Double Green Produce, Inc. v. Forum Supermarket Inc.
387 F. Supp. 3d 260
E.D.N.Y2019Background
- Double Green Produce sold wholesale produce to Forum Supermarket between Nov 20, 2017 and Jan 6, 2018 and alleges unpaid invoices totaling $23,080.75.
- Plaintiff served Forum and individual defendant Hong Wen Cai; neither answered and the Clerk entered default. Plaintiff moved for default judgment under PACA.
- Magistrate judge recommended dismissal for lack of subject-matter jurisdiction; District Court permitted Plaintiff to supplement evidence that Forum is a PACA "dealer." Plaintiff produced invoices, account statements, and USDA public record showing Forum held a PACA license.
- Plaintiff preserved PACA trust rights by including statutory trust language on invoices. Plaintiff also alleged Cai was an officer with control over Forum and trust assets.
- The Court found Defendants’ default willful, found no meritorious defenses, held Forum liable as a PACA dealer, held Cai personally liable for dissipation of trust assets, and granted default judgment.
- Damages awarded: $23,080.75 principal; $5,579.82 prejudgment interest through April 25, 2019; $4,074.25 attorneys’ fees; total $32,734.82; post-judgment interest accrues at $11.38/day from April 26, 2019.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default was willful | Defendants failed to respond to complaint or motion | No appearance or defense offered | Default was willful (failure to answer after proper service) |
| Whether Forum is a PACA "dealer" | Forum bought wholesale produce and held a PACA license | (No response) | Forum is a dealer (PACA license and wholesale sales) |
| Whether transactions fall under PACA interstate-commerce requirement | Sales involved produce shipped/moved in interstate commerce | (No response) | Transactions were in interstate commerce (broad commerce definition applied) |
| Whether individual defendant is personally liable | Cai controlled Forum and trust assets; breached fiduciary duty by dissipation | (No response) | Cai personally liable as corporate official in control of PACA trust assets |
| Whether plaintiff preserved PACA trust rights | Invoices contained statutory trust language / provided timely notice | (No response) | Trust rights preserved via invoice language (section 499e(c)(4)) |
| Damages recoverable (interest, fees) | Contractual 18% interest and attorneys’ fees are allowable under PACA | (No response) | Awarded principal, contractual prejudgment interest, and reasonable attorneys’ fees |
Key Cases Cited
- City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114 (2d Cir.) (default judgment two-step framework)
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir.) (preference for merits decisions)
- Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701 (2d Cir.) (personal liability of individuals controlling PACA trust assets)
- R Best Produce, Inc. v. Shulman-Rabin Mktg. Corp., 467 F.3d 238 (2d Cir.) (definition and corpus of PACA trust)
- Cement & Concrete Workers Dist. Council v. Metro Foundation Contractors Inc., 699 F.3d 230 (2d Cir.) (damages calculation and evidentiary basis on default)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir.) (court must ensure basis for damages on default judgment)
- Endico Potatoes, Inc. v. CIT Group/Factoring, Inc., 67 F.3d 1063 (2d Cir.) (PACA governs transactions in perishable agricultural commodities)