Opinion
Civil Action No. 1:05-cv-256-GET.
October 26, 2005
ORDER
The above-styled matter is presently before the court on defendants Reco Sales Corporation Inc. and Richard E. Saulovich's motion to dismiss [docket no. 8].
On January 28, 2005, plaintiff filed this action against defendants Reco Sales Corporation ("Reco") and its principal, Richard E. Saulovich, asserting claims for unpaid produce based on breach of contract and violations under the Perishable Agricultural Commodities Act ("PACA"), 7 U.S.C. §§ 499a- 499s. Defendant Reco filed a counterclaim alleging damages due to plaintiff's failure to satisfactorily deliver produce in a timely manner.
On May 31, 2005, defendants Reco and Saulovich filed a motion. to dismiss. Specifically, defendant Saulovich moves for dismissal of all claims against him on the basis of lack of personal jurisdiction. Furthermore, defendant Reco moves for dismissal of Counts I and IV because plaintiff failed to plead or demonstrate that it complied with the requirements for establishment of a PACA Trust and failed to plead or demonstrate any misuse of PACA Trust Funds. Finally, defendants assert that plaintiff fails to plead or establish sufficient facts to create an independent basis for its claim for attorney's fees.
Saulovich Motion to Dismiss — Personal Jurisdiction
Standard
When a motion to dismiss for lack of personal jurisdiction is decided without an evidentiary hearing, the plaintiff need only show a prima facie case of personal jurisdiction. Delong Equipment Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1988). When considering a motion to dismiss for lack of personal jurisdiction, the facts alleged in the plaintiff's complaint are taken as true to the extent that they are uncontroverted by the defendant's evidence. Delong Equipment Co., 840 F.2d at 845. Where the evidence presented is controverted, the court must construe all reasonable inferences in favor of the plaintiff.Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988);Delong Equipment Co., 840 F.2d at 845.The Georgia long-arm statute provides for personal jurisdiction over a nonresident defendant who "[t]ransacts any business within this state." O.C.G.A. § 9-10-91(1). The statute confers jurisdiction to the "maximum extent permitted by due process."SES Indus., Inc. v. Intertrade Pack. Mach. Co., 236 Ga. App. 418, 420 (1999). Due process requires that a defendant have sufficient minimum contacts with the forum state to provide "fair warning that a particular activity may subject him to the jurisdiction of a foreign sovereign." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (citation omitted). In determining whether sufficient minimum contacts exist, we look to whether: (1) the defendant has acted so as to avail himself of the law of the forum state; (2) the claim is related to those acts; and (3) the exercise of jurisdiction does not violate notions of fair play and substantial justice. SES Indus., 236 Ga. App. at 420.
A nonresident individual cannot be subject to personal jurisdiction based solely upon acts in Georgia taken in his or her corporate capacity. Club Car, Inc. v. Club Car (Quebec) Import, Inc., 362 F.3d 775, 784 (11th Cir. 2004) (citing Southern Electronics Distrib. v. Anderson, 232 Ga. App. 648 (1998)).
The allegations against defendant Saulovich relate only to actions taken in his corporate capacity. Although plaintiff asserts that Saulovich, as principal, is "personally liable to Plaintiff," plaintiff fails to point thee court to any factual or legal basis for this assertion. There is no allegation that Saulovich made any personal guaranty to plaintiff or personally accepted any responsibility aside from his corporate duties. Therefore, the court finds that plaintiff fails to allege sufficient facts to justify this court's exercise of personal jurisdiction over defendant Saulovich.
