Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00109/USCOURTS-caed-1_07-cv-00109-4/pdf.json

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

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GRIMMWAY ENTERPRISES, INC.

D/B/A GRIMMWAY FARMS, a

California corporation and

NATURIPE FARMS LLC f/k/a

GLOBAL BERRY FARMS, LLC, a

Delaware Limited Liability

Company,

Plaintiffs,

v.

PIC FRESH GLOBAL, INC., a

California corporation; and

JEFFREY D. CASE, an

individual,

Defendants.

1:07-CV-00109 OWW-TAG

MEMORANDUM DECISION RE

GRANTING PLAINTIFFS’ MOTION

FOR PARTIAL SUMMARY JUDGMENT

(DOC. 36)

1. INTRODUCTION

Plaintiffs Grimmway Enterprises, Inc. d/b/a Grimmway Farms

(“Grimmway”), a California Corporation and Naturipe Farms LLC

f/k/a Global Berry Farms, LLC, a Delaware Limited Liability

Company (“Naturipe”) move for partial summary judgment on their

breach of fiduciary claim, pursuant to Federal Rules of Civil

Procedure 56 against Pro Se Defendant Jeffrey D. Case (“Case”). 

Plaintiffs claim Defendant Case is personally liable for

$16,336.00 (inclusive of attorney’s fees and post-judgment

interest). Defendant Case did not appear for the hearing nor did

Defendant file an opposition to this motion. This matter was

heard on January 14, 2008. 

Case 1:07-cv-00109-OWW -GSA Document 44 Filed 02/26/08 Page 1 of 22
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2. PROCEDURAL BACKGROUND

Plaintiffs Grimmway and Naturipe filed their complaint on

January 19, 2007. (Doc. 1, Initial Complaint) Plaintiffs then

filed an amended complaint on January 29, 2007 and an

accompanying application for injunctive relief to enforce

Plaintiffs’ rights under the trust provisions of the Perishable

Agricultural Commodities Act of 1930, as amended, 7 U.S.C. §499e

(“PACA”) against Defendants PIC Fresh Global, Inc. (“PIC Fresh”)

and Case. (Doc. 7, Amended Complaint (“Complaint”)) On January

29, 2007, the Court issued a temporary restraining order, which

among other things, required PIC Fresh to discontinue any further

dissipation of PACA trust assets and other assets which may or

may not be impressed with the PACA trust, pending a hearing on

Plaintiffs’ motion for preliminary injunction and decision of the

Court. (Doc. 17, Temporary Restraining Order) 

A settlement agreement was entered into by the parties in

February 2007 (“Settlement Agreement”); thereafter on February

12, 2007 a judgment was entered in favor of Plaintiffs and

against Defendant PIC Fresh in the aggregate amount of

$48,179.60, inclusive of interest and attorney’s fees, as of the

date of the Order and the case was dismissed. (Doc. 22, Judgment

Order) After Defendant PIC Fresh breached the Settlement

Agreement the case was reopened against Defendant Case and a

final judgment entered in favor of Plaintiffs and against PIC

Fresh in the amount of $12,236.37 on August 15, 2007. (Doc. 27,

Motion to Reopen Case and Final Judgment and Doc. 27, Final

Judgment Order) 

On September 10, 2007 Defendant Case filed an answer to

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Plaintiffs’ Complaint, admitting certain allegations in the

Complaint but claiming no assets remained in the PACA trust and

denying any personal liability. (Doc. 29, Answer) Plaintiffs

filed their motion for partial summary judgment on their breach

of fiduciary duty claim against Defendant Case on November 30,

2007. (Doc. 36, Motion for Summary Judgment) Defendant Case has

not filed any responsive pleadings to Plaintiffs’ Motion for

Summary Judgment nor did Defendant Case appear at oral argument

on January 14, 2008. After this matter was heard, Plaintiffs’

counsel, Lawrence H. Meuers filed a declaration on January 17,

2008 for the calculations of attorney’s fees and post-judgment

interest. (Doc. 42, Meuers Decl.)

3. FACTUAL BACKGROUND

A. Statement of Facts

1. Plaintiffs Grimmway and Naturipe are engaged in the

business of buying and selling wholesale quantities of perishable

agricultural commodities (“Produce”) in interstate commerce.

