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Kingsburg Apple Packers, Inc. v. Ballantine Produce Co.

June 17, 2009

KINGSBURG APPLE PACKERS, INC. D/B/A KINGSBURG ORCHARDS, ET AL., PLAINTIFFS,
v.
BALLANTINE PRODUCE CO., INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge

CONSENT INJUNCTION AND ORDER ESTABLISHING PACA CLAIMS PROCEDURE AND VACATING JUNE 22,2009 PRELIMINARY INJUNCTION HEARING

Before this Court is Plaintiffs, Kingsburg Apple Packers, Inc. d/b/a Kingsburg Orchards and David Del Curto S.A., Motion for Preliminary Injunction, seeking to enjoin Defendants' dissipation of PACA trust assets and to establish certain procedures for the management of the assets subject to the trust provisions of the Perishable Agricultural Commodities Act, 1930 (PACA).*fn1 No objections were filed by Defendants, Ballantine Produce Co., Inc. ("Ballantine"), Virgil E. Rasmussen, David S. Albertson, Eric Albertson, and Jerry DiBuduo to the relief requested by Kingsburg Orchards. The consent order is signed by all parties. Accordingly, the Court finds:

I. PROCEDURAL HISTORY

A. On May 21, 2009, Kingsburg Orchards and Del Curto commenced the above-entitled action against the corporate Defendant, Ballantine, and the Individual Defendants, Virgil E. Rasmussen, David S. Albertson, Eric Albertson, and Jerry DiBuduo, seeking to enforce payment from the statutory trust imposed by the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C. §499e(c)(2) (PACA).*fn2 As part of this action, Kingsburg Orchards and Del Curto sought injunctive relief against Defendants to enjoin and restrain them from violating the provisions of PACA and from dissipating assets subject to the PACA Trust.*fn3

B. On or about May 22, 2009, this Court granted Kingsburg Orchards and Del Curto's Motion, and issued a Temporary Restraining Order*fn4, enjoining Ballantine, its agents, officers (including the Individual Defendants), subsidiaries, assigns, and others acting in concert or participation with them from dissipating, paying, transferring, assigning or selling PACA trust assets.*fn5

C. This Court scheduled a hearing on Kingsburg Orchards' Motion for entry of a Preliminary Injunction, and ordered Kingsburg Orchards to serve the Order, the Motion for Temporary Restraining Order and associated filings, along with the Motion for Preliminary Injunction on all Defendants. Kingsburg Orchards has served Defendants in compliance with ¶6 of the Order.

D. Defendants did not file a response to the Motion for Preliminary Injunction by the June 1, 2009 deadline.

E. According to the pleadings, the Declarations, and the supporting documents (1) Ballantine purchased $1,004,026.07 in perishable agricultural commodities in foreign and interstate commerce from Kingsburg Orchards and Del Curto, (2) both Kingsburg Orchards and Del Curto provided Ballantine proper notice of intent to preserve trust benefits, and (3) Ballantine failed to pay Plaintiffs for the perishable agricultural commodities in violation of PACA, 7 U.S.C. §499e(c).

F. Plaintiffs allege Defendants have dissipated the PACA trust by failing to maintain sufficient "freely available" assets to satisfy the $1,004,026.07 PACA trust claim of Kingsburg Orchards and Del Curto.

G. Kingsburg Orchards and Del Curto have established that there is sufficient evidence of dissipation of assets subject to the PACA trust to warrant the relief granted in this order and the issuance of a Preliminary Injunction Order.

H. This Preliminary Injunction Order causes no damage to Defendants as it merely requires them to meet their obligations set forth in the PACA statute.

I. This Preliminary Injunction Order does not finally adjudicate the amounts owed to Plaintiffs or whether Plaintiffs gave proper notice of intent to preserve trust benefits.

J. The issuance of this injunction will not adversely affect the public interest.

K. This Order is necessary to facilitate the recovery of the PACA trust assets, prevent loss or diversion of such assets, minimize administrative costs, determine amount of valid claims to the assets, distribute the PACA trust assets pro-rata to qualified PACA trust beneficiaries, and to minimize further litigation.

