Taylor & Fulton Packing, LLC v. Marco International Foods, LLC et al
Filing
34
ORDER granting 23 Motion for Summary Judgment. Ordered by Senior Judge I. Leo Glasser on 12/16/2011. (Green, Dana)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------------------------x
TAYLOR & FULTON PACKING, LLC
Plaintiff,
Memorandum and Order
09-cv-2614
- against MARCO INTERNATIONAL FOODS, LLC and
STEVEN J. POSA, JR.
Defendants.
------------------------------------------------------x
GLASSER, United States District Judge:
This is an action for breach of contract and for enforcement of the statutory trust
provisions of the Perishable Agricultural Commodities Act of 1930 (“PACA”), 7 U.S.C. §§
499a-499t. Plaintiff, Taylor & Fulton Packing, LLC (“Taylor & Fulton” or “plaintiff”), is
a produce wholesaler that sold fresh tomatoes to defendant, Marco International Foods,
LLC (“Marco”), a corporation also engaged in the wholesale produce business. Taylor &
Fulton moves for summary judgment against Marco and Steven J. Posa, Jr. (“Posa”), the
Managing Member of Marco (collectively, “defendants”), contending that under PACA
and New York state law, both defendants are liable for non-payment on produce Taylor
& Fulton delivered to Marco. Plaintiff seeks to enforce its PACA trust rights and recover
$125,818.44 plus additional interest, pursuant to 7 U.S.C. § 499a. Plaintiff also brings
claims for (1) failure to account and pay promptly pursuant to 7 U.S.C. § 499b(4); (2)
breach of Posa’s fiduciary duty to PACA trust beneficiaries; and (3) state law breach of
contract by Marco. Defendants have counterclaimed for losses they allegedly suffered
1
due to the poor quality of the tomatoes. For the reasons set forth below, plaintiff’s
motion is GRANTED.
BACKGROUND
Unless otherwise noted, the following facts are not in dispute. Taylor & Fulton is
a corporation with offices in Florida, licensed under PACA and in the business of selling
wholesale quantities of perishable agricultural commodities. Compl. ¶¶ 1-2. Marco is
also a corporation licensed under PACA and operates in New York as a broker in
wholesale quantities of produce. Plaintiff’s Rule 56.1 Statement of Material Facts (“Pl.’s
R. 56.1”) ¶¶ 1-2; Transcript of Order to Show Cause Hearing held July 2, 2009 (“Trans.”)
16, 46. Posa is the Managing Member of Marco. Trans. 46. Plaintiff alleges that, as a
result of his position, Posa was a “principal,” able to control the company and any PACA
trust assets. Compl. ¶¶ 2(b), 32; Pl.’s R. 56.1 ¶¶ 13-16.
Between January 7, 2009 and February 19, 2009, Taylor & Fulton sold ten
shipments of Florida tomatoes to defendants with an aggregate value of $118,748.00.
Compl. ¶¶ 8-11 & Ex. A; Trans. 4; Pl.’s R. 56.1 ¶¶ 3, 10. Plaintiff sent and defendants
received an invoice for each load of tomatoes, invoices that included the following
language:
The perishable agricultural commodities listed on this
Invoice are sold subject to the statutory trust authorized by
section 5c of the Perishable Agricultural Commodities Act,
1930 (7) U.S.C. 499e(c). The seller of these commodities
retains a trust claim over these commodities, all inventories
of food or other products derived from these commodities,
and any receivables or proceeds from the sale of these
commodities until full payment is received.
