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Martini E Ricci Iamino S.P.A. v. Trinity Fruit Sales Co., Inc.

United States District Court, E.D. California

July 2, 2014

MARTINI E RICCI IAMINO S.P.A. - CONSORTILE SOCIETA AGRICOLA, an Italian Company, Plaintiff
v.
TRINITY FRUIT SALES COMPANY, INC., a California Corporation, and DOES 1-20, Defendant

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[Copyrighted Material Omitted]

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For Martini E Ricci Iamino S.P.A. - Consortile Societa Agricola, an Italian Company, Plaintiff: A. Geoffrey Hutchinson, LEAD ATTORNEY, John R. Campo, Branson Brinkop Griffith and Strong, Redwood City, CA; David L. Strong, Menekshe Law Firm, Campbell, CA.

For Trinity Fruit Sales Company, Inc., a California Corporation, Defendant: Lawrence H. Meuers, LEAD ATTORNEY, Meuers Law Firm, P.L., Naples, FL; Steven E Nurenberg, PHV, PRO HAC VICE, Meuers Law Firm, P.l., Naples, FL.

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ORDER ON MOTIONS FOR SUMMARY JUDGMENT (Doc. Nos. 21, 22)

Anthony W. Ishii, SENIOR DISTRICT JUDGE.

This case stems from the provision of kiwi fruit from Plaintiff Martini E Ricci Iamno S.P.A. (" M& R" ) to Trinity Fruit Sales Company, Inc. (" Trinity" ). The active complaint is the First Amended Complaint (" FAC" ). M& R alleges five causes of action against Trinity in the FAC: (1) breach of contract under the United Nations Convention for the International Sale of Goods (" CISG" ); [1] (2) breach of written contract; (3) price of goods; (4) account stated; and (5) open book account. M& R now moves for summary judgment, and Trinity through its opposition counter moves for summary judgment. For the reasons that follow, M& R's motion will be denied and Trinity's counter motion will be granted in part and denied in part. Additionally, the Court will give the parties the opportunity to file a request for a second summary judgment motion.

FACTUAL BACKGROUND

M& R is an Italian company that grows kiwi fruit on its property in Italy. See PUMF 1.[2] Andrea Martini (" Martini" ) is the Vice President of M& R. PUMF 2. Gary Raden (" Raden" ) and Stefano De Nadai (" De Nadai" ) worked together and were something between an agent and broker for M& R. See Raden Depo. 8:15-10:10, 66:11-66:18. Raden explained that they solicit the product from producers/suppliers and negotiate the sales with the receivers. See id. at 8:15-20, 9:21-10:10. Raden is located in the United States, and De Nadai is located in Italy. See id. at 7:8-8:2, 9:21-10:4. Raden and De Nadai were involved in the solicitation of fruit from M& R for the transaction with Trinity. See id. at 10:2-10:19. Martini worked with De Nadai on a regular basis, and De Nadai was aware of the general terms under which M& R sold kiwis, including the prices M& R expected

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for various sizes and quantities. PUMF 4. Martini has characterized Raden and De Nadai as independent sales people who are not employees of M& R. See Martini Dec. ¶ 3. M& R paid Raden and De Nadai fees of 3% for their services, but Trinity paid Raden and De Nadai nothing. See Raden Depo. 66:20-67:1. Raden would typically negotiate with Trinity, pass the order information on to De Nadai, and De Nadai would transmit the order to M& R by e-mail. PUMF 7. De Nadai's e-mail orders were copied to Raden, who would confirm that the e-mail reflect the agreement struck with Trinity. See PUMF 8.

In 2007, De Nadai contacted Trinity about marketing and selling M& R's kiwis to the open market on an open consignment basis. See White Dec. ¶ 4. Trinity and M& R reached an oral agreement for the marketing and sale of M& R's 2007 kiwi crop on an open consignment basis. See id. at ¶ 5. In two e-mails dated November 15, 2007 and November 16, 2007, De Nadai confirmed that M& R would supply kiwis on an open consignment basis for the open market. See id.; Trinity Ex. B at Bates Nos. 000086, 000088. Trinity marketed and sold M& R's 2007 kiwis on an open consignment basis, transmitted accountings and the net proceeds of the sales to M& R, and M& R accepted the accountings and net proceeds without objection. See White Dec. ¶ 6.