(Doc. 35, PSUF No. 3) (Doc. 7, Complaint ¶ 2, Doc. 29, Answer ¶

1)

2. PIC Fresh is a California Corporation with its principal

place of business located at 7701 Palodura Ct., Bakersfield,

California. (PSUF No. 4) (Doc. 7, Complaint ¶ 3(a), Doc. 29,

Answer ¶ 1)

3. At all relevant times, PIC Fresh was a commission

merchant dealer or broker operating subject to the provisions of

PACA, 7 U.S.C. §§499a-499t. (PSUF No. 5) (Doc. 7, Complaint ¶ 72,

Doc. 29, Answer ¶ 1)

4. Defendant Case was President and Principal of PIC Fresh.

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(PSUF No. 18 and Exhibit B, Defendant PIC Fresh’s license listing

Defendant Case as the “Principal”) (Doc. 7, Complaint, ¶¶ 3(b),

39, 40, Doc. 29, Answer, ¶¶ 1-4) 

5. Plaintiffs sold Produce to PIC Fresh in interstate

commerce, and PIC Fresh purchased Produce from Plaintiffs. (PSUF

No. 6) (Doc. 7, Complaint ¶ 8, Doc. 29, Answer ¶ 1)

6. PIC Fresh failed to pay for its purchase of Produce from

Plaintiffs. (PSUF No. 7) (Doc. 7, Complaint ¶ 12, Doc. 29, Answer

¶ 1)

7. On or about January 29, 2007, a Complaint and

accompanying application for injunctive relief were filed by

Plaintiffs Grimmway and Naturipe to enforce their rights under

the trust provisions of PACA against Defendants PIC Fresh and

Case. (PSUF No. 8) (Doc. 7, Complaint)

8. On January 29, 2007, the Court issued a TRO, which among

other things, required PIC Fresh to discontinue any further

dissipation of PACA trust assets, pending a hearing on

Plaintiffs’ motion for preliminary injunction and decision of the

Court. (PSUF No. 9) (Doc. 17, Temporary Restraining Order)

9. In order to avoid the cost, expense and time involved in

litigating the various claims asserted by Plaintiffs against

Defendants, Plaintiffs entered into a Settlement Agreement to

settle and compromise all claims asserted against PIC Fresh and

Case. (PSUF No. 10 and Exhibit A, Settlement Agreement)

10. Pursuant to the Settlement Agreement, a Judgment was

entered in favor of Plaintiffs and against PIC Fresh in the

aggregate amount of $48,179.60, inclusive of interest and

attorneys’ fees as of the date of the $48,179.60 Judgment Order

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(“Settlement Amount”). (PSUF No. 11) (Doc. 22, Judgment Order)

11. Plaintiffs’ claims against Defendant Case were

dismissed without prejudice. (PSUF No. 12) (Doc. 22, Judgment

Order)

12. Since execution of the Settlement Agreement, PIC Fresh

has only paid $40,089.80 of the entire Settlement Amount, with a

balance of $8,089.80. (PSUF No. 13) (Doc. 24, Affidavit, Steven

M. De Falco, Attorney for Plaintiffs, and Doc. 27, Final Judgment

Order)

13. Plaintiffs have received no further payments from PIC

Fresh, and therefore according to the Settlement Agreement, PIC

Fresh is in default. (PSUF No. 14) (Doc. 24, Affidavit, Steven M.

De Falco, Attorney for Plaintiffs and Doc. 27, Final Judgment

Order)

14. As a result of PIC Fresh’s breach of the Settlement

Agreement, the Court on August 15, 2007, entered a Final Judgment

in favor of Plaintiffs Grimmway and Naturipe and against

Defendant PIC Fresh in the total amount of $12,236.37, inclusive

of attorney’s fees and post-judgment interest. (PSUF No. 15)

(Doc. 27, Final Judgment Order)

15. This Court reopened the case against Defendant Case on

August 15, 2007. (PSUF No. 16) (Doc. 27, Final Judgment Order)

16. On September 10, 2007, Defendant Case filed an Answer to

the Complaint. (PSUF No. 17) (Doc. 29, Answer)

17. Defendant Case controlled PIC Fresh’s operations and

financial dealings in connection with the PACA trust assets of

PIC Fresh and admits the outstanding balance of $12,236.37, but

denies any personal liability. (PSUF No. 19) (Doc. 7, Complaint ¶

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42, Doc. 29, Answer, ¶¶ 1, 4)

18. Plaintiffs Accounts Receivable Supervisor for Credit and

Collections at Grimmway, Pamela Terry, claims that she spoke on

several occasions with Defendant Case to determine when Grimmway

would receive payments from PIC Fresh on outstanding invoices. 

(Doc. 33, Pamela Terry Decl., ¶¶ 1, 9)

19. On one occasion Ms. Terry states that she was informed

by another individual at PIC Fresh that Defendant Case was the

individual who decided when Grimmway would receive payment on

outstanding balances. (PSUF No. 20) (Doc. 33, Pamela Terry Decl.,

¶ 10).

