SPECTRUM PRODUCE DISTRIBUTING, INC. v. FRESH MARKETING, INC. et al

Filing 3

OPINION. Signed by Judge Jerome B. Simandle on 11/1/11. (th, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SPECTRUM PRODUCE
DISTRIBUTING, INC.,

Civil No. 11-6368 (JBS-KMW)

Plaintiff,
MEMORANDUM OPINION
v.
FRESH
FRESH
MARIA
RALPH

MARKETING, INC.,
MARKETING FARM, LLC,
DONATO and
DONATO,
Defendants.

SIMANDLE, District Judge:
This matter is before the Court upon an application for a
Temporary Restraining Order and Order to Show Cause Without
Notice to Defendants, pursuant to Rule 65(b)(2), Fed. R. Civ. P.
The Plaintiff is Spectrum Produce Distributing, Inc., a seller of
fresh produce located in Arizona, and the Defendants are Fresh
Marketing, Inc., Fresh Marketing Farm, LLC, Maria Donato, and
Ralph Donato, who conduct business of purchasing and reselling
agricultural produce in New Jersey.

Plaintiff alleges, in brief,

that it sold to Fresh Marketing, Inc., nine truckloads of grapes,
a perishable agricultural commodity, at an agreed price of
$325,426.50.

Defendants made a partial payment, but a balance of

$304,298.50 remains due and owing to Plaintiff.

Pursuant to the provisions of the Perishable Agricultural
Commodities Act, 7 U.S.C. § 499a [hereinafter referred to as
“PACA”], Plaintiff seeks an Order to Show Cause with Temporary
Restraints and Without Notice.

The Court has reviewed the

submissions, including the Complaint, the Certification of
Counsel pursuant to Fed. R. Civ. P. 65(b)(2), the Affidavit of
Gary Blank (President of Plaintiff), the attachments thereto, and
the Memorandum of Law in support of Plaintiff's application.

The

Court makes the following findings in connection with Plaintiff's
emergent application and reserves the opportunity to amend or
supplement these findings at a future date.

The Court finds as

follows:
1.

This Court has jurisdiction pursuant to 7 U.S.C. § 499E

(c)(5)(i) and 28 U.S.C. § 1331.
2.

Between March 2011 and May 2011, Plaintiff sold to

Defendant, Fresh Marketing, Inc., in interstate commerce,
wholesale amounts of produce, namely fresh grapes, worth
$325,426.50 which Defendant accepted, to which an outstanding
balance remains of $304,298.50.

All Defendants have, by their

conduct, acknowledged this indebtedness and have raised no
recognized defense to their failure to have made prompt payment
as required by PACA.

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3.

Plaintiff's invoices for these grapes contained the

language required by 7 U.S.C. § 499E(c)4 and Plaintiff remains a
Trust beneficiary until full payment is made for the produce.
4.

The Plaintiff is a seller of perishable agricultural

commodities and is the beneficiary of a statutory Trust provided
for by PACA, see 7 U.S.C. § 499E(c)(1) and (2).

Under these

provisions of law, the perishable agricultural commodities, and
any receivables or proceeds from the sale of such commodities,
are to be held by the purchasers in a non-segregated floating
trust for the benefit of all unpaid sellers.

Tanimura & Antle,

Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 135-136 (3d
Cir. 2000).

This Trust is created by operation of law upon the

purchase of such goods, and the produce buyer is the statutory
Trustee, here the Defendants.

Id. at 136.

Plaintiff, as the

unpaid seller, has provided Notice of Intent to Preserve the
Trust within thirty days after payment was due, as required by
statute, through its invoices accompanying the grapes sold to and
accepted by Defendants, which included the necessary statutory
language preserving the PACA Trust.
5.

Plaintiff has met its burden of establishing that this

Temporary Restraining Order should be considered and issued
without further notice to Defendants pursuant to Rule 65(b), Fed.
R. Civ. P.

Plaintiff's counsel, Minos H. Galanos, Esquire, has,

in his Certification, certified specific facts that clearly show

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that immediate and irreparable injury, loss, or damage will
result to the Plaintiff before the adverse party can be heard in
opposition, and he has certified in writing the efforts made to
give notice and the reasons why it should not be required at this
time before the entry of the requested Temporary Restraining
Order.

