Case 9:22-cv-80832-XXXX Document 1 Entered on FLSD Docket 06/06/2022 Page 1 of 24
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF FLORIDA
`WEST PALM BEACH DIVISION
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`CASE NO: _____________________
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`Plaintiff,
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`EULER HERMES NORTH AMERICA
`INSURANCE COMPANY,
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`vs.
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`QUALITY FOODS PRODUCE, INC.
`AND JOSE PEREZ,
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`Defendants.
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`________________________________/
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`VERIFIED COMPLAINT
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`Plaintiff, Euler Hermes North America Insurance Company (“Euler Hermes”), complains
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`of Defendants, Quality Foods Produce, Inc. (“Quality Foods”) and Jose Perez (collectively,
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`“Defendants”), as follows:
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`I.
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`THE PARTIES
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`1.
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`Euler Hermes is a Maryland corporation with its principal place of business located
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`at 800 Red Brook Boulevard, Owings Mills, Maryland 21117-1008.
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`2.
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`Euler Hermes provides commodity insurance for the sellers of wholesale quantities
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`of perishable agricultural commodities (hereinafter “Produce”) in both interstate and foreign
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`commerce.
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`3.
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`Euler Hermes’ insureds, specifically Produce Team, LLC and La Casa Del
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`Aguacate, LLC (hereinafter “Assignors”), trade in fresh fruit and vegetable commodities the
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`United States Department of Agriculture (“USDA”) expressly recognizes as commodities covered
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`under the provisions of the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C.
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`§§ 499a-499t (2019) (“PACA”).
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`4.
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`Quality Foods, a buyer of Produce, ordered, received, and accepted Produce from
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`Assignors, but ultimately failed to pay the invoices therefor. As described in more detail below,
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`Euler Hermes is the assignee and is subrogated to the rights of Assignors to collect the amounts
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`due for those unpaid invoices.
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`5.
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`At all times relevant hereto, the Assignors were engaged, directly or indirectly, in
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`the business of purchasing and/or selling Produce in wholesale or jobbing quantities and, therefore,
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`are “dealers” of Produce as defined by PACA.
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`6.
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`At all times relevant hereto, the Assignors operated their business under valid
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`USDA-issued PACA Licenses, which the USDA has identified as License Nos.: 20200399 and
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`20201332, respectively.
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`7.
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`Quality Foods is a Florida corporation with its principal place of business located
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`at 5550 NW 185th St., Miami Gardens, Florida 33056. The registered agent of Quality Foods is
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`Jose Perez who may be served with process at 5550 NW 185th St., Miami Gardens, Florida 33056,
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`or wherever he may be found. At all times relevant to this action, Quality Foods:
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`a. operated, conducted, and otherwise was engaged in or carried on the business of
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`buying, and selling Produce in interstate or foreign commerce;
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`b. is the holder of PACA license number 20211177, which the USDA issued to
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`Quality Foods on or about September 7, 2021 and was active throughout Quality
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`Foods’ dealings with the Assignors;1 and
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`c. specifically, Quality Foods purchased or received Produce, namely tomatoes,
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`lettuce, carrots, potatoes, and avocadoes.
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`1 A true and correct copy of Quality Foods’ PACA license, as maintained by the USDA and made publicly available
`online, is attached hereto as Exhibit A.
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`8.
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`Defendant Jose Perez (“Perez” or the “Principal” and, collectively with Quality
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`Foods, “Defendants”) is a resident of Texas, is or was an employee,2 officer, director, or member
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`of Quality Foods, and was in a position to exercise dominion and control over Quality Foods at all
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`times relevant to this action and otherwise participated in the tortious conduct or other wrongs set
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`forth herein. Perez may be served at 5550 NW 185th St., Miami Gardens, Florida 33056, or
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`wherever he may be found. Perez holds himself out as the General Manager and the Officer and/or
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`Director of Quality Foods and his position as such is listed on Quality Foods’ corporate documents
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`filed with the Texas Secretary of State and credit applications submitted to Assignors.3 Perez is
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`also listed as a Principal on Quality Foods’ PACA license.4
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`II.
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`JURISDICTION AND VENUE
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`9.
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`This Court has subject matter jurisdiction over this civil action arising under 7
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`U.S.C. § 499e(b)(2) (“liability may be enforced by … suit in any court of competent
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`jurisdiction….”) and 7 U.S.C. § 499e(c)(5) (“the several district courts of the United States are
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`vested with jurisdiction specifically to entertain (i) actions by trust beneficiaries to enforce
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`payment from the trust”) of the PACA, pursuant to 28 U.S.C. § 1331 and because this matter
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`involves the interpretation of a federal statute.
