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1 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 1 UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION IN RE: DELTA PRODUCE, L.P. CASE NO LMC Debtor. (Chapter 11) Jointly Administered MOTION FOR LEAVE TO APPEAL FROM NOVEMBER 8, 2012 ORDER DENYING ATTORNEYS FEES BY PACA TRUST CREDITORS COOSEMANS HOUSTON, INC., EAGLE EYE PRODUCE, INC., MECCA FARMS, INC., AND TEXAS SWEET POTATO, LLC Come Now Coosemans Houston, Inc., Eagle Eye Produce, Inc., Mecca Farms, Inc., and Texas Sweet Potato, LLC (collectively, the McCarron Group ) trust creditors under the Perishable Agricultural Commodities Act ( PACA ), 7 U.S.C. 499e(c) et seq., of Delta Produce, L.P. and Superior Tomato-Avocado, Ltd., by and through undersigned counsel, and pursuant to Fed. R. Bankr. P and 8003 and 28 U.S.C. 158(a) file this Motion for Leave to Appeal the Order On PACA Creditors Applications For Attorneys Fees And Objections Thereto (Docket No. 399). In support thereof, the McCarron Group further states as follows: I. BRIEF STATEMENT OF RELEVANT FACTS 1. On January 26, 2012, the Court entered an Order appointing Special PACA counsel to oversee the collection of PACA trust assets of Delta Produce, L.P. and the identification of qualified establishing a PACA, and establishing the procedure through which PACA trust creditors of Delta Produce, L.P. would submit their claims (the PACA Claims Procedure ). In re Delta Produce, L.P., (Docket No. 52). 1

2 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 2 2. The Court entered an Amended Order establishing an identical PACA Claims Procedure in In re Superior Tomato-Avocado, Ltd., (Docket No. 43). 3. Pursuant to the PACA Claims Procedure, Mecca Farms, Inc. filed a trust claim against Delta Produce, (Claim No. 60), and Coosemans Houston, Inc., Eagle Eye Produce, Inc., Mecca Farms, Inc., and Texas Sweet Potato, LLC filed trust claims against Superior Tomato- Avocado (Claim Nos. 46, 45, 44, and 43, respectively). 4. Mecca Farms, Inc. is identified as a qualified trust beneficiary of Delta Produce pursuant to the Court s July 9, 2012 Order on Motion to Compromise in In re Delta Produce, L.P. (Docket Nos. 274). 5. Coosemans Houston, Inc., Eagle Eye Produce, Inc., Mecca Farms, Inc., and Texas Sweet Potato, LLC are identified as qualified trust beneficiaries of Superior Tomato-Avocado pursuant to the Court s July 9, 2012 Orders on Motion to Compromise in In re Superior Tomato- Avocado, Ltd. (Docket No. 93). 6. On August 23, 2012, the Court granted Special PACA Counsel s Motion to amend the PACA Claims Procedures and give PACA Creditors leave to file claims for attorneys fees in both In re Delta Produce, L.P. and In re Superior Tomato-Avocado, Ltd. (Docket Nos. 287 and 105, respectively). 7. Coosemans Houston, Inc., Eagle Eye Produce, Inc., Mecca Farms, Inc., and Texas Sweet Potato, LLC filed claims for attorneys fees in In re: Superior Tomato-Avocado, Ltd. pursuant to the Court s Order on September 12, (Docket Nos. 108, 109, 110, and 111). 8. Mecca Farms, Inc. filed claims for attorneys fees in In re: Delta Produce, L.P. pursuant to the Court s Order on September 12, (Docket No. 299). 2

