Nicholas Malfitano May 22, 2015, 10:46am


PHILADELPHIA – A Philadelphia federal judge has granted the default judgment motion of two California-based produce companies against a former Philadelphia market store and one of its owners who did not respond to the plaintiffs’ claims for outstanding payments due them.

Spring Valley Produce, of Arroyo Grande, Calif., and Salad Farm, of Salinas, Calif., sold agricultural goods to the Stea Bros. Produce store, formerly located on Essington Avenue in Philadelphia, over a total period spanning November 2013 to March 2014.

According to the lawsuit, Stea Bros. owed at least an amount of $159,945.95 to Spring Valley Produce and at least an amount of $25,988.80 to Salad Farm for these transactions.

The defendants have made payments in the amount of $42,918.70 to Spring Valley Produce and $7,145.48 to Salad Farm on their respective outstanding balances, leaving a total unpaid balance between the two businesses for Stea Bros. at $135,870.57.

According to the terms of the invoices forwarded to Stea. Bros by Salad Farm, it was liable for an amount of 1.5 percent monthly interest on unpaid balance amounts and attorneys fees – Spring Valley Produce’s invoices contained no such terms.

Spring Valley Produce and Salad Farm filed suit in January against Stea. Bros collectively and its individual proprietors to recover the unpaid balance funds for both businesses, plus the extra costs stipulated in the invoice for Salad Farm.

Judge Wendy Beetlestone, of the U.S. District Court for the Eastern District of Pennsylvania ruled on the case Monday, finding in favor of the plaintiffs’ motion for default judgment against Stea Bros.

“Under PACA, it is unlawful for a dealer in commodities to fail to make prompt, full payment to the person with whom it made a commodity transaction. To ensure payment, perishable agricultural commodities sold and the proceeds from the resale of those commodities are held in trust by the buyer for the benefit of the seller until full payment is made to the seller,” Beetlestone said.

“It is unlawful for a buyer to fail to maintain the PACA trust for the benefit of the seller. The purchaser is charged with a duty to insure that the PACA trust has sufficient assets to ensure prompt payment of the amounts owed to the seller. A purchaser who violates these provisions is liable for the full amount of damages 3 the seller sustains.”

Beetlestone added the plaintiffs have claimed they supplied Stea Bros. with agricultural commodities covered by PACA and have not received full payment for those commodities, and further claimed the defendants have failed to maintain the trust assets and keep them available to satisfy their claims, as required by PACA.

“Thus, they have stated a valid claim that Stea Bros. is liable for the amounts due them,” Beetlestone decided.

Beetlestone further found Anthony Stea, in his position as an owner with the power to control PACA trust assets, liable for breach of fiduciary duty for not making the necessary payments.

The federal court judge then next considered whether a default judgment was warranted in this case. Citing the defendants receiving service of the claim on Jan. 26 and not actively participating in defending themselves from the suit, this inaction “creates a presumption of culpability” on the part of the defendants, according to Beetlestone, who found a default judgment was appropriate in this matter.

As to the calculation of damages, Beetlestone cited the statutory rate of contractual pre-judgment interest in Pennsylvania of six percent. When amortized through April 23, it amounts to $8,887.99, with additional interest on the judgment accruing at a rate of $19.24 per day.

For Salad Farm, Beetlestone concluded their submission of documents providing for an 18 percent annual pre-judgment interest rate from the due date of payment through April 23, when properly amortized, amounted to $3,969.66. Additional interest on this judgment also accrues at a rate of $9.30 per day, according to the Court.

Additionally, both plaintiffs sought post-judgment interest as well, at rates identical to that of the aforementioned pre-judgment interest, which Beetlestone granted, though not at the rates sought by the plaintiffs.

“While the Court will award post-judgment interest, it will not do so at the requested rates. That is because the availability of post-judgment interest in an action arising under a federal statute is governed by federal law, and post-judgment interest is statutorily mandated for all federal judgments at the rate set forth [by that federal law],” said Beetlestone.

Beetlestone deduced both plaintiffs were only eligible to receive post-judgment interest at the statutory rate of six percent from the date of judgment, at a weekly average rate for maturity Treasury yield, governed by the prior calendar’s year mark set by the Federal Reserve System.

Beetlestone then granted the plaintiffs’ motion for default judgment against Stea Bros. and Anthony Stea. According to court records, Frank Stea, Jr. filed a timely response to this litigation, and the judgment does not apply to him.

The plaintiffs are represented by Jeffrey M. Chebot of Whiteman Bankes and Chebot, in Philadelphia.

U.S. Eastern District Court of Pennsylvania case 2:15-cv-00193

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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