2
Pl.’s R. 56.1 ¶ 8; Declaration of Ed Angrisani dated June 18, 2009 (“First Angrisani
Decl.”) ¶ 8 & Ex. A. Defendants did not make payment on any of these shipments. Pl.’s
R. 56.1 ¶¶ 11-12; Trans. 11-12.
On July 2, 2009, this Court conducted a hearing on plaintiff’s motion for a
preliminary injunction. At that hearing, defendant Posa testified under oath that due to
frosts in Florida, the tomatoes were “sub-standard and either had to be dumped or had
to be sold at greatly reduced prices.” Trans. 5, 45-57. He further testified that he made
complaints by telephone to Taylor & Fulton regarding the poor quality of the tomatoes
and sought to re-negotiate the price, after sale. Trans. 6, 8, 15-16. He alleges that an
employee of Fulton & Taylor, Ed Angrisani, agreed to reduce the bills but that these
adjustments were never made. Trans. 54-55. Plaintiff denies such conversations took
place. Declaration of Ed R. Angrisani dated July 1, 2009 (“Second Angrisani Decl.”) ¶¶
10-12, 15-17. Based on these contentions, defendants seek $150,000.00 in damages.
Ans. & Countercl. ¶¶ 46-48.
On July 9, 2009, this Court granted a preliminary injunction, enjoining
defendants from dissipating their existing PACA trust assets or disposing of corporate
assets until payment of $126,387.71 plus further interest to the plaintiff or this Court.
JURISDICTION
This Court has original jurisdiction over plaintiff’s PACA claim, a claim arising
under federal law. 28 U.S.C. § 1331; 7 U.S.C. § 499(e)(5) (“The several district courts of
the United States are vested with jurisdiction specifically to entertain . . . actions by
[PACA] trust beneficiaries to enforce payment from the trust.”). The Court has
3
supplemental jurisdiction over plaintiff’s state law breach of contract claim.1 Federal
courts have supplemental jurisdiction over “all other claims that are so related to claims
in the action within such original jurisdiction that they form part of the same case or
controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). A
state law claim forms part of the same controversy if the state and federal claim “derive
from a common nucleus of operative fact.” United Mine Workers v. Gibbs, 383 U.S. 715,
725 (1966). Here, both the federal and state claims are derived from the same alleged
delivery and nonpayment of ten shipments of tomatoes.
DISCUSSION
I.
Summary Judgment
Summary judgment is appropriate “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). As an initial matter, the moving party has the burden of
demonstrating that no genuine dispute of material fact exists for trial. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538
(1986). “A party asserting that a fact cannot be or is genuinely disputed must support
the assertion by: (A) citing to particular parts of materials in the record, including
depositions, documents, electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials; or (B) showing that the materials cited do not
1 Because the complaint does not establish plaintiff or defendants’ citizenship, plaintiff has not
demonstrated there is diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Therefore, for
purposes of this motion, jurisdiction over plaintiff’s state-law claim must be predicated on
supplemental jurisdiction.
4
establish the absence or presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1).
Once the moving party has met this burden, the opposing party “‘must do more
than simply show that there is some metaphysical doubt as to the material facts. . . .
[T]he nonmoving party must come forward with specific facts showing that there is a
genuine issue for trial.’” Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002)
(quoting Matsushita, 475 U.S. at 586–87 (emphasis in original)). “If a party fails to
properly support an assertion of fact or fails to properly address another party’s
assertion of fact as required by Rule 56(c), the court may . . . grant summary judgment if
the motion and supporting materials — including the facts considered undisputed —
show that the movant is entitled to it.” Fed. R. Civ. P. 56(e).
The Court is compelled to draw all reasonable inferences in favor of the
nonmoving party, Matsushita, 475 U.S. at 586, and a genuine dispute exists if a
reasonable jury could find in favor of the non-moving party. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). However,
“[i]f the evidence is merely colorable, or is not significantly probative, summary
judgment may be granted.” Anderson, 477 U.S. at 249–50 (citations omitted). “[T]he
mere existence of some alleged factual dispute between the parties” alone will not defeat
a properly supported motion for summary judgment. Id. at 247–4805. “Thus, the
nonmoving party may not rest upon mere conclusory allegations or denials but must set
forth ‘concrete particulars’ showing that a trial is needed.” R.G. Grp., Inc. v. Horn &
Hardart Co., 751 F.2d 69, 77 (2d Cir. 1984) (quoting S.E.C. v. Res. Automation Corp.,
585 F.2d 31, 33 (2d Cir. 1978)). It is insufficient for the nonmovant “‘merely to assert a
5
conclusion without supplying supporting arguments or facts.’” BellSouth Telecomms.,
Inc. v. W.R. Grace & Co., 77 F.3d 603, 615 (2d Cir. 1996) (quoting Res. Automation
Corp., 585 F.2d at 33).
