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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE WESTERN DISTRICT OF TEXAS


SAN ANTONIO DIVISION

IN RE: CASE NO. 5:12-BK-50073-LMC
(CHAPTER 11)
DELTA PRODUCE, L.P.,
1

JOINTLY ADMINISTERED
DEBTOR.

____________________________________________________________________________

SPECIAL PACA TRUST COUNSELS OMNIBUS
OBJECTION TO PACA CREDITORS FEE APPLICATIONS
____________________________________________________________________________

Special PACA Trust Counsel (hereinafter, the PACA Counsel) for Debtor Delta
Produce, L.P. and Superior Tomato-Avocado, Ltd, submits its Omnibus Objection to PACA fee
applications filed by various PACA trust creditors pursuant to this Courts Order dated
September 12, 2012.
I. POSITION ON ENTITLEMENT TO FEES IN BANKRUPTCY CASES OBJECTION
OF WALTER SCOTT JENSEN.

PACA Counsel notes that Walter Scott Jensen (Jensen), through his counsel, filed an
Omnibus Objection to PACA Trust Creditors Applications for Attorneys Fees on October 2,
2012 [D.E. #331]. Mr. Jensen takes the position that no fees may be paid to PACA trust
creditors due to the fact that the two PACA trust debtors are in bankruptcy. Due to the fact that
the PACA Trust Creditors on whose behalf the PACA Counsel acts do not have identical
interests, PACA counsel takes no position as to the objection filed by Jensens counsel.
II. APPLICATION FOR PREJUDGMENT INTEREST, ATTORNEYS FEES AND
COSTS BY BRUCE W. AKERLY AND JASON R. KLINOWSKI, COUNSEL FOR
MULLER TRADING COMPANY, INC.


1
Debtors are the following entities: Delta Produce, L.P. Case No. 12-50073-LMC, Superior Tomato-Avocado, Ltd.
Case No. 12-50074-LMC, Atled, Ltd. Case No. 12-50075-LMC and Staci Properties, Ltd. Case No. 12-50110-
LMC.
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2

Muller Trading Company, Inc. (Muller Trading) has filed two separate fee applications.
In one of the applications it seeks $13,686.90 in attorneys fees [D.E. #300] and $28,874.90 in
another application [D.E. #301] which is described as a common fund application.
A. Billing rate of Freeborn and Peters are both excessive and inconsistent with submitted
Invoices.

1. Lead counsel for Muller, Mr. Klinowski, who has not filed for pro hac vice
admission to this Court, is seeking a $350.00 per hour rate on his fee application. A review of
the records of the Illinois Attorney Registration and Disciplinary Commission reveals that Mr.
Klinowski was admitted to practice in Illinois in 2004 (see, Exhibit A). Based on other reported
PACA cases, it appears that Mr. Klinowski is claiming a rate that is more appropriate for
attorneys with far more experience in PACA litigation. In Sun Pac. Mktg. Coop. v. DiMare
Fresh, Inc., 2012 WL 4482013 (E.D. Ca., September 28, 2012), PACA Counsel with 30 years of
experience were awarded $350.00 an hour, counsel with 20 years experience were awarded
$300.00 an hour and lawyers with five years experience were awarded $265.00 an hour. In
Grant Family Farms v. Liqua-Dry, 2012 WL 4467522 (D. Utah, September 27, 2012). Mr.
Klinowskis former employer, a lawyer with far more experience in PACA cases was granted
$365.00 an hour while other counsel with less experience was granted $265.00. In Mister
Sprout, Inc. v. Williams Farms Produce Sales, Inc., 2012 WL 3031471, (S.D.N.Y., July 25,
2012), attorney Mark Amendola was awarded $345.00 an hour and the Supreme Court of Ohios
Public Attorney Information page reflects that Mr. Amendola has 23 years of experience. In
summary, Mr. Klinowskis $350.00 hourly rate is more appropriate for an attorney with 20 years
of practice and PACA Counsel requests that Mr. Klinowskis rate be reduced to $265.00.
2. Similarly, the rates of other lawyers at Freeborn & Peters, LLP are excessive.
Richard T. Kienzler who according to the same Illinois Attorney Registrations website (see
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9
3

Exhibit B) is a four-year lawyer has billed at $305.00 and $325.00 an hour. PACA Counsel
contends that a rate of $200.00 an hour would be more appropriate.
3. Special PACA notes that Mr. Klinowskis attached invoices carry various rates
[D.E. #301-7]:

Date Invoice Amount
2/24/12 100058455 $350.00
4/4/12 100060123 $370.00
5/16/12 100065108 $370.00
6/11/12 100067397 $295.00
7/27/12 100070457 $295.00
7/31/12 100071311 $295.00

4. In any event, PACA Counsel suggests to the Court that based both on Mr.
Klinowskis experience and comparable rates that the Court set Mr. Klinowskis rate at $265.00
5. PACA Counsel has no objection to Mr. Bruce Akerlys rate.
B. Fees charged in both applications are excessive.
Muller Trading is a PACA trust creditor of Delta with a claim based upon a single
$24,573.50 invoice. The PACA trust in the Delta case may be short-funded. Both companies
have been in Chapter 11 since January 3, 2012, a mere six days after Muller Tradings suit was
filed. Both fee applications are excessive in light of the amount of the claim made. Absent the
possibility of fee shifting no creditor would choose to incur such fees of $13,000+ or $28,000+
on an undisputed debt for a debtor that was in Chapter 11 for all but the first six days that the
claims has been pending.
C. The common fund fee application is excessive and inconsistent with the history of
the case.

In addition to its contractual claim for PACA attorneys fees, counsel for Muller Trading
is also claiming common fund attorneys fees. Leaving aside whether any such fees could be
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4

appropriate for a creditor which counsel was one of three that filed for PACA injunctive relief on
the same day Debtors would enter Chapter 11 six days later, these fees are not supported by the
facts of this matter. Counsel for Muller Trading, despite its claims in its application, did not
create the common fund for all PACA trust creditors. Congress did. Congress established the
PACA trust for the benefit of all creditors in 1984 with the amendments to PACA which created
the PACA Trust.
Counsel for Muller Trading attempts to create the impression that but for its efforts the
PACA trust funds of Delta would have otherwise disappeared. The fact is lead counsel for
Muller Trading was racing to the courthouse and arrived just before two other creditors who
were also seeking to obtain PACA preliminary injunctions each to protect their own clients
interests.
The Court can take judicial notice of the filing dates of three U.S. District Court cases,
since then sent to this Court pursuant to Judge Rodriguezs Order [D.E. #28], Muller Trading
Company, Inc. v. Delta Produce, LP, Delta Produce Management LLC and Walter Jensen, 1:11-
cv-01114-SS, filed December 28, 2012; Rio Bravo Produce Ltd. Co., LLC v. Superior Tomato-
Avocado Ltd., Inc. et. al; 5:11-cv-01126-XR filed December 29, 2012 and Willson Davis
Company v. Superior Tomato-Avocado, Ltd., Inc. et al, 5:11-cv-01125-XR, all filed on the same
day and the case numbers of which are eleven digits apart. All of these creditors were seeking
TROs against Delta or Superior. What counsel for Muller Trading was seeking was to control
the claims procedure in these three cases. An e-mail dated December 29, 2011 from Muller
Tradings lead counsel attached hereto as Exhibit C reveals that he was aware of the pending of
the other actions. Certainly this e-mail is not consistent with the position that Muller Tradings
counsel is taking in its application for common fund fees.
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5

In any event, Muller Trading did not create a common fund for the benefit of all
creditors. In fact, its TRO sought only to protect its own interests. The TRO which was granted
sought only to obtain payment for Muller Trading; see Exhibit D (brief and Order). If Delta had
only paid Muller Trading, it would have been free to dissipate and Muller Trading cannot say
with credibility that it was seeking to protect all Delta or Superior creditors when it only sought
and obtained TRO relief for itself. Certainly Muller Trading was acting on behalf of its own
interests and not on behalf of all creditors.
At least three lawyers were seeking injunction relief against Delta and Superior. Exactly
five days later on January 3, 2012, Delta and Superior filed for Chapter 11 relief. No PACA
assets could be adjudicated after the Chapter 11 filing without court's approval. Any fees after
January 3, 2012 except for filing of a proof of claim, were not strictly necessary. PACA Counsel
requests the Court to bring Muller Tradings fees to $7,500.00.
III. CLAIM FOR ATTORNEYS FEE FILED BY CHRIS TILLMANN AND JAKE C.
BLANCHARD, COUNSEL FOR HARLLEE PACKING, INC.

Harllee Packing, Inc. claims filed in Superior Tomato-Avocado are approximately
$35,000.00 [D.E. #113] and its claims in Delta approximately $108,000.00 [D.E. #304]. Chris S.
Tillmanns rate of $410.00 an hour is excessive. The fee application reflects that Mr. Tillmanns
rate is $410.00 an hour and Mr. John D. Emmanuels rate at $460.00 an hour. Although we are
informed that Mr. Tillmanns was admitted to the bar in 1984, we are told nothing about Mr.
Tillmanns experience in PACA matters. A Westlaw search of reported PACA cases does not
turn up any reported case with either Mr. Tillmanns or Mr. Emmanuels names. Based on rates
for experienced PACA counsel being at $350.00 to $356.00 an hour, as noted in the objections to
the Muller Tradings claim above, PACA Counsel believes Mr. Tillmanns and Mr. Emmanuels
rates should be reduced to $300.00 an hour.
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6

With these rate reductions, PACA Counsel has no further objections to the fee application
filed by Harllee Packing, Inc.
IV. CLAIM FOR ATTORNEYS FEES UNDER PACA FILED BY THE LAW FIRMS OF
McCARRON AND DIESS AND BY CURL & STAHL, P.C., COUNSEL FOR
COOSEMANS HOUSTON, EAGLE EYE PRODUCE, MECCA FAMILY FARMS,
INC., AND TEXAS SWEET POTATO.

PACA Counsel has no objection to these fee applications.

V. CLAIM FOR ATTORNEYS FEES FILED BY RYNN & JANOWSKI, LLP AND BY
CURL & STAHL COUNSEL FOR CREDITORS UESUGI FARMS, INC., WILSON
PRODUCE, LLC.

PACA Counsel has no objection to fee applications filed by Rynn & Janowski, LLP.
[D.E. #306, Delta case, and D.E. #115, Superior case].
VI. MOTION FOR ATTORNEYS FEES FILED BY ROBERT E. GOLDMAN, COUNSEL
FOR CREDITOR LONDON FRUIT, INC., AND TRIPLEH PRODUCE, LLC.

PACA Counsels has a particular objection to the fee application of Robert E. Goldman.
While total fees charged by Mr. Goldman are extremely reasonable, at less than $18,000 [D.E.
#307, Delta case, D.E. #116, Superior case] and Mr. Goldmans rate of $325.00 an hour is quite
modest, the fee application does not reflect the largest claim of Mr. Goldmans group, Willson
Davis, Inc. has no contractual attorneys fee clause and therefore this creditor has no fee claim in
the cases. The Court should consider some apportionment of Mr. Goldmans claimants who are
eligible for fees and those that are not. However, given Mr. Goldmans extensive involvement in
the drafting of the claims procedure order, some fees are appropriate.
VII. FEE APPLICATION OF LOUIS T. ROSENBERG, COUNSEL FOR CREDITOR I
KUNIK COMPANY, INC. AND RIO BRAVO PRODUCE LTD., LLC.

PACA Counsel has no objections to Mr. Rosenberg per hours rates charged.
VIII. APPLICATION FOR CONTRACTUALLY DUE ATTORNEYS FEES AND COSTS
IN PACA CLAIM BY KEVIN P. KELLEY, COUNSEL FOR CREDITOR I KUNIK
COMPANY, INC.
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7

PACA Counsel has no objection as to Mr. Kelleys fee application on behalf of I Kunik
Company, Inc.
IX. APPLICATION FOR CONTRACTUALLY DUE ATTORNEYS FEES AND COSTS
IN PACA CLAIM BY KEVIN P. KELLEY RIO BRAVO PRODUCE LTD. CO., LLC.

