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HILLER CRANBERRY PRODS. v. KOPLOVSKY

May 18, 1998

HILLER CRANBERRY PRODUCTS, INC., Plaintiff,
v.
EDWARD M. KOPLOVSKY, KOPLOVSKY FOODS, INC., and CLERMONT, INC., Defendants. FIRST TRADE UNION SAVINGS BANK, Trustee.



The opinion of the court was delivered by: MCAVOY

MEMORANDUM, DECISION & ORDER

 I. BACKGROUND

 A. Facts

 Plaintiff Hiller Cranberry Products, Inc. ("plaintiff" or "Hiller") is a Massachusetts corporation. Defendant Koplovsky Foods, Inc. ("KPI") also is a Massachusetts corporation. Defendant Edward M. Koplovsky is President and a majority shareholder of KFI. Defendant Clermont, Inc. ("Clermont") is an Oregon corporation. Trustee First Trade Union Savings Bank is a Massachusetts banking institution that holds KFI assets and against which Hiller seeks trustee process.

 On September 10, 1996, Hiller and KFI entered into a supply agreement pursuant to which Hiller agreed to sell and KFI agreed to buy thirty-three percent of all of the Massachusetts-grown cranberries sold by Hiller for processing purposes during each contract year. The purchase price for the cranberries sold by Hiller to KFI would be the average price per-barrel that Hiller pays its contracted growers during a particular contract year harvest, no less than $ 80 per barrel, plus $ 10 dollars per barrel, subject to certain price adjustments. Under the terms of the agreement, KFI was obligated to pay 75% of the purchase price for the cranberries delivered by Hiller within ten days of the invoice date, 12.5% of the purchase price no later than January 1 of the year following delivery of the cranberries, and the final 12.5% no later than February 1 of the year following delivery of the cranberries.

 Between September 25, 1997 and November 25, 1997, Hiller shipped cranberries in the total amount of $ 6,925,455.58 to KFI. As of this date, Hiller has received payments from KFI in the amount of $ 2,700,000, leaving an outstanding balance due to Hiller from KFI under the agreement of $ 4,225,455.58, plus interest.

 After taking possession of the cranberries last Fall, KFI sold them to its other company, Clermont. KFI did not add value to the cranberries and served merely as a conduit. Clermont, in turn, immediately pledged the cranberries to Clermont's lender in order to secure a multi-million dollar loan to Clermont. Clermont used only a fraction of the loan to pay Hiller, using the rest to pay Koplovsky and other creditors of Koplovsky and his companies.

 When no additional payment was forthcoming over the next several weeks, Hiller made demand upon KFI for the immediate payment of the outstanding balance due under the agreement. Hiller alleges that despite repeated assurances, KFI has refused to pay the outstanding balance due. On December 5, 1997, Hiller filed a Notice of Intent to preserve Trust Benefits with the U.S. Dept. Of Agriculture and sent a copy of the notice to KFI.

 Plaintiff asserts that any conveyance of assets or transfer of assets by KFI to Clermont was fraudulent, done at a time when KFI was insolvent or otherwise unable to pay its debts, and was done to hinder, delay or defraud creditors like plaintiff. In December of 1997, Koplovsky in fact transferred, for one dollar each, several parcels of real property in Massachusetts to entities with which he was affiliated.

 B. Procedural History

 On March 11, 1998, plaintiff brought an action in the U.S. District Court for the District of Massachusetts, and obtained orders of attachment as to defendants' Massachusetts property. Plaintiff commenced this action on March 20, 1998. The Complaint contains several claims. Plaintiff alleges federal question jurisdiction based upon its claims for payment from Trust under the Perishable Agricultural Commodities Act of 1930 (PACA), 7 U.S.C. §§ 499a-499s. On March 25, 1998, plaintiff filed an ex parte motion for an Order of Attachment against defendants. This Court granted the motion the same day. Pursuant to the Order of Attachment, on April 2, 1998 the Columbia County Sheriff filed a Notice of Attachment with the Columbia County Clerk, thereby levying on real property owned by Koplovsky in Hudson, New York. On April 7, 1998, plaintiff brought the present timely motion to confirm the Order of Attachment.

 II. DISCUSSION

 A. Motion to Confirm

 On a motion to confirm an order of attachment, CPLR § 6211(b) incorporates the requirements of § 6223(b). The latter section ...


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