Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_20-cv-00199/USCOURTS-caed-1_20-cv-00199-1/pdf.json

Parties Involved:
AM Group, Inc.
Defendant
Kern Vineyards, Inc.
Plaintiff
Chris Kim
Defendant

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

KERN VINEYARDS, INC., a California 

corporation,

Plaintiff,

v.

AM GROUP, INC., a California 

corporation, and CHRIS KIM, an 

individual,

Defendants.

No. 1:20-cv-00199-NONE-JLT

ORDER GRANTING MOTION FOR 

PRELIMINARY INJUNCTION

(Doc. No. 3)

INTRODUCTION

On February 7, 2020, plaintiff Kern Vineyards, Inc., filed a complaint and a motion for 

temporary restraining order (TRO) or, alternatively, preliminary injunction under the Perishable 

Agricultural Commodities Act (PACA), seeking “ex parte”

1

injunctive relief to prevent 

defendants AM Group, Inc., (AM Group) and Chris Kim from dissipating assets held in a

statutory trust for plaintiff. (Doc. Nos. 1, 3.) Despite plaintiff’s efforts to provide notice of the 

TRO motion, defendant failed to oppose or otherwise communicate with the court. Accordingly, 

on February 12, 2020, the court granted the motion for a TRO and ordered defendants to show 

 

1 Although the request was styled as ex parte, plaintiff made reasonable attempts to provide 

notice to defendants via telephone, email, and overnight delivery. (Doc. No. 11.)

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cause why a preliminary injunction should not issue, requiring defendants to file any opposition 

in writing on or before noon (Pacific Time) on February 19, 2020, and setting the matter for 

hearing on February 21, 2020, at 1:30 pm. (Doc. No. 12 (TRO Order).) Both defendants were 

personally served on February 13, 2020, with all documents filed as of that date, including the 

temporary restraining order. (See Doc. Nos. 14, 15, 16.) 

As of the date of this Order no defendant has filed any opposition or otherwise 

communicated with the court. Nor has counsel for plaintiff received any opposition from either 

defendant. (See ECF No. 16 at 2.) The pending motion for preliminary injunction was heard in 

open court on February 21, 2020, as scheduled. Plaintiff’s counsel appeared, but no defendant 

made an appearance. 

For the reasons set forth below, which mirror the reasons set forth in the temporary 

restraining order, plaintiff’s request for entry of a preliminary inunction is GRANTED. 

BACKGROUND

Between August 9 and October 4, 2019, plaintiff sold table grapes to defendants totaling 

an invoiced amount of $146,045.00.

2

 (Doc. No. 7 at ¶¶ 2, 11, Declaration of Thomas Buckley

(Buckley Decl.).) On October 1, 2019, the parties met to discuss delinquent payments. (Id. at 

¶ 21.) At that time, defendants provided plaintiff assurances that payments on the invoices 

disputed in this lawsuit would be forthcoming. (Id.) Plaintiff received no further 

communications or payments from defendants in October or November 2019. (Id. at ¶ 22.) On

December 15, 2019, Kim assured plaintiff that payment would be made. (Id. at ¶ 23.) 

Nonetheless, plaintiff still has yet to receive payment on the disputed invoices. (Id.) 

As a result, plaintiff initiated a complaint with the United States Department of 

Agriculture (“USDA”). (Id.) Based on the fact that there was at least one other complaint 

submitted against AM Group, USDA advised plaintiff to file suit to enforce its rights. (Id.) 

/////

 

2 According to plaintiff, defendants purchased table grapes from plaintiff in the past. Plaintiff 

concedes that defendants raised concerns about a quality issue for a prior shipment that is not the 

subject of this dispute and is not included in the $146,045.00 plaintiff claims to be owed. 

(Buckley Decl. at ¶ 20.)

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In addition to the principle sum plaintiff claims is owed, the relevant invoices each 

disclose a contractual finance charge of 1.5% per month. (Id., Ex. 3.) Plaintiff’s counsel has 

calculated the cumulative finance charge due to plaintiff to be $7,850.18 through January 31, 

2020. (Doc. No. 4 at ¶¶ 14, 16, Declaration of Craig A. Tristao (Tristao Decl.).) This calculation 

appears to be accurate. Finally, the invoices contain language permitting plaintiff to add to the 

amount owed any “necessary collection costs, including attorney’s fees.” (Buckley Decl., Ex. 3.) 

