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Eagle Fruit Traders, LLC v. Ultra Fresh, LLC

United States District Court, D. New Jersey

November 16, 2018

EAGLE FRUIT TRADERS, LLC, Plaintiff,
v.
ULTRA FRESH, LLC, MICHAEL FELIX, and WILLIAM HIDALGO, Defendants.

         Not for Publication

          OPINION

          Esther Salas, U.S.D.J.

         Before the Court is Plaintiff Eagle Fruit Traders, LLC's (“Plaintiff”) Motion for a Preliminary Injunction against Defendants Ultra Fresh, LLC (“Ultra Fresh”), Michael Felix, and William Hidalgo (collectively “Defendants”). (D.E. No. 4). Plaintiff seeks to enjoin Defendants from dissipating the assets of Ultra Fresh. Defendants have not opposed Plaintiff's Motion for Preliminary Injunction, and on November 7, 2018, the Clerk of Court entered default against Defendants for failing to answer the Complaint. As such, the Court deems the Motion unopposed. This Court has jurisdiction pursuant to 7 U.S.C. § 499E (c)(5)(i) and 28 U.S.C. § 1331. For the reasons set forth below, Plaintiff's Motion for Preliminary Injunction is GRANTED.

         I. BACKGROUND

         Plaintiff brings this action under the Perishable Agricultural Commodities Act of 1930 (“PACA”), 7 U.S.C. 499a, et seq. (D.E. No. 1, Complaint (“Compl.”) ¶ 7). Plaintiff is a Massachusetts limited liability company engaged in the business of selling wholesale quantities of perishable agricultural commodities (“Produce”) in interstate commerce, and is a licensed as a Produce dealer under PACA. (Compl. ¶ 3). Defendant Ultra Fresh is a New Jersey limited liability company engaged in the business of buying wholesale quantities of Produce in interstate commerce. (Id. ¶ 4). Defendants Felix and Hidalgo are principals, officers, and owners of Ultra Fresh. (Id. ¶¶ 5-6).

         Between May 15, 2018 and June 5, 2018, Plaintiff sold and delivered to Defendants, in interstate commerce, $44, 800 worth of Produce, which Defendants accepted but failed to pay for. (Id. ¶ 8). Soon after, Plaintiff delivered to Defendants invoices dated May 15, May 16, May 23, and June 5, 2018, which contained certain language required under 7 U.S.C. § 499e(c)(4). (Id. ¶ 9; D.E. No. 4-3, Declaration of Michael Giglio (“Giglio Decl.”) ¶ 8 & Exs. 3-4). Additionally, the invoices contain a provision requiring Defendants to pay Plaintiff interest at a rate of 1.5% monthly (18% annually) on all unpaid amounts, as well as attorneys' fees and costs associated with collecting the unpaid amount. (Compl. ¶¶ 10-11; Giglio Decl. ¶ 9). As such, Plaintiff alleges it is the beneficiary of the “PACA Trust” created by operation of 7 U.S.C. § 499e(c). (Compl. ¶ 9).

         Plaintiff alleges that Defendants acknowledged the PACA Trust debt, have admitted they lack the funds to pay the balance in full, and have breached promises to make partial payments. (Id. ¶ 13; Giglio Decl. ¶ 11). Particularly, Defendants have told Plaintiffs representatives that Defendants lack the money to pay the balance of the debt in full and need a payment plan to pay the debt, because other creditors have filed numerous claims with the USDA for failure to pay against Ultra Fresh. (Giglio Decl. ¶ 11).

         Plaintiff alleges that there are accounts receivable owed to Ultra Fresh, which are likely impressed with the PACA Trust. (Id. ¶ 14). Plaintiff states that unless Defendants are enjoined, Defendants will continue to dissipate the trust, causing Plaintiff immediate and irreparable harm. (Id. ¶ 15).

         On October 1, 2018, Plaintiff filed the instant Complaint (See Compl.), and on October 9, 2018, Defendants were served with process (D.E. No. 3). On or about October 11, 2018, the parties reached a tentative agreement for a payment plan where Defendants would make the first payment of $11, 200 on or before October 15, 2018. (Id. ¶ 12). However, Defendants failed to execute the agreement and failed to make this payment. (Id.). On October 23, 2018, Plaintiff filed a request for an Order to Show Cause with Temporary Restraints against Defendants. (D.E. No. 4). On October 25, 2018, the Court held oral argument on Plaintiff's request. The Court permitted Defendants' out-of-state counsel to appear via telephone. (See D.E. No. 7). After hearing arguments, the Court reserved its decision pending settlement talks before the Honorable Magistrate Judge Steven C. Mannion. (Id.). That afternoon, the parties reached a tentative settlement which was placed on the record.

         On October 31, 2018, however, Plaintiff's counsel filed a letter indicating Defendants had failed to execute the agreed stipulated judgment. (D.E. No. 8). Further, Defendants' counsel informed Plaintiff that he did not anticipate the execution of the stipulated judgment to be forthcoming. (Id.). Consequently, Plaintiff requested that the Court issue the requested temporary restraints and order Defendants to show cause. (Id.).

         On November 1, 2018, the Court read into the record its Opinion and issued an Order to Show Cause with Temporary Restraints temporarily retraining Ultra Fresh and its officers, including Defendants Felix and Hidalgo, from dissipating the PACA Trust assets. (D.E. Nos. 9 & 10). Particularly, the Court found that Plaintiff was likely to succeed on the merits of its PACA claims, that Plaintiff had and would suffer immediate irreparable harm if the restraints were not imposed because it was likely Defendants were dissipating the PACA Trust assets, and that the equities supported the grant of the temporary restraints. Therefore, Defendants were ordered to show cause why a preliminary injunction should not be issued and were ordered to file any opposition to the preliminary injunction by November 8, 2018. (D.E. No. 10). Plaintiff's counsel certified that he served this Order upon Defendants via email to Defendants' out-of-state counsel and via two separate business of emails to Ultra Fresh on November 1, 2018, as well as via overnight mail to Ultra Fresh's principal place of business and Felix's home address on November 1 and again on November 6, 2018. (D.E. No. 14, at 1-2).

         On November 5, after Defendants failed to timely answer the Complaint, Plaintiff moved for default, and on November 7, 2018 the Clerk of Court entered default against Defendants. (D.E. No. 11). As of today, Defendants have not filed an opposition to the Preliminary Injunction, have not answered the Complaint, and have otherwise failed to make any formal appearance before this Court since the October 25, 2018 hearing.

         II. LEGAL STANDARD

         Injunctive relief is an “‘extraordinary remedy' and ‘should be granted only in limited circumstances.'” Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004) (quoting Am. Tel. & Tel. Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421, 1427 (3d Cir. 1994)). The Court may grant an injunction only if a party shows: “(1) a likelihood of success on the merits; (2) that it will suffer irreparable harm if the injunction is denied; (3) that granting preliminary relief will not result in even greater harm to the nonmoving party; and (4) that the public interest ...


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