Derek & Matthew Bissett Farms v. Bissett Produce, Inc. (In re Bissett Produce, Inc.)

512 B.R. 528, 2014 Bankr. LEXIS 2259
CourtUnited States Bankruptcy Court, E.D. North Carolina
DecidedMay 21, 2014
DocketCASE NO. 13-00713-8-SWH ADVERSARY PROCEEDING; NO. 13-00094-8-SWH-AP
StatusPublished
Cited by3 cases

This text of 512 B.R. 528 (Derek & Matthew Bissett Farms v. Bissett Produce, Inc. (In re Bissett Produce, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Derek & Matthew Bissett Farms v. Bissett Produce, Inc. (In re Bissett Produce, Inc.), 512 B.R. 528, 2014 Bankr. LEXIS 2259 (N.C. 2014).

Opinion

ORDER ALLOWING MOTIONS TO DISMISS

Stephani W. Humrickhouse, United States Bankruptcy Judge

This matter is before the court on motions to dismiss the complaint filed by the debtor-defendant, Bissett Produce, Inc. (“Bissett”), and defendant AgCarolina Farm Credit, ACA (“AgCarolina”). A hearing took place in Raleigh, North Carolina, on November 5, 2013, at the close of which the court took the matter under advisement. Pursuant to the court’s request in an order entered on March 26, 2014, the parties submitted supplemental memoranda expanding on their analyses of the relevant provisions under the Perishable Agricultural Commodities Act (“PACA”). For the reasons that follow, both motions to dismiss will be allowed.

JURISDICTION and STANDARD OF REVIEW

The court has jurisdiction over these matters pursuant to 28 U.S.C. § 1334. This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) and (K), which this court may hear and determine, and the proceedings arise in and are related to defendant/debtor Bissett’s chapter 11 bankruptcy case.

Pursuant to Rule 12(b)(6), defendants seek dismissal of the complaint for failure to state a claim upon which relief may be granted. Fed. R. 12(b)(6). To survive a 12(b)(6) motion, the factual allegations of a complaint must “be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility [530]*530when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Angell v. BER CARE, Inc. (In re Careamerica, Inc.), 409 B.R. 737 (Bankr.E.D.N.C.2009) (setting out a detailed analysis of Twombly and Iqbal). Thus, “only a complaint that states a plausible claim for relief survives a motion to dismiss,” and “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft, 556 U.S. at 678-79, 129 S.Ct. 1937; see also E. Shore Mkts. Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175 (4th Cir.2000). Significantly, while the truth of the facts is assumed, the court is not bound by “legal conclusion drawn from the facts,” and “need not accept as true unwarranted inferences, unreasonable conclusions, or arguments.” E. Shore Mkts., 213 F.3d at 180.

STATEMENT OF THE ISSUE

Plaintiffs set out four claims in their complaint, each of which is based upon defendant Bissett’s alleged preservation of, and failure to act in accordance with, plaintiffs’ PACA trust rights. As previously reviewed in the court’s order of March 26, 2014, the defendants’ motions to dismiss originally asserted three bases upon which they believe the plaintiff produce growers failed to allege a prima facie claim under the PACA statutes. Specifically, defendants argued that plaintiffs failed to allege 1) that the sweet potatoes were received by Bissett acting in the capacity of a commission merchant, dealer or broker; 2) that plaintiffs were unpaid suppliers or sellers of the sweet potatoes; and 3) that plaintiffs gave the PACA notice required to preserve their trust benefits. The parties agree that to the extent the complaint may fall short regarding those first two factors, any deficiencies could be cured in an amended complaint.1 Accordingly, the court’s focus now is on the single remaining issue.

Plaintiffs acknowledge that they gave no PACA notice of any kind, at any time, to any party. Defendants contend that this conceded fact is fatal to plaintiffs’ PACA claims, reasoning that both the applicable statutes and a comprehensive body of case law establish quite clearly that a “supplier” seeking to claim entitlement to PACA trust monies must be able to establish that it preserved its rights by giving the required notice. In response, plaintiffs insist that they were neither able nor required to give the notice required of the suppliers and sellers referenced in the statutes, by reason of their special status as “growers.”

FACTUAL BACKGROUND

In their complaint, plaintiffs allege that they are “growers” as that term is used in PACA, which defines growers as “any person who raises produce for marketing.” Complaint ¶ 5; 7 U.S.C. § 46.2(p). In their view, this term is of great significance to courts’ interpretation of the notice requirements applicable to them. The defendant debtor, Bissett, is a “growers’ agent,” which includes “a person operating at shipping point who sells or distributes produce in commerce for or on behalf of growers or others or whose operations may include the planting, harvesting, grad[531]*531ing, packing, and furnishing containers, supplies, or other services.” Compl. ¶ 6; 7 U.S.C. § 46.2(q). Defendant AgCarolina is a creditor of Bissett, having entered into a secured lending relationship with Bissett prior to the petition date. AgCarolina holds a security interest in collateral including Bissett’s accounts, crops, farm products, and inventory.

In 2010 and 2011, the plaintiffs allege, they delivered sweet potatoes to Bissett, which Bissett then “stored, cured, packed, marketed, and sold ... as the growers’ agent for the Growers.” Compl. ¶¶ 9-13. Plaintiffs do not provide the specific dates on which they provided the sweet potatoes to Bissett, beyond simply stating the years in which they did so, nor do they allege specific details with respect to Bissett’s provision of the sweet potatoes and accompanying invoices to buyers; the subsequent failures, if any, of those buyers to remit funds due to Bissett; the demands made, if any, by Bissett to those buyers for payment of any amounts due and owing; and the demands made, if any, by the plaintiffs as against Bissett for failure to remit to the plaintiffs the funds plaintiffs now claim are due to them. Thus, there are as yet no proffered facts upon which the court could presume that defendant Bissett successfully established a PACA trust on its oum behalf (which would in turn depend on the buyers failing to pay Bissett within a very specific and very short time period), much less facts sufficient to support the conclusion that Bissett established a PACA trust on behalf of itself and on behalf of plaintiffs, which is the gravamen of plaintiffs’ action.2 The court will proceed for purposes of these motions only on the premise that Bissett did, through use of the invoice method, preserve and perfect its own PACA rights with respect to the qualifying buyers to whom it sold the sweet potatoes grown by plaintiffs.

STATUTORY BACKGROUND

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
512 B.R. 528, 2014 Bankr. LEXIS 2259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/derek-matthew-bissett-farms-v-bissett-produce-inc-in-re-bissett-nceb-2014.