Summary of a Recent
Judicial Development in
Perishable Agricultural Commodities

Attorney Fees and Interest
Recoverable Under PACA

Bhargavi Motukuri
National AgLaw Center Graduate Assistant

Summary of Decision

In Country Best v. Christopher Ranch, 361 F.3d 629 (11th Cir. 2004) the United States Court of Appeals for the Eleventh Circuit held that suppliers of perishable agricultural commodities were allowed to collect attorney fees and prejudgment interest incurred in an action to enforce its rights in the statutory trust created by the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. §§ 499a-499t.

Background

The PACA provides that in transactions involving perishable agricultural commodities, "those commodities or their proceeds 'shall be held by such commission merchant, dealer, or broker in trust for the benefit of all unpaid suppliers . . . 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 the unpaid supplier. Id. (quoting 7 U.S.C. § 499e(c)(2)).

Several suppliers of perishable agricultural commodities sought to recover prejudgment interest and attorney fees that accrued "in connection with" a collection action brought against John Manning Co. (Manning), a perishable agricultural commodities dealer. See id. at 631. The district court held that the suppliers were not entitled to interest and attorney fees because it would result in disproportionate distribution of the statutory trust assets. See id. The suppliers appealed the district court's decision to the Eleventh Circuit. See id.

Arguments

The suppliers argued that their contractual claim for attorney's fees and interest is recoverable as a part of PACA trust claim. See id. at 632. Manning argued that certain claims like attorney fees and interest do not qualify for relief under PACA trust claim. See id.

Analysis and Holding

Noting that this issue was a matter of first impression for the Eleventh Circuit, the court explained that it first had to examine whether the "'language at issue has a plain and unambiguous meaning with regard to a particular dispute.'" Id. (citations omitted). Based on its interpretation of the statutory language, the court concluded that

[h]ad Congress intended to limit PACA claims solely to the price of the commodities, it could have inserted language reflecting that limitation in 7 U.S.C. § 499e(c)(2). Instead, it chose to allow "full payment of the sums owing in connection with [commodities] transactions." This unambiguously encompasses not only the price of commodities but also additional related expenses. Such related expenses include attorney fees and interest that buyers and sellers have bargained for in their contracts."

Id. (citing Middle Mountain Land & Produce, Inc. v. Sound Commodities, Inc., 307 F.3d 1220, 1223 (9th Cir. 2002) (citation omitted)).

The court remanded the matter to the district court, instructing the district court that if it is determined "that rights to attorney fees and interest exist under applicable contract principles, they can be awarded in the same way as other 'sums owing in connection with' the transactions." Id.

The case was decided on March 1, 2004; this summary was posted Nov. 9, 2004.