Dimare Homestead, Inc. v. Alphas Co. of New York, 09 Civ. 6644 (PKC)
| Decision Date | 05 April 2012 |
| Docket Number | 09 Civ. 6644 (PKC) |
| Parties | DIMARE HOMESTEAD, INC. and DIMARE RUSKIN, INC., Plaintiffs, v. THE ALPHAS COMPANY OF NEW YORK, INC. PETER ALPHAS and YANNI ALPHAS a/k/a JOHN ALPHAS, Defendants. |
| Court | U.S. District Court — Southern District of New York |
FINDINGS OF FACT AND
Plaintiffs DiMare Homestead, Inc. and DiMare Ruskin, Inc. (the "DiMare Companies" or "DiMare") bring this action against the Alphas Company of New York ("Alphas"), Peter Alphas, and John "Yanni" Alphas. DiMare alleges that Alphas failed to pay for tomatoes in violation of the Perishable Agricultural Commodities Act, 7 U.S.C. § 499a et seq. ("PACA"). DiMare seeks $164,159.00 in damages pursuant to a series of unpaid invoices, plus interest and attorneys' fees.
This case was tried before the Court without a jury on November 14 and 15, 2011. At trial, both parties called live witnesses and offered documents into evidence. Thereafter, the Court received post-trial memoranda from the parties. This Opinion sets forth the Court's Finding of Facts and Conclusions of Law pursuant to Rule 52(a), FED. R. CIV. P.1 DiMare brings claims under PACA and New York common law theories of quantum meruit and account stated. It also asserts a claim for failure to pay for goods received pursuant to Article 2 of the New York Uniform Commercial Code ("UCC").
The Court concludes that DiMare did not preserve its PACA trust rights for all but one of the unpaid invoices at issue in this case. Addressing DiMare's common law claims, the Court concludes that DiMare is entitled to the reasonable value of all tomatoes delivered to Alphas under its quantum meruit theory.
1. The DiMare Companies are Florida corporations engaged in the business of buying and selling wholesale quantities of perishable agricultural commodities (or "produce") in interstate commerce. (PTO Stip. ¶ 1[a].)2 The DiMare Companies were licensed dealers under PACA at all times relevant to this action. (Id.; PX-1.) James DiMare was sales manager and marketing manager for the DiMare Companies at all times relevant to this action. (Tr. 1 at 6.)
2. Alphas is a New York corporation engaged in the business of buying and selling wholesale quantities of produce, including tomatoes, at Hunts Point Terminal Market in Bronx, New York ("Hunts Point"). (Tr. 2 at 51-52.) Alphas was a licensed dealer under PACA at all times relevant to this action. (PTO Stip. ¶ 1[d].)
3. Defendants Peter Alphas and Yanni Alphas are officers and principal owners of Alphas, and have been signatories on Alphas' bank accounts since July 13, 2001. (Id.) Yanni Alphas negotiated prices and purchased produce, including tomatoes, on behalf of Alphas. (Tr. 2at 51.) Peter Alphas received incoming produce from Alphas's wholesalers, including DiMare, at Hunts Point where he then resold the produce to retailers. (Tr. 2 at 87-89.)
4. The DiMare Companies sell two "labels" of green tomatoes: DiMare and Diamond D. Each label corresponds to a quality grade established by the U.S. Department of Agriculture ("USDA"). Green tomatoes bearing the DiMare label are USDA Number 1 grade ("U.S. No. 1"), indicating that 85% or more of the load is free from defects. (Tr. 1 at 7-10; PX-2.) Green tomatoes bearing the Diamond D label are USDA Number 2 grade ("U.S. No. 2"), indicating that 60% or more of the load is free from defects. (Tr. 1 at 7-10.)
5. DiMare's practice was to ship tomatoes to a buyer before agreeing on price. (Tr. 1 at 25.) As sales manager, James DiMare would contact the buyer within three days after shipping the tomatoes to determine how many tomatoes the buyer was able to resell, and at what price. (Tr. 1 at 28-30.) DiMare and the buyer would continue those discussions for several days until the buyer sold the entire load. (Tr. 1 at 151-52; Tr. 2 at 38.) DiMare employed this general practice with Alphas at all times relevant to this action. (Tr. 1 at 61-62; Tr. 2 at 22-23, 38-39, 53.)
6. As sales manager for the DiMare Companies, James DiMare also maintained a practice of adjusting the price for a shipment based upon prior dealings with a particular buyer. (Tr. 1 at 124-46.) During the relevant time period, DiMare sold freeze-damaged tomatoes to certain customers from tomato crops collected and harvested in January 2009, and in turn provided discounted prices to those buyers on later shipments. (Tr. 1 at 139-46; Tr. 2 at 39-47.)
