Taylor Farms California, Inc. v. Coopers Cold Food, Inc.

• Court: District Court, C.D. California
• Decided: August 9, 2021
• Docket: 2:19-cv-08924
• Status: Unknown

Opinion

O 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 TAYLOR FARMS CALIFORNIA, INC., a ) Case No. 19-cv-8924 DDP (GJSx) 10 California corporation, ) 11 ) ORDER GRANTING Plaintiff, 12 ) INTERVENING PLAINTIFF vs. ) MONTEREY MUSHROOMS’ 13 COOPER’S COLD FOODS, INC., a ) MOTION FOR SUMMARY 14 California corporation; and, ADAM ) JUDGMENT AND GRANTING IN COOPER, an individual, ) PART, DENYING IN PART 15 ) DEFENDANT ADAM COOPER’S 16 Defendants. ) MOTION FOR SUMMARY ) JUDGMENT 17 MONTEREY MUSHROOMS, INC., a ) 18 California corporation; and, FARMERS ) [Dkts. 58, 64] LINK, INC., a California corporation, ) 19 ) Intervening Plaintiffs, 20 )

) 21 vs. ) 22 COOPER COLD FOODS, INC., a ) California corporation; and, ADAM ) 23 COOPER, an individual, ) 24 ) Defendants. ) 25

26 Presently before the court are Intervening Plaintiff Monterey Mushrooms’ and 27 considered the submissions of the parties and heard oral argument, the court grants 1 Intervening Plaintiff’s motion, and grants in part, denies in part Defendant’s motion, and 2 adopts the following order. 3 I. BACKGROUND 4 On November 7, 2019, Intervening Plaintiff Monterey Mushrooms, Inc. 5 (“Monterey Mushrooms”) filed a Complaint-in-Intervention asserting a breach of 6 contract claim and seeking enforcement of payment under the Perishable Agricultural 7 Commodities Act (“PACA”) against Defendant Cooper Cold Foods, Inc. (“Cooper Cold 8 Foods”) and Defendant Adam Cooper (“Cooper”). (See dkt. 10.) Monterey Mushrooms 9 10 is a California corporation engaged in buying and selling wholesale quantities of 11 perishable agricultural commodities, or “produce,” and operates under the PACA. (Dkt. 12 67, Jenkins Decl. ¶ 7.) Cooper Cold Foods was a produce distributor founded in 1966 13 also operating under the PACA. (Dkt. 61, Cooper Decl. ¶¶ 3-4.) Cooper was the 14 President, CEO, sole director, officer, and shareholder of Cooper Cold Foods from 15 approximately 2010 until it ceased operations in 2019. (Id. ¶ 5.) 16 Between April 24, 2019 and August 18, 2019, Monterey Mushrooms and Cooper 17 Cold Foods entered into various transactions in which Monterey Mushrooms sold, and 18 Cooper Cold Foods purchased, eighty shipments of produce in the principal amount of 19 $241,744.26. (Jenkins Decl. ¶¶ 9-10; Dkt. 66, Ex. 1, Cooper Cold Foods Admissions ## 3, 20 7.) Cooper Cold Foods received and accepted the produce without objection. (Jenkins 21 Decl. ¶¶ 9-10; Cooper Cold Foods Admissions # 4.) Monterey Mushrooms sent invoices 22 to Cooper Cold Foods stating the agreed prices for the produce purchased. (Jenkins Decl. 23 ¶ 11; Cooper Cold Foods Admissions # 6.) Each invoice included the required statutory 24 statement to preserve Monterey Mushrooms’ rights as a PACA trust beneficiary. 25 (Jenkins Decl. ¶ 14; Cooper Cold Foods Admissions # 8.) The parties do not dispute that 26 Cooper Cold Foods failed to pay for the produce it purchased and received from 27 Monterey Mushrooms. (Jenkins Decl. ¶ 17; Cooper Cold Foods Admissions # 12.) Monterey Mushrooms presently moves for summary judgment on all claims 1 against Cooper Cold Foods and summary judgment against Cooper individually for 2 breach of fiduciary duty for failure to maintain PACA trust assets. (Dkt. 65, Monterey 3 Mushrooms’ MSJ.) Monterey Mushrooms maintains that Cooper is secondarily liable for 4 Cooper Cold Foods’ debt because the undisputed facts demonstrate that Cooper was in a 5 position to control Cooper Cold Foods. Cooper does not dispute that during the relevant 6 time at issue, he had control and authority of Cooper Cold Foods. Instead, Cooper 7 opposes Monterey Mushrooms’ motion for summary judgment, and moves for summary 8 judgment in his favor, asserting that the facts demonstrate that neither he nor Cooper 9 10 Cold Foods breached their fiduciary duty under PACA because they did not “misuse” 11 any PACA assets. (See dkt. 59, Cooper MSJ; Dkt. 76, Cooper Opp.) Cooper argues that 12 on June 26, 2019, prior to dissolving, Cooper Cold Foods was burglarized and that a safe 13 that was in Cooper Cold Foods’ office was stolen. (Cooper Decl. ¶ 14; Dkt. 62, Pivtorak 14 Decl., Ex. 2, Gaytan Depo. at 23-24.) Cooper testified that at the time the safe was stolen, 15 the safe contained approximately $500,000 in cash which was PACA trust property and 16 other valuable heirlooms and collectibles. (Cooper Decl. ¶ 15, Exs. 2-4.) According to 17 Cooper, the PACA trust property in the safe would have been sufficient to pay PACA 18 beneficiaries. (Id. ¶ 20.) 