FRESH WESTERN MARKETING
v.
M & L FOOD CENTER, INC.
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The court held that a federal district court should not require a buyer to establish a trust bank account to enforce a seller's right to payment out of a statutory trust, absent evidence of dissipation.
Plaintiff sued Defendants alleging failure to pay $26,573.00 and dissipation of funds under the Perishable Agricultural Commodities Act (PACA). Plaint…
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NESBITT, District Judge.
This cause is before the Court upon Plaintiff’s motion for a temporary restraining order (TRO) and a preliminary injunction, filed February 13, 1989. A hearing was held on February 16, 1989, at which time all defendants were represented.
Plaintiff has alleged that Defendants have not fulfilled their obligations under Section 5(c) of the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. § 499e(c) (the “Act”), by failing to pay Plaintiff $26,573.00 and by dissipating those funds. Plaintiff requests that this Court order Defendants to place said amount into an interest-bearing account so that further dissipation of funds will not occur. Defendants, however, have submitted an affidavit stating that no such dissipation has occurred and that the money owed has been placed in a trust account in accordance with the Act and will be distributed to creditors upon authorization from the Secretary of Agriculture.
The Court finds that Plaintiff’s requested relief is not warranted under the circumstances, nor is it supported by the Act itself. In DeBruyn Produce Co. v. Victor Foods, Inc., 674 F.Supp. 1405 (E.D.Mo.1987), the court, after examining the background of the Act, held that
there is nothing in the statute or its legislative history to indicate that a federal district court should require, as a means to enforce the seller’s right to payment out of the statutory trust, the buyer to establish a trust bank account containing the amount of money which the seller claims is due and owing.
Id. at 1409.
Although there is authority that, upon a showing that Defendant is dissipating the assets of the trust, Plaintiff might be entitled to a TRO requiring Defendant not to dissipate the assets (see Dole Fresh Fruit Co. v. United Banana Co., Inc., 821 F. 2d 106 (2d Cir.1987)), no evidence of dissipation has been presented here. In fact, there has been evidence to the contrary. Defendant has submitted an affidavit stating that the owed funds have not been dissipated and that they are in a separate trust account. However, it has not identified the account in which the money is currently being held nor the amount of funds in the account. Accordingly, in light of the foregoing, it is hereby
ORDERED and ADJUDGED that:
*517
(1) Plaintiff’s motions for a temporary restraining order and a preliminary injunction are DENIED;
(2) Defendant shall submit documentation to this Court by March 1, 1989 identifying the account, the name of the banking institution in which the funds are being held, and the amount which is deposited. Based on the representations of counsel for the Defendants that the funds are being held in a trust account in accordance with the Act, before making any disbursements Defendant shall give notice and be heard thereon.
DONE and ORDERED.
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Citator
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Frio ICE, S.A. v. Sunfruit, Inc., 918 F.2d 154 (11th Cir. 1990)…al courts to order PACA defendants to create segregated trust accounts in order to enforce payments to trust beneficiaries. Frio Ice, 724 F.Supp. at 1376-77. The district court relied on the decisions in Fresh Western Marketing v. M & L Food Center, 707 F.Supp. 515, 516 (S.D.Fla.1989); DeBruyn Produce Co. v. Victory Foods, Inc., 674 F.Supp. 1405 (E.D.Mo.1987). The district court’s reliance on DeBruyn is mistaken. The DeBruyn court adopted [*159] the wrong test for determining the scope of a federal court’s au…
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JSG Trading Corp. v. Tray-Wrap, Inc., 917 F.2d 75 (2d Cir. 1990)…ble agricultural products provides such products to a commission merchant, dealer, or broker on credit. See, e.g., Frio Ice, S.A. v. Sun-fruit, Inc., 724 F.Supp. 1373, 1376-77 (S.D.Fla.1989); Fresh Western Marketing v. M [*78] & L Food Center, Inc., 707 F.Supp. 515, 516 (S.D.Fla.1989); DeBruyn Produce Co. v. Victor Foods, Inc., 674 F.Supp. 1405, 1407 (E.D.Mo.1987). If the seller gives timely notice of its intent to preserve its benefits under the trust, the buyer must conduct itself as trustee of its assets un…
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Frio Ice v. SunFruit, 724 F. Supp. 1373 (S.D. Fla. 1989)…rt has concluded that the establishment of a trust bank account such as required in the preliminary injunction finds no support in PACA language, legislative history, or reasoned precedent. See generally Fresh Western Marketing v. M & L Food Center, 707 F.Supp. 515, 516 (S.D.Fla.1989); DeBruyn Produce Co. v. Victor Foods, Inc., 674 F.Supp. 1405, 1407-08 (E.D.Mo.1987). The language and operation of subsections 466e(c)(2) and (c)(3) automatically creates a statutory trust in a certain defined res, namely the co…1 / 3
Authorities Cited
- Dole Fresh Fruit Co. v. United Banana Co., Inc., 821 F.2d 106 (2d Cir. 1987)