Baginski Potato Company Ltd v. Custom Cuts Fresh LLC et al

Filing 40

ORDER signed by Judge Rudolph T Randa on 08/16/2011 granting (35) Motion for Entry of Amended Preliminary Injunction, Consolidation, and Establishing a PACA Claims Procedure. (Attachments: # 1 Exhibit Notice of Claims, # 2 Exhibit PACA Proof of Claim) (cc: all counsel) (Koll, J)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MILWAUKEE DIVISION
BAGINSKI POTATO COMPANY Ltd,
Plaintiff,
vs.
CUSTOM CUTS FRESH LLC, BRADLEY
BECKMAN,
Defendants.
RIVER POINT FARMS LLC,
Plaintiff,
vs.
CUSTOM CUTS INC., CUSTOM CUTS
FRESH LLC, BRADLEY BECKMAN,
Defendants.
KAISER INTERNATIONAL, LLC,
Plaintiff,
vs.
CUSTOM CUTS FRESH, LLC, BRADLEY
V. BECKMAN,
Defendants.
SUNRIDGE FARMS INC., dba
COASTLINE,
Plaintiff,
vs.
CUSTOM CUTS INC., CUSTOM CUTS
FRESH LLC, BRADLEY BECKMAN,
Defendants.
SANTA BARBARA FARMS LLC
Plaintiff,
vs.
CUSTOM CUTS INC., CUSTOM CUTS
FRESH LLC, BRADLEY BECKMAN,
Defendants.

Case No. 2:11-CV-00439-RTR

ORDER GRANTING MOTION FOR ENTRY OF AMENDED PRELIMINARY
INJUNCTION, CONSOLIDATION, AND ESTABLISHING A PACA CLAIMS
PROCEDURE

Page 1 of 20

Before this Court is Plaintiffs’ Motion for entry of Amended Preliminary Injunction,
seeking to enjoin Defendants’ dissipation of PACA trust assets and to establish certain
procedures for the management of the assets subject to the trust provisions of the Perishable
Agricultural Commodities Act, 1930 (PACA). 7 U.S.C. §§499a-t. Accordingly, the Court finds:
I. PROCEDURAL HISTORY
1.

Plaintiff Baginski Potato Company, Ltd. initiated this action against Defendants

Custom Cuts Fresh, LLC and Bradley V. Beckman on May 6, 2011 seeking enforcement of the
statutory trust arising under the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C.
§499 et seq.
2.

The trust provisions of PACA establish a statutory, nonsegregated trust under

which Custom Cuts and Bradley Beckman are required to hold all trust assets including
inventory, proceeds, and accounts receivable in trust for qualified beneficiaries until full
payment is made. 7 U.S.C. §499e(c)(2).
3.

On May 9, 2011, Baginski filed a Motion for Temporary Restraining Order and

Preliminary Injunction [DE 3] seeking injunctive relief against Defendants for violations of the
duties imposed by PACA, including but not limited to failure to preserve PACA trust funds
and breach of fiduciary duties to pay all PACA trust beneficiaries in full. In support of that
Motion, Baginski filed the Declaration of Michael Baginski [DE 4-1] and the Certification of
Counsel Why Notice Should Not Be Required Under Federal Rule 65(b). [DE 3-2] The
Defendants did not respond to that Motion.

Page 2 of 20

4.

On July 1, 2011, River Point Farms, LLC initiated case number 2:11-cv-00638

against Defendants Custom Cuts and Beckman seeking enforcement of its rights under PACA.
5.

On July 6, 2011, Kaiser International, LLC initiated case number 2:11-cv-647

against Defendants Custom Cuts and Beckman also seeking enforcement of its rights under
PACA. Kaiser also sought a Temporary Restraining Order enjoining Defendants’ dissipation of
PACA trust assets. [DE 2]. In support of that motion, Kaiser filed the Affidavit of Steven L.
Kaiser, Managing Member of Kaiser International, LLC [DE 2-2] and the Certification of
Counsel Why Notice Should Not Be Required Under Federal Rule 65(b). [DE 4] The
Defendants did not respond to that motion, which was denied on July 7, 2011. [DE 8]
6.

On July 8, 2011. Baginski filed an Amended Complaint [DE 17], adding C.H.

