Bear Mountain Orchards, Inc. v. Mich-Kim, Inc. (2010)

In Bear Mountain, the Third Circuit held that the liability of a fifty percent shareholder “turn[ed] not on whether she nominally held an officer (or, if argued, director) position, nor even the size of her shareholding, but whether she had the authority to direct the control of (i.e., manage) PACA assets held in trust for the producers.” 623 F.3d 163, 169 (3d Cir. 2010).

Accord Bear Mountain Orchards, Inc. v. Mich-Kim, 3 Inc., 623 F.3d 163, 167-68 (3d Cir. 2010) ("Bear Mountain"); Nickey Gregory Co., LLC v. 4 AgriCap, LLC, 597 F.3d 591, 594-95 (4th Cir. 2010) ("Nickey Gregory"); Hiller Cranberry 5 Prod., Inc. v. Koplovsky, 165 F.3d 1, 7-9 (1st Cir. 1999) ("Hiller Cranberry"); Sunkist 6 Growers, Inc. v. Fisher, 104 F.3d 280, 282 (9th Cir. 1997) ("Sunkist Growers"); Six L's 7 Packing Co. v. Beale, 524 F. App'x 148, 152 (6th Cir. 2013) ("Six L'…

In assessing individual liability, a court must (1) “determine whether an individual holds a position that suggests a possible fiduciary duty to preserve the PACA trust assets (e.g., officer, director, and/or controlling shareholder)”; and (2) “assess whether that individual’s involvement with the corporation establishes that she was actually able to control the PACA trust assets at issue.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 172 (3d Cir.2010).

Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 169 (3d Cir. 2010).

Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 169 (3d Cir.2010).

To the extent that the District Court made findings of fact, we review them for clear error.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 169 (3d Cir.2010) (internal citation omitted).

The United States Court of Appeals for the Third Circuit has explained that the PACA trust provision “seeks to protect sellers of fresh fruits and vegetables who were unsecured creditors and receive[d] little protection in any suit for recovery of damages where a buyer ha[d] failed to make payment as required by the contract.” Bear Mountain, 623 F.3d at 167 (internal quotations omitted and alteration in original).

Shalom Produce Corp., 165 F.3d 612 , 615 (2d Cir.1998)); Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 167 (3d Cir.2010)(“General trust principles of trust law apply to trusts created under PACA ..., ”)(quoting Nickey Gregory Co., LLC v. AgriCap, LLC, 597 F.3d 591, 595 (4th Cir.2010)); Reaves Brokerage .Co., Inc, v. Sunbelt Fruit & Vegetable Co., Inc., 336 F.3d. 410, 413 (5th Cir.2003)(“General principles of trust law govern PACA trusts.”); Boulder Fruit Exp.…

Bear, 623 F.3d at 174 (“We disagree.

In determining secondary liability, courts consider (1) “whether an 21 individual holds a position that suggests a possible fiduciary duty to preserve the PACA 22 trust assets (e.g., officer, director, and/or controlling shareholder),” and (2) “whether that 23 individual’s involvement with the corporation establishes that she was actually able to 24 control the PACA trust assets at issue.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 25 623 F.3d 163, 172 (3d Cir. 2010).

But, individual liability may only be imposed upon those individuals who “had the authority to direct the control of (i.e., manage) PACA assets held in trust for the producers.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 169 (3d Cir. 2010).

In addition, Plaintiffs have come forward with sufficient evidence to impose personal liability upon the individual Defendants. “[A]n individual who is in the position to control the [PACA] trust assets and who does not preserve them for the beneficiaries has breached a fiduciary duty, and is personally liable for that tortious act.” , 623 F.3d 163, 167-68 (3d Cir. 2010) (quotation omitted).

Compl. ¶¶ 35-39. “[I]ndividual shareholders, officers, or directors of a corporation who are in a position to control trust assets, and who breach their fiduciary duty to preserve those assets, may be held personally liable under PACA.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 166 (3d Cir. 2010) (emphasis omitted) (quoting Golman-Hayden Co. Inc. v. Fresh Source Produce Inc., 217 F.3d 348, 351 (5th Cir. 2000)).

Nov. 5, 2019). 6 Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 166 (3d Cir. 2010) (emphasis omitted) (quoting Golman-Hayden Co. Inc. v. Fresh Source Produce Inc., 217 F.3d 348, 351 (5th Cir. 2000)). shareholders.

Nov. 5, 2019). 6 Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 166 (3d Cir. 2010) (emphasis omitted) (quoting Golman-Hayden Co. Inc. v. Fresh Source Produce Inc., 217 F.3d 348, 351 (5th Cir. 2000)). shareholders.

Appx. at 453 ; Iscavo, 953 F.3d at 318; Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 170 (3rd Cir. 2010); Coosemans Specialties, Inc., 485 F.3d at 705-706; Sunkist Growers, Inc. v. Fisher, 104 F.3d 280, 283 (9th Cir. 1997).

“A formal title alone is insufficient— especially when faced with a small, ‘mom and pop’ corporation . . . where formalities may be less meaningful.” Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 172 (3d Cir. 2010).

Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 172 (3rd Cir.2010) (“the ability to control is core”).

(Bear Mountain Orchards, Inc. v. Mich-Kim, Inc. (3d Cir. 2010) 623 F.3d 163, 167-168, 171-172 ; American Banana Co., Inc. v. Republic National Bank of New York (2d Cir. 2004) 362 F.3d 33, 36-37 ; Patterson Frozen Foods, Inc. v. Crown Foods Internat., Inc. (7th Cir. 2002) 307 F.3d 666, 669 .) Relevant here, PACA applies to produce buyers who meet the statutory definition of a dealer under the act.

Shalom Produce Corp., 155 F.3d 612, 615 (2d Cir. 1998)); Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 167 (3d Cir.2010) (“General trust principles of trust law apply to trusts created under PACA ....”) (quoting Nickey Gregory Co., LLC v. AgriCap, LLC, 597 F.3d 591, 595 (4th Cir.2010)); Reaves Brokerage Co., Inc. v. Sunbelt Fruit & Vegetable Co., Inc., 336 F.3d 410, 413 (5th Cir.2003) (“General principles of trust law govern PACA trusts.”); Boulder Fruit Exp.…

See id. § 47-2-714.

See Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163, 169 (3d Cir.2010). 3 .

See 3 Defendants’ reliance on Bear Mountain Orchards, Inc. v. Mich-Kim, Inc., 623 F.3d 163 (3d Cir. 2010) is unpersuasive.