This case is not published in a printed volume and its disposition appears in a table in the reporter.
Nelson S. Roman, J.
Defendant FLORIDA FRUIT AND VEGETABLE ASSOCIATION (FFVA) moves seeking an Order granting it summary judgment over plaintiff in the instant action. FFVA avers that summary judgment is warranted for a host of different reasons. With regard to plaintiff's cause of action for malicious prosecution, FFVA avers, inter alia, it had probable cause to initiate the prior proceeding upon which the instant action is premised. With regard to plaintiff's cause of action for abuse of process, FFVA avers, inter alia, that it had no intent to harm plaintiff when it initiated the instant action. With regard to plaintiff's cause of action for fraud, FFVA avers that it did not misrepresent any facts to the plaintiff with an intent to deceive. FFVA also seeks summary judgment on its counterclaim against plaintiff for malicious prosecution. FFVA avers that summary judgment on its counterclaim is warranted insofar as, inter alia, plaintiff commenced the instant action absent probable cause. Alternatively, FFVA seeks sanctions commensurate with FVVA's legal fees and costs  for the initiation of the within action, which FFVA deems frivolous. Plaintiff opposes the instant motion averring the instant motion is untimely. Plaintiff further avers that questions of fact with regard to its cause of action for malicious prosecution and abuse of process preclude summary judgment. Plaintiff does not oppose FFVA's motion seeking summary judgment over plaintiff's cause of action for fraud nor does it oppose FFVA's motion seeking summary judgment on its counterclaim for malicious prosecution or FFVA's motion seeking sanctions.
For the reasons that follow hereinafter, FFVA's motion is hereby granted in part.
The instant action is for alleged personal injuries premised upon malicious prosecution, abuse of process and fraud. The complaint alleges that plaintiff is a buyer, in the business of buying tomatoes from various farmers and shippers which it then sells to consumers and purchasers. Defendant PACIFIC TOMATO GROWERS LTD. (Pacific) is a tomato shipper. The United States Department of Agriculture (USDA) is mandated by statute to provide produce inspections to both shippers and wholesalers. Said inspections are designed to ensure that the produce meets defined standards. In 1997-1999 plaintiff through a broker contracted to purchase various shipments of tomatoes from Pacific. When certain shipments were received by the plaintiff they were not of the quality contracted. As a result, Pacific, knowing that the tomatoes were not of the quality contracted, granted plaintiff a price reduction. In 1999, the United States Government (Government), conducted an investigation called "Operation Forbidden Fruit" (OFF) wherein it undertook to investigate USDA inspectors and shippers at the Hunts Point Market (Market), located in Bronx County, New York. Nine USDA inspectors were indicted for accepting bribes from the buyers and several of the buyer's employees were indicted for bribing USDA inspectors. One of the employees indicted was Anthony Spinale (Spinale) an employee with the plaintiff. Eight USDA inspectors pled guilty to the charges and a ninth ultimately pled guilty as well, but not before cooperating with the Government and its investigation.
Plaintiff alleges that on March 27, 2000, FFVA filed an informal complaint with the USDA on behalf of Pacific and against plaintiff. Pacific, despite knowledge that the adjustments on tomatoes sold to plaintiff were warranted, sought reimbursement for the adjustments. Pacific sought reimbursement on eight loads of tomatoes despite previously granting plaintiff an adjustment on many other shipments and failed to seek reimbursement on a load of tomatoes which was part of Spinale's indictment. In April 2001, FFVA filed a formal complaint with the USDA on behalf of Pacific and against plaintiff seeking reimbursement for adjustments granted to plaintiff totaling $38,000 plus interest and costs. On February 6, 2002, the USDA issued a decision awarding Pacific the damages it sought. Plaintiff subsequently sought an appeal of the USDA's decision in the United States District Court, Southern District of New York (S.D.N.Y.) pursuant to the Perishable Agricultural Commodities Act (PACA). Upon plaintiff's filing of the appeal, Pacific discontinued its action with prejudice, withdrew its complaint with the USDA, and executed a stipulation dismissing the action.
