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California Splendor, Inc. v. V.J. Catalano, Inc.

United States District Court, S.D. California

April 25, 2014

CALIFORNIA SPLENDOR, INC. a corporation, Plaintiff, V.J. CATALANO, INC. d/b/a IMPERIAL SALES COMPANY, a corporation, Defendant.

ORDER DENYING PLAINTIFF'S EX PARTE APPLICATION FOR RIGHT TO ATTACH ORDER AND WRIT OF ATTACHMENT [Dkt. No. 3.]

GONZALO P. CURIEL, District Judge.

On April 15, 2014, Plaintiff California Splendor, Inc. filed a complaint and an ex parte application for right to attach order and writ of attachment, or in the alternative, for temporary protective order against V.J. Catalano, Inc. d/b/a/Imperial Sales Company. (Dkt. Nos. 1, 3.) Based on the docket, Plaintiff has not served Defendant with the Complaint and has not filed a certificate of service as to the Application for Writ of Attachment.[1] No opposition has been filed. Based on the reasoning below, the Court DENIES Plaintiff's ex parte application for right to attach order and writ of attachment, and in the alternative, temporary protective order.

Background

This action arises pursuant to the Perishable Agricultural Commodities Act ("PACA") arising out of Defendant's failure to pay the agreed price for shipment of strawberries. According to the Complaint, on or about February 23, 2013, at the America Frozen Food Institute convention in Anaheim, California, Isabelle Chalepas, Cal Splendor's Vice-President of Operations, met with Nick Pengelly, head of Business Development for Imperial Sales, and began negotiations regarding the sale of strawberries in connection with a USDA contract. Shortly thereafter, the parties entered into an oral agreement, (Dkt. No. 3-3, Vano Decl. ¶ 6), whereby Cal Splendor would be the supplier, processor, and packer of strawberries and Imperial would act as the Vendor/Broker if Imperial was awarded a contract with the USDA. Cal Splendor and Imperial worked together to prepare a bid and submitted a bid for the USDA contract on April 5, 2013. On April 25, 2013, Imperial was awarded a contract with the USDA to supply strawberries for a school lunch program. The bid was submitted by Imperial because Imperial had a prior relationship with the USDA.

Imperial was to invoice the USDA and receive payment from the USDA, then remit the payment, minus their broker fee, to Cal Splendor. In June of 2013, Cal Splendor began shipping strawberries to locations specified by the USDA, including Oklahoma, Texas, and New York. Shortly after deliveries began, Cal Splendor encountered an issue with the color of some of the strawberries. The USDA found that certain batches of strawberries had discoloration but were otherwise acceptable. Working together, Nick Pengelly and Isabelle Chalepas drafted and submitted a waiver request to the USDA for the loads of strawberries facing this issue. The USDA agreed to grant the waiver requests in exchange for a 5% discount off the price of the loads. Cal Splendor and Imperial made a deal that Cal Splendor would pay 4% of the discount and Imperial would pay 1%. The 5% discount to the USDA as well as the 1% off of Imperial's brokerage fee is reflected on all the affected invoices.

In November of 2013, Cal Splendor noticed that Imperial had fallen behind on some of its payments. Defendant was apologetic and provided different reasons why it was unable to timely pay the amounts due. (Dkt. No. 3-2, Smith Decl. ¶ 19; Dkt. No. 3-4, Chelapas Decl. ¶¶ 11-16.) Numerous attempts were made to inquire and demand payment. While Imperial made some subsequent payments, it has not fully paid the amounts due. Defendant even created a payment plan provided to Plaintiff on March 6, 2014. (Dkt. No. 3-2, Smith Decl. ¶ 24, Ex. 8.) Plaintiff alleges that Defendant is indebted in the amount of $315, 918.61 for the sale of strawberries grown and shipped by Plaintiff.

In the Complaint, Plaintiff alleges causes of actions for breach of contract; enforcement of Statutory Trust Provision of PACA, 7 U.S.C. § 499e(4); violation of Perishable Agricultural Commodities Act-failure to account and pay promptly; conversion and unlawful retention of PACA Trust Funds; unjust enrichment; declaratory relief; attorneys' fees and costs; and finance charges and/or interest on the unpaid balance owed. (Dkt. No. 1.)

A. Civil Local Rule 83.3(h)

Under the Local Civil Rule,

A motion for an order must not be made ex parte unless it appears by affidavit or declaration (1) that within a reasonable time before the motion the party informed the opposing party or the opposing party's attorney when and where the motion would be made...."

Local Civ. R. 83.3(h).

Here, the Court questions whether Plaintiff has complied with Local Civil Rule 83.3(h) requiring Plaintiff to notify the "opposing party or the opposing party's attorney." Id.

The declaration of Ryan Maughan, attorney for Plaintiff, states that he has been in communication with Kate Ellis, attorney for Imperial and provided her telephone number. (Dkt. No. 3-5, Maughan Decl. ¶ 4.) On February 14, 2014, Maughan called Kate Ellis and informed her that Plaintiff would be filing an ex parte application for writ of attachment the next day. (Id. ¶ 5.) He indicates that he sent Ellis a courtesy copy of the pleading on the morning of April 15, 2014. (Id.) When the Court contacted Ms. Ellis to determine if Defendant intended to file an opposition, she indicated that she was not the attorney for Imperial for purposes of this litigation but would inform Plaintiff of the application. Defendant was not directly served with any of these documents. The Court ...


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