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Food Team International, LTD v. Unilink, LLC

United States District Court, Third Circuit

September 30, 2013

FOOD TEAM INTERNATIONAL, LTD, Plaintiff
v.
UNILINK, LLC, GARY GREGORY, MARC BEHAEGEL, and AKBAR BOUTARABI, Defendants

JOHN C. CREES, ESQUIRE MICHAEL J. KEATON, ESQUIRE On behalf of Plaintiff

MARK C.H. MANDELL, ESQUIRE On behalf of Defendants

ADJUDICATION

JAMES KNOLL GARDNER United States District Judge

The undersigned presided over a non-jury trial on the Complaint of plaintiff Food Team International (“Food Team”) against defendants Unilink, LLC (“Unilink”), Gary Gregory, Marc Behaegel, and Akbar Boutarabi, as well as the counterclaim asserted by defendant Unilink against plaintiff Food Team. At the close of the trial, I took the matter under advisement. Hence this Adjudication.

SUMMARY OF DECISION

This action arises from a business dispute between plaintiff Food Team (a supplier of frozen produce) and defendant Unilink (a purchaser of wholesale quantities of frozen produce who, in turn, package and sell frozen produce to retail merchants).

Based upon the findings of fact and conclusions of law discussed below, I entered a verdict dated September 30, 2013, which accompanies this Adjudication.

In the Verdict, I find in favor of plaintiff Food Team International, LTD and against only defendant Unilink, LLC[1] on plaintiff’s non-PACA claims for failure to pay concerning invoices 1008, 1015, and 4111, and enter judgment in favor of plaintiff Food Team and against defendant Unilink in the amount of $23, 281.75.

In the Verdict, I also find in favor of plaintiff Food Team International, LTD and against only defendant Unilink, LLC on plaintiff’s claim for wrongful repudiation concerning yet-to-be-shipped broccoli and cauliflower, and enter judgment in favor of plaintiff Food Team and against defendant Unilink in the amount of $23, 794.73.[2]

Finally, in the Verdict, I find in favor of plaintiff Food Team International, LTD and against defendant Unilink, LLC on the Second Counterclaim asserted by defendant Unilink against plaintiff Food Team for breach of contract in supplying defective produce, seeking incidental damages incurred by Unilink in storing the allegedly defective produce diverted by Unilink to a third party cold storage facility, for the reasons expressed below in the Discussion section under the subsection headed “Unilink’s Remaining Counterclaim”.

JURISDICTION

This court has jurisdiction over the subject matter of plaintiff’s federal claims pursuant to the Perishable Agricultural Commodities Act (“PACA”), 7 U.S.C. § 499e(c)(5), and 28 U.S.C. § 1331. This court has supplemental jurisdiction over plaintiff’s pendant state-law claims pursuant to 28 U.S.C. § 1367.

VENUE

Venue is proper pursuant to 28 U.S.C. § 1391(b)(2) because a substantial part of the events giving rise to plain- tiff’s claims occurred within this district and because a substantial part of the property which is the subject of this action is located in this district.

Specifically, the perishable agricultural commodities which are at the center of the parties’ dispute were delivered to defendant Unilink, LLC’s facility in Rheems, Pennsylvania and were and/or are stored in a cold-storage facility in Lancaster, Pennsylvania. Both Rheems and Lancaster are within Lancaster County, which is within this judicial district.

PROCEDURAL HISTORY

Plaintiff initiated this action by filing its Complaint on July 21, 2010.[3] On August 17, 2012 defendants filed an Answer to Complaint with Affirmative Defenses and Counterclaims (“Answer and Counterclaims”).[4] On September 15, 2012, pursuant to a court-approved stipulation expanding plaintiff’s time to respond to defendants’ counterclaims, plaintiff filed its Answer and Affirmative Defenses to Counterclaims.[5]

On February 18, 2011 I conducted a Rule 16 status conference by telephone with counsel for the parties. After that status conference, I entered a Rule 16 Status Conference Order dated February 18, 2011 and filed February 24, 2011.[6] At that conference and in that order, I attached this case for a non-jury trial during a two-week trial term commencing January 17, 2012, and set other appropriate pretrial deadlines.

My February 18, 2011 Order established August 31, 2011 as the deadline for either party to file dispositive motions, including motions for summary judgment, and set October 26, 2011 as the date for oral argument on any dispositive motion filed.

