Produce Pay, Inc. v. FVF Distributors Inc.

• Court: District Court, S.D. California
• Decided: May 18, 2021
• Docket: 3:20-cv-00517
• Status: Unknown

Opinion

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4 oe 5 . 6 7 . UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 |} PRODUCE PAY, INC., Case No.: 3:20-ev-517-MMA-RBM 12 Plaintiff, REPORT AND 13 || RECOMMENDATION RE: ’ 14 || FVF DISTRIBUTORS, INC., et al., ENFORCE SHTTLEMENE 15 Defendants.| AGREEMENT 16 [Doc. 48] 17 18 ‘I. INTRODUCTION | 19 On February 23, 2021, Plaintiff Produce Pay, Inc. (“Plaintiff”) filed a motion to 20 j|enforce settlement agreement (“Motion”) against Defendants FVF Distributors, Inc. 21 ||(“FVF”) and F. David Avila (“Avila”) (collectively “Defendants” or “FVF Defendants”). 22 ||(Doc. 48.) Defendants filed a response to the motion on March 12, 2021, and Plaintiff filed 23 |\a reply on March 26, 2021. (Does. 52, 53.) 24 The matter was referred to the undersigned for Report and Recommendation 25 pursuant to 28 U.S.C. § 636(b)(1) and Civil Local Rule 72.1(c). For the reasons that follow, 26 ||the undersigned respectfully recommends that Plaintiff's Motion be GRANTED without 27 evidentiary hearing. It is further recommended that the Court AWARD attorney fees 28 the amount of $2,250.00, enter final judgment, and close the case.

1 II. BACKGROUND» 2 This case arises under the Perishable Agricultural Commodities Act, 1930, as 3 ||amended, 7 U.S.C. §§ 499a-499t (2016) (“PACA”) and includes claims for breach of 4 |\contract (Count IX as against FVF), interference with receipt of trust assets subject to 5 ||PACA (Count X as against FVF), conversion (Count XI as against FVF), and breach of 6 || malfeasance agreement (Count XII as against Avila). (See generally Doc. 1.) Produce Pay 7 a Delaware corporation in the business of buying at a discount produce-related accounts 8 || receivable that are subject to PACA. (/d. at □□ 1-2.) FVF is a California corporation in the 9 || business of trading fresh fruit and vegetable commodities subject to PACA. (/d. at ¥ 3(a).) 10 || Avila is an officer or employee of FVF. (/d. at 4 3().) ‘Several individuals and another 11 || entity were named as Defendants but the Court dismissed these parties pursuant to a joint 12 ||motion. (Docs. 32, 33.) 13 a. Early Neutral Evaluation Conference □ 14 On August 26, 2020, Plaintiff and the FVF Defendants participated in an early 15 ||neutral evaluation (“ENE”) conference, however, the case did not initially settle. (Doc. 16 ||37.) Instead, the parties stipulated to produce initial disclosures on or before September 17 2020, to conduct an internal accounting for settlement purposes. (Id.) The undersigned 18 || scheduled a second ENE session to convene on October 14, 2020. Ud.) 19 At the second session of the ENE on October 14, 2020, the case settled. (Doc. 43.) 20 || The parties executed a Settlement Memorandum of Understanding (“MOU”), the terms of 21 || which were placed on the record. (Doc. 43; see also, Decl. Philip H. Franklin, Doc. 48-2 22 ||at 2, J] 8-9 & Ex. A at 9.) The FVF Defendants do not contest that Avila executed the 23 || MOU in his individual capacity and as an authorized representative of FVF. (See generally 24 || Doc. 52; see Doc. 48-2 at 10.) . 25 26 . 27 \\/// 28 |I///