II.
Local Civil Rule 56.1
In support of its motion, Taylor & Fulton submitted a statement pursuant to
Local Rule 56.1. “Local Rule 56.1 was adopted to aid the courts in deciding summary
judgment motions by quickly identifying disputed material facts.” T.Y. v. N.Y. City Dep’t
of Educ., 584 F.3d 412, 417 (2d Cir. 2009). The Rule requires that a party moving for
summary judgment submit a list of the material facts as to which there is no genuine
issue to be tried, along with “citation to evidence which would be admissible, set forth as
required by Federal Rule of Civil Procedure 56(e).” Loc. Civ. R. 56.1. The party
opposing a motion for summary judgment must submit a corresponding statement,
responding to the movant’s facts, and any fact not specifically controverted is deemed
admitted for purposes of summary judgment. Where the nonmovant opposes a
statement of fact, his Rule 56.1 statement must also “be followed by citation to evidence
which would be admissible.” Local Civ. R. 56.1(d).
Defendants have failed to submit an opposing Rule 56.1 statement. “A
nonmoving party’s failure to respond to a Rule 56. 1 statement permits the court to
conclude that the facts asserted in the statement are uncontested and admissible.” T.Y.,
584 F.3d at 418 (citing Gubitosi v. Kapica, 154 F.3d 30, 31 n.1 (2d Cir. 1998)); Loc. Civ.
R. 56.1(c) (“Each numbered paragraph in the statement of material facts set forth in the
statement required to be served by the moving party will be deemed to be admitted for
6
purposes of the motion unless specifically controverted by a correspondingly numbered
paragraph in the statement required to be served by the opposing party.”). See, e.g.,
Feis v. United States, No. 07 Civ. 2706 (JS), 2009 WL 2983026, at *1 n.2 (E.D.N.Y. Sept.
10, 2009), aff’d in relevant part, 394 Fed. App’x. 797, 799 (2d Cir. 2010) (refusing to
consider as ‘disputed’ any of movant’s Rule 56.1 statements supported by evidence, to
which nonmovant objected without evidentiary support); Transp. Ins. Co. v. AARK
Const. Grp., Ltd., 526 F. Supp. 2d 350, 354 n.1 (E.D.N.Y. 2007) (“Where a responding
party fails to submit a responsive Rule 56.1 Statement, the Court may deem admitted all
facts in the movant’s statement.”); AFL Fresh & Frozen Fruits & Vegetables, Inc., No.
06 Civ. 2142 (GEL), 2007 WL 4302514, at *5 (S.D.N.Y Dec. 7, 2007) (movant’s Rule 56.1
statements admitted “unless specifically controverted by a correspondingly numbered
paragraph in the opposing party’s Rule 56.1 statement and followed by citation to
evidence.” (emphasis in original) (citations and quotations omitted)).
Where a nonmovant fails to file a statement or files a deficient statement, courts
frequently deem all supported assertions in the movant’s statement admitted and find
summary judgment appropriate.2 T.Y., 584 F.3d at 418 (“In the typical case, failure to
2 Although the Court has broad discretion to overlook defendants’ failure to file a Rule
56.1 statement , Holtz v. Rockefeller & Co., Inc., 258 F.3d 62, 73 (2d Cir. 2001), and may
consider other admissible evidence submitted in opposition, defendants have failed to submit
any admissible evidence. Defendant Posa has filed two “declarations” in this case. See Decl. of
Stephen J. Posa, June 29, 2009 (Dkt No. 5); Decl. of Stephen J. Posa, May 22, 2011 (Dkt No.
26). These declarations are not admissible evidence because they are neither sworn nor made
under penalty of perjury, pursuant to 28 U.S.C. § 1746.