19 Cooper also presents evidence that between April 15, 2019 and Cooper Cold 20 Foods’ closing, Cooper Cold Foods used its assets only to pay employee salaries and 21 ordinary business expenses. (Id. ¶ 17, Exs. 5, 6.) At the time of closing, Cooper Cold 22 Foods’ remaining assets were $130,000. (Id. ¶ 18.) Cooper also presents evidence that 23 Cooper Cold Foods was owed $60,000 in unpaid PACA accounts receivable from 24 restaurants which it was unable to recover. (Id. ¶ 22, Ex. 9.) Cooper Cold Foods’ 25 outstanding PACA debt, to approximately twenty PACA creditors, totaled $522,684.81. 26 (Id. ¶ 25, Ex. 8.) Cooper contends that Cooper Cold Foods attempted to distribute its 27 remaining assets pro rata to unpaid PACA sellers. (Id. ¶ 24.) While Monterey Mushrooms does not dispute that Cooper Cold Foods was 1 burglarized, Monterey Mushrooms disputes Cooper’s evidence as insufficient to 2 establish that the safe contained $500,000 in PACA trust property. Monterey Mushrooms 3 also disputes Cooper’s assertion that the money contained in the safe would have been 4 used to pay Monterey Mushrooms based on Cooper’s testimony that the funds were 5 saved for a “rainy day” and, prior to being stolen in June, had not been used to pay 6 Monterey Mushrooms’ invoices which at the time were already past due. (See Cooper 7 Depo. at 75:15-30; 76:1-8.) Monterey Mushrooms does not dispute that Cooper Cold 8 Foods paid employee salaries and ordinary business expenses. 9 10 II. LEGAL STANDARD 11 Summary judgment is appropriate where the pleadings, depositions, answers to 12 interrogatories, and admissions on file, together with the affidavits, if any, show “that 13 there is no genuine dispute as to any material fact and the movant is entitled to judgment 14 as a matter of law.” Fed. R. Civ. P. 56(a). A party seeking summary judgment bears the 15 initial burden of informing the court of the basis for its motion and of identifying those 16 portions of the pleadings and discovery responses that demonstrate the absence of a 17 genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). All 18 reasonable inferences from the evidence must be drawn in favor of the nonmoving party. 19 See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 242 (1986). If the moving party does not 20 bear the burden of proof at trial, it is entitled to summary judgment if it can demonstrate 21 that “there is an absence of evidence to support the nonmoving party’s case.” Celotex, 22 477 U.S. at 323. 23 Once the moving party meets its burden, the burden shifts to the nonmoving party 24 opposing the motion, who must “set forth specific facts showing that there is a genuine 25 issue for trial.” Anderson, 477 U.S. at 256. Summary judgment is warranted if a party 26 “fails to make a showing sufficient to establish the existence of an element essential to 27 that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. A genuine issue exists if “the evidence is such that a reasonable jury 1 could return a verdict for the nonmoving party,” and material facts are those “that might 2 affect the outcome of the suit under the governing law.” Anderson, 477 U.S. at 248. There 3 is no genuine issue of fact “[w]here the record taken as a whole could not lead a rational 4 trier of fact to find for the nonmoving party.” Matsushita Elec. Indus. Co. v. Zenith Radio 5 Corp., 475 U.S. 574, 587 (1986). 