Salas Avocado SPR de RL v. SA&E Enters.

• Docket Number: CV-20-00046-TUC-DTF
• Decision Date: 04 January 2022
• Citation: Salas Avocado SPR de RL v. SA&E Enters., CV-20-00046-TUC-DTF (D. Ariz. Jan 04, 2022)
• Parties: Salas Avocado SPR de RL, Plaintiff, v. SA&E Enterprises LLC, Defendant.
• Court: U.S. District Court — District of Arizona

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Salas Avocado SPR de RL, Plaintiff, v. SA&E Enterprises LLC, Defendant.

No. CV-20-00046-TUC-DTF

United States District Court, D. Arizona

January 4, 2022

MEMORANDUM OPINION AND ORDER

HONORABLE D. THOMAS FERRARO UNITED STATES MAGISTRATE JUDGE

Pending before the Court is Plaintiff's Motion for Summary Judgment (Doc. 39) and the Parties' responsive pleadings and statements of facts (Docs. 40-43).

FACTUAL BACKGROUND

On January 27, 2020, Plaintiff Salas Avocado S.P.S. de R.L (“Salas” or “Plaintiff”) filed a complaint under the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499b (“PACA”), against Defendant SA&E Enterprises LLC (“SA&E” or “Defendant”). (Doc. 1.) On June 18, 2020 SA&E filed its Answer, which included a counterclaim for violation of the implied covenant of good faith and fair dealing. (Doc. 15.)

In its complaint, Salas alleges that in December of 2018, “in the course of foreign commerce, Salas, by contract, sold to SA&E 3, 840 cases of avocados.” (Doc. 1 at ¶ 7.) SA&E would be responsible for selling the cases of avocados to third-party customers and pay Salas, minus expenses and commission. (Id.) SA&E received and accepted all 3, 840 cases of avocados and they sold 2, 083 cases to third-party customers for $45, 624.00 donated 694 cases^[1], and has failed to account for 1, 063 cases that it received. (Id. at ¶¶ 10- 12.) SA&E has failed to pay Salas any sum from the sale of the avocados. (Id. at ¶ 14.)

Plaintiff brings two claims against SA&E. Count One alleges that Salas remains an unpaid supplier of produce in violation of PACA. (Id. at ¶¶ 16-18.) Count Two alleges that Salas and SA&E entered into a contract for the purchase and sale of 3, 840 cases of avocados and that SA&E has “failed to pay for the commodity accepted and thereby breached its contract with Salas resulting in damages to Salas [. . .].” (Id. at ¶¶ 19-23.)

SUMMARY JUDGMENT STANDARD

In deciding a motion for summary judgment, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the party opposing the motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1289 (9th Cir. 1987). Summary judgment is appropriate if the pleadings and supporting documents “show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Material facts are those “that might affect the outcome of the suit under the governing law.” Anderson, 477 U.S. at 248. A genuine issue exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

DISCUSSION

Plaintiff seeks summary judgment on his PACA and breach of contract claims, as well as on Defendant's counterclaim.

Count One - Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499b

Plaintiff alleges that it is “engaged in the business of growing and selling wholesale quantities of perishable agricultural commodities, including avocados [. . .].” (Doc. 40 at 1.) Defendant, a licensed dealer, commission merchant, and/or broker under PACA, entered into a seller/dealer contract to sell avocados on Plaintiff's behalf to third-party buyers in exchange for reimbursement of certain expenses and payment of a commission. (Id. at 1-2.) Salas made two shipments of avocados on December 13th and 18th, 2018 totaling 3, 840 cases and weighing 43, 392 kilograms.^[2] (Id. at 2.) The Parties agreed upon the price of $26 per case or $2.30 per kilogram, making the shipments worth approximately $99, 801.60. (Id.)

On December 21st and 26th, 2018, the U.S. Department of Agriculture (“USDA”) inspected the shipments, confirmed receipt of 3, 840 cases, and Plaintiff asserts that they found the “avocados were delivered, in good condition, with de minimis spoilage.” (Id.). The USDA inspection certificates indicate that Defendant was the responsible party for the handling of the avocados at the time of the inspection. (Docs. 40 at 2; 40-1 at 11-12.)

Plaintiff asserts that Defendant sold 2, 083 cases, donated 694 cases, ^[3] and have left approximately 1, 063 cases unaccounted for or unreported. (Doc. 40 at 3.) It is undisputed that Defendant sold at least 2, 083 cases for a total of $45, 624.00 and incurred $19, 517.82 in broker fees and expenses. (Id. at 2.) Plaintiff has already transferred $8, 166.00 of the brokerage fees and expenses to Defendant, making the total owed to Plaintiff $34, 146.38. (Id.) Plaintiff further asserts that based upon the Parties' agreed upon value, it is owed $30, 226.37 for the unaccounted-for 1, 063 cases of avocados. (Id. at 3.) Thus, Plaintiff contends that Defendant has failed to pay for both the sold and unaccounted-for avocados in an amount totaling $64, 372.75. (Id.)