PACA Counsel has no objection to the per hour rates charges.
PACA Counsel objects to the December 2011 fees of $13,803.39 [D.E. #114-1]. As Mr.
Kelley notes himself, his firm files many PACA cases; the fees incurred were to prepare a
standard form for which the charge of $13,803.39 of which all his $600.00 is attorneys fees is
excessive for work that is filing a standard form and obtaining an ex parte temporary restraining
order. Special Counsel attaches the standard forms that Mr. Kellys firm has used in similar
PACA cases as Exhibits E and F. There is nothing improper with use of standard forms, but the
amount of hours claimed by Mr. Kelly for the filing of an original suit against Superior and for
obtaining a TRO does not seem to be consistent with the economies that should come from the
expertise of his firm and the use of basically the same forms.
Given the experience of Mr. Kelleys firm, it is surprising that associate counsel needed
2.3 hours on or before 12/27/2012, 10.3 hours on 12/28/2011, 5.6 hours on 12/29/2011 and 4.2
hours on 12/30/11, when in addition, lead counsel at $365.00 an hour was charging 2.3 hours on
12/27/2011, 7.8 hours on 12/28/2011, 2.4 hours on 12/29/2011 and 1.3 hours on 12/30/2011
[D.E. #114-1] all while local counsel was charging an additional $3,400.00 [D.E. #114-3] and
local counsel was the lawyer who apparently actually presented the TRO application to the
District Court.
It is difficult to imagine how such an experienced PACA firm needed 22 hours of
associate time, 13 hours of partner time, including nearly 8 hours to file standard, ex parte
pleading. The fees for December are excessive. See, Chip Berry Produce v. Thomas, 2007 WL
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8

2219342 (ED Mich., July 25, 2007) ($53,000 fee application of the same law firm in case
reduced to $12,689.00); Wescott Agri-Products, Inc. v. Sterling State Bank, Inc., 2012 WL
2428423 (8
th
Cir. 2012) (counsel fees in PACA case, denied); In re Robaeck Corp., 9:06-bk-
0729-ALP (Bank. MDFL, January 1, 2007) (fees reduced in bankruptcy case in which majority
of work was done by other counsel). Indeed, counsel for Willson Davis Company which filed a
District Court PACA suit [5:11-cv-1125, USDC WDTX, San Antonio) at the same time as Rio
Bravo Produce Ltd. Co., LLCs counsel [5:11-CV-01126, USDC WDTX, San Antonio] and who
actively participated in negotiating the claims procedure order has billed slightly over $16,000
for the period from December 2011 to September 2012!
X. OMNIBUS APPLICATION FOR ATTORNEYS FEES BY STEVEN S.
NURENBERG, COUNSEL FOR CREDITORS C & R FRESH, LLC, DUCKWALL
FRUIT CO., ECCO-FARMS SALES, INC., FRESH START PRODUCE SALES,
GARGIULO, INC. HENRY AVOCADO CORP., RIO QUEEN CITRUST, INC., AND
SUNRIVER SALES.

A. Delta Case.
PACA Counsel objects to all fees amounting to $11,692.00 of Henry Avocado [D.E.
#112-2] because Henry Avocado is a net debtor of Delta due to offsets and in fact owes Delta for
produce. There is no provision of which PACA Counsel is aware to award contractual attorneys
fees to a party that is a net debtor.
B. Superior Case.
PACA Counsel has no objections to these fees.
WHEREFORE, Special PACA Counsel for Debtor respectfully requests the Court to
enter an order reducing the above fee applications to the extent stated, and granting such other
relief as may be appropriate under the circumstances.
DATED: October 12, 2012

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9

Respectfully submitted,

STOKES LAW OFFICE LLP
3330 Oakwell Court, Suite 225
San Antonio, TX 78218
Telephone (210) 804-0011
Facsimile (210) 822-2595

By: /s/ Craig A. Stokes______________
Craig A. Stokes SBN 19267700
cstokes@stokeslawoffice.com

Special PACA Counsel for Delta Produce, L.P.
and Superior Tomato and Avocado, LLP

CERTIFICATE OF SERVICE

I hereby certify that on the 12
th
day of October, 2012, I electronically filed the foregoing
Omnibus Objection to PACA Creditors Fee Applications with the Clerk of the Court using the
CM/ ECF system which will send a notice of electronic filing to all parties of record. I further
certify that a copy of the foregoing pleading was mailed to all of Deltas produce creditors, listed
in the attached Exhibit G.


