Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-01686/USCOURTS-caed-2_09-cv-01686-0/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 07:499 Agricultural Commodities Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

UNDERWOOD & WONG, INC.,

Plaintiff, No. 2:09-cv-1686 MCE JFM 

vs.

RICARDO ENRIQUEZ,

Defendant. FINDINGS AND RECOMMENDATIONS

 /

Plaintiff’s motion for entry of default judgment came on regularly for hearing on

July 15, 2010. Marion Quesenbery appeared for plaintiff. No appearance was made for

defendant Ricardo Enriquez. Upon review of the motion and the supporting documents, upon

hearing the arguments of counsel and good cause appearing therefor, the court recommended

entry of default judgment in open court. Therefore, THE COURT MAKES THE FOLLOWING

FINDINGS AND RECOMMENDATIONS:

Plaintiff Underwood & Wong, Inc., is a California corporation with its principal

place of business in Los Angeles, CA. Plaintiff sues Ricardo Enriquez for money due for

shipments of perishable agricultural commodities made to defendant between July 23, 2008 and

September 12, 2008. The complaint contains claims for violations of the Perishable Agricultural

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Commodities Act (“PACA”), 7 U.S.C. § 499e(c)(5), breach of fiduciary duty by a PACA trust

trustee, and state claims of breach of contract and unjust enrichment. 

Defendant Enriquez is an individual doing business as Sacramento Valley

Produce in Sacramento, CA. 

Plaintiff seeks recovery in excess of $10,000.00.

Jurisdiction is proper under 28 U.S.C. § 1331. Venue is proper in this district

because defendant is located within the division of this district.

Plaintiff asserts that defendant is a United States Department of Agriculture

(“USDA”) licensed dealer of perishable agricultural commodities in interstate and/or foreign

commerce and is subject to PACA. (See Quesenbery Decl., ¶ 4 and Ex. A.)

Plaintiff submits that it entered into contracts of sale with defendant from July 23,

2008 through September 12, 2008 for the purchase and sale of agricultural commodities. 

(Quesenbery Decl., Ex. A, Parts 1 and 2; Underwood Decl., ¶¶ 6, 8.) Pursuant to those contracts,

plaintiff sold and shipped fresh fruit and vegetables to defendant in Sacramento, CA, for which

defendant agreed to pay plaintiff $20,000.00. Payment was due within ten days of delivery of

the merchandise. Although defendant received and accepted the produce listed on plaintiff’s

invoices, defendant has only paid plaintiff $10,000.00 of the total sum due. (Underwood Decl.,

¶¶ 6, 8, 9, 12, and 13.) 

Plaintiff maintains that it is licensed by the USDA as a commission merchant,

dealer and/or broker of perishable agricultural commodities. (Quesenbery Decl. ¶ 5.) Pursuant

to 7 U.S.C. § 499e(c)(4), plaintiff printed on the face of the invoices that it gave to defendant the

following statutory 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

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or other products derived from these commodities and any receivables or

proceeds from the sale of these commodities until full payment is received.

(See Quesenbery Decl., Ex. A, Parts 1 and 2.) 

Plaintiff maintains that it performed all of its obligations and duties under the

contracts. Under the terms of those contracts, in the event an account is not paid when due, it is

subject to a 1-1/2% monthly delinquent charge (18% per year) and attorneys’ fees and other

costs of collection. (Underwood Decl., ¶¶ 8, 12, and Ex. A.) 

Plaintiff seeks actual damages in the amount of $10,000.00, the sums remaining

due on the contracts. Plaintiff avers that defendant paid only $10,000.00 of the $20,000.00 due. 

Plaintiff also seeks interest on the debt owed in the amount of $4,320.96 through July 1, 2010

and .049% per day thereafter on the outstanding debt until paid in full. (Quesenbery Decl., ¶ 10

and Ex. D.) 

Pursuant to the express language of the contracts, the prevailing party is entitled

to an award of attorneys fees, costs and expenses arising out of litigation. Plaintiff seeks

attorneys fees and costs in the total amount of $4,537.00. (Quesenbery Decl., ¶¶ 7-9 and Ex. C.) 

I. Request for Default Judgment

The complaint in this matter was served upon defendant by mail on June 24,

2009. Pacific Atlantic Trading Co. v. M/V Main Express, 758 F.2d 1325, 1331 (9th Cir. 1985)

(default judgment void without personal jurisdiction). Defendant has not filed an answer. The

clerk of the court entered default against defendant on September 2, 2009. Notice of the entry of

default as well as plaintiff’s motion for entry of default judgment were served by mail on

defendant at his last known address. Defendant has filed no opposition to the motion for entry of

default judgment. 

Entry of default effects an admission of all well-pleaded allegations of the

complaint by the defaulted party. Geddes v. United Financial Group, 559 F.2d 557 (9th Cir.

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1977). Entry of default judgment is proper where, as in the present case, the facts established by

the default support the causes of action pled in the complaint. The complaint and the affidavits

filed in support of the motion for entry of default judgment also support the finding that plaintiff

is entitled to the relief requested in the prayer for default judgment, which does not differ in kind

from the relief requested in the complaint. Henry v. Sneiders, 490 F.2d 315, 317 (9th Cir.), cert.

denied, 419 U.S. 832 (1974). There are no policy considerations which preclude the entry of

default judgment of the type requested. See Eitel v. McCool, 782 F.2d 1470, 1471-1472 (9th

Cir. 1986). 