Plaintiff's first cause of action alleges that the stipulation dismissing the action was an adjudication that defendants had no factual or legal basis to file the complaint with the USDA. It is alleged that defendants knew that the allegations in the complaint were false and that they were nonetheless wrongfully and willfully made with the intent to extort and defraud the plaintiff, using OFF and the guilty pleas resulting therefrom as a basis. As a result of defendants' abuse of process, commencement, and prosecution of the prior actions, plaintiff was caused to expend time, energy and $50,000 in defending the action. As a result of defendants' actions designed to extort and defraud plaintiff, $500,000 in punitive damages is sought. Plaintiff's second cause of action, albeit in a more brief fashion, reiterates the first cause of action.
Within its answer FFVA interposes a counterclaim. FFVA, in its counterclaim, alleges that in April 2002, Pacific filed a complaint against plaintiff for reimbursement of unauthorized adjustments. On February 6, 2002, the USDA issued a decision in Pacific's favor. Plaintiff filed an appeal in the SDNY. Subsequently, plaintiff and Pacific reached a settlement and Pacific withdrew its complaint. Plaintiff commenced the instant action against FFVA despite knowledge that FFVA was not a party to the actions between Pacific and plaintiff, despite knowing that it had no viable cause of action and despite knowledge that the Court of Appeals, Second Circuit issued a decision affirming the USDA's decision in favor of a seller in a case involving identical facts. Plaintiff, knowing that the allegations against FFVA were false, willfully and maliciously prayed upon FFVA for the sole purpose of extorting and defrauding FFVA. FFVA seeks punitive damages in the amount of $500,000 and seeks to recover legal fees incurred in connection with the instant action.
In support of the instant motion FFVA submits  an affidavit from Michael J. Stuart (Stuart) wherein he states, in pertinent part, as follows. Stuart is president of FFVA, responsible for overseeing all of FFVA's financial and business related matters. FFVA is located in Florida and it is an agricultural trade organization representing Florida's producers of fruits, vegetables and other crops. FFVA assists its members in a broad range of farming issues, including representing its members in administrative reparation actions before the PCACA branch of the USDA. Mike Bess (Bess), an employee of FFVA was the person designated to assist FFVA members with any reparation actions. In 1999, Stuart became aware of a bribery scandal at the Market upon receiving various telephone calls from people in the PACA department of the USDA. On November 1, 1999, news of the scandal was published in a newspaper called The Packer. The newspaper account indicated that the USDA had conducted a three year investigation with regard to the bribery of USDA inspectors by the produce companies at the Market. The investigation was called OFF and the plaintiff in the instant action was named as one of the companies that bribed inspectors into downgrading the quality of the fruit received in order to negotiate a price reduction with the shipper. On November 9, 1999, the USDA issued a memo to members of the produce industry apprising them of OFF. The memo indicated that eight USDA inspectors had been arrested in connection with OFF and implicated thirteen produce receivers stationed at the Market. In March 2000, the USDA posted information on its website summarizing OFF. Information was also provided explaining how to seek monetary restitution from companies involved in the bribery scandal.
FFVA's members who had shipped produce to market companies involved in OFF were interested in seeking restitution for any downward price adjustments they agreed to based on tainted inspections. To the extent that these members granted price adjustments without knowledge of the bribery scandal at the Market and there was no way for them to assess the actual condition of the fruit for which they granted price adjustments, these members initiated reparations actions against many of the sellers at the market. FFVA assisted the members and assisted Pacific in a reparation action against the plaintiff, whose employee Spinale pled guilty to the bribery charges stemming OFF. On March 30, 1999, FFVA filed an informal complaint on behalf of Pacific against the plaintiff with the PACA department of the USDA. Thereafter, a formal complaint was filed as well as the other required documents, including an opening statement, an answering statement, a statement in reply, and legal briefs. Based on the submissions, on February 6, 2002, the Secretary of Agriculture (Secretary) issued a decision in Pacific's favor awarding it $38,000, interest and a filing fee. Plaintiff appealed to the S.D.N.Y. and in connection therewith, FFVA was unable to act as Pacific's representative in the appeal, Pacific retained counsel.
Sometime during the procedural history of the instant reparation action, another FFVA member, DiMare Homestead, Inc. (DiMare) brought an identical reparation action against a Market receiver, Koam Produce, Inc. (Koam). DiMare prevailed and Koam appealed to the SDNY. The S.D.N.Y. affirmed the Secretary's decision and when Kaom appealed that determination, the decision was affirmed. Pacific's counsel spoke to counsel for DiMare and counsel in another similar case and learned that in those cases the shipper was unable to fully recover all legal fees. Based on that, Pacific determined that it would be too time consuming and costly to pursue the action any further. Pacific settled the appeal and agreed to discontinue the reparation action.
