Agroexport LLC v. Bacchus Fresh International, Inc. et al

Filing 66

MEMORANDUM Opinion and Order Signed by the Honorable Rebecca R. Pallmeyer on 3/25/2013: Mailed notice(etv, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
HARRIS N.A.,

)
)
Plaintiff,
)
)
v.
)
)
BACCHUS FRESH INTERNATIONAL,
)
INC., et al.,
)
)
Defendants.
)
_____________________________________ )
VALPER, S.A. DE C.V.,
)
)
Cross-Claimant and Third-Party
)
Plaintiff,
)
)
v.
)
)
BACCHUS FRESH INTERNATIONAL,
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INC.,
)
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Cross-Defendant,
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DAVID F. ESTERLINE, an Individual,
)
)
Third-Party Defendant.
)
_____________________________________ )
AGRICOLA Y COMERCIAL CABILFRUT
)
S.A., a Chilean company; SOCIEDAD
)
AGRICOLA SATURNO S.A., a Peruvian
)
company; C.I. WOLF & WOLF LATIN
)
AMERICA S.A., a Colombian company;
)
FRUTAS PIURANAS SAC, a Peruvian
)
company;
)
)
Intervening Plaintiffs,
)
)
v.
)
)
BACCHUS FRESH INTERNATIONAL,
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INC., and DAVID F. ESTERLINE,
)
)
Defendants.
)

No. 11 C 1647
Consolidated with 11 C 1654
Judge Rebecca R. Pallmeyer

MEMORANDUM OPINION AND ORDER
The Perishable Agricultural Commodities Act of 1930 (“PACA”), 7 U.S.C. §§ 499a-499t
(2009 & Supp. 2010) protects sellers of perishable agricultural commodities from unfair conduct by
buyers of such commodities, including failure to pay promptly and fully for produce ordered. PACA
creates a statutory trust in favor of sellers of produce, under which the buyer holds the produce, and
any proceeds and receivables from the produce, in trust for the benefit of the seller. 7 U.S.C. §
499e(c)(2). The claimants in this case sold perishable agricultural commodities to Defendant
Bacchus Fresh International, Inc. (“Bacchus”), and Bacchus failed to pay for that produce. The
court established a claims procedure and entered a judgment against Bacchus.

Plaintiffs

AgroExport LLC, Sanchez Hass Avocado Corp., Rio Queen Citrus, Inc., Cohn Produce Company,
Inc., and New Mundoexport Fruit, Inc. (collectively “AgroExport Group” or “Agro Plaintiffs”) now
seek entry of a judgment in the same amount against individual Defendant David F. Esterline
(“Esterline” or “Defendant”) on the theory that Esterline was an officer of Bacchus and had the
power to manage Plaintiffs’ trust assets. For the reasons set forth below, the court denies the Agro
Plaintiffs’ motion for summary judgment [149] and grants Defendant Esterline’s motion for summary
judgment [146].
INTRODUCTION
The AgroExport Group are unpaid sellers of wholesale quantities of perishable agricultural
commodities (“produce”) who sold produce to the Bacchus and never received payment. On June
17, 2011, this court entered a Consent Injunction and Claims Procedure Order. (See June 17, 2011
Consent Inj. and Order [37].) The Plaintiffs’ PACA trust claims total in the principal sum of
$848,102.74, plus interest and fees, resulting in total claims of $944,551.54, and the AgroExport
Group’s claims total $318,712.07, including principal, interest and attorneys’ fees. (See Jan. 18,

