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 ROBERT SCHACHTEL 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, ROBERT SCHACHTEL, declare and attest as follows: 1. I currently am and during all times mentioned in this declaration have been the

Sales Manager of Plaintiff, EXPO FRESH, LLC. ("EXPO FRESH"). 2. EXPO FRESH is an limited liability company based in San Diego, California

operating as a grower and shipper of wholesale quantities of perishable agricultural commodities ("produce"), and is so licensed (PACA License # 20070026) 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 set forth herein are based upon my own personal knowledge. As to those matters set forth herein based upon information and belief, 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. EXPO FRESH is a creditor of Defendant, Sammy's Produce, Inc. ("SAMMY'S").

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SAMMY'S is a produce dealer as defined under 7 U.S.C. §499a, and operates subject to and is licensed (PACA License # 20071275) under the PACA. The USDA PACA License records list Mr. Yan SKWARA and CALIFORNIA PRODUCE EXCHANGE, INC. as principals of SAMMY'S. SAMMY'S operates as wholesale buyer and seller of perishable agricultural commodities, and in that capacity has purchased perishable agricultural commodities from EXPO FRESH for resale to its 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). Based upon this listing and upon my telephone conversations with representatives of SAMMY'S, I believe that the named individual Defendants (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 EXPO FRESH.

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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' from further dissipating PACA trust assets and to compel turnover of all such trust assets rightfully belonging to Plaintiffs. 7. As Sales Manager of EXPO FRESH, my responsibilities include supervising

collection of its accounts receivable for such sales. I have custody and control of EXPO FRESH'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 EXPO FRESH, 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 EXPO FRESH's employees whose duty it is to make such documents. 9. The produce that is the subject of this dispute was sold and shipped in or in

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contemplation of interstate or foreign commerce. 10. The amount due to EXPO FRESH from Defendants result from multiple sales

transactions involving tomatoes shipped between November 1, 2007 and November 28, 2007. Between on or about those dates, EXPO FRESH sold and delivered to Defendants multiple truck lots of tomatoes of various varieties and quantities all of which Defendant SAMMY'S accepted without objection. The agreed-upon prices for each of these transactions are reflected on EXPO FRESH's invoices, of which the cumulative total principal amount owed by SAMMY'S to EXPO FRESH is $254,441.95, which amount is seriously past due. 11. An invoice for each shipment was prepared and mailed to Defendant SAMMY'S

by EXPO FRESH on or about the day of each transaction. True and correct copies of Plaintiff EXPO FRESH's invoices confirming these sales are appended hereto and incorporated herein by reference as Exhibit 1. In addition, a true and correct copy of Plaintiff EXPO FRESH's aged statement of account summarizing the outstanding invoices and applying partial payments received to date, (hereafter "Aging Report") is appended hereto and incorporated herein by this reference as Exhibit 2. 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

12.

Although Defendant SAMMY'S received and accepted the produce shipments

without objection, Defendant SAMMY'S has failed to pay EXPO FRESH the amounts invoiced in connection with these produce transactions. 13. As the Sales Manager of Plaintiff EXPO FRESH, I review and approve any price

adjustments, credits or discounts issued by EXPO FRESH in connection with the sales that are the subject of this dispute. As of the date of this Declaration, I have not agreed to modify any prices from the prices reflected on Exhibit 2. Indeed, in my numerous conversations with Defendants Sam NUCCI, Daren PINES and Yan SKWARA, in which I was attempting to get them to pay me, never once did either of them object to the amounts invoiced by EXPO FRESH or the cumulative amount for which I was seeking payment. Moreover, there have been no payments received since we generated the attached Aging Report attached as Exhibit 2, and therefore all invoice balances listed thereon, as well as the cumulative principal balance due is correct. 14. As the Sales Manager of Plaintiff EXPO FRESH, it is my responsibility to make certain that EXPO FRESH 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. Plaintiff is now, and during all times herein has been a PACA licensee, operating under PACA license no. 20070026. In compliance with all statutory filing requirements, I made certain that each invoice for EXPO FRESH set forth on its face the following statutory language which is required under PACA to preserve our 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." See, Exhibit 1 confirming 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. I am therefore confident that EXPO FRESH has taken all steps necessary to preserve its PACA trust rights in connection with the amounts due under the invoices appended hereto under Exhibit 1. 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

15.

