United States District Court, N.D. Georgia, Atlanta Division
OPINION AND ORDER
WILLIAM S. DUPFEY, JR. UNITED STATES DISTRICT JUDGE.
matter is before the Court on Third-Party Defendant U.S.
Foods, Inc.'s (“US Foods”) Motion to Dismiss
 Crisp Holdings, LLC d/b/a Fresh Roots'
(“Crisp”) Third Party Complaint .
an action under the Perishable Agricultural Commodities Act
(“PACA”), 7 U.S.C. §§ 499a, et
seq. When perishable agricultural commodities
(“Produce”) are sold, PACA imposes a
nonsegregated, “floating” trust, in favor of
Produce sellers, on the Produce sold, products derived from
the Produce, “and any receivables or proceeds from the
sale of such” Produce or product derived from it. 7
U.S.C. § 499e(c)(2). PACA requires the buyer to hold the
trust assets “in trust for the benefit of all unpaid
suppliers or sellers of such [Produce], ” “until
full payment of the sums owing in connection with such
transactions has been received by such unpaid suppliers . . .
.” Id. A trust beneficiary may bring an action
in federal court “to enforce payment from the
trust.” 7 U.S.C. § 499e(c)(5).
bought Produce on credit from wholesale Produce suppliers,
including Classic Harvest, LLC (“Classic
Harvest”). Crisp then resold the Produce to its
customers, including U.S. Foods, on credit, generating
accounts receivable (“Receivables”). Under PACA,
Crisp was required to hold, in trust (the “PACA
Trust”), the Produce, products derived from the
Produce, and the Receivables or proceeds from the sale of the
Produce (the “Trust Assets”), for the benefit of
Crisp's unpaid Produce suppliers, including Classic
August 25, 2015, Classic Harvest filed suit against Crisp to
recover payment for Produce that Classic Harvest sold to
Crisp. Classic Harvest asserts, among others, claims under
PACA against Crisp, its principals and parent company, for
breach of their duties under PACA and to enforce the PACA
September 4, 2015, the Court entered the “Consent
Injunction and Agreed Order Establishing PACA Claims
Procedure”  (the “September 4th
Order”). The September 4th Order provides for the Court
to exercise exclusive in rem jurisdiction over
Crisp's PACA Trust Assets and directs counsel for Crisp
to preserve and collect Crisp's PACA Trust Assets,
including any unpaid Receivables. The September 4th Order
further establishes a framework for Crisp's other unpaid
PACA creditors to submit their claims against Crisp in this
action and share, on a pro rata basis, in the
recovery of Crisp's PACA Trust Assets.
August 16, 2016, Crisp filed its Third Party Complaint 
(“Complaint”) against U.S. Foods asserting,
inter alia, claims for Declaratory Judgment (Count
IV), Breach of the PACA Trust (Count V), Breach of Duty as
PACA Trustee (Count VI), and Conversion and Unlawful
Retention of PACA Trust Assets (Count VII). Crisp claims U.S.
Foods wrongfully, and in violation of PACA, deducted $1, 077,
516.95 in product promotional allowances from amounts it owed
the terms of the parties' Vendor Program Agreement
(“VPA”) [336.2], U.S. Foods agreed to purchase
Produce from Crisp, and Crisp agreed to pay to U.S. Foods a
promotional allowance based on the amount of Produce U.S.
Foods purchased from Crisp. The promotional allowance
includes a Corporate Marketing Allowance (“CMA”)
which was “intended to be used for Support Office and
Regional Marketing Activities.” (VPA at 3,
The VPA provides:
On or about the 25th day following the end of each calendar
month, USF will (i) calculate the NPA, CMA, and LMA and/or
LPA. . . due; (ii) post the billing amount to the supplier
web portal that [Crisp] will have access to . . ., and (iii)
process a deduction in that amount against any outstanding or
future trade payable.
(Id. at 7). This allowed U.S. Foods to reduce the
amount it owed Crisp on invoices by the amount of the
promotional allowance owed to U.S. Foods by Crisp under the
October 14, 2016, U.S. Foods moved to dismiss Counts IV
through VII of Crisp's Complaint for failure to state a
claim for relief. (Mot. Dismiss ). U.S. Foods argues is
that it cannot be liable for the claimed PACA violations
because it was permitted to deduct the promotional allowance
from amounts it owed Crisp, and thus the promotional
allowance was not subject to the PACA Trust.