1 b. Settlement Terms □ 2 Pursuant to the terms of the MOU, Defendants agreed to pay Plaintiff $40,000.00 in 3 || installments until July 13, 2021. (Doc. 48-2 at 9, sec. 1.) The first installment of $5,000.00 4 || was due on November 10, 2020, the second installment of $5,000.00 was due on December 5 2020, with consecutive weekly payments of $1,000.00 commencing on December 22, 6 ||2020 and continuing each Tuesday until July 13, 2021. (U/d.) The MOU further provided 7 || for FVF’s admission of liability for Counts IX, X, and XI and Avila’s admission of liability 8 || for Count XII. (Ud. at secs. 8-9.) Additionally, the MOU required Plaintiff to prepare the 9 || long-form settlement agreement, “but in the absence of an executed long-form agreement, 10 [MOU] controls and is enforceable.” (/d. at sec. 7.) Both parties acknowledged and 11 ||agreed that the MOU “was made before the Court and is binding and judicially 12 enforceable[,|” and the FVF Defendants’ response to the underlying Motion does not 13 || contest this issue. (See Doc. 48-2 at 10; see also Doc. 52.) 14 Approximately one week after execution of the MOU, counsel for the FVF 15 || Defendants emailed Plaintiff's counsel a fully executed long-form settlement agreement 16 || with an October 15, 2020 signature date (“Settlement Agreement”). (Doc. 48-2 at □□□□ 17 || 10-12 & Ex. B at 15-18.) The Settlement Agreement incorporates the essential terms of 18 ||the MOU and provides for the recovery of reasonable attorney fees and costs by the 19 || prevailing party to the extent litigation arises between the parties regarding the enforcement 20 || or interpretation of the agreement. (Doc. 48-2 at 18.) The FVF Defendants do not contest 21 ||that Avila executed the Settlement Agreement in his individual capacity and as an 22 || authorized representative of FVF. (See Doc. 52.) _ 23 C. Settlement Disposition Conferences 24 A settlement disposition conference (“SDC”) convened on October 30, 2020, with 25 parties appearing. (Doc. 45.) The undersigned set a second SDC to convene on 26 || November 6, 2020. Ud.) At the November 6, 2020 SDC, all parties appeared with counsel. 27 ||(Doc. 46.) The Court’s contemporaneous minute order states “the settlement reached on 28 || October 14, 2020 fell through.” (Jd.) The minute order further advised that it would take

1 motion for sanctions under submission to the extent a written motion is filed. □□□□□ On 2 February 23, 2020, Plaintiff filed the instant Motion. Til. LEGAL STANDARD A federal district court has inherent power to enforce a settlement agreement in an 5 action pending before it. In re City Equities Anaheim, Ltd., 22 F.3d 954, 957 (9th Cir. 6 || 1994) (citation omitted). To enforce an agreement, two requirements must be met. First, 7 |\the agreement must be complete. See Maynard v. City of San Jose, 37 F.3d 1396, 1401 8 ||(9th Cir. 1994). Second, the parties must have agreed to the terms of the settlement or 9 ||authorized their respective counsel to settle the dispute. See Philips v. Pilgrim Creek 10 || Estates Homeowners Ass’n, No. 19-cv-102-AJB-WVG, 2020 WL 5757965, at *3 (S.D. 11 |/Cal. Sept. 28, 2020) (citing Harrop v. W. Airlines, Inc., 550 F.2d 1143, 1144-45 (9th Cir. 12 || 1977)).

13 California has a strong public policy to encourage voluntary settlement of litigation. 14 ||Osumi v. Sutton, 151 Cal-App.4th 1355, 1360 (2007) (internal citations omitted). 15 || California Code of Civil Procedure section 664.6 provides: . □ 16 || [if parties to pending litigation stipulate, in a writing signed by the parties outside 7 the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of 18 settlement. If required by the parties, the court may retrain jurisdiction over the 19 parties to enforce the settlement until performance in full of the terms of the settlement. 20 21 For purposes of interpreting settlement agreements, local law applies even if the 22 ||underlying cause of action is federal. United Commercial Ins. Serv., Inc. v. Paymaster 23 || Corp., 962 F.2d 853, 856 (9th Cir. 1992) (internal citations and quotations omitted); see 24 |lalso Adams v. Johns-Manville Corp., 962 F.2d 853, 856 (9th Cir. 1992) (stating “Tal 25 || settlement agreement is treated as any other contract for purposes of interpretation.”). In 26 California, a contract must be interpreted “as to give effect to the mutual intention of the 27 || parties as it existed at the time of contracting ...” Roden v. Bergen Brunswig Corp., 107 28 || Cal.App.4th 620, 625 (2003); see Cal. Civ. Code § 1636. Where the contract is in writing,