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2012 Minute Order [104]; July 19, 2012 Minute Order [141].)1 Plaintiffs contend that Esterline, as
a principal of the Company, is personally liable for the PACA debts of the Company. On crossmotions for summary judgment, the court concludes, as explained below, that Esterline is not
personally liable.
FACTUAL BACKGROUND
Defendant Esterline began working for Bacchus Fresh International in 1999. At that time,
Bacchus was a division of Fresh America. (Esterline Aff. ¶ 3, Attach. 1 to Def.’s Rule 56.1(a)
Statement of Facts [148] (hereinafter “Def.’s 56.1(a)”.) In 2001, the divisional president of Bacchus
Fresh International, Robert M. Jajkowski (“Jajkowski”), purchased the Bacchus division. (Id.) After
Jajkowski’s purchase, the Bacchus staff consisted of three other individuals: Mary McGuiness,
import coordinator; Ana Meza, bookkeeper; and Esterline, produce salesman. (Esterline Aff. ¶ 3;
Meza Aff. ¶ 3, Attach. 2 to Def.’s 56.1(a).) The Company was incorporated, and Jajkowski offered
Esterline a minority ownership interest. (Esterline Aff. ¶¶ 4-5.) Esterline accepted, agreeing to pay
approximately $90,000 for twenty percent of the Company stock. (Id. ¶ 5.) Esterline paid this sum
through a payroll deduction of $1,000 from every paycheck for about three years. (Id.) At all
relevant times, Jajkowski retained ownership of the remaining eighty percent of the Company stock.
(Id.)
Corporate documents name Esterline as the Company’s vice president, and the Illinois
Secretary of State’s website identifies him as the Company’s secretary. (Esterline Aff. ¶ 6; Meza
Aff. ¶ 9.) The 2009 and 2010 Illinois Domestic/Foreign Annual Reports also identify Esterline as
one of the Company’s officers or directors, and its secretary. (Pls.’ Rule 56.1(a) Statement of Facts
[149-2] (hereinafter “Pls.’ 56.1(a)”), ¶ 15.) The same information is also reflected by Blue Book

