The opinion of the court was delivered by: Wolfson, United States District Judge
Plaintiff Four Seasons Produce, Inc. ("Plaintiff" or "Four Seasons") seeks an entry of default judgment against Defendants Jersey Banana Co. ("Jersey Banana") and Alex Abdalla ("Abdalla") (Collectively "Defendants") pursuant to Federal Rule of Civil Procedure 55(b)(2). Defendants were properly served with a Summons and Complaint on October 31, 2005, but have yet to participate in the case in any fashion. The Clerk entered default on December 14, 2005. This Court has jurisdiction pursuant to 7 U.S.C. § 499e(c)(5) and 28 U.S.C. §§ 1331, 1367.
Plaintiff alleges that it sold and delivered to Jersey Banana $19,606.25 worth of produce between July 22, 2005 and August 19, 2005. According to Plaintiff, Abdalla is an officer, director and principal shareholder of Jersey Banana and signed an agreement personally guaranteeing Jersey Banana's obligations, which is attached as Plaintiff's exhibit 3. Plaintiff alleges that Defendants accepted the produce but failed and refused to pay to Plaintiff any portion of the $19,606.25 due, in violation of statutory, regulatory, contractual duties to preserve and turnover the Perishable Agricultural Commodities Act, 7 U.S.C. § 499e, ("PACA") trust assets belonging to Plaintiff. Plaintiff filed its Complaint against Defendants on October 11, 2005. The docket reflects that Defendants Jersey Banana and Abdalla were served with the Summons and Complaint on October 31, 2005, and, as such, had until November 20, 2005 to file a timely Answer; neither did so. The docket also reflects that on December 14, 2005, the clerk entered default against Jersey Banana and Abdalla. On March 24, 2006, Four Seasons filed a motion for default judgment against Defendants pursuant to Federal Rule of Civil Procedure 55(b)(2). Jersey Banana and Abdalla have not opposed the motion and have yet to participate in the case in any fashion. On July 10, 2006, this case was transferred from the Honorable Stanley R. Chesler, U.S.D.J., to me.
A. Default Judgment Standard
Federal Rule of Civil Procedure 55(b)(2) authorizes courts to enter a default judgment against a properly served defendant who fails to file a timely responsive pleading. Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev., 922 F.2d 168, 177 n. 9 (3d Cir.1990) ("When a defendant fails to appear ..., the district court or its clerk is authorized to enter a default judgment based solely on the fact that the default has occurred."). To obtain a default judgment, a litigant must first obtain an entry of default from the clerk of the court pursuant to Fed. R. Civ. P. 55(a). In this case, the Clerk entered default on December 14, 2005. After that procedural hurdle has been met, the entry of a default judgment is largely a matter of judicial discretion, although the Third Circuit has emphasized that such "discretion is not without limits, however, and we have repeatedly stated our preference that cases be disposed of on the merits whenever practicable." Hritz v.. Woma Corp., 732 F.2d 1178, 1181 (3d Cir.1984) (citations omitted).
Although the Court should accept as true the well-pleaded factual allegations of the Complaint, the Court need not accept the moving party's legal conclusions or allegations relating to the amount of damages. Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir .1990); Directv, Inc. v. Asher, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing Charles A. Wright, Arthur R. Miller & Mary Kay Kane, 10A Federal Practice and Procedure § 2688, at 58-59, 63 (3d ed.1998)). Consequently, before granting a default judgment, the Court must first ascertain whether "the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." Asher, 2006 WL 680533, at *1 (citing Wright, Miller, & Kane, § 2688, at 63); Directv, Inc. v. Croce, 332 F.Supp.2d 715, 717 (D.N.J.2004)).
The purpose of PACA was "primarily to eliminate unfair practices in the marketing of perishable agricultural commodities in interstate commerce in the case of a declining market by making it difficult for unscrupulous persons to take advantage of shippers by wrongful rejection of the goods upon arrival at a point where it is expensive and impractical for the shipper to enforce his legal rights." Martinelli & Co., Inc. v. Simon Seigel Co., 176 F.2d 98, 100 (1st Cir.1949). See 7 U.S.C. § 499e(c)(1). Among other things, PACA requires "licensing of all entities qualifying as commission merchants, dealers, and brokers (buyers); bars a variety of unfair trade practices by buyers; and provides various remedies when violations occur." Am. Banana Co., Inc. v. Republic Nat'l Bank of N.Y., 362 F.3d 33, 36 (2d Cir.2004)(internal citations omitted). "PACA requires buyers to make 'full payment promptly' for all commodities received from produce sellers." Id. ( citing 7 U.S.C. § 499b(4)). Accordingly, PACA provides for the creation of a statutory trust whenever produce is delivered and unpaid by the buyer. The supplier of produce becomes a beneficiary of said statutory trust which is a "non-segregated floating trust" that applies to all of the buyer's produce in inventory and all proceeds from the sale of produce until full payment is made. Essentially, the trust comprises: (1) produce purchased from suppliers, (2) all inventories of foods or other products derived from the produce, and (3) receivables or proceeds from the sale of said produce. In re Magic Rests, Inc., 205 F.3d 108, 111 (3d Cir.2000); Hiller Cranberry Prods., Inc. v. Koplovsky, 165 F.3d 1, 4-5 (1st Cir.1999). To this end, the PACA provides that:
Perishable agricultural commodities received by a commission merchant, dealer, or broker in all transactions, and all inventories of food or other products derived from perishable agricultural commodities, and any receivables or proceeds from the sale of such commodities or products, shall be held by such commission merchant, dealer, or broker in trust for the benefit of all unpaid suppliers or sellers of such commodities or agents involved in the transaction, until full payment of the sums owing in connection with such transactions has been received by such unpaid suppliers, sellers or agents.
Thus, since Plaintiff alleges that it delivered produce that Defendants accepted but for which they failed to pay, Plaintiff has stated a cause of action for failure to pay trust funds, failure to pay for goods sold, and unlawful dissipation of trust assets ...