4. LEGAL STANDARDS

A. Standard of Review

Summary judgment is warranted only "if the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact." Fed. R. Civ. P. 56(c);

California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998). 

Therefore, to defeat a motion for summary judgment, the

non-moving party must show (1) that a genuine factual issue

exists and (2) that this factual issue is material. Id. A

genuine issue of fact exists when the non-moving party produces

evidence on which a reasonable trier of fact could find in its

favor viewing the record as a whole in light of the evidentiary

burden the law places on that party. See Triton Energy Corp. v.

Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995); see also

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252-56 (1986). 

Facts are "material" if they "might affect the outcome of the

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suit under the governing law." Campbell, 138 F.3d at 782 (quoting

Anderson, 477 U.S. at 248). 

The nonmoving party cannot simply rest on its allegations

without any significant probative evidence tending to support the

complaint. Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir.

2001). 

[T]he plain language of Rule 56(c) mandates the entry

of summary judgment, after adequate time for discovery

and upon motion, against a party who fails to make a

showing sufficient to establish the existence of an

element essential to that party's case, and on which

that party will bear the burden of proof at trial. 

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). The more

implausible the claim or defense asserted by the nonmoving party,

the more persuasive its evidence must be to avoid summary

judgment. See United States ex rel. Anderson v. N. Telecom, Inc.,

52 F.3d 810, 815 (9th Cir. 1995). Nevertheless, the evidence

must be viewed in a light most favorable to the nonmoving party.

Id.; Anderson, 477 U.S. at 255.

B. Plaintiffs’ Motion for Summary Judgment against Defendant

Case for Breach of Fiduciary Duty Claim

Plaintiffs Grimmway and Naturipe bring this motion for

partial summary judgment against Defendant Case, as President of

PIC Fresh for breach of fiduciary duty, claiming Defendant Case

is personally liable due to his control of the assets as trustee

under the PACA trust for the $12,236.37 unpaid portion of their

PACA trust claims, plus post-judgment interest and attorney’s

fees. 

“When, as is the case here, the moving party is a plaintiff,

he or she must adduce admissible evidence on all matters as to

which he or she bears the burden of proof.” Zands v. Nelson, 797

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F.Supp. 805, 808 (S.D.Cal. 1992); Schwarzer, Tashima, &

Wagstaffe, Federal Civil Practice Before Trial 14:140 (2007). As

a result, the Court will evaluate individual liability, for a

breach of fiduciary claim under a PACA trust as to Defendant Case

to determine whether there is genuine issue of material fact as

to any element of Plaintiffs’ claim for relief.

In addition, it should be noted that Defendant Case filed no

opposition to Plaintiffs’ Motion. “If the opposing party does

not so respond, summary judgment should, if appropriate, be

entered against that party.” Fed. R. Civ. P. 56(e)(2) (emphasis

added). “The language of the rule [56(e)] is permissive,

conferring discretion upon the district judge to determine

whether non-compliance should be deemed consent to a given

motion. That discretion, however, is necessarily abused when

exercised to grant a motion for summary judgment where the

movant's papers are insufficient to support that motion or on

their face reveal a genuine issue of material fact.” Henry v.

Gill Industries, Inc., 983 F.2d 943, 950 (9th Cir. 1993). 

Federal Rules of Civil Procedure Rule 56(c) requires that

the moving party to show there is no genuine issue as to any

material fact but also that the movant is entitled to judgment as

a matter of law:

The judgment sought should be rendered if the

pleadings, the discovery and disclosure materials on

file, and any affidavits show that there is no genuine

issue as to any material fact and that the movant is

entitled to judgment as a matter of law.

Fed.R.Civ.P. 56(c).

C. PACA

PACA, 7 U.S.C. § 499a-499t, was enacted in 1930 with the

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intent of “preventing unfair business practices and promoting

financial responsibility in the fresh fruit and produce

industry.” Farley and Calfee, Inc. v. U.S. Dept. of Agric., 941

F.2d 964, 966 (9th Cir. 1991). PACA regulates trading in

agricultural commodities, e.g. fruits and vegetables. PACA

requires all brokers and dealers in perishable agricultural

commodities to obtain licenses from the Secretary of Agriculture.

Id.; 7 U.S.C. §§ 499c, 499d. Dealers violate PACA if they do not

pay promptly and in full for any perishable commodity in

interstate commerce. 7 U.S.C. § 499b(4).