1

The members of the AgroExport Group’s trust claims are valid and properly
perfected pursuant to 7 U.S.C. §§ 499a-499t of the PACA in the following amounts: AgroExport,
LLC $208,518.32; Sanchez Hass Avocado Corp. $20,697.86; Rio Queen Citrus, Inc. $20,413.60;
Cohn Produce Company, Inc. $5,536.39; New Mundoexport Fruit, Inc. $63,545.90.
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Services, Inc. (a produce industry credit reporting agency). (Id. ¶ 16.) Esterline is also listed on
three credit applications. (Id.) Esterline asserts that these applications were filled out and signed
by Jajkowski alone, and that he was not aware of their existence prior to this litigation. (Esterline
Suppl. Aff. ¶¶ 18-19, Attach. 1 to Def.’s Resp. to Pls.’ 56.1(a) [156] (hereinafter “Def.’s 56.1
Resp.”).) Esterline’s name also appears on Bacchus’s PACA license. (See PACA Documents, Ex.
B to Pls.’ Resp. to Def.’s 56.1(a) [159] (hereinafter “Pls.’ 56.1 Resp.”).)
It is undisputed that Esterline played some role as an officer of the corporation. Esterline
occasionally signed documents as an officer of Bacchus. (Esterline Aff. ¶ 21.) For example, once
a year, the Company’s attorney sent Esterline a statement to sign, as the Company’s secretary,
confirming that there had been no change in the corporation’s status. (Id.) Esterline also signed
a Harris Bank new account application, a $1,750,000.00 Promissory Note, and a General Security
Agreement on behalf of Bacchus in favor of Harris Bank. (Harris Documents at 2, Ex. A to Pls.’
56.1 Resp.) Esterline maintains, however, that he only signed documents at Jajkowski’s direction,
and that he never carefully reviewed any of these documents, or retained any copies for his own
records. (Esterline Aff. ¶ 21.) Esterline also did not have custody or control of Bacchus’s corporate
minute books, and does not even know whether such records exist. (Esterline Aff. ¶ 23; Meza Aff.
¶ 24.)
Esterline also asserts that he never attended stockholders’ meetings, board of directors’
meetings, or any other corporate meetings. (Esterline Aff. ¶¶ 11-13.) Documents that Esterline and
Jajkowski signed to open a Harris Bank account for Bacchus on April 28, 2010 state that a board
of directors meeting was held that day at which a quorum was present (Harris Documents at 2), but
Esterline denies that he attended any such meeting. (Def.’s Resp. to Pls.’ 56.1 Statement of
Additional Facts, [162] ¶ 2.) Aside from the Harris Bank documents, there is no evidence of formal
corporate meetings. Esterline acknowledges that he attended meetings with the Company’s
attorney(s), but asserts that he did so only when Jajkowski wanted him to sign a document.
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(Esterline Aff. ¶ 15.) Esterline also attended one meeting with the Company’s accountant in 2006
or 2007. (Id.)
Esterline received a bi-monthly paycheck from Bacchus, and, on one occasion at the end
of 2006, was paid a bonus–at the direction of, and in an amount determined by, Jajkowksi.
(Esterline Aff. ¶ 24; Meza Aff. ¶ 25.) Esterline maintains that as a produce salesman, he had no
decision-making power for any purpose except for selling produce. (Esterline Aff. ¶ 8; Meza Aff.
¶¶ 5, 6, 10, 11.) At some point, the Company added employees, but Esterline did not supervise or
manage any of them. He had no authority to hire or fire other workers, and had no input into how
much they were paid. (Esterline Aff. ¶ 25; Meza Aff. ¶ 18.) On one occasion, when two other
employees wanted to become partners in the business, Esterline supported the idea, but Jajkowski
rejected it and instead fired the two employees. (Esterline Aff. ¶ 14; Meza Aff. ¶ 17.)
Even after becoming a shareholder, Esterline asserts, he continued on in his previous role
as a produce salesman, while Jajkowski maintained all responsibility and control over the
management and day-to-day operations of the Company. (Esterline Aff. ¶¶ 8-9; Meza Aff. ¶¶ 5, 6,
10, 11.) Esterline was only responsible for his own sales, and did not approve suppliers used by
other Company employees or those from whom other Company employees made purchases.
(Meza Aff. ¶ 13.) Esterline acknowledges that he represented the company in actions before the
United States Department of Agriculture, collecting sums owed to Bacchus and defending claims
against the trust. (Pls.’ 56.1(a) ¶ 14; Esterline Suppl. Aff. ¶¶ 13-17.) He explains, however, that
he represented Bacchus on those particular matters because they involved his customers and