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`10.
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`This Court also has subject matter jurisdiction over this civil action pursuant to 28
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`U.S.C. § 1337 because PACA qualifies as an “Act of Congress regulating commerce” and several
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`of Euler Hermes’ claims herein arise under 7 U.S.C. § 499e(b)(2) and 7 U.S.C. § 499e(c)(5).
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`11.
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`This Court has supplemental jurisdiction over Euler Hermes’ other claims pursuant
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`to 28 U.S.C. § 1367(a).
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`2 “Employed,” “employ,” or “employment” means “any affiliation of any person with the business operations of a
`licensee, with or without compensation, including ownership or self-employment.” See 7 C.F.R. § 46.2(ee).
`3 See a true and correct copy of Quality Foods’ corporate documents attached hereto as Exhibit B.
`4 See Exhibit A.
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`12.
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`This Court has in rem jurisdiction over Euler Hermes’ claims pursuant to, inter alia,
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`28 U.S.C. § 1655.
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`13.
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`Venue in this district is based on 28 U.S.C. § 1391(b)(2) and (3) because (i)
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`Defendants reside in this district and (ii) a substantial part of the events or omissions giving rise to
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`the claim occurred, or a substantial part of property that is the subject of the action is situated in
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`this district.
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`III. NATURE OF THE CASE
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`14.
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`This is a civil action for monetary and injunctive relief, pursuant to which Euler
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`Hermes seeks to enforce its rights against Defendants under both PACA’s Unfair Conduct
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`provisions and further seeks to enforce its rights under state law (e.g., breach of contract, alter ego
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`liability, tortious interference with receipt of trust assets, civil conspiracy, and aiding and abetting).
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`15.
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`As set forth in detail herein, Defendants have committed willful, repeated, and
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`flagrant violations of Section 2 of PACA (i.e., Unfair Conduct provisions) and, as a direct result
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`of said violations. Euler Hermes, as assignor and subrogee of Assignors’ unpaid invoices, has
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`incurred damages of not less than $124,241.00, plus contractually due costs of collection, including
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`attorney’s fees, as sums owing in connection with the unpaid Produce transactions between Quality
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`Foods and Assignors.
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`IV.
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`EXHIBITS
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`16.
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`True and correct copies of the following documents are attached hereto and are
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`incorporated herein by this reference::
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`a. Quality Foods’ PACA License
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`b. Quality Foods’ Corporate Documents
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`c. Produce Team Declaration
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`d. Quality Foods’ Credit Application with Produce Team
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`e. Produce Team’s Unpaid Invoices to Quality Foods
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`Exhibit A
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`Exhibit B
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`Exhibit C
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`Exhibit C-1
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`Exhibit C-2
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`f. Assignment Agreement from Produce Team to Euler Hermes
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`Exhibit C-3
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`g. La Casa Declaration
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`h. Quality Foods’ Credit Application with La Casa
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`i. La Casa’s Unpaid Invoices to Quality Foods
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`j. Assignment Agreement from La Casa to Euler Hermes
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`k. Euler Hermes Declaration
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`V.
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`FACTUAL ALLEGATIONS
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`Exhibit D
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`Exhibit D-1
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`Exhibit D-2
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`Exhibit D-3
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`Exhibit E
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`A.
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`Assignors’ Assignment of Accounts Receivables to Euler Hermes.
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`2.
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`Euler Hermes entered into written Agreements with the Assignors wherein the
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`Assignors agreed to sell, and Euler Hermes agreed to purchase, certain of its Produce related
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`accounts receivable.5 Each of the Agreements were entered into as a condition to receiving loss
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`payments under the various trade credit policies issued to the Assignors to reimburse for non-
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`payment of goods supplied, so that Euler Hermes could recover for its losses
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`5 A true and correct copy of the Agreements are attached hereto and incorporated herein by this reference as Exhibits
`C-3 and D-3.
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`3.
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`Pursuant to Euler Hermes’ agreement with the Assignors, the Assignors sold,
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`conveyed voluntarily transferred, and assigned all, or the entirety of their right, title, and interest
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`in and to their Produce related accounts receivable, including any and all PACA trust rights
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`appurtenant thereto, if any, to Euler Hermes.