“Such liability may be enforced either (1) by complaint to

the Secretary ... or (2) by suit in any court of competent

jurisdiction; but this section shall not in any way abridge or

alter the remedies now existing at common law or by statute, and

the provisions of this chapter are in addition to such remedies.”

7 U.S.C. § 499e(b).

In 1984 PACA was amended to address the uncertain financial

arrangements created by dealers receiving goods without payment. 

A statutory trust was provided by Congress under PACA on behalf

of suppliers and sellers that were unpaid.

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.

Id. at § 499e(c)(2); see also 7 C.F.R. § 46.46 (2007). “This

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provision imposes a ‘non-segregated floating trust’ on the

commodities and their derivatives, and permits the commingling of

trust assets without defeating the trust.” Boulder Fruit Exp. &

Heger Organic Farm Sales v. Transportation Factoring, Inc., 251

F.3d 1268, 1270 (9th Cir. 2001).

The statute further provides that to preserve one's rights

as a beneficiary of a PACA trust, notice must be given by the

seller to the dealer and the Secretary of Agriculture within

thirty calendar days (i) after expiration of the time prescribed

by which payment must be made, as set forth in regulations issued

by the Secretary, (ii) after expiration of such other time by

which payment must be made, as the parties have expressly agreed

to in writing before entering into the transaction. The

regulations promulgated pursuant to this section provide that the

maximum time parties may agree upon for payment is thirty days

from the date of receipt and acceptance of the goods. 7 C.F.R. §

46.46(f)(1) & (2).

PACA trust rights may be enforced through the Secretary of

Agriculture issuing an order (and subsequent judicial

enforcement), 7 U.S.C. § 499f & g, or through judicial

enforcement in federal court in a breach of fiduciary trust

action, 7 U.S.C. § 499e(c)(5). “The several district courts of

the United States are vested with jurisdiction specifically to

entertain (i) actions by trust beneficiaries to enforce payment

from the trust, and (ii) actions by the Secretary to prevent and

restrain dissipation of the trust.” 7 U.S.C. § 499e(c)(5).

D. INDIVIDUAL LIABILITY UNDER PACA

The Ninth Circuit along with several other circuits

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recognize that individuals may be liable under a PACA trust

theory. “[I]ndividual 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.” Sunkist Growers, Inc.

v. Fisher, 104 F.3d 280, 283 (9th Cir. 1997). “Anyone found to

be a PACA ‘dealer’ is subject to liability under PACA section

499b, which makes unlawful unfair conduct including the failure

to maintain a statutory trust....If deemed a PACA ‘dealer,’ an

individual is liable for his own acts, omissions, or failures

while acting for or employed by any other dealer.” Id. (citations

and quotations omitted); see also Hiller Cranberry Products, Inc.

v. Koplovsky, 165 F.3d 1, 8-9 (1st Cir. 1999) (“An individual who

is in the position to control the trust assets and who does not

preserve them for the beneficiaries has breached a fiduciary

duty, and is personally liable for that tortious act.”); GolmanHayden Co., Inc. v. Fresh Source Produce Inc., 217 F.3d 348, 351

(5th Cir. 2000) (“We join our colleagues in the Ninth Circuit and

hold that individual shareholders, officers or directors of a

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

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

held personally liable under PACA.”); Patterson Frozen Foods,

Inc. v. Crown Foods Int’l, Inc., 307 F.3d 666, 669 (7th Cir.

2002); Bronia, Inc. v. Ho, 873 F.Supp. 854, 861 (S.D.N.Y. 1995)

(sole shareholder, director, and president of corporation

personally liable for corporation's breach of PACA trust under

Morris Okun).

Under California law, a trustee's duties include the duty of

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loyalty, the duty to avoid conflicts of interest, the duty to

preserve trust property, the duty to make the trust property

productive, the duty to dispose of improper investments, and the

duty to report and account. City of Atascadero v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 68 Cal.App.4th 445, 462, 80

Cal.Rptr.2d 329 (Cal.Ct.App. 1998) (emphasis added). A trustee

is bound to act in the highest good faith toward the

beneficiaries and must not occupy a position where his or her

interests either conflict with those of the beneficiaries or even

where the trustee is exposed to the temptation of acting contrary

to the best interest of the beneficiaries.” In re Brown's Estate,

22 Cal.App.2d 480, 485, 71 P.2d 345 (Cal.Ct.App. 1937) 

Individual liability under PACA extends only to those “who are in

a position to control PACA trust assets, and who breach their

fiduciary duty to preserve those assets.” Sunkist Growers, Inc.,

104 F.3d at 283. 

5. DISCUSSION

A. JURISDICTION

The District Court has jurisdiction over this civil action

arising under §5(c)(5) of PACA, 7 U.S.C. §499e(c)(5), pursuant to

28 U.S.C. §1331.

B. INDIVIDUAL LIABILITY UNDER PACA

Plaintiffs bring this Motion for Summary Judgment against

Defendant Case on their breach of fiduciary duty action claiming

no genuine issue as to any material fact exists that Defendant

Case was President and Principal of PIC Fresh and in this

position controlled PIC Fresh operations and financial dealings,

including distribution of PIC Fresh PACA trust assets and

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therefore is personally liable. (Doc. 36, Motion for Summary