accounts. (Esterline Suppl. Aff. ¶¶ 13-17.)
Esterline reports that he had only a limited role in managing the Corporation’s financial
affairs. On some occasions, Esterline extended lines of credit of up to $50,000 to customers (Pls.’
56.1(a) ¶ 13), but he did so only with Jajkowski’s approval, and did not have authority to make
decisions concerning the credit limits of other Company salespersons’ accounts. (Esterline Suppl.
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Aff. ¶¶ 11-12; Meza Aff. ¶ 14.) As a salesman, Esterline was accountable for collecting money from
Bacchus’s customers, and therefore had access to accounts receivable information, and was able
to access customer invoices in the Company computer. (Esterline Aff. ¶¶ 27, 31, 37; Meza Aff. ¶
27.) He could access only such basic information as the customer’s name, the quantity, and the
sale price, however, and had no power to alter the invoices. Only Meza and Jajkowski were
authorized to do so. (Id.)
Significantly, Esterline had no access to accounts payable information. (Esterline Aff. ¶ 32;
Meza Aff. ¶ 31.) During most of his tenure with Bacchus, all accounts payable were handled by
Meza and Jajkowski. (Esterline Aff. ¶ 28; Meza Aff. ¶ 28.) Near the end of Esterline’s employment,
Hernan Brave (“Brave”) was also involved with accounts payable. (Id.) Brave acted as director of
procurement for Bacchus, purchasing produce from the Company’s office in New Jersey and
handling grower relations. (Id.) Esterline made no decisions about which bills or vendors were
paid. (Esterline Aff. ¶ 29; Meza Aff. ¶¶ 13, 29.) And, though he was a signatory on the Company’s
bank account, Esterline claims he never reviewed the account, never received or reviewed bank
statements, and simply signed documents at Jajkowksi’s direction. (Esterline Aff. ¶¶ 18, 22; Meza
Aff. ¶ 20.) Esterline had no online access to Bacchus’s funds or banking records; had no way of
reviewing any of the financial information; had no access to Bacchus’s books and records; never
had possession or control of the Bacchus checkbook (if there was one–Esterline does not know);
never knew the balance in Bacchus’s bank account; and was not authorized to make wire transfers.
(Esterline Aff. ¶¶ 17, 20; Meza Aff. ¶¶ 21-23.) In her affidavit, Meza explained that she prepared
checks and printed them on a computer and does not recall Esterline ever signing any checks.
(Meza Aff. ¶ 8.) Meza confirmed Esterline’s account that he had no access to information about
Bacchus’s expenses or where the money went; those things were the sole purview of Jajkowski.
(Esterline Aff. ¶ 26; Meza Aff. ¶ 26.) Though Esterline occasionally received an “Income Statement”
for Bacchus, the statements were prepared by Jajkowski, and Esterline did not know whether the
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statements accurately reflected the Company’s financial condition. (Esterline Aff. ¶ 33.)
Plaintiffs have offered little evidence of Esterline’s involvement with management of
Bacchus’s financial affairs. Esterline did sign at least one check on August 5, 2010. (Pls.’ 56.1(a)
¶ 10.) Esterline explained that he signed this check, a payment to a grower, when Jajkowski
telephoned Meza from Spain and directed her to cut the check and ask Esterline to execute it.
(Esterline Suppl. Aff. ¶¶ 4-5.) Esterline also opened envelopes containing incoming checks fewer
than five times, but only when neither Jajkowski nor Meza was in the office. (Esterline Aff. ¶ 16.)
He never opened bills, invoices or other mail that did not appear to be a depositable check.
(Esterline Aff. ¶ 19.) Meza, as bookkeeper, kept track of each day’s receipts; she did not share this
information with Esterline. (Meza Aff. ¶ 12.)
Esterline last received an Income Statement in 2009, which reflected that the Company
showed a profit of $55,618.75. (Esterline Aff. ¶ 33.) On January 26, 2011, he resigned as an
employee, officer, and stockholder of Bacchus. (Id. ¶ 36.) Just before Esterline left the Company,
he received calls from vendors reporting that they had not been paid in more than eighty days,
which, according to Esterline, was unusual for Bacchus. (Id. ¶ 30.) Esterline referred all questions
to Jajkowski. (Id.) At that time, Esterline claims he believed that Bacchus had sufficient funds to
pay all its creditors, based upon the information that he received from Jajkowski. (Esterline Aff. ¶¶
33, 36.)
DISCUSSION
I.