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`B.
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`Quality Foods’ Produce Transactions with the Assignors.
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`i.
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`4.
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`Produce Team, LLC.
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`Between September 10 and 25, 2021, Quality Foods and Produce Team, LLC
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`(“Produce Team”) entered into a series of four (4) Produce transactions involving shipments of
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`tomatoes.6 At all times relevant hereto, Produce Team grew and sold Produce, specifically fresh
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`tomatoes.7
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`5.
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`The USDA provides a list of perishable agricultural commodities covered under
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`PACA,8 which includes tomatoes.
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`6.
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`Quality Foods received the Produce in Florida that originated in Mexico and was
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`then shipped from Produce Team’s warehouse location in McAllen, Texas. Because Produce Team
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`delivered Produce, which originated in Mexico, from its warehouse in Texas to Quality Foods in
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`Florida, the Produce transactions at issue herein took place in interstate and foreign commerce.
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`7.
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`Produce Team delivered Produce to Quality Foods in shipments of Produce that
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`totaled or exceeded 2,000 pounds in weight. Because Quality Foods received individual shipments
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`6 See a true and correct copy of the Produce Team Declaration is attached hereto as Exhibit C. A true and correct
`copy of the unpaid invoices that Produce Team issued Quality Foods, which Produce Team subsequently assigned to
`Euler Hermes, are attached hereto as Exhibit C-2 (the “Produce Team Invoices”).
`7 See Id.
`8 The USDA’s Agricultural Marketing Service maintains and updates, in the ordinary course of its business, a complete
`list
`of
`the
`USDA’s
`PACA
`covered
`commodities,
`including
`tomatoes,
`online
`at:
`https://www.ams.usda.gov/sites/default/files/media/Commodities%20Covered%20by%20PACA.pdf.
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`of produce weighing far in excess of 2,000 pounds, Quality Foods was engaged in the purchase of
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`Produce in wholesale or jobbing quantities.9
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`8.
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`At all times relevant hereto, Quality Foods was engaged, directly or indirectly, in
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`the business of purchasing and/or selling Produce in wholesale or jobbing quantities and, therefore,
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`is a “dealer” of Produce as defined by PACA.
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`9.
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`At all times relevant hereto, Quality Foods was engaged in the business, directly or
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`indirectly, of purchasing Produce from growers or others and distributing such Produce in
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`commerce by resale or other methods, and, is therefore a “shipper” of Produce as defined by
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`PACA.
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`10.
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`Quality Foods received and accepted all of the Produce purchased from Produce
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`Team.
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`11.
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`Produce Team invoiced Quality Foods for all of the Produce sold which are
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`identified in the Produce Team invoices, and Quality Foods agreed in those invoices that, “[a]fter
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`payment is due, interest will accrue on unpaid balances at a rate of 18% per annum until paid,”
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`and that, “[i]n the event a legal or other action is commenced to collect sums due under this invoice,
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`the prevailing party shall be entitled to reimbursement of all costs and fees including reasonable
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`attorney’s fees incurred.”10 The total amount of the Produce Team invoices to Quality Foods which
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`remain unpaid and which have been assigned to Euler Hermes is $75,281.00.11
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`12.
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`Subsequent to Quality Foods’ receipt and acceptance of the Produce and failure to
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`pay for the Produce identified in the Produce Team invoices, Produce Team assigned all right,
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`9 Id.
`10 See Exhibit C-2.
`11 Id.
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`title, and interest in those invoices to Euler Hermes, including any and all PACA trust rights and
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`the right to receive payment under the Produce Team Invoices.
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`13.
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`Further, on information and belief, 12 Quality Foods sold all of the Produce
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`described in the Produce Team Invoices to third parties and collected the proceeds thereof.
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`ii.
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`14.
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`La Casa, Inc.
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`On or around September 25, 2021, Quality Foods and La Casa Del Aguacate, LLC
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`(“La Casa”) entered into a Produce transaction involving a shipment of avocados.13
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`15.
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`At all times relevant hereto, La Casa grew and sold Produce, specifically fresh
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`avocados.14 The USDA provides a list of perishable agricultural commodities covered under
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`PACA, which includes avocados.
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`16.
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`Quality Foods received the Produce in Florida from La Casa at their warehouse
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`location in Pharr, Texas. Because La Casa delivered Produce originating from Texas to Quality
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`Foods in Florida, the Produce transactions at issue herein took place in interstate commerce.