6 It is not the court’s task “to scour the record in search of a genuine issue of triable 7 fact.” Keenan v. Allan, 91 F.3d 1275, 1278 (9th Cir. 1996). Counsel have an obligation to 8 lay out their support clearly. Carmen v. San Francisco Sch. Dist., 237 F.3d 1026, 1031 (9th 9 10 Cir. 2001). The court “need not examine the entire file for evidence establishing a 11 genuine issue of fact, where the evidence is not set forth in the opposition papers with 12 adequate references so that it could conveniently be found.” Id. 13 III. DISCUSSION 14 A. Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499a et seq. 15 a. Failure to Pay Promptly and Failure to Maintain PACA Trust Assets 16 “Enacted in 1930, PACA had the intent of ‘preventing unfair business practices 17 and promoting financial responsibility in the fresh fruit and produce industry.’” Sunkist 18 Growers, Inc. v. Fisher, 104 F.3d 280, 282 (9th Cir. 1997) (quoting Farley and Calfee, Inc. v. 19 United States Dep’t of Agric., 941 F.2d 964, 966 (9th Cir. 1991)). In 1984, Congress amended 20 PACA to “to add an additional remedy: the perishable commodities or proceeds from the 21 sale of those commodities are held in trust by the dealer for the benefit of the unpaid 22 seller until full payment is made.” Id. (citing 7 U.S.C. § 499e(c)(2)); see also, S & H Packing 23 & Sales Co. v. Tanimura Distrib., Inc., 883 F.3d 797, 802 (9th Cir. 2018) (discussing PACA’s 24 legislative history). Section 499e(c)(2) of PACA provides, in part, as follows: 25 [p]erishable agricultural commodities received by a commission merchant, dealer, or broker in all transactions, 26 and all inventories of food or other products derived from 27 perishable agricultural commodities, and any receivables or proceeds from the sale of such commodities or products, shall 1 be held by such commission merchant, dealer, or broker in 2 trust for the benefit of all unpaid suppliers or sellers of such commodities or agents involved in the transaction, until full 3 payment of the sums owing in connection with such 4 transactions has been received by such unpaid suppliers, sellers, or agents. . . . 5

6 7 U.S.C. § 499e(c)(2). 7 PACA also provides that it is unlawful for a dealer to “to fail or refuse truly and 8 correctly to account and make full payment promptly in respect of any transaction in any 9 such commodity to the person with whom such transaction is had; . . . or to fail to 10 maintain the trust as required under section 499e(c) of this title.” 7 U.S.C. § 499b. By 11 federal regulation, a PACA trustee is “required to maintain trust assets in a manner so 12 that the trust assets are freely available to satisfy outstanding obligations to sellers of 13 perishable agricultural commodities. Any act or omission which is inconsistent with this 14 responsibility, including dissipation of trust assets, is unlawful and in violation of section 15 [499b].” 7 C.F.R. § 46.46(d)(1). 16 Cooper Cold Foods does not dispute that Monterey Mushrooms is a valid PACA 17 trust beneficiary, that Cooper Cold Foods qualifies as a commission merchant, dealer, or 18 broker under the PACA, that the transactions at issue involved interstate commerce, that 19 Monterey Mushrooms provided Cooper Cold Foods written notice of its intent to 20 preserve the benefits of the PACA trust, nor does it dispute that it has not provided full 21 payment to Monterey Mushrooms. (See dkt. 76, Cooper Opp. at 5-6.) Instead, Cooper 22 Cold Foods contends that the PACA claims against it must fail because it reasonably 23 attempted to keep its business afloat, and payment of a pro rata share of Cooper Cold 24 Foods’ remaining trust assets to Monterey Mushrooms is sufficient to avoid liability 25 under PACA. (Cooper Opp. at 5-6 (citing Farm-Wey Produce, Inc. v. Wayne L. Bowman Co., 26 Inc., 973 F. Supp. 778, 784 (E.D. Tenn. 1997).) 27 However reasonable Cooper Cold Foods’ business decisions may have been, 1 Cooper Cold Foods nonetheless failed to provide full and prompt payment to Monterey 2 Mushrooms for eighty shipments of produce which were PACA trust assets. Cooper 3 Cold Foods does not cite any controlling authority for the proposition that a pro rata 4 share of remaining assets is sufficient to satisfy its obligations under the PACA. As 5 discussed in detail below, Farm-Wey is contrary to the law of this Circuit and appears to 6 be contrary to federal regulations. 