In late 2008, De Nadai and Raden contacted Trinity regarding the option to market and sell M& R's 2008-2009 kiwi crop. See id. at ¶ 7. Trinity agreed to conduct business with M& R regarding the 2008-2009 crop. See Martini Dec. ¶ 4; White Dec. ¶ 8. Martini characterizes the relationship as M& R selling kiwis to Trinity, while Trinity's President, David White, declares that Trinity agreed to market and sell Martini's kiwis on an open consignment basis, just as in 2007. See id. Generally, there were two types of kiwi shipments involved between M& R and Trinity regarding M& R's 2008-2009 kiwi crop. See Martini Dec. ¶ 4; White Dec. ¶ 9. The first type involved 14 kg. boxes that were to be sold to Trinity's customers Costco and Sam's Club at fixed prices. See id.; PUMF 11. Raden confirmed that the 14 kg. boxes were fixed price loads for sale to Costco or Sam's Club, with the price per box indicated on the confirming order e-mail. PUMF 11. M& R provided 4 loads of the 14 kg. boxes. See White Dec. ¶ 4. The second type involved consignments of 9 kg. boxes of kiwis to be sold on the general market. See Martini Dec. ¶ 4; White Dec. ¶ 9. Raden also testified that all of the 9 kg. boxes were consignment deliveries for sale on the open market, as indicated on the e-mail orders sent from De Nadai to Martini. PUMF 12. M& R provided 5 containers of 9 kg. boxes. See id. At no time did M& R sell kiwis directly to Trinity, nor did Trinity ever agree to purchase kiwis from M& R. See White Dec. ¶ 13. Trinity did not purchase the 14 kg. boxes from M& R and resell them to Costco, rather Trinity handled the 14 kg. boxes on consignment and took a commission for the sale of the 14 kg. boxes to Costco. See id. at ¶ 12.

Martini declares that there was a minimum price expectation for the 9 kg. boxes. See Martini Dec. ¶ 4. Martini declares that the minimum agreed price was memorialized in e-mails between De Nadai and M& R. See id. White declares, however, that there were no fixed or minimum prices for the 9 kg. boxes. See White Dec. ¶ 9. Raden testified that he did not recall whether any minimum price was established for the 9 kg. consignment loads, but that a seller in Trinity's position has an obligation to achieve the best possible market price. PUMF 14. However, Raden also testified that the price per box which appears on the 9 kg. box consignment orders was a

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" theoretical price." PUMF 13. Similarly, after acknowledging that the 9 kg. boxes were on consignment, Raden testified that the term " consignment" meant to him that the receiver sells the product at the best price it can get, deducts its costs, and returns the net amount that is left after deductions to the shipper. See Raden Depo. 76:7-25. Raden testified that M& R's invoice amounts (found in the third column of the invoices) were of " no moment" because Trinity did not agree to buy the fruit at an agreed price. See id. at 77:7-78:11.

On December 30, 2008, Trinity (through Maria Alaniz (" Alaniz" )) sent an e-mail to Raden objecting to the prices listed on the pro forma invoices and stating that the pricing was in excess of the real market in the United States. See White Dec. ¶ 14; Trinity Ex. B at Bates No. 000065. On the same day, and in apparent response to Trinity's e-mail, De Nadai stated in part that as to 42' and 45' kiwis, " as I told you by phone, not any price is low enough, cause there is a stock of these sizes, so we can discuss an espected [sic] return wk by wk." Trinity Ex. B at Bates No. 000064. De Nadai also stated in part, " I do not see major problems for landed and traveling centers for General Market, as returns will be on line with all other receivers, regardless of how low they will be. . . . All the deal you can find on the market by now will significantly decrease or disappear in 2-3 wks . . . so I can try to get maximum support to you on current January shipments, but no guarantee and no fixed prices from now up to the end of the season, it is not reasonable and then I will not push for it, it wouldn't succeed." Id. Also, on January 2, 2009, Raden sent an e-mail to Trinity that purports to confirm a conversation with Trinity. See Trinity Ex. B at Bates No. 0098. Under a heading called " East and West Coast General Market Loads," Raden wrote, " These loads will be on open consignment to Trinity. It is agreed that the Trinity margin will be 8%." Id.