/s/ Craig A. Stokes_____________________
Craig A. Stokes

12-50073-lmc Doc#347 Filed 10/12/12 Entered 10/12/12 16:13:53 Main Document Pg 9 of
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12-50073-lmc Doc#347-1 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 1 of 2
AKUL 1 Lawyer :::;earch: Attorney's Keg1stratwn and Public Disciplinary Record Page 1 of2
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Inforn1mirn1
LAWYER SEARCH: ATTORNEY'S REGISTRATION AND
PUBLIC DISCIPLINARY RECORD
ARDC Individual Attorney Record of Public Registration and Public
Disciplinary and Disability Information as of October 12, 2012 at 9:00:00 AM:
I Full Licensed Name:
I Full Former name(s):
Date of Admission as
Lawyer
by Illinois Supreme
Court:
Registered Business
Address:
Registered Business
Phone:
Illinois Registration
Status:
Malpractice Insurance:
(Current as of date of
registration;
consult attorney for
further information)
II Jason Ryan Klinowski
II None
In annual registration, attorney reported that
he/she has malpractice coverage.
Public Record of Discipline
and Pending Proceedings: None
Check carefully to be sure that you have selected the correct lawyer. At
times, lawyers have similar names. The disciplinary results displayed above
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EXHIBIT A
https://www.iardc.org/ldetail.asp?id=294804384 10/12/2012
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IARDC :online access to registration and discipline information regarding
lllinois lawvers
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ARDC J Lawyer Search: Attorney's Registration and Public Disciplinary Record Page 1 of2
Hmv to Submit a Request
For Investigation
Rn!es and Decisions
Ethics Inquiry Pmgn11n
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New Filings, Bearing
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Client Protection Program
Resoun:es & Links
ARDC Organizational
Information
LAWYER SEARCH: ATTORNEY'S REGISTRATION AND
PUBLIC DISCIPLINARY RECORD
ARDC Individual Attorney Record of Public Registration and Public
Disciplinary and Disability Information as of October 12, 2012 at 9:00:00 AM:
I Full Licensed Name:
I Full Former name(s):
Date of Admission as
Lawyer
by Illinois Supreme
Court:
Registered Business
Address:
Registered Business
Phone:
Illinois Registration
Status:
II Richard Thomas Kienzler
II None
Malpractice Insurance:
(Current as of date of
registration;
consult attorney for
further information)
Public Record of Discipline
and Pending Proceedings: None
Check carefully to be sure that you have selected the correct lawyer. At
times, lawyers have similar names. The disciplinary results displayed above
include information relating to any and all public discipline, court-ordered
disability inactive status, reinstatement and restoration dispositions, and
pending public proceedings. Investigations are confidential and information
relating to the existence or status of any investigation is not available. For
additional information regarding data on this website, please contact ARDC
at (312) 565-2600 or, from within Illinois, at (800) 826-8625.
ARDC makes every effort to maintain the currency and accuracy of Lawyer
Search. If you find any typographical errors in the Lawyer Search information,
please email registration@iardc.org. For changes to contact information,
including address, telephone or employer information, we require that the
attorney submit a change of address form. Please consult our Address
Change Requests page for details. Name changes require the filing of a
EXHIBITB
https://www.iardc.org/ldetail.asp?id=748533376 10112/2012
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motion with the Supreme Court. Please consult our Name Change Requests
page for details.
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Illinois lawyers
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https://www.iardc.org/ldetail.asp?id=748533376 10112/2012
12-50073-lmc Doc#347-3 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 1 of 1
Crai Stokes
From:
Sent:
To:
Cc:
Subject:
Craig,
Klinowski, Jason R. <jklinowski@freebornpeters.com>
Thursday, December 29, 2011 5:22 PM
Craig Stokes
'Bruce Akerly'; Kienzler, Richard T.
Delta Produce
Please e-mail me of give me a buzz on my cell phone- 312/375-6849.
It looks like several other cases were filed today against your client and Muller, my client, has both the low case number
and a TRO. I would like for us to agree on a PACA claims procedure before we are forced to include too many cooks in
the kitchen. As you know, this will reduce the cost of litigation for everyone involved. If you are not interested, we will
simply move the court for the entry of such an order tomorrow based on the numerous after filed PACA claims. Hopefully,
you will call me and we can work something out quickly.
Please advise. Thanks.
Jason R. Klinowski, Esq.
EXHIBlTC
1
12-50073-lmc Doc#347-4 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 1 of 19
Case 5: 12-cv-00046-XR Document 5 Filed 12/29/11 Page 1 of 13
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
MULLER TRADING COMPANY, INC., )
)
Plaintiff, )
)
v. )
)
DELTA PRODUCE, LP, DELTA )
PRODUCE MANAGEMENT LLC )
and WALTERJENSEN, individually, )
)
Defendants. )
CIVIL ACTION
CASE NO.: 11-cv-01114-SS
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER
I. INTRODUCTION
Muller Trading Company, Inc. (the "Plaintiff''), has filed an action to recover no less than
$29,573.50, plus further interest, costs and attomeys fees for perishable agricultural commodities
("Produce") sold to the defendants, Delta Produce, LP (the "Company") and Delta Produce
Management LLC and Walter Jensen (the "Principals") (the Principals and the Company are
collectively referred to herein as the "Defendants"). Count I seeks enforcement of the trust
imposed on the Defendants' assets under the Perishable Agricultural Commodities Act, 1930, as
amended, 7 U.S.C. 499a-499t(the "PACA"). Plaintiff alleges that the Defendants have
dissipated, and are continuing to dissipate, the assets impressed with the statutory P A CA trust,
thereby harming the rights of all of the Company's PACA trust beneficiaries, including the
Plaintiff herein.
The Defendants' dissipation and continued dissipation of Plaintiffs trust assets is
wrongful and in violation of Plaintiffs trust rights. The PACA requires a Produce debtor in the
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 1
EXHIBIT D
12-50073-lmc Doc#347-4 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 2 of 19
Case 5:12-cv-00046-XR Document 5 Filed 12/29/11 Page 2 of 13
Company's position to maintain sufficient assets at all times to satisfy the claims of all the
qualified PACA trust beneficiaries, such as the Plaintiff herein. Accordingly, Plaintiff's action
seeks the entry of a Temporary Restraining Order to prevent the Company from further
dissipating the PACA trust. If the Company is not restrained from dissipating the PACA trust,
the trust assets will be forever lost to Plaintiff and it will thereby suffer the exact irreparable
harm this remedial statute was designed and enacted to prevent.
II. STATEMENT OF THE FACTS
Plaintiff is a seller of wholesale quantities of Produce. The Defendants are buyers of
wholesale quantities of Produce. The Plaintiff sold Produce to the Defendants and the
Defendants accepted shipments of Produce from the Plaintiff which have a current aggregate
invoice value of $24,573.50. After the inclusion of all sums owing in connection with the
transactions, per the USDA regulations, the Plaintiff properly preserved its PACA trust rights for
this entire sum.
Despite repeated demands, the Defendants have not paid Plaintiff the balance due on their
PACA trust claims and the current aggregate sum of $29,573.50 remains due and owing. (See
Affidavit of Eric Muller, the owner of the Plaintiff, attached hereto as Exhibit 1). The
Defendants are unable to pay due to the dissipated condition of the P ACA trust res. (See Ex. 1,
~ ~ 11, 12-21). Based on the Company's demonstrated inability to pay its bills (See Ex. 1), this
situation will effectively prevent the Company from satisfying the balances owed to the Plaintiff
or any other equally-situated trust beneficiary if allowed to continue dissipating the trust. Id.
Rather than allocating the PACA trust assets to their only rightful purpose, i.e., the
payment of the claims of PACA trust beneficiaries such as the Plaintiff, the Defendants have
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 2
12-50073-lmc Doc#347-4 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 3 of 19
Case 5:12-cv-00046-XR Document 5 Filed 12/29/11 Page 3 of 13
instead been, either voluntarily or against their will, diverting these trust assets to other uses in
clear violation of their duties as statutory trustees under PACA.
III. SUMMARY OF THE PERISHABLE AGRICULTURAL COMMODITIES ACT
Congress enacted the PACA in 1930 to provide a comprehensive scheme for the
regulation of traders of fresh fruit and vegetables. "This Act provides a code of fair play ... and
provides an aid to [agricultural] traders in enforcing their contracts." 49 Fed. Reg. 45735,
45737 (Nov. 20, 1984). As the Eleventh Circuit succinctly stated, PACA regulates the sale of
perishable agricultural commodities to protect produce sellers from unscrupulous or insolvent
dealers, brokers, and commission merchants. Country Best v. Christopher Ranch, LLC, 361 F.3d
629, 631 (11th Cir. 2004). The PACA requires produce buyers to make full payment promptly
for any produce they purchase. 7 U.S.C. 499b(4). The PACA protects suppliers of produce by
giving rise to civil liabilities in favor of the unpaid seller against buyers who fail to make full
payment promptly. 7 U.S.C. 499e(a); In re Carpenito Bros., 46 Agric. Dec. 486 (1987), aff'd
851 F.2d 1500 (D.C. Cir. 1988). See also Endico Potatoes, Inc. v. CIT/Factoring, Inc., 67 F.3d
1063, 1066-67 (2nd Cir. 1995). An unpaid seller loses the benefit ofthe trust unless it serves
written notice of its intent to preserve trust benefits with the produce buyer within 30 days after
payment becomes past due. 7 U.S.C. 499e(c)(3) (as amended).
In 1984, Congress determined that the increase in nonpayment and delinquent payment
by Produce buyers threatened the financial stability of the produce industry. Congress
recognized that under the prevailing law "sellers of fresh fruits and vegetables "[were] unsecured
creditors and receive[ d] little protection in any suit for recovery of damages where a buyer ha[ d]
failed to make payment required by the contract." H. R. Rep. 98-453 (1983), as reprinted in
1984 U.S. Code Cong. & Admin. News, 405, 407. In response, Congress amended the PACA in
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 3
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1984 to provide further protection to sellers of produce and to establish an express, non-
segregated floating statutory trust in which a Produce buyer as trustee holds its Produce-related
assets in trust as a fiduciary until full payment is made to the unpaid seller/trust beneficiary. 7
U.S.C. 499e(c); Frio Ice S.A. v. Sunfruit, 918 F.2d 154, 156 (11th Cir. 1990).
The PACA trust commences by operation of law upon delivery of the Produce and
continues until full payment for the Produce has been made. 7 C.P.R. 46.46(d)(l), 7 U.S.C.
499e(c)(2). Once the seller delivers the Produce, failure of the buyer (as trustee) to maintain
trust assets sufficient to make full payment promptly to the trust beneficiaries is unlawful. 7
U.S.C. 499b(4); See also, Collins Brothers v. Perrine (In re PeiTine), 2006 Bankr. LEXIS 2516
* 14-15 (Bankr. N.D. Ga. 2006)("Use of the trust assets for any purpose other than paying the
produce seller, including the payment of legitimate business expenses, is a violation ... under
PACA."). The trust provisions of the PACA are similar to, and based upon, the trust provisions
of the Packers and Stockyards Act, 7 U.S.C. 181-229 (1980) (the "PSA"). The trust
provisions of both Acts are interpreted similarly, and the courts have looked to the PSA for
guidance in interpreting the PACA. See In re: Fresh Approach, 48 B.R. 926, 931 (Bankr. N.D.
Tex. 1985).
The principal benefit of the trust for a Produce seller is that when a buyer fails to pay or
becomes insolvent, the seller is placed first in line among creditors to receive the trust res, which
consists of all assets of the debtor unless and until the debtor proves a particular asset was
acquired with something other than the proceeds of the debtor's dealings in Produce. Frio Ice,
918 F.2d at 156. See In re: Monterey House, 71 B.R. 244, 249 (Bankr. S.D. Tex. 1986); Fresh
Approach, 51 B.R. at 420-422. The PACA trust res serves as a fund from which unpaid Produce
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 4
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sellers can be assured payment. By operation of trust law, while a buyer of Produce has legal
title to the PACA trust res, equitable title remains with the seller of the Produce.
The establishment of the trust occurs upon the commencement of the buyer's buying and
selling of Produce and exists continuously throughout the life of the buyer's business until the
sellers are paid in full. Any assets purchased while the trust is in existence will be assumed to be
purchased with trust assets and will, therefore, become part of the trust fund assets available to
satisfy the claims of the qualified unpaid sellers. In re: Atlantic Tropical Market, 118 B.R. 139,
142 (Bankr. S.D. Fla. 1990). When trust assets are commingled with funds not subject to the
trust, the trust is impressed upon the entire commingled fund for the benefit of the trust
beneficiaries. In re: Gotham Provision, 669 F.2d 1000 (5th Cir. 1982). The PACA was designed
to ensure that a Produce buyer's secured lender and other third parties do not receive and retain
proceeds from the sale of Produce when the buyers's Produce suppliers have not been paid. The
USDA has recognized that Congress intended unpaid sellers to recover trust assets that are
transferred to third parties including secured lenders. 49 Fed. Reg. 45736 (Nov. 20, 1984). See
44 U.S.C. 1507.
With respect to any issue of tracing assets, the Atlantic Tropical Market comi considered
this legislative history when it placed on the buyer the burden to "track the status of the trust
fund and to provide evidence of other origin of purchases of assets." Id., citing In re: AI
Nagelberg & Co., 84 B.R. 19 (S.D.N.Y. 1988); In re: Fresh Approach, 51 B.R. at 422 ("[s]hould
a dispute arise, it will be the buyers' burden to establish which, if any, assets are not subject to
the PACA trust."); In re: N. Merberg & Sons, 166 B.R. 567, 570 (Banlcr. S.D.N.Y. 1994; Six L's
Packing v. West Des Moines State Bank, 967 F.2d 256, 258 (8th Cir. 1992).
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 5
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In Sanzone-Palmisano Co. v. Seaman Enterprises, 986 F.2d 1010 (6th Cir. 1993), the
Sixth Circuit provided a detailed discussion on the issue of tracing and the policy reasons for
placing the burden on the buyer/debtor, recognizing:
that in most cases it will be virtually impossible for a PACA debtor to trace the
origin of the disputed assets ... [However, w ]e believe that this is the outcome that
Congress intended.
Id. at 1014 (emphasis added). After finding the supplier had established the validity of its PACA
trust interest, the Court stated the burden on remand to the district court is on the buyer to:
prove which seized assets were not purchased with funds from the sale of
produce. All of the seized assets that cannot be traced to a non-trust source
are part of the trust res and are subject to [supplier's] trust claim.
Id. (emphasis added.)
The Produce buyer is required to maintain trust assets so that such assets are freely
available to satisfy all outstanding obligations to Produce sellers. 7 C.P.R. 46.46(e). This
obligation is plainly set forth in the PACA statute. 7 U.S.C. 499(b)(4).
The officers of a corporation responsible for its financial dealings are personally liable to
PACA trust creditors for any dissipation of the Plaintiffs PACA trust assets by virtue of their
directing the corporate trustee to breach its fiduciary duties. Sunkist Growers v. Fisher, 104 F.3d
280, 283 (9th Cir. 1997) (agreeing with prior district court decisions, the Court stated:
"individual shareholders, officers, or directors of a corporation who are in a position to control
P ACA trust assets, and who breach their fiduciary duty to preserve those assets, may be held
personally liable under the Act.").
IV. JURISDICTION
Injunctive relief is necessary and proper under the PACA to prevent the dissipation of a
seller's interest in PACA trust assets, and the District Courts have jurisdiction to entertain
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 6
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injunctive actions by both the USDA and private unpaid Produce sellers with PACA trust rights.
Frio Ice, 918 F.2d at 158; Gullo Produce v. Jordon Produce, 751 F. Supp. 64 (W.D. PA. 1990);
Debruyn Produce v. Olympia Produce, 734 F. Supp. 483 (N.D. Ga. 1989); J.R. Brooks & Sons
v. Norman's Country Market, 98 B.R. 47 (Bania. N.D. Fla. 1989). See also 7 U.S.C.
499e(c)(4). "Injunctive relief is necessary to preserve the status quo for the protection of the