Robinson Custom Cuts, Inc. as a Plaintiff to this case, and this Court entered an Order [DE 16]
consolidating the River Point and Kaiser cases into this case and granting Baginski’s Motion
for a Preliminary Injunction (“Preliminary Injunction Order”). The Preliminary Injunction
Order directed Defendants to escrow the proceeds from produce sales, identify the receivables,
inventory the assets of Custom Cuts and to separate and maintain Custom Cuts’ producerelated assets.
7.

On July 19, 2011, Baginski, C.H. Robinson, River Point and Kaiser (collectively

the “PACA Plaintiffs”) discovered that Custom Cuts intended to sell substantially all of its
assets at an auction on July 27, 2011 and did not intend to preserve these funds for the PACA
Plaintiffs, in violation of the Injunction Order.

Page 3 of 20

8.

On July 22, 2011, two other related PACA actions were filed in this District by

Sunridge Farms, Inc. (case number 11-CV-699) and Santa Barbara Farms, LLC (case number
11-CV-701).
9.

On July 25, 2011, the PACA Plaintiffs and counsel for the auction company

entered into a Stipulation to Permit Auction of Assets. [DE 22] In accordance with the Order
[DE 23] approving that Stipulation, the auction sale took place, and $531,001.30 of the proceeds
from the auction are being held in trust by the law firm of Beck, Chaet, Bamberger & Polsky,
S.C., counsel for River Point Farms.
10.

On August 2, 2011, the PACA Plaintiffs filed a motion seeking an order to show

cause why Defendants Custom Cuts and Beckman should not be held in contempt of Court.
[DE 24]. That motion, and the supporting affidavits of attorneys Steven W. Jelenchick [DE 241] and Devin J. Oddo [DE 24-2], alleges that Defendants were served with the Preliminary
Injunction Order by UPS delivery and by personal service, and have nevertheless failed to
comply with that Order. Defendants have provided the PACA Plaintiffs with a copy of a
report titled “Open Receivable Aging Detail by Company Name” which appears to show
$759,630.69 in accounts receivable due and owing to Defendants. Despite the mandates in the
Preliminary Injunction Order, the PACA Plaintiffs contend that Defendants have indicated
that they have no intention to collect accounts receivable and preserve as required.
11.

On August 4, 2011, Harvest Food Group, Inc. sought leave to intervene in this

case. [DE 26].

Page 4 of 20

12.

On August 15, 2011, the PACA Plaintiffs filed an Amended Motion For

Preliminary Injunction, Consolidation, and Establishing a PACA Claims Procedure.

Page 5 of 20

II. LEGAL AND FACTUAL FINDINGS
13.

According

to

the

pleadings,

the

Declarations,

and

the

supporting

documents Custom Cuts has purchased or received from the PACA Plaintiffs, and Harvest
Fresh $882,447.03 in perishable agricultural commodities in foreign and interstate commerce,
and that Custom Cuts has failed to pay the PACA Plaintiffs and Harvest Fresh for the
perishable agricultural commodities in violation of PACA, 7 U.S.C. §499e(c).
14.

Defendants have dissipated the PACA trust assets by failing to maintain

sufficient “freely available” assets to satisfy, inter alia, the $882,447.03 in PACA trust claims of
the PACA Plaintiffs and Harvest Fresh.
15.

The PACA Plaintiffs have established that there is sufficient evidence of

dissipation of assets subject to the PACA trust to warrant the relief granted in this Order.
16.

This Amended Preliminary Injunction Order causes no damage to Defendants as

it merely requires them to meet their obligations set forth in the PACA statute.
17.

This Amended Preliminary Injunction Order does not finally adjudicate the

amounts owed to the PACA Plaintiffs and Harvest Fresh or whether either gave proper notice
of intent to preserve trust benefits.
18.

The issuance of this Injunction will not adversely affect the public interest.

19.

This Order is necessary to facilitate the recovery of the PACA trust assets,

prevent loss or diversion of such assets, minimize administrative costs, determine amount of
valid claims to the assets, distribute the PACA trust assets pro-rata to qualified PACA trust
beneficiaries, and to minimize further litigation.

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20.