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`17.
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`La Casa delivered Produce to Quality Foods in shipments of Produce that totaled
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`or exceeded 2,000 pounds in weight. Because Quality Foods received individual shipments of
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`produce weighing far in excess of 2,000 pounds, Quality Foods was engaged in the purchase of
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`Produce in wholesale or jobbing quantities.15
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`12 On or upon “information and belief,” as used herein, means Euler Hermes is informed and believes a fact or
`condition to be true and, upon such information and belief, alleges the fact or condition in connection with the instant
`complaint. Euler Hermes’ information and beliefs are based upon investigation and derived from such sources as:
`Euler Hermes’ conversations with Defendants, e-mail correspondence with Defendants, publicly available
`government documents, relevant statements or information contained on Defendant owned or controlled websites,
`import/export documents, Euler Hermes’ communications with Defendants, Euler Hermes and Defendants relevant
`produce transaction documents, documents Defendants uploaded to and otherwise provided Euler Hermes, and
`relevant third party documents.
`13 See a true and correct copy of the La Casa Declaration is attached hereto as Exhibit D. A true and correct copy of
`the unpaid invoices that La Casa issued Quality Foods, which La Casa subsequently assigned to Euler Hermes, are
`attached hereto as Exhibit D-2 (the “La Casa Invoices”).
`14 See Id.
`15 Id.
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`18.
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`At all times relevant hereto, Quality Foods was engaged, directly or indirectly, in
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`the business of purchasing and/or selling Produce in wholesale or jobbing quantities and, therefore,
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`is a “dealer” of Produce as defined by PACA.
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`19.
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`At all times relevant hereto, Quality Foods was engaged in the business, directly or
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`indirectly, of purchasing Produce from growers or others and distributing such Produce in
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`commerce by resale or other methods, and, is therefore a “shipper” of Produce as defined by
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`PACA.
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`20.
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`21.
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`Quality Foods received and accepted all of the Produce purchased from La Casa.
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`La Casa invoiced Quality Foods for all of the Produce sold which are identified in
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`the La Casa invoices. The total amount of the La Casa invoices to Quality Foods which remain
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`unpaid and which have been assigned to Euler Hermes is $48,960.00.16
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`22.
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`Subsequent to Quality Foods’ receipt and acceptance of and failure to pay for the
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`Produce identified in the La Casa invoices, La Casa assigned all right, title, and interest in and to
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`those invoices to Euler Hermes, including any and all PACA trust rights and the right to receive
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`payment under the La Casa Invoices.
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`23.
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`Further, on information and belief, Quality Foods sold all of the Produce described
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`in the La Casa Invoices to third parties and collected the proceeds thereof.
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`C.
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`PACA Trust Preservation.
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`24.
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`Pursuant to Exhibits C-2 and D-2 (“Assignors’ Invoices”), Assignors sold to
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`Quality Foods, and Quality Foods received and accepted Produce having the current aggregate
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`value (inclusive of interest and contractual fees to date as well as credits and off-sets for any
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`surplus payment on other invoices) of an outstanding balance not less than $75,281.00 at 18% per
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`16 Id.
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`annum17 and $48,960.00.18 Assignors utilized the assigned Assignors’ Invoices to perfect and
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`otherwise preserve its PACA trust rights in and to each load of Produce listed therein.19
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`25.
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`Each of Assignors’ Invoices, including all unpaid invoices, contained the following
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`language preserving its beneficial interest in and to Quality Foods’ PACA trust assets:
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`The perishable agricultural commodities listed on this invoice as sold subject to the
`statutory trust authorized by Section 5(c) of the Perishable Agricultural
`Commodities Act, 1930 (7 USC § 499e(c)). The seller of these commodities retains
`a trust claim over these commodities, all inventories of food or other products
`derived from these commodities, and any receivables or proceeds from the sale of
`the commodities until full payment is received.20
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`26.
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`Quality Foods failed to object to Assignors’ inclusion of the above-quoted statutory
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`and contract language in Assignors’ Invoices as a material part of the parties’ agreement. The
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`statutory and contract language quoted in the Credit Documents and Assignors’ Invoices represent
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`a material part of Assignors’ standard credit terms. Assignors’ inclusion of the contract language
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`quoted in Assignors’ Invoices represent a standard industry practice and, as such, is of no surprise
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`to Quality Foods. Assignors’ inclusion of the contract language quoted in Assignors’ Invoices
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`represent bargained for terms and are sums owing in connection with the Produce transactions.
