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Import Fresh Direct, LLC v. Premier Trading, LLC

United States District Court, D. Colorado

March 27, 2014

IMPORT FRESH DIRECT, LLC, Plaintiff,
v.
PREMIER TRADING, LLC, d/b/a ALLIANCE WHOLESALE, DIRECT LINE TRANSPORTATION, LLC, WILLIAM VOGEL, and ANTHONY FILPI, Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR TEMPORARY RESTRAINING ORDER AND SETTING HEARING ON PRELIMINARY INJUNCTION

WILLIAM J. MARTINEZ, District Judge.

Plaintiff Import Fresh Direct, LLC ("Plaintiff") brings this action against Premier Trading, LLC, doing business as Alliance Wholesale ("Premier"), Direct Line Transportation, LLC ("Direct Line"), William Vogel, and Anthony Filpi (collectively "Defendants") alleging violations of various provisions of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499 et seq., as well as claims for breach of contract, unjust enrichment, theft, and conversion. (ECF No. 1.) Contemporaneous with the filing of the Complaint, Plaintiff filed a Motion for Ex Parte Temporary Restraining Order and for Preliminary Injunction ("Motion"). (ECF No. 5.) For the reasons set forth below, the Motion is granted.

I. BACKGROUND

Plaintiff is an Indiana company that sells and ships wholesale quantities of perishable agricultural commodities. (Compl. (ECF No. 1) ¶ 3.) Defendant Premier is a Colorado company that is licensed to act as a dealer of perishable agricultural commodities, and Defendant Direct Line is a transportation company that shares Premier's office space, telephone lines, and employees, and allegedly comingles assets with Premier. ( Id. ¶¶ 4-5.) Vogel and Filpi are officers and directors of both Premier and Direct Line. ( Id. ¶¶ 4, 6-7.)

Between October 14, 2013 and November 4, 2013, Plaintiff sold Premier fresh produce worth $158, 628.50. ( Id. ¶¶ 12-14.) Of that amount, several payments were late, and $56, 825.00 remains unpaid. ( Id. ¶¶ 21-23.) Each of the outstanding invoices sent by Plaintiff to Defendants contained the following language:

"WE SHIP F.O.B. GOOD DELIVERY STANDARDS" P.A.C.A. TRUST APPLY The Perishable Agricultural Commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(C) of the Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499E(C)). The Seller of these Commodities retains a trust claim over these commodities. All inventories of food or other products delivered from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.

(ECF No. 1-4 at 2-10.)

Plaintiff contacted Defendants numerous times between October 2013 and January 2014 to collect payment but was unsuccessful. (Roberts Decl. (ECF No. 7) ¶¶ 33-40; Kislin Decl. (ECF No. 8) ¶¶ 37-42.) In December 2013, Defendant Vogel-who Plaintiff understood to be the individual who could authorize payment on behalf of Premier-stated that Premier did not have the funds to pay Plaintiff, and was waiting for funds to come in from other sources to make the payments. (Roberts Decl. ¶ 37; Kislin Decl. ¶ 41.) However, since these statements were made, Plaintiff has been unable to contact Vogel, and has received no response to a demand letter sent on January 22, 2013. (Roberts Dec. ¶¶ 39-40.)

II. ANALYSIS

A. Entitlement to Injunctive Relief

To prevail on a motion for injunctive relief, the movant must establish that four equitable factors weigh in his favor: (1) he is substantially likely to succeed on the merits; (2) he will suffer irreparable injury if the injunction is denied; (3) his threatened injury outweighs the injury the opposing party will suffer under the injunction; and (4) the injunction would not be adverse to the public interest. See Westar Energy, Inc. v. Lake, 552 F.3d 1215, 1224 (10th Cir. 2009). "[B]ecause a preliminary injunction is an extraordinary remedy, the right to relief must be clear and unequivocal." Greater Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1256 (10th Cir. 2003).

The Court finds that Plaintiff has satisfied each of these four prongs with respect to its PACA claims. First, federal regulations provide that payment for perishable agricultural commodities is due no later than 30 days after delivery. See 7 C.F.R. § 46.2(aa). Plaintiff has submitted invoices showing that it delivered produce to Defendants in October and November of 2013 but has yet to be paid in full for two invoices due November 16, 2013. (ECF No. 1-4; Roberts Decl. ¶¶ 31-32.) Plaintiff has submitted sworn statements by its Managing Director and Senior Vice President of Sales stating that it has attempted to collect these debts in vain, and that Defendant Vogel, whose authorization is required for payment, has ceased communication. (Roberts Decl. ¶¶ 33-40; Kislin Decl. ¶¶ 39-42.) On this record, the Court finds that Plaintiff has shown a substantial likelihood of success on the merits of its PACA claims.

Although purely monetary loss is not typically found to be an irreparable injury, dissipation of PACA's statutory trust is an exception to this rule. See Frio Ice v. Sunfruit, Inc., 918 F.2d 154, 159 (11th Cir. 1990); Cont'l Fruit Co. v. Thomas J. Garziolis & Co., 774 F.Supp. 449, 453 (N.D. Ill. 1991) (stating that an argument that only monetary damages were at stake in an action to enjoin trust dissipation might be persuasive in the absence of the PACA statute). Because it is well accepted that once the trust is dissipated it is almost impossible for a beneficiary to obtain recovery, courts have held that dissipation of a PACA trust's assets constitutes irreparable injury. Id .; Tanimura & Antle, Inc. v. Packed Fresh Produce, Inc., 222 F.3d 132, 139 (3d Cir. 2000) ("Thus, the prevention of trust dissipation becomes essential to any meaningful remedy at all."). Plaintiff here has submitted evidence showing that Defendants have admitted they lacked the funds to pay Plaintiff, have since ceased communication, and have likely already dissipated trust assets. (Roberts Decl. ¶¶ 35, 37 (citing communications from Defendants that Premier was attempting to use income from Direct Line to repay PACA trust assets). Moreover, given Vogel's statement that Premier lacked the funds to pay Plaintiff, it is likely that recovery of the trust assets from Defendants will be difficult, if not impossible, if further dissipation occurs. ( Id. ¶ 35, 37.) Therefore, the Court finds that Plaintiff has shown that it is likely to suffer irreparable injury if injunctive relief is not granted.

With respect to harm to the Defendants, PACA provides that buyers of produce are required to hold proceeds from the sale of such produce in trust for the benefit of the sellers. See 7 U.S.C. § 499e(c)(2). This is meant to ensure that sellers are paid in full from the proceeds derived from the re-sale of the produce. Under the statute, the trust is formed at the moment the produce is shipped to the buyer and remains in effect until the seller is paid in full. See 7 C.F.R. § 46.46(c)(1). The evidence shows that Plaintiff delivered perishable commodities to Defendants worth $56, 825.00 and has not received its trust proceeds for this exchange. (Roberts Decl. ¶¶ 31-32.) Because Defendants have a legal obligation to pay the trust assets to Plaintiff, they will not suffer ...


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