DECISION AND ORDER
I. Background
By рrior order of June 23, 1997, this Court directed that monies collected from accounts receivable of David Fishgold, Inc. (“Fishgold”), be held in trust for the benefit of Fishgold’s suppliers under provisions of the Perishable Agricultural Commodities Act (“PACA”).
Fishgold originally commenced this action when it sought to enjoin one of its creditors, OnBank & Trust Company (“On-Bank”), from seizing its accounts receivable to satisfy its loan, now in default. Fishgold claimed that this seizure was in violation of PACA. Eventually, numerous PACA creditors intervened and filed claims to the trust’s assets. A receiver was appointed to marshal the assets and to make payment to creditors with undisputed claims. The amount of money held in trust is unquestionably insufficient to satisfy the claims of all PACA suppliers, thus the trust will be distributed on a pro rata basis to the eligible named PACA creditors.
The receiver sought to distribute $46,750 of the money held in the trust account, roughly 85% of the account balance. Pro rata distributions to five of the PACA creditors whose claims were undisputed were ordered by this Court on August 13, 1998:
Key Produce Sales, Inc.: $3,478.20
Giumarra Vineyards, Corp.: $4,726.43
Cayuga Produce, Inc.: $4,511.37
Weis-Buy Sendee, Inc.: $1,991.55
Giorgio Foods, Inc.: $9,999.83
Cayuga Produce, Inc. (“Cayuga”) has filed objections as to the claims made by five of the remaining potential PACA creditors: Genecco Produce, Inc. (“Genecco”), Oswego Growers and Shippers, Inc. (“Oswego”), Brock’s Fresh Foods, Inc. (“Brock”), Double Diamond Acres, Ltd. (“Double Diamond”), and OnBank. 1 Obviously, to the extent these objections are sustained, the trust corpus would increase, which would аlso result in an increased pro rata share to Cayuga and those other creditors whose claims to the funds are undisputed.
II. Cayuga’s Specific Objections
A. Objection to Genecco and Oswe-go’s Claims — Were the Claimed Transactions in Interstate Commerce?
Cayuga asserts that two of the potential trust recipients, Genecco and Oswego,
2
should be disqualified because the claimed transactions were solely “intrastate,” thus falling outside the provisions of PACA. Cayuga advocates a very narrow interpretation of the statute, limiting the provisions of PACA to commodities that have physically crossed state lines, or to situations where the parties specifically envisioned such a crossing. Although courts
The PACA statute, at 7 U.S.C. § 499e(c)(2), creates- a trust for the benefit of sellers of “рerishable agricultural commodities received by a commission merchant, dealer, or broker in all transactions .... ” The PACA trust provision is triggered when “in connection with any transaction in interstate or foreign commerce ... any commission merchant, dealer, or broker ... fail[s] ... to ... make fuh payment....” 7 U.S.C. § 499b(4). The term interstate cоmmerce is defined as “commerce between any State or Territory, or the District of Columbia and any place outside thereof; or between points within the same State or Territory, or the District of Columbia but through any place outside thereof; or within the District of Columbia.” 7 U.S.C. § 499a(3). A transaction under the Act is considered tо be in interstate commerce if it “is part of that current of commerce usual in the trade in that commodity whereby such commodity and/or the products of such commodity are sent from one State with the expectation that they will end their transit, after purchase, in another....” 7 U.S.C. § 499a(8).
This language has been interpreted broadly, and covers the transactions conducted by Fishgold.
In re Southland,
+
Keystone,
The D.C. Circuit poetically analyzed the Secretary of Agriculture’s interpretation of the language in section 499a(8), noting that:
In the spirit of the riverine metaphor used by the Congress ... the current of interstate commerce should be thought of as akin to a great river that may be used for both interstate and intrastate shipping; imagine a little raft put into the Mississippi River at Hannibal, Mo., among the big barges bound for Memphis, New Orleans and ports beyond, with St. Louis as the rafter’s modest destination. On this view, a shipment of strawberries can enter the current of interstate commerce even if the berries are reserved exclusively for sale and consumption within the state where they were grown.