7. Alphas began regularly purchasing green tomatoes from the DiMare Companies in October 2001. (Tr. 1 at 33-35; Tr. 2 at 52-54.) Alphas purchased tomatoes bearing both theDiMare and Diamond D labels. Tomatoes are the only type of perishable produce Alphas has ever purchased or received from DiMare. (Tr. 2 at 53-54.)
8. The parties used F.O.B. shipping points of Homestead, Florida, and Ruskin, Florida for all tomato deliveries during the relevant time period. The acronym F.O.B. refers to "Free On Board." A sales contract containing F.O.B. shipping terms indicates that transportation expenses and the risk of loss for the goods passes from the seller to the buyer at the specified location. (Tr. 1 at 13-14.) See, e.g., Taylor Devices, Inc. v. Walbridge Aldinger Co., 538 F. Supp. 2d 560, 566 n.3 (W.D.N.Y. 2008) (citing U.C.C. § 2-319(1) (2004)).
9. For all deliveries relevant to this action, DiMare sold its tomatoes to Alphas on a price-after-sale basis. A "price after sale" transaction is one in which the seller provides the buyer with goods and the parties do not agree on price until after the buyer has resold the goods. The seller and buyer then agree on a price "in light of the profits realized by the receiver." Tom Lange Co. v. A. Gagliano Co., Inc., 61 F.3d 1305, 1306 n.1 (7th Cir. 1995) (quoting La Verne Co-Operative Citrus Ass'n v. Mendelson-Zeller Co., 46 Agric. Dec. 1673 (1987)); see also M. Offutt Co. v. Caruso Produce, Inc., 49 Agric. Dec. 596 (1990) ().
10. The USDA's Agricultural Marketing Service generates a daily Tomato Fax Report. (PTO Stip. ¶ 1[h]; Tr. 1 at 14-15.) The Tomato Fax Report contains F.O.B. shipping point prices for tomatoes by geographic sales market. (Tr. 1 at 14-18; PX-2.) Each report contains F.O.B. market prices from the prior day. (Tr. 1 at 14-18; 106-07.) The report pertaining to the New York market includes daily tomato prices for both U.S. No. 1 and No. 2 grade tomatoes. (PX-2 at 3.) James DiMare generally consulted the Tomato Fax Report prior to negotiating prices with his customers. (Tr. 1 at 107.)
11. Regardless of the price agreed to by the parties, DiMare charged all buyers, including Alphas, an up-front charge of $1.95 per unit (twenty-five-pound carton) for ripening and loading the tomatoes onto trucks prior to shipping. (Tr. 1 at 13-14, 31; see, e.g., PX-4 at 2.) DiMare would deduct this up-front loading charge from the buyer's resale price when negotiating its wholesale price to the buyer. (Tr. 1 at 30-32.) In addition to the $1.95 per carton charge, DiMare also billed Alphas $23.50 per load for the temperature recording equipment used to ship the tomatoes. (PX-4.)
12. With the exception of three loads, Alphas arranged for transportation and shipping of each load of tomatoes it purchased from DiMare during the relevant time period. (Tr. 1 at 40-41, 67-69.)
13. DiMare billed its customers, including Alphas, with invoices. Each invoice corresponded to a specific shipment of tomatoes. (See, e.g., PX-4.) DiMare would prepare and mail an invoice only after agreeing on price with the buyer after reselling the tomatoes. (Tr. 1 at 27-29, 32-33; Tr. 2 at 23.) In general, DiMare would mail its invoice to the customer within one day after generating the invoice. This date was reflected as the "invoice date" on the face of each invoice. (Tr. 1 at 33; see, e.g., PX-4.)
14. The invoices that DiMare generated for each shipment to Alphas contained the shipment date, the date the invoice was created, the quantity of tomatoes shipped, the label of tomatoes shipped, and the price per carton for the tomatoes. (PX-4.) Each invoice noted the $1.95 per unit loading surcharge as "ENVIRONMENTAL/HANDLING" and the additional $23.50 charge for "TEMPERATURE RECORDER." (Id.)
15. All invoices also stated: "All sales due 10 days from acceptance." (Id.) Both parties understood this remark as requiring payment within ten days following an agreement onprice. James DiMare included this statement on the face of each invoice to indicate that he "expect[ed] a check in ten days." (Tr. 1 at 55.) As purchaser for Alphas, Yanni Alphas also understood the payment terms with DiMare to be due ten days after an oral agreement on price for the tomatoes delivered. (Tr. 2 at 85.)
16. The face of each invoice DiMare sent to Alphas also included the following:
(PX-4; Tr. 1 at 57.) James DiMare included this language on each invoice in order to notify customers of its intent to invoke PACA's statutory trust protections, described more fully in the Court's Conclusions of Law.
17. Each invoice DiMare sent to Alphas also stated on its face: (PTO Stip. ¶ 1[g]; see, e.g., PX-4 at 2.)
18. During the relevant time period, Alphas never provided DiMare with...
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