To be admissible in a summary judgment proceeding, an affidavit
must be sworn to before an officer authorized to administer oaths,
such as a notary public. See Pfeil v. Rogers, 757 F.2d 850, 859 (7th
Cir. 1985). Alternatively, under 28 U.S.C. § 1746, an unsworn
declaration made under the penalty of perjury has the same
evidentiary weight as an affidavit if it includes language in
substantially the same form as “I declare (or certify, verify, or
7
respond results in a grant of summary judgment once the court assures itself that Rule
56’s other requirements have been met.” (citation omitted)); see, e.g., Millus v.
D’Angelo, 224 F.3d 137, 138 (2d Cir. 2000) (affirming grant of summary judgment
where plaintiff failed to deny defendants’ allegations, in accordance with Rule 56.1); EQ
Transp., Inc. v. TNT Transp., Inc., No. 04 Civ. 5711 (ILG), 2005 WL 1492379, at *2
(E.D.N.Y. June 24, 2005) (deeming plaintiff’s unopposed Rule 56.1 statement admitted
and granting summary judgment).
Nevertheless, defendants’ failure does not relieve plaintiff “of the burden of
showing that it is entitled to judgment as a matter of law, and a Local Rule 56.1
statement is not itself a vehicle for making factual assertions that are otherwise
unsupported in the record.” Holtz, 258 F.3d at 74; see also Vermont Teddy Bear Co.,
Inc. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004) (“[T]he district court may
not rely solely on the statement of undisputed facts contained in the moving party’s Rule
56.1 statement. It must be satisfied that the citation to evidence in the record supports
the assertion.” (citing Giannullo v. City of New York, 322 F.3d 139, 142 (2d Cir. 2003)).
state) under penalty of perjury that the foregoing is true and
correct” followed by a signature and date of execution. See, e.g.,
LeBoeuf, Lamb, Greene & MacRae, L.L.P. v. Worsham, 185 F.3d
61, 65–66 (2d Cir.1999) (unsworn letter that met requirements of
28 U.S.C. § 1746 deemed admissible as affidavit in summary
judgment); Williams v. Elzy, No. 00 Civ. 5382 (HBP), 2003 WL
22208349, at *5 (S.D.N.Y. Sept. 23, 2003) (same).
Quintero v. Rite Aid of New York, Inc., No. 09 Civ. 6084 (JLC), 2011 WL 5529818, at *5
(E.D.N.Y. Nov. 10, 2011); see also United States v. All Right, Title & Interest in Real Prop. &
Appurtenances, 77 F.3d 648, 657–58 (2d Cir.1996) (“[U]nsworn letter was an inappropriate
response to the . . . motion for summary judgment, and the factual assertions made in that letter
were properly disregarded by the court.”). Because the Posa declarations are not admissible
evidence, they cannot create genuine issues of material fact and the Court will not take them
into consideration in deciding this motion.
8
Accordingly, the Court will only deem admitted those assertions in Taylor & Fulton’s
Rule 56.1 statement that are supported by admissible evidence.
III.
The Perishable Agricultural Commodities Act (PACA)
PACA was enacted in 1930 to regulate the interstate sale of perishable
agricultural commodities (essentially, fruits and vegetables). The Act was amended in
1984 “upon a finding by Congress that a burden on commerce in perishable agricultural
commodities was caused by certain financial arrangements, whereby dealers would
receive goods without having made payment for them.” Morris Okun, Inc. v. Harry
Zimmerman, Inc., 814 F. Supp. 346, 347 (S.D.N.Y. 1993). To remedy this burden,
Congress created an unusual statutory scheme where, “produce sellers become the
beneficiaries of a constructive, statutory trust that lasts until they get paid. This trust
consists of all produce-related assets, including produce inventory, receipts, and
accounts receivable.” Food Auth., Inc. v. Sweet & Savory Fine Foods, Inc., No. 10 Civ.
1783 (JS), 2011 WL 477714, at *1 (E.D.N.Y. Feb. 4, 2011); 7 U.S.C. § 499e(c)(2); see also
Am. Banana Co., Inc. v. Republic Nat’l Bank of N.Y., 362 F.3d 33, 36-38 (2d Cir. 2004)
(detailing the legislative history and statutory structure of PACA).