FFVA submits a copy of the decision, dated February 6, 2002, issued by the Secretary in the reparation action filed by Pacific against the plaintiff. Said action was one pursuant to the PCAC and upon the waiver of oral hearing by the parties, was resolved by documentary procedure, where the parties submitted pleadings, a report, sworn statements, opening statements, and briefs. Pacific sought reparation in connection with eight truckloads of tomatoes it shipped to plaintiff for price adjustments granted totaling $38,000. The Secretary granted judgment in favor of Pacific after finding that the agreed upon price reductions were voidable based upon misrepresentation and mistake. Central to the Secertary's decision was the fact that both Spinale, an employee with plaintiff, and eight USDA inspectors pled guilty to indictments alleging bribery stemming from operation OFF and during the time period that the price adjustments at issue were agreed upon. The Secretary imputed knowledge of the bribery scandal to plaintiff and thereafter concluded that failure to disclose the ongoing bribery was basis for setting aside the agreed upon price adjustments.
FFVA submits a copy of a decision issued by the S.D.N.Y. in a case titled
Tray-Wrap, Inc. v. Meyer Tomatoes. Said decision sets the amount of fees and costs to be awarded to the defendant in that action and reduces the amount awarded from what was initially claimed. That action involved similar facts and circumstances in that the plaintiff in this action was the subject of a reparation action by the defendant therein. Plaintiff lost at every level and ultimately had to pay a portion of said defendant's legal fees.
FFVA submits a letter from the S.D.N.Y. dated March 21, 2001, wherein the court states that Spinale pled guilty to one count of bribing a public official in relation to case number 99 CR 1093. FFVA submits a copy of the S.D.N.Y. docket evincing the criminal action against Spinale. FFVA submits a copy of the indictment against Spinale. Said indictment alleges that Spinale engaged in bribery of a public official. The indictment alleges that on nine separate days in 1999, Spinale, while in the employment of plaintiff and G & T Terminal Packaging Corp. (G & T), bribed USDA inspectors to influence the outcome of fresh fruit and vegetable inspections at the Market.
FFVA submits all the decisions evincing the procedural history in the actions between Koam and DiMare. The first decision grants judgment in favor of DiMare in a reparation action brought pursuant to the PACA. The facts are similar to the facts in the reparation action brought by Pacific against plaintiff and judgment in favor of DiMare, the shipper was granted summary judgement for the same reasons cited in Pacific's reparation action. The second decision is related to Koam's subsequent appeal to the S.D.N.Y. who affirmed the Secretary's finding. The third decision is related to Koam's subsequent appeal wherein the SDNY's decision was affirmed. The fourth decision relates to DiMare's application to recover legal fees incurred in connection with the actions just discussed. The S.D.N.Y. awarded DiMare legal fees and costs totaling less than the amount requested.
FFVA submits a copy of a decision issued by the Secretary dated September 8, 2005, wherein he granted judgment in favor of the USDA in an action brought by them seeking to revoke plaintiff and G & T's PACA license for a host of reasons, all of which are related to Spinale's involvement in OFF, the indictments that stemmed therefrom and Spinale's subsequent guilty plea. The Secretary concluded that due to Spinale's involvement in OFF, he, plaintiff and G & T violated 7 U.S.C. 499b(4), which prohibits unfair conduct. FFVA submits a copy of a Second Circuit Court of Appeals where the Court upheld the Secretary's decision revoking plaintiff and G & T's license.
FFVA submits a copy of a decision in a case titled G & T Terminal Packaging Co. v. Western Growers Association.
That action was substantially similar to the instant action and by virtue of the decision provided has been dismissed by JSC Williams, who sits in this very court. That action was one for malicious prosecution, abuse of process and fraud. That action was based upon a reparation action instituted by defendants against the plaintiffs, one of which is the plaintiff in the within action. Said action stemmed from price adjustments granted to plaintiffs, which as a result of OFF, defendants argued were fraudulently obtained. After losing the reparation action, the plaintiffs appealed to the S.D.N.Y. and after considering the cost of continued litigation versus the potential of not recovering all legal fees, defendants discontinued the action. The court granted summary judgment to defendant finding the existence of probable cause to bring the underlying reparation action. The court also granted defendant attorney fees and costs.