produce sellers." Debruyn Produce, 734 F.2d at 486.
Preventing dissipation of the trust is a key purpose of the PACA. Preventing transfer of
trust assets often may be the only means by which a Federal Court can prevent dissipation of the
trust. Upon a showing the trust is being dissipated or threatened with dissipation, a District
Court should require the maintenance of trust assets. Frio Ice, 918 F.2d at 159. See also Taylor
Farms Florida v. Gennaro's Produce, 2007 U.S. Dist. LEXIS 13260 (S.D. FL 2007)(wherein the
Court granted no notice injunctive relief to the PACA trust beneficiary in order to stop the
defendants continued dissipation of the trust res and to maintain the status quo).
V.ARGUMENT
Federal Rule of Civil Procedure 65 (b) provides that a temporary restraining order may be
issued without written or oral notice to the adverse party or that party's attorney only if (1) it
clearly appears from the specific facts shown by affidavit or by the verified complaint that
immediate and irreparable injury, loss, or damage will result to the applicant before the adverse
party or that party's attorney can be heard in opposition, and (2) the applicant's attorney certifies
to the court, in writing the effmis, if any, which have been made to give the notice and the
reasons supporting the claim that notice should not be required. Rule 65(b ).
Defendants' dissipation of Plaintiffs PACA trust funds is an immediate and irreparable
injury which courts have consistently held as a valid basis to a plaintiff's entitlement to an
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 7
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immediate injunction to restrain any further dissipation of trust assets when the produce supplier
is not paid. See Taylor Farms Florida v. Gennaro's Produce,_2007 U.S. Dist. LEXIS 13260 *5
(S.D. FL 2007)(holding that the Plaintiff "will suffer immediate irreparable injury in the f01m of
a loss of trust assets unless this Order is granted without notice."); Frio Ice, supra, 918 F. 2d at
159 ("[ u ]pon a showing that the trust is being dissipated or threatened with dissipation, a district
court should require the PACA debtor to escrow its proceeds from produce sales, identify its
receivables, and inventory its assets.")(emphasis added). Accord Dole Fresh Fruit v. United
Banana, 821 F.2d 106 (2d Cir. 1987); In re Richmond Produce, 112 B.R. 364, 367 (Bania. N.D.
Cal. 1990).
Second, granting the TROis necessary and proper to prevent further dissipation ofPACA
trust assets. In Taylor Fanns Florida v. Gennaro's Produce, 2007 U.S. Dist. LEXIS 13260 (S.D.
FL 2007), also involving a PACA creditor requesting a TRO, District Judge Cooke addressed the
no-notice provision ofFRCP 65(b) and stated that:
[i]f notice is given to Defendants of the pendency of this Motion, trust assets will
be further threatened with dissipation before the Motion is heard. As noted in the
legislative history of PACA, once dissipation has occurred, recovery of trust assets
is all but impossible. Entry of this Oder without notice assures retention of the trust
assets under the control of this Court which is specifically vested with jurisdiction
over the trust.
Id. at 4. (internal citations omitted). See also Procacci Brothers Sales Group v. Indian Rock
Produce, U. S. Dist. Court E.D. Pa. No. 03-5543 (E.D. Pa. October 9, 2003) (Wells, M.J.),
similarly involving a PACA creditor requesting an ex parte TRO, Magistrate Judge Wells
addressed the no-notice provision of FRCP 65(b), stating in her Report and Recommendation
that: "[ e ]x parte proceedings pursuant to FRCP 65(b ), are appropriate in this instance, because,
once the produce has been sold and trust funds dissipated, there will be no asset or other reliable
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 8
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source of payment available to the Plaintiff." 2003 U.S. Dist. Lexis 19620 *4 (E.D. Pa 2003).
On the same date the Report and Recommendation issued, October 9, 2003, Judge O'Neill
adopted Magistrate Judge Wells' recommendation that Plaintiffs suggested temporary
restraining order be granted.
Plaintiffs Motion for a Temporary Restraining Order should be granted with an Order
providing as follows:
A. Restraining the Company from further violating the provisions of the
PACA through dissipation and establishing a common fund for the
payment of all valid P ACA claims;
B. Restraining the Company, its principals, agents, banking institutions, or
any entity acting on behalf of, or in concert with, the Company from using
or consuming PACA trust assets in any way until further Order or until the
Company pays the sum of at least $29,573.50, plus further interest, costs
and attorneys' fees into the Registry of this Honorable Court; and
C. Within three (3) business days of entry of this Order, the Company is
ordered to tender a detailed accounting of all the Company's accounts
receivable, accounts payable, inventory, equipment and other assets by a
date certain to the Comi and to Plaintiffs counsel for a detennination of
the extent of the dissipation.
The above-listed preliminary relief is significantly less burdensome than the relief other
courts have found necessary to effectuate the purpose of the statute, that being to ensure payment
to unpaid sellers of Produce who have properly preserved their rights under the law. See also
Gullo Produce, 751 F. Supp. at 65-66.
In deciding whether to issue a preliminary injunction, a court must consider four factors:
(1) whether the movant has shown a reasonable probability of success on the merits; (2)
whether the movant will be irreparably injured by denial of the relief; (3) whether
granting the preliminary relief will result in even greater harm to the nonmoving party;
and ( 4) whether granting the preliminary relief will be in the public interest. ... A court
should endeavor to balance these factors when determining if an injunction should issue.
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 9
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Tanimura, supra, at 140; William Inglis & Sons Baking v. ITT Continental Baking, 526 F.2d 86
(9th Cir. 1975); Corning Glass Works v. Jeannette Glass, 308 F. Supp. 1321 (D.C. N.Y. 1970),
affd 432 F. 2d 784 (2nd Cir. 1970). See also Strube Celery & Vegetable v. Global Foods, 2006
U.S. Dist. LEXIS 78330 *4 (S.D. IN 2006)(citing Faheem-El v. Klincar, 841 F.2d 712 (7th Cir.
1988)). Plaintiff will now demonstrate the satisfaction of each factor for temporary and
permanent injunctive relief.
1. LIKELIHOOD OF SUCCESS ON THE MERITS
The Affidavit of the Plaintiff's owner, Eric Muller, demonstrates, the Plaintiff properly
preserved its tmst rights by affixing the required notice language on the face of its invoices and
serving same on the Company. See Ex. 1, ~ 7; see also 7 U.S.C. 499e(c)(4). As a case based
almost exclusively on written documents which have been properly authenticated (an "account
stated" action), and because the Company has no defenses to these claims under the P ACA, the
Plaintiff will almost certainly prevail at any hearing on the merits of its claims.
2. IRREPARABLE INJURY
In cases interpreting the rights of P A CA creditors, courts in other jurisdictions have
recognized that without injunctive relief, a PACA seller faced with a financially unstable or an
insolvent buyer will not receive either the PACA tmst assets or the proceeds of such trust assets.
Tanimura, supra. "PACA tmst dissipation ... constitutes irreparable harm." Tanimura, 222
F.3d at 140. See also Gullo Produce, 751 F. Supp. at 67; Frio Ice, 918 F.2d at 159 ("[t]he
legislative history [of the PACA] noted that once the trust is dissipated it is almost impossible
for the beneficiary to obtain recovery") (emphasis added). "[T]rust dissipation can satisfy [the
irreparable hann] factor if, absent such relief, ultimate recovery is rendered unlikely." Tanimura,
222 F .3d at 141. A moving party must show either actual dissipation or the threat of dissipation
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 10
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of the PACA trust in order to obtain injunctive relief and a segregation of the trust proceeds.
Frio Ice, 918 F.2d at 159. In this instance, the Company lacks the ability to pay for the Produce
it purchased from the Plaintiff. Furthermore, the Company has ceased operations, and it is
therefore incapable of timely satisfying the debts owed to the trust's beneficiaries, such as the
Plaintiff. See Ex. 1, ~ ~ 11-21. This clearly establishes either actual dissipation or a clear threat
of dissipation of the PACA trust assets unless the Company is enjoined from further violating the
P ACA statute.
Injunctive relief will force the Company to cease dissipation of the PACA trust, prevent
third party purchasers from terminating or "cutting off' the Plaintiffs trust rights and require the
Company to retum the trust to a fully-funded level sufficient to satisfy the claims of qualified
beneficial interests in full. To date, the Company has dissipated the trust by failing to pay
Plaintiffs, and the Company has demonstrated their inability to do so. The Company continues to
dissipate the trust assets to entities other than the rightful owners of the P ACA trust's beneficial
interests and by failing to make the trust assets readily available to make a full payment promptly
to Plaintiff as required under federal law (the PACA). Because Congress specifically recognized
the virtual impossibility of recovering PACA trust assets once they have been dissipated or
transferred to third pmiies who may have BFP status, the loss to Plaintiff and other trust creditors
is irreparable.
3. BALANCING OF HARM
The Company simply cannot be harmed by the issuance of an injunction because the
relief Plaintiff seek is merely to force the Company to comply with the law. It will also require
the Company to satisfy its pre-existing obligations under PACA, that is, to preserve the PACA
trust assets for the benefit of P ACA beneficiaries and make "full payment promptly" on all
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 11
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Case 5:12-cv-00046-XR Document 5 Filed 12/29/11 Page 12 of 13
Produce-related invoices. On the other hand, the risk of harm to Plaintiff is great if the Company
is allowed to further dissipate trust assets and disburse the PACA trust assets to non-trust
creditors. Judicial oversight is necessary to protect the trust rights of the Plaintiff and other
PACA trust beneficiaries. As stated above, previous experience has bome out the fact that, once
the PACA trust assets are dissipated, an unpaid P ACA claimant is extremely unlikely to recover
any portion of its beneficial interest in the trust -- a result clearly at odds with the express
purpose of this remedial federal statute. Thus, the issuance of a TRO will merely ensure the
Company does not continue to violate the law.
4. PUBLIC INTEREST
The strong preference for the plight ofPACA trust creditors which Congress expressed in
the 1984 trust amendments to the PACA clearly illuminates the public interest at stake in this
case. In the text of the statute itself, Congress made this point very clear:
[t]his subsection [the new PACA trust provision] is intended to remedy such
burden on commerce in perishable agricultural commodities and to protect the
public interest.
7 U.S.C. 499e(c)(1) (emphasis added). These safeguards were established in order to assure
payment to Produce growers and shippers. There can scarcely be a more vital public concem
than the economic security and viability of this nation's food supply.
This supply and distribution chain consists of the very same growers, producers and
distributors which Congress sought to protect when it enacted this legislation in 1930, and then
amended it in 1984 to include the PACA trust provisions. To deny Plaintiff the requested relief
would erode the protection Congress guaranteed to the growers and sellers of Produce in
Plaintiffs position, by passing the PACA and the regulations promulgated thereunder.
"[I]ssuance of a preliminary injunction here is in the public interest, as the statutory purpose
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER- Page 12
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explicitly encapsulates injunctive relief." Tanimura, 222 F .3d at 140 (3rd Cir. 2000). Therefore,
the requested injunction is clearly in the public interest.
VI. CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests the Court to issue a Temporary
Restraining Order and set this matter for a full hearing on Plaintiffs motion for a preliminary
injunction and to consolidate that hearing with a hearing on the merits.
DATE: December 29, 2011 Respectfully submitted,
By: /s/ Bruce Akerly
Bruce W. Akerly
Texas Bar No. 00953200
CANTEY HANGER LLP
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Telephone: (214) 978-4100
Facsimile: (214) 978-4150
bakerly@canteyhanger.com
Attorney for the Plaintiff
Of-Counsel:
Jason R. Klinowski, Esq.
(pro hac vice forthcoming)
Illinois Bar. No. 6283266
FREEBORN & PETERS LLP
311 S. Wacker Dr., Suite 3000
Chicago, Illinois 60606
Telephone: (312) 360-6536
Facsimile: (312) 360-6570
jklinowski@freebornpeters.com
Attorney for the Plaintiff
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT
OF MOTION FOR TEMPORARY RESTRAINING ORDER Page 13
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UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
MULLER TRADING COMPANY, INC., )
)
Plaintiff, )
)
v. )
)
DELTA PRODUCE, LP, DELTA )
PRODUCE MANAGEMENT LLC )
and WALTERJENSEN, individually, )
)
Defendants. )
CIVIL ACTION
CASE NO.: 11-cv-01114-SS
(PROPOSED) TEMPORARY RESTRAINING ORDER
On December 29, 2011, Muller Trading Company, Inc. (the "Plaintiff') applied for the
issuance of a Temporary Restraining Order under Federal Rules of Civil Procedure 65(b) (the
"Applications") which came before this Honorable Court and the undersigned on the date set
forth below. The Court considered all of the pleadings, including the Application, the Affidavit
of Eric Muller, owner of the Plaintiff, and all related moving papers. The Plaintiffs Affidavit
demonstrates the defendants, Delta Produce, LP (the "Company") and Delta Produce
Management LLC and Walter Jensen, (collectively the "Principals")(the Principals and the
Company are collectively referred to herein as the "Defendants") purchased perishable
agricultural commodities ("Produce") in interstate commerce and, thereafter, failed to pay
Plaintiff in violation of the Perishable Agricultural Commodities Act, 1930, as amended, 7
U.S.C. 499a-499t (the "PACA").
These same pleadings and supporting documents establish the Defendants have either
dissipated the PACA trust or have presented a sufficient threat of dissipation of such trust to
warrant the relief granted in this Order. On the basis of the pleadings, the Affidavit and other
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submissions the Plaintiff filed in this matter, it appears to this Honorable Court that the Plaintiff
will suffer immediate and iiTeparable injury due to the Defendants' dissipation of Plaintiffs
beneficial interest in the statutory trust created pursuant to 7 U.S.C. 499e(c) and that such
dissipation will continue in the absence of injunctive relief. The Court is of the opinion that a
Temporary Restraining Order should be issued due to the threat of further dissipation.
Based on the foregoing, IT IS HEREBY ORDERED:
1. The Company and its respective agents, officers, assigns, and any of their banking
institutions are DIRECTED NOT to pay, withdraw, transfer, assign or sell any and all existing
PACA trust assets or otherwise dispose of corporate assets to any creditors, persons or entities
until fmiher Order for this Court, or until the Company deposits into the Registry of this Comi
the sum of$29,573.50.
2. Pending further orders of this Court, or until such time as the Company pays
Plaintiff or deposits into the Registry of the Court the sum of $29,573.50, no banking institution
holding funds for the Company shall pay, transfer or pennit assignment or withdrawal of any
existing PACA trust assets held on behalf of the Company. Further, pending further order of this
Court, or until such time as the Company deposits into the Registry of this Comi the sum of
$29,573.50, no banking institution holding funds for the Company shall pay, transfer or permit
assignment or withdrawal of the corporate assets of the Company without this Court's express
written approval.
3. If the Company fails to deposit into the Registry of this Court the sum of
$29,573.50 in full within three (3) business days of the entry of this Order, the Company must
account to the Court and Plaintiffs counsel for all accounts receivable, accounts payable,
2
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equipment, inventory and all other assets subject to the PACA trust and the regulations
promulgated thereunder.
4. In furtherance of such an accounting, the Court hereby directs any banking
institution holding funds for the Company to tum over to Plaintiffs undersigned counsel any
statements, signature cards and other documents relating to or regarding any of the Company's
accounts at such banking institutions within five (5) days of receipt ofthis Order.