1 intention . . . is to be ascertained from the writing alone, if possible.” Roden, 107 2 || Cal.App.4th at 625 (quoting Brinton v. Bankers Pension Servs., Inc., 76 Cal.App.4th 550, 3 ||559 (1999)); see Cal. Civ. Code § 1639. In addition, the contract language will govern its 4 interpretation “if the language is clear and explicit, and does not involve an absurdity.” 5 |)Cal. Civ. Code § 1638. On the other hand, if the contract’s meaning is uncertain, the 6 || general rules of interpretation will be applied. Cal. Civ. Code § 1637; but see Facebook, 7 v. ConnectU, Inc., No. C 07-01389 JW, 2008 WL 8820476, at *4 (N.D. Cal. June 25, 8 2008) (settlement agreement is unenforceable if a material term is not reasonably certain, |)/but “courts will not set aside contracts for mere subjective interpretation.”) (quoting 10 Hedging Concepts, Inc. v. First Alliance Mortgage Co., 41 Cal.App.4th 1410, 1421 11 ||(1996)). 12 IV. DISCUSSION 13 a. Agreement Subject to Enforcement 14 Produce Pay seeks enforcement of the Settlement Agreement against the FVF 15 ||Defendants pursuant to California Code of Civil Procedure section 664.6, including a 16 || liquidated judgment in the amount of $40,000.00. (Doc. 48 at 6.) The FVF Defendants’ 17 response raises no objection as to the existence and execution of the Settlement Agreement. 18 ||(See generally Doc. 52.) Instead, they generally dispute the applicability of PACA, and toa produce transaction not at issue in this case.' (/d. at 1-2.) 20 . □ 21 22 23 , The FVF Defendants argue, “Plaintiff has submitted no proof they handled in any way any ‘perishable commodity’ . . . Further, Defendants believe that any potatoes for canning were not any part of any 25 || transaction that is subject to this case.” (Doc. 52 at 2.) Produce Pay’s reply clarifies that FVF’s receipt of money in exchange for invoices related to produce transactions involved watermelons and cantaloupes, 26 || not potatoes. (Doc. 53 at 2.) Given that the reply brief challenges the FVF Defendants’ misstatement of the facts and the FVF Defendants did not file a notice of errata and/or supplemental brief to clarify its 27 position, it appears any misstatement of facts is immaterial and will be disregarded. See generally 28 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (only disputes over facts that might affect the outcome of litigation should be considered in resolution of the issues).

1 While the FVF Defendants dispute the applicability of PACA, the undersigned finds 2 || the terms of the Settlement Agreement clearly and unambiguously address the issue. See 3 ||Cal. Civ. Code § 1638. The Settlement Agreement states as follows: 4 _ RECITALS: .

