Fresh Direct Inc. v. Harvin Foods Inc. et al
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
FRESH DIRECT, IN ., et al.,
C.A. No. 10-040-GMS
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
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).
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.
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
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
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
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.)
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
complaint with the Wilmington Police Department to alert them of the fraudulent scheme. Id. at
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
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
atto~eys' fees from Mr. Harvin personally.
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
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
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).
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
[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.
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.
· 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
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
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
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
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