United States District Court, E.D. North Carolina, Western Division
C. DEVER III UNITED STATES DISTRICT JUDGE.
14, 2019, defendants Unique Food Company, Inc., Louis
Deangelis, Beverly Deangelis, Louise Deangelis, Jr., Gina
Bissette, and Bissette Brothers, LLC ("defendants")
objected to the claims under the Perishable Agricultural
Commodities Act ("PACA"), 7 U.S.C. § 499a et
seq., of plaintiffs Palumbo Foods, LLC ("Palumbo
Foods"), L&M Companies, Inc. ("L&M"),
Patterson Repack, Inc. ("Patterson Repack"), and
Ford's Produce Co. ("Ford's Produce") [D.E.
123, 124, 125, 127]. On May 28 and 30, Palumbo Foods,
L&M, and Patterson Repack responded in opposition [D.E.
136, 137, 139]. On June 4, 2019, defendants replied [D.E.
first objection to L&M's PACA claim asserts that
L&M gave notice too early to preserve its rights under
PACA because L&M sent its invoices, on which PACA notice
was provided, to defendants before defendants received
delivery of L&M's produce. See, e.g., 7
U.S.C. § 499e(c)(3); 7 C.F.R. § 4646(f)(2)-(4);
Kingsburg Apple Packers Inc. v. Ballantine Prod. Co.,
No. 1:09-CV-901-AWI-JLT, 2010 WL 529486, at *4 (E.D. Cal.
Feb. 9, 2010) (unpublished); hire Bissett Produce.
Inc., 512 B.R. 528, 536 (Bankr. E.D. N.C. 2014),
aff'd, No. 5:14-CV-451-FL, 2015 WL 868029 (E.D. N.C. Feb.
2, 2015) (unpublished), aff'd sub nom., Derek &
Matthew Bissette Farms v. Rissette Produce. Inc., 612
Fed.Appx. 684 (4th Cir. 2015) (per curiam) (unpublished); cf
Produce Alliance v. Let-Us Produce, 776 F.Supp.2d
197, 201-03 (E.D. Va. 2011). Defendants, however, raised this
objection in its motion and not in its objection to
L&M's claim, thereby violating this court's
consent order. See [D.E. 63] ¶ 32. Thus, the court deems
this objection waived.
second objection to L&M's PACA claim asserts that
L&M failed to disclose the agreed-upon seven-day payment
term on its invoices. Parties may opt out of the default
ten-day payment requirement by written agreement. See 7
C.F.R.§ 46.2(aa)(11); Perfectly Fresh Farms,
Inc.,692 F.3d 960, 963 (9th Cir. 2012). The new payment
term, however, must be disclosed on "invoices,
accountings, and other documents relating to the
transaction." 7 U.S.C. § 499e(c)(3). L&M does
not contest the fact that the term was not on its invoices.
See [D.E. 116]. L&M, however, asserts that the agreement
between the parties ended on June 6, 2018. See [D.E. 116-1]
at 2. Accordingly, the court sustains defendants'
objection as to any payments made under the agreement between
L&M and defendants for seven-day payment terms, and
allows discovery on how many invoices to which that agreement
final objection to L&M's PACA claim asserts that the
parties agreed to payment 35 days after delivery and
acceptance of produce in violation of PACA. Defendants,
however, provided no evidence in their objection of any such
agreement, thereby violating this court's consent order.
See [D.E. 63] ¶ 32; cf [D.E. 103]. Thus, the court deems
this objection waived.
first objection to Palumbo's PACA claim asserts that
Palumbo was not a licensed PACA dealer when it attempted to
give PACA notice through its invoices for all produce sold on
or before September 20, 2018. See [D.E. 123-1]; [D.E. 137] 2;
[D.E. 142] 1. Dealers not licensed under PACA cannot preserve
trust rights under 7 U.S.C. § 499e(c)(4), but may
preserve trust rights by giving notice under 7 U.S.C.