By Order dated August 24, 2011 and filed August 25, 2011, [7] I granted plaintiff’s uncontested motion to extend discovery and accordingly modified in part my February 18, 2011 Rule 16 Status Conference Order. Specifically, I extended the discovery deadline until October 17, 2011, established December 9, 2011 as the modified deadline for any dispositive motions, and re-scheduled oral argument on dispositive motions for February 3, 2012. Finally, I re-attached this case for a non-jury trial during a two-week trial term commencing May 14, 2012.

Partial Summary Judgment

Plaintiff’s Motion for Summary Judgment was filed December 9, 2011[8] and refilled with eleven attachments on December 10, 2011.[9] Defendants’ Opposition to Plaintiff’s Motion for Partial Summary Judgment was filed January 3, 2012.[10] On February 3, 2012 Plaintiff’s Reply to Defendants’ Response to Motion for Summary Judgment[11] and Defendants’ Surreply Memorandum of Law in Opposition to Plaintiff’s Motion for Partial Summary Judgment[12] were filed. Oral argument was conducted on Plaintiff’s Motion for Summary Judgment on February 3, 2012. At the conclusion of oral argument, I took the matter under advisement.

By Order and accompanying Opinion dated May 17, 2012 and filed May 18, 2012, [13] I granted in part and denied in part Plaintiff’s Motion for Summary Judgment. Specifically, for the reasons expressed in that Opinion, I granted plaintiff’s motion to the extent that it sought summary judgment in its favor concerning the unpaid balance due for the produce billed on invoices 4115, 1017 and 2901, each of which contained a PACA-trust-preservation clause.[14] I also granted plaintiff’s motion to the extent that it sought contractual interest at the rate of 1.5% per month on the balances due on invoices 4115 and 1017. Furthermore, I granted plaintiff’s motion to the extent that it sought a declaratory ruling that defendant Unilink accepted, and had a duty to pay for, invoices 1019, 4111, 1008, 1012, 1014 and 1015.[15]

Accordingly, I entered judgment in favor of plaintiff Food Team International, LTD and against defendants Unilink, LLC; Gary Gregory; Marc Behaegel; and Akbar Boutarabi on the PACA-trust claims in the sum of $104, 843.37, as follows:

(A) in the sum of $44, 452.60 for the unpaid balance due for produce billed on invoices 4115 and 1017;
(B) in the sum of $29, 294.10 for contractual interest on the balances due on invoices 4115 and 1017;
(C) in the sum of $26, 115.70 for the unpaid balance due for produce billed on invoice 2901; and
(D) in the sum of $4, 980.97 for statutory interest on the balance due on invoice 2901.[16]

Additionally, I granted plaintiff’s motion and entered judgment in favor of plaintiff Food Team International, LTD and against defendant Unilink, LLC in the sum of $46, 608.20 for the unpaid balance due on invoices 1008 and 1015.[17]

However, I denied plaintiff’s motion to the extent that it sought summary judgment that plaintiff for attorney fees incurred in connection with its efforts to recover the unpaid balance on invoices 4115 and 1017.[18]

Accordingly, the balance of plaintiff’s claims against defendants Unilink, LLC, Gary Gregory, Marc Behaegel, Akbar Boutarabi, Mike Moore, and Pennsylvania Food Group, LLC, and the counterclaims asserted by defendant Unilink against plaintiff Food Team remained for disposition at the non-jury trial of this case.[19]

Non-Jury Trial

A non-jury trial was held before the underDated: May 18, 21-22, and 24, 2012.[20]

Withdrawal of Claims Against Mike Moore and Pennsylvania Food Group, LLC

On the first day of trial, during its opening statement, plaintiff made an oral motion, through its lead trial counsel, Michael J. Keaton, Esquire, to withdraw all claims of plaintiff against defendants Mike Moore and Pennsylvania Food Group, LLC with prejudice. I conducted a colloquy of plaintiff’s representative, Dale A. Brunton, and determined that Mr. Brunton had authority to bind plaintiff to the decision to withdraw the claims and that plaintiff concurred in the oral motion made by its counsel.

Accordingly, and in the absence of objection from defendants, I entered an Order granting plaintiff’s oral motion and dismissing all claims against defendants Mike Moore and Pennsylvania Food Group, LLC from plaintiff’s Complaint with prejudice.[21]

Stipulation to Entry of Judgment on First Counterclaim

Defendant Unilink asserted two counterclaims against plaintiff Food Team. The First Counterclaim and Second Counterclaim asserted by defendant Unilink are separate claims for different damages flowing from the same alleged breach of contract by Food Team.