Standard of Review
Summary judgment is proper if “the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). On
cross-motions for summary judgment, the court construes all facts and inferences “in favor of the
party against whom the motion under consideration is made.” In re United Air Lines, Inc., 453 F.3d
463, 468 (7th Cir. 2006) (quoting Kort v. Diversified Collection Servs., Inc., 394 F.3d 530, 536 (7th
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Cir. 2005)); see also Gross v. PPG Industries, Inc., 636 F.3d 884, 888 (7th Cir. 2011); Foley v. City
of Lafayette, Ind., 359 F.3d 925, 928 (7th Cir. 2004). To avoid summary judgment, the opposing
party must go beyond the pleadings and “set forth specific facts showing that there is a genuine
issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (internal quotation and
citation omitted).
A genuine issue of material fact exists if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Id. at 248. The party seeking summary judgment has the
burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Summary judgment is proper against “a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Id. at 322. The party opposing summary
judgment “must do more than simply show that there is some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). “The
mere existence of a scintilla of evidence in support of the opposing] position will be insufficient;
there must be evidence on which the jury could reasonably find for the [opposing party].” Anderson,
477 U.S. at 252.
II.

Merits
PACA requires produce dealers to make “full payment promptly” for any produce they

purchase. 7 U.S.C. § 499(b)(4). Buyers of produce must hold proceeds from the sale of that
produce in a non-segregated floating trust until the seller is paid in full. 7 U.S.C. § 499e(c)(2).
Several circuits have held that PACA’s statutory trust provision permits plaintiffs to recover against
both a corporation and its controlling officers for breach of fiduciary duty. See, e.g., Weis-Buy
Svcs., Inc. v. Paglia, 411 F.3d 415, 421-22 (3d Cir. 2005); Golman-Hayden Co., Inc. v. Fresh
Source Produce, 217 F.3d 348, 351 (5th Cir. 2000). The Seventh Circuit has also recognized such
a remedy. See Patterson Frozen Foods, Inc. v. Crown Foods Int’l, Inc., 307 F.3d 666, 669 (7th Cir.
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2002) (citing Golman-Hayden, 217 F.3d at 351).
“Individual liability . . . is not derived from the statutory language, but from common law
breach of trust principles.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 169 (3d
Cir. 2010). A controlling officer of a corporation may be held personally liable when: (1) the
individual’s involvement with the company was sufficient to establish a legal responsibility; and (2)
the individual breached a fiduciary duty to the PACA creditors. Shepard v. K.B. Fruit & Vegetable,
Inc., 868 F. Supp. 703, 705-06 (E.D. Pa. 1994). Courts have considered various factors to
determine whether an individual was sufficiently involved with the company, such as whether an
individual was a director (Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701, 706 (2nd Cir.
2007)), was active in the management of the company (Sunkist Growers, Inc. v. Fisher, 104 F.3d
280, 283 (9th Cir. 1997)), had control of day-to-day operations (Okun, Inc. v. Zimmerman, 814
F.Supp. 346, 349-50 (S.D.N.Y. 1993)), signed for company accounts (K.B. Fruit & Vegetable, 868
F. Supp. 703, 706 (E.D Pa. 1994)), had a role in causing the breach of trust (Shepard v. K.B. Fruit
& Vegetable, 868 F. Supp. at 706), or was the primary actor in failing to pay under PACA (Bronia
Inc. et al. v. Ho, 873 F. Supp. 854, 861 (S.D.N.Y. 1995)).
In small corporations, like Bacchus, courts have recognized that an individual may hold a
corporate office or shares for entirely legitimate purposes, and not exercise any day-to-day control
over the company. Mid-Valley Produce Corp. v. 4-XXX Produce Corp., 819 F. Supp. 209 (E.D.N.Y.
1993). The Third Circuit considered the issue of whether an officer and shareholder had actual
control over the management of a PACA trust in Bear Mountain Orchards, Inc. v. Mich-Kim, Inc.,
623 F.3d 163, 169 (3d Cir. 2010). In Bear, the Third Circuit explained that the liability of an
individual under PACA does not depend on whether she nominally held an officer or director
position, nor the size of her shareholding. Id. Instead, liability turns on whether the individual had
the authority to direct the control (i.e., manage) PACA assets held in trust. Id. If so, that person
is secondarily liable for breaching the duty to preserve the PACA trust. Id.