The interests of judicial economy justify consolidation of the Sunridge Farms,

Inc. case (case number 11-CV-699) and Santa Barbara Farms, LLC (case number 11-CV-701)
with the instant case. The Complaint and any Amended Complaint filed by the PACA
Plaintiffs, Sunridge Farms, Santa Barbara and Harvest Fresh are deemed to satisfy any
Complaint in Intervention filing requirement set forth herein.
Based on the foregoing, IT IS HEREBY ORDERED, as follows:
III. PRELIMINARY INJUNCTION
21.

This Order is binding upon the Parties to this action, their officers, agents,

assigns, employees, banking institutions and attorneys, and all other persons or entities who
receive actual notice of the entry of this Order.
22.

Custom Cuts and Bradley Beckman, their agents, employees, officers, directors,

assigns, representatives, and banking institutions are restrained and enjoined from alienating,
dissipating, withdrawing, paying over, or assigning any assets belonging to Custom Cuts,
including, without limitation, all assets contemplated by 7 C.F.R. §46.46, as interpreted by
applicable case law, except as set forth in this Order.
23.

On or before 5:00 p.m. CST on Monday, August 22, 2011, Defendant Beckman

shall provide the attorneys listed in ¶39 with:
a.

A detailed statement listing Custom Cuts’ outstanding accounts receivable
("Receivables Report"), including the address, telephone number, and
primary contact person for each of company listed, along with the
amounts due to Custom Cuts.

b.

A detailed statement listing Custom Cuts’ outstanding accounts payable
(“Payables Report”), including the address, telephone number, and

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primary contact person for each of company listed, along with the
amounts owed by Custom Cuts,
c.
d.

A sworn statement, identifying all assets purchased by Custom Cuts
within the last year;

e.

All liabilities incurred by Custom Cuts within the last year;

f.
24.

A list that identifies all financial institutions where Custom Cuts has had
an account within the past two years.

The income tax returns filed by Custom Cuts for the 2009 and 2010 tax
years, including all schedules, attachments, and amendments.

Steven W. Jelenchick, Esq., counsel for River Point shall serve a copy of this

Order on (a) each of Custom Cuts’ customers identified on the Receivables Report, (b) all
financial institutions in which Custom Cuts has funds on deposit, and (c) on any other entity
that may be in possession of any of Custom Cuts’ assets. Mr. Jelenchick shall send the Notice
and Order by certified mail with return receipt requested, facsimile, or any equally verifiable
means of delivery, and shall file a Proof of Service identifying the name and address of all
persons and entities served with this Order.
25.

Upon request, during normal business hours, Bradley Beckman shall provide the

attorneys listed in ¶¶39 with reasonable access to Custom Cuts’ books and records, including
without limitation, all banking records, statements, check registers, invoices, credit memos,
Receivables, ledgers, insurance policies, inventory lists, accounts payable lists, customer lists,
vendor invoices and access to Custom Cuts computers, computer software and related
passwords.
26.

The PACA Trust Assets subject to claims of the PACA Plaintiffs and Harvest

Fresh and in the possession of Custom Cuts as described in 7 C.F.R. §46.46 as interpreted by
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applicable case law, shall serve as Plaintiffs’ security for this injunction as required by Rule
65(c) of the Federal Rules of Civil Procedure.
IV. ESTABLISHMENT OF PACA TRUST ACCOUNT
27.

On or before 5:00 p.m. CST on Monday, August 29, 2011, Mr. Jelenchick, shall

establish an escrow account at a federally insured financial institution entitled "Custom Cuts
PACA Trust Account" (“PACA Trust Account"). Mr. Jelenchick shall be the only person with
authority to write checks and make withdrawals from this account. Mr. Jelenchick may not
authorize any withdrawals from the account without either a written stipulation signed by the
attorneys listed in ¶39 or a Court Order. The PACA Trust Account shall not be subject to
execution, levy or attachment by any creditor of Custom Cuts or Bradley Beckman without
further order of this Court.
28.

Any and all interest which accrues on the funds held in the PACA Trust Account

from the date the account was opened to the date of distribution, shall follow the funds into
the hands of the party ultimately deemed entitled to such funds.
29.

Mr. Jelenchick shall promptly forward to the counsel identified in ¶¶39 the

monthly statements from the PACA Trust Account.
V. COLLECTION AND LIQUIDATION OF THE PACA TRUST ASSETS
30.

