A and A Produce, Inc. v. Felipes Market, Inc.

Background

A and A Produce, Inc. said it sold and shipped produce to Felipes Market, Inc. between October 1 and November 11, 2021, for which Felipes agreed to pay $149,652.25. A and A Produce alleged that Felipes accepted the produce without objection and failed to pay. It sought protection under the Perishable Agricultural Commodities Act, which requires certain produce businesses to hold proceeds from produce sales in trust for unpaid suppliers.

A and A Produce applied for a temporary restraining order without advance notice to the defendants. It asked the court to prohibit Felipes Market, Felipe Diaz Ayala, Saira Diaz, and others acting with them from using, consuming, or dissipating assets subject to the alleged produce trust, or from paying those assets to creditors or others. A and A Produce said it suspected that Felipes was dissipating trust assets and could not satisfy the claim.

Court’s Analysis

The court explained that a temporary restraining order uses the same standard as a preliminary injunction. The requesting party generally must show likely success on the merits, likely irreparable harm without relief, that the balance of hardships favors the request, and that the injunction would serve the public interest. A no-notice order also requires specific facts showing that immediate and irreparable harm will occur before the opposing party can be heard, along with the required attorney certification.

The court acknowledged that dissipating assets protected by the produce trust can constitute irreparable harm. But it found that A and A Produce had not clearly shown that immediate dissipation would occur before Felipes had an opportunity to respond. The court characterized the evidence as, at most, a suspicion that trust assets were being dissipated. It also found that A and A Produce had not shown that giving notice would make further prosecution of the case fruitless. Because notice could be given, the court ruled that notice was required before considering the substance of the temporary-restraining-order request.

Disposition

The court DENIED A and A Produce’s ex parte application for a temporary restraining order. It did not decide the merits of the separate preliminary-injunction motion in this order. The court ordered A and A Produce to serve the defendants with the order no later than the close of business on January 7, 2022; required Felipes to respond to the preliminary-injunction motion by 7:00 a.m. on January 10; allowed a reply by 7:00 a.m. on January 11; and set a preliminary-injunction hearing by video conference for January 13 at 9:00 a.m. Judge Edward J. Davila signed the order.