Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_10-cv-00049/USCOURTS-azd-4_10-cv-00049-1/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 07:499 Agricultural Commodities Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

William Consalo & Sons Farms 

Incorporated, 

Plaintiff, 

v. 

Drobnick Distributing Incorporated; 

Edward Drobnick; Deborah Drobnick; 

Babaluci Fresh Fruit & Vegetables LLC; 

Marco Antonio Siqueiros; Veronica 

Siqueiros, 

Defendants.

No. CV-10-00049-TUC-CKJ

ORDER 

Drobnick Distributing Incorporated, a 

California corporation 

Cross-Complainant, 

v. 

Marco Antonio Siquerios, and Babaluci 

Fresh Fruit & Vegetables, LLC aka Whole 

Foods & Vegetables, 

Cross-Defendants.

 Pending before the Court is Cross-Complainant Drobnick Distributing Inc.’s 

(“Drobnick”) Supplemental Notice of Application and Application for Entry of Default 

Judgment as to Cross-Defendants Babaluci Fresh Fruit & Vegetables LLC aka Whole 

Foods & Vegetables and Marco Antonio Siquerios. (Doc. 159). 

 

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I. Background 

 Plaintiff William Consalo & Sons Farms, Inc. is a wholesale buyer and seller of 

fresh fruits and vegetables located in Vineland, New Jersey. Plaintiff has held a PACA 

license since 1962. In approximately June 2008, Defendant Marco Siqueiros started 

Babaluci Fresh Fruit & Vegetables, LLC (“Babaluci”). Babaluci is a buyer and seller of 

fresh fruits and vegetables. In January 2009, Plaintiff hired Marco Siqueiros to act as its 

agent to buy and sell produce on behalf of Plaintiff in its Nogales, Arizona office. 

 Defendant Drobnick Distributing, Inc. is a brokerage firm in the business of 

buying and selling fresh fruits and vegetables located in Salinas, California. Defendant 

Edward Drobnick is its principal. Defendant Drobnick Distributing, Inc. has held a 

PACA license since 2001. 

 On January 25, 2010, Plaintiff filed a Complaint against Babaluci and Marco 

Siqueiros (collectively “Babaluci Defendants”), and Drobnick Distributing, Inc., Edward 

and Deborah Drobnick (collectively “Drobnick Defendants”) alleging breach of PACA 

trust. (Doc. 1). On March 5, 2010, the Drobnick Defendants filed their Answer. (Doc. 

30). Drobnick also asserted a Cross-Complaint against the Babaluci Defendants. 

 The Cross-Complaint alleges that Drobnick entered into an agreement with 

Babaluci to process invoices for the purchase of produce from Plaintiff to Babaluci, in an 

effort to help Marco Siqueiros establish an industry credit rating. As compensation, 

Drobnick would receive a transaction fee of $.25 per carton. Invoices for the purchase of 

produce from Plaintiff were delivered to Drobnick, which processed the invoices and 

forwarded them to Babaluci. However, Babaluci received the purchased produce directly 

from Plaintiff. 

 Between September 17, 2009 and November 20, 2009, Drobnick sent Babaluci 

invoices for the produce purchased from Plaintiff as well as invoices for the agreed upon 

transaction fees. However, Babaluci never made payments on those invoices. In 

addition from November 3, 2009 through December 16, 2009, Drobnick agreed to sell 

Babaluci produce and Babaluci agreed to pay Drobnick for that produce. However, 

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Babaluci failed to pay Drobnick for the produce. 

 The Babaluci Defendants have not filed an Answer in this cause of action or 

responded to the Cross-Complaint. At an April 2010 hearing Defendant Siqueiros 

admitted in open Court that he owes the outstanding balance to Plaintiff and that he owes 

Drobnick money as well. On June 2, 2010, Plaintiff filed an Amended Complaint adding 

Defendant Marco Siqueiros’s wife, Veronica Siqueiros as a Defendant. (Doc. 85). 

 On June 3, 2010, Drobnick filed a Motion for Entry of Default as to the CrossDefendants. (Doc. 87). On June 9, 2010, the Clerk of the Court entered an Amended 

Entry of Default pursuant to Rule 55(a), Federal Rules of Civil Procedure, against CrossDefendants. (Doc. 94). On June 23, 2010, Drobnick filed a Motion for Entry of Default 

as to the Cross-Defendants. (Doc. 96). 

 On February 9, 2011, the Court denied Drobnick’s Motion for Entry of Default 

with leave to resubmit. (Doc. 112). The Court reasoned that Drobnick’s claims in the 

Cross-Complaint may affect Plaintiff’s claims against Drobnick. As such, the Court 

found that Drobnick could resubmit its Motion for default judgment upon the resolution 

of the issues between Plaintiff and the Drobnick Defendants. 

