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Alan Weeks, An Individual Doing Business As K&W Sales; and v. Fresh-Pic Produce Company

May 17, 2012

ALAN WEEKS, AN INDIVIDUAL DOING BUSINESS AS K&W SALES; AND
KING FRESH PRODUCE, LLC,
PLAINTIFFS,
v.
FRESH-PIC PRODUCE COMPANY, INC., A CALIFORNIA CORPORATION; FRANK AVILA, AN INDIVIDUAL; KARINA SAUCEDO, AN INDIVIDUAL; FRESH CUT PRODUCE COMPANY, A CORPORATION; ROBERTO SALINAS, AN INDIVIDUAL; MICHAEL A. ALMANZA, INDIVIDUAL AND DOING BUSINESS AS PURA VIDA, DEFENDANTS.



The opinion of the court was delivered by: Barry Ted Moskowitz, Chief Judge United States District Court

ORDER RE MOTION FOR RECONSIDERATION

On July 25, 2011, the Court entered an order (1) denying Plaintiffs' motion for summary judgment against Defendants Fresh-Pic Produce Company ("Fresh-Pic"), Frank Avila, Karina Saucedo, and Michael A. Almanza (individually and doing business as Pura Vida); and (2) denying Plaintiffs' motion for default judgment against Defendants Fresh Cut Produce Company ("Fresh Cut") and Roberto Salinas. On August 22, 2011, Plaintiffs timely filed a motion for reconsideration of the July 25, 2011 order. See S.D. Cal. Civ. L.R. 7.1(i)(2). For the reasons set forth herein, the Court GRANTS IN PART and DENIES IN PART Plaintiff's motion for reconsideration.

Local Rule 7.1 provides that "[w]henever any motion or any application or petition for any order or other relief has been made to any judge and has been refused in whole or in part," a party may bring a motion or application for reconsideration based on a showing of "new or different facts and circumstances [that] are claimed to exist which did not exist, or were not shown, upon such prior application." S.D. Cal. Civ. L.R. 7.1(i)(1).

The Court presumes the parties' familiarity with the facts.

I. Motion for Summary Judgment

In their original motion for summary judgment, Plaintiffs claimed that Defendants Fresh-Pic, Frank Avila, Karina Saucedo, and Michael A. Almanza (individually and doing business as Pura Vida) (collectively, the "SJ Defendants") failed and refused to pay Plaintiffs for perishable agricultural commodities received by the SJ Defendants in 2008. Plaintiffs also claimed that the entire amounts owed are protected by the statutory trust provisions of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499a et seq.

In the July 25, 2011 order, the Court explained that a PACA claimant must establish five elements to recover for unpaid accounts under the PACA statutory trust provisions: (1) the produce in question are "perishable agricultural commodities"; (2) the produce were received by a commission merchant, dealer, or broker; (3) the transaction occurred in contemplation of interstate or foreign commerce; (4) the purchaser failed to pay fully and promptly; and (5) the seller preserved its trust rights by including statutory language referencing the trust on its invoices. (Dkt. No. 68 at 5 (citing C & G Farms, Inc. v. Capstone Bus. Credit, LLC, No. CV F 09-0032, 2011 WL 677487, at *5-8 (E.D. Cal. Feb 17, 2011).) The Court concluded in the July 25, 2011 order that Plaintiffs had established each of these elements except that the transactions occurred in contemplation of interstate or foreign commerce. See Order dated July 25, 2011, at 5-6 & n.1 (Dkt. No. 68).

Under PACA, a transaction implicates "interstate or foreign commerce" if commodities transported pursuant to that transaction originate in one state (or foreign country) with the expectation that they will end their transit, after purchase, in another. 7 U.S.C. § 499a(b)(8). This language is deliberately broad, and a PACA plaintiff does not have to prove that the produce actually crossed state lines. C & G Farms, 2011 WL 677487, at *8 (citing In re Southland Keystone, 132 B.R. 632, 640-41 (B.A.P. 9th Cir. Cal. 1991). The court in In re Southland Keystone reasoned that PACA covered all transactions between a debtor and a seller where "the commodities involved are the type typically sold in interstate commerce" and where the seller involved is "the type that congress intended to protect by implementing PACA." 132 B.R. at 641.

In its July 25, 2011 order, the Court denied summary judgment for Plaintiffs on the ground that they "fail[ed] to provide any evidence that Defendants acquired produce from outof-state sources." (Dkt. No. 68 at 6.) In their motion for reconsideration, Plaintiffs have provided evidence that Defendant Fresh-Pic received a July 31, 2008 shipment from Plaintiff King Fresh Produce, LLC ("King Fresh") in Mexico (Dkt. No. 69-1 at 5 of 7),*fn1 and that Defendant Fresh-Pic received shipments from Plaintiff K&W Sales ("K&W") in California that were shipped from Arizona and Pennsylvania (Dkt. No. 69-2). Although Plaintiffs have not introduced any evidence proving that Defendants Fresh Cut and Pura Vida ever "acquired produce from out-of-state sources," Plaintiffs have established that Fresh Cut and Pura Vida were in the same line of business as Defendant Fresh-Pic and that the individual defendants responsible for managing Fresh-Pic were also responsible for managing Fresh Cut. (See Dkt. No. 57, Exs. 6-8.)

Under these circumstances, and in light of the broad standard for defining interstate transactions under PACA, the Court finds that Plaintiffs have established the requisite jurisdictional hook for all relevant transactions involving Defendants Fresh-Pic, Fresh Cut, and Pura Vida. The Court therefore reverses its holding that Plaintiffs are not entitled to summary judgment on their PACA claims against Defendants Fresh-Pic, Frank Avila, Karina Saucedo, and Michael A. Almanza (individually and doing business as Pura Vida), and holds that Plaintiffs have established the elements of their damages claim under PACA. See 7 U.S.C. §§ 499b and 499e(c)(1)-(4); Order dated July 25, 2011, at 5-6 & n.1 (Dkt. No. 68).

II. Motion for Default Judgment

In their original motion for a default judgment, Plaintiffs sought entry of a default judgment against Defendants Fresh Cut and Roberto Salinas (collectively, the "Default Defendants") in the amount of $375,683.71, plus attorneys' fees and costs and an award of prejudgment interest. The amount sought is equal to the claims against the SJ Defendants, minus the claim against Defendant Michael A. Almanza (individually and doing business as Pura Vida), and arises out of the same transactions. Presumably, Plaintiffs seek a judgment holding the Default Defendants jointly and severally liable with the SJ Defendants on the overlapping claims (as opposed to a double recovery).

In its July 25, 2011 order, the Court did not reach the merits of Plaintiffs' motion for a default judgment, because Plaintiffs had failed to establish that Defendant Fresh Cut was properly served. (Dkt. No. 68 at 8.) In their motion for reconsideration, Plaintiffs have overcome this defect.

Exhibit 1 to the Declaration of Bart M. Botta, filed in support of the motion for reconsideration, is a "Business Entity Detail" for Fresh Cut Produce Company, received from the official website for the California Secretary of State, naming "Robert Salinas" as the "Agent for Service of Process." (Dkt. No. 69, at 6 of 7.) Exhibit 2 is a printout from the U.S. Department of Agriculture's official website naming Roberto Salinas as the "Reported Principal" for Fresh Cut Produce Company. (Id. at 7 of 7.) Notwithstanding the fact that the Business Entity Detail (Ex. 1) uses the name "Robert" (rather than "Roberto"), the Court ...


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