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`27.
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`As the assignee and surbogee of all of Assignors’ rights, title, and interests in and
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`to the Produce related accounts receivable identified in Assignors’ Invoices, and proper payee of
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`Assignors’ Invoices, Euler Hermes assumed the right to receive the proceeds of the Produce
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`identified in Assignors’ Invoices from Quality Foods, and any and all PACA trust rights
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`thereunder.
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`17 See Exhibit C-2.
`18 See Exhibit D-2.
`19 See Exhibits C-2 and D-2.
`20 See Id.
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`28.
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`Quality Foods failed to pay Euler Hermes for the Assignors’ Invoices in the total
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`amount of $124,241.00, despite repeated demands from Euler Hermes via its collection agent,
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`Euler Hermes Collections North America Company.21
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`D.
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`Bad Faith Dealings by Quality Foods.
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`29.
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`As a dealer of Produce, Quality Foods had and has a duty to deal fairly with the
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`Assignors and in good faith.22
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`30.
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`Additionally, upon information and belief, Quality Foods failed to preserve
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`sufficient funds to fully satisfy all qualified PACA claims, such as Assignors’ (now Euler
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`Hermes’s) claim for unpaid Produce transactions as asserted in this action. Quality Foods failed to
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`ensure that its funds were freely available to satisfy its outstanding obligations to Assignors’ (now
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`Euler Hermes’s) PACA trust rights, and other similarly situated Produce suppliers.
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`31.
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`At all times relevant hereto, upon information and belief, Quality Foods lacked the
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`liquidity or free cash flow to pay Assignors (now Euler Hermes) for any of the shipments of
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`Produce listed in Assignors’ Invoices. Quality Foods lacked adequate capitalization to pay its
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`Produce suppliers and to sustain any losses resulting from its inability to collect upon its own
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`accounts receivables.
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`32.
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`Upon information and belief, Quality Foods improperly shifted the risk of Quality
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`Foods’ undercapitalization or bad debt risk to Assignors, which was insured, paid and assigned to
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`Euler Hermes. Upon information and belief, at all times relevant hereto, Quality Foods was
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`insolvent.
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`21 See a true and correct copy of the Euler Hermes Declaration, which is attached hereto as Exhibit E.
`22 “Good faith,” as used herein, means honesty in fact and the observance of reasonable commercial standards of fair
`dealing in the trade. 7 C.F.R. § 46.2(hh).
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`33.
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`At all times relevant hereto, Quality Foods acted or failed to act by and through its
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`Principals. As a dealer of Produce, the acts, omissions, or failures of Quality Foods’ employees or
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`agents constitute acts, omissions, or failures of Quality Foods. Upon information and belief,
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`Quality Foods’ employees or agents possessed actual and constructive knowledge of Quality
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`Foods’ insolvency. Quality Foods’ employees or agents failed to voluntarily cease business
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`operations and to otherwise refrain from receiving and accepting Produce on credit either while
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`Quality Foods was insolvent or during a time when Quality Foods’ liabilities exceeded its assets
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`or it was unable to pay its undisputed debts when they became due.
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`VI. COUNT I
`ENFORCEMENT OF THE PACA TRUST
`[QUALITY FOODS]
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`34.
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`35.
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`Euler Hermes re-alleges paragraphs 1 through 33 as though fully set forth herein.
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`Quality Foods is in possession, custody and control of all assets derived from sale
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`or other disposition of the Produce which is identified in Assignors’ Invoices that Assignors
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`assigned to Euler Hermes, including, without limitation: (a) accounts receivables; (b) proceeds
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`from the sale of Produce; (c) cash; (d) any other assets commingled with proceeds of Produce; and
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`(e) any other assets acquired or maintained with such proceeds, cash, assets, or other trust assets
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`held in Quality Foods’ name (collectively the “PACA Trust Assets”).
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`36.
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`As assignee and subrogee of all of Assignors’ right, title, and interest in and to the
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`Assignors’ Invoices, Euler Hermes is the holder of unpaid Produce-related accounts receivable.
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`37.
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`Quality Foods failed to deliver to Assignors or Euler Hermes sufficient funds from
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`the PACA Trust Assets for any of the shipments of Produce listed in Assignors’ Invoices. Quality
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`Foods failed to preserve sufficient amounts of the PACA Trust Assets to fully satisfy all qualified
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`PACA trust claims, such as the Euler Hermes’s unpaid claims asserted in this action.
