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DRISCOLL POTATOES, INC. v. N.A. PRODUCE CO.

May 14, 1991

DRISCOLL POTATOES, INC., PLAINTIFF,
v.
N.A. PRODUCE CO., INC., AND NESTOR BALOCOS, A/K/A, NESTOR BALOCO, DEFENDANTS.



The opinion of the court was delivered by: Lechner, District Judge.

OPINION

Currently before the court is the application of plaintiff Driscoll Potatoes, Inc. ("Driscoll") for a preliminary injunction pursuant to Fed.R.Civ.P. 65.*fn1 Driscoll seeks a preliminary injunction directing defendants N.A. Produce, Inc. ("N.A. Produce") and Nestor Balocos, also known as Nestor Baloco, ("Balocos") (collectively, "Defendants"), to comply with the statutory trust provision of the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499a, et seq. Specifically, Driscoll seeks an order directing Defendants to place in an interest-bearing account at a particular nationally chartered banking institution the amount of $11,068.50. For the reasons set forth below, Driscoll's application is denied.

Facts

Because no opposition has been received, the facts as alleged by Driscoll are not disputed. Driscoll, located in Idaho, is a dealer, broker and/or commission merchant of fresh potatoes. Davis Affidavit at ¶ 2. N.A. Produce, located in New Jersey, is a dealer, broker and/or commission merchant licensed under PACA. Id. at ¶ 3. Balocos is an officer, director and shareholder of N.A. Produce. Id. at ¶ 4.

On 18 January 1991, Driscoll sold N.A. Produce a wholesale lot of potatoes, a perishable agricultural commodity, for the price of $11,068.50. Id. at ¶ 5. This transaction, involving interstate commerce, is apparently governed by certain provisions of PACA, namely 7 U.S.C. § 499e(c).*fn2

Under PACA, a dealer, broker or commission merchant of perishable agricultural commodities must hold all proceeds from the sale of such commodities in trust for the unpaid suppliers of the commodities. 7 U.S.C. § 499e(c)(2). The unpaid supplier will be entitled to the benefit of the trust only if it provides written notice of its intent to preserve the benefits of the trust to the dealer, broker or commission merchant who sold the commodities. Id. at § 499e(c)(3). Furthermore, the notice of intent must be filed with the Secretary of Agriculture. Id. Assuming the notice of intent has been properly given and filed, PACA provides "[t]he several district courts of the United States are vested with jurisdiction specifically to entertain (i) actions by trust beneficiaries to enforce payment from the trust, and (ii) actions by the Secretary [of Agriculture] to prevent and restrain dissipation of the trust." Id. at § 499e(c)(4).

Driscoll has not been paid for the potatoes sold to N.A. Produce. Davis Affidavit at ¶ 9. Therefore, under PACA, Defendants are required to hold any proceeds from the sale of potatoes supplied by Driscoll in trust for Driscoll. On 27 February 1991, and pursuant to PACA, Driscoll filed a notice of intent to preserve its rights in the trust with the Secretary of Agriculture. Davis Affidavit at ¶ 7. On the same day, Driscoll sent a copy of its notice of intent to Defendants. Id.

On 11 April 1991, Driscoll filed a complaint against Defendants. By its complaint, Driscoll seeks to enforce the trust provisions of PACA and to recover the $11,068.50 owed to Driscoll for the potatoes sold to N.A. Produce. The summons and complaint was served on 15 April 1991. No answer has yet been filed.

On 19 April 1991, Driscoll filed a motion for a preliminary injunction directing Defendants to place the price of the potatoes in trust, pursuant to PACA. Driscoll believes Defendants have been dissipating the assets of the trust. Id. at ¶ 10. Driscoll also contends Defendants have been using the proceeds from the sale of the potatoes to pay other creditors and suppliers of N.A. Produce. Id. at ¶¶ 8 & 10. As noted above, no opposition to this motion has been received.

Discussion

A.  Standard of Review

To prevail on its application for a preliminary injunction, the moving party must show:

  (1) the probability of irreparable injury to the
  moving party in the absence of relief; (2) the
  possibility of harm to the nonmoving party if
  relief were granted; (3) the likelihood of success
  on the merits; and (4) the public interest [in
  granting preliminary relief].

Alessi v. Pennsylvania, Dept. of Pub. Welfare, 893 F.2d 1444, 1447 (3d Cir. 1990); see Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 800 (3d Cir. 1989); Fechter v. HMW Indus., Inc., 879 F.2d 1111, 1116 (3d Cir. 1989); CPC Int'l, Inc. v. Caribe Food Distrib., 731 F. Supp. 660, 664 (D.N.J. 1990); Bascom Food Prod. Corp. v. Reese Finer Foods, Inc., 715 F. Supp. 616, 624 (D.N.J. 1989). Significantly, a "grant of injunctive relief is an extraordinary remedy which should ...


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