United States District Court for the District of Columbia
March 10, 2003
FRESH KIST PRODUCE, LLC, Plaintiff,
CHOI CORPORATION, INC. d/b/a, WASHINGTON WHOLESALE PRODUCE COMPANY et al., Defendants.
The opinion of the court was delivered by: URBINA, District Judge.
GRANTING THE PLAINTIFF'S MOTION TO AMEND THE COURT'S JUDGMENT
Plaintiff Fresh Kist Produce ("Fresh Kist"), a seller of perishable
produce, brings this motion to collect pre-judgment interest from
defendant J.C. Watson ("JCW"), also a seller of perishable produce. Fresh
Kist asks the court to amend its July 31, 2002 Memorandum Opinion by
adding to its judgment the requirement that JCW pay pre-judgment interest
on the disgorged funds. The Memorandum Opinion granted in part Fresh
Kist's motion for summary judgment and required JCW to disgorge certain
funds. For the reasons that follow, the court grants the plaintiff's
motion to modify the judgment and require JCW to pay pre-judgment
Both Fresh Kist and JCW are produce sellers falling within the
provisions of the Perishable Agricultural Commodities Act ("PACA"),
7 U.S.C. § 499a et seq. PACA requires produce buyers to pay proceeds
from sales into floating trusts to protect produce sellers when produce
buyers default on payment. Pursuant to PACA, if a produce buyer becomes
insolvent and is unable to pay its sellers for their perishable goods,
the sellers may collect a pro rata payment from the PACA trust,
preempting other creditors' claims.
Produce seller Fresh Kist brought the instant case to recover PACA
trust funds that produce seller JCW obtained by filing an earlier case,
C.A. No. 01-1225 (D.D.C. filed on June 5, 2001), against Washington
Wholesale Produce Company ("WWP"), a buyer that bought produce from both
Fresh Kist and JCW. The facts of the instant case are intertwined with
those of the earlier case (C.A. No. 01-1225). In the earlier case,
produce seller JCW asserted that produce buyer WWP owed it $70,946.90 for
unpaid invoices for perishable produce commodities. JCW's Compl. (C.A.
No. 01-1225). In its June 5, 2001 complaint, JCW plead that WWP was
insolvent. Id. ¶ 19. WWP paid a total of $59,189.40 to JCW pursuant
to a partial settlement and the Consent Order compelling this payment.
Consent Order dated Aug. 10, 2001 (C.A. No. 01-1225); Mem. Op. dated July
31, 2002 at 3.
[251 F. Supp.2d 140]
On August 28, 2001, Fresh Kist filed, in the instant case, a complaint
and a motion for a temporary restraining order and an order establishing
a non-party PACA claims procedure. The court issued a temporary
restraining order freezing WWP's PACA trust funds and requiring WWP to
pay $11,757.50, the amount still owed to JCW pursuant to the Consent Order
in C.A. No. 01-1225, into the court's registry. Order Granting Motion for
T.R.O. dated Aug. 29, 2001. In its motion for summary judgment, Fresh
Kist argued that JCW violated applicable laws by taking WWP's PACA trust
funds once it knew WWP was insolvent. Pl.'s Mot. for Summ. J. Ruling on
Fresh Kist's and JCW's cross-motions for summary judgment, this court
held, inter alia, that (1) Fresh Kist is a qualified PACA trust
beneficiary, (2) JCW breached and dissipated the PACA trust, (3) JCW did
not enhance the value of the trust, and (4) JCW must return $59,189.40
(the funds JCW had demanded from WWP in violation of PACA) to the PACA
trust. Mem. Op. dated July 31, 2002 at 5, 18.
In the instant motion, Fresh Kist asks the court to amend its judgment
by ordering JCW to pay pre-judgment interest on the disgorgement amount
the $59,189.40 it accepted from WWP in violation of PACA. Pl.'s
Mot. to Amend Summ. J. ¶ 7. The plaintiff argues that the interest is
needed to compensate the PACA trust beneficiaries for the interest that
would have accrued to them had WWP promptly paid the money owed to them
pursuant to the provisions governing the PACA trust. Id. Fresh Kist argues
that the court should award pre-judgment interest calculated from June
5, 2001 (the date of JCW's complaint alleging that WWP was insolvent)
through July 31, 2002 (the date of the court's Memorandum Opinion
ordering disgorgement). Id. at 3.
