Impact of Perishable Agricultural Commodities Act Liability Considered By Appellate Panel.
Plaintiff (produce seller) sued a restaurant (Jack’s La Jolla) and its controlling officer Berkley to recover monies owed for the produce, claiming that Berk
ley had signed a guaranty and Berkley was subject to personal liability for restaurant’s contractual obligations (under an agreement with a fees clause) through the Perishable Agricultural Commodities Act (PACA), which can impose personal liability on a corporate officer who controls and holds the assets of a produce buyer in trust for the produce seller. Originally, plaintiff won against both defendants, although the trial court rejected that Berkley had signed the guaranty but did rule he was liable personally under PACA. In a prior appellate decision, the reviewing court reversed the PACA liability ruling, which meant that Berkley was a prevailing party. He was then awarded $14,725 in fees for new trial and appellate work based on the guaranty agreement. That prompted an appeal by produce seller.
The fee award was affirmed in Tomatoes Extraordinaire, Inc. v. Berkley, Case No. D065768 (4th Dist., Div. 1 Mar. 20, 2015) (unpublished). Although the trial court incorrectly relied on the guaranty agreement not signed by Berkley, defendant was entitled to fees because PACA made him personally liable if he had lost. In cases where a nonsignatory “stands in the shoes” of the signatory contracting party, fees are recoverable under Civil Code section 1717, with it being inconsequential whether the liability is based on express terms of a contract or by operation of a statute like PACA. (E. Marmata, Inc. v. Platinum Funding Corp., 887 F. Supp. 590, 594-595 (S.D.N.Y. 1995) [contractual fees clause between PACA produce buyer and seller applied to nonsignatory party who took over buyer’s account and who was on constructive notice of its liability under PACA].)
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