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Full Circle Sales, Inc., A Montana Corporation; Growers v. Organic Alliance

November 28, 2012

FULL CIRCLE SALES, INC., A MONTANA CORPORATION; GROWERS EXPRESS, LLC, A LIMITED LIABILITY COMPANY; STEINBECK COUNTRY PRODUCE, INC., A CORPORATION; STEVE W. ALMQUIST D/B/A STEVE ALMQUIST SALES AND BROKERAGE; DANIEL ANDREWS D/B/A DAN ANDREWS FARMS, A SOLE PROPRIETORSHIP; FRESH NETWORK, LLC, A LIMITED LIABILITY COMPANY; QUEBEC DISTRIBUTING CO., INC., A CORPORATION,
PLAINTIFFS,
v.
ORGANIC ALLIANCE, INC., A NEVADA CORPORATION,
DEFENDANT.



The opinion of the court was delivered by: Lucy H. Koh United States District Judge

For the Northern District of California

AMENDED ORDER GRANTING MOTION TO DISMISS

Plaintiffs Full Circle Sales, Inc. ("FCS"), Growers Express, LLC ("Growers"), Steinbeck Country Produce, Inc. ("Steinbeck"), Steve W. Almquist d/b/a Steve Almquist Sales and Brokerage 25 ("Almquist"), Daniel Andrews d/b/a/ Dan Andrews Farms ("Andrews"), Fresh Network, LLC 26 ("Fresh"), and Quebec Distributing Co., Inc. ("Quebec") (referred to collectively as "Plaintiffs") 27 bring this action against Organic Alliance, Inc. ("Defendant" or "Organic") alleging: (1) breach of contract; (2) violation of Section 2 of the Perishable Agricultural Commodities Act ("PACA"), 7 2 U.S.C. § 499b; and (3) unjust enrichment. Pursuant to Civil Local Rule 7-1(b), the Court finds this 3 matter appropriate for determination without oral argument. Accordingly, the hearing and case 4 management conference set for November 1, 2012, are VACATED. Having considered the 5 submissions of the parties and the relevant law, the Court hereby GRANTS Defendant's Motion to 6 Dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. 7

I.BACKGROUND

A.Factual Allegations

Plaintiffs allege that, between October 13, 2009, and March 24, 2010, Plaintiffs sold and 10 shipped perishable agricultural commodities to Defendants pursuant to a series of commercial produce agreements. First Am. Compl. ("FAC") ¶ 13, ECF No. 14. Defendant failed to pay the amounts due under those agreements. See Mot. to Dismiss Pls.' FAC ("Mot.") at 2, ECF No. 48. 13

Consequently, on or about April 15, 2010, Plaintiffs jointly filed a complaint in United States 14 District Court for the Northern District of California, San Jose Division, Case Number 10-CV-15 01615 (the "Settled Action"). Id. The parties then resolved the Settled Action through a series of 16 settlement agreements ("Settlement Agreements") entered into in September 2010 (initial 17 settlement agreement), November 2010 (first and second amendments to the Settlement 18 Agreements), and January 2011 (third amendment to the settlement agreements). See FAC ¶¶ 14-19 33; Opp'n to Mot. to Dismiss Pls.' FAC ("Opp'n") at 2, ECF No. 51. The parties agreed to dismiss 20 the Settled Action in exchange for Defendant making payments on the outstanding balances. See 21 Decl. Anne Frassetto Olsen Supp. Df.'s Mot. to Dismiss ("Olsen Decl.), ECF No. 49, Ex. B. The 22 Court dismissed the Settled Action with prejudice on February 7, 2011. Id. at Ex. C. Defendant 23 then defaulted on the Settlement Agreements. FAC ¶ 35. 24

B.Procedural History

In an effort to enforce their rights under the Settlement Agreements, Plaintiffs commenced 26 this action on July 12, 2011. ECF No. 1. On or about August 8, 2011, Defendant filed a Motion to 27 Dismiss the Complaint based on lack of subject matter jurisdiction. ECF No. 7. The Plaintiffs then amended their Complaint by adding one paragraph which alleges that: "Defendant . . . made false 2 and misleading statements in connection with the settlement agreements . . . in violation of Section 3 2 of PACA (7 U.S.C. 499b)." FAC ¶ 40. On September 9, 2011, Defendant filed a Motion to 4 Dismiss the First Amendment Complaint, again based on lack of subject matter jurisdiction. ECF 5 No. 15. The parties then submitted a joint stipulation to continue the initial case management 6 conference and hearing on Defendant's Motion to Dismiss the First Amended Complaint, which 7 the Court granted based on the parties' represented expectation of a global settlement that would 8 result in resolution of the matter and dismissal of the action in its entirety. See ECF Nos. 20, 21. 9

Thereafter, Plaintiffs filed an opposition to the Motion to Dismiss on October 21, 2011, ECF No. 10 22, to which Defendant filed a reply, ECF No. 23.

This case was reassigned to the undersigned judge on December 19, 2011. See ECF No. 33. On March 2, 2012, and June 13, 2012, the parties filed additional requests for continuances, 13 again representing to this Court that the parties expected to be able to reach a global settlement that 14 would result in resolution of the matter and dismissal of the action in its entirety. See ECF Nos. 15 36, 40. On June 26, 2012, the parties filed a Joint Stipulation for Defendant's Withdrawal of the 16 Motion to Dismiss with a tolling agreement. ECF No. 46. On June 28, 2012, Defendant re-filed its 17 Motion to Dismiss Plaintiffs' First Amended Complaint for Lack of Subject Matter Jurisdiction. 18

See ECF No. 48. Plaintiffs filed an opposition to the motion on July 12, 2012. ECF No. 51. 19

II.LEGAL ...


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