Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-04032/USCOURTS-cand-3_05-cv-04032-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 07:499 Agricultural Commodities Act

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

C. H. ROBINSON CO.,

Plaintiff,

 v.

MARINA PRODUCE CO., INC.,

DOMINIC MONTALBANO AND

DONNA RODRIGUEZ,

Defendants. /

No. C 05-04032 WHA

ORDER GRANTING IN PART

PLAINTIFF’S MOTION FOR

DEFAULT JUDGMENT

INTRODUCTION

In this action for the collection of the amount owing on shipments of fruits and

vegetables, plaintiff C. H. Robinson Co. moves for default judgment against defendants

Marina Produce Co., Inc., Dominic Montalbano and Donna Rodriguez. In addition to the

amount owed for the produce, plaintiff asks for attorney’s fees, interest and costs. The motion

for default judgment against defendant Marina Produce is GRANTED. Damages for the unpaid

goods, attorney’s fees and costs are awarded. To the extent allowed by 28 U.S.C. 1961,

post-judgment interest is awarded. Plaintiff is entitled to prejudgment interest, but must submit

additional briefing as to the amount. Plaintiff’s request to establish personal liability against

individual defendants Dominic Montalbano and Donna Rodriguez is DENIED.

Case 3:05-cv-04032-WHA Document 25 Filed 03/13/06 Page 1 of 7
United States District Court

For the Northern District of California

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STATEMENT

Plaintiff is a wholesale supplier of perishable agricultural commodities. Defendants are

dealers. Defendants Dominic Montalbano and Donna Rodriguez are the owners of

Marina Produce. 

Plaintiff sold and delivered produce to defendants. Defendants have not paid. 

Defendants have fifteen outstanding invoices dating from October 18 to December 16, 2003. 

The outstanding balance is $23,814.55. Plaintiff filed its complaint on October 5, 2005,

alleging violation of the statutory trust established under the Perishable Agricultural

Commodities Act, 7 U.S.C. 499e(c). Defendants were served on December 6. They failed to

respond and the Clerk entered default on January 17. 

In addition to the unpaid balance of $23,814.55, plaintiff seeks prejudgment interest of

$5,117.88, costs of $558.00, attorney’s fees of $4,200.00 and post-judgment interest.

ANALYSIS

Under FRCP 55(b)(2), a party can apply to the court for entry of judgment by default. 

“The district court’s decision whether to enter a default judgment is a discretionary one.” 

Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The following factors are considered:

(1) the possibility of prejudice to the plaintiff, (2) the merits of

plaintiff’s substantive claim, (3) the sufficiency of the complaint,

(4) the sum of money at stake in the action, (5) the possibility of a

dispute concerning the material facts, (6) whether the default was

due to excusable neglect, and (7) the strong policy underlying the

Federal Rules of Civil Procedure favoring decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986).

For the following reasons, these factors favor entry of default judgment against

defendant Marina Produce.

1. MERITS OF SUBSTANTIVE CLAIMS AND SUFFICIENCY OF THE COMPLAINT.

After entry of default, well-pleaded factual allegations in the complaint are taken as true,

except as to the amount of damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th

Cir. 2002).

Plaintiff alleges violation of 7 U.S.C. 499e(c) (“PACA”). PACA applies to sales of

perishable agricultural commodities to “any commission merchant, dealer, or broker.” 

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United States District Court

For the Northern District of California

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PACA gives the suppliers of such commodities special rights designed to ensure payment. It

requires that all produce-derived revenues “be held by such commission merchant, dealer, or

broker in trust for the benefit of all unpaid suppliers or sellers of such commodities . . . until

full payment of the sums owing in connection with such transactions has been received . . . .” 

Section 499b(4) requires buyers to “make full payment promptly.”

To establish the existence of a PACA trust, plaintiff must show that: (1) the

commodities sold were perishable agricultural commodities; (2) the buyer was a commission

merchant, dealer or broker; (3) the transaction occurred in interstate commerce; (4) the seller

has not yet received full payment; and (5) the seller preserved its trust rights by giving proper

notice to the buyer. 7 U.S.C. 499e. A seller can use “ordinary and usual billing or invoice

statements to provide notice of the [seller’s] intent to preserve the trust,” so long as they contain

the following language:

The perishable agricultural commodities listed on this invoice are

sold subject to the statutory trust authorized by section 5(c) of the

Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499e(c)). 

The seller of these commodities retains a trust claim over these

commodities, all inventories of food or other products derived from

these commodities, and any receivables or proceeds from the sale of

these commodities until full payment is received.

7 U.S.C. 499e(c)(4).

Plaintiff’s allegations of the existence of a PACA trust are sufficient. Plaintiff claims to

have sold perishable produce through interstate commerce to defendants who were dealers, and

that plaintiff has not received full payment for sales dating back to October 18, 2003. Plaintiff

also claims to have complied with PACA’s notice requirement under 7 U.S.C. 499e(c)(4). 