All financial institutions in which Custom Cuts has funds on deposit and any

other person or entity that may be in possession of any of Custom Cuts’ assets shall, upon
receipt of actual notice of this Order, promptly account for and turn over all monies to Mr.
Jelenchick, who shall then promptly deposit such funds into the PACA Trust Account.

Page 9 of 20

31.

On or before September 30, 2011, all persons and businesses that have purchased

produce from Custom Cuts and owe money to Custom Cuts for those purchases, shall tender
to Mr. Jelenchick all amounts owed to Custom Cuts. Mr. Jelenchick shall then promptly
deposit all amounts received into the PACA Trust Account.
32.

The PACA Plaintiffs are authorized to stipulate to retain one or more collection

agents, which may include attorneys, to assist with the collection of assets owed to Custom
Cuts, and to enter into an agreement with each collection agent which provides for reasonable
compensation to be paid to the collection agent for services rendered.
33.

Bradley Beckman is ordered and directed to maintain the integrity and security

of Custom Cuts’ financial records, including its computer data, financial records, and records
of Custom Cuts’ accounts payable and receivable. Mr. Beckman shall cooperate with the
attorneys listed in ¶¶39 in the collection of accounts receivable and turnover of PACA trust
assets.
VI. PACA CLAIMS PROCEDURE
34.

Because Custom Cuts has ceased operations, and is being liquidated for the

benefit of its creditors, all validly qualified PACA trust beneficiaries of Custom Cuts have the
right to share pro-rata with the PACA Plaintiffs in any PACA Trust Assets distributed in this
action.
35.

The efficient administration of justice requires that all persons or entities

claiming to be potential PACA Trust Creditors of Custom Cuts receive notice of this action.
Further, to ensure finality of any ultimate distribution of PACA Trust Assets in this case, all

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persons or entities claiming to be PACA Trust Creditors of Custom Cuts must be required to
intervene in this action in order to bring them within the jurisdiction of this Court.
Accordingly, all persons or entities claiming an interest in the PACA Trust Assets are required
to intervene in this action prior to an established bar date in order to (i) avoid duplicate
actions, (ii) define the class of PACA Trust Creditors, (iii) establish a method to determine the
validity and amount of their claims, and (iv) share in any distribution of PACA Trust Assets
recovered. All persons or entities having an unpaid invoice for the sale of produce to Custom
Cuts or Bradley Beckman or who otherwise claim to be a PACA Trust Creditor of Defendants,
are granted leave to intervene pursuant to the procedure set forth below and, upon such
intervention, each such entity shall be bound by all Orders entered in this case.
36.

Any and all other persons, firms, and corporations whose interests may be

affected by this Order or the results of this action may intervene without further order of this
Court.
37.

On or before Friday, September 16, 2011, Mr. Jelenchick shall send the Notice

attached to this Order as Exhibit 1 to each creditor listed on Custom Cuts’ Payables Report. If
the creditor is already a party to this case, or if a notice of appearance has been filed on its
behalf in this action, the Notice shall be sent to the creditor’s attorney of record. The Notice
shall be accompanied by a copy of this Order, Mr. Jelenchick shall send the Notice and Order
by certified mail with return receipt requested, facsimile, or any equally verifiable means of
delivery.
38.

The Notice shall be structured on the following schedule:

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Deadline to File Complaint in Intervention and
PACA Proof of Claim .................................................... Thursday, October 06, 2011
Objections to any PACA Proof of Claim Due ........ Wednesday, October 26, 2011
Responses to Claims Objections Due ........................ Monday, November 07, 2011
Deadline to File Motion to Rule on Objections .... Thursday, November 17, 2011
Deadline to File PACA Trust Chart and Motion for
Interim Distribution of Available Funds ................. Tuesday, November 22, 2011
Deadline to object to PACA Trust Chart and
Motion for Interim Distribution of Available
Funds ............................................................................ Tuesday, November 29, 2011
Deadline to Reply to any Objection to PACA Trust
Chart and Motion for Interim Distribution of
Available Funds.................................................................. Friday, December 2, 2011
Deadline for Interim Distribution .................................... Friday, December 9, 2011
39.