Produce Place v. U.S. Dept. of Agriculture,
It is true that Genecco and Oswego havе stated in their respective claims that their produce was shipped from within New York for distribution within New York. Yet it is also true that a portion of Fishgold’s business involved produce that physically crossed' state lines. Fishgold’s complaint states that Fishgold purchased and imported perishable agricultural commodities in interstate commerce for distribution in New York. Complaint ¶ 5. This fact is corroborated by the unchallenged “interstate” claims of other PACA creditors in this action. Arguably, requiring the bifurcation of Fishgold’s accounts into intra and interstate may, in and of itself, burden interstate commerce.
See J.R. Brooks & Son, Inc. v. Norman’s Country Market, Inc.,
B. Objection to Brock’s Claim — Alleged Discrepancies in Invoices
Cayuga challenges Brock’s claims on two grounds. First, Cаyuga argues that Brock has overstated the amount owing on an invoice submitted with its claim. Brock indicated a PACA trust claim for invoice
Second, Cayuga objects to three invoices that indicate $150 in returned-сheck charges (# 009862-00, # 010490-00) and a $75 handling fee (# 009639-00). The language on the invoices submitted to the Court contain no mention of returned-check fees. The only reference to these fees are the actual entry items on the invoices submitted for reimbursement from the PACA trust. Those invoices contain no entries other than the returned-сheck charges. There has been no evidence submitted to the Court that the assessment of a returned-check fee was contracted for between the parties. As such, the Court will not consider those charges as “sums owing in connection with” the transaction under section 499e(c)(2), therefore, Brock cannot rеcover those fees from the PACA trust account. The $75 handling fee, however, was included on an invoice for the shipment of produce, and appears to be related to the produce charges noted on the bill. As such, this charge is recoverable from the PACA trust.
See Weis-Buy Services, Inc. v. Roncone,
C. Objections to Double Diamond’s Claim
1. Allegations that Double Diamond Did Not Give Proper Nоtice
Cayuga argues that Double Diamond did not give proper notice of its intent to preserve the PACA trust, alleging that there was “no allegation or proof offered that the requisite notice under 7 U.S.C. § 499e(c)(3) was given to the Secretary.” Section 499e(c)(3) requires that notice be given to the “commission merchant, deаler, or broker within thirty calendar days (i) after expiration of the time prescribed by which payment must be made.... The written notice shall set forth information in sufficient detail to identify the transaction subject to the trust....” Under 499e(4), notice may also be printed on the invoices. 3
Double Diamond’s invoices did not contain PACA notice informаtion. Instead, on July 10, 1996, Double Diamond sent a letter to Fishgold, stating “[t]his is a Notice Of Our Intent to preserve Trust Benefits. Attached are our invoices.” The invoices were dated June 22, 1996; June 26, 1996; and June 28, 1996; and such notice was timely.
Moreover, it appears that Cayuga’s objection is based on language deleted from PACA in 1995. Pre-amendment languаge in section 499e(e)(3) required that a PACA trust claimant “file[ ] such notice with the Secretary within thirty calendar days.... ” Reference to filing with the Secretary was removed on November 15, 1995. Pub.L. No. 104^8 § 6(a), 109 Stat. 424, 427 (1995). Cayuga’s objection as to notice is hereby denied.
2. Double Diamond’s Request for Interest
Double Diamond’s invoices all contain language stating “2% per month carrying charges on all overdue accounts.” Double Diamond asserts that this charge began accruing in August 1996 and continues to date. Double Diamond’s proof of claim notes that $22,256.85 in carrying costs have accrued as of April 30, 1998.
Given the volume of claims pending before the Court and the relatively small amount of money available in the trust, the PACA claimants in this action arе in a position to recover only a small pro rata percentage of their outstanding invoices. The application of a 2% carrying charge to Double Diamond’s claim would severely disadvantage the remaining PACA claimants. The Court finds- that a grant of 2% interest to Double Diamond would be inequitable. Thus, Double Diamond may not collect a 2% carrying charge from the PACA trust fund.
D. OnBank’s PACA Proof of Claim
OnBank also filed a PACA proof of claim, to which Cayuga objected. OnBank is clearly not, nor has it ever claimed to be, a supplier or seller of perishable agricultural commodities. As such, OnBank’s claim is denied.