 On March 30, 2011, the Court granted Plaintiff’s Motion for Summary Judgment 

against the Drobnick Defendants. (Doc. 118). In its Order, the Court found that the 

Drobnick Distributing and Edward Drobnick were liable to Plaintiff for $1,525,896.88 in 

produce sold to the Drobnick Defendants. On July 29, 2013, the Court denied the 

Drobnick Defendants Motion for Reconsideration. (Doc. 138). Judgment was entered on 

July 29, 2013. (Doc. 139). On November 15, 2013, Drobnick filed a Supplemental 

Motion for Default Judgment against Babaluci. (Doc. 159). No response has been filed. 

II. Discussion 

 Rule 55, Federal Rules of Civil Procedure, provides for the entry of default 

judgment by the Court. Fed. R. Civ. P. 55(b)(2). “The district court’s decision whether to 

enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 

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(9th Cir. 1980). After entry of default by the Clerk of the Court pursuant to Fed. R. Civ. 

P. 55(a), the Court may grant default judgment pursuant to Fed. R. Civ. P. 55(b)(2). See 

Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986) (discussing the two-step process 

required by Rule 55). In exercising its discretion whether to grant default judgment, the 

Court may consider the following factors: 

(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 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. 

 Id. at 1471-72 (citations omitted). Upon entry of default by the Clerk, the general 

rule is that “the factual allegations of the complaint, except those relating to the amount 

of damages, will be taken as true.” Televideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 

917-18 (9th Cir. 1987) (internal citations omitted). Therefore, Plaintiff is “required to 

provide proof of all damages sought in the complaint.” Pepsico, Inc. v. California 

Security Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002). 

A. Procedural Requirements 

 As a preliminary matter, the Court addresses the adequacy of the service of 

process on Cross-Defendants. See e.g., SEC v. Internet Solutions for Business, Inc., 509 

F.3d 1161, 1165 (9th Cir. 2007) (reviewing de novo whether “default judgment is void 

because of lack of personal jurisdiction due to insufficient service of process.”); Mason v. 

Genisco Technology Corp., 960 F.2d 849, 851 (“A person is not bound by a judgment in 

a litigation to which he or she has not been made a party by service of process.”). 

Regarding service of process, Rule 4(e), Federal Rules of Civil Procedure, provides: 

Unless federal law provides otherwise, an individual – other 

than a minor, an incompetent person, or a person whose waiver has been filed – may be served -in a judicial district of the United States by: (1) following state law for serving a 

summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service 

is made[.] 

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 Fed. R. Civ. P. 4(e). Further, “a domestic or foreign corporation, or a partnership 

or other unincorporated association that is subject to suit under a common name, must be 

served: (1) in a judicial district of the United States: (A) in the manner prescribed by Rule 

4(e)(1) for serving an individual.” Fed. R. Civ. P. 4(h). 

 Defendant Babaluci Fresh Fruit & Vegetables LLC aka Whole Foods & 

Vegetables is an Arizona corporation and Defendant Marco Siqueiros is above the age of 

majority. As such, none of the Defendants are minors or incompetent. On March 5, 2010, 

Plaintiff filed Returns of Service as to the Babaluci Defendants who were personally 

served on March 3, 2010. (Docs. 28, 29). As such, Plaintiff properly served the Babaluci 

Defendants with the Complaint. 

 Since the Complaint was properly served on the Babaluci Defendants in 

accordance with Fed.R.Civ.P. 4, the Cross-Complaint constitutes a pleading filed after 

the original complaint and therefore requires service under Federal Rule of Civil 

Procedure 5. Fed.R.Civ.P. 5(a)(1)(B); see e.g. Kruska v. Perverted Justice Foundation 

Inc., 2010 WL 3156089, *3 (D. Ariz. 2010). One method of effecting proper service of a 

Cross-Complaint is to mail “it to the person’s last known address – in which event 

service is complete upon mailing.” Fed.R.Civ.P. 5(b)(2)(C). Drobnick mailed a copy of 

the Cross-Complaint to the Cross-Defendants on March 5, 2010. (Doc. 31). Then, on 

May 6, 2010, Drobnick had another copy of the Cross-Complaint served on the CrossDefendants including the registered agent for Babaluci Fresh Fruit & Vegetables, by 

mailing a copy of the Cross-Complaint to their last known addresses. (Doc. 77). 

