LAURA TAYLOR SWAIN, District Judge.
A&J Produce Corp. ("Plaintiff") moves for a default judgment against Defendants, pursuant to Federal Rule of Civil Procedure 55(b)(2) and S.D.N.Y. Local Civ. R. 55.2(b), on its claim for breach of the trust provision of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499e(c), which creates a trust in favor of the seller of perishable agricultural commodities and their proceeds upon receipt by the buyer, pending full payment. Plaintiff, a wholesale distributor that sold perishable agricultural commodities to Harvest Corp. ("Harvest") without receiving payment, brings this action against defendants Harvest, Cuong Luc Hoang and Danny Truong (collectively, "Defendants"), jointly and severally, asserting a variety of claims resulting from Defendants' alleged failure to pay Plaintiff for the wholesale quantities of produce sold and delivered by Plaintiff to Harvest. Defendants have not appeared or responded to the claims asserted in this action, despite being afforded ample time and opportunity to do so. The Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331.
The Court has reviewed Plaintiff's submissions carefully and, for the following reasons, Plaintiff's motion for default judgment is granted.
The following facts are alleged in the Complaint. ("Compl.," Docket Entry No. 1). Both Plaintiff and Harvest are New York corporations engaged in the business of buying and selling wholesale quantities of produce in interstate commerce. (Compl. ¶¶ 3-4.) Each has its principal place of business in New York and both are licensed as dealers pursuant to PACA. (
Plaintiff alleges, based on an attached invoice, that between June 27, 2016 and June 28, 2016, Plaintiff sold and delivered to Defendant Harvest $19,812.00 worth of wholesale quantities of produce moved in interstate commerce. (Compl. ¶ 8, Ex. H.) Plaintiff performed its obligations and Defendants accepted the produce, received Plaintiff's invoice and never disputed the amount due, but failed to pay for the goods tendered despite repeated demands. (Compl. ¶ 9.) Plaintiff asserts that a trust was created, "[a]t the time of receipt of the produce, [where] A&J became a beneficiary of the PACA statutory trust designed to assure payment to produce suppliers." (
(Ex. H.) Plaintiff's invoice further provides that "[p]ast due invoices shall accrue interest at the annual rate of 18%. If overdue accounts are referred to an attorney, you agree to pay our reasonable attorney's fees, plus the costs of all legal action as an additional charge under the contract of sale covered by this invoice." (
On September 7, 2016, Plaintiff notified Harvest of the overdue invoice and requested attention for payment. (
On September 16, 2016, Plaintiff filed the Complaint in this action, seeking to recover the principal amount of $19,812.00 plus accrued interest and attorneys' fees for Defendants' breach of the PACA trust provisions and on other related theories of liability. (Docket Entry No. 1.) When Defendants failed to appear or file an Answer, Plaintiff requested entry of a certificate of default against all defendants, which was entered by the Clerk of Court on November 2, 2016. (Docket Entry No. 16.)
In determining whether to grant a motion for default judgment, courts within this district first consider three factors: "(1) whether the defendant's default was willful; (2) whether defendant has a meritorious defense to plaintiff's claims; and (3) the level of prejudice the non-defaulting party would suffer as a result of the denial of the motion for default judgment."
Defendants' failure to respond to either Plaintiff's Complaint or Motion for Default Judgment is indicative of willful conduct.
Although defendants have not appeared to defend this action and the Clerk of Court has entered a certificate of default, this Court must determine "whether the allegations in Plaintiff's complaint are sufficiently pleaded to establish [the defendants] liability."
To enforce a PACA trust, a plaintiff must show: "(1) the commodities sold were perishable agricultural commodities; (2) the purchaser of the perishable agricultural commodities was a commission merchant, dealer, or broker; (3) the transaction occurred in interstate or foreign commerce; (4) the seller has not received full payment on the transaction; and (5) the seller preserved its trust rights by giving written notice to the purchaser of its intention to[ ]do so."
Plaintiff alleges, and proffers invoices showing that, between June 27, 2016 and June 28, 2016, Plaintiff sold and delivered to Defendants $19,812.00 worth of wholesale quantities of produce which had been shipped or moved in interstate commerce, thereby meeting the first and third elements. (Compl. ¶ 8;
Having established Harvest's liability, the Court next examines Hoang and Truong's derivative joint and several liability as individuals in control of Harvest's trust assets. "An individual who is in a position to control the assets of the PACA trust and fails to preserve them, may be held personally liable to the trust beneficiaries for breach of fiduciary duty."
To date, Hoang and Truong have also failed to appear or respond to Plaintiff's Complaint and Motion for Default Judgment, despite having been properly served and having had adequate time to do so. The Court accepts as true Plaintiff's allegations that both defendants were "officer[s], director[s], and/or shareholder[s] who operated Harvest during the relevant time period and, upon information and belief, [were] in a position of control over the PACA trust assets belonging to [Plaintiff]." (Compl. ¶¶ 5-6.) Additionally, the documents provided by Plaintiff to the Court confirm Hoang and Truong's positions in Harvest and include both Hoang and Truong's signatures as personal guarantors of Harvest at the relevant time. (
Under PACA, perishable agricultural commodities are to be held in a trust by purchasing dealers "until full payment of the sums owing in connection with" the purchase is received. 7 U.S.C.S. § 499e(c)(2) (LexisNexis 2001). A dealer in violation of any provision of PACA "shall be liable to the person or persons injured thereby for the full amount of damages (including any handling fee paid by the injured person or persons under section 6(a)(2) [7 USCS § 499f(a)(2)] of this title) sustained in consequence of such violation."
Plaintiff's invoice provides that "[p]ast due invoices shall accrue interest at the annual rate of 18%. If overdue accounts are referred to an attorney, you agree to pay our reasonable attorney's fees, plus the costs of all legal action as an additional charge under the contract of sale covered by this invoice." (
For the foregoing reasons, Plaintiff's motion for default judgment is granted. Plaintiff is entitled to judgment against Defendant in the principal amount of $19,812.00, plus accrued interest at an annual rate of 18% from September 7, 2016, the date on which payments to Plaintiff were contractually due, in the amount of $3,429.37, and attorneys' fees in the amount of $4,178.42, for a total judgment in the amount of $27,419.79. This Memorandum Opinion and Order resolves Docket Entry No. 19.
The Clerk of Court is directed to enter judgment and close this case.
SO ORDERED.