3 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 3 9. On October 2, 2012, the Principal of the Debtor, Walter Scott Jensen ( Jensen ), filed his Omnibus Objections to PACA Trust Creditors Applications for Attorneys Fees, claiming that PACA Trust creditors are unsecured creditors and, therefore, not entitled to attorneys fees. (Docket No. 331). 10. On October 5, 2012, the McCarron Group filed a response to Jensen s Omnibus Objection, arguing that PACA trust creditors are not unsecured in the bankruptcy sense because PACA Trust assets are not part of the bankruptcy estate and PACA trust creditors enjoy a position of recovery ahead of even secured creditors. Further, under the PACA, attorneys fees are considered sums owing in connection with the transaction, and therefore these fees become part of the PACA trust creditor s PACA trust claim. (Docket No. 335). 11. On November 2, 2012, a hearing on PACA creditors claims for attorneys fees was held before Judge John C. Ackard. Judge Ackard denied PACA creditor s claims for attorneys fees, finding under the Bankruptcy Code that PACA trust creditors were unsecured creditors and therefore not entitled to post-petition attorneys fees. 12. The Court entered the Order on PACA Creditors Applications For Attorneys Fees and Objections Thereto on November 8, (Docket No. 399). 13. A copy of the Order is attached as Required by Fed R. Bankr. P II. STATEMENT OF QUESTIONS ON APPEAL AND RELIEF SOUGHT 1. Whether the Bankruptcy Court erred in denying the claims for attorneys fees of PACA trust creditors Coosemans Houston, Inc., Eagle Eye Produce, Inc., Mecca Farms, Inc., and Texas Sweet Potato, LLC. Coosemans Houston, Inc., Eagle Eye Produce, Inc., Mecca Farms, Inc., and Texas Sweet Potato, LLC seek a determination that the PACA trust creditors are entitled to recover 3

4 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 4 contractually obligated attorneys fees as sums owing in connection with the PACA transaction. III. STATEMENT WHY LEAVE TO APPEAL SHOULD BE GRANTED 1. The Court s Interlocutory Order Satisfies The Factors Under 28 U.S.C. 158(a)(3) And 1292(b). An interlocutory order of a Bankruptcy Court may be reviewed by a district court or bankruptcy appellate panel after granting leave to appeal. 28 U.S.C. 158 (a)(3); Fed. R. Bankr. P Because there is no standard of review of a motion for leave to appeal pursuant to 158(a)(3), courts generally have turned to the factors established by 28 U.S.C. 1292(b), which governs interlocutory appeals from district courts, In re Tullius, 2011 U.S. Dist at *5 (W.D. Tex. 2011). See generally Connecticut Nat l Bank v. Germain, 503 U.S. 249, 252 (1992). Under 28 U.S.C. 1292(b), courts consider three elements: (1) a controlling issue of law must be involved; (2) the question must be one where there is substantial ground for difference of opinion; and (3) an immediate appeal must materially advance the ultimate termination of the litigation. Mire v. Guillory, 2011 U.S. Dist. LEXIS 87555, at * 17 18, n. 5 (W.D. La. 2011); In re Merle K. Moerbe, 2005 U.S. Dist. LEXIS 32468, at * 10 (W.D. Tex. 2005). However, in Ichinose v. Homer National Bank, 946 F.2d 1169 (5th Cir. 1991), the Court expressly declined to state whether consideration of the Section 1292(b) factors is proper in the context of a motion for leave to appeal brought pursuant to Section 158(a). Mire v. Guillory, 2011 U.S. Dist. LEXIS 87555, at * 17 18, n. 5; In re Mounce, 2008 Bankr. LEXIS 4797, at * (W.D. Tex. 2008). Therefore, a court may but need not find that these elements have been met. Nevertheless, while these factors may set a high bar in some instances, In re Mounce, 2008 Bankr LEXIS at * 11, the specialized nature of the PACA, which gives qualified trust 4

