchants Fin.
Grp., Inc., 741 F. Su p. 2d 651, 687 (D.N.J. 2010) ("A reasonable term for attorneys' fees, which

presumes the need o take legal action to recover sums owed under contract, more closely

4

Mr. Harvin sta es that "there is no evidence that [Harvin Foods] received any of [the invoices] before
subsequent orders were paced." (D.I. 169 at 8). Mr. Harvin's contention is supported by one statement in his
affidavit, "I do not know for when [Harvin Foods] received invoices from Fresh Direct, Champion, Whitmore, and
PPCB." (D.1. 169, Ex. A~ 4). Mr. Harvin's statement cannot qualify as a disputed, material fact precluding
summary judgment. See nderson, 477 U.S. at 249 (holding that "a genuine issue for trial exists ifthere is sufficient
evidence favoring the no oving party for a jury to return a verdict for that party").
Rule 56 requires that parties support their assertion that a material fact remains disputed by: (1) "citing to
particular parts of materi ls in the record"; or (2) "showing that the materials cited do not establish the absence of a
genuine dispute." Fed. R Civ. P. 56(c)(l). Mr. Harvin cites only to an affidavit reiterating the same
unsubstantiated, concluso statement he makes in his brief Every single invoice with an attorneys' fee provision
states that the perishable ,ommodities are to be shipped or sold to Harvin Foods at 620A Street, Wilmington,
Delaware 19801. As pre Iiously stated, there is no genuine dispute that Harvin Foods received the perishable
agricultural commodities nd failed to pay for thqse commodities. Faced with the fact that Plaintiffs sent around one
hundred invoices to Mr. arvin, and the fact that Mr. Harvin does not dispute receipt of the corresponding produce,
a jury would lack sufficie t evidence from which it could reasonably concluded that Mr. Harvin did not receive the
invoices. The court, ther fore, does not believe that this is the type of genuine factual dispute that should preclude
summary judgment.
·

14

resembles a term fo interest on past-due invoices than any examples of material alteration
provided by commen 4 to§ 2-207.").
The language and purpose of PACA also support the court's decision to award attorneys'
fees as a matter of law. Congress chose not to limit P ACA claims solely to the price of the
perishable commodities. 7 U.S.C. § 499e(c)(2). Instead, Congress allowed for "full payment in
the sums owing inc nnection with [the] transactions." Id. The Act specifically notes that the
reason for its incep ion was to reduce the burden on commerce in perishable agricultural
commodities caused y financing arrangements where buyers, who have failed to pay suppliers
for purchased perish ble commodities, grant lenders a security interest in those commodities. Id.
§ 499e(c)(l ). In som cases, lenders would have a superseding interest in the commodities, leaving
suppliers with little ecourse in the event that a buyer fails to pay.. See Explanation of the
Regulations Under t e Perishable Agricultural Commodities Act; Addition of Provisions to Effect
a Statutory Trust, 49 ed. Reg. 45,735, 45,738 (Nov. 20, 1984) (to be codified at 7 C.F.R. pt. 46).
While the act does ot declare that attorneys' fees are due to the supplier in every case under
PACA, it is fair to aslsume that when attorneys' fees provisions are included on invoices between
a buyer and supplier such a provision cannot effect a material alteration to the contract. Such a
finding would inflict a large burden on suppliers attempting to enforce their rights under PACA,
rendering the act effi ctively toothless.
Lastly, U.C. . § 2-207 states that clauses that materially alter the contract "result in
surprise or hardship "f incorporated without express awareness of the other party." U.C.C. § 2207, comment 4. I would be illogical for the court to consider an interest fee provisionamounting to an aw d of $160,025.41 in interest payments-as a nonmaterial alteration under§
2-207, while finding an attorneys' fee provision-amounting to an award of$ 71,639.75-to be a

15

material alteration.

or those reasons, the court finds as a matter of law that the attorneys' fee

provisions did not m terially alter the contract between Plaintiffs' and Mr. Harvin, making those
provisions part ofth1 contract for the sale of perishable agricultural commodities under§ 2-207.
Accordingly,

Plainti~s'

that included such a provision on their invoices are entitled to reasonable

attorneys' fees inc,d in the effort to obtain payment for the perishable commodities sold.

VI.

CONCLUSION
.

.

The court cotludes that Plaintiffs have met their burden of demonstrating that there is no

genuine dispute as tol any material fact and that they are entitled to judgment as a matter of law.
Accordingly, the co

Dated: March

will grant Plaintiffs' motion for summary judgment pursuant to Rule 56.

"?a ·, 2017

16

.