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Los Angeles G.W. Palmer & Co., Inc., et al. v. Prime Tropical

April 30, 2013


The opinion of the court was delivered by: Honorable Manuel L. Real United States District Judge



UPON CONSIDERATION of the Motion for Entry of Default Judgment as to Prime Tropical, Inc. and Permanent Injunction ("Motion") filed by Plaintiff G.W. PALMER & CO., INC. and Intervening Plaintiffs FRANK GIOIA d/b/a STATE PRODUCE, WEST COAST PRODUCE & SPECIALTIES, INC., SUNLINE INTERNATIONAL, LLC, and CARDILE BROS. MUSHROOM PACKAGING, INC. (collectively referred to herein as "Palmer Plaintiffs"), and any opposition thereto, the Court hereby

GRANTS Palmer Plaintiffs' Motion; and further finds as follows:


The standard for granting injunctive relief in the Ninth Circuit requires the moving party to show: (1) there is a likelihood that Plaintiff will be successful on the merits of their claims; (2) there is a likelihood of irreparable harm to Plaintiff if the injunction does not issue; (3) the balance of the equities favors Plaintiff, and (4) the public interest would be furthered by the granting of an injunction. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 129 S. Ct. 365, 374, 172 L. Ed. 2d 249 (2008); Enyart v. Nat'l Conf. of Bar Examiners, Inc., 630 F.3d 1153 (9th Cir. 2011); Alliance for the Wild Rockies v. Cottrell, 622 F.3d 1045 (9th Cir. 2010). The Palmer Plaintiffs' claims for relief meet each of these tests, and accordingly, should be granted in all aspects.


Plaintiff G.W. Palmer & Co., Inc. filed a civil action alleging violations of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499e(c) and other causes of action against Defendants Prime Tropical, Inc. ("Prime Tropical"), Julio Chan, Vincent Ramirez, Jr., Yolanda Ramirez, and Maria Chan. The complaint seeks an order enforcing payment from the produce trust established under the PACA, 7 U.S.C. § 499e(c), and damages.

This Court has subject matter jurisdiction over this action. 7 U.S.C. § 499e(c)(5).

On June 27, 2011, this Court entered the Consent Injunction and Agreed Order for PACA Claims Procedure ("PACA Order") [Doc. 22], the terms of which were stipulated and agreed to by plaintiff G.W. Palmer & Co., Inc. and Defendants [Doc. 20]. The PACA Order set forth a procedural framework to determine the bona fide beneficiaries of the statutory trust arising under the PACA and for the orderly liquidation of Defendant Prime Tropical's assets impressed with the PACA statutory trust. See PACA Order, p. 3. Through the process set forth in the PACA Order, the bona fide beneficiaries of the PACA trust were conclusively determined. See PACA Order ¶¶ 18-33.

PACA impresses a statutory, non-segregated floating trust ("PACA Trust") on all of Prime Tropical's inventories of perishable agricultural commodities ("Produce"), food or products derived from Produce ("Products"), accounts receivable and other proceeds of the sale of Produce or Products, and assets commingled or purchased or otherwise acquired with proceeds of such Produce or Products (assets subject to the PACA Trust are hereinafter referred to as "PACA Trust Assets") for the benefit of qualifying sellers to Prime Tropical. 7 U.S.C. § 499e(c)(5); Tom Lange Co. v. Kornblum & Co (In re Kornblum & Co.), 81 F.3d 280 (2d Cir. 1996); In re Atlantic Tropical Market Corp., 118 B.R. 139, 142-43 (Bankr. S.D. Fla. 1990). A PACA trust exists for the benefit of all of Prime Tropical's unpaid produce suppliers. 7 U.S.C. § 499e(c)(2). Although over $200,000.00 has been collected for the benefit of Prime Tropical's PACA Trust Creditors, the total PACA claims are nearly $1.5 million, resulting in a significant shortfall in the amount due to the PACA trust creditors. Congress has recognized that if a PACA trust is "dissipated, it is almost impossible for a beneficiary to obtain recovery" from the trust. Frio Ice, S.A. v. Sunfruit, Inc., 918 F.2d 154 (11th Cir. 1990) (citing legislative history); Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132 (3d Cir. 2000). Prime Tropical's operations have wound down, but efforts to collect receivables and pursue third party beneficiaries of trust funds are ongoing. Additionally, there are funds on deposit in the Prime Tropical PACA Trust Account in the approximate amount of $67,000 for distribution to bona fide PACA trust creditors in this matter. Maintenance of injunctive relief over these assets is imperative to ensure that they are not dissipated.

Finally, any threatened injury to PACA trust creditors of Defendants outweighs whatever damages the proposed injunction may cause Defendants, and the issuance of the injunction is not contrary to the public interest and will ensure the collection and preservation of trust assets for the benefit of Prime Tropical's PACA trust creditors. 7 U.S.C. § 499e(c)(1).

The Court finds that it is reasonable and necessary to continue the procedural framework for the orderly collection of Prime Tropical's PACA Trust Assets and distribution of such trust assets ...

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