Free Declaration - District Court of California - California

Case 3:08-cv-00914-JLS-JMA

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LAW OFFICES RYNN & JANOWSKY 4100 NEWPORT PLACE DRIVE SUITE 700 NEWPORT BEACH, CALIFORNIA 92660 (949) 752-2911 FAX (949) 752-0953

PATRICIA J. RYNN State Bar No. 092048 ELISE O'BRIEN, State Bar No. 245967 RYNN & JANOWSKY, LLP 4100 Newport Place Drive, Suite 700 Newport Beach, CA 92660 Telephone: (949) 752-2911 Facsimile: (949) 752-0953 E-Mail: [email protected] E-Mail: [email protected] Attorneys for Plaintiffs SUCASA PRODUCE, et al. UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA, SAN DIEGO DIVISION

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SUCASA PRODUCE, an Arizona Partnership; P.D.G. PRODUCE, INC., an Arizona corporation; EXPO FRESH, LLC, a California limited liability company; H.M. DISTRIBUTORS, INC., an Arizona corporation; PRIME TIME SALES, LLC, a California limited liability company; VANAL DISTRIBUTING, INC., an Arizona corporation, DEL CAMPO SUPREME, INC., an Arizona corporation; MEYER, LLC, a California limited liability company, Plaintiffs vs. SAMMY'S PRODUCE, INC., a California corporation; CALIFORNIA PRODUCE EXCHANGE, INC., a California corporation; US FARMS, INC., a California corporation; WORLD GARLIC & SPICE INC., a California corporation; AMERICAN NURSERY EXCHANGE, INC., a California corporation; YAN SKWARA, an individual; SAMUEL V. NUCCI, an individual; DARIN PINES, an individual, Defendants.

CASE NO. 08-cv-914 JLS (JMA) DECLARATION OF CESAR PARADA IN SUPPORT OF PLAINTIFFS' MOTION TO EXPAND THE PRELIMINARY INJUNCTION; EXHIBITS IN SUPPORT THEREOF

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LAW OFFICES RYNN & JANOWSKY 4100 NEWPORT PLACE DRIVE SUITE 700 NEWPORT BEACH, CALIFORNIA 92660 (949) 752-2911 FAX (949) 752-0953

I, CESAR PARADA, declare and depose as follows: 1. I currently am and during all times mentioned in this declaration have been the

Secretary and Treasurer of Plaintiff and Moving Party herein, Vanal Distributing, Inc. ("VANAL"). 2. VANAL is a corporation in Nogales, Arizona which sells wholesale quantities of

perishable agricultural commodities ("produce") under its own name and which is licensed as a dealer under the Perishable Agricultural Commodities Act of 1930, as amended, [7 U.S.C. §499a, et seq.] ("PACA"). 3. I am personally familiar with all matters which are the subject of this declaration

and the facts stated herein are based upon my own personal knowledge, except as to those matters based upon information and belief, and as to those matters, I believe them to be true. If called as a witness in this proceeding, I would and could competently testify to the matters stated herein. 4. VANAL is a produce creditor of Defendant, Sammy's Produce, Inc.

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("SAMMY'S"). SAMMY'S is a produce dealer as defined under 7 U.S.C. §499a, and operates subject to and is licensed under the PACA. SAMMY'S operates as wholesale buyer and seller of perishable agricultural commodities, and in that capacity has purchased perishable agricultural commodities from Plaintiff for resale to SAMMY'S own customers. 5. Defendants Yan Skwara ("SKWARA"), Samuel V. Nucci ("NUCCI"), and Darin

Pines ("PINES") are listed as SAMMY'S President, Vice President of Sales and Vice President of Operations, respectively, with the Blue Book (a credit service for the produce industry). As such, and based on my conversations with Mr. SKWARA, Mr. NUCCI, and Mr. PINES, I believe that each of the individuals named as Defendants herein (SKWARA, NUCCI and PINES) are and were responsible for the day-to-day operations of SAMMY'S during all material times herein, and were in a position to control the PACA Trust assets in SAMMY'S possession which belong to PRIME TIME.