As a PACA trustee, “a produce buyer is charged with a duty ‘to ensure that it has
sufficient assets to assure prompt payment for produce and that any beneficiary under
the trust will receive full payment.’” Coosemans Specialities, Inc. v. Gargiulo, 485 F.3d
701, 705 (2d Cir. 2007) (quoting D.M. Rothman & Co. v. Korea Commer. Bank of N.Y.,
411 F.3d 90, 94 (2d Cir. 2005)). The buyer has a “fiduciary obligation under PACA to
repay the full amount of the debt owed to the PACA beneficiary.” C.H. Robinson Co. v.
Alanco Corp., 239 F.3d 483, 488 (2d Cir. 2001). Under the statute, the trust is formed
9
at the moment the buyer receives the produce and remains in effect until the seller is
paid in full. See 7 C.F.R. § 46.46(c)(1); In re Kornblum & Co., 81 F.3d 280, 286 (2d Cir.
1996). PACA also makes it unlawful for a recipient dealer or broker to fail to make
payment promptly or to fulfill any other conditions of the parties’ agreement. See 7
U.S.C. § 499b(4). It is this final violation – failure to make payment – upon which
plaintiff’s motion for summary judgment is premised.
a. Plaintiff Has Established a PACA Trust
To establish the existence of a PACA trust, a number of statutory prerequisites
must be met.
[T]he seller must demonstrate that: (1) the commodities sold
were perishable agricultural commodities; (2) the purchaser
of the perishable agricultural commodities was a commission
merchant, dealer or broker; (3) the transaction occurred in
interstate or foreign commerce; (4) the seller has not
received full payment on the transaction; and (5) the seller
preserved its trust rights by giving written notice to the
purchaser of its intention to do so.
S. Katzman Produce, Inc. v. Won, No. 08 Civ. 2403 (KAM), 2009 WL 2448408, at *4
(E.D.N.Y. Aug. 7, 2009) (citing 7 U.S.C. § 499e; Family Tree Farms, LLC v. Alfa Quality
Produce, Inc., No. 08 Civ. 481, 2009 WL 565568 (E.D. Ca. Mar. 5, 2009)). None of
these elements are in dispute: fresh tomatoes are clearly a “perishable agricultural
commodity” pursuant to the statute; the purchaser, Marco, is a broker pursuant to
PACA, Pl.’s R. 56.1 ¶ 2; the tomatoes, grown in Florida, moved in interstate commerce,
Pl.’s R. 56.1 ¶ 2; no payment has been made, R. 56.1 ¶¶ 11-12; and Taylor & Fulton
preserved its trust rights through the “invoice method,” by including the statutory
10
language of 7 U.S.C. § 499e(c)(4) in each invoice, First Angrisani Decl. ¶ 8 & Ex. A.
Thus, as a matter of law, plaintiff has established a statutory trust under PACA.
Equally, as a matter of law, plaintiff has established that Posa was a “principal” of
Marco and personally liable for any breach of the PACA trust. The standard for a breach
of fiduciary duty under PACA is distinct from the standard for piercing the corporate
veil. Morris Okun, 814 F. Supp. at 348. Under PACA, the question is whether the
trustee was “in a position to control the assets of the PACA trust.” Coosemans
Specialities, 485 F.3d at 705 (exhaustive citations omitted). If the trustee “‘in any way
encumbered the funds or rendered them less freely available to PACA creditors,’” then
he may be personally liable. Id. at 706 (quoting D.M. Rothman & Co., 411 F.3d at 99).
Not only do defendants fail to oppose plaintiff’s assertion on this matter, but Posa’s
testimony before this Court amply demonstrated the type of control over the
corporation’s operations, bank accounts, and other assets to render him a principal,
personally liable under PACA. See Trans. 3-6, 9-28.