Plaintiff submitted invoices including the requisite statutory language. 

Plaintiff next seeks to establish personal liability on individual defendants Dominic

Montalbano and Donna Rodriguez. Plaintiff cites Sunkist Growers, Inc. v. Fisher, 104 F.3d 280

(9th Cir. 1997), for the proposition that defendants are personally liable (Br. 7). Sunkist, after

surveying the decisions concerning individual liability under a PACA trust claim, stated:

The unanimous conclusion of the cases is that PACA liability

attaches first to the licensed seller of perishable agricultural

commodities. If the seller’s assets are insufficient to satisfy the

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liability, others may be found secondarily liable if they had some

role in causing the corporate trustee to commit the breach of trust.

We agree that individual shareholders, officers, or directors of a

corporation who are in a position to control PACA trust assets, and

who breach their fiduciary duty to preserve those assets, may be

held personally liable under the Act. (citation omitted).

Id. at 283.

Consequently, to establish personal liability plaintiff must make a showing that the

licensed seller’s assets are insufficient to satisfy the liability. Following this, plaintiff must then

show that the individuals controlled PACA trust assets. Finally, plaintiff must show that the

individuals breached their fiduciary duty to preserve those assets.

Plaintiff’s complaint falls short. Plaintiff did not allege any facts showing that

defendant Marina Produce, the licensed seller, has insufficient assets to satisfy the liability. 

Plaintiff did not allege any facts as to the manner in which individual defendants controlled

PACA trust assets and the day-to-day operations. Nor are there any facts showing how

individual defendants breached their fiduciary duty. “[N]ecessary facts not contained in the

pleadings, and claims which are legally insufficient, are not established by default.” Cripps v.

Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citation omitted). Instead of

alleging facts showing that the requirements for imposing personal liability have been met the

complaint repeats the holding of Sunkist.

Plaintiff also cites In re Zois, 201 B.R. 501, 507 (Bankr. N.D. Ill. 1996), for the

proposition that “[c]ourts have generally imparted individual responsibility for breaches of

PACA while individuals were in the employ or an officer of a corporation” (Br. 7–8). This

simply restates an element to find individual liability, i.e., that there must first be a breach of the

PACA trust. Zois was a bankruptcy decision. Zois held that an individual’s defalcation while

acting as a fiduciary of a PACA trust was sufficient grounds to deny discharge of a debt under

11 U.S.C. 523(a)(4). Section 523(a)(4) provided that there shall be no discharge from any debt

“for fraud or defalcation while acting in a fiduciary capacity . . . .” Defalcation was defined as

“the misappropriation of trust funds held in any fiduciary capacity, and the failure to properly

account for such funds.” Zois, 201 B.R. at 506. Plaintiff’s cite to In re Snyder, 184 B.R. 473

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(Bankr. D. Md. 1995), involved a similar fact pattern as Zois. Neither decision augments

plaintiff’s claim that individual defendants are personally liable. Plaintiff seems to suggest that

whenever a produce buyer defaults on payments it results in a breach of the PACA trust to

which the individual buyers are liable. This ignores the requirements in Sunkist.

2. THE REMAINING EITEL FACTORS.

With the exception of individual defendants, the remaining Eitel factors favor entry of

default judgment. To deny plaintiff’s application would leave plaintiff without a remedy. 

Moreover, defendants have refused to litigate this action here after being properly served with

the complaint and summons. In general, the fact that a large sum of money is at stake is a factor

disfavoring default judgment. Cf. Eitel, 782 F.2d at 1472 (stating that the fact that three million

dollars was at stake, when considered in light of the parties’ dispute as to material facts,

supported the court’s decision not to enter judgment by default). Plaintiff asks for damages of

$23,814.55. That amount pales beside the three million dollars at stake in Eitel. Since

defendants never filed an answer to the complaint, it is unclear whether there is a possibility of

dispute concerning the material facts. There is no evidence that defendants’ failure to respond

was the result of excusable neglect. Although federal policy may favor a decision on the merits,

FRCP 55(b) permits entry of default judgment in situations, such as this, where the defendant

has refused to litigate. On balance, the Eitel factors weigh in favor of default judgment.

3. DETERMINATION OF DAMAGES, INTEREST, FEES AND COSTS.

Damage allegations are not deemed true simply because of the defendant’s default. 

Some proof of the amount is required. Geddes v. United Fin. Group, 559 F.2d 557, 560

(9th Cir. 1977). The statute at issue provides that violators are liable “for the full amount of

damages” and that buyers maintain the statutory trust “until full payment of the sums owing in

connection with such transactions has been received by such unpaid suppliers . . . .” 7 U.S.C.