Plaintiff’s counsel indicates that to date he has expended 24 hours on this matter at a billable rate 

of $300.00 per hour for a total of $7,200.00. (Tristao Decl. at ¶ 13.) In addition, plaintiff has 

incurred filing fees in the amount of $400.00 to initiate this lawsuit. (Id.) The expended time, 

hourly rate, and costs appear facially reasonable/allowable under the circumstances. In sum, the 

principal plus finance charges, attorney’s fees and costs totals $161,495.18.

LEGAL STANDARD

A. PACA

“Congress enacted PACA in 1930 to promote fair trading practices in the produce 

industry.” Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 135 (3d Cir. 

2000) (citation omitted). In particular, the statute requires that “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.” 

7 U.S.C. § 499e(c)(2). If a seller of produce is not paid, it must give written notice of its intent to 

preserve its rights, which may be accomplished by including a statutorily specified notice in its 

invoices. See 7 U.S.C. § 499e(c); Tanimura & Antle, Inc., 222 F.3d at 136. Any failure to “make 

full payment promptly” in respect to a transaction is unlawful. 7 U.S.C. § 499b(4). Any violation 

of § 499b subjects the buyer to liability for any damages caused by the violation. 7 U.S.C. 

§ 499e(a). Moreover, federal regulations state that all dealers “are required to maintain trust 

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assets in a manner that such assets are freely available to satisfy outstanding obligations to sellers 

of perishable agricultural commodities.” 7 C.F.R. § 46.46(d)(1). District courts are specifically 

given jurisdiction to hear “actions by trust beneficiaries to enforce payment from the trust” and 

“actions by the Secretary to prevent and restrain dissipation of the trust.” 7 U.S.C. § 499e(c)(5). 

The trust formed by PACA from the dealer’s assets is “a single, undifferentiated trust for the 

benefit of all sellers and suppliers.” In re Kornblum & Co., Inc., 81 F.3d 280, 286 (2d Cir. 1996). 

B. Preliminary Injunction Standard

“The proper legal standard for preliminary injunctive relief requires a party to demonstrate 

‘that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the

absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction 

is in the public interest.’” Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009) (quoting 

Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)); see also Ctr. for Food Safety v. 

Vilsack, 636 F.3d 1166, 1172 (9th Cir. 2011) (“After Winter, ‘plaintiffs must establish that 

irreparable harm is likely, not just possible, in order to obtain a preliminary injunction.”); Am. 

Trucking Ass’n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009). The Ninth 

Circuit has also held that “[a] preliminary injunction is appropriate when a plaintiff demonstrates

. . . that serious questions going to the merits were raised and the balance of hardships tips 

sharply in the plaintiff’s favor.” Alliance for Wild Rockies v. Cottrell, 632 F.3d 1127, 1134–35 

(9th Cir. 2011) (quoting Lands Council v. McNair, 537 F.3d 981, 97 (9th Cir. 2008) (en banc)).3 

The party seeking the injunction bears the burden of proving these elements. Klein v. City of San 

Clemente, 584 F.3d 1196, 1201 (9th Cir. 2009). Finally, an injunction is “an extraordinary 

remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such 

relief.” Winter, 555 U.S. at 22. 

/////

 

3

 The Ninth Circuit has found that this “serious question” version of the circuit’s sliding scale 

approach survives “when applied as part of the four-element Winter test.” Alliance for Wild 

Rockies v. Cottrell, 632 F.3d 1127, 1134 (9th Cir. 2011). “That is, ‘serious questions going to the 

merits’ and a balance of hardships that tips sharply towards the plaintiff can support issuance of a 

preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable 

injury and that the injunction is in the public interest.” Id. at 1135.

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ANALYSIS

District courts in the Ninth Circuit have regularly found injunctive relief warranted in the 

PACA context, and routinely conclude that the prospect of statutory trust assets being depleted 

constitutes irreparable injury. See, e.g., CP Produce, LLC v. Quality Fresh Farms, Inc., No. 1:18-

cv-00077 DAD EPG, 2018 WL 1980749, at *1 (E.D. Cal. Jan. 19, 2018); Chula Brand CA, Corp. 

v. Martinez, 17cv37-JLS (KSC), 2017 WL 107672, at *3–4 (S.D. Cal. Jan. 11, 2017); Newland N. 