Finally, plaintiff has established that defendants failed to make payment on any
of the produce deliveries. Not only do defendants fail to controvert plaintiff’s Rule 56.1
statement on this matter, but Posa testified that no payment was made. Although
defendants have repeatedly and misleadingly stated in their pleadings that payment was
made on the first two shipments, see First Posa Decl. (Dkt No. 5) ¶¶ 10-11; Second Posa
Decl. (Dkt No. 26) ¶¶ 10-13, Posa admitted in his testimony those payment were for two
shipments prior to January 7, 2009 that are not the subject of this suit. Trans. 11-12;
see also Trans. 38 (testimony of John Moon, confirming payment was made on two
deliveries that are not the subject of this suit). Posa conceded that no payment had been
11
made for any of the ten shipments that are the subject of the complaint. Trans. 11-12.
For the above reasons, the Court finds that plaintiff has established, as a matter of law,
the existence of a PACA trust and defendants’ breach of that trust, through failure to
make prompt payment.
b. Defendants’ Defenses and Counterclaim
In opposing summary judgment, defendants raise state law defenses and a
counterclaim. Defendants claim that they are not liable to Taylor & Fulton because
plaintiff delivered non-conforming, damaged tomatoes and, as a result of the poor
quality, Marco was unable to sell the tomatoes to its clients and suffered economic
damages. Ans. ¶¶ 39-48. Although PACA does not address these matters, PACA did not
repeal the UCC or abrogate the rights and defenses of contracting parties under state
law.
The provisions of PACA apply to [produce] transactions to
the extent that the Act contains pertinent requirements or
standards. See, e.g., Tray–Wrap, Inc. v. Meyer, [No. 90 Civ.
7688 (DLC),] 1994 WL 710804, at *4 (S.D.N.Y. Dec. 20,
1994), aff’d, 71 F.3d 404 (2d Cir. 1995). Otherwise, state law
controls—in this case in the form of the Uniform Commercial
Code (“UCC”), codified in New York as N.Y. U.C.C. Law § 4–
101 et seq. See, e.g., Genecco Produce, Inc. v. Sol Group
Mktg. Co., [No. 04 Civ. 6282 (CJS),] 2006 WL328385, at *4
(W.D.N.Y. Feb. 9, 2006); Tray–Wrap, 1994 WL 710804, at
*4.
Condado Agroexportadora Ltda. v. USA Tropical, Inc., No. 07 Civ. 9370 (MHD), 2009
WL 2568435, at *4 (S.D.N.Y. July 6, 2009).
Because this was an “f.o.b.” transaction, see First Angrisani Decl. Ex. A (listing
“Sale Terms: FOB”), Trans. at 58-59, Marco bore the risk of damages caused during
transportation of the tomatoes from Florida to New York. See Tray-Wrap, 1994 WL
12
710804, at *4. The term “f.o.b.” is defined in the applicable section of the Code of
Federal Regulations as meaning:
that the produce quoted or sold is to be placed free on board
the boat, car or other agency of the through land
transportation at shipping point, in suitable shipping
condition . . . , and that the buyer assumes all risk of damage
and delay in transit not caused by the seller irrespective of
how the shipment is billed.
7 C.F.R. 46.43(i). Here, plaintiff states that it “delivered conforming goods to the
Company and has otherwise satisfied all conditions of the contracts.” Pl.’s R. 56.1 ¶ 7.
In other words, plaintiff states that it fulfilled its obligation to deliver tomatoes in
suitable shipping condition to defendants’ transport company. In support, plaintiff cites
to the sworn testimony of John Moon, an employee of Taylor & Fulton, who testified
that the tomatoes at issue were subject to a USDA “marketing order,”3 were “inspected
at shipping point by inspectors employed by the federal and state inspection service,”
and that all of the shipments passed inspection. Trans. 39. Under PACA, “inspection
certificates . . . are ‘prima-facie evidence of the truth of the statements therein
contained,’” Koam Produce, Inc. v. Dimare Homestead, Inc., 329 F.3d 123, 128 (2d Cir.