On or before Thursday, October 06, 2011, the "Deadline to File Complaint in

Intervention and PACA Proof of Claim" each unpaid supplier of Produce to Custom Cuts or
other claimant alleging rights under the PACA Trust, shall file with the Clerk of the Court for
this District:
(a)

A Complaint in Intervention (or Amended Complaint) complying with
Federal Rule of Civil Procedure 8(a); and

(b)

A completed Declaration in Support of PACA Trust Claim (“PACA Proof
of Claim”), in a form substantially similar to that attached as Exhibit 2,
along with any and all documents supporting its claim. Each PACA Proof
of Claim must be verified by either an owner, an officer, or authorized
corporate employee of the claimant having personal knowledge of the
facts comprising such claims, and any documents that are not attached to
the PACA Proof of Claim shall be inadmissible at any evidentiary
proceeding or trial conducted in this proceeding. This requirement does
not apply to documents relied upon by a PACA claimant to rebut an
objection to its claim.

Page 12 of 20

The Complaint in Intervention (or Amended Complaint) and Declaration in Support of PACA
Trust Claim shall be served upon the attorneys listed below.
MEUERS LAW FIRM, P.L.
Katy Koestner Esquivel
5395 Park Central Court
Naples, Florida 34109-5932
Telephone: [phone]
Facsimile: [phone]
[e-mail]

BECK, CHAET, BAMBERGER & POLSKY, S.C.
Steven W. Jelenchick
330 E. Kilbourn Avenue, Suite 1085
Milwaukee, WI 53202
Telephone: [phone]
Facsimile: [phone]
[e-mail]

MARTYN AND ASSOCIATES
Devin J. Oddo
820 Superior Avenue, N.W., Tenth Floor
Cleveland, Ohio 44113
Telephone: [phone]
[phone]
[e-mail]
Service under this paragraph will be accomplished by in accordance with Rule 5(b) of the
Federal Rules of Civil Procedure. The parties agree that service may be made in accordance
with Fed.R.Civ.P. 5(b)(2)(D) via e-mail, provided that if service is effectuated via e-mail, a copy
of the document shall also be served via facsimile or U.S. Mail on the date of e-mail service,
and service via e-mall shall be made to the e-mail address identified above. All filings will be
accompanied by a certificate of service.
40.

Any Produce supplier who fails to timely file such Complaint in Intervention

and a PACA Proof of Claim with the Court and serve the counsel identified in ¶39, shall be
forever barred from thereafter asserting any claim against Custom Cuts, its officers, directors,
shareholders, or employees, under PACA or for non-payment of Produce sold, whether in this
Court or any other forum.

Page 13 of 20

41.

All non PACA-creditors must file and serve a Complaint in Intervention, only, in

the manner set forth in ¶39, on or before the Thursday, October 06, 2011 Deadline to File
Complaint in Intervention and PACA Proof of Claim set forth in ¶38. Any creditor of Custom
Cuts, which is not a Produce supplier, who fails to timely file a Complaint in Intervention with
the Court and serve the counsel and parties identified in ¶39 shall be forever barred from
contesting whether Custom Cuts’ assets are subject to the trust provisions of PACA, whether
in this Court or any other forum.
42.

Each person or entity intervening in this case shall be bound by all Orders

entered in this case.
43.

Any party wishing to review or copy any pleadings filed in this case may make

arrangements with the Clerk of the Court to view the documents or arrange for copying at the
requesting party's expense.
44.

Any objections to any PACA claims, including without limitation, objections of

Plaintiffs, Defendants, and any third parties, shall be deemed waived if not raised as specified
in ¶28.
45.

Any objections to any PACA claims must be filed with the Clerk of the Court and

served upon all counsel and parties identified in ¶39 on or before Wednesday, October 26,
2011, the deadline for "Objections to any PACA Proof of Claim Due" set forth in ¶38 of this
Order ("Valid Objection"). The Valid Objection must set forth in detail the legal and factual
basis for the objection. Any additional evidence which the objecting party wishes the Court to

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consider when resolving the objection must be filed with the Valid Objection and presented by
way of sworn affidavits or deposition testimony.
46.

On or before the Monday, November 07, 2011 deadline for "Responses to Claims

Objections Due" set forth in ¶38 of this Order, any PACA claimant whose claim is subject to a
Valid Objection may file with the Court a detailed response to any Valid Objection received,
including any supporting rebuttal evidence by way of sworn affidavits, declarations, or
deposition testimony, and serve all counsel and parties identified in ¶39, as well as the
objecting party or its counsel, if represented. A claim will be disallowed if a Valid Objection
was timely filed and the claimant fails to file and serve a timely response.
47.