The evidence presently before the Court demonstrates that

Defendants have not paid Plaintiff the full amount due and owing
the Plaintiff, that they have admitted to Plaintiff that they
lack sufficient funds on hand to pay the Plaintiff, and that they
have effectively conceded that they have dissipated PACA Trust
assets belonging to Plaintiff.

Defendants have also advised

Plaintiff that they were in the process of possibly selling the
farm associated with Fresh Marketing, Inc. and Fresh Marketing
Farm, LLC, and all of their assets, thereby threatening further
and complete dissipation of such Trust assets.

It is also

apparent that Fresh Marketing, Inc. and Fresh Marketing Farm,
LLC, have comingled assets and responsibility with respect to
this PACA Trust, with Fresh Marketing Farm, LLC having stepped
forward to make, and to attempt to make, several partial payments
upon this debt.

Maria Donato and Ralph Donato are officers and

principals of Fresh Marketing, Inc., and Fresh Marketing Farms,
LLC, who are liable to maintain and preserve the PACA trust,
owing a duty to Plaintiff to do so and to render payment for
Plaintiff's grapes.

Under these circumstances, the Court finds

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that an adequate remedy at law does not exist and that injunctive
relief to prevent further dissipation of PACA Trust assets must
be issued against all Defendants.

Tanamura & Antle, Inc., supra,

222 F.3d at 139.
6.

Standard for TRO.

When evaluating a motion for a

temporary restraining order, the Court must consider four
factors:

"(1) the likelihood of success on the merits after a

full hearing; (2) whether the movant will be irreparably injured
without the restraint; (3) whether the party to be enjoined will
be irreparably injured if the preliminary relief is granted; and
(4) whether the public interest will be served by the preliminary
relief."

Value Group, Inc. v. Mendham Lake Estates, L.P., 800 F.

Supp. 1228, 1231 (D.N.J. 1992) (citing Opticians Ass'n of America
v. Independent Opticians of America, 920 F.2d 187, 191-92 (3d
Cir. 1990)).
7.
factors.

The Court has carefully considered each of these
First, the Court finds Plaintiff is likely to succeed

on the merits after a full hearing.

The obligations established

by PACA are met by the evidence Plaintiff has proffered.

There

is apparently no dispute that this debt is overdue and owing.
8.

The Plaintiff will be irreparably injured without this

temporary restraint.

There is a likelihood that the PACA Trust

funds will be further dissipated if this relief is not put in

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place to preserve the status quo pending the opportunity for a
more complete hearing.
9.

Plaintiff has demonstrated that there is little risk

that the Defendants to be enjoined would be irreparably injured
if this emergent relief is granted; as the Defendants have no
right to use the PACA Trust funds for any purpose other than to
pay Plaintiff for this produce, the entry of temporary restraints
serves that purpose without harm to any cognizable interest of
the Defendants.
10.

Finally, the Court finds that the public interest will

be strongly served by this emergent relief; Congress has
expressed itself in unequivocal terms in PACA of the importance
of protecting the interest of the produce of purveyors in these
interstate transactions.
11.

Accordingly, the accompanying Order to Show Cause with

Temporary Restraints and Without Notice will be entered.

The

Court will restrain the Defendants from “alienating, dissipating,
paying over or signing any assets of Defendants, Fresh Marketing,
Inc., Fresh Marketing Farms, LLC, Ralph Donato, and Maria Donato,
their subsidiaries or related companies, except for payment to
Plaintiff until further Order of this Court or until Defendants
pay Plaintiff the sum of $304,298.50 plus interest, costs, and
attorney's fees.”

These temporary restraints can be dissolved

upon application of Defendants upon at least two days' notice,

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for good cause shown after a hearing.

The Preliminary Injunction

hearing will be convened on Tuesday, November 15, 2011 at 2:30
P.M. before the undersigned in Courtroom 4A, United States
Courthouse, 4th and Cooper Streets, Camden, New Jersey.
briefing schedule is set in the accompanying Order.

The

The Court

will convene a telephone status conference upon request of any
attorney, after counsel have spoken among themselves.
12.

The accompanying Order will be entered.

Plaintiff

shall promptly make service of all process, including this
Memorandum Opinion and Order, upon all Defendants on or before
November 3, 2011.

November 1, 2011
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
U.S. District Judge

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