On January 5, 9, 14, 20, and 28, eight containers of kiwi were received by Trinity in either California or New Jersey.[3] See White Dec. ¶ 10. The 9 kg. containers each had corresponding pro forma invoices. See Martini Dec. ¶ ¶ 10, 11, 14, 15, 18, 19, 22, 23, 26, 27. Martini declares that each of the pro forma invoices include a price per box, which is the alleged minimum price agreed per box. See id. at ¶ 11, 15, 19, 23, 27. Of the shipments of M& R kiwis that were inspected by the USDA, all but one received a grade of Number 1. See PUF 32.[4] Only one container (Order No. 12) failed USDA inspection, which had average defects of 9%. See PUF 34. However, each of the USDA reports did indicate some degree of decay. See Trinity Ex. B at Bates Nos. 000073-000080. Additionally, on February 16, 2009, and February 20, 2009, Trinity sent e-mails to Raden and De Nadai regarding severe damage to Order No. 30. See Trinity Ex. B at Bates Nos. 000106-000114. On February 20, 2009, Trinity sent another e-mail to Raden and De Nadai that M& R's kiwis were not holding up well in storage, and that Trinity had been telling De

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Nadai and Raden this " from the beginning." See id. at Bates No. 000116.

Trinity marketed and sold the kiwis, accounted to M& R for its handling of all loads, and submitted the net returns to M& R, which were accepted by M& R. See White Dec. ¶ 19. However, Martini was concerned over the returns that Trinity was paying M& R for the kiwis because Martini believed that the returns were far below what they should have been, given the price of kiwis at the time. See Martini Dec. ¶ 41. The market prices for kiwis at Los Angeles for January 2009 appear to be higher than M& R's alleged minimum prices for the 9 kg. containers.[5] See PUF 16. Martini reviewed liquidation reports, but did not believe that the liquidation reports explained what he believed to be the low returns. See Martini Dec. ¶ 41. In some instances, there were up to 3 liquidation reports, and sometimes the reports were unclear and appeared to be inconsistent with each other. See PUF 18.[6] In Raden's words, " in some instances, there were one, two, and three liquidation reports before we got the accurate thing, and in some cases we never did." PUMF 19. M& R never received a satisfactory explanation was to why the returns were so low. PUF 20.

SUMMARY JUDGMENT FRAMEWORK

Cross motions for summary judgment are evaluated separately under the same standards that apply to single summary judgment motions. See Pintos v. Pacific Creditors Ass'n, 565 F.3d 1106, 1111 (9th Cir. 2009); ACLU v. City of Las Vegas, 466 F.3d 784, 790 (9th Cir. 2006). Summary judgment is appropriate when it is demonstrated that there exists no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Fortyune v. American Multi-Cinema, Inc., 364 F.3d 1075, 1080 (9th Cir. 2004). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying the portions of the declarations (if any), pleadings, and discovery that demonstrate an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). A fact is " material" if it might affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); United States v. Kapp, 564 F.3d 1103, 1114 (9th Cir. 2009). A dispute is " genuine" as to a material fact if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Anderson, 477 U.S. at 248; Freecycle Sunnyvale v. Freecycle Network, 626 F.3d 509, 514 (9th Cir. 2010).

Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the movant. Soremekun, 509 F.3d at 984. Where the non-moving

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party will have the burden of proof on an issue at trial, the movant may prevail by presenting evidence that negates an essential element of the non-moving party's claim or by merely pointing out that there is an absence of evidence to support an essential element of the non-moving party's claim. See James River Ins. Co. v. Herbert Schenk, P.C., 523 F.3d 915, 923 (9th Cir. 2008); Soremekun, 509 F.3d at 984. If a moving party fails to carry its burden of production, then " the non-moving party has no obligation to produce anything, even if the non-moving party would have the ultimate burden of persuasion." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1105-06 (9th Cir. 2000). If the moving party meets its initial burden, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Nissan Fire, 210 F.3d at 1103. The opposing party cannot " 'rest upon the mere allegations or denials of [its] pleading' but must instead produce evidence that 'sets forth specific facts showing that there is a genuine issue for trial.'" Estate of Tucker v. Interscope Records, 515 F.3d 1019, 1030 (9th Cir. 2008).

