The opinion of the court was delivered by: Hon. Oliver W. Wanger U.S. District Court Judge
STIPULATED ORDER GRANTING PLAINTIFFS' SECOND AMENDED MOTION FOR A PRELIMINARY INJUNCTION ORDER, ESTABLISHING A PACA CLAIMS PROCEDURE, AND APPOINTING TERENCE J. LONG AS PACA TRUSTEE
Before this Court is Plaintiffs' Second Amended Motion for a Preliminary Injunction Order, Establishing a PACA Claims Procedure, and Appointing Terence J. Long as PACA Trustee, 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.*fn1 The parties have stipulated as follows:
A. On May 22, 2009, Onions Etc., Inc. and Duda Farm Fresh Foods, Inc. (the "Meuers Law Firm Group") commenced the instant action against defendants Z&S Fresh, Inc. fdba Z&S Distributing Co., Inc. ("Z&S Fresh"), Martin Zaninovich, Loren Schoenburg, and Marge Schoenburg (collectively the "Individual Defendants") ("Z&S Fresh" and the "Individual Defendants" hereinafter collectively the "Defendants") to enforce the trust provision of Section 5 (c) of the Perishable Agricultural Commodities Act, 7 U.S.C. 499e(c)("PACA").
B. The trust provisions of PACA establish a statutory, nonsegregated trust under which the Individual Defendants and Z&S Fresh are required to hold all trust assets including inventory, proceeds, and accounts receivable in trust for qualified beneficiaries until full payment is made.*fn2
C. On June 3, 2009 the Honorable Oliver W. Wanger, of the United States District Court, Eastern District of California, entered a Temporary Restraining Order against the Defendants in the above-captioned civil action.
D. This Court scheduled a hearing on Meuers Law Firm Group's Motion for entry of a Preliminary Injunction, and ordered the Meuers Law Firm Group to serve the Temporary Restraining Order, the Motion for Temporary Restraining Order and associated filings, along with the Motion for Preliminary Injunction on all Defendants. The Meuers Law Firm Group has served Defendants Z&S Fresh and the Individual Defendants, in compliance with ¶6 of the Temporary Restraining Order.
E. On May 11, 2009, prior to the filing of the complaint in the instant case, PACA trust claimant Southern Specialties, Inc. commenced an action to enforce its PACA trust rights against Z&S Fresh and its Individual Defendants, which action is now pending before this Court, Case 1:09-cv-00832-OWW-GSA.
F. Additional PACA trust claimants have retained counsel for Southern Specialties, Inc., including Fresco Produce, Inc.; Pandol Bros., Inc.; Booth Ranches, LLC; Golden Star Citrus, Inc.; Chamberlain Distributing, Inc.; J-C Distributing, Inc.; Epicure Trading, Inc.; Sundale Sales, Inc.; Seald Sweet, LLC; Richard Cottrell Marketing Inc.; Big Chuy Distributors & Sons, Inc.; Kirschenman Enterprises Sales; Divine Flavor, LLC; CH Distributing, LLC; Wilson Produce, LLC; R & C Berndt, Inc.; Meyer, LLC; Pro Citrus Network, Inc.; Gemco, Inc.; King Fresh Produce, LLC; Premium Produce Dist, Inc.; Mikaelian Farms; Cal Fresco, LLP; and Sunriver Sales (the "Rynn & Janowsky Group"). The Rynn & Janowsky Group will file a Complaint in Intervention after entry of this Order.
G. On June 9, 2009, subsequent to the filing of Plaintiff's complaint, PACA trust claimant Frank A. Logoluso Farms ("Logoluso") together with Onions Etc. Group and Defendants filed a stipulation and order for intervention for the purpose of filing a complaint in intervention ("Logoluso's Complaint") under Case No. 1:09-cv-00906-OWW-SMS, to enforce Logoluso's PACA trust rights against the Defendants. On June 10, 2009, the Court executed the Order permitting Logoluso to file a Complaint in Intervention, and the Complaint in Intervention was filed on June 10, 2009.
