Quality Foods Sued by Insurer for Unpaid Produce Invoices

On Monday, insurance wholesaler Euler Hermes North America Insurance Company filed a complaint in the Southern District of Florida – West Palm Beach Division against Quality Foods Produce, Inc. and Jose Perez for failure to pay Euler Hermes’ insurance assignees the proper invoices for their products.

Euler Hermes is the insurance provider for assignees Produce Team, LLC and La Casa Del Aguacate, LLC who trade in fresh fruit and vegetable commodities covered under the Perishable Agricultural Commodities Act (PACA). The defendant allegedly ordered, received and accepted produce from the assignees, but failed to pay the invoices for them. Quality Foods accrued a balance of $75,281.00 with Produce Team and $48,960.00 with La Casa Del Aguacate with an 18% interest rate per year. According to the plaintiff, this constitutes bad faith as the defendant “failed to preserve sufficient funds to fully satisfy all qualified PACA claims” and “failed to ensure that its funds were freely available to satisfy its outstanding obligations to Assignors’ PACA trust rights.”

The complaint further claimed that Quality Foods “lacked the liquidity or free cash flow to pay Assignors” for the produce they bought and “improperly shifted” the risk of their undercapitalization onto the assignees and Euler Hermes. By PACA, sellers “retain a trust claim over the[ir] commodities” which Euler Hermes is using to recoup the lost payments. As a result, the plaintiff is suing for enforcement of the PACA trust, PACA violations and breach of duties, breach of contract, interference with receipt of trust assets, and breach of fiduciary duty.

The plaintiff is seeking an injunction enjoining Quality Foods to pay $124,241 dollars to Euler Hermes, interest, damages, attorney’s fees and costs, and other relief.
Euler Hermes is represented by McGlinchey Stafford, PLLC.