5. This Order will be binding upon the parties to this action, their officers, agents,
servants, employees, banks, or attomeys and all other persons or entities who receive actual
notice of this Order by personal service or otherwise. In this regard, the Company shall serve a
copy of this Order on all financial institutions with which the Company does any business, may
do any business with, or who may be holding any assets for or on behalf of any of the Company.
6. Because Company already possess $29,573.50 ofPACA trust assets which is the
Plaintiffs property, the bond in this matter is hereby set at $0.00.
7. A Preliminary Injunction Hearing is hereby set for January __ , 2012 at
.M. in Courtroom ____ of the U.S. Courthouse, in ______ , Texas.
8. Plaintiff, through its Counsel, shall serve a true and correct copy of this Order on
all Defendants including their respective counsel.
DONE AND SO ORDERED the date shown below in , Texas.
-------
Signed: __________ , 20
UNITED STATES DISTRICT JUDGE
3
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....--------------------------.. --------
Case 1 : 11-cv-0 4-SS Document 12 Filed 1
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
MULLER TRADING COMPANY, INC., )
)
Plaintiff, )
)
v. )
CIVIL ACTION
Page 1 of 3
) CASE NO.: 11-cv-01114-SS
DELTA PRODUCE, LP, DELTA )
PRODUCE MANAGEMENT LLC )
and WALTERJENSEN, individually, )
)
Defendants. )
~ { P l 1 II; i.ij!ii)) TEMPORARY RESTRAINING ORDER
On December 29, 2011, Muller Trading Company, Inc. (the "Plaintiff") applied for the
issuance of a Temporary Restraining Order under Federal Rules of Civil Procedure 65(b) (the
"Applications") which came before this Honorable Court and the undersigned on the date set
forth below. The Court considered all of the pleadings, including the Application, the Affidavit
of Eric Muller, owner of the Plaintiff, and all related moving papers. The Plaintiff's Affidavit
demonstrates the defendants, Delta Produce, LP (the "Company") and Delta Produce
Management LLC and Walter Jensen, (collectively the "Principals")(the Principals and the
Company are collectively referred to herein as the "Defendants") purchased perishable
agricultural commodities ("Produce") in interstate commerce and, thereafter, failed to pay
Plaintiff in violation of the Perishable Agricultural Commodities Act, 1930, as amended, 7
U.S.C. 499a-499t (the "PACA").
These same pleadings and supporting documents establish the Defendants have either
dissipated the PACA trust or have presented a sufficient threat of dissipation of such trust to
warrant the relief granted in this Order. On the basis of the pleadings, the Affidavit and other
12-50073-lmc Doc#347-4 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 18 of 19
Case 1 : 11-cv-0 4-SS Document 12 Filed 1 Page 2 of 3
submissions the Plaintiff filed in this matter, it appears to this Honorable Court that the Plaintiff
will suffer immediate and irreparable injury due to the Defendants' dissipation of Plaintiff's
beneficial interest in the statutory trust created pursuant to 7 U.S.C. 499e(c) and that such
dissipation will continue in the absence of injunctive relief. The Court is of the opinion that a
Temporary Restraining Order should be issued due to the threat of further dissipation.
Based on the foregoing, IT IS HEREBY ORDERED:
1. The Company and its respective agents, officers, assigns, and any of their banking
institutions are DIRECTED NOT to pay, withdraw, transfer, assign or sell any and all existing
PACA trust assets or otherwise dispose of corporate assets to any creditors, persons or entities
until further Order for this Court, or until the Company deposits into the Registry of this Court
the sum of$29,573.50.
2. Pending further orders of this Court, or until such time as the Company pays
Plaintiff or deposits into the Registry of the Court the sum of $29,573.50, no banking institution
holding funds for the Company shall pay, transfer or permit assignment or withdrawal of any
existing PACA trust assets held on behalf of the Company. Further, pending further order of this
Court, or until such time as the Company deposits into the Registry of this Court the sum of
$29,573.50, no banking institution holding funds for the Company shall pay, transfer or permit
assignment or withdrawal of the corporate assets of the Company without this Court's express
written approval.
3. If the Company fails to deposit into the Registry of this Court the sum of
$29,573.50 in full within three (3) business days of the entry of this Order, the Company must
account to the Court and Plaintiff's counsel for all accounts receivable, accounts payable,
2
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Case 1 : 11-cv-0
4-SS Document 12 Filed 12/2 Page 3 of 3
equipment, inventory and all other assets subject to the PACA trust and the regulations
promulgated thereunder.
4. In furtherance of such an accounting, the Court hereby directs any banking
institution holding funds for the Company to turn over to Plaintiffs undersigned counsel any
statements, signature cards and other documents relating to or regarding any of the Company's
accounts at such banking institutions within five (5) days of receipt of this Order.
5. This Order will be binding upon the parties to this action, their officers, agents,
servants, employees, banks, or attorneys and all other persons or entities who receive actual
notice of this Order by personal service or otherwise. In this regard, the Company shall serve a
copy of this Order on all financial institutions with which the Company does any business, may
do any business with, or who may be holding any assets for or on behalf of any of the Company.
6. Because Company already possess $29,573.50 ofPACA trust assets which is the
Plaintiffs property, the bond in this matter is hereby set at $0.00.
7. A Preliminary Injunction Hearing is hereby set for January _5__, 2012 at
00 .e_.M. in Courtroom Jf 2- of the U.S. Courthouse, in Ausl-i , Texas.
8. Plaintiff, through its Counsel, shall serve a true and correct copy of this Order on
all Defendants including their respective counsel.
DONE AND SO ORDERED the date shown below in , Texas.
Signed: ,
3
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Case: 1:11-cv-08212 Document#: 1 Filed: 11/17/11 Page 1 of 9 PageiD #:1
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LEATHERS MELON COMPANY, INC.,
Plaintiff,
v.
QUALITY PRODUCE SUPPLIERS, INC.,
DONALD SRUM, RICHARD SRUM and
PATSY SRUM, each individually,
Defendants.
)
)
) CIVIL ACTION
)
) Case No.
)
)
)
)
)
)
COMPLAINT
For its complaint, Plaintiff respectfully states as follows:
THE PARTIES
1. Leathers Melon Company, Inc. (the "Plaintiff') has offices in LaBelle, Florida and
operates its business under a valid P ACA License, which the United States Depmiment of
Agriculture granted to Plaintiff
2. Plaintiff sells wholesale quantities of perishable agricultural commodities ("Produce")
in interstate commerce.
3. Defendants are:
a) Quality Produce Suppliers, Inc., is an Illinois corporation (the "Company");
b) Donald Snnn, individually("D. Srum"), is an officer, director, shareholder or person
in a position to control the Company at all times relevant to this action;
c) Richard Srum, individually ("R. Snun"), is an officer, director, shareholder or person
in a position to control the Company at all times relevant to this action, and;
EXHIBITE
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Case: 1:11-cv-08212 Document#: 1 Filed: 11/17/11 Page 2 of 9 PageiD #:2
d) Patsy Srum, individually ("P. Srum"), is an officer, director, shareholder or person
in a position to control the Company at all times relevant to this action.
D. Srum, R. Srum and P. Srum are collectively refeued to herein as the "Principals." The Company
and Principals are collectively refeued to herein as the "Defendants."
4. Defendants are engaged in the business of purchasing or selling Produce in wholesale
or jobbing quantities and, therefore, are "dealers" of Produce as defined by the Perishable
Agricultural Commodities Act, 1930, as amended, 7 U.S.C. 499a-499t (20 11) (the "PACA").
5. Defendants are engaged in the business of negotiating purchases and sales of various
types of Produce in interstate or foreign commerce, and, therefore acting as "brokers" of Produce
within the scope of the PACA.
6. At all times relevant hereto, the Defendants operated their business under a license
the United States Department of Agriculture ("USDA") issued to the Company.
JURISDICTION AND VENUE
7. The District Court has jurisdiction over this civil action arising under 5( c )(5) of the
PACA, 7 U.S.C. 499e(c)(5), pursuant to 28 U.S.C. 1331. The Court has supplementaljurisdiction
over Plaintiffs other claims pursuant to 28 U.S.C. 1367(a).
8. Venue in thisDistrictis based on28 U.S.C. 139l(b) because a substantial part ofthe
events or omissions giving rise to Plaintiff's claims occurred in this district and a substantial part of
the property that is the subject of this action is situated in this district.
2
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FACTUAL ALLEGATIONS
9. Plaintiff sold to the Defendants, and Defendants purchased from Plaintiff, Produce
having a current aggregate value of $190,153.90, as set forth the chart attached hereto as Exhibit A
and incorporated herein by this reference.
10. The Defendants accepted a load ofProduce which corresponds to the invoice number
listed in Exhibit A.
11. The Defendants accepted the load of Produce stated in Exhibit A in Chicago, Illinois.
12. The Plaintiff issued to the Defendants, and the Defendants received, the invoice listed
in Exhibit A
13. The Plaintiff is an unpaid supplier or seller ofProduce, having sold Produce to the
Defendants for which it remains unpaid.
14. The Plaintiff utilized the invoices listed in Exhibit A to preserve its PACA tmst
rights.
15. The Defendants failed to deliver good funds to the Plaintiff in the amomt set forth
under "Tmst Amount" in Exhibit A, despite repeated demands from the Plaintiff.
COUNT I.
ENFORCEMENT OF TilE PACA TRUST
7 U.S.C. 499e(c)(4)
COMPANY and PRINCIPALS
16. Plaintiff re-alleges paragraphs 1 through 15 as though fully set forth herein.
3
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Case: 1:11-cv-08212 Document#: 1 Filed: 11/17/11 Page 4 of 9 PageiD #:4
17. The Defendants are in possession, custody and control of all assets derived from the
Defendants' sale of Produce (the "P ACA Trust Assets") for the benefit of the Plaintiff and other
similarly-situated PACA trust beneficiaries.
18. The Defendants failed to deliver to the Plaintiff sufficient funds from the PACA
Tmst Assets from the shipment of Produce as listed in Exhibit A.
19. The Defendants failed to presetve sufficient amounts of the PACA Tmst Assets to
fully satisfy all qualified PACA tmst claims, such as the Plaintiffs unpaid claims asserted in this
action.
20. As a direct result of the Defendants' failme to properly protect the PACA Tmst
Assets fiom dissipation, the Plaintiff suffered damages for the unpaid invoice which is covered under
the PACA trust in the current aggregate amount of $190,153.90, plus fmther intet-est at the Illinois
5.0% statutory rate of pre-judgment interest.
21. On information and belief, additional unknown and unpaid tmst beneficiaries exist.
As a result, the Plaintiff further seeks the entry of an Order directing the Defendants to immediately
tmn over to the registry of the Court all assets impressed with the PACA tmst for the benefit of all
unpaid trust beneficiaries such as the Plaintiff herein, thereby creating a fund for the benefit of said
tmst beneficiaries.
4
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COUNT II.
FOR VIOLATION OF THE PERISHABLE AGRICULTURAL
COMMODITIES ACT: FAILURE TO PAY PROMPTLY
7 U.S.C. 499b(4)
COMPANY and PRINCIPALS
22. Plaintiffre-alleges paragraphs 1 through 21 as though fully set fmih herein.
23. The Defendants received the shipment of Produce referenced in paragraph above.
24. The Defendants failed to pay the invoice within the applicable payment terms in effect
between the pariies at the time of each transaction.
25. As a direct result of the Defendants' failure to pay the invoice within tenns, the
Plaintiff incurred damages in the aggregate current amount of $190,153.90, plus further interest at
the Illinois statutory rate of 5.0%.
COUNT III.
BREACH OF CONTRACT
COMPANY
26. Plaintiff re-alleges paragraphs 1 through 25 as though fully set fmih herein.
27. Plaintiff and the Company entered into a contract under which Plaintiff agreed to sell
the Produce and the Company agreed to purchase the Produce, which is referenced in paragraph 9
above.
2 8. The Plaintiff delivered confonning goods to the Company and has otherwise satisfied
all conditions of the contracts.
29. The Company failed to pay for the shipment of Produce referenced in paragraph 9
5
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above.
30. As a direct result of the Company's failure to pay for the shipment of Produce, the
Plaintiff incuned damages in the cunent aggregate amount of$190,153.90, plus further interest at
the Illinois statutory rate of 5.0%.
COUNT IV.
BREACH OF FIDUCIARY DUTY TO PACA TRUST BENEFICIARIES
PRINCIPALS
31. Plaintiff re-alleges paragraphs 1 through 30 as though fully set forth herein.
32. At all times relevant to this action, the Principals were each a person in charge of the
Company's relevant business undertakings.
33. At all times relevant to this action, the Principals were each a person engaged in the
business of buying or selling Produce in interstate commerce in wholesale or jobbing quantities.
34. At all times relevant to this action, the Principals controlled and managed the
Company's operations and had control over the Company's financial dealings, including those
involving the P ACA Trust Assets.
35. At all times relevant to this action, the Principals were each in a position to control
and manage the Company's business operations and had the ability to control the Company's
financial dealings, including those involving the PACA Trust Assets.
36. At all times relevant to this action, the Principals had authority to direct the payment
of the Company's funds and otherwise had the power to direct the application or disposition of the
PACA Trust Assets.
6
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Case: 1:11-cv-08212 Document#: 1 Filed: 11/17/11 Page 7 of 9 PageiD #:7
37. At all times relevant to this action, the Principals were authorized signatories on the
Company's bank account(s).
38. At all times relevant to this action, the Principals had the power to direct the
application or disposition of the PACA Tmst Assets.
39. The Principals were each stah1tory tmstees with a duty to safeguard the PACA Tmst
Assets and were required to maintain the trust assets in such a manner as to ensure there were, at all
times, sufficient tmst assets to satisfy all outstanding P ACA tmst obligations such as those owed to
the Plaintiffherein.
40. Because the Principals controlled and/or were in a position to control the Company's
operations, and the Plaintiff's invoice has not been paid from PACA tmst assets as its bills fell due,
the Principals breached their respective fiduciary duties under the PACA trust.
41. The Principals continue to hold any and all PACA Tmst Assets having come into their
individual possession as tmstees for the Plaintiff's beneficial interest in the P ACA tmst.
42. The Principals are each personally liable to the Plaintiff, which liability is joint and
several with the Company and any third parties having received any P ACA trust assets with actual
or constructive notice of the breach of the PACA Trust, for the dissipation of the PACA trust in the
current aggregate amount of$190,153.90, plus the Illinois 5.0% statutory rate of interest contract
rate.
7
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Case: 1:11-cv-08212 Document#: 1 Filed: 11/17/11 Page 8 of 9 PageiD #:8
FOR THESE REASONS, Plaintiff respectfully seeks the entry of an Order providing as
follows:
A) As to Count I: (i) entering an Order creating a common fund and/or otherwise
compelling the preservation of the Defendants' P ACA trust assets for the benefit of
the Plaintiff and other similarly-situated P ACA trust beneficiaries that properly join
in the instant action, (ii) entering an Order directing the Defendants to immediately
turn over to the registry of the Court all assets impressed with the PACA trust for the
benefit of all unpaid trust beneficiaries such as the Plaintiff, (iii) entering a Final
Judgment in favor of the Plaintiff and against the Defendants, jointly and severally, in
the current amount of $190,153 .90, plus further interest at the Illinois statutmy rate
of 5.0%, less any actual recovery on other C01mts herein.
B) As to Count II, entering a Final Judgment in favor of Plaintiff and against the
Defendants, jointly and severally, in the current amount of $190,153.90, plus further
interest at the Illinois statutory rate of 5 .0%, less any actual recovery on other Counts
herein.
C) As to Count III, entering a Final Judgment in favor of Plaintiff and against the
Company for breach of contract in the current amount of $190,153.90, plus further
interest at the Illinois statutory rate of5 .0%, less any actual recovery on other Cmmts
herein.
D) As to Count IV, entering a Final Judgment in favor of Plaintiff and against the