2003) (quoting 7 U.S.C. § 499n(a)). Moon brought copies of those inspection reports
with him to the hearing. Trans. 44. As discussed previously, because plaintiff has
supported its Rule 56.1 statement with admissible evidence and because defendants
3 See 7 C.F.R. § 966 (establishing a marketing order for tomatoes grown in Florida). “Marketing
orders” are:
regulations, initiated by industry and enforced by USDA, bind[ing] the entire
industry in the geographical area regulated if approved by producers and the
Secretary of Agriculture. Marketing orders and agreements (1) maintain the high
quality of produce that is on the market; (2) standardize packages and
containers; (3) regulate the flow of product to market; (4) establish reserve pools
for storable commodities; and (5) authorize production research, marketing
research and development, and advertising.
USDA, “Marketing Orders and Agreements,” available at: http://www.ams.usda.gov/AMSv1.0/
FVMarketingOrderLandingPage (last visited Dec. 9, 2011).
13
failed to file an opposing Rule 56.1 statement, defendants are deemed to have admitted
that plaintiff delivered conforming goods. For these reasons, plaintiffs are entitled to
judgment as a matter of law.
However, even if the Court were to overlook defendants’ failure to file a Rule 56.1
statement, the record does not support defendants’ defenses and counterclaim. To
maintain a claim that goods are non-conforming under an f.o.b. contract, defendants
have the burden of showing the tomatoes were not in “suitable shipping condition” at
the time they were placed on the truck in Florida: that is, “‘in such a condition at the
time of shipment that it will make good delivery at contract destination.’” Tray-Wrap,
1994 WL 710804, at * 4 (quoting Lookout Mountain Tomato & Banana Co., Inc. v. Case
Produce, Inc., 51 Agric. Dec. 1471, at *4 (U.S.D.A. Sept. 30, 1992)). Obviously, the most
relevant evidence is the inspection at shipping point. Id. Lacking evidence of the
tomatoes’ condition at the point of origin, defendants have two available alternatives:
defendants’ could present evidence that the tomatoes were transported under normal
conditions and nevertheless arrived damaged, permitting the inference that they were
not in suitable condition; or – lacking evidence of transportation conditions –
defendants could present evidence, such as a U.S.D.A. inspection report, demonstrating
that “‘the nature of the damage found at destination was such as could not have been
caused or aggravated by the faulty transportation service.’” Id. at *5 (quoting Jack T.
Baillie Co., Inc. v. S & K Farms, Inc., 32 Agric. Dec. 1874 (1973), citing Nikademos Dist.
Co., Inc. v. D & J Tomato Co., Inc., 50 Agric. Dec. 1884 (1991), and discussing grounds
for sellers’ liability in the f.o.b. context); see also Frankie Boy Produce Corp. v. Sun
Pacific Enter., No. 99 Civ. 10158 (DLC), 2000 WL 991507, at *3 (S.D.N.Y. July 19,
2000).
14
Defendants have presented no admissible evidence to support their claims.
Defendants presented no evidence of the tomatoes’ condition at the point of origin, did
not obtain “Ryan tapes,” recording the temperature of the truck transporting the
tomatoes or present any other evidence of transportation conditions, Trans. at 6, and
did not obtain a USDA inspection, assessing the condition of the tomatoes on arrival in
Brooklyn, Trans. at 5. The only admissible evidence in the record is Posa’s testimony in
which he estimated that, at some unspecified time after the tomatoes arrived in New
York, he observed 30-40% decay in some of the tomatoes and “some number ones, some
number twos, numbers that didn’t qualify to be in the box. In my looking at them, that’s
what I thought.” Trans. at 51. Posa also testified that after Marco delivered some
shipments to clients, some clients called to complain. Trans. at 4, 51. Even viewed in
the light most favorable to the defendant, this testimony does not permit the inference
that the tomatoes were not in “suitable shipping condition” at the point of origin in
Florida. Thus, even looking beyond defendants’ failure to file a Rule 56.1 counterclaim,
defendants have failed to present admissible evidence to support their counterclaim or
defenses and plaintiffs are entitled to judgment as a matter of law.
IV.