5 WHEREAS, FVF admits liability for Counts IX, X and XI of the Complaint in the 6 Civil Action and agrees that Produce Pay retains all remedies under the federal Perishable Agricultural Commodities Act (“PACA”) to enforce this Agreement, 7 including ex parte remedies upon breach. 8 WHEREAS, Avila admits to liability for Count XII of the Complaint in the Civil 9 Action. 10 12. This Agreement is executed by the parties in the interest of compromising and 11 settling disputed matters .... FVF expressly admits liability for Count IX (breach of contract), Count X (interference with receipt of PACA trust assets) and Count XI (conversion of PACA trust assets), and agrees that Plaintiff retains all remedies 13 under the federal Perishable Agricultural Commodities Act (“PACA”) to enforce 14 this Settlement due to the admitted liability, including ex parte remedies upon any breach of this Agreement. Avila admits liability for Count XII (breach of 15 Malfeasance Agreement). 16 17 ||(Doc. 48-2 at 15, 18.) As expressly provided in the Settlement Agreement, FVF admitted 18 ||that Plaintiff retains all remedies available under PACA. FVF’s mere subjective 19 || interpretation as to the applicability of PACA does not warrant setting the contract aside as 20 || unenforceable. See Facebook, Inc., 2008 WL 8820476, at *4. 21 Furthermore, the Settlement Agreement appears complete as to all material terms. 22 ||It addresses and releases the claims asserted against FVF and Avila individually. (Doc. 23 ||48-2 at 15, Recitals 2-4.) It expressly memorializes that all signatories “desire to forever 24 ||resolve and settle all claims between Produce Pay and the FVF Defendants in said Civil 25 |; Action, known or unknown.” (/d. at Recital 8.) It also details the sequence of installment 26 || payments to effectuate complete resolution under its terms. (/d. at 16, sec. 1.) Considering 27 || the Settlement Agreement as a whole, the undersigned finds it complete and binding. See 28 || Cal. Civ. Code § 1638; see also Payrolling.com Corp. v. WMBE Payrolling, Inc., No. 11-

|\cv-1072-IEG (DHB), 2013 WL 1187019, at *2 (S.D. Cal. March 20, 2013) (enforcing 2 signed settlement agreement as complete and binding under California law) (internal 3 || citations omitted). 4 The undersigned also finds the FVF Defendants failed to allege any basis for denying 5 |lenforcement. To be sure, the response does not raise any dispute as to the authenticity of 6 || Avila’s signatures in his individual capacity or as an authorized representative of FVF. 7 Doc. 52.) Because the Settlement Agreement is complete and each party agreed to its 8 terms, it is subject to enforcement. See Maynard, 37 F.3d at 1401; Philips, 2020 WL 9 115757965, at *3. 10 ~~ Finally, there is no dispute that the FVF Defendants failed to perform as promised 11 || pursuant to the terms of the Agreement. The FVF Defendants failed to remit any 12 ||installment payment, and the FVF Defendants do not contend otherwise. (Doc. 48-2 at 4, 13 || 4 23; see generally Doc. 52.) While the FVF Defendants allege settlement discussions are 14 || continuing, this attempt to renegotiate the terms of the Settlement Agreement does nothing 15 ||to help their position. (Doc. 52 at 2-3 (stating FVF “made a settlement offer as late as 16 ||[March 11, 2021]. Unfortunately plaintiff rejected same with a counter-offer which 17 defendants rejected as they were without sufficient cash assets for a lump-sum payment at 18 time.”.) Absent any showing of mistake, fraud, or another applicable defense, the FVF 19 || Defendants’ mere change of mind cannot void the Settlement Agreement. See Bland v. 20 || Badger, No. 19-cv-00702-DAD-EPG (PC), 2020 WL 508874, at *3 (E.D. Cal. Jan. 31, 21 2020) (stating “[o]nce a party enters into a binding settlement agreement, that party cannot 22 ||unilaterally decide to back out of the agreement.”) (citing Doi v. Halekulani Corp., 276 23 |F.3d 1131 (9th Cir. 2002)). □ 24 Based upon all of the foregoing, the undersigned recommends that Produce Pay’s 25 ||Motion be GRANTED and the Court enter judgmént pursuant to the terms of the 26 || Settlement Agreement. 27 28 , .