The opposing party's evidence is to be believed, and all justifiable inferences that may be drawn from the facts placed before the court must be drawn in favor of the opposing party. See Anderson, 477 U.S. at 255; Matsushita, 475 U.S. at 587; Narayan v. EGL, Inc., 616 F.3d 895, 899 (9th Cir. 2010). While a " justifiable inference" need not be the most likely or the most persuasive inference, a " justifiable inference" must be rational or reasonable. See Narayan, 616 F.3d at 899. " If conflicting inferences may be drawn from the facts, the case must go to the jury." Holly D. v. Cal. Inst. of Tech., 339 F.3d 1158, 1175 (9th Cir. 2003). Inferences are not drawn out of the air, and it is the opposing party's obligation to produce a factual predicate from which the inference may be drawn. See Sanders v. City of Fresno, 551 F.Supp.2d 1149, 1163 (E.D. Cal. 2008); UMG Recordings, Inc. v. Sinnott, 300 F.Supp.2d 993, 997 (E.D. Cal. 2004). " A genuine issue of material fact does not spring into being simply because a litigant claims that one exists or promises to produce admissible evidence at trial." Del Carmen Guadalupe v. Agosto, 299 F.3d 15, 23 (1st Cir. 2002); see Bryant v. Adventist Health System/West, 289 F.3d 1162, 1167 (9th Cir. 2002). Further, a " motion for summary judgment may not be defeated . . . by evidence that is 'merely colorable' or 'is not significantly probative.'" Anderson, 477 U.S. at 249-50; Hardage v. CBS Broad. Inc., 427 F.3d 1177, 1183 (9th Cir. 2006). If the nonmoving party fails to produce evidence sufficient to create a genuine issue of material fact, the moving party is entitled to summary judgment. Nissan Fire, 210 F.3d at 1103.

PLAINTIFF'S MOTION

Plaintiff's Argument

M& R argues that it is entitled to summary judgment on its breach of contract claims. Under the CISG, the elements for breach of contract are formation of a contract, performance of a contract, breach of contract, and resulting damages. Here, there was a formation of contracts for the sale of kiwis, and the contracts were memorialized in order e-mails. M& R performed by shipping the amounts of kiwi indicated in the orders. Trinity accepted the kiwis and partially performed by paying M& R in partial satisfaction of the judgment. Trinity breached the contract

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by not failing to pay the full contract prices. The difference between the full contract prices and the amounts actually paid by Trinity represent M& R's damages. Each of the shipments of kiwis were accompanied by a pro forma or final invoice that stated the price for each size of kiwi. Trinity did not contest the amount. The CISG permits enforcement of a party's subjective intent when the other party knows of the subjective intent and does not oppose it. The invoices were an indication of M& R's subjective intent for a minimum price, and Trinity's silence in the face of the invoices is sufficient to constitute consent to the minimum price term.

Alternatively, even if the Court concludes that the 9 kg. boxes were not subject to a minimum price, Trinity still breached the contract. Trinity has argued that the 9 kg. boxes were consignments and that significant quantities of the kiwis decayed before Trinity could sell them. Although the CISG does not address consignments as a form of contract, Art. 55 and Art. 79 have relevance. Art. 55 states that when a valid contract does not expressly or implicitly fix a price, the parties are considered to have made reference to the price generally charged at the time the contract was concluded. Art. 79 states that a party is not liable for breach if he proves that the failure was due to an impediment beyond his control. Thus, Trinity has the burden of proving the amount of kiwis that were unsellable due to decay in order to justify the amount it remitted to M& R. The liquidation reports are no longer in M& R's possession and Trinity has produced none. That leaves only the USDA inspection reports. Using the USDA inspection reports and the USDA market reports for January 2009 for the price of kiwis, damages can be calculated accordingly.

If the CISG does not govern the transaction, and instead California law governs, the result under California law would be the same as utilizing CISG's Arts. 55 and 79. Under California Food & Agriculture Code § 56279, the commission merchant (which would be Trinity) has the burden to prove the correctness of any accounting.