II. RECEIVERSHIP

M. Pursuant to that Amended and Restated Credit and Security Agreement dated as of April 30, 2008 ("Credit Agreement"), executed by Ballantine and Bank of the West ("Bank"), Bank agreed to make loans to Ballantine.

N. Bank's loans to Ballantine are secured by valid and perfected security interests in virtually all of the Ballantine's personal property, including without limitation, all crops and farm products of Ballantine.

O. On May 22, 2009, Bank commenced Civil Action No. 09 CECG 01818 DSB pending in the Superior Court of California County of Fresno-Central Division ("Civil Action") against Ballantine, Redwood Farms, Inc., BabiJuice Corporation of California, David Albertson, and Vonda M. Taussig, Trustee of the Sierra Investment Trust dated December 5, 2005.

P. On May 25, 2009, there was entered in the Civil Action that Order on Plaintiff's Ex Parte Application for Appointment of a Receiver and Temporary Restraining Order and Order to Show Cause ("Receivership Order").

Q. Pursuant to the Receivership Order, Steve Franson ("Receiver") was appointed to take possession of certain real property collateral and all of the personal property collateral of Ballantine which secures Bank's loans to Ballantine, including without limitation, all currently growing crops and farm products ("Crops").

R. Plaintiffs and Bank agree that funds have to be expended by the Receiver to cultivate, maintain, care for, preserve, and harvest the Crops and collect and account for the proceeds thereof.

S. Bank is willing to advance funds to the Receiver for the purpose of cultivating, maintaining, preserving, caring for and harvesting the Crops and collecting and accounting for the proceeds thereof, only if Bank's right to the repayment of those funds is senior to any rights of Plaintiffs or any other holder of a PACA trust claim against Ballantine (collectively, "PACA Claimants") with respect to the Crops and the proceeds thereof.

III. PRELIMINARY INJUNCTION

1. Kingsburg Orchards and Del Curto's Motion is granted. This Order supersedes and replaces the original TRO entered on May 22, 2009 and extended on June 8, 2009, and is binding upon the parties to this action, their officers, agents, employees, banks, or attorneys and all other persons or entities who receive actual notice of the entry of this Order.

2. Ballantine, its agents, employees, officers (including Virgil E. Rasmussen, David S. Albertson, Eric Albertson, and Jerry DiBuduo), subsidiaries, assigns, financial and banking institutions, and others acting in concert or participation with them who receive actual notice of this Order are restrained and enjoined from dissipating, paying, transferring, assigning or selling assets covered by or subject to the trust provisions of the PACA as defined in ¶3.

3. Under §499e(c)(2) of PACA, Ballantine's PACA trust assets include, without limitation, inventory of perishable agricultural commodities ("Produce"), inventory of food or products derived from Produce, accounts receivable or proceeds from the sale of such commodities or products, cash, and other produce related assets commingled with proceeds of such commodities or products ("PACA Trust Assets"). The Plaintiffs reserve the right to assert that the Ballantine's other assets, including without limitation, furniture, fixtures, equipment, vehicles, leases, real property, and leasehold improvements should be considered or deemed to be included within the definition of PACA Trust Assets and the Receiver, Bank or Defendants reserve the right to assert any asset is not a PACA Trust Asset.

4. The PACA Trust Assets do not include the current or any future crop that is cultivated, maintained, preserved, cared for and harvested by the Receiver, and the proceeds from the sale of the Crops except as further discussed below.

5. The PACA Trust Assets subject to Plaintiffs' claims and in the possession of Ballantine as described in this Order, and 7 C.F.R. §46.46 as interpreted by applicable case law, serve as Plaintiffs security for this injunction as required by Rule 65(c) of the Federal Rules of Civil Procedure.

6. Pursuant to the parties' consent order, the Preliminary Injunction Hearing set for June 22, ...


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