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LAW OFFICES RYNN & JANOWSKY 4100 NEWPORT PLACE DRIVE SUITE 700 NEWPORT BEACH, CALIFORNIA 92660 (949) 752-2911 FAX (949) 752-0953

6.

I make this declaration in support of Plaintiffs' Motion to Expand the Preliminary

Injunction, to prevent Defendants' further dissipation of PACA trust assets and to compel turnover of all such trust assets rightfully belonging to Plaintiffs. 7. As the Secretary and Treasurer of VANAL, my responsibilities include

monitoring its sales of perishable agricultural commodities, including the sales that are the subject of this dispute, and supervising collection of its accounts receivable for such sales. I have custody and control of VANAL'S sales and accounts receivable records as they relate to Defendant SAMMY'S, and I am thoroughly familiar with the manner in which those records are compiled. 8. The sales and accounts receivable records of Plaintiffs, including invoices, billing

statements and other related documents, are made in the ordinary course of business and are made at or near the time of the occurrence of the event of which they are a record. These sales records are made either by me or under my direction and supervision by VANAL'S employees whose duty it is to make such documents. 9. The produce that is the subject of this dispute was sold in the course of interstate

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commerce between the states of Arizona and California. 10. The total balance due to VANAL from Defendants results from a series of

fourteen (14) sales transactions involving tomatoes shipped between January 15, 2008 and April 3, 2008. Between on or about those dates, VANAL sold and delivered to Defendants truck lots of tomatoes of various varieties and quantities, being perishable agricultural commodities, which Defendant SAMMY'S accepted without objection, for agreed-upon selling prices as reflected on VANAL'S invoices, of which a total principal amount of $136,839.30 remains outstanding and seriously past due. 11. An invoice for each shipment was prepared and mailed to Defendant SAMMY'S

by VANAL on or about the day of each transaction. True and correct copies of Plaintiff VANAL'S fourteen invoices confirming these sales are appended hereto and incorporated herein by reference as Exhibit 1. A true and correct copy of Plaintiff VANAL'S aged statement of account summarizing the outstanding invoices and applying partial payments received to date, 3

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LAW OFFICES RYNN & JANOWSKY 4100 NEWPORT PLACE DRIVE SUITE 700 NEWPORT BEACH, CALIFORNIA 92660 (949) 752-2911 FAX (949) 752-0953

(hereafter "Aging Report") is appended hereto and incorporated herein by this reference as Exhibit 2. 12. Although Defendant SAMMY'S received and accepted the produce shipments

without objection, Defendant SAMMY'S has failed to pay for the produce that it purchased from VANAL. 13. As Secretary and Treasurer for Plaintiff VANAL, I review and approve any price adjustments, credits or discounts issued by VANAL in connection with the sales that are the subject of this dispute. As of the date of this Declaration, no price adjustments of any amount have been issued to Defendants. 14. Further, as Secretary and Treasurer of VANAL, it is my responsibility to make certain that VANAL complies with all requirements necessary to preserve its trust rights under PACA for all unpaid shipments of produce, including the shipments that are the subject of this dispute. VANAL is now, and during all times herein has been a PACA licensee, operating under PACA license no. 20031380. In compliance with the statutory filing requirements, I made certain that each of VANAL'S invoices set forth the following statutory language required by PACA to preserve VANAL 'S PACA trust benefits: "The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by section 5(c) 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 products derived from these commodities and any receivables or proceeds from the sale of these commodities until full payment is received."

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See, Exhibit 1, which shows that the above-quoted language appears on the face of each invoice sent to Defendants concerning the transactions that are the subject of this dispute. 15. For the above-stated reasons, I am confident that VANAL has taken all steps

necessary to preserve its PACA trust rights in connection with its outstanding invoices in this proceeding. 16. Plaintiffs' invoices issued to Defendant SAMMY'S contain PACA Prompt

payment terms, or terms of net 10 days. However, as of the date of this declaration, the principal 4

