CJ Tropical Corp. v. Golden Produce LLC

Background

CJ Tropical Corporation, described in the opinion as a wholesale produce seller, sued Golden Produce LLC, Golden Produce III Corp., and Wilson Henriquez under the Perishable Agricultural Commodities Act of 1930 (PACA) and state contract law. CJ Tropical alleged that the defendants failed to pay $17,628.10 for produce delivered between December 8, 2022, and January 6, 2023.

CJ Tropical previously sought a preliminary injunction concerning PACA trust assets, which the court granted on July 13, 2023. The defendants did not file answers. The Clerk of Court entered defaults against each defendant. CJ Tropical then moved for default judgment under Federal Rule of Civil Procedure 55(b)(2).

Default-judgment standard

The court explained that a defendant generally must answer within 21 days after service, or within 60 days after a timely waiver of service. A defendant’s default generally concedes well-pleaded allegations about liability, but the court must still review whether the complaint shows a legally sufficient claim. Because none of the defendants had appeared, the court found that advance notice of the default-judgment motion was not required. The court also found that none of the defendants was a minor or incompetent person.

PACA notice problem

PACA creates a trust for a seller when produce is shipped to a buyer, and the trust continues until the seller is paid in full. But an unpaid seller loses the trust’s benefits unless the seller provides the specific notice required by the statute.

The complaint alleged that CJ Tropical’s invoices provided the required notice. However, the invoices were not attached to the complaint; only statements of account that referred to the invoices were attached. The court said those statements did not show the required notice, and counsel’s declaration did not fix the problem. The court therefore concluded that CJ Tropical had failed to preserve its PACA trust benefits and could not recover under PACA based on the materials then before the court.

Federal jurisdiction and disposition

The court stated that without the PACA claim there would be no federal question. It further stated that, if CJ Tropical could not renew its motion by showing the required notice, the court would not exercise supplemental jurisdiction over the state-law claim.

Judge Alvin K. Hellerstein denied CJ Tropical’s motion for default judgment, with leave to renew in 14 days. The Clerk was directed to terminate the open motion at ECF No. 39 and mark the case closed. The order did not award damages or enter default judgment against any defendant, and it did not resolve the state-law claim on its merits.