III. Attorney’s Fees
Both Key Produce and OnBank have filed separate requests for attоrney’s fees. Both parties argue that their actions made it possible for others to recover PACA money. OnBank argues that if it had not taken steps to seize Fishgold’s accounts receivable, there would be no fund from which the PACA creditors could collect. OnBank is seeking $13,190 in attorney’s fees. 4 With the exception of one billing еntry from August 6,1996, OnBank’s claim appears to include all legal services rendered to the bank from October 3, 1996 to February 25, 1997 in connection with the loan and Fishgold’s defalcation. In contrast, Key Bank, seeking $2,898 in fees and $261.85 in costs, has limited its request to fees and charges incurred in seeking the appointment of a receiver and in including other potential PACA creditors in this action.
Attorney’s fees may be recoverable under PACA when the parties have so contracted, or when ordinarily available as exceptions to the so-called “American Rule,” which requires litigants to bear their own costs.
See Alyeska Pipeline Service Co. v. Wilderness Society,
A. Key Produce’s Request for Attorney’s Fees.
Key Produce has not alleged any contractual basis by which it could seek attorney’s fees. Instead, as Key Produce stresses in its submission to the Court,
Relying on the “common fund exception” to the American Rule, the Ninth Circuit in
In re Milton Poulos, Inc.
granted attorney’s fees to a PACA creditor “directly responsible for the availability of the funds from the statutorily created trust.”
It should also be noted that much of the work for which Key Produce seeks compensation complemented the work performed by the trustee. It would be inequitable for the Court to compensate the trustee for his work in managing and distributing the fund (see Court’s order of June 23, 1997), yet fail to award Key Produce reasonable attorney’s fees and costs incurred in facilitating the trustee’s work. Therefore, having found the attorney’s fees and costs requested by Key Produce to be reasonable, Key Produce is awarded attorney’s fees in the amount of $2,898 and costs in the amount of $261.85.
B. OnBank’s Request for Attorney’s Fee
In support of its claim, OnBank cites no case law that suggests that a creditor ordered to disgorge collected accounts receivable for the benefit of PACA claimants can recover attorney’s fees for its collection efforts. It is true that following Fishgold’s default, OnBank’s efforts to collect Fishgold’s accounts receivable led to the accumulation of а sum of money that, pursuant to the Court’s order, was later ordered held in trust, not for OnBank but for PACA claimants. OnBank’s actions, many of which were adversarial to the interests of the PACA claimants and originally commenced to recover monies to satisfy its loan, do not warrant a fee award in OnBank’s favor. Moreover, OnBank’s submission to the Cоurt does little to suggest any legal basis for such an award. OnBank’s request for attorney’s fees is hereby denied.
CONCLUSION
Cayuga’s objections to Geneeco’s (Dkt. # 73) and Oswego’s (Dkt.# 75) claims are denied. Cayuga’s objection to Brock’s claims (Dkt.# 78) and Double Diamond’s claims (Dkt.# 77) are granted in part and denied and part. Cayuga’s objection to OnBank’s proof of claim (Dkt.# 76) is granted. Key Produce’s request for attorney’s fees and costs (Dkt.# 90) is granted. OnBank’s request for attorney’s fees (Dkt. # 93) is denied. Pursuant to the September 1, 1998 letter from counsel for Lawrence H. Meurs, the proof of claim filed by Meuers (Dkt.# 69) is hereby dismissed with prejudice.
The trustee is ordered to make
pro rata
distributions to Genecco, Oswego, Brock,
IT IS SO ORDERED.
Notes
. Cayuga also objected to a claim filed by Lawrence W. Meuers. Although Meuers responded to these objections, he later withdrew his claim in correspondence providеd to the Court via an attachment to Cayuga’s Memorandum in Support of its objections. (Dkt. # 92) Claims filed by Harold Quebe-deaux Produce, Inc. and Orbaker's Fruit Farm were dismissed by order of the Court.
. A similar “intrastate objection” was made against Brock and later withdrawn.
. 499e(4) provides in part:
In addition to the method of preserving the benefits of the trust specified in paragraph (3), a licensee may use ordinary and usual billing or invoice statements to provide notice of the licensee's intent to preserve the trust....
. This amount reflects a corrected tabulation of the claim.