Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Classic Harvest LLC v. Freshworks LLC

United States District Court, N.D. Georgia, Atlanta Division

November 3, 2017

CLASSIC HARVEST LLC, Plaintiff,
v.
FRESHWORKS LLC, et al., Defendants. CRISP HOLDINGS, LLC d/b/a FRESH ROOTS, Third Party Plaintiff,
v.
US FOODS, INC., Third Party Defendant.

          OPINION AND ORDER

          WILLIAM S. DIJFFEY, JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Third-Party Defendant U.S. Foods, Inc.'s (“US Foods”) Motion to Strike [464] Crisp Holdings, LLC d/b/a Fresh Roots' (“Crisp”) Amended Third Party Complaint [454] (“Amended Complaint”). Also before the Court is Crisp's Motion for Leave to File its Amended Third Party Complaint [474] (“Motion to Amend”).

         I. BACKGROUND

         This is 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).

         Crisp 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 Harvest.

         On 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 Trust.

         On September 4, 2015, the Court entered the “Consent Injunction and Agreed Order Establishing PACA Claims Procedure” [24] (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. The Court evaluated the claims filed by the PACA Creditors in this case and approved claims in the total amount of $1, 860, 344.02. (See May 31, 2017, Order [436]; Updated PACA Trust Chart [439.1]).[1]

         On August 16, 2016, Crisp filed its Third Party Complaint [336] (“Complaint”) against U.S. Foods asserting claims for Enforcement of the PACA Trust (Count I), Failure to Pay Promptly (Count II), and Breach of Contract (Count III), based on U.S. Foods' alleged failure to pay in full certain invoices.[2]Crisp also asserted 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), based on U.S. Foods' deduction, from amounts it owed to Crisp, of $1, 077, 516.95 in product promotional allowances.

         On 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 [383]).[3]

         On April 28, 2017, the Court dismissed Count VI of Crisp's Complaint for failure to state a claim for relief. ([431]). The Court denied U.S. Foods' Motion to Dismiss Counts IV, V and VII. (Id.).

         On June 9, 2017, Crisp and U.S. Foods filed their Joint Preliminary Report and Discovery Plan (“JPR”), in which they agreed, among other things, that “[a]mendments to the pleadings submitted LATER THAN THIRTY DAYS after the Joint Preliminary Report and Discovery Plan is filed, or should have been filed, will not be accepted for filing, unless otherwise permitted by law.” (JPR [440] at 4). The parties also indicated that they did not anticipate any amendments to the pleadings. (Id.).

         On June 21, 2017, the Court entered an order approving the parties' JPR. (June 21st Order [445]). The June 21st Order states that the “time limits for adding parties, amending the pleadings, filing motions, completing discovery, and discussing settlement are as set out in the Federal Rules of Civil Procedure and the Local Rules of this Court . . . .” (Id at 1-2).[4]

         On July 21, 2017, Crisp, without seeking U.S. Foods' consent or leave of Court, filed its Amended Third Party Complaint [454] (“Amended Complaint”). In it, Crisp asserts new claims for “Enforcement of the PACA Trust Control of the PACA Trust” (Count VII), Co-Fiduciary Liability under PACA (Count VIII) and Interference with Receipt of Trust Assets (Count IX). Crisp alleges:

• Beginning no later than January 2015, U.S. Foods was made aware that Crisp was not paying its produce suppliers. PACA Trust Beneficiaries of Crisp informed U.S. Foods that Crisp's failure to pay would result in cancellation of shipments to U.S. Foods.
• U.S. Foods, in response to these notifications from Crisp's produce suppliers, began meeting regularly with the Officers, Directors and/or Principals of Crisp to discuss payment to Crisp's produce suppliers.
• During these meetings, U.S. Foods would direct Crisp which produce suppliers to pay and when to pay them.
• U.S. Foods caused Crisp to commit a breach of the PACA trust by transferring PACA Trust Assets from Crisp to specific PACA trust beneficiaries, for the benefit of U.S. Foods, in violation of its duties under PACA.
• U.S. Foods directed the priority of which the produce suppliers of Crisp would be paid and therefore controlled the PACA Assets of Crisp.
• Following the direction of U.S. Foods, Crisp failed to make prompt payment in full to some of its produce suppliers from the PACA Trust Assets of Crisp.
• Due to the direction of U.S. Foods, Crisp failed to preserve sufficient amounts of the PACA Trust Assets freely available to fully satisfy all qualified PACA trust claims, such as the PACA Trust ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.