5 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 5 beneficiaries a first-in-line right of recovery ahead of all other creditors, clearly exceeds the basic elements of 1292(b). As set forth more fully below, a controlling question of law exists in the bankruptcy context with regard to PACA creditors right to recover attorneys fees as sums owing in connection with the perishable agricultural transaction. It is clear that PACA trust assets are not part of the bankruptcy estate, and most courts agree that contractually obligated attorneys fees are sums owing in connection with the transaction and, therefore, are part of the PACA trust res. See Middle Mountain Land and Produce, Inc. v. J.R. Simplot Company, 307 F.3d 1220, (9th Cir. 2002); Country Best v. Christopher Ranch, LLC, 361 F.3d 629, 632 (11th Cir. 2004). Here, the Court s ruling establishes substantial ground for difference of opinion, which could undercut the very purpose of the PACA trust provisions by constraining the willingness of produce suppliers to extend any credit to produce buyers. Finally, a determination of the controlling questions of law would materially advance the termination of this case because of the need to have a correct distribution system in place for any and all future distribution of funds impressed with the PACA trust. a. The Scope of the PACA Trust The PACA was enacted in 1930 to suppress unfair and fraudulent practices in the marketing of fruits and vegetables in interstate and foreign commerce. 49 Fed. Reg In 1984, adding the PACA was amended the trust provisions of Section 5 to increase the legal protection for unpaid sellers and suppliers of perishable agricultural commodities until full payment of sums due has been received by them. (Emphasis added.) 1984 U.S.C.C.A.N. 406; See also Tanimura & Antle, Inc., et al. v. Packed Fresh Produce, Inc., 222 F.3d 132 (3d Cir. 2000); Frio 5

6 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 6 Ice, S.A. v. Sunfruit, Inc., 918 F.2d 154, 159 (11th Cir. 1990) (... the central purpose of Section 499e(c) is to ensure payment to trust beneficiaries. ). Section 5 of the PACA establishes a statutory, non-segregated floating trust that is composed of the perishable agricultural commodities received in all transactions, all inventories of food or other products derived from such perishable agricultural commodities, and all receivables or proceeds from the sale of such commodities and food or products derived therefrom. 7 C.F.R (b); 7 U.S.C. 499 e(c)(2). Modeled after the Packers & Stockyards Act, the trust provisions were intended to secure for sellers of produce a superior right of recovery ahead of all other creditors and to relieve the burden on interstate commerce that could arise when a produce supplier extends short-term credit to a produce buyer who then attempts to subordinate the produce supplier claim. 7 U.S.C. 499e(c)(1). See H.R. Rep. No (1983), reprinted in 1984 U.S.C.C.A.N. 405, 406 ( This legislation would provide a remedy by impressing a trust in favor of the unpaid seller or supplier on the inventories of commodities and products derived herefrom and on the proceeds of sale of such commodities and products in the hands of the commission merchant, dealer or broker in the same manner that has been provided by 'trust' amendments to the Packers and Stockyards Act adopted in The trust provisions of that act have operated very successfully without imposing a regulatory burden on the industry. ). These trust provisions are broad, and accordingly, all assets of a produce buyer are presumed to be impressed with the trust provisions of the PACA. See Tom Lange Co. v. Kornblum & Co., Inc. (In re Kornblum & Co., Inc.), 81 F.3d 280 (2d Cir. 1996); Sam Wang Produce, Inc. v. EE Mart FC, LLC, 2010 U.S. Dist. LEXIS 13608, *6 (E.D. Va. February 16, 2010). Failure to maintain the trust and make full payment promptly to the trust beneficiary is unlawful. 7 U.S.C. 499b(4). Furthermore, agricultural merchants and dealers are required to 6

7 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 7 maintain trust assets in a manner that such assets are freely available to satisfy outstanding obligations to sellers of perishable agricultural commodities. 7 C.F.R (e)(1). Any act or omission inconsistent with this responsibility, including dissipation or trust assets, is unlawful and in violation of [7 U.S.C. 499b]. Id. b. PACA Trust Creditors Enjoy Recovery Rights Superior To Secured Creditors Ordinary trust principals apply to the PACA trust. Therefore, the beneficiaries of the trust enjoy special status ahead of even secured creditors. Nickey Gregory Company, LLC, et al. v. Agricap, LLC, 597 F.3d 591, 595 (2d Cir. 2010); In re Kornblum & Co., Inc., 81 F.3d at 284. When a buyer or receiver of perishable agricultural commodities declares bankruptcy, those trust assets are not part of the bankruptcy estate. See In re Kornblum & Co., Inc., 81 F.3d at 284; Hiller Cranberry Produces, Inc. v. Koplovsky, 165 F.3d 1, 5 (1st Cir. 1999); In re Fresh Approach II, 51 B.R. 412, (N.D. Tex 1985) (applying the Packers and Stockyards Act to the Perishable Agricultural Commodities Act and noting that the beneficiary of such a trust would be entitled to priority in payment as to all the assets of the bankrupt, ahead of the claims of creditors who have valid security interests, ahead of the administrative costs and expenses incurred in this court and ahead of all other priority and general creditors. ); In re Monterey House, Inc., 71 B.R. 244, (S.D. Tex 1986); In re Kennedy & Cohen, Inc., 612 F.2d 963, 965 (5th Cir. Fla. 1980). The bankruptcy code also acknowledges this truism regarding trust assets. See 11 USC 541(d) ( property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest... becomes property of the estate... only to the extent of the debtor s legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold. ). Ultimately, the notes to the regulations regarding the trust provisions of the PACA also agree: 7