Any PACA claim listed on a Proof of Claim, to which no Valid Objection has

been filed and served prior to the Objection Deadline, shall be deemed a valid PACA trust
claim for the full amount stated in the PACA Proof of Claim. If a PACA claim is subject to a
timely filed and served Valid Objection as to only a part of the claim's amount, that claim will
be deemed a valid PACA Trust claim only to the extent it is not subject to the timely filed and
served Valid Objection.
48.

The claimant and the objecting party shall thereafter exercise best efforts to

resolve any Valid Objections. In the event the claimant and the objecting party are unable to
resolve such dispute or the Valid Objection is not withdrawn, the claimant shall file a motion
for determination of the validity of the disputed claims on or before Thursday, November 17,
2011, the "Deadline to File Motion to Rule on Objections" set forth in ¶38 of this Order. The
Motion to Rule on Objections must set forth in detail the legal and factual basis for the validity

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of the disputed claim. Any claimant that does not file a timely Motion to Rule on Objections
shall be deemed to have waived that portion of its claim subject to the objection.
49.

On or before Tuesday, November 22, 2011, the “Deadline to File PACA Trust

Chart and Move for Interim Distribution, set forth in ¶38 of this Order, Mr. Jelenchick shall
prepare, file with the Court, and serve upon all counsel of record and any pro se entities that
filed a PACA Proof of Claim a PACA Trust Chart listing:
a)

Each person or entity having filed a verified PACA Proof of Claim;

b)

The amount of its claim as set forth on the Proof of Claim;

c)

The amount which is deemed valid due to no Valid Objections filed;

d)

The amount which is deemed invalid due to no response to a Valid
Objection filed;

e)

The amount, if any, subject to a pending Valid Objection;

f)

The amount of any Valid Objection resolved by settlement (“PACA Trust
Chart");

g)

The funds available for an interim distribution, which shall be equal to
75% of the funds on deposit at the time in the PACA Trust Account
("Available Funds”);

h)

The pro-rata distribution of the Available Funds to the undisputed and
disputed claims, and ‘

i)

Allow for a reserve in the event all pending Valid Objections are
overruled.

Mr. Jelenchick shall simultaneously file with the Court and serve on all parties a motion
requesting distribution of the Available Funds to the qualified PACA trust creditors in
accordance with the PACA Trust Chart. The PACA Trust Chart and Motion for Interim
Distribution shall be filed with the Court and served upon all parties. Claimants' percentages

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subject to pending Valid Objections will be maintained in reserve in the PACA Trust Account.
The 25% of the funds in the PACA Trust account which is being withheld from the Interim
Distribution may be subject to the claims of Mr. Jelenchick for attorneys’ fees.
50.

Any objection to the PACA Trust Chart or Motion for Interim Distribution of

Available Funds, shall be filed with the Court and served on all counsel listed in paragraph
¶39 on or before Tuesday, November 29, 2011, the “Deadline to File Objections to PACA Trust
Chart and Motion for Interim Distribution of Available Funds” set forth in ¶38.
51.

On or before Friday, December 2, 2011, the "Deadline to Reply to any Objection

to PACA Trust Chart and Motion for Interim Distribution of Available Funds” set forth in ¶38,
any party may file with the Court and serve on all parties and the attorney for the objecting
party, a reply to the objection which may include a request for a hearing.
52.

Absent an unresolved objection to the “PACA Trust Chart

and Motion for

Interim Distribution of Available Funds”, on Friday, December 9, 2011, Mr. Jelenchick shall,
and is hereby authorized to, make an interim distribution of Available Funds to be paid prorata to the holders of valid claims listed on the PACA Trust Chart. Mr. Jelenchick shall make
the distributions payable to the client trust account of the claimant's attorney of record. If an
attorney represents more than one claimant, the distribution shall be made in one lump sum in
the aggregate amount of all of the attorney's clients' distributions. Each attorney has the duty
to then distribute the funds to their clients in accordance with the PACA Trust Chart subject to
any contrary agreement among the attorney and his or her clients. The pro-rata portion of any
claims subject to an unresolved objection, to the extent of the objection only, will be held in the

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PACA Trust Account until such time as the Valid Objections to such claims are resolved, in
which case the reserve portion is either used to make the pro-rata distribution to the claim to
the extent the claim is allowed, or is made available for distribution to other valid claimants if
the claim is disallowed. Mr. Jelenchick shall adjust all valid claimants' percentage shares and
distributions after the resolution of these disputed claims, but before any subsequent
distributions. The total amount distributed to each valid claimant, including all prior interim
and subsequent distributions, will reflect the claimants' percentage shares after the resolution
of Valid Objections.
53.