Title 7 U.S.C. § 499b(4) provides in pertinent part that it shall be unlawful in, or

in connection with, any transaction in interstate or foreign commerce, for any commission

merchant, dealer, or broker to fail or refuse truly and correctly to account and make full payment

promptly in respect of any transaction in any perishable agricultural commodity to the person

with whom such transaction is had, or to fail, without reasonable cause, to perform any specific

action or duty, express or implied, arising out of any undertaking in connection with any such

transaction, or to fail to maintain the trust as required under section 499e(c). In pertinent part,

§ 499e(c)(2) provides for a trust with respect to commodities received:

2) Perishable agricultural commodities received by a commission merchant,

dealer, or broker in all transactions, and all inventories of food or other products

derived from perishable agricultural commodities, and any receivables or

proceeds from the sale of such commodities or products, shall be held by such

commission merchant, dealer, or broker in trust for the benefit of all unpaid

suppliers or sellers of such commodities or agents involved in the transaction,

until full payment of the sums owing in connection with such transactions has

been received by such unpaid suppliers, sellers, or agents. Payment shall not be

considered to have been made if the supplier, seller, or agent receives a payment

instrument which is dishonored.

7 U.S.C. § 499e(c)(2). The unpaid supplier must retain and preserve the benefits of the trust by

giving notice of intent to do so to the commissioner merchant, dealer, or broker, and this may be

accomplished by giving written notice on ordinary and usual billing or invoice statements.

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§ 499e(c)(3), (4). The notice must be given to the buyer within thirty days of a payment default,

or by referring to the trust on invoices. Id.

The elements of recovery under a PACA trust claim are thus the transaction, here

a contract for sale of perishable agricultural commodities; purchase and receipt of the perishable

agricultural commodities by a commission merchant, dealer, or broker engaged in the handling

of produce in interstate and/or foreign commerce, who is thus subject to PACA; a failure to pay

fully and promptly, or a failure to maintain the trust as required by § 499e(c); and preservation of

trust rights by the seller by notifying of intent to preserve the benefits of the trust on invoices or

billing statements. 7 U.S.C. §§ 499b, 499e(c); Sunkist Growers, Inc. v. Fisher, 104 F.3d 280,

284 (9th Cir. 1997).

Here, plaintiff properly alleged that defendant Enriquez was engaged in the

handling of produce in interstate and/or foreign commerce as a commission merchant, dealer

and/or broker. Plaintiff alleged that it shipped perishable agricultural commodities to defendant

at defendant’s request and pursuant to agreements by defendant to $20,000.00. Defendant paid

$10,000.00 of the amount due, but failed to pay the remaining balance of $10,000.00. Plaintiff

also alleged the creation of the trust by submitting evidence that the invoices sent to defendant

reflected the language required by 7 U.S.C. § 499e(c). 

Accordingly, the undersigned concludes that the complaint is legally sufficient to

state a claim or claims under PACA against defendant Enriquez for enforcement of the statutory

trust based on a failure to perform the duty to account and pay fully and promptly, and to

conserve the trust assets for the benefit of plaintiff. The complaint is also legally sufficient to

state a claim for breach of contract. Cal. Civ. Code §§ 1549, 1550; Acoustics, Inc. v. Trepte

Construction Co., 14 Cal. App. 3d 887, 913 (Cal. Ct. App. 1971).

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As to the state claim of unjust enrichment, plaintiff has not briefed the legal

sufficiency of this claim and has not explained what disposition is to be made of the claim upon

which judgment is not sought.

Good cause appearing, it is the recommendation of this court that plaintiff be

granted default judgment as to plaintiff’s PACA and breach of contract claims. 

II. Relief Requested

It is specifically provided in PACA that the remedies created by the Act are in

addition to, and are not intended to in any way abridge or alter, the remedies existing at common

law or by statute. § 499e(b). 

A. Actual Damages

Defendant is liable to plaintiff for actual damages in the amount of $10,000.00. 

B. Interest

Plaintiff seeks prejudgment and post judgment interest. In diversity cases, state

law governs awards of interest. Lund v. Albrecht, 936 F.2d 459 (9th Cir. 1991). Plaintiff

submits that the interest due to it is $4,320.96 through July 1, 2010, and 0.49% per day thereafter

until paid in full. Plaintiff argues that post-judgment interest should be set at the same

contractual rate as prejudment interest. See Rey Rey Produce SFO, Inc. v. M&M Produce &

Food Services, 2006 LEXIS 47949 at *10-11 (N.D. Cal. 2006). The court agrees. 

C. Attorneys’ Fees and Costs.

The written agreement entitled the prevailing party to an award of attorney’s fees,

costs and expenses arising from litigation. Plaintiff requests that the court award $4,537.00 in

attorneys’ fees and costs. The affidavit provided by counsel as to attorneys fees and costs is

supported by detailed billings. 

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Accordingly, IT IS HEREBY RECOMMENDED that:

1. Plaintiff’s June 4, 2010 motion for entry of default judgment be granted as to

plaintiff’s PACA and breach of contract claims;

2. Plaintiff be awarded $10,000.00 in actual damages; 

3. Plaintiff be awarded interest in the amount of $4,320.96 through July 1, 2010,

and 0.49% per day thereafter until paid in full; and 

4. Plaintiff be awarded $4,537.00 in attorneys’ fees and costs. 

These findings and recommendations are submitted to the United States District

Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within ten days

after being served with these findings and recommendations, any party may file written

objections with the court and serve a copy on all parties. Such a document should be captioned

“Objections to Magistrate Judge's Findings and Recommendations.” The parties are advised that

failure to file objections within the specified time may waive the right to appeal the District

Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

DATED: July 20, 2010.

/014;unde1686.def

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