 As such, Drobnick Distributing has effected proper service of its Cross-Complaint 

against the Cross-Defendants and the Cross-Defendants have failed to respond. Since the 

Court has determined that service of the Cross-Complaint was proper, the Court shall 

analyze the factors enunciated in Eitel to determine whether default judgment on the 

Cross-Complaint is appropriate in this case. 

B. Eitel Factors 

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1. Possibility of Prejudice to the Plaintiff 

 With respect to the first Eitel factor, Drobnick would suffer prejudice if the default 

judgment is not entered because it would otherwise be without recourse for recovery. 

Since the Cross-Defendants have failed to answer or otherwise respond to the allegations 

in the Cross-Complaint, the Cross-Defendants are deemed to have admitted the truth of 

those statements. See Danning v. Lavine, 572 F.2d 1386, 1389 (9th Cir. 1978). The 

evidence before this Court indicates that Drobnick will be prejudiced by its inability to 

recover damages for the Cross-Defendants’ breach of contract and breach of trust. This 

factor favors granting default judgment. 

2. Substantive Merits and Sufficiency of the Complaint 

 The second and third Eitel factors are interrelated and shall be considered in 

tandem. The Court will review Drobnick’s claims in the Cross-Complaint and weigh 

their substantive merits and sufficiency. 

 The Cross-Complaint alleges a breach of contract. The Cross-Complaint has 

pleaded the existence of a contract. It alleges that Drobnick performed its contractual 

duties and that the Cross-Defendants breached the agreement by not paying Drobnick the 

amount owed on the invoices. As such, the Cross-Complaint has sufficiently pled breach 

of contract. See Raymat Materials, Inc. v. A&C Catalysts, Inc., 2013 WL 3662477, *2 

(N.D. Cal. 2013). 

 The Cross-Complaint also alleges a breach of trust. To prevail on their breach of 

trust claim, Plaintiff must prove “a violation by the trustee of any duty which as trustee 

he owes to the beneficiary.” Boulder Fruit Exp. & Heger Organic Farm Sales v. 

Transportation Factoring, Inc., 251 F.3d 1268, 1271 (9th Cir. 2001). (quoting 

Restatement (Second) of Trusts § 201 (1959)). The federal regulations delineate a PACA 

trustee’s primary duty as follows: 

Commission merchants, dealers and brokers are required to maintain trust assets in a manner that such assets are freely available to satisfy outstanding obligations to sellers of 

perishable agricultural commodities. Any act or omission 

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which is inconsistent with this responsibility, including dissipation of trust assets, is unlawful and in violation of 

Section 2 of the Act, (7 U.S.C. 499b). 

 7 C.F.R. § 46.46(d)(1). “Dissipation” is defined as “any act or failure to act which 

could result in the diversion of trust assets or which could prejudice or impair the ability 

of unpaid suppliers, sellers, or agents to recover money owed in connection with produce 

transactions.” 7 C.F.R. § 46.46(a)(2). 

 In the instant case, the Cross-Complaint properly alleges the elements for a breach 

of the PACA trust. The Cross-Complaint identifies the PACA trust, and alleges a failure 

by the Cross-Defendants to pay trust funds to Drobnick for goods sold. The CrossComplaint further alleges that the Cross-Defendants dissipated trust assets. Accordingly, 

Drobnick has adequately pled its claims against the Cross-Defendants for breach of trust. 

The substantive merits and sufficiency of the Cross-Complaint favors granting default 

judgment. 

3. Amount of Money at Stake1

 The fourth Eitel factor directs the Court to consider the amount of money at stake 

in relation to the seriousness of the Cross-Defendants’ conduct. Eitel, 782 F.2d at 1471-

72. In this case, Drobnick seeks a total of $17,603.79 in unpaid transaction fees and 

interest. The unpaid transaction fees requested is $10,320.00. Pursuant to the 

outstanding transaction fee invoices, a penalty payment of 1.5% per month is owed on all 

unpaid invoices. The amount of interest owed on the unpaid transaction fees is presently 

$7,283.79. 

 Drobnick also seeks a total of $361,626.93 in damages and interest for the produce 

sold to Cross-Defendants pursuant to the terms set forth in the invoices. The amount of 

unpaid invoices for produce totals $212,519.80. Pursuant the invoices, a penalty payment 

 

1

 Drobnick has attached copies of all the invoices for unpaid produce and unpaid transaction fees that had been submitted to Babaluci as well as a spreadsheet itemizing the attorneys’ fees and costs incurred by Drobnick. 

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of 1.5% per month on any unpaid balance is charged. The total interest owed on the 

unpaid produce invoices is $149,107.13. 