7 C.F.R. § 46.46(d)(1) (a trustee is “required to 7 maintain trust assets in a manner so that the trust assets are freely available to satisfy 8 outstanding obligations to sellers of perishable agricultural commodities.”). There is no 9 10 genuine dispute that Cooper Cold Foods did not maintain the PACA trust assets as 11 required by the PACA. At the time Cooper Cold Foods’ debt became due, Cooper Cold 12 Foods did not have freely available trust assets to fulfill its obligations to Monterey 13 Mushrooms. Cooper Cold Foods attempts to avoid this conclusion asserting that trust 14 assets which were not directed to trust beneficiaries were directed to reasonable 15 expenses—salaries and ordinary business expenses—however, PACA’s “duty to 16 maintain trust assets is far-reaching.” S & H Packing, 883 F.3d at 803. “Courts have held 17 that ‘[a] PACA trustee may use trust assets to pay ordinary business expenses as long as it 18 does not do so at the expense of its PACA beneficiaries, or in any way impair the ability 19 of the beneficiaries to collect money owed in connection with produce sales.’” Sun Hong 20 Foods, Inc. v. Outstanding Foods, Inc., No. CV1910121PSGMAAX, 2020 WL 2527048, at *3 21 (C.D. Cal. Mar. 26, 2020) (quoting C.H. Robinson Co. v. Alanco Corp., 239 F.3d 483, 488 (2d 22 Cir. 2001)) (collecting cases). In this case, Cooper Cold Foods’ payments of salaries and 23 ordinary business expenses was at the expense of the trust beneficiaries.1 24 25 1 Cooper also argues that Monterey Mushrooms “waived its right to rely on the terms of 26 the statute by agreeing late and partial payments in its dealings with Cooper Cold Foods.” (Reply at 3-4.) However, the sole evidence of this alleged course of dealings is 27 Cooper’s declaration in which he states that “Because of the length of their ongoing The court concludes that there are no genuine issues of material fact. The 1 evidence demonstrates that Cooper Cold Foods failed to promptly provide payment and 2 failed to maintain PACA trust assets. The court grants summary judgment to Monterey 3 Mushrooms on Counts II through V of the Complaint-in-Intervention. 4 b. Breach of Fiduciary Duty against Adam Cooper 5 Monterey Mushrooms next moves for summary judgment on the breach of 6 fiduciary duty claim under the PACA against Cooper. (Monterey Mushrooms MSJ at 14- 7 18.) Monterey Mushrooms argues that because Cooper Cold Foods breached the PACA 8 trust by failing to maintain “freely available assets to satisfy Monterey Mushrooms’ 9 10 PACA trust claim,” and the undisputed facts show that Cooper was in a position to 11 control the PACA trust assets and actually controlled the disbursement of the PACA 12 trust assets, Cooper is secondarily liable to Monterey Mushrooms for breach of fiduciary 13 duty. (Id. at 18.) 14 Cooper opposes secondary liability arguing that the standard for breach of 15 fiduciary duty under PACA is “misuse of funds” and that for secondary liability, 16 Monterey Mushrooms must show that Cooper had the “ability to control the corporate 17 trustee’s assets and direct[ed] those assets in a manner that constitutes a breach of 18 fiduciary duty.” (Cooper MSJ at 6 (citing Farm-Wey Produce, Inc. v. Wayne L. Bowman Co., 19 Inc., 973 F. Supp. 778, 782 (E.D. Tenn. 1997)).) According to Cooper, a breach of fiduciary 20 duty can only occur where there is “evidence of active wrongdoing”. (Cooper MSJ at 10.) 21 Cooper argues that there is no evidence of wrongdoing and notes that he stored PACA 22

23 business relationship, Monterey would often allow Cooper Cold Foods to make 24 payments outside of the ‘stated terms’ on Monterey’s invoices. Monterey regularly 25 allowed Cooper Cold Foods to make payments that were late and for less than the full amount owed.” (Cooper Decl. ¶ 7.) Drawing all reasonable inferences in favor of Cooper 26 Cold Foods, this conclusory statement is insufficient to create a triable issue of fact. 27 trust property in a large, secured safe and administered that property with the same care 1 as his personal property, therefore, Cooper argues, he cannot be liable for the stolen 2 PACA trust property that was kept in the safe. (Id. at 7.) 