D'Arrigo Bros Co. of New York, Inc. v. Gramercy Produce Inc.
- Ho
- 1:24-cv-04841
- U.S. District Court · Southern District of New York
- 7
In D’Arrigo Bros. v. Gramercy Produce, Judge Ho denied D’Arrigo’s preliminary-injunction motion because its PACA claim was not clearly likely to succeed.
D’Arrigo did not obtain preliminary injunctive relief, while Gramercy Produce Inc. and the individual defendants avoided that relief at this stage. The court left unresolved whether D’Arrigo is ultimately entitled to PACA trust protection.
What happened
D’Arrigo Bros. Co. of New York, Inc. v. Gramercy Produce Inc. concerns unpaid produce purchases and protections under the Perishable Agricultural Commodities Act. D’Arrigo alleged that the defendants owed $178,104.25 and were dissipating assets held in a statutory trust for unpaid produce sellers. The defendants responded that their longstanding dealings included weekly invoices and, at times, four weeks of credit.
The court found that the evidence did not clearly show D’Arrigo was likely to win its claim. The records did not establish whether the invoice dates matched the delivery dates, and the parties’ course of dealing might have allowed payment more than 30 days after delivery. Under the law discussed by the court, that could eliminate the Act’s trust protections. The court did not decide whether D’Arrigo ultimately is entitled to those protections.
Judge Ho denied D’Arrigo’s motion for a preliminary injunction. Because D’Arrigo did not satisfy the likelihood-of-success requirement, the court did not address the other preliminary-injunction factors. The parties were ordered to submit case-management and settlement-related information by January 22, 2025.
The detailed version
- D'Arrigo Bros Co. of New York, Inc. v. Gramercy Produce Inc. · No. 1:24-cv-04841
- Ho
- Jan. 8, 2025
Background
D’Arrigo sought a preliminary injunction against Gramercy Produce Inc., Anthony J. Vivacqua, Sr., Anthony J. Vivacqua, Jr., and Salvatore V. Vivacqua under the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. § 499a et seq. The court had previously denied D’Arrigo’s emergency request for a temporary restraining order and ordered briefing on the preliminary-injunction motion.
D’Arrigo and Gramercy buy and sell wholesale produce in interstate commerce and are subject to PACA. D’Arrigo alleged that it sold the defendants $178,104.25 in produce between April 9, 2024, and May 17, 2024, without receiving payment. It alleged that it timely sent invoices containing the language required to preserve its interest in a PACA statutory trust and that Gramercy began bouncing checks made as partial payments. D’Arrigo also alleged that the defendants could not afford a payment plan and were dissipating trust assets.
The defendants asserted that their longstanding relationship created a course of dealing under which Gramercy bought produce daily, received weekly invoices for the prior week’s purchases, and was sometimes given four weeks of credit. The defendants stated that the invoices did not expressly provide payment terms.
Legal Standard
A preliminary injunction is an extraordinary remedy. The party requesting one must show a likelihood of success on the merits, likely irreparable harm without an injunction, a favorable balance of hardships, and that an injunction would not harm the public interest. The court emphasized that the requesting party must make a clear showing supporting the relief.
PACA requires produce dealers to make full payment promptly and requires them to hold sales proceeds in trust for unpaid suppliers or sellers until payment is complete. The court explained that PACA trust protection generally applies when a seller sells produce for cash or on short-term credit. Under the regulation discussed by the court, a seller may agree before a transaction to payment no later than 30 days after receipt and acceptance while remaining eligible for trust protection. A payment period longer than 30 days may cause the seller to lose that protection.
Court’s Analysis
The court held that D’Arrigo had not clearly shown a likelihood of success because the record was unclear about the parties’ longstanding payment arrangement. D’Arrigo submitted an account statement showing due dates consistently 28 days after invoice dates, along with invoices dated June 24, 2024, that appeared to reflect transactions dating back to April 2024.
The court found it unclear whether the invoice dates represented the dates of delivery or later dates when the invoices were sent. That distinction mattered because the 30-day period is measured from delivery. The defendants stated that Gramercy bought produce daily and later received weekly invoices, and that four weeks of credit was not uncommon. The court also found it unclear whether that four-week period ran from delivery or from invoicing.
If invoices were sent a week after delivery and the parties commonly understood that payment was due four weeks after invoicing, the arrangement could have permitted payment more than 30 days after delivery. That could mean D’Arrigo was not entitled to PACA trust protections. The court expressly stated that it was not deciding that D’Arrigo was ineligible for those protections; it decided only that the submissions at the preliminary-injunction stage did not clearly establish entitlement.
Disposition
Judge Ho denied D’Arrigo’s Motion for Preliminary Injunction. Because the likelihood-of-success factor was not satisfied, the court declined to address the remaining preliminary-injunction factors. The clerk was asked to terminate the motion, and the parties were ordered to file a proposed case-management plan, scheduling order, and joint status letter by January 22, 2025, addressing discovery, settlement discussions, alternative dispute resolution, and other information relevant to moving the case toward settlement or trial.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.