H. On June 10, 2009, the Meuers Law Firm Group filed an Amended Motion for Issuance of Preliminary Injunction, to Consolidate and for Entry of PACA Claims Procedure Order seeking to add a PACA claims procedure to the Preliminary Injunction (the "Amended Motion").*fn3
I. On June 18, 2009, Del Monte Fresh Produce N.A and C.H. Robinson Company (collectively the "Del Monte Group") sought leave to intervene in this case.*fn4
J. On June 22, 2009 this Court held a hearing on the Meuers Law Firm Group's original Motion for Preliminary Injunction and found that a Preliminary Injunctions should be issued without consideration of the PACA claims procedure sought in the Amended Motion and set the matter for an additional hearing on June 24, 2009 at 1:30 p.m.
K. On June 23, 2009, the Meuers Law Firm Group filed a Second Amended Motion for a Preliminary Injunction Order, Establishing a PACA Claims Procedure and Appointing Terence J. Long as PACA Trustee (the "Second Amended Motion").
II. LEGAL AND FACTUAL FINDINGS
L. According to the pleadings, the Declarations, and the supporting documents, Z&S Fresh has purchased, or received from growers, including Logoluso, the Meuers Law Firm Group, the Rynn & Janowsky Group, the Del Monte Group and other nonparties, perishable agricultural commodities in foreign and interstate commerce who qualify as PACA trust beneficiaries (collectively "PACA Claimants"), and that Z&S Fresh has failed to pay the PACA Claimants for the perishable agricultural commodities in violation of PACA, 7 U.S.C. §499e(c).
M. Z&S Fresh has dissipated the PACA trust assets by failing to maintain sufficient "freely available" assets to satisfy the PACA trust claims of the PACA Claimants.
N. Logoluso and the Meuers Law Firm Group 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.
O. This Preliminary Injunction Order causes no damage to Defendants as it merely requires them to meet their obligations set forth in the PACA statute.
P. This Preliminary Injunction Order does not finally adjudicate the amounts owed to Logoluso and the Meuers Law Firm Group or whether either gave proper notice of intent to preserve trust benefits.
Q. The issuance of this Preliminary Injunction Order will not adversely affect the public interest.
R. 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.
S. Plaintiffs' Complaint and any amended complaint filed by them, Logoluso's Complaint and any amended complaint filed by Logoluso or the Del Monte Group, as well as any Complaint, or amended complaints filed by the Rynn & Janowsky Group are deemed to satisfy the Complaint in Intervention filing requirement set forth herein.
Accordingly, IT IS STIPULATED:
III. PRELIMINARY INJUNCTION
1. The Plaintiffs' Second Amended Motion for Preliminary Injunction is granted.
2. This Order supersedes and replaces the Temporary Restraining Order entered on June 3, 2009, and extended on June 11 by stipulation of the parties, 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.
3. Z&S Fresh, its agents, employees, officers (including Martin Zaninovich, Loren Schoenburg, and Marge Schoenburg), 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 ¶4.
4. Under §499e(c)(2) of PACA, Z&S Fresh's PACA trust assets include, without limitation, inventory of perishable agricultural commodities ("Produce"), inventory of food or products derived from Produce ("Products"), accounts receivable or proceeds of the sale of Produce or Products ("Proceeds"), and assets commingled with, purchased with or otherwise acquired with Proceeds, unless a party, Bank of the West ("Bank") or Defendants can prove to this Court that a particular asset is not derived from perishable agricultural commodities. Assets subject to the PACA trust are hereinafter referred to as "PACA Trust Assets." This Order does not impair the right of any party to assert that Z&S Fresh'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, or the right of the Defendants to assert that any asset is not a PACA Trust Asset ("Non PACA Trust Assets").
5. The PACA Trust Assets subject to Plaintiffs' claims and in the possession of Z&S Fresh 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.
IV. APPOINTMENT OF TRUSTEE
6. Terence J. Long ("Trustee") is hereby appointed as Trustee of the PACA Trust that is the subject of this action. Trustee shall post a bond in the amount of $50,000.00 and shall perform the duties set forth in this Order or in any further order of this Court.
7. The Trustee will be directed by a committee composed of those parties identified in this paragraph who represent the majority of the PACA Claimants (the "PACA Beneficiary Committee" or "PBC"). Trustee shall from time to time consult with PBC to secure instructions from the PBC and to obtain the approval of the PBC as required herein. Instructions from PBC or approval shall have the same form and effect as if such instructions or approval were ordered by the Court. The PBC shall be composed of five ...