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Sun Pacific Marketing Cooperative, Inc v. Dimare Fresh

September 27, 2012



I. History

Both Appellant Sun Pacific Marketing Cooperative, Inc. ("Sun Pacific") and Appellee DiMare Fresh, Inc. ("DiMare") are companies engaged in buying and selling wholesale quantities of produce. DiMare agreed to buy from Sun Pacific a set quantity of various types of tomatoes at set prices every week from July 17, 2006 through October 31, 2006 ("Contract"). The Contract specified that "In the event of a product shortage caused by an Act of God, Natural disaster or other incident that could not be foreseen and is beyond the control of Sun Pacific, then performance under this contract shall be excused." That summer, the San Joaquin Valley of California, where Sun Pacific's growing facilities were located, experienced a heat wave that negatively affected tomato crops. Sun Pacific sought to invoke the Act of God clause. DiMare disagreed and insisted upon performance of the Contract. The parties filed suit in Fresno and filed a formal reparation complaint pursuant to PACA provision 7 U.S.C. §499f(a) with the USDA. The parties presented their cases before William Jenson, a Judicial Officer of the USDA, at a hearing in Los Angeles, CA. Judge Jenson concluded there was no product shortage and awarded DiMare $1,136,599 plus interest, fees, and costs.

Sun Pacific appealed the decision to this court. A de novo bench trial was held in accord with PACA procedure. The court issued Findings of Fact and Conclusions of Law ("FOFCOL"), finding that Sun Pacific breached the Contract and was liable to DiMare for damages. Though Sun Pacific asserted that there was a product shortage that excused performance, there was insufficient evidence to support that conclusion. DiMare provided invoice records that show $1,225,362 worth of damages. However, DiMare did not account for purchases made at prices below Contract prices; these savings must be deducted from damages. In the absence of an accounting for these savings, the court cut damages by 20%. The court awarded 2.18% prejudgment interest as requested by DiMare.

Both parties now seek reconsideration of the FOFCOL under Fed. Rules Civ. Proc 52(b) and 59(a)(2). Sun Pacific seeks a finding that a product shortage existed, excusing performance under the contract. Doc. 169. DiMare seeks an interest rate of 10% under California law and a difference calculation of the savings from cover. Doc. 166. Additionally, DiMare seeks attorney's fees and costs. Doc. 167.

II. Legal Standards

Fed. Rule Civ. Proc. 52(b) states "On a party's motion filed no later than 28 days after the entry of judgment, the court may amend its findings - or make additional findings - and may amend the judgment accordingly. The motion may accompany a motion for a new trial under Rule 59." Fed. Rule Civ. Proc. 59(a)(2) states "After a non-jury trial, the court may, on motion for a new trial, open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new ones and direct the entry of a new judgment."

Motions under Fed. Rule Civ. Proc. 52(b) are "designed to correct findings of fact which are central to the ultimate decision; the Rule is not intended to serve as a vehicle for a rehearing." R.C. Fischer and Co. v. Cartwright, 2011 U.S. Dist. LEXIS 139388, *13 (N.D. Cal. Dec. 5, 2011), citing Davis v. Mathews, 450 F. Supp. 308, 318 (E.D. Cal. 1978). Fed. Rule Civ. Proc. 52(b) motions are appropriately granted in order to correct manifest errors of law or fact or to address newly discovered evidence or controlling case law. Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1219-20 (5th Cir. 1986). A motion to amend a court's factual and legal findings is properly denied where the proposed additional facts would not affect the outcome of the case or are immaterial to the court's conclusions. Weyerhaeuser Co. v. Atropos Island, 777 F.2d 1344, 1352 (9th Cir. 1985). "Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law. There may also be other, highly unusual, circumstances warranting reconsideration." School Dist. No. 1J Multnomah County v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993), citations omitted.

