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BOTMAN INTERNATIONAL, B.V. v. INTERNATIONAL PRODUCE IMPORTS

July 27, 2004.

BOTMAN INTERNATIONAL, B.V.
v.
INTERNATIONAL PRODUCE IMPORTS, INC., et al.



The opinion of the court was delivered by: RICHARD B. SURRICK, District Judge

MEMORANDUM AND ORDER

Presently before the Court is Plaintiff's Renewed Motion for Partial Summary Judgment. (Doc. No. 53.) For the reasons that follow, Plaintiff's Motion will be granted in part and denied in part.

1. Factual Background

  The following facts are based on documents submitted by the parties. Where the parties dispute certain facts, we construe the record in the light most favorable to the defendants.

  Over the course of nearly two years, Plaintiff Botman International, B.V. ("Botman International"), a corporation engaged as a supplier of perishable agricultural commodities with its principal place of business in the Netherlands, sold and shipped over 460 individual shipments of produce to Defendant International Produce Imports, Inc. ("IPI"). Initially, IPI was a Pennsylvania corporation with its sole shareholders consisting of Defendants Dirk J. Keijer ("Mr. Keijer") and Clare A. Keijer ("Ms. Keijer"), individuals who are husband and wife. However, in early May, 1999, Ms. Keijer resigned as an officer and director and transferred her shares to Mr. Keijer. Thereafter, Ms. Keijer worked as general counsel to IPI which, on July 1, 1999, was reincorporated in Delaware for the purpose of facilitating a possible bankruptcy filing. (Tr. of Oct. 29, 1999 hearing, at 75-76.)

  IPI initially developed a business relationship with Botman International in the fall of 1997, when Mr. Keijer met Adri Botman, president of Botman International, at a produce convention. Shortly after that meeting it was decided that IPI and Botman International would undertake a limited number of produce transactions to determine whether it was worthwhile to continue. After a number of trades were completed Mr. Botman traveled to the Keijers' home in Oxford, Pennsylvania in January, 1998, to discuss whether to continue their trading relationship. At this meeting Mr. Botman gave Mr. Keijer a document entitled "Conditions of Sale Governing Export Transactions" which they discussed in detail, including provisions stating that goods would be paid for within twenty-one days of the date of the invoice relating to the delivery of those goods.*fn1 Mr. Keijer agreed that IPI would adhere to the terms contained therein.

  From January, 1998 until August, 1999, IPI repeatedly purchased produce from Botman International. Each of these purchases is reflected by an invoice prepared by Botman International detailing the date of purchase, the type and quantity of produce being purchased, and the unit price of the produce. In addition, the invoices contain figures apparently stating the amount of freight and packing costs and include language relating to the manner in which the produce was shipped. Examination of the invoices reveals that produce shipped to IPI was destined for a variety of locations, with many of these locations being several hours distant from the Philadelphia area.*fn2

  When each shipment arrived at its destination, it was trucked to a warehouse and inspected. After inspection, adjustments to the invoices were made through negotiations between IPI and Botman International to account for any irregularities in the shipped produce. The produce was then stored at a warehouse until sold by IPI to another party. Virtually all of IPI's business revolved around purchasing produce from Botman International and re-selling that produce in the Philadelphia area, with IPI's largest single account being Giant Foods.*fn3 In 1999, approximately ninety percent of IPI's supply of produce came from Botman International. (Tr. of Oct. 25, 1999 hearing, at 30.) Thus, at all times relevant to this case, Botman International was a component of Giant Foods's produce supply chain.

  As IPI continued to do business with Botman International, IPI began to incur substantial debt. In April, 1999, IPI's debt to Botman International had increased to such a level that Botman International requested financial information from IPI in order to re-evaluate its creditworthiness. In reponse, IPI delivered to Botman International a Profit and Loss Statement covering the period January, 1999, through March, 1999, informing Botman International of IPI's exact financial condition.

  In May, 1999, IPI's financial situation took a turn for the worse when another firm displaced IPI as a produce dealer for Giant Foods. Prior to May, 1999, when IPI received a shipment of produce from Botman International, that shipment would be warehoused by Colace, one of Giant Foods' main produce suppliers. Although Colace sold the same type of produce to Giant Foods, it was not, strictly speaking, IPI's competitor at the time that IPI was trading with Botman International because IPI dealt only with produce imports from Holland whereas Colace dealt in more locally grown produce. This changed, however, in May, 1999, when Botman International began selling produce to Colace. Because Giant Foods was now able to buy Holland produce from Colace, IPI lost the Giant Foods account. This had a devastating impact on IPI's already shaky finances and led Mr. Keijer to travel to Holland on or about May 10, 1999, to discuss the matter with Mr. Botman.

