A federal judge has ruled in favor of five growers who took their Perishable Agricultural Commodities Act trust claims against Salyer American Fresh Foods to court.
They were the last of the unsettled PACA claims against Monterey, Calif.-based Salyer American, which went into receivership in 2009.
U.S. District Judge Jeremy Fogel issued his ruling May 4 in San Jose, Calif.
The court approved 10% interest on the claims for late payment, said Marion Quesenbery, a partner in the law firm of Rynn & Janowsky. The firm represented three of the growers — Merrill Farms, K&S Farms and M. Nishimori Farms — that were awarded a total of about $1 million.
The other claims involved Braga Ranch and Sabor Farms.
Receiver Steve Franson paid the claims with the approval of Bank of the West shortly after the ruling was issued, said Quesenbery.
“We were pleased the guys who stuck it out and took the chance with a hearing were rewarded,” she said. “The bank was out a lot of money so it wasn’t pleased to give up any of it to the PACA Trust creditors. We’ve been battling with them for two years.”
After Salyer American collapsed, 16 PACA claims were filed. Before Fogel’s ruling, the rest had been settled. Among other objections, the receiver argued that four of the remaining claims violated PACA Trust provisions because the companies held shared equity farming agreements with Salyer accepting final payment in 45 days — more than the 30 provided for under PACA.
“The agreements said the last payment would be within 45 days of the accounting,” Quesenbery said. “The bank took the position that that extended payment terms beyond 30 days. Our position was, ‘No, that was a clean-up payment.’ The court agreed.
"You can’t waive your PACA rights without a discussion, the ruling says. We had former employees of Salyer who submitted statements saying, ‘We never intended anybody to waive their PACA Trust rights.’”