Judgment, p. 2:2-10) Defendant Case has filed no opposition to

this Motion for Summary Judgment in defense of Plaintiffs’

motion.

Individual liability under PACA extends to those "who are in

a position to control PACA trust assets, and who breach their

fiduciary duty to preserve those assets." Sunkist, 104 F.3d at

283. 

Defendant Case, representing himself pro se, admitted in his

Answer to Plaintiffs’ Complaint that (a) Plaintiffs Grimmway and

Naturipe are engaged in the buying and selling wholesale

quantities of Produce in interstate commerce. See Doc. 7,

Complaint ¶ 2 and Doc. 29, Answer ¶ 1; (b) Defendant PIC Fresh is

a California corporation, a commission merchant dealer or broker

operating subject to PACA. See Doc. 7, Complaint ¶ 7 and Doc. 29,

Answer ¶ 1; (c) Plaintiffs sold Produce between September 20,

2006 and December 13, 2006 to PIC Fresh and PIC Fresh purchased

the Produce from Plaintiffs in interstate commerce Produce in the

total amount of $42,179.60. See Doc. 7, Complaint ¶ 8 and Doc.

29, Answer ¶ 1; (d) Pursuant to PACA, 7 U.S.C. § 499e(c), at the

time of PIC Fresh’s receipt of the Produce, PIC Fresh became

trustee of the PACA trust for the benefit of Plaintiffs in the

amount of $42,179.60. The PACA trust consists of all PIC Fresh’s

inventories of Produce, food or products derived from Produce

(“Products”), accounts receivable and other proceeds of the sale

of Produce or Products, and assets commingled or purchased or

otherwise acquired with proceeds of such Produce or Products

(assets subject to the PACA trust are hereinafter referred to as

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“PACA Trust Assets”). See Doc. 7, Complaint ¶ 10 and Doc. 29,

Answer ¶ 1; (e) Plaintiffs gave written notice of intent to

preserve trust benefits to PIC Fresh in accordance with the PACA

Amendments of 1995 by including the statutory trust language, as

set forth in 7 U.S.C. §499e(c)(4), on each of their invoices and

by sending those invoices to PIC Fresh. See Doc. 7, Complaint ¶

11 and Doc. 29, Answer ¶ 1; (f) PIC Fresh failed to pay for the

Produce despite Plaintiffs’ repeated demands. See Doc. 7,

Complaint ¶ 12 and Doc. 29, Answer ¶ 1; (g) Pursuant to PACA, 7

U.S.C. §499e(c), Plaintiffs are unpaid suppliers and sellers of

Produce, and are entitled to PACA trust protection and payment

from PIC Fresh’s PACA Trust Assets. See Doc. 7, Complaint ¶ 13

and Doc. 29, Answer ¶ 1; (h) PACA requires PIC Fresh, as a PACA

trustee, to hold its PACA Trust Assets in trust for the benefit

of Plaintiffs and all other unpaid suppliers of Produce until all

such suppliers have received full payment; PIC Fresh has failed

to maintain sufficient trust assets to fully satisfy all

qualified PACA trust claims, including Plaintiffs’ asserted

herein. See Doc. 7, Complaint ¶ 23-24 and Doc. 29, Answer ¶ 1;

(i) As a direct result of PIC Fresh’s failure to properly

maintain and protect the PACA Trust Assets from dissipation,

Plaintiffs have suffered damages which are covered under the PACA

trust in the amount of $12,236.37 (inclusive of attorney’s fee

and post-judgment interest through August 6, 2007), the balance

reduced by prior payments. See Doc. 7, Complaint ¶¶ 23-24 and

Doc. 29, Answer ¶ 1; (j) At all times relevant to this action,

Defendant Case was the principal, president, officer, director,

shareholder and employee of PIC Fresh. See Doc. 7, Complaint ¶ ¶

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3(b), 39-40 and Doc. 29, Answer ¶ ¶ 1, 3; and (k) Defendant Case

was the principal of PIC Fresh, and controlled its operations and

financial dealings, but denies that his actions give rise to

personal liabilities of the corporation and claims no assets in

the PACA trust remain. See Doc. 29, Answer ¶ ¶ 1, 4. 