Principals, on a joint and several basis with the Company, for breach of their fiduciary
8
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Case: 1:11-cv-08212 Document#: 1 Filed: 11/17111 Page 9 of 9 PageiD #:9
duties to the P ACA Trust, in the current amount of $190,153.90, plus fmiher interest
at the Illinois statutory rate of5.0%, less any actual recovery on other Counts herein.
E) Providing such other and further relief as the Court deems appropriate upon
consideration of this matter.
Date: November 17, 2011
9
Respectfully submitted,
LEATHERS MEWN COMPANY, INC.
By: Is/ John C. Crees, Esq.
Michael J. Keaton, Esq.- IL Bar #6207206
John C. Crees, Esq. - IL Bar #6299569
KEATON & ASSOCIATES, P.C.
1278 W. Northwest Highway, Suite 903
Palatine, Illinois 60067
Tel: 847/934-6500
Fax: 847/934-6508
E-mail: keaton@pacatrust.com
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PACA TRUST CHART
Claimant: Leathers Melon Company, Inc. Debtor: Quality Produce Suppliers
Date: 11/17/11 Terms: USDA Default Net 10 + 5% state rate per Illinois Statute 815 ILCS 205/2 (2011)
Rate: 5.0%APR 0.42%
INVOICE DATE OF PMT NOTICE ELAPSED INVOICE CREDITS/ BALANCE ACCRUED INVOICE TRUST
NUMBER TRANS. DUE DATE DAYS AMOUNT PAYMENTS DUE INTEREST* TOTAL AMOUNT
16021-11 07/22/11 08/01/11 07/22/11 118 $ 10,454.67 $ - $ 10,454.67 $ 132.28 $ 10,586.95 $ 10,586.95
16104-11 07/24/11 08/03/11 07/24/11 116 $ 8,152.00 $ - $ 8,152.00 $ 103.15 $ 8,255.15 $ 8,255.15
16060-11 07/24/11 08/03/11 07/24/11 116 $ 11,445.20 $ - $ 11,445.20 $ 144.82 $ 11,590.02 $ 11,590.02
16111-11 07/24/11 08/03/11 07/24/11 116 $ 9,588.00 $ -
$ 9,588.00 $ 121.32 $ 9,709.32 $ 9,709.32
16132-11 07/30/11 08/09/11 07/30/11 110 $ 11,922.40 $ - $ 11,922.40 $ 150.85 $ 12,073.25 $ 12,073.25
16135-11 07/30/11 08/09/11 07/30/11 110 $ 11,869.20 $ -
$ 11,869.20 $ 150.18 $ 12,019.38 $ 12,019.38
16147-11 07/30/11 08/09/11 07/30/11 110 $ 11,286.80 $ - $ 11,286.80 $ 142.81 $ 11,429.61 $ 11,429.61
16180-11 08/01/11 08/11/11 08/01/11 108 $ 11,681.60 $ -
$ 11,681.60 $ 147.81 $ 11,829.41 $ 11,829.41
16166-11 08/01/11 08/11/11 08/01/11 108 $ 11,547.20 $ - $ 11,547.20 $ 146.11 $ 11,693.31 $ 11,693.31
16157-11 08/01/11 08/11/11 08/01/11 108 $ 12,271.00 $ -
$ 12,271.00 $ 155.26 $ 12,426.26 $ 12,426.26
16188-11 08/01/11 08/11/11 08/01/11 108 $ 11,471.60 $
-
$ 11,471.60 $ 145.15 $ 11,616.75 $ 11,616.75
16210-11 08/06/11 08/16/11 08/06/11 103 $ 7,498.05 $ - $ 7,498.05 $ 94.87 $ 7,592.92 $ 7,592.92
16211-11 08/06/11 08/16/11 08/06/11 103 $ 7,142.85 $ - $ 7,142.85 $ 90.38 $ 7,233.23 $ 7,233.23
16225-11 08/06/11 08/16/11 08/06/11 103 $ 7,623.00 $ - $ 7,623.00 $ 96.45 $ 7,719.45 $ 7,719.45
16233-11 08/06/11 08/16/11 08/06/11 103 $ 7,115.58 $ 795.58 $ 6,320.00 $ 79.97 $ 6,399.97 $ 6,399.97
16236-11 08/10/11 08/20/11 08/10/11 99 $ 7,360.74 $ 817.86 $ 6,542.88 $ 82.79 $ 6,625.67 $ 6,625.67
16244-11 08/13/11 08/23/11 08/13/11 96 $ 7,131.30 $ 219.30 $ 6,912.00 $ 87.46 $ 6,999.46 $ 6,999.46
16267-11 08/23/11 09/02/11 08/23/11 86 $ 6,082.50 $ 811.00 $ 5,271.50 $ 44.37 $ 5,315.87 $ 5,315.87
16286-11 08/23/11 09/02/11 08/23/11 86 $ 6,465.00 $ - $ 6,465.00 $ 54.42 $ 6,519.42 $ 6,519.42
16294-11 08/23/11 09/02/11 08/23/11 86 $ 5,949.00 $ - $ 5,949.00 $ 50.08 $ 5,999.08 $ 5,999.08
16303-11 08/23/11 09/02/11 08/23/11 86 $ 6,465.00 $
-
$ 6,465.00 $ 54.42 $ 6,519.42 $ 6,519.42
TOTALS $190,522.69 $ 2,643.74 $ 187,878.95 $ 2,274.95 JiJ90,153.9Q_
*Interest calculated at 5.0% state rate, divided by 12 to get monthly rate
EXHIBIT
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12-50073-lmc Doc#347-6 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 1 of 13
Case: 1:11-cv-08212 Document#: 9 Filed: 11/17/11 Page 1 of 65 PageiD #:46
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FILE
NOV 1 7 2011 MF
LEATHERS MELON COMPANY, INC., )
MICHAEL W. D08BIN5
CLERK, U.S. DISTRICT COURT
Plaintiff,
v.
QUALITY PRODUCE SUPPLIERS, INC.,
DONALD SRUM, RICHARD SRUM and
PATSY SRUM, each individually,
Defendants.
)
11 cv8212
) (
)
)
)
' Judge William J. Hibbler .
Magistrate Sidney I. Sctt_enkter
)
)
)
)
)
PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT OF
APPLICATION FOR TEMPORARY RESTRAINING ORDER
I. INTRODUCTION
Leathers Melon Company Inc. ("Plaintiff'), has just filed an action to recover $190,153.90,
plus further interest for perishable agricultural commodities ("Produce") sold to defendants, Quality
Produce Suppliers, Inc. (the "Company'') and Donald Srum, Richard Srum and Patsy Srum, each
individually (collectively the "Principals") (the Company and the Principals hereinafter collectively
the "Defendants"). Count I seeks enforcement of the trust imposed on the Defendants' assets under
5(c)(3) [7U.S.C. 499e(c)(3)] ofthePerishableAgricultural Commodities Act, 1930, as amended,
7 U.S.C. 499a-499t (2009 & Supp. 2011) (the "PACA"). Plaintiff alleges that the Defendants
have dissipated, and are continuing to dissipate, the assets impressed with the statutory P ACA trust,
thereby harming the rights of the trust beneficiaries such as the Plaintiff.
The Defendants' dissipation and continued dissipation ofPlaintiff s trust assets is wrongful
and in violation of Plaintiffs trust rights. The PACA requires a Produce debtor in the Defendants'
position to maintain sufficient assets at all times to satisfy the claims of the qualified P ACA trust
beneficiaries such as the Plaintiff herein. Accordingly, Plaintiffs action seeks the entry of a
EXHIBITF
12-50073-lmc Doc#347-6 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 2 of 13
Case: 1:11-cv-08212 Document#: 9 Filed: 11117111 Page 2 of 65 PageiD #:47
Temporary Restraining Order ("TRO") to prevent the Defendants from further dissipating the P ACA
trust. If the Defendants are not restrained from dissipating the P ACA trust, the trust assets will be
forever lost to Plaintiff and it will thereby suffer the exact irreparable harm this remedial statute was
designed and enacted to prevent.
II. STATEMENT OF THE FACTS
Plaintiff are sellers of wholesale quantities of Produce. The Defendants are buyers of
wholesale quantities of Produce. The Plaintiff sold Produce to the Defendants and the Defendants
accepted shipments of Produce from the Plaintiff which have a current aggregate invoice value of
$190,153.90. After the inclusion of all sums owing in connection with the transactions, per the
USDA regulations, the Plaintiff properly preserved its P ACA trust rights for this entire sum.
Despite repeated demands, the Defendants have not paid Plaintiff the balance due on their
P ACA trust claims and the cunent aggregate sum of $190,153.90, plus further interest remains due
and owing. (See Affidavit of James E. Leathers, President of the Plaintiff, attached as Exhibit 1).
The Defendants also appear to be unable to pay due to the dissipated condition of the P ACA trust
res. (See Exhibit 1, ~ ~ # # ) . Based on the Defendants' demonstrated inability to pay its bills (See
Exhibit 1, Plaintiffs Affidavit), this situation will effectively prevent the Defendants from satisfying
the balances owed to the Plaintiff or any other equally-situated trust beneficiary if allowed to
continue dissipating the trust. Id.
Rather than allocating the P ACA trust assets to their only rightful purpose, i.e., the payment
of the claims ofPACA trust beneficiaries such as the Plaintiff, the Defendants have instead been,
either voluntarily or against their will, diverting these trust assets to other uses in clear violation of
their duties as statutory trustees under P A CA.
2
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III. SUMMARY OF THE PERISHABLE AGRICULTURAL COMMODITIES ACT
Congress enacted the P ACA in 1930 to provide a comprehensive scheme for the regulation
of traders of fresh fruit and vegetables. "It provides a code of fair play ... an aid to agricultural
traders in enforcing their contracts." 49 Fed. Reg. at 45737. The PACArequires produce buyers to
make "full payment promptly'' for any produce they purchase. 7 U.S.C. 499b(4). The PACA
protects suppliers of produce by giving rise to civil liabilities in favor of the unpaid seller against
buyers who fail to make full payment promptly. 7 U.S.C. 499e(a); In re Carpenito Bros., 46 Agric.
Dec. 486 (1987), affd 851 F.2d 1500 (D.C. Cir. 1988). See also Endico Potatoes v. CIT/Factoring,
67 F.3d 1063, 1066-67 (2nd Cir. 1995). An unpaid seller loses the benefit of the trust unless it serves
written notice of its intent to preserve trust benefits with the produce buyer within 30 days after
payment becomes past due. 7 U.S.C. 499e(c)(3) (as amended).
In 1984, Congress determined that the increase in nonpayment and delinquent payment by
Produce buyers threatened-the financial stability of the produce industry. Congress recognized that
under the prevailing law "sellers of fresh fruits and vegetables [were] unsecured creditors and
receive[ d] little protection in any suit for recovery of damages where a buyer ha[ d] failed to make
payment required by the contract." H. R. Rep. No. 543, 98th Cong. 1 St. Sess. (1983), reprinted in
1984 U.S. Code Cong. & Admin. News, 405, 407. In response, Congress amended the PACA in
1984 to provide further protection to sellers of produce and to establish an express, non-segregated
"floating" statutory trust in which a Produce buyer as trustee holds its Produce-related assets in trust
as a fiduciary until full payment is made to the unpaid seller/trust beneficiary. 7 U.S.C. 499e( c);
Frio Ice S.A. v. Sunfruit, 918 F.2d 154, 156 (11th Cir. 1990).
3
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The P A CA trust commences by operation oflaw upon delivery of the Produce and continues
until full payment for the Produce has been made. 7 C.F.R. 46.46(d)(l), 7 U.S.C. 499e(c)(2).
Once the seller delivers the Produce, failure of the buyer (as trustee) to maintain trust assets
sufficient to make full payment promptly to the trust beneficiaries is unlawful. 7 U.S.C. 499b( 4).
The trust provisions of the PACA are similar to, and based upon, the trust provisions of the Packers
and Stockyards Act, 7U.S.C. 181-229 (1980)(the "PSA"). The trust provisions ofbothActs are
interpreted similarly, and the courts have looked to the PSA for guidance in interpreting the P ACA.
See In re: Fresh Approach, 48 B.R. 926, 931 (Bankr. N.D. Tex. 1985).
The principal benefit of the trust for a Produce seller is that when a buyer fails to pay or
becomes insolvent, the seller is placed first in line among creditors to receive the trust res, which
consists of all assets of the debtor unless and until the debtor proves a particular asset was acquired
with something other than the proceeds of the debtor's dealings in Produce. Frio Ice, 918 F .2d at
156. See In re: Monterey House, 71 B.R. 244, 249 (Bankr. S.D. Tex. 1986); Fresh Approach, 51
B.R. at 420-422. The P ACA trust res serves as a fund from which unpaid Produce sellers can be
assured payment. By operation of trust law, while a buyer of Produce has legal title to the PACA
trust res, equitable title remains with the seller of the Produce.
The establishment of the trust occurs upon the commencement of the buyer's buying and
selling ofProduce and exists continuously throughout the life of the buyer's business until the sellers
are paid in full. Any assets purchased while the trust is in existence will be assumed to be purchased
with trust assets and will, therefore, become part of the trust fund assets available to satisfy the
claims of the qualified unpaid sellers. In re: Atlantic Tropical Market, 118 B.R. 139, 142 (Bankr.
S.D. Fla. 1990). When trust assets are commingled with funds not subject to the trust, the trust is
4
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impressed u p o ~ the entire commingled fund for the benefit of the trust beneficiaries. In re: Gotham
Provision, 669 F.2d 1000 (5th Cir. 1982). The PACA was designed to insure that a Produce buyer's
secured lender and other third parties do not receive and retain proceeds from the sale of Produce
when the buyers's Produce suppliers have not been paid. The USDA has recognized that Congress
intended unpaid sellers to recover trust assets that are transferred to third parties including secured
lenders. 49 Fed. Reg. 45736 (Nov. 20, 1984). See 44 U.S.C. 1507.
With respect to any issue of tracing assets, the Atlantic Tropical Market court considered this
legislative history when it placed on the buyer the burden to "track the status of the trust fund and
to provide evidence of other origin of purchases of assets." Id., citing In re: AI Nagelberg & Co.,
84B.R. 19 (S.D.N.Y. 1988); In re: Fresh Approach, 51 B.R. at422 ("[s]hould a dispute arise, it will
be the buyers' burden to establish which, if any, assets are not subject to the PACA trust."); In re: N.
Merberg & Sons, 166 B.R. 567, 570 (Bankr. S.D.N.Y. 1994; In re: Milton Poulos, Inc., 94 B.R. 648,
652-53 (Bankr. C.D. Cal. 1988), aff'd 107 B.R. 715 (9th Cir. BAP 1989) ("the debtor or bankruptcy
trustee, rather than the trust beneficiary, is responsible for determining which assets, if any, are not
subject to the trust.");
In Sanzone-Palmisano Co. v. Seaman Enterprises, 986 F.2d 1010 (6
1
h Cir. 1993), the Court
provided a more detailed discussion on the issue of tracing and the policy reasons for placing the
burden on the buyer/debtor, recognizing:
that in most cases it will be virtually impossible for a P ACA debtor to trace the origin
of the disputed assets ... [However, w ]e believe that this is the outcome that Congress
intended.
Id. at 1014 (emphasis added). After finding the supplier had established the validity of its P ACA
trust interest, the Court stated the burden on remand to the district court is on the buyer to:
5
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prove which seized assets were not purchased with funds from the sale of produce.
All of the seized assets that cannot be traced to a non-trust source are part of the
trust res and are subject to [supplier's] trust claim.
Id. (emphasis added.)
The Produce buyer is required to maintain trust assets so that such assets are freely available
to satisfy all outstanding obligations to sellers of produce. 7 C.P.R. 46.46(e). This obligation is
plainly set forth in the P ACA statute as follows:
[ a]ny act or omission which is inconsistent with the buyer's responsibility to
maintain trust assets, including any act which results in the diversion of trust assets
or which prejudices the ability of unpaid sellers to recover money owed, is
unlawful.
7 U.S.C. 499(b )( 4) (emphasis added). The officers of a corporation responsible for its financial
dealings are personally liable to PACA trust creditors for any dissipation of the Plaintiff's PACA
trust assets by virtue of their directing the corporate trustee to breach its fiduciary duties. Sunkist
Growers v. Fisher, 104 F.3d 280,283 (9
1
h Cir. 1997) (agreeing with prior district court decisions, the
Court stated: "individual shareholders, officers, or directors of a corporation who are in a position
to control P ACA trust assets, and who breach their fiduciary duty to preserve those assets, may be
held personally liable under the Act.").
IV. JURISDICTION
Injunctive relief is necessary and proper under the PACA to prevent the dissipation of a
seller's interest in P ACA trust assets, and the District Courts have jurisdiction to entertain injunctive
actions by both the USDA and private unpaid Produce sellers with PACA trust rights. Frio Ice, 918
F.2d at 158; Gullo Produce Co. v. Jordon Produce Co., 751 F. Supp. 64 (W.D. PA. 1990); Debruyn
Produce Co. v. Olympia Produce, 734 F. Supp. 483 (N.D. Ga. 1989); J.R. Brooks & Sons v.
Norman's Country Market, 98 B.R. 47 (Bankr. N.D. Fla. 1989). See also 7 U.S.C. 499e(c)(4).
6
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"Injunctive relief is necessary to preserve the status quo for the protection of the produce sellers<'
Debruyn Produce, 734 F.2d at 486.
Preventing dissipation of the trust is a key purpose of the PACA. Preventing transfer of trust
assets often may be the only means by which a Federal Court can prevent dissipation of the trust.
Upon a showing the trust is being dissipated or threatened with dissipation, a District Court should
require the maintenance of trust assets. Frio Ice, 918 F.2d at 159. See also Taylor Farms Florida v.
Gennaro's Produce, 2007 U.S. Dist. LEXIS 13260 (S.D. FL 2007)(wherein the Court granted ex
parte injunctive relief to the P ACA trust beneficiary in order to stop the defendants continued
dissipation ofthe trust res and to maintain the status quo).
V. ARGUMENT
Federal Rule of Civil Procedure 65(b) provides that a temporary restraining order may be
issued without written or oral notice to the adverse party or that party's attorney only if (1) it clearly
appears from the specific facts shown by affidavit or by the verified complaint that immediate and
irreparable injury, loss, or damage will result to the applicant before the adverse party or that party's
attorney can be heard in opposition, and (2) the applicant's attorney certifies to the court, in writing
the efforts, if any, which have been made to give the notice and the reasons supporting the claim that
notice should not be required. FRCP Rule 65(b ).
Defendants' dissipation ofPlaintiffs P ACA trust funds is an immediate and irreparable injury
which this District has previously serves as a valid basis for issuance of an ex parte injunction to
