Fresh Kist Produce, LLC v. Choi Corp., Inc.

362 F. Supp. 2d 118, 2005 U.S. Dist. LEXIS 3148, 2005 WL 517907
CourtDistrict Court, District of Columbia
DecidedMarch 3, 2005
DocketCIV.A. 01-1834(JMF)
StatusPublished
Cited by11 cases

This text of 362 F. Supp. 2d 118 (Fresh Kist Produce, LLC v. Choi Corp., Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fresh Kist Produce, LLC v. Choi Corp., Inc., 362 F. Supp. 2d 118, 2005 U.S. Dist. LEXIS 3148, 2005 WL 517907 (D.D.C. 2005).

Opinion

*120 MEMORANDUM OPINION

FACCIOLA, United States Magistrate Judge.

Currently pending and ready for resolution is plaintiffs Motion to Disburse PACA Trust Assets in One of Three (3) Alternate Ways and for Reimbursement of Plaintiff’s Fees and Costs from the Common Fund (“Mot. to Disburse”), which was referred to me by Judge Urbina for final determination. For the reasons articulated below, plaintiffs motion will be granted in part and denied in part.

INTRODUCTION

This matter was brought pursuant to the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499a et seq. 1 PACA provides for the establishment of trust funds to protect sellers of perishable agricultural commodities from defaulting buyers. If a buyer defaults by going bankrupt or becoming insolvent, the buyer’s trust reimburses the sellers, who are the trust beneficiaries. Congress enacted PACA so that a defaulting buyer’s assets would be used to satisfy the trust fund before they are used to satisfy other debts. This means that the produce sellers, who are the trust beneficiaries, are reimbursed ahead of most other creditors if a produce buyer becomes insolvent.

In this case, defendant, Washington Wholesale Produce Company (‘WWP”), bought produce from plaintiff, Fresh Kist Produce (“Fresh Kist”), defendant, J.C. Watson (“JCW”), and fourteen other companies. Ultimately, all sixteen companies became PACA trust beneficiaries of WWP. In the period between June 6, 2001 and August 6, 2001, JCW accepted $59,189.40 as partial payment for produce JCW had previously sold to WWP.

Upon learning of JCW’s acceptance of payment from WWP, Fresh Kist sued JCW, WWP, and two other companies, Norfolk Banana (“Norfolk”) and Berkley Tomato (“Berkley”), claiming that the defendants, knowing WWP had become insolvent, continued to accept payments from WWP when those payments should have gone to the trust fund for the benefit of all trust beneficiaries.

On August 29, 2001, Fresh Kist obtained a temporary restraining order (“TRO”) against WWP. Pursuant to the TRO, WWP paid $11,757.50 (the balance of what WWP still owed JCW) into the court’s registry pending resolution of the litigation.

Ultimately, on July 31, 2002, Judge Ur-bina granted in part and denied in part the parties’ cross motions for summary judgment. Fresh Kist Produce, L.L.C. v. Choi Corp., 223 F.Supp.2d 1 (D.D.C.2002) (“Partial Summ. J.”). Judge Urbina found that defendant JCW knew that WWP was insolvent, and therefore JCW had to disgorge itself of the $59,189.40 it received from WWP after it became aware of WWP’s insolvency. Id. at 10-11. Judge Urbina then designated JCW’s $59,189.40 and WWP’s $11,757.50 (a total of $75,516.95) as PACA trust funds to be distributed pro-rata to the trust beneficiaries, including Fresh Kist, JCW, and all other parties submitting valid claims. Id. at 11.

According to Fresh Kist, it incurred $95,290.57 in attorneys’ fees and costs as a result of its suit against defendants; it now seeks reimbursement for those fees and costs. Fresh Kist argues that it should either be reimbursed for all of its attorneys’ fees and costs out of the PACA trust fund for successfully recovering the *121 trust assets or, alternatively, that JCW should pay Fresh Kist’s attorneys’ fees as a sanction for JCW’s alleged misconduct. Thus, the two issues before me are (1) the disbursement of the PACA trust, and (2) the imposition of sanctions.

DISCUSSION

I. Disbursement of the PAGA Trust Including Reimbursement of Attorneys’ Fees

A. Background

On September 24, 2001, Judge Urbina issued a Consent Injunction and Agreed Order Establishing PACA Claims Procedure (“PACA Claims Procedure”). The PACA Claims Procedure established the PACA trust fund (valued at $75,516.95) and instituted a process for the filing and service of proofs of claim on the trust.

The deadline for filing a proof of claim was November 16, 2001. PACA Claims Procedure at 5. According to Paragraph 14 of the PACA Claims Procedure,

[a]ny supplier or creditor who fails to timely file such Proof of Claim with the Court and serve it on those persons listed in ¶ 13 above, shall be forever barred from thereafter asserting any claim against the Company under the PACA for non-payment of Produce sold, whether in this Court or any other forum.

Id.

Sixteen 2 companies filed proofs of claim, amounting to a total of $420,798.40 in claims against WWP. As illustrated by the chart below, of the sixteen potentially eligible claimants, only thirteen companies will receive funds from the trust.

PACA Claimants Filing Proofs

PACA Claimant Date Proof of Claim was received by Clerk’s Office Date Proof of Claim was File Stamped Whether Claimant Filed on or by the November 16, 2001 Deadline Court’s Determination as to Timeliness of Filing

Berkley Tomato Co. This proof of claim was not file stamped by the Clerk’s Office. Docket Docket [# 26] 11/16/01 Yes. 3 The proof of claim will be considered.

*122 2. Cardille Bros. Mushroom 11/14/01 Docket [#29] 11/14/01 Yes. The proof of claim ■will be considered.

Eagle Fruit Traders 12/04/01 Docket [# 42] 12/04/01 No. The proof of claim will not be considered as it was not timely filed.

Edward G. Rahil & Sons 11/14/01 Docket [# 30] 11/14/01 Yes. The proof of claim will be considered.

E.M. Trading Corp. This proof of claim was not file stamped by the Clerk’s Office. Docket [# 34] 11/05/01 Yes. The proof of claim will be considered.

First Class Produce, Inc. 11/14/01 Docket [#31] 11/14/01 Yes. The proof of claim will be considered.

Fresh Kist Produce This proof of claim was not file stamped by the Clerk’s Office. Docket [# 28] 11/15/01 Yes. The proof of claim will be considered.

J.C. Watson Co., Inc. 11/15/01 Docket [# 39] 11/15/01 Yes. The proof of claim will be considered.

Joco Products, Inc. 11/15/01 Docket [# 27] 11/15/01 Yes. The proof of claim will be considered.

10. Muranaka Farm, Inc. 12/04/01 Docket [#41] 12/04/01 No. The proof of claim will not be considered as it was not timely filed.

11. National Onion, Inc. 12/04/01 Docket [# 40] 12/04/01 No. The proof of claim will not be considered as it was not timely filed.

12. Norfolk Banana Dist. This proof of claim was not file stamped by the Clerk’s Office. Docket [#24] 11/16/01 Yes. The proof of claim will be considered.

13. North Florida Tomatoes 11/05/01 Docket [# 33] 11/28/01 No, but RMU allowed it to be filed.

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Cite This Page — Counsel Stack

Bluebook (online)
362 F. Supp. 2d 118, 2005 U.S. Dist. LEXIS 3148, 2005 WL 517907, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fresh-kist-produce-llc-v-choi-corp-inc-dcd-2005.