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LAW OFFICES RYNN & JANOWSKY 4100 NEWPORT PLACE DRIVE SUITE 700 NEWPORT BEACH, CALIFORNIA 92660 (949) 752-2911 FAX (949) 752-0953

balance of $136,839.30 due to VANAL from Defendants remains delinquent. Because of Defendants' failure to make payments when promised, and the seriously delinquent status of its account with our Company, and SAMMY'S admitted lack of sufficient funds to pay the amount it owes VANAL, I believe that there is a great risk that VANAL will not recover the balance due to it without this Court's intervention and issuance of an order restraining Defendants from further dissipation of PACA trust assets. 17. In or about January, 2008 I began contacting SAMMY'S regarding their past due

balance. In the beginning, I would call and speak with Mr. NUCCI. Mr. NUCCI advised me that I would need to talk to Darin PINES in order to collect the sums due to VANAL. Mr. NUCCI assured me that VANAL would be paid, and further assured me that he would contact Mr. PINES himself to make sure that VANAL would be paid. 18. In or about February, 2008 I began contacting Mr. PINES on a regular basis. In

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the beginning, Mr. PINES would take my phone call each time and repeatedly assure me that VANAL would be getting paid, explaining that SAMMY'S was working on getting money and just hit a little snag. After a period of time, however, Mr. PINES stopped taking my phone calls entirely, and I would instead leave him voice messages, which he would not return. 19. After Mr. PINES stopped taking my phone calls, I spoke with Mr. NUCCI again

and told Mr. NUCCI that I was preparing to file a complaint with PACA. Mr. NUCCI then put me in contact with Yan SKWARA. 20. Over the past two to three months I have had several conversations with Mr.

Skwara. Each time he assures me that SAMMY'S would pay VANAL the sums due and owing. During this time period VANAL received three payments in the amounts of $20,000.00 each towards SAMMY'S past due balances, including a check dated April 24, 2008 from AMERICAN NURSERY EXCHANGE, INC., a check dated May 2, 2008 from WORLD GARLIC & SPICE, INC., and cashier's check dated May 7, 2008 from Banco Popular. After application of these payments, the total principal amount of $136,839.30 remains outstanding and seriously past due.

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LAW OFFICES RYNN & JANOWSKY 4100 NEWPORT PLACE DRIVE SUITE 700 NEWPORT BEACH, CALIFORNIA 92660 (949) 752-2911 FAX (949) 752-0953

21.

My last conversation with Mr. SKWARA was on June 17, 2008. During that

conversation, Mr. SKWARA explained to me that SAMMY'S does not have the money to VANAL right now, that he is working on finding new money for SAMMY'S and possibly finding other people to invest in the business. He assured me again that VANAL would be paid. 22. Because Defendants have (a) admitted that they cannot promptly and fully pay the

PACA trust debt to VANAL; (b) repeatedly failed to remit payments as promised; and (c) advised me that SAMMY'S is trying to obtain new sources of financing to enable it to pay at least part of its obligation to VANAL, I am quite certain that Defendants have dissipated the PACA trust assets they control in violation of PACA. Absent immediate intervention from this Court, I believe those trust assets, which rightfully belong to the Plaintiffs in this action, will continue to be dissipated and will remain beyond the reach of the Plaintiffs herein. 23. VANAL relies upon its customers' prompt payment for produce sales so that it

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can effectively and adequately manage its current payables to its own vendors, monitor its cash flow, and make informed business decisions. The failure of Defendants to adequately preserve Plaintiffs' PACA trust assets and to pay the amounts due has jeopardized and will continue to jeopardize the ability of VANAL to properly operate its business, to make informed business decisions, to make necessary purchases and acquisitions, and to pay some of its own suppliers. 24. For the above reasons, VANAL has been economically harmed and will likely be

irreparably harmed if the PACA trust assets in Defendants' possession are allowed to continue being dissipated and diverted to other uses. The PACA assets which Defendants now possess rightfully belong to Plaintiffs. These trust assets, including inventory and accounts receivable, must be preserved for the benefit of and remitted to Plaintiffs. 25. Unless this Court expands the Preliminary Injunction as requested by Plaintiffs, in

my view, the remaining PACA trust assets being held by Defendants will be further dissipated, and VANAL'S chances of recovering the amounts due it for the produce sold to SAMMY'S

will have been thereby effectively undermined. For these reasons, I respectfully urge this Court to issue the requested relief.

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