  When the Keijers flew to Holland to meet with Mr. Botman in May, 1999, IPI was approximately $1.6 million in arrears and approximately sixty to ninety days overdue in its payments to Botman International. Although there is some dispute over exactly what information was communicated to Mr. Botman at this meeting, Defendants contend that Mr. Botman was informed that for IPI to remain viable, it was imperative that it be able to maintain the Giant Foods account. At this meeting, according to Defendants, it was proposed by Botman International that IPI would receive a twenty-five cent per carton commission for logistical support. Also, according to Defendants, there was an agreement by Mr. Botman and Botman International to extend IPI's payment schedule to sixty days. In support of their contention that Botman International agreed to extend IPI's payment schedule to sixty days, Defendants cite to a May 12, 1999, Memorandum signed by Mr. Keijer and Mr. Botman stating, in pertinent part, "For its part, Botman has expressed its concern that an aging analysis of IPI's account shows that some of IPI's invoices are outstanding for more than 60 days. Botman International and IPI agree that it [sic] their mutual goal to find solutions to IPI's financial concerns so as to enable it to bring its account within the 60 day range which is acceptable to Botman." (Apr. 10, 2000, Aff. of Dirk Keijer, Ex. C.) The Memorandum also states that "IPI agrees to provide Botman with monthly and cumulative profit and loss statements" and that the parties discussed various measures proposed by Botman to facilitate IPI's financial recovery. According to the Memorandum, one of the measures discussed was an "incentive bonus." However, it is clear from the Memorandum that no agreement as to any bonus had been reached at that time. Rather, the document itself states that "the specific amount, timing, duration and method of payment [had] yet to be discussed."*fn4 (Id.)

  After the May, 1999 meeting, IPI continued to purchase numerous lots of produce from Botman International until August 30, 1999. During this time, IPI's debt to Botman International remained substantial. To protect itself, on September 9, 1999, Botman International sent IPI Notices of Intent to Preserve Trust Benefits covering invoices between July 20, 1999, up to and including August 25, 1999 and covering a total of $433,079.54 in unpaid invoices.*fn5 Ultimately, by September 29, 1999, IPI owed Botman International a then-undisputed balance of $1,464,233.75 for produce that it had purchased.

  As IPI's debt was mounting higher and higher, IPI's principals sought to limit whatever potential liability they might incur for the unpaid produce under the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. § 499a, et seq. For this reason, Ms. Keijer resigned her position as an officer of IPI and transferred all of her shares of IPI to her husband After resigning as an officer of IPI, Ms. Keijer undertook the representation of IPI as its general counsel. In another effort to limit PACA liability, IPI sought to have the payment schedule extended to sixty days during the May 12, 1999, meeting with Mr. Botman. Because PACA regulations provide that "[t]he maximum time for payment for a shipment to which a seller, supplier, or agent can agree and still qualify for coverage under the trust is 30 days after receipt and acceptance of the commodities," 7 C.F.R. § 46.46(e)(2), had Botman International been agreeable to extending the payment schedule to sixty days, this would have prevented the creation of the PACA trust.

  Broadly speaking, this case concerns IPI's alleged failure to pay Botman International for various shipments of produce that IPI ordered and received from Botman totaling $1,464,233.75. However, it is clear from the submissions of the parties that this case more closely revolves around the alleged failure of Defendants to maintain a statutorily mandated trust pursuant to PACA. With respect to these particular allegations, Botman International claims that between July 20, 1999 and August 25, 1999, Botman International sold produce to IPI totaling $433,079.54 and that Botman International took appropriate measures under PACA to preserve its trust benefits as to this amount.

  Botman International initiated this action by filing suit in this court on October 15, 1999. On that same day, Botman International requested that the court issue a preliminary injunction to enforce the statutory trust under PACA and to establish a constructive trust until Defendants paid $1,464,233.75 plus interest, costs, and attorneys' fees to Botman International. On October 25, 27, and 29, 1999, Judge Buckwalter held a hearing on the issuance of a preliminary injunction and, after making several findings of fact, entered a Preliminary Injunction on November 4, 1999. After the preliminary injunction was issued Botman International amended its complaint on November 18, 1999 to assert additional causes of action against Defendants. Defendants answered the complaint on December 8, 1999. The initial pleadings in this matter were then followed by a litany of motions to dismiss and for summary judgment, as well as two motions by Defendants to amend their answer to the complaint. Judge Buckwalter denied the motions to dismiss and for summary judgment on June 28, 2000 and permitted Defendants to amend their answer. Defendants' Amended Answer to Amended Complaint with Affirmative Defenses and Counterclaims consists of 1,510 paragraphs contained within its extraordinarily bulky 552 pages. The Amended Answer also contains sixteen affirmative defenses and six counterclaims. Much of Defendants' Amended Answer consists of an exceptionally detailed pleading of the facts underlying their six counterclaims wherein Defendants describe documents that were simultaneously filed as exhibits. On June 27, 2001, Botman International filed the Instant Motion.

  II. Legal Standard

  Summary judgment may be granted pursuant to Federal Rule of Civil Procedure 56 "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. A summary judgment . . . may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages." FED. R. CIV. P. 56(c). The moving party has the initial burden of demonstrating the absence of genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Following such a showing by the moving party, the nonmoving party must make a sufficient showing to establish the existence of an essential element of his case with respect to which he has the burden of proof. Celotex, 477 U.S. at 322-23. "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249.

  III. Discussion

  Judge Buckwalter made numerous findings of fact and conclusions of law with respect to this matter in his Memorandum accompanying the Order of ...


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