A. Legal Standard for Amendment of Judgment Pursuant to Rule 59(e)
Federal Rule of Civil Procedure 59(e) motions to alter or amend a
judgment must be filed within 10 days of the entry of the judgment at
issue. FED. R. CIV. P. 59(e); W.C. & A.N. Miller Cos. v. United
States, 173 F.R.D. 1, 3 (D.D.C. 1997) (citing Derrington-Bey v. Dist. of
Columbia Dep't of Corrections, 39 F.3d 1224, 1226 (D.C. Cir. 1994)).
While the court has considerable discretion in ruling on a Rule 59(e)
motion, the reconsideration and amendment of a previous order is an
extraordinary measure. Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C.
Cir. 1996) (per curiam) (citations omitted). Rule 59(e) motions "need not
be granted unless the district court finds that there is an `intervening
change of controlling law, the availability of new evidence, or the need
to correct a clear error or prevent manifest injustice.'" Id. Finally,
"[a] Rule 59(e) motion to reconsider is not simply an opportunity to
reargue facts and theories upon which a court has already ruled," New
York v. United States, 880 F. Supp. 37, 38 (D.D.C. 1995), nor is it a
vehicle for presenting theories or arguments that could have been
advanced earlier. W.C. & A.N. Miller Cos., 173 F.R.D. at 3.
B. The Court Grants the Plaintiff's Motion to Amend the Judgment
At the outset, the court notes that the plaintiff's post-judgment
motion for pre-judgment interest constitutes a motion to alter or amend
the court's judgment pursuant to Rule 59(e). Osterneck v. Ernst &
Whitney, 489 U.S. 169, 175 (1989). Because the plaintiff filed its motion
within the 10-day period set for Rule 59(e) motions, the court will treat
the motion as a Rule 59(e) motion to alter or amend the judgment, as
opposed to a Rule 60(b) motion
[251 F. Supp.2d 141]
seeking relief from a judgment or order.
United States v. Emmons, 107 F.3d 762, 764 (10th Cir. 1997) (applying the
filing-date-determinative rule); Small v. Hunt, 98 F.3d 789, 797 (4th
Cir. 1996) (same).
The underlying judgment ordered disgorgement of $59,189.40 from JCW,
but did not order pre-judgment interest. Though the plaintiff did request
pre-judgment interest in its motion for summary judgment, the plaintiff
failed to detail this request or provide legal support for this request.
In its motion to amend judgment, the plaintiff presents a legal argument
in support of the request for pre-judgment interest. Although the court
disapproves of parties raising arguments that they could have advanced
earlier, the court recognizes that the interests of justice and fairness
support reviewing the plaintiff's motion. W.C. & A.N. Miller Cos.,
173 F.R.D. at 3.
Turning to the merits of the plaintiff's argument for pre-judgment
interest, the court determines that an award of pre-judgment interest in
this PACA case is within its discretion. Next, the court evaluates the
relevant equitable concerns. Finally, the court determines that the
equities weigh in favor of an award of pre-judgment interest.
1. An Award of Pre-judgment Interest Is Within the Court's Discretion
Because PACA claims arise under federal statute, federal law governs
the availability of pre-judgment interest. In re W.L. Bradley Co.,
78 B.R. 92, 93 (Bankr.E.D.Pa. 1987) (citing Poleto v. Consol. Rail
Corp., 826 F.2d 1270 (3d Cir. 1987) overturned on other grounds by Kaiser
Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827 (1990)). While no
federal statute directly addresses the issue of interest on PACA
judgments, the general federal interest statute, 28 U.S.C.A. §
1961(a) allows interest "on any money judgment in a civil case recovered
in a district court." Id. The PACA statute is silent on the issue of
pre-judgment interest. 7 U.S.C. § 499a et seq.; E. Armata, Inc. v.