8 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 8 If a buyer or receiver declares bankruptcy, makes an assignment for the benefit of creditors, declares its intention to sell under the bulk sales law, or otherwise terminates its business, trust assets are not to be considered part of the estate to be distributed to other creditors or sold unless all trust beneficiaries have been paid. This follows the precedent of the similar statutory trust imposed on certain assets of meat packers, after which the statutory trust provision of the PACA has been patterned. 49 Fed. Reg. 45, 738 (1984) (emphasis added). Thus, in the bankruptcy context, PACA trust creditors enjoy a unique position to which the terms secured and unsecured are irrelevant. c. The PACA Trust Includes Contractually Obligated Attorneys Fees and Interest The PACA requires produce suppliers to provide notice to the buyer of their intent to preserve trust benefits. In 1995, the PACA was amended so that notice could be accomplished by produce suppliers including the following language on the face of their invoices: 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. 7 U.S.C. 499e(c)(4). The McCarron Group properly preserved its trust rights by including the requisite language on its invoices to Superior Tomato-Avocado, Ltd. and Delta Produce, L.P. PACA trust creditors are entitled to recover full payment of all sums owing in connections with the transaction. The PACA provides that a dealer who receives produce must hold the produce, all inventories derived from the produce, and receivables from the sale of such produce in trust for the benefit of all unpaid suppliers or sellers of such commodities... until full payment of the sums owing in connection with such transaction has been received. 7 U.S.C. 499e(c)(2). Sums owing in connection with the transaction includes attorneys fees, 8

9 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 9 provided that a contractual right arose from the exchange of contractual communications and [a PACA claimant s] invoices, then [the PACA claimant] has a right under PACA to enforce the full scope of its perishable agricultural commodities contract. Middle Mountain Land and Produce, Inc. v. J.R. Simplot Company, 307 F.3d 1220, (9th Cir. 2002); Country Best v. Christopher Ranch, LLC, 361 F.3d 629, 632 (11th Cir. 2004) (finding that the term sums owing in connection with includes not only the price of commodities but also... attorneys fees and interest that buyers and sellers have bargained for in their contracts. ). Accord May Produce Co. v. East West Imps. Inc., 2009 U.S. Dist LEXIS (N.D. Tex. Dec. 15, 2009); Ruby Robinson Co v. Kalil Fresh Marketing, Inc., 2009 U.S. Dist LEXIS (S.D. Tex., Oct. 16, 2009). PACA creditors right to full payment of all sums owing in connection with the transaction, including contractually obligated attorneys fees, extends to the bankruptcy context. Ruby Robinson is particularly instructive here. In Ruby Robinson, a principal argued he was not liable for the fees incurred litigating the bankruptcy proceedings of the corporate defendant, and the court stated that: Although the existence of a bankruptcy no doubt increased the attorneys' fees in this case, it did not change the nature of the fees. Since the fees incurred in the bankruptcy proceeding are also covered by the claimants' contractual right to attorneys' fees, they are "sums owing in connection with" a perishable commodities transaction. Ruby Robinson Co v. Kalil Fresh Marketing, Inc., 2009 U.S. Dist LEXIS at * 8 (S.D. Tex., Oct. 16, 2009). That is, the court in Ruby Robinson implicitly acknowledged the PACA trust claimants rights to recover attorneys fees even in bankruptcy. 9

