Middle Mountain Land & Produce Inc. v. Sound Commodities Inc.

307 F.3d 1220, 2002 WL 31319522
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 17, 2002
DocketNo. 01-35471
StatusPublished
Cited by42 cases

This text of 307 F.3d 1220 (Middle Mountain Land & Produce Inc. v. Sound Commodities Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Middle Mountain Land & Produce Inc. v. Sound Commodities Inc., 307 F.3d 1220, 2002 WL 31319522 (9th Cir. 2002).

Opinion

OPINION

GOULD, Circuit Judge.

Appellant J.R. Simplot Company (“Sim-plot”) appeals the district court’s denial of its interest and attorneys’ fees claims against Sound Commodities (“Sound”). We consider whether the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499e(c)(2), as amended (2000 & Supp.2002), supports a contractual right to attorneys’ fees and interest as part of a PACA trust claim.

I

This is a PACA action for proceeds from the sale of agricultural products held in trust by Sound.1 After the bankruptcy [1222]*1222and liquidation of Sound, Simplot, an agricultural supplier, filed a PACA proof of claim in the Western District of Washington for amounts due on unpaid invoices, including outstanding attorneys’ fees and interest. Simplot based its entitlement to attorneys’ fees and interest on language included in each of the invoices that Sim-plot sent to Sound.2

Because the assets of the statutory PACA trust were insufficient to cover all PACA claimants, the court-appointed receiver recommended a pro rata distribution of the funds to all PACA claimants. Additionally, the receiver objected to the portion of Simplot’s claim for attorneys’ fees and prejudgment interest and noted that it would be inequitable to grant Sim-plot attorneys’ fees and interest and thereby reduce the awards of other PACA claimants. The district court agreed, concluded that it had broad authority to grant or deny attorneys’ fees and interest to a PACA claimant under 7 U.S.C. § 499e(c)(2), and denied Simplot’s claim for attorneys’ fees and interest. Simplot appeals.

II

We address whether, if valid,3 a contractual claim by Simplot for attorneys’ fees and interest is within the scope of a PACA trust claim. This issue, one of first impression in our circuit, hinges on the statutory interpretation of the language “full payment of the sums owing in connection with perishable agricultural commodities transactions” within 7 U.S.C. § 499e(c)(2) (emphasis added).4

We begin by looking at the plain meaning of the statute. Alaska Dep’t of Envtl. Conservation v. U.S. E.P.A., 298 F.3d 814, 818 (9th Cir.2002). “Our task is to give effect to the will of Congress, and where its will has been expressed in reasonably plain terms, that language must ordinarily be regarded as conclusive.” Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570, 102 S.Ct. 3245, 73 L.Ed.2d 973 (1982) (internal quotation marks omitted). First, Simplot argues that the words “in connection with’’ include contractual rights to attorneys’ fees and interest because Congress could have narrowly defined the scope of a PACA claim but instead chose to draft the statute broadly to include all sums owing “in connection with” the perishable agricultural commodities transaction. We find this argument persuasive. The plain meaning of the PACA statute’s words “in connection with” encompasses not only the price of the perishable agricultural commodities but also additional related expenses, including contractual rights to attorneys’ [1223]*1223fees and interest, in a PACA claim. We must give the statutory language its ordinary meaning, and “[w]here Congress has, as here, intentionally and unambiguously drafted a particularly broad definition, it is not our function to undermine that effort.” Commodity Futures Trading Comm’n v. Frankwell Bullion Ltd., 99 F.3d 299, 303 (9th Cir.1996).

Congress wrote the statute broadly to include not only the value of commodities sold but also expenses in connection with the sale of perishable agricultural commodities when it drafted the statute. It did not limit the claim to perishable agricultural commodities alone. As with many other commercial sellers, those who sell perishable agricultural commodities may include contractual provisions for attorneys’ fees and interest to account for losses that arise from delay in payment under a contractual credit arrangement. The ability to recover such losses may affect a supplier’s competitive pricing. Where a PACA trust may not have sufficient funds to compensate all PACA claimants fully for their claims, the plain language of the statute does not exclude recovery of contractual rights to attorneys’ fees and interest that are due in connection with the transaction that is the subject of their PACA trust claim. A fair reading of the statute brings contractually due attorneys’ fees and interest within the scope of the statute’s protection of “full payment owing in connection with the [perishable agricultural commodities] transaction.” 7 U.S.C. § 499e(c)(2).

We next consider the legislative history of the statute. There is a strong presumption that the plain language of the statute expresses congressional intent, “rebutted only in rare and exceptional circumstances, when a contrary legislative intent is clearly expressed.” Ardestani v. I.N.S., 502 U.S. 129, 135 136, 112 S.Ct. 515, 116 L.Ed.2d 496 (1991) (internal quotations and citations omitted); see also United States v. Ron Pair Enters., Inc. 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). Simplot is thus entitled to attorneys’ fees and interest as a matter of contract as part of its PACA claim unless this is one of those rare and exceptional circumstances where literal interpretation of the statute would lead to a result “demonstrably at odds with the intentions of the drafters.” Demarest v. Manspeaker, 498 U.S. 184, 190-191, 111 S.Ct. 599, 112 L.Ed.2d 608 (1991) (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. at 571, 102 S.Ct. 3245).

To assess that possibility, we must evaluate the legislative history of PACA. PACA is a federally created statutory trust intended to promote efficiency and fairness in the perishable agricultural commodities industry. PACA was enacted in 1930 to suppress unfair and fraudulent business practices in the marketing of fresh and frozen fruits and vegetables. Perishable Agricultural Commodities Act of 1930, Pub.L. No. 98-273, § 1, 98 Stat. 165 (1930). Unfortunately, PACA as originally drafted was unable to provide complete protection to sellers. Agricultural buyers could purchase commodities on credit and then encumber the purchased assets with “hidden security agreements.” 49 F.R. §§ 45735, 45737.5 If the buyer then declared bankruptcy, the seller would have “no meaningful possibility” of receiving its contractual right to payment. Id. In re[1224]

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307 F.3d 1220, 2002 WL 31319522, Counsel Stack Legal Research, https://law.counselstack.com/opinion/middle-mountain-land-produce-inc-v-sound-commodities-inc-ca9-2002.