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Taylor & Fulton Packing, LLC v. Marco International Foods

December 16, 2011

TAYLOR & FULTON PACKING, LLC PLAINTIFF,
v.
MARCO INTERNATIONAL FOODS, LLC AND STEVEN J. POSA, JR. DEFENDANTS.



The opinion of the court was delivered by: Glasser, United States District Judge:

Memorandum and Order

This is an action for breach of contract and for enforcement of the statutory trust provisions of the Perishable Agricultural Commodities Act of 1930 ("PACA"), 7 U.S.C. §§ 499a-499t. Plaintiff, Taylor & Fulton Packing, LLC ("Taylor & Fulton" or "plaintiff"), is a produce wholesaler that sold fresh tomatoes to defendant, Marco International Foods, LLC ("Marco"), a corporation also engaged in the wholesale produce business. Taylor & Fulton moves for summary judgment against Marco and Steven J. Posa, Jr. ("Posa"), the Managing Member of Marco (collectively, "defendants"), contending that under PACA and New York state law, both defendants are liable for non-payment on produce Taylor & Fulton delivered to Marco. Plaintiff seeks to enforce its PACA trust rights and recover $125,818.44 plus additional interest, pursuant to 7 U.S.C. § 499a. Plaintiff also brings claims for (1) failure to account and pay promptly pursuant to 7 U.S.C. § 499b(4); (2) breach of Posa's fiduciary duty to PACA trust beneficiaries; and (3) state law breach of contract by Marco. Defendants have counterclaimed for losses they allegedly suffered due to the poor quality of the tomatoes. For the reasons set forth below, plaintiff's motion is GRANTED.

BACKGROUND

Unless otherwise noted, the following facts are not in dispute. Taylor & Fulton is a corporation with offices in Florida, licensed under PACA and in the business of selling wholesale quantities of perishable agricultural commodities. Compl. ¶¶ 1-2. Marco is also a corporation licensed under PACA and operates in New York as a broker in wholesale quantities of produce. Plaintiff's Rule 56.1 Statement of Material Facts ("Pl.'s R. 56.1") ¶¶ 1-2; Transcript of Order to Show Cause Hearing held July 2, 2009 ("Trans.") 16, 46. Posa is the Managing Member of Marco. Trans. 46. Plaintiff alleges that, as a result of his position, Posa was a "principal," able to control the company and any PACA trust assets. Compl. ¶¶ 2(b), 32; Pl.'s R. 56.1 ¶¶ 13-16.

Between January 7, 2009 and February 19, 2009, Taylor & Fulton sold ten shipments of Florida tomatoes to defendants with an aggregate value of $118,748.00. Compl. ¶¶ 8-11 & Ex. A; Trans. 4; Pl.'s R. 56.1 ¶¶ 3, 10. Plaintiff sent and defendants received an invoice for each load of tomatoes, invoices that included the following language:

The perishable agricultural commodities listed on this Invoice are sold subject to the statutory trust authorized by section 5c 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 of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.

Pl.'s R. 56.1 ¶ 8; Declaration of Ed Angrisani dated June 18, 2009 ("First Angrisani Decl.") ¶ 8 & Ex. A. Defendants did not make payment on any of these shipments. Pl.'s R. 56.1 ¶¶ 11-12; Trans. 11-12.

On July 2, 2009, this Court conducted a hearing on plaintiff's motion for a preliminary injunction. At that hearing, defendant Posa testified under oath that due to frosts in Florida, the tomatoes were "sub-standard and either had to be dumped or had to be sold at greatly reduced prices." Trans. 5, 45-57. He further testified that he made complaints by telephone to Taylor & Fulton regarding the poor quality of the tomatoes and sought to re-negotiate the price, after sale. Trans. 6, 8, 15-16. He alleges that an employee of Fulton & Taylor, Ed Angrisani, agreed to reduce the bills but that these adjustments were never made. Trans. 54-55. Plaintiff denies such conversations took place. Declaration of Ed R. Angrisani dated July 1, 2009 ("Second Angrisani Decl.") ¶¶ 10-12, 15-17. Based on these contentions, defendants seek $150,000.00 in damages. Ans. & Countercl. ¶¶ 46-48.

On July 9, 2009, this Court granted a preliminary injunction, enjoining defendants from dissipating their existing PACA trust assets or disposing of corporate assets until payment of $126,387.71 plus further interest to the plaintiff or this Court.

JURISDICTION

This Court has original jurisdiction over plaintiff's PACA claim, a claim arising under federal law. 28 U.S.C. § 1331; 7 U.S.C. § 499(e)(5) ("The several district courts of the United States are vested with jurisdiction specifically to entertain . . . actions by [PACA] trust beneficiaries to enforce payment from the trust."). The Court has supplemental jurisdiction over plaintiff's state law breach of contract claim.*fn1 Federal courts have supplemental jurisdiction over "all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). A state law claim forms part of the same controversy if the state and federal claim "derive from a common nucleus of operative fact." United Mine Workers v. Gibbs, 383 U.S. 715, 725 (1966). Here, both the federal and state claims are derived from the same alleged delivery and nonpayment of ten shipments of tomatoes.

DISCUSSION

I.Summary Judgment

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed R. Civ. P. 56(a). As an initial matter, the moving party has the burden of demonstrating that no genuine dispute of material fact exists for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or ...


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