However, despite Defendant Case’s assertion that no PACA

trust assets remain, Case can be held personally liable as a

trustee for a PACA trust under a breach of fiduciary claim.

Sunkist Growers, Inc., 104 F.3d at 283. Defendant Case admitted

in his Answer that he is the President, Principal, officer,

director and shareholder of PIC Fresh and in that capacity

controlled or was in the position to control the assets of PIC

Fresh, however he denied allegations in Plaintiffs’ Complaint

that he had a duty to ensure PIC Fresh fulfilled its duties as a

PACA trustee and maintain PACA Trust Assets in such a manner as

to ensure there were, at all times, sufficient trust assets

available to satisfy all outstanding PACA trust obligations. See

Doc. 7, Complaint, ¶ ¶ 40-42 and Doc. 29, Answer, ¶ 4. Defendant

Case also denied in his Answer that he breached his fiduciary

duty and denies personally being liable to direct PIC Fresh to

fulfill its duties as PACA trustee (to preserve and maintain

sufficient PACA trust assets) which as a result of the breach,

Plaintiffs incurred damages. See Doc. 7, Complaint, ¶ ¶ 44, 46 and

Doc. 29, Answer, ¶ 4. Defendant Case has not submitted evidence

to support the denials in his Answer. 

Plaintiffs submits in support of their breach of fiduciary

claim, a declaration by Plaintiff Grimmway’s Accounts Receivable

Supervisor for Credit and Collections, Pamela Terry, who

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personally attempted to collect Grimmway’s unpaid invoices from

PIC Fresh. (Doc. 33, Pamela Terry Decl., ¶ 3) She claims that

throughout Grimmway’s relationship with PIC Fresh she spoke with

Defendant Case and Justin Case regarding PIC Fresh’s business

operations. (Doc. 33, Pamela Terry Decl., ¶ 8) In particular,

she spoke on several occasions with Defendant Case to determine

when Grimmway would receive payments from PIC Fresh on

outstanding invoices. (Doc. 33, Pamela Terry Decl., ¶¶ 1, 9) On

one occasion Ms. Terry states that she was informed by PIC Fresh,

through Justin Case, that Defendant Case was the individual who

decided when Grimmway would receive payment on outstanding

balances. (PSUF No. 20) (Doc. 33, Pamela Terry Decl., ¶ 10) 

Whether Defendant Case is secondarily liable is dependent on

(1) whether his involvement with the corporation was sufficient

to establish legal responsibility, and (2) whether Defendant

Case, by failing to exercise any appreciable oversight of the

corporation's management, breached a fiduciary duty owed to PACA

creditors, Plaintiffs Grimmway and Naturipe. Golman-Hayden Co.,

Inc. v. Fresh Source Produce Inc., 217 F.3d 348, 350 (5th Cir.

2000). In Golman-Hayden Co., the court held “It is undisputed

that Tomaneng is the sole owner of Fresh Source. As the sole

shareholder, he manifestly had absolute control of the

corporation. Although Tomaneng maintains that he was a passive

shareholder, he may not escape liability based on a real or

claimed failure to exercise his right and obligation to control

the company. We conclude that his refusal or failure to exercise

any appreciable oversight of the corporation's management was a

breach of his fiduciary duty to preserve the trust assets.” 217

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F.3d at 351. 

Although Defendant Case cannot be held secondarily liable

merely because he served as a corporate officer or shareholder,

it has been established that Defendant Case’s involvement with

PIC Fresh was more than passive and he is legally responsible

under PACA. The PACA license lists Defendant Case as the

reported principal of PIC Fresh. (Doc. 35, PSUF, Exhibit B, PACA

license) Defendant Case admits he is the Principal, President,

director and shareholder of PIC Fresh. Defendant Case admitted

in his Answer that he controlled PIC Fresh’s operations and

financial dealings. Ms. Terry of Grimmway stated in her

declaration that she frequently spoke with Defendant Case

regarding PIC Fresh’s business operations and on several

occassions to determine when payment would be made by PIC Fresh

on outstanding invoices. Ms. Terry was informed by PIC Fresh,

through Justin Case, that Defendant Case was the person who

decided if and when Grimmway would receive payment. 