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The defendant in Bear was a corporate officer during the relevant time period and owned
fifty percent of the stock in a small “mom and pop” corporation subject to PACA. Despite her title
and ownership status, the Third Circuit concluded she had no actual authority over how her
husband operated the company and therefore did not have power to manage the plaintiffs’ PACA
assets. 623 F.3d at 171-172. In support, the court reiterated the principle that many circuits have
adopted for assessing claims of secondary liability under PACA: “[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 assets, may be held personally liable under PACA.” 623 F.3d at
171 (emphasis in original); Golman, 217 F.3d at 351; see also Coosemans, 485 F.3d at 705-06;
Sunkist, 104 F.3d at 283. Concluding that the defendant wife was not in that group, the Bear court
noted that all management decisions were made by her husband and his office manager. Id.
When considering a small corporation where titles and formalities may be less meaningful,
courts rely primarily on context to (i) determine whether an individual holds a position that suggests
a possible fiduciary duty to preserve the PACA trust assets (e.g., officer, director, and/or controlling
shareholder) and (ii) assess whether that individual’s involvement with the corporation establishes
the actual ability to control the PACA trust assets at issue. Id. at 172. An individual’s formal
position within the company does not necessarily place him “in a position to control trust assets”
for PACA liability. Id. at 171-72. “The ability to control is core.” Id. at 172.
Plaintiffs assert that Esterline was “in a position to control” the trust assets of the Company.
(Pls.’ Mem. in Supp. of Mot. for Summ. J. [149-1] (hereinafter “Pls.’ Mem.”), at 3, 8.) Much of the
evidence they rely on, however, relates to Esterline’s position or title within the Company, rather
than his actual authority. Thus, they emphasize that Esterline was an officer during the relevant
period, and urge that this means he was necessarily in a position to control trust assets. (Id.)
Plaintiffs point out, further, that Esterline was a signatory for the corporate bank account, signed
corporate documents, and held himself out as vice president and secretary. (Id.) As Plaintiffs see
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things, corporate documents identifying Esterline establish that Esterline was “in a position to
control” the Company’s PACA trust assets. (Id.) They suggest that Esterline had and exercised
the power to bind the Company contractually and make all business decisions. (Id. at 3.) The fact
that he did not actually exercise that power does not excuse him from PACA liability, Plaintiffs
argue, because all individuals in positions like Esterline’s are required to act in the best interests
of those producers who entrusted their produce to Bacchus. (Id. at 4.)
It is undisputed that Esterline was an officer of the company. Esterline acknowledges that
he held the titles of vice president and secretary and that he held a shareholder interest in Bacchus.
As explained above, however, liability does not turn on Esterline’s titles or shareholder status; what
matters is whether he had the authority to control the PACA assets held in trust. See Bear, 623
F.3d at 171-72. Esterline’s formal position does not answer that question.
Plaintiffs contend that there is indeed evidence that Esterline “actively controlled” the PACA
trust assets, as well. (Pls.’ Mem. at 3.) This control was manifested, Plaintiffs urge, by Esterline’s
signing a check; extending lines of credit to customers; requesting lines of credit for the Company;
receiving e-mail messages regarding collecting funds and settling account balances; representing
the Company in administrative law proceedings before the USDA; and actively holding himself out
as the Company’s vice president, principal, owner, partner, and/or officer. (Id.) Esterline maintains
that though he took these actions, he was only nominally an officer of the Company, had no actual
control over PACA trust assets, and did not breach any fiduciary duty to the trust beneficiaries.
(Def.’s Mem. in Supp. of Mot. for Summ. J. [147] (hereinafter “Def.’s Mem.”), at 3.) Even after
becoming twenty-percent owner and nominally taking on the role of vice president and secretary,
Esterline points out, he continued on in his role as a produce salesman while Jajkowski maintained
all managerial and operational control over the Company. (Esterline Aff. ¶¶ 8-9; Meza Aff. ¶¶ 5,
6, 10, 11.)
As an officer, shareholder, and signatory on the Company’s bank account, Esterline did
11