preserve the PACA trust assets until a full injunction hearing can be scheduled. See Exhibit 2 to
Affidavit fo James E. Leathers. See also Taylor Farms Florida v. Gennaro's Produce, 2007 U.S.
Dist. LEXIS 13260 *5 (S.D. FL 2007)(holding that the Plaintiff"will suffer immediate irreparable
injury in the form of a loss of trust assets unless this Order is granted without notice."); Frio Ice,
7
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918 F. 2d at 159 ("[u]pon a showing that the trust is dissipated or threatened with
dissipation, a district court should require the P ACA debtor to escrow its proceeds from produce
sales, identify its receivables, and inventory its assets.")( emphasis added). Accord Dole Fresh Fruit
v. 821 F.2d 106 (2ndcir. 1987); InreRichmondProduce, 112 B.R. 364,367 (Bankr.
N.D. Cal. 1990).
Second, granting the TRO ex parte is necessary and proper to prevent further dissipation of
P ACA trust assets. In Sanzone Brokerage. Inc. v. J &M Produce Sales. Inc., 2008 U.S. Dist. LEXIS
21524, the Court concluded that, "providing notice would only serve to provide Defendants 'an
opportunity to further dissipate the P ACA trust assets to ... non-trust creditors, who can then claim
a bona fide purchaser status."' Id. at 9. In Taylor Fanns Florida v. Gennaro's Produce, 2007 U.S.
Dist. LEXIS 13260 (S.D. FL 2007), also involving a PACA creditor requesting an ex parte TRO,
the Court specifically addressed the no-notice provision ofFRCP 65(b) and stated that:
[i]f notice is given to Defendants of the pendency of this Motion, trust assets will be
further threatened with dissipation before the Motion is heard. As noted in the
legislative history ofPACA, once dissipation has occurred, recovery of trust assets is
all but impossible. Entry of this Oder without notice assures retention of the trust
assets under the control of this Court which is specifically vested with jurisdiction
over the trust.
I d. at 4. (internal citations omitted). See also Procacci Brothers Sales Group v. Indian Rock Produce,
U.S. Dist. CourtE.D. Pa. No. 03-5543 (E.D. Pa. October9, 2003) (Wells, M.J.), similarly involving
a P ACA creditor requesting an ex parte TRO, the Court addressed the no-notice provision ofFRCP
65(b ), stating that: "[ e ]x parte proceedings pursuant to FRCP 65(b ), are appropriate in this instance,
because, once the produce has been sold and trust funds dissipated, there will be no asset or other
reliablesourceofpaymentavailabletothePlaintiff." 2003 U.S. Dist. Lexis 19620 *4(E.D.Pa2003).
8
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Plaintiffs Motion f o ~ a Temporary Restraining Order should be granted with an Order
providing as follows:
A. Restraining the Defendants from further violating the provisions of the P ACA
through dissipation and establishing a common fund for the payment of all
valid P ACA claims;
B. Restraining the Defendants, their principals, agents, banking institutions, or
any entity acting on behalf of, or in concert with, the Defendants from using
or consuming P ACA trust assets in any way until further Order or until the
Defendants pay into the Registry of this Court the sum of $190,153.90, plus
further interest, and;
C. If the Defendants fail to make payment in full to the Registry of this Court
within three (3) business days of entry of this Order, the Defendants are
ordered to tender a detailed accounting of all the Company's accounts
receivable, accounts payable, inventory, equipment and other assets by a date
certain to the Court and to Plaintiff's counsel for a determination of the extent
of the dissipation.
The Third Circuit in Tanimura & Antle v. Packed Fresh Produce, 222 F.3d 132 (3rd Cir.
2000) held that "the dissipation ofP ACA trust assets can render money damages inadequate." I d. at
139-140. Accord Dole Fresh Fruit v. United Banana, 821 F.2d 106 (2nd Cir. 1987); Inre Richmond
Produce, 112 B.R. 364, 367 (Bankr. N.D. Cal. 1990).
The above-listed preliminary relief is significantly less burdensome than the relief other
courts have found necessary to effectuate the purpose of the statute, that being to ensure payment to
unpaid sellers of Produce who have properly preserved their rights under the law. See also Gullo
Produce, 751 F. Supp. at 65-66.
[f]our factors must be considered by a court in deciding whether to issue a
preliminary injunction: (1) whether the movant has shown a reasonable probability
of success on the merits; (2) whether the movant will be irreparably injured by denial
of the relief; (3) whether granting the preliminary relief will result in even greater
harm to the nonmoving party; and ( 4) whether granting the preliminary relief will be
9
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in the public interest. ... A court should endeavor to balance these factors when
determining if an injunction should issue.
Tanimura, supra, at 140; William Inglis & Sons Bakingv. ITT Continental Baking, 526 F.2d 86 (9th
Cir. 1975); Corning Glass Works v. Jeannette Glass, 308 F. Supp. 1321 (D.C. N.Y. 1970), a.ff'd 432
F. 2d 784 (2nd Cir. 1970). See also See Strube Celery & Vegetable v. Global Foods, 2006 U.S. Dist.
LEXIS 78330 *4(S.D. IN 2006)(citingFaheem-El v. Klincar, 841 F.2d 712 (7th Cir.1988). Plaintiff
will demonstrate the satisfaction of each condition for temporary and permanent injunctive relief.
1. LIKELIHOOD OF SUCCESS ON THE MERITS
The Affidavit of James E. Leather, President of the Plaintiff, demonstrates that the Plaintiff
properly preserved its trust claim by affixing the required notice language on the face of its invoices
and serving the same on the Company. See 7 U.S.C. 499e(c)(4). As a case based almost
exclusively on written documents which have been properly authenticated (an "account stated"
action), and because the Defendants have admitted the debt in this case, the Plaintiff will almost
certainly prevail at any hearing on the merits of its claims.
2.
In cases interpreting the rights ofP ACA creditors, courts in this and other jurisdictions have
recognized that without injunctive relief, a P ACA seller faced with a financially unstable or an
insolvent buyer will not receive either the P ACA trust assets or the proceeds of such trust assets.
Tanimura, supra. "PACA trust dissipation ... constitutes irreparable harm." Tanimura, 222 F.3d
at 140 (3rd Cir. 2000). See also Gullo Produce, 751 F. Supp. at 67; Frio Ice, 918 F.2d at 159 ("[t]he
legislative history [of the P A CA] noted that once the trust is dissipated it is almost impossible for
the beneficiary to obtain recovery') (emphasis added). "[T]rust dissipation can satisfy [the
irreparable harm] factor if, absent such relief, ultimate recovery is rendered unlikely." Tanimura,
10
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222 F.3d at 141 (3rd Cir. 2000). A moving party must show either actual dissipation OR the threat
of dissipation of the P ACA trust in order to obtain injunctive relief and a segregation of the trust
proceeds. Frio Ice, 918 F.2d at 159 n.8. In this instance, the Defendants have lacked the ability to
pay for the Produce they purchased for several months, despite repeated promises and efforts to pay
(albeit through delivery ofNSF checks). This clearly establishes either actual dissipation or a clear
threat of dissipation of the P ACA trust assets unless the Defendants are enjoined from further
violating the P ACA statute.
Injunctive reliefwill force the Defendants to cease dissipation of the PACA trust, prevent
third party purchasers from terminating or "cutting off" the Plaintiff's trust rights and require the
Defendants to return the trust to a fully-funded level sufficient to satisfy the claims of qualified
beneficial interests in full. To date, the Defendants have dissipated the trust by failing to pay
Plaintiffs and the Defendants have demonstrated their inability to do so by delivering at least six (6)
NSF checks in a row to the Plaintiff. The Defendants continue to dissipate the trust assets to entities
other than the rightful owners of the P ACA trust's beneficial interests and by failing to make the trust
assets readily available to make "full payment promptly" to Plaintiff as required under federal law
(the P ACA). Because Congress specifically recognized the virtual impossibility of recovering
P ACA trust assets once they have been dissipated or transferred to third parties who may have "BFP"
status, the loss to Plaintiff and other trust creditors is irreparable.
3. BALANCING OF HARM
The Defendants simply cannot be harmed by the issuance of an injunction because the relief
Plaintiff seek is merely to force the Defendants to comply with the law. It will also require the
Defendants to satisfy their pre-existing obligations under PACA- that is, to preserve the PACA trust
11
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assets for the benefit of P ACA beneficiaries and make "full payment on all Produce-
related invoices. On the other hand, the risk of harm to Plaintiff is great if the Defendants are
allowed to further dissipate trust assets and disburse the P ACA trust assets to non-trust creditors.
Judicial oversight is necessary to protect the trust rights of the Plaintiff and other PACA trust
beneficiaries. As stated above, previous experience has borne out the fact that, once P ACA trust
assets are dissipated, an unpaid P ACA claimant is extremely unlikely to recover any portion of its
beneficial interest in the trust -- a result clearly at odds with the express purpose of this remedial
federal statute. Thus, the issuance of a TRO will merely ensure the Defendants do not continue to
violate the law.
4. PUBLIC INTEREST
The strong preference for the plight of P ACA trust creditors which Congress expressed in
the 1984 trust amendments to the P ACA clearly illuminates the public interest at stake in this case.
In the text of the statute itself, Congress made this point very clear:
[t]his subsection [the new PACA trust provision] is intended to remedy such burden
on commerce in perishable agricultural commodities and to protect the public
interest.
7 U.S.C. 499e(c)(1) (emphasis added). These safeguards were established in order to assure
payment to the growers and shippers of Produce. There can scarcely be a more vital public concern
than the economic security and viability of this nation's food supply.
This supply and distribution chain consists of the very same growers, producers and
distributors which Congress sought to protect when it enacted this legislation in 1930 and then
amended it in 1984 to include the PACA trust provisions. To deny Plaintiff the requested relief
would erode the protection Congress guaranteed to the growers and sellers of Produce in Plaintiffs
12
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position, bypassing the PACA and the promulgated thereunder. "[I]ssuance of a
preliminary injunction here is in the public interest, as the statutory purpose explicitly encapsulates
injunctive relief. Tanimura, 222 F .3d at 140 (3rd Cir. 2000). Therefore, the requested injunction is
clearly in the public interest.
VI. CONCLUSION
For the foregoing reasons, Plaintiff respectfully requests the Court to issue a Temporary
Restraining Order and set this matter for a full hearing on Plaintiffs motion for a preliminary
injunction and to consolidate that hearing with a hearing on the merits.
Dated: November 16,2011
13
Respectfully submitted,
Michael J. Keaton, Esq.
John C. Crees, Esq.
Kevin P. Kelley, Esq.
KEATON & ASSOCIATES, P.C.
1278 W. Northwest Highway, Suite 903
Palatine, lllinois 60067
Tel: 847/934-6500
Fax: 847/934-6508
E-mail: keaton@pacatrust.com
A & A Concepts, LLC
1219 S. Zarzamora St
San Antonio, TX 78207-6747
Andrew & Williamson
9940 Marconi Drive
San Diego, CA 92154-7270
Averitt Brokerage Co., Inc.
Mr. David Faubion
9999 Perrin Beitel, Suite B
San Antonio, TX 78217
B. Catalani, Inc.
1500 South Zarzamora, Unit #326
San Antonio, TX 78207
Bernardi & Associates
c/o Diana M. Geis
Curl & Stahl
700 North St Marys Street, Suite 1930
San Antonio, TX 78205
Bernardi & Associates
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Bucks Fresh Produce
P. O. Box 207
Hidalgo, TX 78557-0207
Buster Lind Produce
502 W. Schunior St.
Edinburg, TX 78541-3099
C & R Fresh, LLC
Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
California Fruit Produce
1500 So. Zarzamora, #338
San Antonio, Texas 78207-7291
California Artichoke & Veg Growers Corp.
c/o Diana M. Geis
Curl & Stahl
700 North St Marys Street, Suite 1930
San Antonio, TX 78205
California Artichoke & Veg Growers Corp.
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Camila Fresh
2501 W. Military Hwy., Suite C-34
McAllen, TX 78503-8948
Canon Potato Co.
P.O.Box 880
Center, CO 81125-0880
Central American Produce
2200 Park Central Blvd., #600
Pompano Beach, FL 33064-2220
Chuys Produce
1500 S. Zarzamora St., Unit 434
San Antonio, TX 78207-7209
Comptom Brokerage, Ltd
5530 IH-10 East, Bldg F
San Antonio, TX 78219-4504
Compton Brokerage, Ltd.
P. O. Box 1696
Pharr, TX 78577-1630
Coosemans Houston, Inc.
Mr. Richard D. Thomas
3124 Produce Row
Houston, TX 77023
Costa Oro, LLC
P.O. Box 2424
McAllen, TX 78502-2424
Cummer Graham Company
1500 South Zarzamora, #310
San Antonio, TX 78207-7383
Dajalala Produce Co.
2501 Military Hwy, #A-30
McAllen, TX 78503-8941
DiMare Enterprises, Inc.
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio,TX 78205
DiMare Enterprises, Inc.
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Dayka & Hackett, LLC
42874 Rd. 64
Reedley, CA 93654-9010
Del Campo Supreme, Inc.
672 W. Frontage Rd.
Nogales, AZ 85621-9633
Delightful Quality Produce
2201 S. Laredo
San Antonio, TX 78207
Delina Fresh
1068 Pine Branch Rd.
Weston, FL 33326-2842
Dajlala Produce, Co.
2501 Military Highway, Unit A-30
McAllen TX 78503
Direct Source Produce
1500 So. Zarzamora, Unit 707
San Antonio, TX 78207-7210
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Diversified Produce
P. O. Box 911523
Dallas, TX 75391-1523
Divine Ripe, LLC
c/o Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Duckwall Fruit Co.
c/o Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Dynasty Farms
P. O. Box 3737
Salinas, CA 93912-3737
Eagle Eye Produce
32 Avenida Acaponeta
Rio Rico, AZ 85648
Eagle Eye Produce
P. O. Box 460
Iona, ID 83427-0460
Eco Farms Sales, Inc.
Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Eco Farms Sales, Inc.
c/o Meuers Law Firm, P.L.
5395 Park Central Court
Naples, FL 34109-5932
Expo Fresh, LLC
8775 Airway Rd.
San Diego, CA 92154-6207
Farm Fresh Direct, LLC
c/o Michael G. Colvard
MARTIN & DROUGHT
300 Convent, Suite 2500
San Antonio, Texas 78205
Farmer Brothers Co.
P.O. Box 79705
City of Industry, CA 91716-9705
Fernandez Produce Express
1603 S. Zarzamora St.
San Antonio, TX 78207-7214
Fikes Family Farms
3760 North grape Creek
Fredericksburg, TX 78624-5740
Five Brothers Jalisco Produce Co., Inc.
c/o Kevin P. Kelley
Keaton & Associates, P.C.
1278 W Northwest Highway, Suite 903
Palatine, IL 60067
Franks Distributing of Produce, LCC
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Franks Distributing of Produce, LLC
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio,TX 78205
Fresh Imports International
824 E. Hackberry Ave., #100
McAllen, TX 78501
Fresh Pac International
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Fresh Pac International
c/o Diana M. Geis
Curl & Stahl
700 North St Marys Street, Suite 1930
San Antonio, TX 78205
Fresh Start Produce Sales
c/o Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Full Service Commodities
1500 S. Zarzamora
San Antonio, TX 78207-7297
Gargiulo, Inc.
Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Gargiulo, Inc.
Steve Nurenberg, Esq.
c/o Meuers Law Firm, P.L.
5395 Park Central Court
Naples, FL 34109-5932
Greenhouse Produce Co., Inc.
Robert E. Goldman, Esq.
1 East Broward Blvd., Suite 700
Fort Lauderdale, FL 33301
Greenpoint Distributors
P. O. Box 7270
Nogales, AZ 85628-7270
Gonzalez Mexican Produce
2501 W. Military Hwy., A-23
McAllen, Texas 78503
Guerra Produce
1500 S. Zarzamora, Unit 304
San Antonio, TX 78207-7210
G.R. Produce, Inc.
Kevin P. Kelley, Esq.
Keaton & Associates, P.C.
1278 W Northwest Highway, Suite 903
Palatine, IL 60067
Harllee Packing, Inc.
John P. Harllee, IV
P.O. Box 8
Palmetto, FL 34220-0008
Harvest Crown Co., Inc.
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio,TX 78205
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Harvest Crown Co., Inc.
c/o Bart M. Botta
Rynn & Janowsky, LLP
1100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Henry Avocado Corp.
Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Henry Avocado Corp.
Steve Nurenberg, Esq.
c/o Meuers Law Firm, P.L.
5395 Park Central Court
Naples, FL 34109-5932
Hermez Produce, Inc.
3909 E. Ramseyer Rd
Edinburg, TX 78542-0855
I Kunik Company
c/o Kevin P. Kelley
Keaton & Associates, P.C.
1278 W Northwest Highway, Suite 903
Palatine, IL 60067
International Bank of Commerce
c/o Michael G. Colvard
MARTIN & DROUGHT
300 Convent, Suite 2500
San Antonio, Texas 78205
Irigoyen Farms, Inc.
14801 S. Clovis Ave.
Selma, CA 93662-9641
J-C Distributing, Inc.
c/o Bart M. Botta
Rynn & Janowsky, LLP
1100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
J-C Distributing, Inc.
c/o Diana M. Geis
Curl & Stahl
700 North St Marys Street, Suite 1930
San Antonio, TX 78205
Jacks Produce
P. O. Box 561
Pearsall, TX 78061-0561
JFJ Company
Mr. Jose Francisco Jimenez
127 N San Gabriel
San Antonio, TX 78237

