754 F. Supp. 2d 1120
N.D. Cal.2010Background
- Andrew Smith sues Paul’s Pak, Premium Fresh, Church Brothers, True Leaf, and others for unpaid lettuce invoices totaling over $3 million.
- Paul’s Pak supplied Church Brothers under a Supply Agreement; Church Brothers did not pay about $496,022.85 for Church Produce.
- Premium Fresh contracted with Church Brothers for marketing of its salads; a Waiver Agreement allegedly affects how proceeds and payments are allocated among vendors.
- Premium Fresh and Paul’s Pak have related contracts (Premium Contracts) and a Marketing Agreement governing distribution of net sales proceeds; Waiver addressed payments to various vendors.
- Paul’s Pak seeks summary judgment on breach of contract claims against Church Brothers and Premium Fresh, and challenges enforceability and scope of the Waiver; other PACA and related claims are also at issue.
- The court grants in part and denies in part; breaches against Premium Fresh are awarded with prejudgment interest; several PACA and related claims against Church Brothers and True Leaf are dismissed or denied depending on the count.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Waiver Agreement forecloses Paul's Pak's breach claim against Church Brothers | Paul's Pak argues Waiver covers all related claims including Supply Agreement. | Church Brothers contends Waiver bars claims arising from Premium Contracts, potentially affecting Supply Agreement. | Scope of Waiver is disputed; triable issue remains. |
| Enforceability of the Waiver Agreement for PACA rights | Waiver lacks valid consideration. | Waiver is supported by part performance and consideration via Premium Fresh payments. | Waiver not unenforceable for lack of consideration; defenses fail. |
| Whether Premium Fresh breached the 2007 Agreement | Premium Fresh failed to pay $1,238,289.35 for lettuce. | Challenges include writing, waiver, mitigation, and unclean hands defenses. | Paul’s Pak entitled to judgment on breach; damages awarded $1,620,046.86 including prejudgment interest. |
| Church Brothers’ liability for breach of Contract/related PACA claims and scope of waiver | Paul's Pak seeks recovery on multiple counts (Counts Two–Twelve) under various theories including PACA and third-party claims. | Waiver and contract scope should bar some claims; some counts require proof of PACA control and trust assets. | Counts Two–Twelve denied as to some waivers; Counts Three, Five, Eight, Ten questioned; genuine issues remain; other counts resolved against Church Brothers (e.g., Thirteen, Fifteen) and in favor of True Leaf on others. |
| Interference with contract and third-party beneficiary/indemnification claims | Paul's Pak asserts interference and third-party beneficiary rights under Marketing Agreement. | Standing and beneficiary status are disputed; some claims lack merit. | Count Thirteen (interference) dismissed for lack of standing; Count Fourteen (third-party beneficiary) dismissed; Count Fifteen (state code) dismissed; Count Sixteen remains pending depending on other rulings. |
Key Cases Cited
- Mattei v. Hopper, 51 Cal.2d 119 (Cal. 1958) (illusory promise analysis; consideration when part performance exists)
- Steiner v. Thexton, 48 Cal.4th 411 (Cal. 2010) (enforceability despite initial illusory nature due to part performance)
- PG&E v. G.W. Thomas Drayage & Rigging Co., 69 Cal.2d 33 (Cal. 1968) (parol evidence and contract interpretation principles)
- Cal. U. Com. Code § 2201(3)(c), – (–) (enforcement without signed writing where goods have been received and accepted)
- Silva v. Wells Fargo Bank, N.A., 202 B.R. 140 (N.D.Cal. 1996) (waiver elements and burden of proof for effective waiver)
- Asmus v. Pacific Bell, 23 Cal.4th 1 (Cal. 2000) (good consideration; pre-existing obligation limitations)
- Brinderson-Newberg Joint Venture v. Pac. Erectors, Inc., 971 F.2d 272 (9th Cir. 1992) (parol evidence and complete integration rule in parol evidence context)
- Quelimane Co., Inc. v. Stewart Title Guaranty Co., 19 Cal.4th 26 (Cal. 1998) (intent required for third-party beneficiary standing)
- Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118 (Cal. 1990) ( Rest.2d Torts; interference standards)
- Van Asdale v. Int'l Game Tech., 577 F.3d 989 (9th Cir. 2009) (sham affidavit rule limitations)
- Orr v. Bank of Am., 285 F.3d 764 (9th Cir. 2002) (summary judgment evidence considerations)