As of the date of this declaration, the entire outstanding principal of $254,441.95

due EXPO FRESH from Defendants remains seriously delinquent. Despite my repeated efforts to secure the payment from SAMMY'S to which EXPO FRESH is entitled, Defendants have refused to remit payments when promised, and have repeatedly acknowledged that SAMMY'S lacks sufficient funds to pay EXPO FRESH the amounts it is owed and are hard at work trying to locate other sources of capital with which to pay produce creditors like EXPO FRESH. In light of SAMMY'S admitted lack of sufficient funds to pay the amount it owes EXPO FRESH, I believe that there is a great risk that EXPO FRESH may never recover the balance due to it unless this Court intervenes to restrain Defendants from further dissipation of PACA trust assets. 16. In or about July of 2007, EXPO FRESH began selling perishable agricultural

commodities to SAMMY'S. In September of 2007, SAMMY'S started to have trouble paying on time. When I asked Sam NUCCI if SAMMY'S was having problems, he told me that SAMMY'S had two accounts which were very slow paying them, but that SAMMY'S would be catching up and staying current with EXPO FRESH. 17. We continued to ship to SAMMY'S until the end of November 2007, at which

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time the payments became extremely slow. I was constantly calling Mr. NUCCI, as there were many outstanding invoices from September and October, in addition to the outstanding invoices for November. When I would speak with Mr. NUCCI, he would call Mr. PINES to find out the amount of the next payment and then MR. NUCCI would call me back with that information, which never turned out to be the correct amount. 18. In the middle of December, I began to speak with Mr. PINES twice a week about

the money SAMMY'S owed to EXPO FRESH. Mr. PINES gave me several excuses as to why the payments were slow, but always assured me that EXPO FRESH would receive payment. 19. In February 2008, Mr. PINES informed me that they were going to "sell their

garlic deal in Los Angeles" and that it would bring in more money for their accounts payables, and that EXPO FRESH would be paid up because EXPO FRESH was the oldest on their list. 20. During April and May we received two checks which were returned for

insufficient funds: check number 11095 dated April 13, 2008 in the amount of $4,809.00, and 5

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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

check number 11104 dated May 2, 2008 in the amount of $3,000.00. These checks were later covered by sending cashier's checks. 21. On or about April 1, 2008, Mr. PINES informed me that I should speak with Yan

SKWARA regarding the outstanding balance due to EXPO FRESH from SAMMY'S. I called Mr. SKWARA at that time, and Mr SKWARA informed me that EXPO FRESH would be paid because he was working hard to obtain more investment money for U.S. FARMS, INC. Mr. SKWARA told me that he was going to New York to speak with investment bankers and going to the "Money Show" in Las Vegas to speak with investors. Mr. SKWARA also informed me that he had a nursery stock of palm trees and other plants with an approximate value of $200,000.00 to $300,000.00 which they were trying to sell. During all my subsequent

conversations with Mr. SKWARA, he has continued to assure me that he is still working on obtaining money to pay EXPO FRESH. 22. At no time have any of the Defendants, or anyone acting on behalf of Defendants,

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ever denied owing Plaintiff EXPO FRESH money for the produce it received, nor have they disputed that the cumulative sum of $254,441.95 remains past due to EXPO FRESH. 23. Because Defendants have (a) admitted that they cannot promptly and fully pay

their PACA trust obligation to EXPO FRESH; (b) repeatedly failed to remit payments as promised; and (c) advised me that they are attempting to secure new sources of financing to enable them to pay the balance owed to EXPO FRESH, I am convinced that Defendants have dissipated the PACA trust assets under their control, in violation of PACA. Unless we are able to obtain an immediate injunction against Defendants from this Court, I fear that the remaining PACA trust assets now in the hands of Defendants will continue to be dissipated until there is nothing left to satisfy the balances due to Plaintiff EXPO FRESH. 24. EXPO FRESH relies upon its customers' prompt payment for produce sales so

that it 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 pay the amounts due EXPO FRESH in a timely fashion has jeopardized and will continue to jeopardize the ability

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