Platinum Funding Corp., 887 F. Supp. 590, 595 (S.D.N.Y. 1995); In re
Southland v. Official PACA Creditors' Comm., 132 B.R. 632, 641 (B.A.P.
9th Cir. 1991). Where a statute is silent on this issue, an award of
pre-judgment interest lies within the court's discretion and the court may
fashion a remedy to enforce congressional intent. E. Armata, Inc.,
887 F. Supp. at 595 (citing Rodgers v. United States, 332 U.S. 371, 373
(1947)). The Ninth Circuit has ruled that district courts have the
discretion to award reasonable pre-judgment interest to PACA claimants
when the award is needed to protect the interests of PACA claimants.
Middle Mountain Land & Produce, Inc. v. Sound Commodities Inc.,
307 F.3d 1220, 1226 (9th Cir. 2002).
Congress enacted PACA to protect produce sellers from slow payment as
well as non-payment. E. Armata, Inc., 887 F. Supp. at 595; Morris Okun,
Inc. v. Harry Zimmerman, Inc., 814 F. Supp. 346, 351 (S.D.N.Y. 1993)).
Courts have consistently awarded pre-judgment interest to compensate PACA
trust beneficiaries (produce sellers) where defendant PACA trustees
(produce buyers) failed to make adequate payments. Id.; Gullo Produce Co.
v. A.C. Jordan Produce Co., 751 F. Supp. 64, 68 (W.D.Pa. 1990); In re
W.L. Bradley Co., 78 B.R. at 94; In re Monterey House Inc., 71 B.R. 244,
248 (Bankr.S.D.Tex. 1986). These awards are consistent with Congress'
intent to promote prompt and full payment to produce sellers.
This case is different from cases involving PACA trust beneficiaries
(produce sellers) suing PACA trustees (produce
[251 F. Supp.2d 142]
buyers) for payments due,
however, because this case involves a PACA trust beneficiary (produce
seller Fresh Kist) suing another trust beneficiary (produce seller JCW)
for illegally collecting from the PACA trustee (produce buyer WWP).
Here, the congressional purpose of promoting prompt payment is less
obvious. The interest Congress expressed in produce sellers' receiving
prompt and full payment from produce buyers still applies in the present
situation, though in an attenuated manner. Trustees (produce buyers)
cannot make prompt payment to trust beneficiaries (produce sellers) if
one beneficiary has illegally withdrawn more than its pro rata share of
funds from the PACA trust. Therefore, whether the cause of slow payment
is the trustee's intransigence or the interference of another trust
beneficiary is irrelevant; the congressional purpose of securing prompt
payment for all beneficiaries is similarly frustrated.
2. Equitable Concerns Require an Award of Pre-judgment Interest
Although prior cases interpreting PACA do not provide a precise answer
to the question before this court, they do establish a clear precedent
for granting pre-judgment interest where equitable concerns and fairness
so require. E.g., Tray-Wrap, Inc. v. Meyer, 1994 WL 710804, at *7
(S.D.N.Y. Dec. 20, 1994). In determining whether to award pre-judgment
interest, the court considers the following factors: (1) the need to make
the plaintiff whole, (2) the degree of wrongdoing on the part of the
defendant, (3) the availability to the plaintiff of investment
opportunities, (4) whether plaintiff delayed in bringing the action, and
(5) other considerations of fairness. Osterneck, 489 U.S. at 176.
Applying the first factor, the court determines that pre-judgment
interest is necessary to fully compensate the plaintiff and the other
beneficiaries (produce buyers) of WWP's PACA trust. Id. While the funds
were in the hands of JCW, the rightful owners (the PACA trust
beneficiaries) could not earn interest on the funds. Each PACA
beneficiary's pro rata share, including the plaintiff's, was diminished
not only by the $59,189.48 improperly accepted by JCW, but also by the
interest that amount would have accumulated had it remained in the
Turning to the second consideration, the court concludes that the
defendant's culpability level is low. Id. In Frederick County Fruit
Growers Ass'n v. Martin, the court affirmed the grant of pre-judgment
interest to the plaintiff workers association because the lower court
found that the growers knowingly underpaid their workers contrary to
federal law. 968 F.2d 1265, 1275 (D.C. Cir. 1992). Here, the court
concluded in its Memorandum Opinion that the "actions that JCW undertook
to collect PACA benefits were contrary to law." Mem. Op. dated July 31,
2002 at 13. Although the court determined that JCW knew that WWP, the
PACA trustee, was insolvent when it sought and accepted $59,189.48 from
the trust in violation of 7 U.S.C. § 499a et seq., the court did not
go so far as to find bad faith on the part of JCW. Id. at 12, 18.
