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Import Fresh Direct, LLC v. Premier Trading, LLC

United States District Court, D. Colorado

April 23, 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 ON PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION AND MOTION TO MODIFY TEMPORARY RESTRAINING ORDER

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. §§ 499a et seq., and related claims. (ECF No. 1.) This matter is before the Court on Plaintiff's Motion for Ex Parte Temporary Restraining Order and for Preliminary Injunction ("Motion for PI") (ECF No. 3) and Plaintiff's Motion to Modify Temporary Restraining Order ("Motion to Modify") (ECF No. 30). For the reasons set forth below, the Motion for PI is granted, the Motion to Modify is granted in part and denied in part, and a preliminary injunction is entered.

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.[1] 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 the outstanding amounts, but received only partial payment. (Roberts Decl. (ECF No. 7) ¶¶ 33-40; Kislin Decl. (ECF No. 8) ¶¶ 37-42; see also Watterson Aff. (ECF No. 34-5) pp. 3-19.) Plaintiff contends that 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 Decl. ¶¶ 39-40.) Defendants contend that they never stated that Plaintiff would not be paid, and that Plaintiff had previously accepted and acquiesced to receiving late payments. (Watterson Aff. ¶¶ 4, 6.)

Plaintiff filed this action on March 26, 2014, alleging PACA violations, 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. (ECF No. 3.) On March 27, 2014, the Court entered a temporary restraining order for a period of fourteen days, and set a hearing on the Motion for PI. (ECF No. 16.) On April 6, 2014, Plaintiff filed its Motion to Modify the temporary restraining order. (ECF No. 30.) On April 8, 2014, a hearing was held on the Motion for PI. (ECF No. 36.) A few hours prior to the hearing, Defendants filed a Response to the Motion for PI. (ECF No. 34.)

At the hearing, the Court heard argument from counsel and found good cause to extend the temporary restraining order until April 24, 2014. (ECF No. 36.) No additional evidence or testimony was presented by either party. ( See id. ) The Court ordered Plaintiff to file a Reply in support of the Motion for PI, ordered Defendants to file a Response to the Motion to Modify, and took the Motion for PI under advisement. ( Id. ) On April 14, 2014, Plaintiff's Reply (ECF No. 37) and Defendants' Response (ECF No. 38) were filed. Both Motions are now fully briefed.[2]

II. ANALYSIS

A. Motion for PI

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).

As noted above, the Court has already granted Plaintiff's request for a temporary restraining order. (ECF No. 16.) In the Court's March 27, 2014 Order, the Court found that, based on the documentary evidence filed by Plaintiff in connection with the Motion for PI, Plaintiff had met its burden with respect to each of the four prongs for injunctive relief. ( Id. ) In Defendant's Response to the Motion for PI, Defendant contends that Plaintiff has not shown the requisite likelihood of success on the merits of its PACA claims under the first prong of the injunctive relief analysis. (ECF No. 34.) Defendant has raised no arguments in its briefing or at the hearing on the Motion for PI with respect to the other three prongs of the injunctive relief analysis. As to these three prongs, the Court has reviewed its prior reasoning and finds that it is still applicable. Accordingly, the only issue before the Court on the Motion for PI is whether Plaintiff has established a substantial likelihood of success on the merits of its PACA claims.

Defendants raise three arguments that Plaintiff has failed to show a substantial likelihood of success: (1) Plaintiff waived its PACA rights because it previously acquiesced to receiving late payments; (2) Plaintiff failed to preserve its PACA benefits because it provided inadequate notice to Defendants; and (3) Plaintiff cannot show dissipation of the PACA trust because Defendants have already paid the disputed sum into Plaintiff's trust account. (ECF No. 34.) The Court will discuss each argument in turn.

1. Waiver

Defendants contend that Plaintiff cannot succeed on its PACA claims because it waived its right to assert them by acceding to Defendant's late payments. (ECF No. 34 at 1-2.) Defendants cite American Banana Co. v. Republic National Bank of New York, N.A., 362 F.3d 33, 45 (2d Cir. 2004), for the proposition that PACA claims are waived if there is evidence that the parties agreed to extend a payment deadline beyond thirty days after acceptance of the commodities. ( Id. at 2.) Defendants point to e-mails between employees of the parties in which, according to Defendants, Plaintiff "acquiesced to the delayed payments, " which constitutes "strong evidence of [a] waiver in writing". ( Id. )

Upon reviewing the regulations cited by Plaintiff in its Reply, the Court finds that Defendants' reading of American Banana is unpersuasive in light of the 2011 amendments to the federal regulations, which "clarif[y] that the 30-day maximum time period for payment to which a seller can agree and still qualify for coverage under the trust refers to pre-transaction agreements." 76 Fed. Reg. 20, 217 (Apr. 12, 2011). As of April 13, 2011, 7 C.F.R. § 46.46(e)(3) states that a supplier of produce that is otherwise eligible for PACA protection "will not forfeit eligibility under the trust by agreeing in any manner to a schedule for payment of the past due amount or by accepting a partial payment." The relevant transactions here occurred in 2013, well after the effective date of the amendment to § 46.46(e)(3). Plaintiff's alleged acquiescence to ...


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