REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT

BERNARD ZIMMERMAN, Magistrate Judge

Plaintiff's motion for entry of default judgment against defendants MM Produce and Food Service Supplies, Inc. ("MM"), Felipe Ceja and Christian Ceja came on for hearing on April 19, 2006, at 10:00 a.m. Christian Ceja appeared on April 19, 2006, and the motion was continued to July 5, 2006, to allow the parties to exchange information and discuss a resolution. The parties did not reach a resolution and plaintiff's motion came on for hearing again on July 5, 2006. Defendants did not appear and did not request that their default be set aside. As defendants have not consented to magistrate judge jurisdiction, the following is a report and recommendation for entry of default judgment.

On November 4, 2005, plaintiff filed a complaint for violations of the Perishable Agricultural Commodities Act ("PACA") under 7 U.S.C. § 499e, et seq. Plaintiff alleged that it sold and shipped $8,316.80 in perishable agricultural commodities to defendants for which they have failed and refused to pay. Complaint ("Compl.") ¶¶ 11, 13.

Plaintiff served defendants with a copy of the complaint on November 21, 2005. Defendants failed to answer the complaint or otherwise defend the action. On December 22, 2005, the Clerk of this court entered defendants' default under Rule 55(a). By their default, defendants are deemed to have admitted the well-pled averments of the complaint except those as to the amount of damages. See Fed.R.Civ.P. 8(d).

A court may not enter a default judgment against an unrepresented minor, an incompetent person, or a person in military service. See Fed.R.Civ.P. 55(b)(2); 50 App. U.S.C. § 521. Plaintiff submitted the declaration of its attorney who stated on information and belief that none of the defendants are infants or incompetent persons or in military service. See Declaration of Bart M. Botta ¶ 12 ("Botta Decl."). I reminded plaintiff in my Scheduling Order that compliance with the Soldiers' and Sailors' Civil Relief Act of 1940 may not be satisfied on information and belief, but at the April 19, 2006 hearing, it was apparent that Christian Ceja is not a minor, an incompetent person or in military service, and he did not raise this concern on behalf of his father. The corporate defendant, MM, is not subject to this limitation.

Pursuant to Rule 55(b)(2), a court may enter a default judgment against a party against whom default has been entered. The decision to grant or deny a default judgment under Rule 55(b) is within the discretion of the court. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Having reviewed the complaint, I find that the allegations are sufficiently well-pled to support default judgment.

PACA makes it unlawful for any commission merchant, dealer, or broker in connection with any transaction in interstate or foreign commerce to "fail or refuse truly and correctly to account and make full payment promptly in respect of any transaction in any [perishable commodity] to the person with whom such transaction is had" or "fail to maintain the trust as required under section 499e(c)." 7 U.S.C. § 499b(4). Section 499e(c) requires a trustee to hold any commodities and receivables or proceeds from the sale of such commodities in trust for the benefit of all unpaid suppliers or sellers until full payment of the sums owing have been received by the supplier or seller. 7 U.S.C. § 499e(c). Under PACA, a commission merchant, dealer, or broker that violates any provision of section 449b shall be liable for the full amount of damages sustained in consequence of such violation. 7 U.S.C. § 499e(a). "'PACA liability attaches first to the licensed seller of perishable agricultural commodities. If the seller's assets are insufficient to satisfy the liability, others may be found secondarily liable if they had some role in causing the corporate trustee to commit the breach of trust.'" Sunkist Growers, Inc., v. Fisher, 104 F.3d 280, 283 (9th Cir. 1997) (citing Shepard v. K.B. Fruit Vegetable, Inc., 868 F. Supp 703, 706 (E.D. Pa. 1994)). As such, "individual shareholders, officers, or directors of a corporation who are in a position to control PACA trust assets, and who breach their fiduciary duty to preserve those assets, may be held personally liable under the Act." Sunkist, 104 F.3d at 283. PACA also requires the unpaid supplier, seller, or agent to give written notice of intent to preserve the benefits of the trust. 7 U.S.C. § 499e(c)(3), (4).

As a threshold matter, plaintiff alleges that defendants were engaged in handling produce in interstate and/or foreign commerce as dealers and/or commission merchants subject to PACA. Compl. ¶ 9. According to the complaint, defendants meet the statutory definition of trustee under PACA. Compl. ¶¶ 9, 21. Plaintiff alleges on information and belief that Felipe Ceja and Christian Ceja were officers, directors, and/or shareholders of MM and were statutory trustees under PACA in a position to control the trust assets that are the subject of the action. Compl. ¶¶ 5-8. Defendants allegedly failed to maintain the trust assets for the satisfaction of their obligation to plaintiff and continue to fail and refuse to make full payment. Compl. ¶¶ 21-22, 25; Declaration of Manuel Reynoso ¶ 8 ("Reynoso Decl."). Plaintiff gave written notice of intent to preserve the benefits of the trust in its invoices to defendants. Id. at Exh. 1. Plaintiff has performed and fulfilled all duties required to preserve its trust benefits under PACA. Compl. ¶¶ 14, 20. As plaintiff has satisfied the statutory requirements under PACA, it is entitled to relief for all unpaid invoices.