10 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 10 d. Trust Beneficiaries Are Entitled to be Made Whole A fundamental common law feature of trust law is that courts will give to the beneficiaries of a trust such remedies as are necessary for the protection of their interests. A. Scott, Law of Trusts, Section 199, p (1967); see also Restatement (Second) of Trusts, Section 205, comment (a) (1959). Thus, a beneficiary is entitled to a remedy which will put him in the position in which he would have been if the trustee had not committed the breach of trust. G. Bogert, Trusts, 157 (6th Ed. 1987). The attorney fee language on the invoices notifies the trustee that the value of its trust property will not be diminished by legal costs necessitated by the trustee s failure to comply with its trust obligations, and the attendant loss of use of the trust property. Otherwise, the trust beneficiary will not be in the same position he would have been if the trustee had not committed the breach. Such a common law trust principle applies here since it furthers the goal of the PACA trust statute. See C.H. Robinson Co. v. Alanco Corp., 239 F.3d 483 (2d Cir. 2001); see also Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776 (1957) (attorney fees encompassed within language allowing recovery of sums justly due under Miller Act). The Court s Order denying attorneys fees is at odds with the purposes of the PACA and its trust provisions specifically and case law examining it. An appeal is necessary to more fully consider these issues and appropriately distribute the PACA trust assets to which the beneficiaries are entitled. 2. In the Alternative, The Court s Order is a Final Judgment From Which the McCarron Group May Appeal As Of Right Parties may appeal final judgments, orders, and decrees of a bankruptcy court as a matter of right. 28 U.S.C. 158(a)(1). The McCarron Group is entitled to appeal as of right pursuant to the Collateral Order Doctrine, Richardson Merrell, Inc. v. Koller, 472 U.S. 424, (1985), 10

11 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 11 which is also known as the Cohen Doctrine. In re Tullius, 2011 U.S. Dist , at * (citing Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546, 69 S. Ct. 1221, 93 L. Ed (1949)). Under the Collateral Order, or Cohen, Doctrine an Order is final if it: (1) conclusively determines a disputed question, (2) resolves an important issue completely separate from the merits of the action, and (3) is effectively unreviewable on appeal from a final judgment. Richardson Merrell, Inc. v. Koller, 472 U.S. at ; In re Tullius, 2011 U.S. Dist , at * PACA claimants submitted their claims for attorneys fees pursuant to Court Order. The Principal of the Debtor, Walter Scott Jensen, challenged the fees claimed. Despite the briefs submitted in support of attorneys fees, the Court ruled that PACA trust creditors are not entitled to recover attorneys fees because the creditors are unsecured. There is no question that the issue was disputed, and moreover, the Court s ruling was conclusive finding that as a matter of law, PACA trust creditors were not entitled to recover attorneys fees in bankruptcy, which, as noted earlier, is counter to the purpose of the PACA. The claimants right to attorneys fees under the PACA is an important issue that is tangential to the underlying bankruptcy proceedings of Delta Produce, L.P. and Superior Tomato-Avocado, Ltd. In this case, the Court the PACA Claims Procedure was established to collect and pursue the accounts receivable of the debtors, which money is held in trust for prorata distribution to the PACA trust creditors of the debtors that properly preserved their interest in the trust and that filed their claims pursuant to the Claims Procedure. The attorneys fees, as sums owing in connection with the transaction, would be recovered from the funds held in escrow and collected from the accounts receivable of the debtors. Resolution of the claimants 11