Juniper Tomato Growers, Inc.
C/o Robert E. Goldman
1 East Broward Blvd., Suite 700
Fort Lauderdale, FL 33301
Kingdon Fresh Produce, Inc.
C/o Kevin P. Kelley
Keaton & Associates, P.C.
278 W Northwest Highway, Suite 903
Palatine, IL 60067
Le Best Banana Supply Co., Inc.
P. O. Box 295
Hidalgo, Texas 78557-0295
London Fruit, Inc.
C/o Robert E. Goldman
1 East Broward Blvd., Suite 700
Fort Lauderdale, FL 33301
Lone Star Citrus Growers
9625 N. Moorfield Rd.
Mission, TX 78574-4598
M & P Logistic LP
Mr. Michael Lopez, Jr.
1500 S. Zarzamora, Unit 306
San Antonio, TX 78207-7210
M & P Produce Co., Inc.
Mr. Michael J. Lopez
1500 Zarzamora #308
San Antonio, TX 78207-7284
Malena Produce
947 E. Frontage Rd.
Rio Rico, AZ 85648-6264
Marengo Foods Company
P. O. Box 190649
Dallas, TX 75219-0649
Mecca Family Farms, Ltd.
c/o Diana M. Geis
Curl & Stahl
700 North St Marys Street, Suite 1930
San Antonio, TX 78205
Mecca Family Farms, Ltd.
c/o Bart M. Botta
Rynn & Janowsky, LLP
1100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Miedema Produce
5005 40
th
Avenue
Hudsonville, MI 49426-9481
Mission Produce, Inc.
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio, TX 78205
Mission Produce, Inc.
Bart M. Botta, Esq.
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Muller Trading Company, Inc.
Bruce W. Akerly, Esq.
CANTEY HANGER LLP
1999 Bryan Street, Suite 3300
Dallas, Texas 75201
Muller Trading Company, Inc.
c/o Jason R. Klinowski, Esq.
FREEBORN & PETERS LLP
311 S. Wacker Dr., Suite 3000
Chicago, Illinois 60606
Ninos Fresh Cut Fruits & Veggies
1500 S. Zarzamora, Unit 404
San Antonio, TX 78207-7210
Pacific International Veg Marketing Inc.
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio, TX 78205
Pacific International Veg Marketing Inc.
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
12-50073-lmc Doc#347-7 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 3 of 5
Paul Obst Farms
1520 N. Alamo Rd.
Alamo, TX 78516-6817
Prime Time Sales
Diana M. Geis, Esq.
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio, TX 78205
Prime Time Sales
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Produce Express
1603 S. Zarzamora
San Antonio, TX 78207-7214
Providencia Fresh, LLC
P. O. Box 381
Hidalgo, TX 78557-0381
The Pumpkin Patch, LLP
Robert E. Goldman, Esq.
1 East Broward Blvd., Suite 700
Fort Lauderdale, FL 33301
R. C. Food Service & Produce
305 Market St.
Laredo, TX 78040-8529
R.M. Compton Transport, Inc.
PO Box 1696
Pharr, TX 78577-1630
Richie Boice Tomato Sales
1368 NW 100
th
Dr.
Coral Springs, FL 33071-5937
Rio Bravo Produce Limited LLC
Kevin P. Kelley, Esq.
Keaton & Associates, P.C.
1278 W Northwest Highway, Suite 903
Palatine, IL 60067
Rio Queen Citrus, Inc.
c/o Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Rio Queen Citrus, Inc.
Steve Nurenberg, Esq.
c/o Meuers Law Firm, P.L.
5395 Park Central Court
Naples, FL 34109-5932
River City Produce
1616 So. Laredo St.
San Antonio, TX 78207-7029
Johnny Rizo
Rizzo Farms
432 CR 6610
Devine, TX 78016-4147
Royal Flavor, LLC
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Royal Flavor, LLC
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio, TX 78205
Six Ls Packing Co., Inc.
P. O. Box 3088
Immokalee, FL 34143-3088
Skyline Potato Company
Mr. Michael D. Jones
55 North Torres Street
P. O. Box 416
Center, CO 81125-0416
Slankard Produce
1500 So. Zarzamora St.
San Antonio, TX 78207-7284
South Central Brokerage
Mr. Victor M. Gonzalez
11550 IH 10 West, Suite 232
San Antonio, TX 78230-1036
Solano Produce
1500 S. Zarzamora ST., 301B
San Antonio, TX 78207-7372
Steinbeck Country Produce
PO Box 7417
Spreckels, CA 93962-7417
Sunriver Sales
c/o Michael J. Black
BURNS & BLACK, PLLC
750 Rittiman Road
San Antonio, Texas 78209
Sunsweet Fresh Stone Fruit, LLC
P. O. Box 250
Kingsburg, CA 93631
Texas Sweet Potato Dist.
11281 State Highway 19
Edgewood, TX 75117-5438
Tijerina & Sons, LLC
808 S. Shary Rd., Suite 5
Mission, TX 78572-8569
Tomatoes of Ruskin, Inc.
PO Box 306
Ruskin, FL 33575-0306
Total Quality Logistics, Inc.
1701 Edison Drive
Milford, OH 45150
Triple H Produce, LLC
Robert E. Goldman, Esq.
1 East Broward Blvd., Suite 700
Fort Lauderdale, FL 33301
Uesugi Farms, Inc.
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio,TX 78205
12-50073-lmc Doc#347-7 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 4 of 5
Uesugi Farms, Inc.
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
Unifresh, Inc.
1500 So. Zarzamora St., #348
San Antonio, TX 78207-7376
Vaughn Foods, Inc.
Ms. Sonya Logan
216 NE 12
th
St.
Moore, OK 73160-5841
Verstuyft Farms
14819 IH 35 South
Von Ormy, TX 78073-3903
Visalia Produce Sales
Mr. George M. Matoian
PO Box 190
Kingsburg, CA 93631
West Coast Tomato, Inc.
502 6
th
Avenue West
Palmetto, FL 34221-5110
Whisenant Farms, Inc.
19755 State Rd. 62
Parrish, FL 34219-9235
Willson Davis Co.
c/o Joe R. Hinojosa
Barkhurst & Hinojosa, P.C.
110 Broadway, Suite 350
San Antonio, Texas 78205
Wilson Produce, LLC
c/o Diana M. Geis
Curl & Stahl
700 North St. Marys Street, Suite 1930
San Antonio, TX 78205
Wilson Produce, LLC
c/o Bart M. Botta
Rynn & Janowsky, LLP
4100 Newport Place Drive, Suite 700
Newport Beach, CA 92660
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EXHIBIT G
12-50073-lmc Doc#347-7 Filed 10/12/12 Entered 10/12/12 16:13:53 Exhibit Pg 5 of 5