In Shepard v. K.B. Fruit & Vegetable, Inc., 868 F.Supp. 703

(E.D.Pa. 1994), a Pennsylvania District Court case, individuals

were held liable after the court found they demonstrated an

“active involvement” in the operation of the business, including

evidence that they established the corporation, exercised legal

control as officers and directors, they were signatories on a

banking agreement, applied for the businesses tax identification

number, paid rent after the business ceased and stored some of

its own produce at the business. “The record demonstrates that

the Kalecks were not merely uninvolved ‘silent’ corporate

officers or shareholders, but rather established the business,

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albeit for Blumberg's sake, used the premises and took action to

continue the business after Blumberg abandoned it.” Id. at 706. 

In Morris Okun, Inc. v. Harry Zimmerman, Inc., 814 F.Supp. 346

(S.D.N.Y. 1993), the court determined thata sole shareholder of

the corporation licensed to sell produce under PACA was

secondarily liable to PACA trust creditors as a corporate

fiduciary: “An individual who is in the position to control the

trust assets and who does not preserve them for the beneficiaries

has breached a fiduciary duty and is personally liable for that

tortious act.” Id. at 348. 

Plaintiffs bear the burden of proof to prove a breach of

fiduciary duty claim and have submitted pleadings and affidavits

to demonstrate there is no genuine issue as to any material fact

as to Defendant Case’s breach of fiduciary under the PACA trust.

Fed. R. Civ. P. 56(c); California v. Campbell, 138 F.3d 772, 780

(9th Cir. 1998). Defendant Case is personally liable for the

outstanding amount due under the Settlement Agreement. While

Defendant Case filed no opposition to Plaintiffs’ Motion for

Summary Judgment and it is in the discretion of the District

Judge to determine if summary judgment should entered in favor of

Plaintiff due to the non-response of opposing party, Fed. R. Civ.

P. 56(e), summary judgment is justified because Plaintiffs’

evidence proves an implied PACA obligation and Defendant Case

actively participated in PIC Fresh’s operations. He is

personally liable. See Henry v. Gill Industries, Inc., 983 F.2d

943, 950 (9th Cir. 1993). 

Defendants’ motion for partial summary judgment against

Defendant Case for breach of fiduciary duty is GRANTED.

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C. ATTORNEY’S FEES AND POST-JUDGMENT INTEREST

I. ATTORNEY’S FEES

Plaintiffs are also seeking attorney’s fees from Defendant

Case. See Doc. 34, Declaration of Plaintiffs’ Attorney Steven M.

De Falco. Plaintiffs do not provide any briefing on this issue. 

The Ninth Circuit in Middle Mountain Land and Produce Inc. v.

Sound Commodities Inc., 307 F.3d 1220 (9th Cir. 2002) describes

the awarding of attorney’s fees in a PACA trust suit:

First, turning to attorneys' fees, the district court

has limited authority to grant attorneys' fees to PACA

claimants. Unlike the British legal system rule, in

which the winner automatically gets attorneys' fees,

the rule in American courts, commonly known as the

American Rule, looks with disdain upon awarding

attorneys' fees unless an independent basis exists for

the award. See Alyeska Pipeline Serv. Co. v. Wilderness

Soc'y, 421 U.S. 240, 257-59, 95 S.Ct. 1612, 44 L.Ed.2d

141 (1975) (noting that exceptions to the "American

Rule" that prevailing party is not entitled to

attorneys' fees include (1) statutory basis, (2)

enforceable contract, (3) willful violation of court

order, (4) bad faith action, and (5) litigation

creating common fund for the benefit of others). Under

PACA, we have held that a court should award attorneys'

fees to a PACA claimant whose litigation efforts "are

directly responsible for the availability of the funds

from the statutorily created trust." In re Milton

Poulos, 947 F.2d at 1353 (parties deserved fee award

because litigation efforts caused bankruptcy court to

"declare[ ] the trust valid and enforceable."). In such

cases, the "common fund" exception of Alyeska entitles

the litigant to an attorneys' fees award out of the

trust assets. Nonetheless, if the litigant is not

responsible for the availability of the trust funds,

the district court cannot award attorneys' fees to PACA

claimants, unless the PACA claimant has another

independent legal basis for attorneys' fees under an

Alyeska exception. Alyeska, 421 U.S. at 259, 95 S.Ct.

1612; see, e.g., Golman-Hayden Co. v. Fresh Source

Produce Inc., 217 F.3d 348, 352-353 (5th Cir.2000).

307 F.3d at 1225.

Here, the Settlement Agreement entered into by Plaintiffs

and Defendants provides an independent contractual right to

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 The Final Judgment Order was inclusive of attorney's fees 1

charged prior to entry of the Final Judgment, entered on August

15, 2007. $2,904.00 is the amount earned after August 15, 2007.

