Currently before the Court in this action commenced by A. Ferlito Farms, Inc. ("Ferlito Farms") against Empire Fresh Cuts, LLC, James R. Zappala and Samuel A. Zappala ("Defendants") under the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499e(c)(5) ("PACA"), is Ferlito Farms' motion for a preliminary injunction enjoining Defendants (as well as their agents, employees, successors, banking institutions, attorneys, and all other persons in active concert or participation with them) from using, consuming or otherwise dissipating trust assets or making payment of any PACA trust asset to any creditor, person, or entity until further order of this Court or upon agreement of Ferlito Farms. (Dkt. No. 9.) For the reasons set forth below, Ferlito Farms' motion is granted.
On August 31, 2010, Ferlito Farms filed an ex parte motion for temporary restraining order restraining Empire Fresh Cuts, its agents, officers, directors, members, including James R. Zappala and Samuel A. Zappala, subsidiaries, assigns, and financial and banking institutions, including but not limited to Pathfinder Bank, from alienating, dissipating, paying over or assigning any PACA trust assets to any creditor, person or entity, without agreement of the parties or until further order of the Court, or until Defendants pay Ferlito Farms the sum of $429,590.00. (Dkt. No. 9.) On September 1, 2010, the Court ordered Defendants to show cause on September 15, 2010, why an order for preliminary injunction should not be entered. (Dkt. No. 10.) On September 2, 2010, Ferlito Farms served Defendants with its motion for a temporary restraining order. (Dkt. No. 11.) Defendants failed to appear on (or before) September 15, 2010. (See generally docket sheet.) As a result, the Court directed Ferlito Farms to electronically file, on or before September 29, 2010, a proposed order with regard to their motion for a preliminary injunction, and serve that proposed order on Defendants. (Text Order of Sept. 15, 2010.) On September 27, 2010, Ferlito Farms did so. (Dkt. No. 15.)
Having carefully reviewed and considered Ferlito Farms' proposed findings of fact and conclusions of law, the Court makes the following findings of fact and conclusions of law and enters this preliminary injunction pursuant to Fed. R. Civ. P. 65.
1. Ferlito Farms commenced this action on August 30, 2010, under PACA.
2. Ferlito Farms, a New York corporation located in Oswego County, New York, operates as a seller of onions, a perishable agricultural commodity, and in that capacity sells and ships fresh onions, a type of perishable agricultural commodity commonly shipped in interstate commerce, in the U.S. Produce markets.
3. At all times relevant hereto, Ferlito Farms has held, and presently holds a valid PACA license number 19781760.
4. Defendant Empire Fresh Cuts, LLC ("Empire Fresh"), is a New York Limited Liability Company located in Oswego County, New York, which at all times relevant hereto operated as a buyer, processor, and seller of perishable agricultural commodities in interstate commerce under PACA license number 20060612, and is subject to the provisions of PACA and the regulations promulgated thereunder.
5. Empire Fresh purchased onions from Ferlito Farms for processing and sale in interstate markets in the New England, Mid-Atlantic, and Ohio State regions of the United States.
6. Ferlito Farms made 36 shipments of onions to Empire Fresh between December 9, 2009 and April 20, 2010, with invoices showing a total principal amount of $429,590.00, plus interest, due and owing for the onions, none of which has been paid by Empire Fresh.
7. Each of the Ferlito Farms' invoices issued in connection with the 36 shipments of onions contains the payment terms "NET 30 DAYS 2% INTEREST ADDED AFTER 30 DAYS."
8. Each of the Ferlito Farms' invoices issued in connection with the 36 shipments of onions also contained the language:
The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e[c]). The seller of these commodities retains a trust claim over these commodities, all inventories, and any receivables or proceeds from the sale of these commodities until full payment is received.
9. Under PACA, upon receipt of the onions sold to Empire Fresh by Ferlito Farms, Ferlito Farms became a beneficiary of a floating, non-segregated statutory trust on all of the Defendants' perishable agricultural commodities, all inventories of food or other products derived from the perishable agricultural commodities, and any receivables or proceeds ...