3 As an initial matter, the court addresses Cooper’s reliance on Farm-Wey, a 1997 4 Eastern District Court of Tennessee decision. In that case, agricultural suppliers sought 5 to hold the president and sole shareholder of a defunct purchaser of produce liable under 6 the PACA for breach of fiduciary duty. Farm-Wey Produce, 973 F. Supp. at 779. At the 7 time of that case, there was only one Circuit—the Ninth Circuit—to have directly 8 addressed the issue of individual liability under the PACA. Id. at 782 (discussing Sunkist 9 10 Growers, Inc. v. Fisher, 104 F.3d 280 (9th Cir. 1997)). The Eastern District Court of 11 Tennessee rejected the Ninth Circuit’s reasoning and other district courts’ reasoning 12 which, like the Ninth Circuit, had also concluded that an officer could be secondarily 13 liable. See id. The district court found that “there is no indication in the statute itself, the 14 associated regulations, or the legislative history that Congress intended to abrogate 15 substantial portions of state corporation and contract law by making a large class of 16 individuals sureties on the contracts of produce buyers.” Id. at 783. 17 Farm-Wey is directly contrary to the Ninth Circuit’s decision in Sunkist. See 18 Sunkist, 104 F.3d 280. In Sunkist, the Ninth Circuit held that “individual shareholders, 19 officers, or directors of a corporation who are in a position to control PACA trust assets, 20 and who breach their fiduciary duty to preserve those assets, may be held personally 21 liable under the Act.” Id. at 283. Cooper Cold Foods has not cited any subsequent Ninth 22 Circuit decision overturning Sunkist. Therefore, Sunkist remains controlling precedent. 23 The court also notes that, since Farm-Wey, other Circuits have also concluded that under 24 the PACA, individual liability may attach to persons in position to control. See Patterson 25 Frozen Foods v. Crown Foods Int’l, 307 F.3d 666, 667-68 (7th Cir. 2002); GolmanHayden Co., 26 Inc. v. Fresh Source Produce Inc., 217 F.3d 348, 351 (5th Cir. 2000); Hiller Cranberry Products, 27 Inc. v. Koplovsky, 165 F.3d 1, 9 (1st Cir. 1999); see also Red’s Market v. Cape Canaveral Cruise Line, Inc., 181 F. Supp. 2d 1339, 1343-44 (M.D. Fla.), aff’d, 48 Fed. App’x. 328, 2002 WL 1 2001204 (11th Cir. 2002); Consumers Produce Co. v. M & T Chirico, Inc., No. 04-CV- 2 295C(SR), 2005 WL 2420355, at *2 (W.D.N.Y. Sept. 30, 2005) (citing Weis-Buy Services, Inc. 3 v. Paglia, 411 F.3d 415, 421 (3d Cir. 2005)). Therefore, Farm-Wey is neither controlling nor 4 does the court find it to be persuasive. 5 Cooper also misstates the law for breach of fiduciary duty under the PACA. To 6 find an individual secondarily liable for breach of fiduciary duty, a plaintiff need not 7 demonstrate “misuse” of PACA assets. Instead, a “PACA trust in effect imposes liability 8 on a trustee, whether a corporation or a controlling person of that corporation, who uses 9 10 the trust assets for any purpose other than repayment of the supplier.” Sunkist, 104 F.3d at 11 283 (emphasis added) (quoting Morris Okun, Inc. v. Harry Zimmerman, Inc., 814 F. Supp. 12 346, 348 (S.D.N.Y. 1993)). “This includes use of the proceeds from the sale of perishables 13 for legitimate business expenditures, such as the payment of rent, payroll, or utilities.” 14 Morris Okun, 814 F. Supp. at 348. “[A] plaintiff[ ] need only show that the assets of the 15 licensed commission merchant, dealer, or broker are insufficient to satisfy the PACA 16 liability.” Superior Sales W., Inc. v. Revival Enterprises, Inc., No. SACV13352JSTJPRX, 2013 17 WL 12136966, at *3 (C.D. Cal. June 18, 2013) (quoting Coosemans Specialties, Inc. v. 18 Gargiulo, 485 F.3d 701, 707 (2d Cir. 2007)). Individuals will not be secondarily liable, 19 however, “merely because they served as corporate officers or shareholders.” Shepard v. 20 K.B. Fruit & Vegetable, 868 F. Supp. 703, 706 (E.D. Pa. 1994). Rather, individuals may be 21 liable “if they had some role in causing the corporate trustee to commit the breach of 22 trust.” Sunkist, 104 F.3d at 283. “A court considering the liability of the individual may 23 look at the closely-held nature of the corporation, the individual’s active management 24 role and any evidence of the individual’s acting for the corporation.” Id. (internal citation 25 and quotation marks omitted). 