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GENECCO PRODUCE, INC. v. SANDIA DEPOT

August 19, 2005.

GENECCO PRODUCE, INC., Plaintiff,
v.
SANDIA DEPOT, INC., Defendant.



The opinion of the court was delivered by: CHARLES SIRAGUSA, District Judge

DECISION AND ORDER

INTRODUCTION

  This is an action pursuant to the Perishable Agricultural Commodities Act of 1930 ("PACA"), 7 U.S.C. § 499a et seq. Plaintiff Genecco Produce, Inc. ("Plaintiff") commenced this action against defendant Sandia Depot, Inc. ("Defendant") after the United States Secretary of Agriculture ruled against plaintiff in an administrative proceeding. Now before the Court is a motion for summary judgment [#8] by defendant. For the reasons that follow, the application is denied.

  BACKGROUND

  This action involves a dispute between the parties over payments allegedly owed for twelve separate shipments of produce. Defendant demanded payment from plaintiff, and after plaintiff refused to pay the full amount demanded, defendant filed a petition with the U.S. Secretary of Agriculture, pursuant to PACA, 7 U.S.C. § 499a. The matter came on for a hearing before an Administrative Judicial Officer, who determined that plaintiff owed defendant a total of $50,144.34, plus interest. Plaintiff subsequently commenced this action, pursuant to 7 U.S.C. § 499g(c).

  Defendant filed the subject motion for summary judgment [#8], and in support of the motion, submitted the Secretary's Decision and the full administrative record. As will be discussed further below, although 7 U.S.C. § 499g(c) provides for a de novo review of the matter in the District Court, the Secretary's findings of fact are treated as prima facie evidence in this proceeding. In opposition to the motion, plaintiff submitted, inter alia, an affidavit from David Genecco, President of the plaintiff corporation.

  The disputes over the various invoices are summarized below:

  Invoice 4795 involved the sale by Sandia to Genecco of 41,753 pounds of watermelons on an f.o.b. basis for an invoice price of $3,757.77. Genecco resold the watermelons to Michel Desjardins, a wholesaler-importer in Montreal Canada. An inspection of the shipment revealed that approximately 23% of the watermelons had defects. Desjardins agreed to pay Genecco $2,654.60 for the watermelons, but after deducting $2,248.45 for freight, inspection, dumping, and handling, Desjardins paid Genecco only $406.15. From that amount, Genecco paid Sandia $206.15, leaving an invoice balance of $3,551.62. The Secretary found that Sandia breached its warranty of suitable shipping conditions, but nonetheless found that Sandia was entitled to the full invoice price. In this regard, the Secretary found the value of the shipment as warranted to be $1,356.30, based upon the United States Department of Agriculture's ("USDA") Market News Service report. The secretary further found that because Genecco was able to resell the produce for more than the value as warranted, Genecco suffered no damages. Genecco contends, however, that the Secretary should have determined the value as warranted based upon the invoice price of $3,551.62.

  Invoice 4879 involved the sale by Sandia to Genecco of 41,920 pounds of pumpkins, on a "price after sale" basis. Genecco paid Sandia $1,000.00 for the shipment. The Secretary determined that Genecco owed Sandia an additional $1,717.00, based upon a finding that Genecco was able to re-sell the produce for $4,802.50. After allowing Genecco 20% of this amount for profit and handling, and after deducting additional amounts for freight and inspection fees, the Secretary found that Genecco owed Sandia $1,717.00. However, Genecco's president, David Genecco, in an affidavit, contends that this finding is erroneous, since Genecco actually re-sold the pumpkins for only $1,000.00. Genecco Aff. [#18-2] ¶ 21.

  Invoice 4880 involved the sale by Sandia to Genecco of 40,760 pounds of pumpkins on a price after sale basis. Genecco paid Sandia $1,228.00 for the shipment. The Secretary determined that Genecco still owed Sandia $255.50 for the shipment. However, Genecco contends that the Secretary failed to credit Genecco $250 for dumping fees that it incurred, and that it actually owes nothing to Sandia for this shipment. Genecco Aff. [#18-2] ¶ 35. Invoice 4881 involved the sale by Sandia to Genecco of 47,300 pounds of pumpkins, on a price after sale basis. Genecco paid Sandia $709.50 for the shipment. The Secretary determined that Genecco owed Sandia an additional $1,298.00 for the shipment. However, Genecco contends that, in calculating that figure, the Secretary incorrectly found that Genecco was able to re-sell 12 bins of pumpkins that it actually had to discard because of the poor quality of the pumpkins. Genecco Aff. [#18-2] ¶ 44.

  Invoice 4884 involved the sale by Sandia to Genecco of 44,340 pounds of pumpkins on a price after sale basis. Genecco paid Sandia $886.80 for the shipment. Genecco maintains that Sandia agreed to accept this amount as payment in full, and that there is no further dispute between the parties as to this invoice.

  Invoice 5392 involved the sale of 8,269 pounds of watermelons for an invoice price of $2,067.25. Invoice 5392-A involved the sale of 5,468 pounds of watermelons for an invoice price of $1,367.00. Invoice 5392-B involved the sale of 5,468 pounds of watermelons for an invoice price of $1,367.00. Although Genecco claims that the shipment was defective, the Secretary found that the inspection certificate produced by Genecco did not indicate that the entire shipment was inspected, and that Genecco had therefore not proven breach of warranty. The Secretary consequently found that Genecco owed Sandia the full invoice price of $4,801.25. However, Genecco contends that the inspection certificate in fact shows that the entire shipment was inspected and found to be defective. Genecco Aff. [18-2] ¶ 53.

  Invoice 5716 involved the sale of 8,934 pounds of watermelons for an invoice price of $2,253.50. The Secretary found that Genecco owed Sandia $2,253.50 for this shipment. In this regard, the Secretary found that Genecco had failed to establish a breach by Sandia, because it failed to have the produce inspected. However, Genecco contends that inspection was unnecessary, because Sandia admitted that the shipment was defective and waived inspection. Genecco Aff. [18-2] ¶¶ 59, 63.

  Invoice 5385 involved the sale of 22,018 pounds of watermelons for an invoice price of $6,225.04. Inspection showed that 25% of the watermelons were defective. The Secretary found that Genecco owed Sandia $4,529.83 for the shipment. In calculating this figure, the Secretary found first that Sandia had breached its warranty. The Secretary then found that the only available evidence of the value of the shipment was the invoice price, which the Secretary then reduced by 25% to reflect the defects. After granting Genecco an additional allowance for inspection fees, the Secretary found that Genecco owed Sandia $4,529.83. Genecco maintains that the shipment was entirely worthless and had to ...


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