12 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 12 entitlement to attorneys fees is entirely separate from the merits of the core bankruptcy proceeding. The trust funds collected will be distributed to the qualified trust claimants prior to an ultimate discharge of the bankruptcy proceedings. Therefore, failure to review this now will result in certain claimants that were not contractually entitled to attorneys fees receiving a larger pro-rata share than those claimants who are entitled to attorneys fees. Even if the parties appealed after a final discharge in this matter, it would be cost prohibitive to litigate recovery of attorneys fees from those claimants who received more than the amount to which they were entitled. Therefore, this decision would be effectively unreviewable after this case is discharged. The Court s decision easily satisfies the Cohen Doctrine and should be considered a final judgment. Accordingly, the McCarron Group should be granted appeal as of right in this matter. IV. CONCLUSION WHEREFORE, the McCarron Group respectfully requests that it be granted leave to appeal the Court s November 8, 2012 Order, or in the alternative, that the Court accepts the McCarron Group s appeal as of right. Respectfully submitted this 20th day of November, By: /s/ Diana M. Geis Diana M. Geis, Esq. State Bar No Curl & Stahl, P.C. 700 N. St. Mary's Street, Suite 1930 San Antonio, Texas (210) (210) Fax dmgeis@curlstahl.com and 12

13 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg 13 By: /s/ Blake Surbey Blake A. Surbey, Esq. McCarron and Diess 4530 Wisconsin Avenue, NW Suite 301 Washington, DC (202) (202) Fax Pro Hac Vice Counsel for Mecca Farms, Inc., Coosemans Houston, Inc., Texas Sweet Potato, LLC, and Eagle Eye Produce, LLC CERTIFICATE OF SERVICE I HEREBY CERTIFY that this Notice of Appeal and attached Motion for Leave to Appeal and Memorandum thereto were filed with the Clerk of the Court and served on the below parties to the appeal via the Court s CM/ECF system upon all attorneys of record and parties receiving such service this Tuesday, November 20, /s/ Blake A. Surbey Blake A. Surbey, Esq. 1. Uesugi Farms, Inc., Wilson Produce, LLC, Bernardi and Associates, Inc., Frank s Distributing of Produce, LLC, Fresh Pac International, Inc., J-C Distributing, Inc., Mission Produce, Inc., California Artichoke & Vegetable Growers Corp. d/b/a Ocean Mist Farms, Pacific International Vegetable Marketing, Inc. d/b/a Pacific International Marketing, Prime Time Sales, LLC, Royal Flavor, LLC, Wilson Produce, LLC, Bart Botta Rynn & Janowksy, LLP 4100 Newport Place Drive Suite 700 Newport Beach, CA and Diana M. Geis, Esq. State Bar No Curl & Stahl, P.C. 700 N. St. Mary's Street, Suite 1930 San Antonio, Texas (210) represented by: 13

14 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg Rio Bravo Produce, Ltd., LLC, I. Kunik Company, Inc., represented by: Kevin P. Kelly, Esq. Keaton Law Firm, P.C. 707 Lake Cook Road Suite 300 Deerfield, IL (847) Muller Trading Company, Inc., represented by: Jason R. Klinowski, Esq. Illinois Bar. No FREEBORN & PETERS LLP 311 S. Wacker Dr., Suite 3000 Chicago, Illinois Telephone: (312) Harllee Packing, Inc., represented by: Fowler White Boggs Jake Blanchard 501 E Kennedy Blvd Suite 1700 Tampa, FL (813) C&R Fresh, LLC, Duckwall Fruit Co., Eco-Farms Sales, Inc., Fresh Start Produce Sales, Gargiulo, Inc., Henry Avocado Corp., Rio Queen Citrus, Inc., and Sunriver Sales, represented by: and Bruce W. Akerly Texas Bar No CANTEY HANGER LLP 1999 Bryan Street, Suite 3300 Dallas, Texas Telephone: (214) London Fruit, Inc., Triple H Produce, LLC, The Pumpkin Patch, LLC, Juniper Tomato Grower, Inc., Greenhouse Produce Company, LLC represented by: Goldman Law Firm Robert E. Goldman, Esq. 1 East Broward Blvd., Ste. 700 Fort Lauderdale, Fl (954) Meuers Law Firm Steven E. Nurenberg Pro Hac Vice 5395 Park Central Court Naples, FL Telephone: (239) Walter Scott Jensen, Principal of Debtor, represented by: Randall A. Pulman Pulman Cappuccio Pullen & Benson LLP 2161 NW Military Hwy, Suite 400 San Antonio, TX (210)