As for damages, based on a summary of the invoices, M& R is entitled to at least $128,931.80, which is based on the amounts received versus the minimum price. If Trinity persists in contending that the transactions were consignments, then the damages are greater because the market price for kiwis in January 2009 was greater than M& R's minimum price. Using the market price, the balance owed would be $175,083.48. Additionally, because the CISG is a federal law, M& R is entitled to pre-judgment interest. The proper amount of pre-judgment interest for $175,083.48 is $8,558.09.

In reply, M& R argues that, there has been sufficient notice of its claims against Trinity, not only in the FAC, but also through discovery. Trinity knew that M& R was claiming that money was owed for the kiwis. Trinity has been aware of the consignment versus sales issues because Trinity raised the issue in answer to the FAC. In responding to an allegation regarding " each sale transaction," Trinity answered that it admits it " received fruit from Plaintiff on consignment in 2009." Further, when the parties deposed Raden, Raden was not aware that a minimum price was involved, and as far as Raden and Trinity were concerned, the transactions were consignments. The issue of consignment versus sale is not a surprise to Trinity.

As to the applicability of the CISG, cases recognize that the CISG applies to consignment transactions. Moreover, the CISG is not designed to strictly control the

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dealings of treaty members, but to provide parties leeway to conduct their business and enforce their intent. Both the CISG and California law place the burden on Trinity to show that decay justified the low prices obtained for the kiwis, and California and PACA would both look to the acceped market rates to determine damages.

As for the statute of limitations, this case involves oral agreements that were memorialized in writings. Thus, a 4-year limitations period applies. Also, the transactions between M& R and Trinity were book accounts, and M& R also stated the amount owing on that account, which gives rise to a claim for an " account stated." If an account is sent to the debtor, and the debtor does not object to it within a reasonable time, his acquiescence will be taken as an admission that the account is truly stated. A book account is open when the debtor has made some payment on the account, but leaves a balance due. A common count, such as a book account or account stated, is proper when there is an indebtedness for a sum certain for the value of goods furnished, whether the original transaction was an express contract or a quasi-contract. M& R has alleged, and the facts demonstrate, that the common counts for a book account and an account stated apply to this case. The applicable limitations period is 4-years for these common counts. Also, Trinity's reliance on PACA to argue that the limitations period began to run 10 days after receipt of the kiwis is not availing because M& R is not proceeding under PACA. PACA was meant to provide an additional remedy, not to abridge others. Additionally, if the transactions are consignments, then it is impossible to know when Trinity sold the kiwis because Trinity no longer has the liquidation reports. However, evidence does exist as to when M& R sent the last invoice, which was March 31, 2009. Under California Civil Code § 337, when an account stated is based upon an account of more than one item, the limitations period begins to run from the date of the last item. Finally, M& R's claim did not accrue under the California discovery rule until it became reasonably clear that M& R and Trinity would not be able to resolve their dispute about the amount due. This realization did not occur until, at the earliest, after March 31, 2009, when Raden sent an e-mail to Trinity that recapped meetings about amounts owed. Raden's e-mail shows that the parties were still discussing the results of the 2008-2009 transactions and it had not become clear that Trinity was not going to pay. This lawsuit was timely filed prior to March 31, 2013.

As for translated documents, there are numerous documents that are not in Italian, and the universal numbers in the Italian documents are understood. Trinity offers no contradictory interpretations of any material fact, nor does it identify any translation with which it disagrees. Martini's declaration explains a limited number of terms and is sufficient to meet the standards for translations under the Federal Rules.

Finally, as to the whether Trinity is the proper entity, both Trinity (i.e. Trinity Fruit Sales Company) and Trinity Fruit Company have the same address and same agent for service. The shipping documents, USDA inspection reports, and various e-mails, including e-mails sent by Maria Alaniz of Trinity, all bear the name Trinity Fruit Sales. Thus, Trinity is the proper defendant. Alternatively, because Trinity Fruit Company has by its appearance in the action and argument in opposition to this motion made a judicial admission that it is the proper entity to respond to M& R's claims, any judgment in favor of M& R should be jointly and severally

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against Trinity Fruit Sales Company and Trinity ...


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