26 The court notes that the concerns behind the PACA are fairly unique. The fair 27 value of perishable goods, unlike other products, diminishes rapidly. There is no real opportunity to mitigate any loss. There is no opportunity to take the produce back. In 1 recognition of this highly evaporative state of the product, Congress has drawn a bright 2 line—a purchaser must pay the debt owed when due. The reasons for failure to pay are 3 irrelevant and personal liability is going to attach to whoever provides the leadership 4 and makes those management decisions, or else companies can avoid this situation by 5 the usual corporate means which is not what was intended with the PACA. 6 Here, the undisputed evidence demonstrates that Cooper controlled Cooper Cold 7 Foods’ day-to-day operations, made all decisions concerning Cooper Cold Foods’ 8 finances, had authority to enter into loan transactions and borrow funds on behalf of 9 10 Cooper Cold Foods, controlled the disposition of Cooper Cold Foods’ inventories of 11 produce, controlled the proceeds from sales of Cooper Cold Foods’ inventories of 12 produce, and controlled payments to Cooper Cold Foods’ creditors, including payment 13 of invoices for purchases of produce from its suppliers. (Adam Cooper Admissions ## 14 10-17.) Additionally, on August 21, 2019, as President and sole director, Cooper signed 15 and filed Cooper Cold Foods’ Certificate of Election to Wind Up and Dissolve. (Adam 16 Cooper Admissions ## 19-20.) The evidence indisputably establishes that Cooper was in 17 a position to control and actually controlled Cooper Cold Foods. 18 Cooper appears to argue that, even if he could be held secondarily liable because 19 of his position of control, he did not breach his fiduciary duty because he kept the PACA 20 trust assets in a safe which was subsequently burglarized. (See Cooper MSJ at 6-7.) 21 Evidence of the burglary and the stolen safe in June 2019 does not create a genuine issue 22 of material fact. The court agrees that there is insufficient evidence establishing that the 23 safe contained $500,000 in PACA trust property and that Cooper Cold Foods would have 24 used the funds to pay Monterey Mushrooms. Assuming that the safe did contain the 25 PACA trust property, the transactions at issue occurred between April 2019 and August 26 2019. At the time of the burglary, in June 2019, Monterey Mushrooms’ invoices from 27 April 2019 were already past due and there is no evidence suggesting that Cooper Cold Foods’ paid any past due amount. (Cooper Depo. at 75:10-25.) Cooper could not explain 1 why Cooper Cold Foods did not make prompt payment on the invoices which were past 2 due prior to the burglary. (Id.) Additionally, the evidence also demonstrates that after 3 the burglary, Cooper Cold Foods continued to receive shipments from Monterey 4 Mushrooms. (See Dkt. 67-3 at 51-81.) Cooper Cold Foods received and accepted 5 approximately thirty shipments of produce between July 1, 2019 to August 18, 2019. (Id.) 6 These subsequent shipments were PACA trust assets. Therefore, the burglary in June 7 2019 could not have been the reason, or even a reason, for these PACA trust assets to 8 have been dissipated or otherwise not freely available. 9 10 As discussed above, Cooper Cold Foods’ payments for salaries and ordinary 11 business expenses were at the expense of the trust beneficiaries. (Cooper Depo. at 80:8- 12 13.) These payments are evidence of a breach of fiduciary duty. See Sun Hong Foods, 2020 13 WL 2527048, at *3 (“Courts have held that ‘[a] PACA trustee may use trust assets to pay 14 ordinary business expenses as long as it does not do so at the expense of its PACA 15 beneficiaries, or in any way impair the ability of the beneficiaries to collect money owed 16 in connection with produce sales.” (quotations and citations omitted)). Because Cooper 17 had a role in using the trust assets for a purpose other payment to the trust beneficiaries, 18 Cooper is secondarily liable for breach of fiduciary duty. 19 The court concludes that there is no triable issue of material fact as to the breach of 20 fiduciary duty claim against Cooper. Accordingly, the court grants summary judgment 21 in favor of Monterey Mushrooms on Count VI of the Complaint-in-Intervention. 