15 a998 Doc#407 Filed 11/20/12 Entered 11/20/12 10:39:49 Main Document Pg Special PACA Counsel Craig A. Stokes Stokes Law Offices, LLP 3330 Oakwell Court, Suite 225 San Antonio, TX (210) Delta Produce, L.P., Superior Tomato-Avocao, Ltd. represented by: Allen M. DeBard Langley & Banack, Inc 745 E Mulberry, Suite 900 San Antonio, TX (210) and R. Glen Ayers, Jr Langley and Banack, Inc 745 E Mulberry, 9th Floor San Antonio, TX (210) and Randall A. Pulman Pulman Cappuccio Pullen & Benson LLP 2161 NW Military Hwy, Suite 400 San Antonio, TX (210) and William R. Davis, Jr Langley & Banack, Inc 745 E Mulberry Ave, Suite 900 San Antonio, TX (210)

16 a998 Doc#399 Filed 11/09/12 Entered 11/09/12 13:52:34 Main Document Pg 1 of a998 Doc#407-1 Filed 11/20/12 Entered 11/20/12 10:39:49 Order on Attorneys Fees Pg 1 of 6 SIGNED this 08th day of November, JOHN C. AKARD UNITED STATES BANKRUPTCY JUDGE UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION In re: Chapter 11 DELTA PRODUCE, L.P. 1, Case No LMC Debtors Jointly Administered ORDER ON PACA CREDITORS APPLICATIONS FOR ATTORNEYS FEES AND OBJECTIONS THERETO On the 2 nd day of November, 2012, the Court considered the Applications for Attorneys Fees and the Objections thereto set forth in Exhibit A. The Court, having considered said Applications and the Objections thereto, the pleadings on file herein, and the arguments of counsel, is of the opinion that the Applications should be GRANTED IN PART and DENIED IN 1 Debtors are the following entities: Delta Produce, L.P. Case No LMC-11, Superior Tomato-Avocado, Ltd. Case No LMC-11, Atled, Ltd. Case No LMC-11, and Staci Properties, Ltd. Case No LMC. 1

17 a998 Doc#399 Filed 11/09/12 Entered 11/09/12 13:52:34 Main Document Pg 2 of a998 Doc#407-1 Filed 11/20/12 Entered 11/20/12 10:39:49 Order on Attorneys Fees Pg 2 of 6 PART, and the Objections should be GRANTED IN PART. In addition to the findings of fact and conclusions of law set forth on the record on November 2, 2012, the Court makes the following findings of fact and conclusions of law. The Court has jurisdiction over these matters pursuant to 28 U.S.C. 157 and This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Specifically, the Court has jurisdiction over this matter because (1) the claims procedure for PACA Creditors set forth in Judge Leif Clark s January 25, 2012 Order [Docket No. 52] ( Claims Procedure Order ), which concurrently satisfies the PACA Creditors obligation to file PACA proofs of claim and proofs of claim under the Bankruptcy Code, is a matter concerning the administration of the Joint Debtors estates pursuant to 28 U.S.C. 157(b)(2)(A); (2) allowance or disallowance of PACA Creditors claims under the Claims Procedure Order is a proceeding that concerns the allowance or disallowance of claims against the Joint Debtors estates pursuant to 28 U.S.C. 157(b)(2)(B); and (3) the PACA Creditors claims, in and of themselves, affect and are related to the administration of the Joint Debtors estates. The PACA Creditors are not entitled to recover post-petition attorneys fees. It is, therefore ORDERED that, for the reasons stated on the record, Jensen s Omnibus Objections to the PACA Creditors Applications for Attorneys Fees is GRANTED IN PART to the extent it objects to the recovery of post-petition attorneys fees, and, conversely, the PACA Creditors Applications for Attorney s Fees are DENIED IN PART to the extent they seek post-petition attorneys fees. It is further ORDERED that the Applications of the following PACA Creditors are GRANTED IN PART to the extent they set forth a claim for pre-petition attorneys fees, and therefore, the following 2