Interest
Plaintiff has requested an award of pre-judgment interest in the amount of 1.5%
per month after thirty days from the date on which payment was due, pursuant to the
terms of the invoices. PACA itself does not create a right to prejudgment interest but the
Second Circuit has held that courts have broad discretion to award prejudgment interest
to PACA claimants. See Coosemans Specialities, 485 F.3d at 709; Endico Potatoes, Inc.
v. CIT Grp./Factoring, Inc., 67 F.3d 1063, 1071–1072 (2d Cir.1995). Courts have found
that prejudgment interest is consistent with Congressional intent to protect agricultural
15
suppliers. See, e.g., Endico Potatoes, Inc., 67 F.3d at 1071-72; Morris Okun, 814 F.
Supp. at 351 (prejudgment interest awarded on overdue accounts based on
congressional intent reflected in PACA).
Courts typically look to the contractual terms contained in the invoices when
determining the appropriate award. See, e.g., John Georgallas Banana Distrib. of N.Y.,
Inc. v. N & S Tropical Produce, Inc., 07 Civ. 5093, 2008 WL 2788410, at *4–5 (E.D.N.Y.
July 15, 2008); Top Banana LLC v. Dom’s Wholesale & Retail Ctr., No. 04 Civ. 2666
(GBD), 2005 WL 1149774, at *2 (S.D.N.Y. May 16, 2005) (“Where the parties’ contracts
include [interest rate] terms, they can be awarded (and are subject to the PACA trust) as
sums owing in connection with perishable commodities transactions under PACA.”).
Here, Taylor & Fulton included the following language in its invoices: “NET DUE 21
DAYS FROM INVOICE DATE; Thereafter 1-1/2% Additional Each 30 Day Period or
Portion Thereof.” First Angrisani Decl. Ex. B.
The Court finds that the terms set forth in plaintiff’s invoices are enforceable.
“Between merchants such as plaintiff and defendant, ‘inclusion of terms in the seller’s
invoice, without protest from the buyer on receipt, makes the invoice terms the terms of
the contract.’” S. Katzman Produce, Inc., 2009 WL 2448408 at *5 (citing Top Banana,
2005 WL 1149774, at *3 (in a PACA case, granting plaintiff-seller, inter alia, interest as
specified in its invoices, which had been accepted by defendant-buyer without protest);
N.Y. U.C.C. § 2–201(2)); see also Dayoub Mktg., Inc. v. S.K. Produce Corp., No. 04 Civ.
3125, 2005 WL 3006032 (S.D.N.Y. Nov. 9, 2005) (same); Brigiotta’s Farmland Produce
& Garden Ctr., Inc. v. Przykuta, Inc., No. 05 Civ. 273S, 2006 WL 3240729, at *5
16
(W.D.N.Y. July 13, 2006) (awarding pre-judgment interest at a rate specified in the
seller’s invoices, to which the defendant had not objected)).
There is no indication that defendants ever objected to the terms of plaintiff’s
invoices and a service charge of 1.5% per month is within the range of trade practice.
See Northeast Trading, Inc. v. Ven-Co Produce, Inc. No. 09 Civ. 7767 (PGG), 2011 WL
4444511, at *5 (interest charge of 1.5% per month, or 18% per annum, is within the
range of trade practice); S. Katzman Produce, Inc., 2009 WL 2448408, at *6 (same);
Brigiotta’s Farmland, 2006 WL 3240729, at *5-6 (same); Dayoub Mktg., 2005 WL
3006032, at *4-5 (same). Accordingly, the court finds that plaintiff is entitled to recover
prejudgment interest at the rate of 1.5% per month, as specified in its invoices, in
addition to the original principal amount of $118,748.00.
CONCLUSION
For the foregoing reasons, plaintiff’s motion for summary judgment is GRANTED
in the principal amount of $118,748.00. The Clerk of Court is directed to calculate the
interest due, at the rate of 1.5% per month.
SO ORDERED.
Dated:
Brooklyn, New York
December 16, 2011
__/s/____________________
I. Leo Glasser, U.S.D.J.
17
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?