Am. Foods, Inc. v. H.P. Skolnick, Inc., No. 5:13-cv-00934 EJD, 2013 WL 792672, at *3 (N.D. 

Cal. Mar. 4, 2013); Herb Fresh, LLC v. GR Prods., LLC, No. 5:12-cv-03669 EJD, 2012 WL 

2906592, at *2–3 (N.D. Cal. July 16, 2012); Pittman v. Stow Food – Navajo, Inc., No. 12cv1670-

IEG (WMC), 2012 WL 12885231, at *1–2 (S.D. Cal. July 6, 2012); T.Q.M. Food Serv., Inc. v. 

Santanas Grill, Inc., No. 12cv1254-IEG (MDD), 2012 WL 12872452, at *1–2 (S.D. Cal. June 6, 

2012); Batth v. Market 52, Inc., No. 1:11-CV-1806 AWI SKO, 2011 WL 5240439, at *2 (E.D. 

Cal. Nov. 1, 2011); F.T. Produce, Inc. v. AGWA, Inc., No. 11-CV-102 JLS (WVG), 2011 WL 

677259, at *3 (S.D. Cal. Jan. 21, 2011); Rey Produce SFO, Inc. v. Mis Amigos Meat Market, Inc., 

No. C 08-1518 VRW, 2008 WL 1885738, at *1–2 (N.D. Cal. 2008).

Here, plaintiff has shown it is likely to succeed on the merits of its claim. Plaintiff 

persuasively asserts that defendants are “dealers” within the meaning of PACA. (See Buckley 

Decl. at ¶¶ 6–9.) Among other things, plaintiff has presented evidence that during the relevant 

timeframe defendant AM Group operated under USDA PACA license number 20160590, which 

lists Kim as the principal for AM Group. (Id. at ¶ 9 & Ex. 2.) Plaintiff has likewise produced 

evidence that during the relevant timeframe it operated under PACA license number 20150701. 

(Id. at ¶ 27.)

Plaintiff further demonstrates that the produce at issue was sold in interstate commerce, as 

required by 7 U.S.C. § 499a(b)(8). (Id. at ¶ 15 & Ex. 3.) The invoices sent to defendants contain 

the statutorily required language to ensure plaintiff preserved its right to the benefits of the 

statutory trust under 7 U.S.C. § 499e(c)(4). (Id. at ¶ 28 & Ex. 3.) Plaintiff has likewise produced 

evidence that the invoices it seeks payment for have not been paid. (Id. at ¶¶ 20–23 & Ex. 3.) 

Invoices totaling $146,045.00, reflecting table grape shipments sold to defendant AM Group, are 

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attached (id., Ex. 3), and counsel has provided support for the requested, contractually allowable 

interest, attorney’s fees, and costs (see Tristao Decl. at ¶¶ 13–16.) Accordingly, and in light of 

the absence of any evidence to the contrary, the court finds it is likely plaintiff will succeed on the 

merits of its PACA claim.

Plaintiff has also shown a likelihood of irreparable injury in the form of dissipation of the 

trust assets. Plaintiff’s sales manager, Thomas Buckley, declares that Kim admitted that the table 

grapes in dispute were sold to a company in Korea, possibly to a related family company. 

(Buckley Decl.§ at ¶ 25.) Any proceeds from those sales would therefore be trust assets. See 7 

U.S.C. § 499e(c)(2). However, the fact that defendants repeatedly broke promises to remit even 

partial payments to plaintiff suggests to Buckley that the trust assets have been or are being 

dissipated. (Buckley Decl. ¶ 25.) In addition, Buckley “is informed and believe[s] that AM 

Group is suffering severe financial difficulties and that PACA trust assets rightfully belonging to 

Plaintiff are being dissipated, possibly forever beyond Plaintiff’s reach.” (Id.) As identified 

above, courts routinely accept the dissipation of assets from the statutory trust as indicative of 

irreparable injury.

The balance of equities thus tips clearly in favor of plaintiff here. Plaintiff is statutorily 

entitled to a trust in the proceeds of any sales from the produce it shipped until the outstanding 

invoices are paid in full. See 7 U.S.C. § 499e(c)(2). Defendants’ failure to respond to the order 

to show cause results in a failure on their part to demonstrate any hardship they will suffer by 

being forced to not dissipate the trust assets. 