 Additionally, Drobnick asserts that it never received any of the produce or any 

proceeds from the sale of the produce referenced in the invoices for $1,555,396.62, which 

are the subject of the Plaintiff’s First Amended Complaint. Further, Cross-Defendants 

were responsible for selling that produce and received all the proceeds from the sale of 

that produce. As such, Drobnick asserts that Cross-Defendants should be required to 

indemnify and hold harmless Drobnick against damages of $1,525,896.88 plus interest at 

the federal judgment rate, which was awarded to Plaintiff against Drobnick and Edward 

Drobnick pursuant to the Judgment entered in this case. (Doc. 139). 

 Finally Drobnick seeks $63,866.46 in attorneys’ fees and costs. In light of CrossDefendants failure to defend against this cause of action and the liquidated amount of 

damages sought, this Court finds that this factor favors granting default judgment. 

4. The Possibility of a Dispute Concerning Material Facts 

 The fifth Eitel factor contemplates the possibility of a dispute concerning material 

facts. Upon entry of default “the factual allegations of the complaint, except those 

relating to the amount of damages, will be taken as true.” Televideo Systems, Inc. v. 

Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (internal citations omitted). The CrossDefendants have had more than an ample amount of time to defend against Drobnick’s 

claims, yet they have not done so. As such, there are no material facts in dispute. Thus, 

this factor favors the entry of default judgment. 

5. Whether Default Was Due to Excusable Neglect 

 The sixth Eitel factor considers whether the default was due to excusable neglect. 

The Cross-Defendants were served via first class mail on March 5, 2010 and again on 

May 6, 2010. (Docs. 31, 77). There is no evidence before this Court to indicate that the 

Cross-Defendants failure to answer or otherwise respond to the Cross-Complaint is due to 

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excusable neglect. Indeed, in light of the amount of time that has passed since service of 

the Cross-Complaint and Cross-Defendants Marco Siqueiros’s appearance at the April 

2010 evidentiary hearing, it seems unlikely that Cross-Defendants’ failure to respond 

could be attributable to excusable neglect. As such, this factor favors entry of default 

judgment. 

6. Public Policy Favoring Decisions on the Merits 

 The seventh Eitel factor involves “the strong public policy underlying the Federal 

Rules of Civil Procedure favoring decisions on the merits.” Eitel, 782 F.2d at 1472. This 

concept, however, is not an absolute. Rule 55(a), Federal Rules of Civil Procedure, 

specifically contemplates “termination of a case before hearing the merits . . . whenever a 

defendant fails to defend an action.” Pepsico, Inc. v. California Security Cans, 238 

F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Thus, despite the strong public policy in favor of 

decisions on the merits, cases such as this make “a decision on the merits impractical, if 

not impossible.” Id. As such, this Court is not precluded from entering default judgment 

against the Cross-Defendants, and finds that default judgment is appropriate. 

 Accordingly, IT IS HEREBY ORDERED that: 

 1. Drobnick’s Supplemental Notice of Application and Application for Entry 

of Default Judgment is GRANTED. (Doc. 159). 

 2. Cross-Defendants Babaluci Fresh Fruit & Vegetables LLC aka Whole 

Foods & Vegetables and Marco Siqueiros, jointly and severally, shall pay Drobnick 

Distributing Inc. damages in the amount of $379,230.72. 

 3. Cross-Defendants Babaluci Fresh Fruit & Vegetables LLC aka Whole 

Foods & Vegetables and Marco Siqueiros, jointly and severally, shall pay Drobnick 

Distributing Inc.’s attorneys’ fees and costs in the amount of $63,866.46. 

 4. Interest on the total principal amount of this Judgment of $443,097.18 at 

the federal judgment rate as specified in 28 U.S.C. §1961 shall accrue from the date of 

this Judgment until paid. 

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 5. Cross-Defendants Babaluci Fresh Fruit & Vegetables LLC aka Whole 

Foods & Vegetables and Marco Siqueiros, shall indemnity and hold harmless Drobnick 

Distributing, Inc., and its officers, directors and shareholders, including, without 

limitation, Edward and Deborah Drobnick against the $1,525.896.88, plus interest at the 

federal judgment rate, which is owed by Drobnick Distributing, Inc., and Edward 

Drobnick to Plaintiff William Consalo & Sons Farms, Inc. pursuant to the Judgment 

entered in this case. 

 6. The Clerk of the Court shall enter judgment in favor of Drobnick 

Distributing, Inc. and against Babaluci Fresh Fruit & Vegetables LLC aka Whole Foods 

& Vegetables and Marco Siqueiros. 

 Dated this 6th day of December, 2013. 

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