Mr. Jelenchick shall use the same procedure to make subsequent distributions. In

the event of a change in the PACA Trust Chart, before making any subsequent interim or final
distributions, Mr. Jelenchick shall file with the Court and serve, via email, facsimile, or
overnight delivery upon all counsel of record and all pro se parties, a revised PACA Trust
Chart. All parties have seven (7) days from service of the revised PACA Trust Chart to file and
serve timely, Valid Objections to the revised PACA Trust Chart. Absent timely, Valid
Objections, Mr. Jelenchick is authorized to make the distribution set forth in the revised PACA
Trust Chart.
VII. PROCEDURAL ISSUES
54.

So that all trust beneficiaries share the burden of the expenses incurred in

administering the trust on the same pro-rata basis as they are accepting the benefits of such
actions, including the prospective costs of marshalling the trust assets for their benefit; that the
Court will direct payment of reasonable reimbursement for attorneys’ fees and costs to

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Plaintiff and/or Defendants, to the extent their actions benefit the trust beneficiaries, and
reimbursement of their costs upon separate application and order, after notice to all creditors
and hearing if necessary.
55.

Mr. Jelenchick may apply to the Court for reimbursement of reasonable fees

incurred and costs expended in connection with his performance of the tasks set forth in this
Order.
56.

In light of the numerous Complaints and Complaints in Intervention anticipated

to be filed in this case, Custom Cuts, Bradley Beckman and any other Defendants are granted
an extension until November 15, 2011 to file an omnibus answer to any such Amended
Complaints and Complaints in Intervention.
57.

This Court shall exercise exclusive in rem jurisdiction over this action, the PACA

Trust Assets, and the PACA Trust Account established pursuant to this Order. The Court also
hereby retains jurisdiction to enter further Orders to enforce the terms of this PACA Claims
Procedure.
58.

Initial Disclosures as provided for under Rule 26(a)(1) of the Federal Rules of

Civil Procedure are hereby deferred pending further Court Order. Pursuant to Rule 26(d)(1),
discovery may commence without the need to first confer as required by Rule 26(f). Bradley
Beckman is directed to submit himself for deposition by the PACA Plaintiffs on or before
September 15, 2011. The parties will endeavor in good faith to arrange a reasonable schedule
for such deposition. Nothing in this order shall limit the right of any party that intervenes in
this case to later depose Mr. Beckman.

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59.

Mr. Jelenchick shall have no responsibility or obligation to any person or entity

with respect to the PACA Trust Account, or the tasks to be performed hereunder, other than to
comply in good faith with the terms of this Order and other Orders of this Court. Mr.
Jelenchick may rely upon and shall be protected in acting or refraining from acting upon any
statement, certificate, notice, request, consent, order or other documents (including
Defendant’s books and records) reasonably believed by Mr. Jelenchick to be genuine and to
have been signed or presented by the proper party or parties, or their counsel. Mr. Jelenchick
shall have no duty or liability to verify any such statement, certificate, notice, request, consent,
order or document. Mr. Jelenchick shall not be liable for any mistake of fact or error or
judgment or for any act done or omitted in good faith as required or permitted by this or other
orders of this Court. Mr. Jelenchick shall be under no obligation to institute or defend any
action, suit or proceeding in connection with the PACA Trust Account.
60.

Any and all pending actions by or on behalf of other persons or entities against

Custom Cuts, its officers or employees, which arise under or relate to the trust provisions of
PACA are hereby stayed and all subsequent actions by any unpaid seller of Produce under the
trust provisions of PACA to the Company are hereby barred.
Dated at Milwaukee, Wisconsin, this 16th day of August, 2011.
BY THE COURT:
s/ Rudolph T. Randa
HON. RUDOLPH T. RANDA
U.S. District Judge

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