S. Katzman Produce Inc. v. Yadid, 999 F.3d 867

Background

Plaintiffs S. Katzman Produce and related companies supplied Orel Produce with perishable produce (Feb–Jul 2018) and were unpaid for over $516,000; they preserved PACA trust rights and sued Orel, its owner Moshe Yadid, and Moshe's son Eliran.
Orel ceased operations in summer 2018; Moshe was undisputedly Orel’s sole shareholder and sole officer; Eliran is Moshe’s son who worked for Orel intermittently and received a weekly salary.
Bank records showed Eliran had check-signing authority, made withdrawals, signed supplier checks, and on July 27, 2018 Orel wired $40,000 to Eliran’s personal account shortly before plaintiffs sued.
Plaintiffs moved for summary judgment; defendants conceded Orel’s liability but disputed Eliran’s control over the PACA trust assets. Eliran submitted a sworn declaration denying ownership or decisionmaking authority and describing mental‑health issues; plaintiffs submitted texts and other documents suggesting Eliran acted on Orel’s behalf.
The district court granted summary judgment against Eliran, finding he exercised control over Orel’s assets and was jointly and severally liable for $606,664.87. Eliran appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Eliran can be held personally liable under PACA for dissipation of trust assets (control test)	Eliran exercised control (check signing, withdrawals, text negotiations, loan guaranty/"owner" designation)	Eliran was a non‑owner, non‑officer, only a salaried employee who acted under Moshe's directions	Control is the dispositive test; liability possible even for non‑owners, but facts must be resolved at trial except as to $40,000
Whether the $40,000 wired to Eliran’s personal account constituted dissipation of PACA trust assets making him liable	Transfer and subsequent exclusive control over the funds shows dissipation	Transfer was at Moshe’s direction; Eliran did not personally benefit and merely held funds for Moshe	Affirmed: summary judgment proper as to $40,000 — Eliran had sole control after the wire, so dissipation occurred
Whether summary judgment was appropriate for the remainder of the debt (liability for other trust assets)	The aggregate record (signing authority, texts, checks, loan guarantees) showed Eliran exercised control over Orel’s assets	Genuine disputes of fact exist (Moshe was sole owner, Eliran acted under Moshe’s instructions, mental‑health evidence)	Vacated as to amounts beyond $40,000 and remanded for trial on whether Eliran had sufficient control over other assets
Whether an individual who is not an owner/officer can be subject to PACA liability	PACA liability follows trust/agency principles; control, not title, is determinative	Non‑owner/non‑officer status and sworn denials create triable issues	Individual liability can attach to non‑owners if they controlled trust assets; here triable issues remain for most amounts

Key Cases Cited

Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701 (2d Cir. 2007) (PACA liability where individual controlled and dissipated trust assets)
"R" Best Produce, Inc. v. Shulman‑Rabin Mktg. Corp., 467 F.3d 238 (2d Cir. 2006) (definition and scope of PACA trust corpus)
D.M. Rothman & Co. v. Korea Commercial Bank of New York, 411 F.3d 90 (2d Cir. 2005) (applying general trust principles to PACA)
American Banana Co. v. Republic Nat'l Bank, 362 F.3d 33 (2d Cir. 2004) (background on PACA amendments and protections for sellers)
Endico Potatoes, Inc. v. CIT Grp./Factoring, Inc., 67 F.3d 1063 (2d Cir. 1995) (PACA trust may be commingled; floating trust concept)
DiSapio ("R" Best Produce, Inc. v. DiSapio), 540 F.3d 115 (2d Cir. 2008) (non‑owner individual may be liable if facts show personal responsibility)
Golman‑Hayden Co. v. Fresh Source Produce Inc., 217 F.3d 348 (5th Cir. 2000) (individual shareholders/officers liable when in control of PACA assets)
Sunkist Growers, Inc. v. Fisher, 104 F.3d 280 (9th Cir. 1997) (PACA trust principles and individual liability for dissipation)
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (U.S. 2000) (summary judgment standard and that credibility/weight are jury functions)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (standard for summary judgment and view of evidence in the nonmovant's favor)