Gold Medal Produce, Inc. v. KNJ Trading Inc.

Background

Gold Medal Produce, Inc., Rubin Bros. Produce Corp., A.J. Trucco, Inc., Leeloi Industries, Inc., and Best Tropical Island, Inc. sued KNJ Trading Inc. and Byung Soo Kang. The amended complaint alleged that the plaintiffs sold and delivered perishable agricultural commodities to the defendants between May and October 2018, but the defendants did not pay despite repeated demands.

The defendants were served with the complaint and amended complaint but did not appear or respond. The Clerk entered default, and the plaintiffs moved for default judgment. The plaintiffs also served the default-judgment motion on the defendants.

Liability under PACA

The court analyzed the plaintiffs’ claims under the Perishable Agricultural Commodities Act, or PACA. PACA creates a trust for unpaid sellers of perishable agricultural commodities. A produce dealer must hold the commodities, their proceeds, or related receivables in trust until the seller is paid in full.

To recover from that trust, the plaintiffs had to show that: the goods were perishable agricultural commodities; KNJ was a produce dealer; the transactions involved interstate or foreign commerce; the plaintiffs had not been fully paid; and the plaintiffs preserved their trust rights through written notice. The court found that the allegations and submitted invoices established all five requirements. The invoices showed sales of fresh fruits and vegetables, KNJ had a PACA dealer license, and the pleadings and invoices supported transactions between New York and New Jersey. The invoices also contained the required trust-preservation language.

The court did not need to decide the plaintiffs’ alternative claims because it found liability for breach of the PACA trust.

Kang’s responsibility

The court considered whether Byung Soo Kang could be held jointly and severally liable with KNJ. The amended complaint alleged that Kang was an officer, director, and shareholder of KNJ, was responsible for writing checks to pay KNJ’s accounts payable, and chose not to pay the plaintiffs. Accepting those allegations as true for the default-judgment motion, the court found that Kang controlled the PACA trust assets and could be held jointly and severally liable.

Damages

The plaintiffs sought $94,773.10 in combined damages and $590 in costs, for a total of $95,363.10. The court’s calculations matched the principal amounts requested for Rubin Bros. Produce, A.J. Trucco, and Leeloi Industries. But the plaintiffs did not explain why Gold Medal Produce and Best Tropical Island were entitled both to the invoice amounts and to the full amounts of returned checks included with those invoices.

Because the court could not determine a sufficient basis for the requested damages, it did not award damages at that point. Instead, it reserved judgment as to the amount of damages and ordered the plaintiffs to submit additional supporting evidence for Gold Medal Produce and Best Tropical Island within 14 days.

Disposition

Judge Alison J. Nathan’s order granted in part the plaintiffs’ motion for default judgment and entered judgment as to the defendants’ liability. The court reserved judgment as to damages. The order resolved the default-judgment motion, Dkt. No. 23.