524 F. App'x 148
6th Cir.2013Background
- Six L’s sues JR Beale d/b/a Sunfresh Farms and JE Beale under PACA for unpaid tomato invoices and related claims.
- Sunfresh argues counterclaim about cantaloupes; district court held Sunfresh liable on four invoices and denied cantaloupe claim, and held JE Beale personally liable.
- Six L’s preserved PACA trust rights by including trust-preserving language on invoices.
- Invoices at issue include: (i) 1,178-case shipment (Invoice #212127); (ii) partial deliveries (Invoices #242380, #242381); (iii) December 21 order for peppers (Invoice #243406); and Sunfresh’s partial settlement attempt.
- Sunfresh and Beale appeal, Six L’s cross-appeals, district court’s rulings on trust rights, contract formation for partially-delivered orders, and individual liability are reviewed de novo for summary judgment and reviewed for proper application of PACA and related law.
- The record shows Sunfresh accepted or controlled the shipment at issue, stance on price terms for the partially delivered orders, and Sunfresh’s selective rejection and alleged damages under PACA and state law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PACA trust rights extend to un-delivered invoices. | Six L’s argues trust rights attach upon acceptance/ownership, not physical possession. | Sunfresh contends trust rights require possession/receipt of the produce. | Agree: trust rights extend where Sunfresh had ownership/control; notices triggered PACA protections. |
| Whether Sunfresh validly rejected Invoice #212127 for defects. | Sunfresh accepted the shipment; rejection without reasonable cause barred. | Defects present; revocation of acceptance not properly raised. | Sunfresh accepted the shipment; no valid revocation; payment due under PACA. |
| Whether there was a binding contract for Invoices #242380 and #242381 despite no price term. | Price fixed post-delivery; market-based pricing valid; contract implied in sale. | No price term; no contract unless price fixed. | Binding contract implied; price determined by market values on December 8 under customary pricing terms. |
| Whether JE Beale can be held personally liable under PACA. | Beale controlled trust assets and failed to preserve them. | Beale had limited control; not officer/director; no liability. | JE Beale not personally liable under PACA given lack of control over trust assets. |
| Whether Six L’s is entitled to attorney’s fees under contract and PACA. | Fees authorized by contract and PACA. | Settlement offer undermines fee enforceability; not enough to negate. | Affirmed fee award based on contractual provision; PACA not sole basis; district court to set amount on remand. |
Key Cases Cited
- Golman-Hayden Co. v. Fresh Source Produce, Inc., 217 F.3d 348 (5th Cir.2000) (PACA trust creation and priority; determination of trust protection scope)
- Overton Distribs., Inc. v. Heritage Bank, 340 F.3d 361 (6th Cir.2003) (Trust notice requirements and preservation of PACA rights)
- Arava USA, Inc. v. Kami Family Farm, LLC, 474 Fed.Appx. 452 (6th Cir.2012) (individual liability under PACA for control of trust assets (citing Arava ruling))
- Weis-Buy Servs. v. Paglia, 411 F.3d 415 (3d Cir.2005) (trust principles and personal liability for officers/directors in PACA context)
- Coosemans Specialties, Inc. v. Gargiulo, 485 F.3d 701 (2d Cir.2007) (personal liability for individuals in control of trust assets under PACA)
- Sunkist Growers v. Fisher, 104 F.3d 280 (9th Cir.1997) (extends individual PACA liability to those in control of trust assets)