FFVA submits a portion of Spinale's deposition transcript, wherein he stated that he was convicted based on the indictment.
In opposition to the instant motion, plaintiff submits an affidavit from Spinale wherein he states, in pertinent part, the following. On June 22, 2001 , FFVA, on behalf of Pacific, brought a reparation action against the plaintiff before the USDA pursuant to the PACA. The action was preceded by an informal complaint filed by letter on March 27, 2000. When the informal complaint was filed, Spinale had not yet been convicted of bribery and had merely been indicted for the same. Although Spinale pled guilty to one count of bribery of public official, he did so on poor advise of counsel, insofar as he was a victim of soft extortion. The count to which Spinale pled guilty was count 9 of the indictment which involved a load of potatoes sold to G & T. That count did not involve the plaintiff. Attempts to appeal Spinale's guilty plea proved fruitless insofar as the statute of limitations had expired.
With regard to the reparation action, by a decision rendered by the Secretary, the same was decided in Pacific's favor. On March 1, 2002, plaintiff filed a petition in the S.D.N.Y. appealing the Secretary's determination and on March 19, 2003, plaintiff and Pacific executed a stipulation dismissing the action. On March 30, 203, Pacific contacted the PACA indicating that Pacific would be dismissing its complaint. Pacific thereafter contacted plaintiff apprising it of the same. On March 25, 2004, Pacific made a motion before the S.D.N.Y. seeking an Order setting aside the dismissal of the action. Said motion was denied.
Subsequent thereto, the USDA commenced a license revocation proceeding against the plaintiff and G & T in order to revoke their much needed PACA licenses. William B. Moran (Moran), an administrative law judge rendered a decision siding with plaintiff and G & T, thereby dismissing the license revocation action. Moran concluded that the USDA had not met its burden and further stated that with regard to Spinale's guilty plea, the same was not tantamount to an actual finding of guilt. Moran also concluded that the record was bereft of evidence indicating an occasion where Spinale participated in an inspection of produce wherein the produce was downgraded to make it look worse than it actually was.
Spinale avers that the instant action was commenced absent probable cause because neither Pacific nor FFVA conducted an investigation to verify whether plaintiff had indeed defrauded them prior to initiation of the instant action. Neither Sandy Scahuberger, Pacific's employee, or Bess undertook an investigation. The USDA had advised shippers who felt that they might have been defrauded to compare downgraded loads shipped to the Market with loads shipped elsewhere to see if other loads, shipped elsewhere had been downgraded. Pacific and FFVA commenced the proceeding solely to obtain an easy money judgment. Spinale further avers that the instant action terminated favorably in plaintiff's favor and that there was no basis for dismissing the action but for a realization that Pacific and FFVA had no basis for commencing the reparation action. As a result of the reparation action, plaintiff suffered a loss in business and damage to its reputation.
Plaintiff submits an affidavit from Mazie Faraci (Faraci) who states, in pertinent part, as follows. Faraci is owner and general manager of plaintiff. He reiterates much of what Spinale stated.
Plaintiff submits a copy of a decision titled United States Department of Agriculture v. G & T Terminal Packaging Company, Inc. Said decision is dated March 28, 2005 dismisses the USDA's license revocation proceeding against plaintiff and G & T. Moran, who issued the decision concludes that the USDA had not demonstrated that plaintiff and G & t had violated 7 U.S.C. 499b(4). In essence, Moran concludes that although Spinale pled guilty to charges of bribing a public official, there was no evidence that plaintiff and G & T were guilty of the same.
Plaintiff provides a portion of a transcript  wherein a senior marketing analyst with the USDA testified, in pertinent part, as follows. It was his opinion that to the extent that USDA inspectors altered reports at the USDA's direction, the same affected the integrity of the USDA.
Plaintiff provides a portion of a transcript wherein, Cashin, testified in pertinent part, as follows. With regard to an inspection regarding a load of potatoes, the same was accurate.
Plaintiff provides a portion of Shandy Schauberger's (Schauberger) deposition transcript wherein she testified, in pertinent part, as follows. She was employed by Pacific and as a result of the bribery scandal was asked to provide certain information to Bess in order to initiate a reparation action. She was asked to search Pacific's records and pull any documents evincing price adjustments allowed by Pacific to customers at the Market between ...