Lastly, the issuance of an injunction here would be in the public interest. Congress 

specifically passed this statute because it had found there was “a burden on commerce in 

perishable agricultural commodities.” 7 U.S.C. § 499e(c)(1); Tanimura & Antle, Inc., 222 F.3d at 

135 (“In particular, Congress intended to protect small farmers and growers who were especially 

vulnerable to the practices of financially irresponsible commission merchants, dealers, and 

brokers.”). Given plaintiff’s high likelihood of success on the merits and the Congressional 

directive in passing PACA, the public interest will be served by granting the preliminary 

injunction here. 

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Rule 65 states a court may only issue a preliminary injunction “if the movant gives 

security in an amount that the court considers proper to pay the costs and damages sustained by 

any party found to have been wrongfully enjoined or restrained.” Fed. R. Civ. P. 65(c). Because 

the only evidence before the court indicates the invoices are due and owing, and defendants’ 

failure to participate results in the absence of any showing of any hardship, the court concludes no 

bond or posting of security is required of plaintiff at this time. 

PRELIMINARY INJUNCTION ORDER

For the reasons set forth above:

IT IS HEREBY ORDERED that Defendants AM Group, Inc., and Chris Kim, and their 

agents, bankers, subsidiaries, successors, assignees, principals, employees, officers, directors, 

shareholders, attorneys, and representatives, are preliminarily enjoined during the pendency of 

this action, pursuant to Federal Rule of Civil Procedure 65, from engaging in, committing, or 

performing directly and indirectly, any and all of the following acts:

A. Removing, withdrawing, transferring, assigning or selling to any other person or 

entity, the proceeds from the sales of any or all existing or future inventories of food or other 

products derived from perishable agricultural commodities and/or receipts of payment for such 

commodities sold prior to the date of this order and/or otherwise disposing of assets, books or 

funds;

B. Taking any other action whatsoever which causes, has the effect of causing, or 

which otherwise dissipates plaintiff’s beneficiary interests in PACA trust assets. 7 U.S.C. §499e, 

et seq.;

C. Taking any other action whatsoever which violates 7 U.S.C. §499e(c)(1) through 

(4), inclusive, and/or 7 U.S.C. §499b(4) [PACA § 2].

IT IS FURTHER ORDERED that defendants, their partners, officers, directors, 

shareholders, owners, bankers, agents, subsidiaries, successors, assignees, principals, assignors, 

attorneys and persons acting in concert with them, shall, within 24 hours after being served with 

this Order, deposit into the trust account of plaintiff’s counsel, Darryl J. Horowitt, Esq. of 

Coleman & Horowitt, LLP, PACA Trust assets in the amount of at least $161,495.18, consisting 

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of the principal sum due of $146,045.00, plus contractual finance charges through January 31, 

2020, in the amount of $7,850.18, plus reasonable attorneys’ fees in the amount of $7,200.00, 

plus filing fees of $400.00, owing to Plaintiff.

IT IS FURTHER ORDERED hat during the pendency of this action, defendants, their

partners, shareholders, owners, agents, bankers, subsidiaries, successors, assignees, principals, 

attorneys, and persons acting in concert with them shall be and hereby are prevented from 

transferring, withdrawing or in any other manner removing PACA trust assets, including funds on 

deposit in banking accounts held by or on behalf of defendant, from defendant’s banking 

accounts, including funds on deposit in banking accounts held by or on behalf of defendant AM 

Group, from defendant’s banking accounts, including but not limited to defendant AM Group 

accounts held at Wells Fargo Bank, and any other accounts subsequently discovered to be 

standing in defendant’s name or for its benefit.

IT IS FURTHER ORDERED that during the pendency of this action, defendants, and 

their counsel, agents, shareholders, owners, or representatives, shall be preliminary enjoined from 

engaging in, committing, or performing directly and indirectly, any and all of the following acts:

D. Removing, withdrawing, transferring, assigning or selling to any other person or 

entity, the proceeds from the sales of any or all existing or future inventories of food or other 

products derived from perishable agricultural commodities, including, but not limited to growing 

crops, and/or receipts of payment for products sold prior to the date of this order and/or otherwise 

disposing of assets, books or funds;

E. Taking any other action whatsoever which causes, has the effect of causing, or 

which otherwise dissipates plaintiff’s beneficiary interests in the trust assets;

F. Taking any other action whatsoever which violates 7 U.S.C. §499e(c)(1) through 

(4), inclusive, and 7 U.S.C. §499b(4) [PACA § 2].