1 b. Evidentiary Hearing is Unnecessary 2 In deciding whether to enforce an agreement, the necessity of an evidentiary hearing 3 depends on the circumstances. - In re City Equities Anaheim, Ltd., 22 F.3d at 958. In 4 ||instances where material facts concerning the existence or terms of settlement are in 5 || dispute, summary enforcement without an evidentiary hearing is inappropriate... Jd. at 957 6 (citation omitted). However, when the terms of an agreement are unequivocal, the court is || well-suited for summary enforcement upon motion without an evidentiary hearing. Jd. at 8 9 Here, there is no need for an evidentiary hearing. Not only were the terms of 10 |} settlement memorialized in an MOU.-and the parties’ assent to those terms expressed in 11 open court, but the parties subsequently executed a formal, long-form Settlement 12 || Agreement incorporating the terms of the MOU. See supra pp. 2-3; (Doc. 48-2 at 15, 13 Recital 7); see Doi, 276 F.3d at 1139 (“there was no need for an evidentiary hearing on 14 || whether an agreement existed, or what its terms were: the parties dispelled any such 15 || questions in open court.”). Further, the FVF Defendants do not contest the existence, any 16 material term, or their execution of the Settlement Agreement. (See generally Doc. 52.) 17 || Considering all of the foregoing, summary enforcement without an evidentiary hearing is 18 || appropriate. Inre City Equities Anaheim, Ltd., 22 F.3d at 957. . 19 C. Request for Attorney Fees 20 Produce Pay seeks an award of $2,250.00 in attorney fees pursuant to the terms of 21 Settlement Agreement, which were allegedly incurred as a result of filing the instant 22 Motion. (Doc. 48 at 7-8; Doc. 48-2 at 18, sec. 17.) The FVF Defendants contend attorney 23 || fees are not recoverable due to Produce Pay’s failure to strictly comply with PACA. (Doc. at2.) - 25 The Settlement Agreement provides: 26 2. If the FVF Defendants fail to timely pay any of the installments pursuant to the schedule set forth in Paragraph 1, and pay full Settlement Amount by the close of business on Tuesday, July 13, 2021, Pacific Standard Time, the FVF Defendants 28 have agreed to be jointly and severally liable for the Settlement Amount, and shall

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1 be subject to post-judgment collection measures, and such nonpayment shall be considered a material breach of this Agreement giving rise toa claim for breach of contract. The prevailing party in any action to enforce this Agreement shall be 3 entitled to recover attorney’s fees and costs in accordance with Paragraph 17 below. 4 17. In the event litigation arises between the parties regarding the enforcement or 5 interpretation of this Agreement, the prevailing party in such action shall recover his 6 or her reasonable attorneys’ fees and costs. 7 ||(Doc. 48-2 at 16, 18.) 8 Again, the FVF Defendants’ contention regarding the applicability of PACA is not 9 || the issue. The issue is that the FVF Defendants executed a final, binding Settlement 10 |} Agreement and do not dispute otherwise. See supra pp. 5-7. The clear and unambiguous 11 terms of the.Settlement Agreement provides that the prevailing party is entitled to recover 12 ||reasonable attorney fees. (Doc. 48-2 at 16, 18.) 13 The trial court has discretion to determine the amount of attorney fees to be awarded. 14 || Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 69 (9th Cir. 1975), cert. denied, 425 U.S. 1/951, 96 S.Ct. 1729 (1976). The Ninth Circuit has adopted guidelines to consider in: 16 || determining the reasonableness of attorney fees, which were developed by the Fifth Circuit. 17 ||Jd. (citing Johnson v. Georgia Highway Express, Inc., 488 F.2d 715 (Sth Cir. 1974)). The 18 || guidelines to consider include: (1) the time and labor required; (2) the novelty and difficulty. 19 || of the issues involved; (3) the requisite skill to perform the legal services properly; (4) the 20 preclusion of other employment by the attorney due to acceptance of the case; (5) the 21 customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by 22 client or circumstances; (8) the amount involved and the results obtained; (9) the 23 experience, reputation, and ability of the attorneys; (10) the “undesirability” of the case; 24 the nature and length of the professional relationship with the client; and (12) awards 25 |/in similar cases. Jd. “The most useful starting point for determining the amount of a 26 reasonable fee is the number of hours reasonably expended on the litigation multiplied by 27 ||a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). 28