Therefore, the PACA violation reflects a lower "degree of personal
wrongdoing on the part of the defendant" than existed in Frederick County
Fruit Growers Ass'n. 968 F.2d at 1275.
The court cannot weigh the third factor because the record contains no
evidence regarding whether the plaintiff had an available investment
opportunity. Considering the fourth factor, the court concludes that the
plaintiff did not delay bringing an action against JCW for its unlawful
acceptance of trust funds. Id. The plaintiff initiated this action on
August, 28, 2001, less than two months after JCW's PACA
[251 F. Supp.2d 143]
JCW began its proceedings against WWP that resulted in the payment of
$59,189.40 from the PACA trust to JCW). Compl.; JCW's Compl. (C.A. No.
01-1225); Consent Order dated Aug. 10, 2001 (C.A. No. 01-1225). The two
months between JCW's PACA violation and the plaintiff's claim in this
case falls within the permissable time frame recognized in In re W.L.
Bradley Co., where the court found no inequity when the plaintiff waited
eight months to file a claim under PACA. 78 B.R. at 94.
Finally, fairness demands an award of pre-judgment interest.*fn2
Osterneck, 489 U.S. at 176. Congress enacted the PACA provisions "to
increase the legal protection for unpaid sellers and suppliers of
perishable agricultural commodities until full payment of sums due have
been received by them." In re Bradley Co., 78 B.R. at 93 (quoting H.R.
No. 98-543, 98th Cong., 1st Sess. 3 (1983)). Congress created PACA to
remedy the failure of buyers to pay for goods and to do so in a timely
manner. Id. This suggests that Congress was concerned not only with
sellers' need to enforce claims against buyers, but with their ability to
do so quickly. Id.; see also Morris Okun, Inc., 814 F. Supp. at 351
(explaining that "failure to make [a pre-judgment interest] award may
create a disincentive to prompt payment to suppliers and encourage
collection litigation while financially strapped purchasers fend off
creditors, contrary to the congressional intent evidenced in PACA."). An
award of pre-judgment interest effectively remedies the harm caused by
payment delays by providing to the plaintiff the amount of interest it
would have earned had the payment occurred without delay. The argument
remains salient where the defendant party is not a trustee, but a trust
beneficiary. Cf. id.
Accordingly, the plaintiff is entitled to pre-judgment interest from
the date of the PACA violation through the date of the entry of the
court's judgment. E. Armata, 887 F. Supp. at 595 (ordering pre-judgment
interest accruing from the date of default of payment). JCW must pay
interest on all funds received from WWP on or after June 5, 2001.
Interest is due from the date JCW received the post June 4, 2001 payments
from WWP up to July 31, 2002, the date of the court's Memorandum Opinion
ordering disgorgement, and shall be
[251 F. Supp.2d 144]
paid at the statutory rate.
28 U.S.C.A. § 1961; Morris Okun, 814 F. Supp. at 351 (limiting interest
amount to the statutory rate).
For all these reasons, the court grants the plaintiff's motion to amend
the order granting summary judgment by adding an award of pre-judgment
interest. JCW shall pay the interest due within 20 calendar days of the
filing of this Memorandum Opinion and the accompanying order. An order
directing the parties in a manner consistent with this Memorandum Opinion
is separately and contemporaneously issued.
GRANTING THE PLAINTIFF'S MOTION TO AMEND THE COURT'S JUDGMENT
For the reasons stated in this court's Memorandum Opinion separately
and contemporaneously issued.
ORDERED that the plaintiff's motion to amend the court's judgment is