499e(a), (c)(2).

Plaintiff submitted fifteen invoices showing a total amount of $23,814.55 outstanding

(Biesterfeld Decl., Exh. A). This accounting is sufficient and reflects the exact amount plaintiff

seeks in damages.

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Plaintiff next seeks attorney’s fees in the amount of $4,200.00, prejudgment interest in

the amount of $5,117.88, and post-judgment interest. Plaintiff argues that the language on each

invoice, which stated that “[i]nterest and attorneys fees necessary to collect payment are sums

owing in connection with the transaction,” constituted an agreement between plaintiff and

defendants for interest and attorney’s fees in any dispute (Br. 8).

Contractual claims for attorney’s fees and interest are within the scope of a PACA trust

claim. Middle Mountain Land & Produce, Inc. v. Sound Commodities, Inc., 307 F.3d 1220,

1224–25 (9th Cir. 2002). Absent a contractual claim, a district court has limited authority to

grant attorney’s fees and broad discretion to award prejudgment interest. Id. at 1225–26.

The issue then is whether a contractual right was created by the provision on plaintiff’s

invoices stating that “[i]nterest and attorneys fees necessary to collect payment are sums owing

in connection with the transaction.” These are additional terms as the invoices were sent after

the produce had shipped. “Between merchants [additional] terms become part of the contract

unless: (a) [t]he offer expressly limits acceptance to the terms of the offer; (b) [t]hey materially

alter it; or (c) [n]otification of objection to them has already been given or is given within a

reasonable time after notice of them is received.” Cal. Com. Code 2207(2). There is no reason

to conclude that any of the exceptions apply. See United States v. A.E. Lopez Enters., Ltd.,

74 F.3d 972, 976 (9th Cir. 1996) (finding that interest terms on concrete supplier’s invoice

created an enforceable contract); JC Produce, Inc. v. Paragon Steakhouse Rests., Inc.,

70 F. Supp. 2d 1119, 1123 (E.D. Cal. 1999) (holding that the plaintiff’s invoices expressly

reserved PACA trust rights over interest and reasonable attorney’s fees). The invoices

submitted by plaintiff thus set forth the terms for past due accounts with respect to interest and

attorney’s fees.

Plaintiff seeks an amount of $4,200.00 for attorney’s fees. Plaintiff submitted a

description of the legal work performed, a breakdown of the 16.8 hours expended, and the

attorney’s hourly rate of $250 per hour (Cornell Decl. ¶¶ 6–7). This accounting is sufficient.

Plaintiff next claims a prejudgment interest award in the amount of $5,117.88. Plaintiff

appears to base this amount on an interest rate of ten percent (Biesterfeld Decl., Exh. C). 

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Plaintiff did not provide any authority supporting its entitlement to that particular rate. Nor did

plaintiff provide any evidence that plaintiff and defendants agreed to that rate. Plaintiff’s

invoices did not specify the amount of interest. It is unclear whether plaintiff based its interest

rate on that provided for in 28 U.S.C. 1961, in California Civil Code 3289(b), or on some other

agreement between the parties. Plaintiff’s summary chart of the invoices showing the interest

owed as to each invoice is insufficient. As to post-judgment interest, that interest is mandatory. 

Air Separation, Inc. v. Underwriters at Lloyd’s of London, 45 F.3d 288, 290 (9th Cir. 1994)

(noting that “[u]nder the provisions of 28 U.S.C. 1961, post-judgment interest on a district court

judgment is mandatory”).

Finally, plaintiff claims court costs in the amount of $558.00. Plaintiff has submitted a

breakdown of the court costs which consist of fees for filing and service of process

(Cornell Decl. ¶ 5). This accounting is sufficient. 

CONCLUSION

Plaintiff’s entry of default judgment against defendant Marina Produce for the principle

amount of $23,814.55, for attorney’s fees in the amount of $4,200.00 and for costs in the

amount of $558.00 is GRANTED. To the extent allowed by 28 U.S.C. 1961, post-judgment

interest is GRANTED. Plaintiff’s motion for prejudgment interest is DENIED. Plaintiff cited no

authority indicating that ten percent is the correct prejudgment interest rate. Plaintiff may file a

motion for prejudgment interest within seven calendar days of entry of judgment. Plaintiff

failed to allege sufficient facts as to individual liability. Plaintiff’s request to establish liability

of individual defendants Dominic Montalbano and Donna Rodriguez is DENIED. In order to fix

the latter, it will be necessary to file a sufficient amended complaint, serve it on the individuals,

wait for a default, and start over again.

IT IS SO ORDERED.

Dated: March 13, 2006. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:05-cv-04032-WHA Document 25 Filed 03/13/06 Page 7 of 7