IT IS FURTHER ORDERED that in the event defendants lack sufficient funds to 

promptly deposit the sums described above, defendants shall be and hereby are required and 

ordered to:

/////

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G. Immediately account to the court and plaintiff for all assets of the PACA trust 

from commencement of defendants’ business through the date of this Order.

H. Immediately assign defendant’s inventory of perishable agricultural commodities 

and produce related receivables to plaintiff for collection until plaintiff is fully paid, and deposit 

and/or deliver complete accounts, records, and information of all of said receivables to plaintiff’s

counsel without charge to the trust, and subject to plaintiff’s counsel making a weekly accounting

for all receivables received or collected by plaintiff’s counsel in that regard. Plaintiff’s counsel 

shall act as trustee in connection with its duties of collection of the accounts receivable and shall 

deposit any cash assets of the trust which are collected under this order in a trust account. In 

plaintiff’s sole discretion, to the extent necessary to prevent loss of defendant’s inventory of 

perishable agricultural commodities through decay, over-ripening, spoliation or improper storage 

or handling; plaintiff may immediately take possession of any such inventory and sell such 

inventory through a PACA licensed broker. The proceeds of any such sales shall be held in trust 

by plaintiff’s counsel pending further order of this court. Any broker retained by plaintiff or 

plaintiff’s counsel to effectuate such sales may retain a brokerage commission in an amount 

reasonable and customary in the produce industry.

I. Endorse any checks made, endorsed or paid, wire transfers, and cash receipts to 

defendants which are trust assets and which are in their possession or obtainable by defendants at 

the time of the entry of this Order, or which defendants obtains or which become obtainable by 

defendants after the entry of this Order, including but not limited to checks representing payment 

for sales of inventory, and shall deliver said assets within 48 hours of defendants’ receipt of them 

to plaintiff’s counsel as set forth above. Likewise, defendants shall deliver any cash assets of the 

PACA trust which are in its possession or are obtainable by defendants at the time of the entry of 

this order, or which defendants obtain or which become obtainable by defendants after entry of 

this Order, within 48 hours of defendants’ receipt of them to plaintiff’s counsel.

IT IS FURTHER ORDERED that during the pendency of this action, and continuing 

thereafter, plaintiff and their counsel, agents, or representatives, shall have full and complete and 

continuing access to all of defendant’s books and records, which shall include but not necessarily 

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be limited to, defendant’s accounts receivable and payable ledgers, invoices, ledgers, computer 

runs, bank statements and canceled checks, relating to defendant’s business and financial status 

from commencement of defendant’s business activities forward for the purpose of verifying 

defendant’s accountings required by this Order and for enforcement of this Order. Defendant 

shall, upon 48 hours’ notice by plaintiffs’ counsel, allow inspection and copying of the books and 

records of said defendant by plaintiff or their representatives at defendant’s place of business.

IT IS FURTHER ORDERED that during the pendency of this action, plaintiff shall be 

entitled to depose, under oath, at reasonable times and places, upon at least 48 hours’ notice, 

defendants and/or defendants’ principals, owners, directors, officers, shareholders, employees, 

agents and accountants concerning any matter pertaining to any accounting due pursuant to this 

Order, any books or records which plaintiff is entitled to inspect under this Order, the trust assets 

or any of defendants’ business assets, and/or defendants’ business practices, procedures or 

operations from commencement of defendants’ business activities.

IT IS FURTHER ORDERED that Wells Fargo Bank and any other bank in which deposit 

amounts standing in the name of defendant, or any of them, are located, to release information 

about the above-described accounts including the amounts contained in the accounts, to plaintiff’s 

counsel, in confidence, to the extent necessary to confirm compliance with this Order.

IT IS FURTHER ORDERED that no bond shall be required to be posted by plaintiff 

before this preliminary injunction is effective.

IT IS SO ORDERED.

Dated: February 21, 2020 

UNITED STATES DISTRICT JUDGE

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