III. Discussion

A. Product Shortage

In the FOFCOL, the court defined "a 'product shortage' of a category of tomato when Sun Pacific did not pack enough to fulfill the Contract quantities." Doc. 165, FOFCOL, 11:22-23. Sun Pacific, as the party asserting the product shortage, had the burden of proof. Sun Pacific produced its pack records, which represent "the quantity available to hindsight what was actually packed." Doc. 169, Sun Pacific's Brief, 3:5-6 The court noted that on order sheets which sent back and forth between buyer and seller the week before shipment, Sun Pacific consistently represented that it had more tomatoes to sell (by filling in a pick-up number) than are ultimately reflected in the pack records. In some circumstances, Sun Pacific noted on these order sheets that they would not likely have the quantities requested by putting in a question mark instead of a pick-up number. See, e.g. Joint Exhibit 8. However, for many categories, Sun Pacific represented that they would have sufficient quantities even though the later pack records would seem to show that Sun Pacific fell far short. Based on these discrepancies, the court concluded that the pack records were not sufficiently reliable to show a product shortage in the relevant categories of tomatoes. Doc. 165, FOFCOL, 13:19-21.

Sun Pacific argues that the court misinterpreted the evidence, explaining that the court has a "fundamental misunderstanding of the parties' ordering procedures." Doc. 169, Sun Pacific's Brief, 3:13-14. Sun Pacific asserts "Providing the pick-up numbers simply proved that Sun Pacific placed DiMare's orders in its computer system based upon Sun Paciric's projected production, not that it had the actual inventory. Doc. 169, Sun Pacific's Brief, 4:23-25.

First, the court does not find this argument convincing as Sun Pacific put a question mark instead of a pick-up number when it thought the quantities would be insufficient. Sun Pacific asks that the court believe it often overestimated (sometimes grossly overestimated) its actual production 5-11 days before delivery. Second, in looking over the data again, the court has found serious problems with the pack records. For the week of 8/14-8/20, Sun Pacific's pack records show 5,297 boxes of Medium Round 6x7 #1 grade tomatoes, 640 boxes of Medium Round 6x7 #2 grade tomatoes, and 1,160 boxes of Large Round 6x6 #2 grade tomatoes packed. Plaintiff's Exhibit 29, page 14. Mr. Bates, general manager of Sun Pacific, testified that Defendant's Exhibit B was a spreadsheet that represented what was actually supplied to DiMare in the Contract period. Trial Transcript, 175:16-176:2. Sun Pacific also cites to and relies upon Defendant's Exhibit B in this motion. Doc. 169, Sun Pacific's Brief, 11:22-25. For the week of 8/14-8/20, this record shows 6,000 boxes of Medium Round 6x7 #1 grade tomatoes, 960 boxes of Medium Round 6x7 #2 grade tomatoes, and 1,840 boxes of Large Round 6x6 #2 grade tomatoes were delivered to DiMare. Defendant's Exhibit B, page 1. These quantities delivered are greater than the quantities the pack record shows were available. For the week of 8/21-8/27, the pack records show 911 boxes of Medium Round 6x7 #2 grade tomatoes available while 1,120 boxes were actually delivered to DiMare. Plaintiff's Exhibit 29, page 14; Defendant's Exhibit B, page 1. There is nothing in the record that suggests Sun Pacific obtained tomatoes from outside sources to supply DiMare during this period. These tomatoes which were available (and actually delivered) were not reflected in Sun Pacific's pack record. Yet, Sun Pacific asserts that the pack record includes all of what it had available to ship. In fact, Sun Pacific asserts that the pack record included more tomatoes than the quantity available to ship: "Available to ship is a small subset of the quantity of tomatoes Sun Pacific Packed because it only includes tomatoes that will satisfy the contractual ripeness specifications and are packed by the specified pick-up date." Doc. 175, Sun Pacific's Reply, 3:14-17. Again, the court must find that "there is contradictory evidence that strongly suggests Sun Pacific had more boxes for sale in certain weeks than the number of boxes packed. Sun Pacific does not explain this discrepancy." Doc. 165, FOFCOL, 13:9-11. The pack record appears to be either insufficiently explained or unreliable. Sun Pacific has not provided sufficient evidence to establish a product shortage.

Sun Pacific does point out a mistake in the FOFCOL. The court stated that "The order sheets for 8/21-8/27 and 8/28-9/3 only show what Mr. Licato requested; it does not show Mr. Gilardi's response....The specific details of how Mr. Gilardi and Mr. Licato negotiated these shipments has not been presented. The parties have not provided Mr. Gilardi's response to these weekly order sheets with pick-up numbers filled in." Doc. 165, FOFCOL, 6:10-12. The order sheets are found at Joint Exhibit 2. While that document shows no response for 8/21-8/27, it does show a response (pick-up numbers) for 8/28-9/3. This mistake does not change the substance of the analysis. ...

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