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`38.
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`The matters and actions alleged in this Count I constitute a violation by Quality
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`Foods of Section 2 of the PACA. As a direct result of Quality Foods’s failure to properly protect
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`the PACA Trust Assets from dissipation, Euler Hermes, as subrogee and assignee, has suffered
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`damages which are covered under the PACA trust in an amount not less than $124,241.00, plus
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`further interest and contractually due costs of collection, including attorneys’ fees, incurred in this
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`action.
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`39.
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`As a result, Euler Hermes respectfully requests that the Court enter a temporary
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`restraining order under Rule 65 of the Federal Rules of Civil Procedure enforcing the statutory
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`trust established by Section 5(c) of PACA, 7 U.S.C. § 499e(c), by restraining the transfer of any
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`and all assets of Defendants up to the sum of $124,241.00, except for payment to Euler Hermes,
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`pending either payment to Euler Hermes by bank check or wire transfer of the sum of $124,241.00
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`or a further hearing to be set within fourteen (14) days of the issuance of the temporary restraining
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`order.
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`40. Within fourteen (14) days from the issuance of the temporary restraining order,
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`after a hearing, Euler Hermes requests that a preliminary injunction order be entered to enforce the
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`statutory trust under PACA. Specifically, a preliminary injunction order will ensure all trust assets
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`of Quality Foods are maintained and segregated throughout this case, and compel Quality Foods
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`to produce documentation, including financial and bank records, showing all trust assets in its
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`possession or control.
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`Case 9:22-cv-80832-XXXX Document 1 Entered on FLSD Docket 06/06/2022 Page 14 of 24
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`VII. COUNT II
`PACA VIOLATIONS AND BREACH OF DUTIES
`7 U.S.C. § 499b(4)
`[QUALITY FOODS]
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`41.
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`42.
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`Euler Hermes re-alleges paragraphs 1 through 40 as though fully set forth herein.
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`Assignors and Quality Foods entered into a series of transactions involving
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`Assignors’ sale of Produce to Quality Foods and Quality Foods’ receipt and acceptance of said
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`Produce between September 9 and 25, 2021 (the “Sales Period”).23
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`43.
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`As a PACA licensee and dealer of Produce, Quality Foods possessed a statutory
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`duty to promptly pay Assignors for any and all Produce transactions. Quality Foods’ failure to pay
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`Assignors for the Produce transactions identified in Assignors’ Invoices constitutes a violation of
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`an express duty under Section 2 of PACA.
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`44.
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`Quality Foods’ use or disposition of any funds or other PACA Trust Assets in a
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`manner that impairs or endangers Quality Foods’ ability to faithfully and promptly pay Assignors
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`constitutes a violation of an express duty under Section 2 of PACA.
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`45.
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`Quality Foods’ issuance of checks or other payments to entities and individuals
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`other than Assignors, during the Sales Period, is inconsistent with its obligation to maintain its
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`PACA Trust Assets freely available to satisfy its obligations to its Produce suppliers.
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`46.
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`During the Sales Period, Quality Foods received and accepted not less than five (5)
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`shipments of Produce from Assignors.24
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`47.
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`As assignee and subrogee of all of Assignor’s right, title, and interest in and to the
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`Assignors’ Invoices, Euler Hermes is the holder of unpaid Produce-related accounts receivable.
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`23 See Exhibits C-2 and D-2.
`24 See Exhibits C-2 and D-2.
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`Case 9:22-cv-80832-XXXX Document 1 Entered on FLSD Docket 06/06/2022 Page 15 of 24
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`48.
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`During the Sales Period, Quality Foods failed to pay Assignors for the Assignors’
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`Invoices within the applicable payment terms that were in effect at the time of each transaction.
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`49.
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`During the Sales Period, Quality Foods lacked the liquidity or free cash flow to pay
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`Assignors for the Produce transactions identified in Assignors’ Invoices.
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`50.
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`During the Sales Period, Quality Foods’ PACA Trust Assets were not freely
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`available to satisfy its outstanding obligations to Assignors.
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`51.
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`52.
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`All of the Assignors’ Invoices remain unpaid.
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`On information and belief, Quality Foods issued checks or otherwise made
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`payments to various entities and individuals during the Sales Period while the Produce-related
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`invoice assigned to Euler Hermes remained unpaid.
