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Janicek v. First Fruits Holdings, LLC

United States District Court, D. Idaho

June 29, 2017

BRAD JANICEK d/b/a JANICEK FARMS and BLUE DIAMOND TURF, LLC, Plaintiffs,
v.
FIRST FRUITS HOLDINGS, LLC d/b/a FOUR RIVERS ONION PACKING, Defendant.

          MEMORANDUM DECISION AND ORDER

          Dee Benson United States District Judge.

         Judge Dee Benson Before the Court is Defendant's Motion to Dismiss Plaintiff's fifth and sixth causes of action pursuant to Federal Rule of Civil Procedure 12(b)(6). The motion has been fully briefed and a hearing was held before the Court in Boise, Idaho on June 8, 2017. Plaintiffs were represented at the hearing by Julie Klein Fischer. Defendant was represented by Patrick Mahoney and Gregory Brown. Based on the parties' written and oral arguments and on the relevant facts and the law, the Court enters the following Order.

         BACKGROUND

         Plaintiff Brad Janicek is an onion grower who resides in Ada County, Idaho and does business as Janicek Farms. Complaint, Dkt. 1 at ¶1. Plaintiff Blue Diamond Turf, LLC is an Idaho company with its principle place of business in Ada County, Idaho. Id. at ¶2. Defendant First Fruits Holdings, LLC is a North Carolina company in the business of purchasing, packing and reselling perishable agricultural commodities, including onions. Id. at ¶¶ 3, 7. In June 2015, First Fruits purchased the assets of Four Rivers Packing Co., an Idaho corporation. Id. at ¶8.

         On September 25, 2015 and July 20, 2016, Plaintiffs and First Fruits entered into agreements with each other, both of which are entitled “Contract to Buy or Handle, ” for the sale, purchase and delivery of yellow onions. The agreements constitute the contract (“the Contract”) between the parties and provide that Plaintiffs would deliver to Defendant 100, 000 hundredweight of onions in exchange for payment from Defendants to be made as follows: $100, 000 within 10 days of the completion of the first delivery; $100, 000 within 40 days of the completion of the first delivery; one-quarter of the balance due on November 20, 2016; one-quarter of the balance due on December 20, 2016; $100, 000 due on January 20, 2017; $100, 000 on February 20, 2017 and the remaining balance due on March 20, 2017. See Complaint at ¶¶ 9-11 & Exhs. A & B.

         Pursuant to the terms of the Contract, Plaintiffs delivered onions to Defendant's facility in Weiser, Idaho from August 10 through August 27, 2016. Id. at Exh. C. Accordingly, Defendant's first payment was due on August 28, 2016 in the sum of $100, 000 and the second payment was due on September 27, 2016, also in the sum of $100, 000. Id. at ¶ 24. Defendant failed to make the first payment on the date due and instead made a payment of $50, 000 on September 5, 2016 and a payment of $25, 000 on September 8, 2016. Id. at ¶¶ 27 & 32. First Fruits failed to make the second payment of $100, 000 which was due on September 27, 2016. Complaint at ¶ 31.

         On September 30, 2016, Defendant emailed the following to Plaintiffs:

I need to inform you that we are rejecting the contract signed on July 20th, 2016 and intend to run your onions and take deductions according to shrink weight. Payment will begin on November 20, 2016 but deductions will be across the 5 payments remaining.

Id. at ¶ 33-34. On September 30, 2016, Plaintiffs made demand for full payment then due under the Contract. See Exh. D. On October 7, 2017, Defendant's counsel delivered a letter to Plaintiffs' counsel in which Defendant alleged Plaintiffs had breached the Contract due to the condition of the onions delivered.

         On October 14, 2016, Plaintiffs sent a Notice of Intent to Preserve Trust Benefits Under the Perishable Agricultural Commodities Act (“Trust Notice”). On the same date, Plaintiffs accelerated all amounts due under the Contract. Id. at ¶ 36 and Exh. E.

         Plaintiffs filed this lawsuit on November 8, 2016. The Complaint asserts seven causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) violation of the uniform commercial code; (4) unjust enrichment; (5) declaratory judgment for violation of the Trust provisions of the Perishable Agricultural Commodities Act (“PACA”); (6) enforcement of Plaintiffs' PACA Trust rights; and (7) violation of the unfair conduct provisions of PACA.

         Defendants move to dismiss Plaintiffs' fifth and sixth causes of action on the basis that Plaintiffs are not entitled to relief under PACA's Trust provisions for two independent reasons: (1) the Contract's payment terms do not comply with the requirements necessary for PACA trust benefits; and (2) Plaintiffs did not preserve any PACA trust rights. Both of these positions are discussed below.

         ANALYSIS

         Plaintiffs' Eligibility for ...


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