§499e(c)(3). See In re Enoch Packing
Co., 386 F App'x 611, 613 (9th Cir. 2010) (per
curiam) (unpublished); Evergreen Farms
& Produce LLC v. ABL Farms, 357
F.Supp.3d 1252, 1256-57 (N.D.Ga. 2019); In re Choez,
594 B.R. 142, 161 (Bankr. E.D.N.Y. 2018); Bissett
Produce, 512 B.R. at 538. Section 4993(c)(3) states that
an unpaid seller, like Palumbo, "shall lose the
benefits" of the PACA trust if the seller fails to
comply with the statute. 7 U.S.C. § 499e(c)(3); see 7
C.F.R. § 46.46(f)(1). Palumbo did not comply with
section 4993(c)(3) for its produce sold on or before
September 20, 2018, when it failed to file a separate notice
of intent to preserve PACA trust rights. See 7 C.F.R. §
46.46(f)(1); Bissett Produce, 512 B.R. at 538; cf. 7
C.F.R. § 46.46(f)(3). Thus, the court sustains
defendants' objection as to Palumbo's produce sold on
or before September 20, 2018.
second and third objections to Palumbo's PACA claim
asserts that the contractual payment schedule between Palumbo
and Unique did not comply with PACA because Unique's
payments were not made within the statutorily-mandated time
frame. See [D.E. 123] 5-8; see 7 C.F.R.§ 46.46(e)(1),
(2); Idahoan Fresh v. Advantage Produce, Inc., 157
F.3d 197, 209 (3d Cir. 1998). Viewing the evidence in a light
most favorable to Palumbo, the non-moving party, the court
finds that Palumbo and Unique agreed to several successive
post-default payment plans. See Exs. B-G [D.E. 123-1]; 7
C.F.R. § 46.46(e)(3); Epic Fresh Produce. LLC v.
Olympic Wholesale Produce. Inc., No. 17-cv-8381, 2017 WL
6059971, at *7 (N.D. Ill.Dec. 7, 2017) (unpublished);
Heeren, LLC v. Cherry Growers, LLC, No. 1:15-cv-47,
2015 WL 9450851, at *4 (W.D. Mich. Dec. 23, 2015)
(unpublished); cf. Spada Properties. Inc. v. Unified
Grocers. Inc., 121 F.Supp. 3D 1070, 1086-88 (D. Or.
2015). Moreover, assuming arguendo that Palumbo's
November 27, 2018 email constitutes a pre-default agreement
for future shipments of produce, see Ex. G [D.E. 123-1], the
terms comply with PACA. See 7 C.F.R. § 46.46(e)(3).
Accordingly, the court overrules defendants' objection.
final objection to Palumbo's PACA claim asserts that the
court should exclude Palumbo's freight expenses from its
claim. Defendants fail to cite any legal authority for its
position in either its objection or its motion to rule on the
objection, and thereby violated this court's consent
order. See [D.E. 63] ¶ 32. Thus, the court deems this
dispute between Patterson Repack and defendants turns on
whether Patterson Repack provided sufficient evidence for the
court to find that it sent invoices (with PACA notices) to
defendants. See 7U.S.C. § 499e(c)(3); 7 C.F.R. §
46.46(f)(3)-(4); Bissett Produce, 512 B.R. at 533.
Viewing the evidence in a light most favorable to Patterson
Repack, the non-moving party, the court finds that Patterson
Repack has provided such evidence. See [D.E. 86, 86-1, 113,
113-1]; 7U.S.C. § 499e(c)(3); 7 C.F.R. §
46.46(f)(3)-(4); see P.M. Rnthman & Co. v. Korea
Commercial Bank of N.Y.,411 F.3d 90, 96-97 (2d
Cir. 2005); P.L.U.S. Brokerage. Inc. v. Jong Fun
Kim,908 F.Supp.2d 711, 716 (D. Md. 2012);
Dell's Maraschino Cherries Co. v. Shoreline Fruit
Growers. Inc.,887 F.Supp.2d 459, 477-78 (E.D.N.Y.
2012); cf. PACA Tr. Creditors of Lenny Perry's
Produce. Inc. v. Genecco Produce ...