Weis-Buy Services v. John Manning Co.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
____________________________ ELEVENTH CIRCUIT
March 1, 2004
No. 03-11119 THOMAS K. KAHN
____________________________ CLERK

D. C. Docket No. 02-02039 CV-TWT-1

COUNTRY BEST, M&M WEST COAST,
PRODUCE RIVERWOOD FARMS,

Movants-Appellees,

WEIS-BUY SERVICES, INC.,

Plaintiff-Appellant,

TOM LANGE COMPANY, INC.,
BYRON J. WOOD,
d.b.a. Harvest Moon Trading,

Plaintiffs-Appellees,

DAYOUB MARKETING, INC.,
CAPITAL PRODUCE DISTRIBUTORS, INC.,
SIX L'S PACKING CO., INC.,
DE BRUYN PRODUCE COMPANY,

Intervernors-Appellants,

versus

CHRISTOPHER RANCH, LLC,
FRESH START PRODUCE SALES, INC.,
TAYLOR FARMS TENNESSEE, INC.,
GARGIULO, INC.,
FIVE BROTHERS JALISCO PRODUCE CO., INC.,
d.b.a. Bonanza 2001, et al.,

Intervenors-Appellees.

______________________________________

Appeal from the United States District Court
for the Northern District of Georgia
______________________________________

(March 1, 2004)

Before EDMONDSON, Chief Judge, BIRCH and FARRIS*, Circuit Judges.

PER CURIAM:

We must decide whether sellers who are beneficiaries of a trust established

under the Perishable Agricultural Commodities Act are entitled to attorney fees

and costs as provided in their contracts. We hold that attorney fee and interest

provisions can be enforceable as additional contract terms under the Uniform

Commercial Code, and that such fees and interest can be awarded as “sums owing

in connection with” perishable commodities transactions under the PACA statute.

*
Honorable Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting by
designation.

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We reverse the district court’s ruling denying fees and costs and remand for

further proceedings consistent with this opinion.

Background

Weis-Buy Services, Inc., a produce wholesaler, filed suit against John

Manning, Co., a financially-troubled produce dealer, under the Perishable

Agricultural Commodities Act to recover payment for produce sold to Manning. 7

U.S.C. §§ 499a-499t. Another group of sellers, the Tom Lange Group, filed a

similar claim against Manning the same day. The actions were consolidated and

the district court issued a temporary restraining order to prevent Manning from

dissipating any assets pending creation of a “floating” trust for the sellers’ benefit.

Other produce sellers sought to intervene, claiming that they too had not been paid

for produce they sold to Manning. The district court consolidated the cases and

established a procedure for sellers to present their PACA claims. The district

court ordered plaintiffs and interveners to submit their proofs of claim to the court,

appointed a trustee to oversee liquidation of Manning’s assets, and ordered the

establishment of a trust account for the compensation of PACA beneficiaries. The

ongoing evaluation of PACA claims and apportionment of the trust involves forty-

two suppliers and claims exceeding $2 million.

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 The claims made by Weis-Buy and eight other claimants include requests

for interest on past due balances and for payment of their attorney fees accrued in

pursuing collection. These requests were based on notations on invoices, which

they assert created a contractual right to such an award. Manning, along with

some of the other claimants, objected on the ground that attorney fees and

prejudgment interest awards may not be awarded from a PACA trust.

The district court granted in part Manning’s “Motion to Determine the

Validity of PACA Claims,” finding certain claims did not qualify for relief, and

denying some claimants’ requests for interest and attorney fees. The court later

denied the claims for attorney fees and interest, ruling that such awards were not

permitted by PACA because it would result in disproportionate distribution of the

trust. The Weis-Buy group of claimants appeal, seeking to enforce their

contractual rights to prejudgment interest and attorney fees.

Discussion

We exercise jurisdiction over this interlocutory appeal under 28 U.S.C. §

1292(a)(1). See Mitsubishi Int’l Corp. v. Cardinal Textile Sales, Inc., 14 F.3d

1507 (11th Cir. 1994).

PACA regulates the sale of perishable agricultural commodities to protect

produce sellers from unscrupulous or insolvent dealers, brokers, and commission

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merchants. “The Act requires licensing of all entities qualifying as commission

merchants, dealers, and brokers in perishable agricultural commodities, and

provides for various remedies that may be enforced either through a complaint

filed with the Secretary of Agriculture, or through an action in any court of

competent jurisdiction.” Endico Potatoes, Inc. v. CIT Group/Factoring, Inc., 67

F.3d 1063, 1066-67 (2d Cir. 1995).