In plaintiff's motion for default judgment, plaintiff seeks $8,316.80 in damages from defendants. Plaintiff has the burden of proving damages through testimony or written declaration or affidavit. According to the complaint, and corroborated by the invoices and statements attached to the declaration of Manuel Reynoso, defendants failed to pay plaintiff $8,316.80. See Compl. ¶ 11; Reynoso Decl.; Exhs. 1-3. Having reviewed the complaint, the motion for default judgment, and the declaration and exhibits submitted in support of the motion, I find that plaintiff has established that defendants are liable for this amount. I recommend that plaintiff recover $8,316.80 from defendants.

Plaintiff also requests $866.37 in attorney's fees and costs incurred in connection with this action. See Botta Decl. ¶ 14. A district court has limited authority to grant attorney's fees to PACA claimants. Middle Mountain Land and Produce Inc. v. Sound Commodities Inc., 307 F.3d 1220, 1225 (9th Cir. 2002). While an express statutory basis for attorney's fees does not exist under PACA, the Ninth Circuit has found attorney's fees proper in two situations: first, when an enforceable contract exists giving the plaintiff a right to attorney's fees, id. at 1224-25, and second, when a PACA claimant's litigation efforts result in a common fund for the benefit of a group of claimants.In re Milton Poulos, Inc., 947 F.2d 1351, 1353 (9th Cir. 1991) (citing Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980) ("noting that it is well-settled 'that a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole'")). Plaintiff has not alleged nor does it contend that its litigation efforts will result in a common fund. Plaintiff instead argues that the following language printed at the bottom of its invoices constitutes a contract entitling it to attorney's fees: "Terms: PACA a service charge of 1 ½% per month at the annual percentage rate of 18% will be charged on all accounts not paid within thirty days. Buyer agrees to pay reasonable attorney's fees if collection in [sic] necessary." Reynoso Decl., Exh. 1.

To begin, although some districts do not include attorney's fees and costs in the awards covered under PACA, the Ninth Circuit has ruled that the language "in connection with" in the statute authorizes "not only the price of the perishable agricultural commodities but also additional related expenses, including contractual rights to attorneys' fees and interest, in a PACA claim." Middle Mountain, 307 F.3d at 1222-23. The question then centers around whether plaintiff has shown that it is due attorney's fees pursuant to a contract. The Ninth Circuit in Middle Mountain did not decide the issue whether language similar to the "Terms" language included in the invoices constituted a contract, remanding to the district court.

The formation of this contract is governed by California law.Comerica Bank v. Whitehall Specialties, Inc., 352 F.Supp.2d 1077, 1081 (C.D. Cal. 2004). The California version of the Uniform Commercial Code applies to contracts for the sale of goods. Cal. Com. Code § 2102. "A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." Cal. Com. Code § 2204(1). Multiple invoices containing the "Terms" language and continued acceptance of the goods by defendants without any objections constitute a contract in this case. Reynoso Decl. ¶¶ 11-12. The attorney's fees provision in the invoices creates a contractual right binding defendants, and plaintiff is therefore entitled to properly documented attorney's fees necessarily incurred in collection. See Weis-Buy Services, Inc. v. Paglia, 307 F.Supp.2d 682, 694 (W.D. Pa. 2004) (awarding attorney's fees and interest because it was undisputed that the language in the invoices created a contractual right), rev'd on other grounds.

Plaintiff's counsel has personal knowledge of the attorney's fees accrued and declares under penalty of perjury that $866.37 has been billed on this matter. Botta Decl. ¶ 14. This amount seems reasonable and necessary for plaintiff to obtain a default judgment against elusive defendants. I therefore recommend that plaintiff recover $866.37.

Finally, plaintiff requests pre- and post-judgment interest at 18%, requesting $2,000.80 in pre-judgment interest and post-judgment interest accrual at 18%. Reynoso Decl., Exh. 3. Similar to its attorney's fees argument, plaintiff contends that it is entitled to pre-judgment interest because the "Terms" language printed at the bottom of its invoices creates a contract. Just as PACA authorizes attorney's fees, it also authorizes interest to plaintiff if there is a contract that does so. "[A] district court has broad discretion to award prejudgment interest to PACA claimants under 7 U.S.C. § 499e(c)(2)." Middle Mountain, 307 F.3d at 1226. Pursuant to statute, plaintiff is entitled to interest on any monetary judgment in a civil case recovered in a district court from the date of entry of the judgment. Although normally interest would accrue at the legal rate, because the invoices created a contract, the interest rate of 18% on unpaid accounts agreed to by the parties is the correct rate to apply. Citicorp Real Estate, Inc. v. Smith, 155 F.3d 1097, 1108 (9th Cir. 1998) ("affirm[ing] the district court's grant of post-judgment interest based upon the mutually agreed upon contract rate").

For the foregoing reasons, I recommend that judgment be entered against defendants for $8,316.80 in damages, plus attorney's fees and costs of $886.37, pre-judgment interest of $2,006.80 and post-judgment interest at a rate of 18%.