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attorney’s fees. See Doc. 35, Statement of Undisputed Facts,

Exhibit A, Settlement Agreement, ¶ 19, Rights of Prevailing

Party. In the provision of the Settlement Agreement entitled

Rights of Prevailing Party it states:

If any lawsuit or other legal action is brought as

between or among any of the Parties hereto relating to,

arising out of, or to enforce, any of the provisions of

this Agreement, the prevailing Party shall be entitled

to collect its reasonable attorneys’ fees and costs

incurred in connection therewith.

Id.

While Plaintiffs may also be afforded attorney’s fees based

on establishing a “common fund,” see In re Milton Poulos, Inc.,

947 F.2d 1351, 1353 (9th Cir. 1991), this is unnecessary as an

explicit contractual basis exists.

Plaintiffs’ counsel, Mr. Meuers, has personal knowledge of

the attorneys fees accrued and declares under penalty of perjury

that $5,192.00 has been billed on this matter. (Doc. 42, Meuers

Decl. ¶ 8) The amount billed from August 15, 2007, the date of

entry of the Final Judgment, to the present is $2,904.00. This 1

amount is reasonable and necessary for Plaintiffs to obtain a

default judgment against the elusive Defendant in this matter. 

Therefore, Plaintiffs shall recover $2,904.00 in attorney’s fees

and costs.

II. POST-JUDGMENT INTEREST

Finally, Plaintiffs also seek post-judgment interest, (Doc.

42, Meuers Decl. ¶ 9), on the outstanding amount due under the

Settlement Agreement pursuant to paragraph 8 of the Settlement

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 Defendants paid Plaintiffs $32,000.00 on February 2, 2007 2

and $8,089.80 on February 28, 2007. See Doc. 42-3, Meuers Decl.,

Exhibit B, Trust Chart.

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Agreement which states:

8. Remedies for Default. In the event of a Default,

Plaintiffs may request the Court to ... execute upon

the Judgment against PIC Fresh in the amount of

$48,179.60, plus interest accruing at the post-judgment

rate from the date of entry of the Judgment, plus

attorneys’ fees incurred in enforcing the terms of this

Agreement, less any payments made. 

(Doc. 35, Statement of Undisputed Facts, Exhibit A, Settlement

Agreement, ¶ 8) Plaintiffs are entitled pursuant to statute to

post-judgment interest which accrues on an unpaid federal

judgment and is governed by federal law. “Such interest shall be

calculated from the date of the entry of the judgment, at a rate

equal to the weekly average 1-year constant maturity Treasury

yield, as published by the Board of Governors of the Federal

Reserve System, for the calendar week preceding.” 28 U.S.C. §

1961. 

A judgment was entered on February 12, 2007 for the amount

of $48,179.60. (Doc. 22, Judgment) And a final judgment was

entered on August 15, 2007 for $12,236.37, after Defendants paid

$40,089.80, leaving an unpaid balance due under the Settlement

Agreement. The final judgment consists of that remaining 2

balance along with attorney’s fees and post-judgment interest

through August 6, 2007. (Doc. 27, Final Judgment and Doc. 24,

DeFalco Affid.) 

The most recent calculations provided by Plaintiffs, after

oral argument, in Exhibit A, to Meuers Decl., (See Doc. 42,

Meuers Decl.), calculate post-judgment interest from February 2,

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The Final Judgment Order of August 15, 2007 includes the 3

amount outstanding under the Settlement Agreement plus attorney’s

fees and post-judgment interest through August 6, 2007. The

statutes states: “Such interest shall be calculated from the date

of the entry of the judgment...” 28 U.S.C. § 1961. On August 9,

2007 the post-judgment rate was 4.78%. The post-judgment

interest amount is calculated from August 15, 2007 through

February 25, 2008. “Interest shall be computed daily to the date

of payment except as provided in section 2516(b) of this title

and section 1304(b) of title 31, and shall be compounded

annually.” 28 U.S.C. § 1961(b). 

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2007 not August 15, 2007, the date the final judgment was

entered. Post-judgment interest is calculated from August 15,

2007 at the rate of 4.78% on $12,236.37.3

Plaintiffs shall recover $310.88 in post-judgment interest.

CONCLUSION

For the reasons set forth above, Plaintiffs motion for

summary judgment against Defendant Jeffrey D. Case is GRANTED. 

Defendants shall recover $12,236.37, plus $2,904.00 in attorney’s

fees and $310.88 in post-judgment interest. 

IT IS SO ORDERED.

Dated: February 25, 2008 /s/ Oliver W. Wanger 

bb4ed UNITED STATES DISTRICT JUDGE

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