The Act also provides that in interstate transactions involving agricultural

commodities, those commodities or their proceeds “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.” 7 U.S.C. § 499e(c)(2)

(emphasis added). This creates a “non-segregated floating trust,” which gives

produce suppliers priority over banks or other creditors who may have perfected

security interests in the inventory and receivables of an insolvent produce dealer.

7 C.F.R. § 46.46; Gargiulo, NT v. G.M. Sales, Inc., 131 F.3d 995, 999 (11th Cir.

1997). Because PACA trusts are intended for the benefit of all unpaid suppliers,

all beneficiaries to a trust share the same priority. See Frio Ice, S.A. v. Sunfruit,

Inc., 918 F.2d 154, 159 (11th Cir. 1990).

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 We have not previously addressed whether a contractual claim for attorney

fees and interest is recoverable as part of a PACA trust claim. In resolving this

issue, we first examine the language of PACA itself in light of that statute’s

purpose. The first rule in statutory construction is to determine whether the

“language at issue has a plain and unambiguous meaning with regard to the

particular dispute.” United States v. Fisher, 289 F.3d 1329, 1337-38 (11th Cir.

2002), cert. denied, 537 U.S. 1112 (2003) (citation omitted). We presume “that

Congress said what it meant and meant what it said.” United States v. Steele, 147

F.3d 1316, 1318 (11th Cir. 1998). “When the import of the words Congress has

used is clear . . . we need not resort to legislative history, and we certainly should

not do so to undermine the plain meaning of the statutory language.” Harris v.

Garner, 216 F.3d 970, 976 (11th Cir. 2000).

Had Congress intended to limit PACA claims solely to the price of the

commodities, it could have inserted language reflecting that limitation in 7 U.S.C.

§ 499e(c)(2). Instead, it chose to allow “full payment of the sums owing in

connection with [commodities] transactions.” This unambiguously encompasses

not only the price of commodities but also additional related expenses. Such

related expenses include attorney fees and interest that buyers and sellers have

bargained for in their contracts. See Middle Mountain Land & Produce, Inc. v.

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Sound Commodities, Inc., 307 F.3d 1220, 1223 (9th Cir. 2002); see also, e.g.,

Sherman v. Carter, 353 U.S. 210, 77 S. Ct. 793, 1 L. Ed. 2d 776 (1957) (attorney

fees encompassed within language allowing recovery of “sums justly due” under

Miller Act).

This reading of the statute is supported by the purpose and goals of PACA.

PACA was designed to give produce sellers a meaningful opportunity to recover

full payment of the amounts due for their sales. Middle Mountain, 307 F.3d at

1223-24 (citing 49 F.R. § § 45735, 45737). As the Ninth Circuit recently stated,

“it cannot be contended seriously that interpreting PACA claims to include

contract right to attorneys’ fees and interest under the ‘in connection with’

language of the statute is contrary to the statute’s purpose, absurd, or

‘demonstrably at odds with the intentions of the drafters.’” Id. at 1224 (quoting

Demarest v. Manspeaker, 498 U.S. 184, 190-91, 111 S. Ct. 599, 112 L. Ed.2d 608

(1991)). Congress signaled that it had not contemplated PACA would impact “the

ability of the [seller] . . . to set contract terms.” H.R. Rep. No. 98-543 (1983)

(reprinted in 1984 U.S.C.C.A.N. 405); accord Middle Mountain, 307 F.3d at

1224. This indicates that sellers and buyers remain free to negotiate and enforce

contract terms and to enforce those terms within the context of the trust

established by PACA. Such is the reasonable and equitable result. In a free

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market, the price of goods is influenced by a variety of factors, including credit

risks, litigation costs, late fees, and other incidents of the collection process.

Commodity sellers likely offer lower prices if they know that the financial burden

of their collection efforts will be lightened by the recovery of attorney fees and

prejudgment interest.

Because we determine that prejudgment interest and attorney fees are “sums

owing in connection with” perishable commodities transactions, we reverse the

district court’s ruling denying all attorney fee requests as barred by the PACA

statute. And we remand for further proceedings consistent with this opinion. If

the district court finds and concludes that rights to attorney fees and interest exist

under applicable contract principles, they can be awarded in the same way as other

“sums owing in connection with” the transactions.

Each side will bear its own cost of this appeal.

REVERSED AND REMANDED.

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