have the apparent authority to control trust assets. The remaining evidence, however, supports the
conclusion that Esterline did not actively manage the Company, had little control over the
Company’s operations, and thus, could not actually control trust assets. It was Jajkowski, not
Esterline, who maintained control of Bacchus’s business. There is inconclusive evidence that
Esterline may have attended a single corporate meeting: documents Esterline and Jajkowski signed
to open the Harris Bank account for Bacchus on April 28, 2010 state that a board of directors
meeting was held that same day (Harris Documents at 2), but Esterline denies attending any such
meeting and claims he did not attend corporate meetings, including stockholders’ meetings or board
meetings, at all. (Esterline Aff. ¶¶ 11-13; Def.’s Resp. to Pls.’ 56.1 Statement of Additional Facts
¶ 2.) Further, Esterline maintains that he only signed corporate documents at Jajkowski’s direction,
he retained no such documents for his own records, and he was unaware of whether Bacchus even
maintained corporate minute books. (Esterline Aff. ¶¶ 15, 21, 23; Meza Aff. ¶ 24.)
There is little evidence that Esterline was able to make any management decisions on
behalf of the Company. Esterline had no authority to hire or fire employees and had no input
regarding what employees were paid. (Esterline Aff. ¶ 25; Meza Aff. ¶ 18.) Plaintiffs point out that
Esterline extended lines of credit to customers (Pls.’ Mem. at 3), but Esterline only did so with
Jajkowski’s approval, and had no authority to make decisions on the credit limits of other
salespersons’ accounts. (Esterline Suppl. Aff. ¶¶ 11-12; Meza Aff. ¶ 14.) Plaintiffs also claim that
Esterline requested lines of credit for the Company because he is listed as an officer of the
Company on applications for credit. (Pls.’ Mem. at 3; Pls.’s 56.1(a) ¶ 17.) The credit applications,
however, were filled out and signed by Jajkowski alone, and Esterline claims that he was not aware
of their existence prior to this litigation. (Esterline Suppl. Aff. ¶¶ 18-19.) The e-mails regarding
collecting funds and settling account balances that Plaintiffs claim Esterline received were sent after
he resigned from Bacchus, and all were all addressed to Jajkowski with Esterline listed as an
additional recipient. (See Pls.’s 56.1(a) ¶¶ 11-12; Esterline Suppl. Aff. ¶¶ 18-19.)
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Esterline was involved in the day-to-day operation of the company, but that involvement was
incident to his primary role selling produce. There is no evidence that he controlled the Company’s
operations. He did not supervise or manage any of Bacchus’s employees. Esterline was only
responsible for his own sales, and did not approve suppliers used by other Company employees
or those from whom other Company employees made purchases. (Meza Aff. ¶ 13.) Esterline had
access to accounts receivable because he was accountable for collecting money from his
customers if they were not paying in a timely fashion. (Esterline Aff. ¶¶ 31, 37.) But even in that
role, Esterline only had access to such basic information as customer name, product quantities, and
sale price. (Esterline Aff. ¶ 27; Meza Aff. ¶ 27.) Significantly, Esterline could not make changes
to invoices; only Meza and Jajkowski had that authority. (Id.)
Nor does Esterline’s role as a signatory on Bacchus’s bank account change the analysis.
The parties dispute the significance of that role; Plaintiffs infer that Esterline had knowledge of, or
control over, certain aspects of Bacchus’s business based on his title and the fact that he was one
of two signatories on the bank account. (See Pls.’s 56.1 Resp. ¶¶ 13, 19, 21, 22, 25, 38.) Again,
however, Esterline’s formal position within the Company does not necessarily place him “in a
position to control trust assets” for PACA liability. See Bear, 623 F.3d at 171-72. Importantly,
Esterline had no actual control over the bank account; though he was a signatory, he was not
authorized to issue checks unilaterally and never had control of the check book. There is evidence
that Esterline signed one check, but that episode demonstrates the limits of Esterline’s authority:
he signed it only because Jajkowski–who was out of the country–directed the bookkeeper to issue
the check to pay a supplier, and ask Esterline sign it. (Esterline Suppl. Aff. ¶¶ 4-5.) Apart from that
single incident, there is no evidence Esterline issued any checks to pay vendors, expenses, or for
any other purpose, or that he had any authority to do so.
Significantly, Esterline did not make any decisions about which bills or vendors would be
paid. (Esterline Aff. ¶ 29; Meza Aff. ¶¶ 13, 29.) All payables were handled by Jajkowski and Meza.
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(Esterline Aff. ¶¶ 28, 32; Meza Aff. ¶¶ 28, 31.) Although, as a salesman, Esterline had access to
accounts receivable (Esterline Aff. ¶¶ 31, 37), he never had access to Bacchus’s accounts payable.
(Esterline Aff. ¶ 26; Meza Aff. ¶ 26.) Esterline played no role in determining how Bacchus would
balance its receivables against its payables. Who was paid, when they received payment, and how
much they were paid was solely Jajkowksi’s decision. (Id.) And, as described above, Esterline had
only limited access to the Company’s financial information. (Esterline Aff. ¶ 18; Meza Aff. ¶¶ 2022.) He had no access to books and records no information about the Company’s bank balance,
and no access to the information underlying the “Income Statements” that Jajkowski occasionally
provided. (Esterline Aff. ¶¶ 17, 33; Meza Aff. ¶¶ 21, 22.)
In short, the available evidence does not establish that Esterline possessed the power to
manage the Plaintiffs’ trust assets. Esterline’s apparent authority, as a corporate officer, to sign
corporate documents, is not sufficient. See Bear, 623 F.3d at 174. It was Jajkowski who made all
management decisions on behalf of the corporation and controlled all aspects of its finances. Id.
at 173. Despite his titles, Esterline remained Jajkowski’s subordinate, took all direction from
Jajkowski, and was never involved in any management decisions. Esterline’s involvement as a
salesman in the day to day business operations were at Jajkowski’s direction and subject to his
authority. Esterline “had no ability to manage the corporation, and hence no power to control its
use of PACA trust assets.” Id. at 174.
Moreover, there is no evidence that Esterline was the primary actor in failing to pay under
PACA, or otherwise played any role in the breach of trust. Esterline did not control proceeds of
sales, deposit funds, or have access to accounts payable. He did not write checks on his own, pay
invoices, make purchases, or otherwise dissipate trust assets.

Plaintiffs’ evidence fails to

demonstrate that Esterline possessed the requisite control over trust assets that would support a
finding of liability. See Weis-Buy, No. 11 CV 2011, 2012 WL 280617, at *14 (concluding that the
executive vice president–who purchased produce to fill existing orders, had signature authority on
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the operating account, received a salary, and drove a company car–was not personally liable
because he was not in a position to oversee the preservation of trust assets); cf. Anthony Marano
Co. v. MS-Grand Bridgeview, Inc., No. 08 C 4244, 2010 WL 5419057, at *11 (N.D. Ill. Dec. 23,
2010) (one-third shareholder, who had served as vice president and night manager, was personally
liable where he oversaw not only the produce but also other trust assets, was a signatory on the
bank account, and attended shareholder meetings).
CONCLUSION
For the reasons stated above, the court denies the Agro Plaintiffs’ motion for summary
judgment [149] and grants Defendant Esterline’s motion for summary judgment [146] as to all
Plaintiffs.
ENTER:

Dated: March 25, 2013

_________________________________________
REBECCA R. PALLMEYER
United States District Judge

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