22 c. Unlawful Receipt of PACA Trust Assets 23 Cooper moves for summary judgment on the claim of unlawful receipt of PACA 24 trust assets. (Cooper MSJ at 11.) Cooper argues that unlawful receipt of PACA trust 25 assets is “only applicable to third parties, not individuals who are considered PACA 26 trustees . . .” (Id.) Monterey Mushrooms contends that Cooper can be liable as a third- 27 party recipient of assets, specifically, receiving salary and wages. However, as discussed above, Cooper is a PACA trustee, not a third party. The court has been unable to find, 1 and Monterey Mushrooms has failed to provide, any authority supporting Monterey 2 Mushrooms theory of liability. Thus, the unlawful receipt of PACA trust assets fails as a 3 matter of law. The court grants summary judgment in favor of Cooper on Count VII of 4 the Complaint-in-Intervention. 5 6 B. Attorneys’ fees and Interest The parties appear to agree that in the Ninth Circuit, attorneys’ fees and pre- 7 judgment interest are recoverable in PACA trust claims if provided for by contractual 8 agreement. Middle Mountain Land & Produce Inc. v. Sound Commodities Inc., 307 F.3d 1220, 9 10 1222-23 (9th Cir. 2002). The terms of the invoices here provided for payment of interest 11 on any past-due balances at the rate of 1.5% per month (18% per annum), or the 12 maximum amount allowed by law. The invoices also provided the additional terms for 13 payment of Monterey Mushrooms’ attorneys’ fees and costs in the event of any action to 14 enforce the terms of the agreements. 15 Cooper Cold Foods does not dispute that these additional terms were terms on the 16 face of the invoices and that it did not object to the additional terms. Instead, Cooper 17 Cold Foods opposes attorneys’ fees and interest in this case based on waiver and 18 modification through conduct. (See Cooper Opp. at 11.) However, Cooper Cold Foods’ 19 evidence of waiver and modification consists of Cooper’s declaration in which he states 20 that “Because of the length of their ongoing business relationship, Monterey would often 21 allow Cooper Cold Foods to make payments outside of the ‘stated terms’ on Monterey’s 22 invoices. Monterey regularly allowed Cooper Cold Foods to make payments that were 23 late and for less than the full amount owed.” (Cooper Decl. ¶ 7.) This conclusory, single 24 statement is insufficient to create a triable issue of fact. 25 The court concludes that Monterey Mushrooms is entitled to attorneys’ fees and 26 costs, and pre-judgment interest. 27 /// C. Breach of Contract 1 To establish breach of contract under California law, Monterey Mushrooms must 2 satisfy four elements: (1) the existence of a contract; (2) Monterey Mushrooms’ 3 performance or excuse for nonperformance; (3) Cooper Cold Foods’ breach; and (4) the 4 resulting damages to Monterey Mushrooms. Glob. Hawk Ins. Co. (RRG) v. Wesco Ins. Co., 5 424 F. Supp. 3d 848, 853 (C.D. Cal. 2019). As discussed above, Cooper Cold Foods does 6 not dispute that a contract existed, that Monterey Mushrooms delivered the agreed upon 7 produce, and that Cooper Cold Foods’ failed to provide payment for the produce. The 8 undisputed evidence establishes that Cooper Cold Foods breached its contract with 9 10 Monterey Mushrooms. 11 The court grants summary judgment in favor of Monterey Mushrooms on Count I 12 of the Complaint-in-Intervention. 13 IV.CONCLUSION 14 For the reasons stated above, the court grants Monterey Mushrooms’ motion for 15 summary judgment in its entirety, and grants Cooper’s motion for summary judgment as 16 to Count VII of the Complaint-in-Intervention and denies Cooper’s motion for summary 17 judgment as to all other claims. 18 IT IS SO ORDERED. 19 20 Dated: August 9, 2021 21 22 23 ___________________________________ 24 DEAN D. PREGERSON 25 UNITED STATES DISTRICT JUDGE 26 27