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`53.
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`On information and belief, Quality Foods issued checks or otherwise made
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`payments to entities and individuals other than its unpaid Produce suppliers, including Assignors,
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`during the Sales Period.
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`54.
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`Quality Foods’ issuance of checks or other payments to entities and individuals
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`other than Assignors during the Sales Period is inconsistent with its obligation to maintain its
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`PACA Trust Assets freely available to satisfy its obligations to its Produce suppliers.
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`55.
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`As a PACA licensee and commission merchant or dealer of Produce, Quality Foods
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`possessed a statutory duty to deal with Assignors pursuant to a standard of honesty in fact and
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`were further obligated to observe commercial standards of fair dealing in the Produce trade, which
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`standard is defined, inter alia, in Section 2 of PACA.
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`56.
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`Quality Foods breached its obligation of good faith and fair dealing by, among other
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`things receiving and accepting Produce from Assignor on credit when Quality Foods knew or
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`should have known of Quality Foods’ insolvency. Quality Foods further breached its obligation of
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`good faith and fair dealing by selling Assignor’s Produce to third parties and failing to Assignors,
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`despite Quality Foods’ express acknowledgement and agreement to pay Assignors under such
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`Assignors’ Invoices.
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`57.
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`The matters and actions or inactions alleged in this Count II constitute violations
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`by Quality Foods of Section 2 of the PACA.
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`58.
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`As a direct result of Quality Foods’s aforementioned actions and inactions,
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`Assignors (now Euler Hermes) have incurred damages in an amount not less than $124,241.00,
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`plus further interest and contractually due costs of collection, including attorneys’ fees, incurred
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`in this action.
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`VIII. COUNT III
`BREACH OF CONTRACT
`[QUALITY FOODS]
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`59.
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`60.
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`Euler Hermes re-alleges paragraphs 1 through 58 as though fully set forth herein.
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`Between September 9 and 25, 2021, Assignors and Quality Foods entered into a
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`series of contracts, which are identified in Assignors’ Invoices.
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`61.
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`Assignors assigned all right, title, and interest in and to Assignors’ Invoices to Euler
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`Hermes, including any and all PACA trust rights and the contract right to receive payment under
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`Assignors’ Invoices.25
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`62.
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`Assignors invoiced Quality Foods for the Produce identified in Assignors’
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`Invoices.26
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`63.
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`Assignors delivered or otherwise caused all the Produce identified in Assignors’
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`Invoices to be delivered to Quality Foods.
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`25 See Exhibits C-3 and D-3.
`26 See Exhibits C-2 and D-2.
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`64.
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`Quality Foods received and accepted all of the Produce from Assignors identified
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`in Assignors’ Invoices at its location within the States of Texas and Florida.
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`65.
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`66.
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`Quality Foods failed to pay Assignors (or Euler Hermes) for Assignors’ Invoices.
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`As a direct result of Quality Foods’ breaches of contract, Assignors (now Euler
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`Hermes) have incurred damages in an amount not less than $124,241.00, plus further interest and
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`all costs of collection, including attorneys’ fees, incurred in this action.
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`IX. COUNT IV
`INTERFERENCE WITH RECIEPT OF TRUST ASSETS
`[QUALITY FOODS]
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`67.
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`68.
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`Euler Hermes re-alleges paragraphs 1 through 66 as though fully set forth herein.
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`As assignee and subrogee of Assignors’ Produce-related accounts receivable,
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`Assignors are unpaid suppliers of Produce and, thus, PACA trust beneficiaries who were entitled
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`to immediate distribution of Quality Foods’ PACA Trust Assets by virtue of the Assignors’
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`Invoices. Euler Hermes, assignee of Assignors’ claims, is now entitled to such distribution.
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`69.
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`On information and belief, Quality Foods paid the proceeds of the Assignors’
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`Invoices to entities and individuals other than its unpaid Produce suppliers, instead of paying the
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`proceeds to Assignors (or Euler Hermes).
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`70.
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`Quality Foods knew or should have known, at the time Quality Foods paid entities
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`and individuals other than its unpaid Produce suppliers for the Assignors’ Invoices that as
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`purchaser and assignee of Assignor’s Produce-related accounts receivable, Euler Hermes, was a
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`PACA trust beneficiary entitled to immediate distribution of Quality Foods’ PACA Trust Assets
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`relating to the Assignors’ Invoices.
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`71.
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`Despite