Motion to Dismiss — Failure to State a Claim
Standard
A motion to dismiss under Rule 12(b)(6) attacks the legal sufficiency of the complaint. It is viewed with disfavor and rarely granted. See e.g., International Erectors, Inc. v. Wilhoit Steel Erectors Rental Service, 400 F.2d 465, 471 (5th Car. 1958). A complaint should not be dismissed for failure to state a claim unless the plaintiff can prove no set of facts entitling him to relief. Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Pataula Electric Membership Corp. v. Whitworth, 951 F.2d 1238, 1240 (11th Cir. 1992). The court is to presume true all of the complaint's allegations and make all reasonable inferences in favor of the plaintiff. Duke v. Cleland, 5 F.3d 1399, 1402 (11th Cir. 1993). The rules require nothing more than "a short and plain statement" that will give the defendant fair notice of the claims and the grounds upon which they are based. Conley v. Gibson, 355 U.S. 41, 45-46 (1957).Facts
Plaintiff is a seller of wholesale quantities of perishable agricultural commodities and operates its business under a PACA License issued by the United States Department of Agriculture. Defendant is a purchaser of produce in wholesale quantities.
Plaintiff sold to defendants produce having an invoice value in the amount of $110,463.24 including interest and costs. The defendant accepted each load of produce in Clovis, California. Plaintiff issued invoices to defendant which, state in part:
The perishable agricultural commodities listed on this invoice are to be sold subject to the statutory trust authorized by Section 5c of the Perishable Agricultural Commodities Act 1930 7 U.S.C. 499e(c). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other product derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received.
. . . In the event collection action becomes necessary Buyer agrees to pay all costs of collection, including attorney's fees and costs.
According to plaintiff, defendant failed to deliver sufficient funds to plaintiff from the PACA Trust Assets for all shipments of produce and failed to preserve sufficient amounts of the PACA Trust Assets to fully satisfy all qualified PACA trust claims.
Discussion
Defendants originally asserted plaintiff's failure to properly preserve its PACA Trust Rights by providing the statutorily required notice as one basis for the dismissal of plaintiff's claims. Having received invoices that were attached to the complaint but apparently not served on defendant, defendant now withdraws, without prejudice, this portion of its motion to dismiss.
Defendant, in its brief in support of its motion to dismiss, also argued that plaintiff's claim for attorney's fees and costs should be dismissed because plaintiff failed to allege "that it is entitled to attorney's fees under a contract. . . ." Although defendant did not specifically withdraw this ground for dismissal once the invoices were produced, it appears that the specific language contained in the invoices attached to the complaint are sufficient to allege that defendant is contractually obligated to pay attorney's fees and costs. Therefore, to the extent defendant still seeks to dismiss plaintiff's claims for attorney's fees, the motion to dismiss is DENIED.
Finally, defendant seeks dismissal of Count I of plaintiff's complaint seeking enforcement of the PACA Trust pursuant to 7 U.S.C. § 499e(c). Defendant, citing opinions from the Second and Ninth Circuits, argues that "PACA trust funds are not misused if they are utilized to `pay off other perishable commodities producers,'" see e.g. E. Armata v. Korea Commercial Bank of New York, 367 F.3d 123, 130 (2nd Cir. 2004), and plaintiff failed to allege that defendant improperly utilized funds.
Section 499e(c) states:
Perishable agricultural commodities received by a commission merchant, dealer, or broker in all transactions, and all inventories of food or other products derived from perishable agricultural commodities, and any receivables or proceeds from the sale of such commodities or products, shall be held by such commission merchant, dealer, or broker in trust for the benefit of all unpaid suppliers or sellers of such commodities or agents involved in the transaction, until full payment of the sums owing in connection with such transactions has been received by such unpaid suppliers, sellers, or agents.7 U.S.C. § 499e(c)
Any act or omission which is inconsistent with a PACA trustee's duty to "maintain trust assets in a manner that such assets are freely available to satisfy outstanding obligations to sellers of perishable agricultural commodities" violates PACA. See 7 C.F.R. § 46.46(d)(1).
Having reviewed plaintiff's complaint, the court finds that the allegations therein are sufficient to satisfy the minimum pleading requirements of the federal rules. The cases cited by defendant are distinguishable and do not require a contrary result.
Therefore, for all the foregoing reasons, defendant's motion to dismiss [docket no. 8] is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to plaintiff's claims against individual defendant Saulovich and DENIED as to all other claims.
Summary
Defendant's motion to dismiss [docket no. 8] is GRANTED IN PART and DENIED IN PART. The motion is GRANTED as to plaintiff's claims against individual defendant Saulovich and DENIED as to all other claims.