1 “[A]n award of attorney’s fees may be based on the affidavits of counsel, so long as 2 ||they are sufficiently detailed to enable the court to consider all the factors necessary in 3 |} settling the fees.” Henry v. Gill Indus., Inc., 983 F.2d 943, 946 (9th Cir. 1993). Documents 4 || disclosing the nature of services rendered, the amount of attorney time expended, and the 5 || attorney’s hourly rate is sufficient. Jd. While the fee applicant has the burden of producing 6 || evidence that their requested fee is consistent with the prevailing market rate, a district 7 || court is also justified in relying on its own knowledge of customary rates in determining 8 ||the reasonableness of a fee. Ingram v. Oroudijan, 647 F.3d 925, 928 (9th Cir. 2011) 9 || (affirming district court’s reliance upon its own knowledge and experience in setting a 10 reasonable hourly rate for an award of fees) (citations omitted); see also Chaundry v. City 11 LA, 751 F.3d 1096, 1110-11 (9th Cir. 2014) (burden is on fee applicant to produce 12 || evidence of prevailing market rate). 13 Produce Pay’s Motion is supported by the Declaration of Philip H. Franklin 14 || (‘Franklin”), counsel of record for Produce Pay. (Doc. 48-2 at 1, § 2.) Franklin alleges he 15 expended seven hours researching and drafting the instant Motion and expected to expend 16 three hours preparing a reply brief. (/d. at 4, | 24.) He also alleges the attorney fees 17 incurred in seeking to enforce the Settlement Agreement total $2,250.00, which is 18 || Franklin’s $225.00 hourly rate multiplied by ten hours. (/d.) Franklin’s declaration is 19 || silent as to whether his hourly rate is consistent with the prevailing market rate. 20 Based upon the undersigned’s knowledge and experience, the $225.00 hourly rate is 21 || well within the range of prevailing market rates in the Southern District for work on matters 22 || of similar complexity. See Gonzalez v. City of Maywood, 729 F.3d 1196, 1205-06 (9th Cir. 23 2013) (for purposes of determining prevailing market rate, the relevant community is the 24 ||“forum in which the district-court sits.”); see Rutherford v. Evans Hotels, LLC, No. 18-cv- 25 ||435-JLS-MSB, 2021 WL 1945729, at *7 (S.D. May 14, 2021) (awarding attorney fees 26 seeking $250 in hourly rates, discounted from regular hourly rates of $450 and $350 in 27 || case involving alleged violations of the Americans with Disabilities Act); see also Kinder 28 ||v. Woodbolt Distrib., LLC, No. 18-cv-2713-DMS-AGS, 2021 WL 1226444, at *8 (S.D. 10

1 Apr. 1, 2021) (awarding attorney fees seeking hourly rates ranging between $775 to 2 $345 in case involving allegations of misleading business practices). Furthermore, the 3 || undersigned finds the ten hours of time and labor expended by Produce Pay in seeking to 4 |lenforce the Settlement Agreement is reasonable and appropriate. Thus, the request for 5 ||$2,250.00 in attorney fees represents a reasonable fee. As such, the undersigned 6 ||recommends that Produce Pay’s Motion for an award of attorney fees be GRANTED. 7 V. CONCLUSION 8 For the reasons given, the undersigned recommends that Plaintiff's Motion be 9 || GRANTED, the Court AWARD attorney fees in the amount of $2,250.00 to Maurice 10 || Wutscher LLP, and enter final judgment consistent with the terms of the parties’ Settlement 11 || Agreement (Doc. 48-2 at 15-18). , 12 This Report and Recommendation is submitted to the United States District Judge 13 assigned to this case, under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 14 || 72(b). Any party may file written objections with the Court and serve a copy on all parties 15 or before June 1, 2021. The document should be captioned “Objections to Report and 16 Recommendation.” Any reply to the Objections shall be served and filed on or before June 17 || 15, 2021. The parties are advised that failure to file objections within the specific time 18 may waive the right to appeal the District Court’s Order. Martinez v. Yist, 951 F.2d 1153 19 || (9th Cir. 1991). 20 IT IS SO ORDERED. 21 DATE: May 18, 2021 2 □ Fe ie Mm ds Mt le A par) 33 YON. RUTH BERMUDEZ MONTENEGRO UNITED STATES MAGISTRATE JUDGE 74 . . 95 .

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