Specifically, at trial, defendant Unilink sought, on its First Counterclaim, $3, 916 for the cost of replacement broccoli to cover the broccoli which was diverted to third party cold storage and broccoli which was never shipped because defendant Unilink cancelled the broccoli contract before the completion of its term. On its Second Counterclaim, Unilink sought $10, 398.00 in freight charges, pallet costs, and storage costs related to the produce diverted to the third party cold storage facility.

On the first day of trial, again during its opening statement, plaintiff, through Attorney Keaton, agreed to the entry of judgment against it in the amount of $3, 916.00 on the First Counterclaim asserted by defendant Unilink. However, in agreeing to the entry of judgment against it in that amount on the First Counterclaim, plaintiff expressly provided that it did not concede or admit to having committed any breach of contract as alleged in the First Counterclaim asserted by defendant Unilink.[22]

Plaitiff Food Team did not similarly concede to entry of judgment in the amount sought by defendant Unilink on the Second Counterclaim, but rather put Unilink to its proof as to the alleged breach and damages asserted in the Second Counterclaim.

Presentation of Evidence and Testimony

Plaintiff did not call any witnesses during the non-jury trial, but did admit Plaintiff’s Exhibits 1-30 into evidence.[23] Following the admission of those exhibits, plaintiff rested its case-in-chief.[24]

Additionally, on the third day of trial a joint exhibit -- Plaintiff’s Trial Exhibit 32 and Defendants’ Exhibit 7 -- was admitted into evidence by stipulation of the parties.[25]

Four witnesses testified in defendants’ case-in-chief: Nurdin Hasagic (a former employee of Unilink)[26], defendant Gary Gregory[27], defendant Marc Behaegel, [28] and Sue Haar (a former employee of Unilink, who is now employed by defendant Gregory at Frozen Food Development)[29]. Defendants admitted Defendants’ Exhibits 1-4[30] and 6-8 into evidence.[31]

Following the completion of defendants’ case-in-chief on the fourth day of trial, defendants’ rested their case. Closing arguments were held. At the conclusion of those arguments, I took the matter under advisement.

Post-Trial Submissions

Following completion of trial and preparation of the transcript of the proceedings, the parties submitted proposed findings of fact and conclusions of law.[32]

FINDINGS OF FACT

Based upon the testimony and exhibits received during the non-jury trial, and the pleadings and record papers in this matter, I make the following findings of fact.[33]

This action arises from a business dispute between plaintiff Food Team Intenational, LTD (a supplier of frozen produce) and defendant Unilink, LLC (a purchaser of wholesale quantities of frozen produce who, in turn, package and sell frozen produce to retail merchants).

Defendant Unilink is wholly owned by former-defendant Pennsylvania Food Group LLC, which is, in turn owned by defendant Gary Gregory, defendant Marc Behaegel, defendant Akbar Boutarabi, and former-defendant Mike Moore, as well as, three other individuals.[34] Although Unilink is wholly owned by Pennsylvania Food Group, LLC, defendants Gregory, Behaegel, and Boutarabi are each officers and members of defendant Unilink, LLC.

In the fall of 2008, Food Team and Unilink entered into agreements for sale of certain frozen vegetables (frozen broccoli and cauliflower florets, and frozen red pepper strips) by Food Team to Unilink. Accordingly, Unilink submitted three purchase orders (“P.O.”) to Food Team for the produce in October 2008 (P.O. 6122 for broccoli, and P.O. 6123 for cauliflower) and December 2008 (P.O. 6238 for red pepper strips)(hereafter referred to as “broccoli contract”, “cauliflower contract”, and “red pepper contract”).

The produce was to be shipped from January 2009 through August 2009. Specifically, the agreement between Food Team and Unilink was for the shipment of one shipping container of frozen broccoli per week beginning January 2009 and continuing through June 2009;[35] one shipping container of frozen cauliflower every three weeks beginning March 2009 and continuing through August 2009;[36] and one shipping container of red pepper strips each month beginning April 2009 and continuing through July 2009.[37]

The agreed-upon amount of broccoli listed on P.O. 6122 was 999, 990 pounds. The agreed-upon amount of cauliflower listed on P.O. 6123 was 450, 000 pounds. However, the parties agreed to increase the quantity term for broccoli to 1, 100, 000 pounds and the quantity term for cauliflower was increased to 500, 000 pounds, and to extend the shipments of broccoli through the first week of July 2009.[38]

The poundage of broccoli and cauliflower were increased to permit Food Team to maximize the capacity of each shipping container.[39] The purchase order for red pepper strips -- P.O. 6238 -- was submitted after the adjustment was made to the broccoli and cauliflower orders and ...


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