[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
_____________ ELEVENTH CIRCUIT
May 15, 2008
No. 07-11278 THOMAS K. KAHN
_____________ CLERK
D.C. Docket No. 05-00610-CV-WSD-1
PARIS FOODS CORP.,
DENNIS SALES, LTD.,
Plaintiffs-Appellants,
versus
FORESITE FOODS, INC.,
HUGH COLLINS,
MAX B. COLLINS,
BENJAMIN T. COLLINS,
TODD COLLINS, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Northern District of Georgia
____________
(May 15, 2008)
Before TJOFLAT, ANDERSON and HILL, Circuit Judges.
PER CURIAM:
This is an appeal brought by Paris Foods, Corp. (Paris Foods) and Dennis
Sales Ltd. (Dennis Sales) (collectively plaintiffs/appellants), from the denial by the
district court of their cross-motion for summary judgment, and the grant of
summary judgment in favor of Foresite Foods, Inc. (Foresite), and multiple
individual defendants (collectively defendants/appellees). Paris Foods and Dennis
Sales brought this action for damages pursuant to the Perishable Agricultural
Commodities Act of 1930, 7 U.S.C. § 499 et seq. (PACA), relating to the purchase
of frozen vegetables by Foresite from them.1 In each of the five counts alleged in
their complaint, Paris Foods and Dennis Sales sought to impose liability on
1
The individual defendants named in the PACA action were shareholders, officers,
directors, and/or persons exercising operational and managerial control over the affairs, practices
and assets of Foresite, that is, “responsibly connected,” as such term is defined under PACA. 7
U.S.C. § 499a(b)(9).
PACA was enacted in 1930 to encourage fair trading in the marketing of perishable
agricultural commodities and to prevent unfair and fraudulent practices in the industry. See H.R.
Rep. No. 98-543 (1983), reprinted in 1984 U.S.C.C.A.N. 405, 406. PACA provides protection
to the sellers of perishable goods. The seller of perishable merchandise is exposed to unusual
loss if payment is not promptly made and the produce spoils.
In 1984, PACA was amended to create a statutory trust in favor of sellers of PACA goods
in the assets of the buyer. Pub. L. No. 98-273, 98 Stat. 165 (codified as amended at 7 U.S.C. §
499e(c)(1)-(5)). Strict compliance with PACA is required to preserve one’s rights in a PACA
statutory trust. See American Banana Co., Inc. v. Republic Nat. Bank of New York, N.A., 362
F.3d 33, 42 (2d Cir. 2004).
In order to preserve its security interest, a supplier seeking to impose a PACA statutory
trust upon the buyer’s assets may not agree to payment terms greater than thirty days. 7 C.F.R. §
46.46(e)(2). If the supplier extends more generous payment terms, the underlying debt may not
be affected, but the security interest in the buyer’s assets is lost. Id.
2
Foresite and the individual defendants using the protective umbrella of PACA.
The counts were predicated upon Foresite’s failure to pay twenty-five invoices
dating from April 27, 2004, to July 8, 2004, for produce it purchased in the
amount of $500,200.24, together with annual interest of eighteen percent.2
Paris Foods and Dennis Sales asked the district court to impose a statutory
PACA trust on Foresite’s assets. They also asked the district court to find that
certain individual defendants were personally liable for breach of their fiduciary
duty in failing to maintain and protect the PACA trust assets. See note 1 supra.
Plaintiffs raised no separate breach of contract claim in their PACA action. This
common law remedy is expressly referenced in PACA as being separate, and in
addition to, a remedy under PACA.3 7 U.S.C. § 499e(b); see, e.g., Sunkist
Growers, Inc. v. Fisher, 104 F.3d 280, 282 (9th Cir. 1997).
Foresite and the individual defendants argued to the district court that they
2
Each of the invoices was attached to the complaint as an exhibit.
3
Section 499e(b), Remedies, reads in its entirety:
Such [PACA] liability may be enforced either (1) by complaint to the Secretary as
hereinafter provided, or (2) by suit in any court of competent jurisdiction; but this
section shall not in any way abridge or alter the remedies now existing at
common law or by statute, and the provisions of this chapter are in addition to
such remedies.
(Emphasis added.)
3
were entitled to summary judgment because Paris Foods and Dennis Sales waived
their PACA rights when they entered into post-default agreements with Foresite,
extending the time of payment for the produce beyond the thirty-day maximum
allowable under the PACA regulations. 7 C.F.R. § 46.46(e)(2)4; see In re:
Lombardo Fruit and Produce Co., 12 F.3d 806, 809 (8th Cir. 1993) (“[PACA]
regulations require payment be made within ten days after the produce is accepted,
but permit the parties to agree to a longer term provided that term is no longer than
thirty days.”). Id.; see also Overton Distribs. v. Heritage Bank, 340 F.3d 361, 368
(6th Cir. 2003) (when supplier’s payment terms, originally complying with PACA,
were extended to forty days, supplier failed to preserve its PACA trust benefits).
The district court agreed with Foresite and the individual defendants that Paris
Foods and Dennis Sales, by extending their payment terms beyond the maximum
thirty day period allowable by statute, had waived their rights to PACA protection.
7 C.F.R. § 46.46(e)(2).
This summary judgment decision of the district court catapulted Paris Foods
and Dennis Sales into an appellate quandary. Having put all their eggs in the
PACA basket, they were met head on by the district court’s determination that
4
The regulation states that “[t]he maximum time for payment for a shipment to which a
seller, supplier, or agent can agree and still qualify for coverage under the trust is 30 days after
receipt and acceptance of the commodities.” 7 C.F.R. § 46.46(e)(2).
4
they had no redress under PACA because they had waived their statutory rights by
extending the time for payment. What was to become of the underlying
$500,200.24 debt, admittedly owed by Foresite on the twenty-five invoices?
On appeal from a summary judgment decision based solely upon PACA,
Paris Foods and Dennis Sales now attempt to reinvent their case by distancing it
from PACA. They try to breathe life into their appeal by recharacterizing the
issues properly before us. So, for the first time, in their Blue Brief, Paris Foods
and Dennis Sales, argue that we should examine Foresite’s failure to pay the
twenty-five invoices, not only under the statute, but also under common law
principles of breach of contract. They claim this to be what the statute intends.
The fatal flaw in this argument is that no breach of contract claim was ever
raised in the district court, nor was it raised in any state court. Therefore that
cause of action is not properly before us on appeal. Paris Foods and Dennis Sales,
having lost on PACA grounds, now contend that the district court should somehow
have perceived their claims as including claims for breach of contract, in addition
to claims under the PACA statute.
We have scoured the record. For whatever reason, either strategically, or
simply by oversight, Paris Foods and Dennis Sales filed a complaint whose cause
of action was based solely on PACA. They litigated only PACA claims. They
5
moved for summary judgment on only PACA claims. They lost solely on PACA
grounds.5
Under a de novo review, we have carefully reviewed the record, the briefs,
the arguments of counsel, and, finding no error, the judgment of the district court
is
AFFIRMED.
5
We offer no opinion as to the viability of the underlying debt as of this writing.
6