Defendant asserts that it did not beach its obligations, that the damages are less than $50, 000, and asserted a counterclaim alleging that Plaintiff breach its implied covenant of good faith and fair dealing. (Docs. 15; 40-2 at 2-3). Specifically, Defendant contends that the first shipment was untimely and arrived in “poor near spoiled” condition and had to be sold at a value lower than that set by the Parties. (Doc. 41 at 2.) Defendant concedes that the second shipment was timely, that all cases have been sold, and Defendant has failed to issue payment for any portion of the sales from either shipment. (Id. at 1-2, 4.)

PACA was enacted to regulate, promote fairness, and prevent unfair business practices in the perishable agricultural commodities industry. Middle Mountain Land & Produce Inc. v. Sound Commodities Inc., 307 F.3d 1220, 1223 (9th Cir. 2002); Farley & Calfee, Inc. v. U.S. Dep't of Agric., 941 F.2d 964, 966 (9th Cir. 1991) (citing Tri-Cty. Wholesale Produce Co. v. U.S. Dep't of Agric., 822 F.2d 162, 163 (D.C. Cir. 1987)). “PACA provides that, in connection with any transaction in interstate or foreign commerce involving any perishable agricultural commodity, it shall be unlawful for a commission merchant, dealer, or broker, ‘to fail or refuse truly and correctly to account and make full payment promptly in respect of any transaction in any such commodity to the person with whom such transaction is had.'” C.H. Robinson Co. v. Glob. Fresh, Inc., No. CV 08-2002-PHX-SRB, 2010 WL 11515522, at *2-3 (D. Ariz. Jan. 22, 2010) (quoting 7 U.S.C. § 499b(4)).

Additionally, PACA requires that all merchants, dealers, and brokers in perishable agricultural commodities be licensed by the Secretary of Agriculture. Sunkist Growers, Inc. v. Fisher, 104 F.3d 280, 282 (9th Cir. 1997). Finally, PACA also requires “commission merchants, dealers, and brokers to hold all perishable agricultural commodities received by the merchant, dealer, or broker, as well as all ‘inventories of food or other products derived from' such commodities ‘and any receivables or proceeds from the sale of such commodities or products ... in trust for the benefit of all unpaid suppliers or sellers' of such commodities, until full payment to the suppliers or sellers.” Chucho Produce LLC v. Tonys Fresh Produce Inc., No. CV-21-00372-TUC-RM, 2021 WL 4282580, at *2 (D. Ariz. Sept. 21, 2021) (quoting 7 U.S.C. § 499e(c)(2)). Following any of the above-mentioned failures, a seller may enforce its rights either:

(1) by complaint to the Secretary ... or (2) by suit in any court of competent jurisdiction; but this section shall not in any way abridge or alter the remedies now existing at common law or by statute, and the provisions of this chapter are in addition to such remedies.

Id. (quoting 7 U.S.C. § 499e(b)).

To prevail on a PACA claim, a plaintiff must show that the following four elements are met: “(1) a transaction[. . .]; (2) purchase and receipt of the perishable agricultural commodities by a commission merchant, dealer, or broker engaged in the handling of produce in interstate and/or foreign commerce; (3) a failure to pay fully and promptly or a failure to maintain the trust required by § 499e(c); and (4) preservation of trust rights by the seller by notification of intent to preserve the benefits of the trust on invoices or billing statements.” C.H. Robinson Company, 2010 WL 11515522, at *3 (citing Fam. Tree Farms, LLC v. Alfa Quality Produce, Inc., No. 108-CV-00481-AWI-SMS, 2009 WL 565568, at *5 (E.D. Cal. Mar. 5, 2009), report and recommendation adopted, No. 1:08-CV-00481AWISMS, 2009 WL 1066255 (E.D. Cal. Apr. 20, 2009); Sunkist Growers, Inc., 104 F.3d at 284; and 7 U.S.C. §§ 499b, 499e(c)).

Here, the Parties do not dispute that a transaction occurred that involved the handling of produce in foreign/domestic commerce; that Defendant was a licensed dealer, commission merchant, and/or broker under PACA; that Defendant failed to pay Plaintiff fully or promptly and failed to maintain a trust; and that Plaintiff provided notice of its intent to pursue its rights under PACA. (Doc. 41 at 4-5.) Therefore, the Court finds that these elements have been met and pretermits further discussion.

However, Defendant avers that there are issues of material fact regarding Plaintiff's PACA rights. (Id. at 5.) Specifically, Defendant contends that the Parties contracted for Plaintiff to make two timely shipments from Mexico to Defendant in Nogales, Arizona. (Id.) Defendant concedes that the second shipment was made timely; however, argues that the first shipment “arrived several days after December 13, 2018, ” and “[a]s a result of the late arrival [the] avocados were in poor near spoiled condition.” (Id.) Defendant further claims that there are no unaccounted-for cases of avocados. (Id. at 2.)

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