18 a998 Doc#399 Filed 11/09/12 Entered 11/09/12 13:52:34 Main Document Pg 3 of a998 Doc#407-1 Filed 11/20/12 Entered 11/20/12 10:39:49 Order on Attorneys Fees Pg 3 of 6 PACA Creditors are awarded pre-petition attorneys fees, but no other fees, in the following amounts, against the below listed estate(s) as unsecured claims: Group Fee against Superior Fee Against Delta McCarron & Diess $0.00 $0.00 Rynn & Janowski, LLP $40.42 $ Keaton Law Firm, P.C. $12, $1, Freeborn & Peters LLP $0.00 $9, Law Office of Robert E. Goldman $0.00 $0.00 Fowler White Boggs, P.A. $0.00 $0.00 Meuers Law Firm, P.L. $ $ It is finally ORDERED that the Motion for Reimbursement of Fees and Costs filed by Muller Trading Company, Inc. [Docket No. 300], seeking attorney s fees under the common fund doctrine, is, in all things, DENIED. ### APPROVED AS TO FORM AND ENTRY REQUESTED: PULMAN, CAPPUCCIO, PULLEN & BENSON, LLP 2161 NW Military Highway, Suite 400 San Antonio, Texas (210) Telephone (210) Telecopier By: /s/ Randall A. Pulman Randall A. Pulman Texas State Bar No rpulman@pulmanlaw.com Leslie Sara Hyman Texas State Bar No lhyman@pulmanlaw.com Ryan C. Reed Texas State Bar No rreed@pulmanlaw.com ATTORNEYS FOR WALTER SCOTT JENSEN 3

19 a998 Doc#399 Filed 11/09/12 Entered 11/09/12 13:52:34 Main Document Pg 4 of a998 Doc#407-1 Filed 11/20/12 Entered 11/20/12 10:39:49 Order on Attorneys Fees Pg 4 of 6 EXHIBIT A Applications for Attorneys Fees McCarron & Diess (1) Claim for Attorneys Fees filed by Coosemans Houston, Inc. (DE #108, Case No ); (2) Claim for Attorneys Fees filed by Texas Sweet Potato Distributors, LLC (DE #109, Case No ); (3) Claim for Attorneys Fees filed by Eagle Eye Produce, Inc. (DE #110, Case No ); (4) Claim for Attorneys Fees filed by Mecca Farms, Inc. (DE #111, Case No ); (5) Claim for Attorneys Fees filed by Mecca Farms, Inc. (DE #299, Case No ); Rynn & Janowski, LLP (6) Claim for Attorney s Fees filed by Uesugi Farms, Inc. and Wilson Produce, LLC (DE #115, Case No ); (7) Claim for Attorney s Fees filed by Bernardi and Associates, Inc., Frank s Distributing of Produce, LLC, Fresh Pac International, Inc., J-C Distributing, Inc., Mission Produce, Inc., California Artichoke & Veg Growers Corp. dba Ocean Mist Farms, Pacific International Vegetable Marketing Inc. dba Pacific International Marketing, Prime Time Sales, LLC, Royal Flavor, LLC, and Wilson Produce, LLC (DE #306, Case No ); Keaton Law Firm, P.C. (8) Rio Bravo Produce Ltd., LLC Application for Contractually Due Attorney s Fees and Costs (DE #114, Case No ); EXHIBIT A, PAGE 1 OF 3

20 a998 Doc#399 Filed 11/09/12 Entered 11/09/12 13:52:34 Main Document Pg 5 of a998 Doc#407-1 Filed 11/20/12 Entered 11/20/12 10:39:49 Order on Attorneys Fees Pg 5 of 6 (9) I. Kunik Company, Inc. s Application for Contractually Due Attorney s Fees and Costs (DE #305, Case No ); Freeborn & Peters LLP (10) Motion for Reimbursement of Fees and Costs filed by Muller Trading Company, Inc. (DE #300, Case No ); (11) Application for Prejudgment Interest, Attorneys Fees and Costs filed by Muller Trading Company, Inc. (DE #301, Case No ); Law Office of Robert E. Goldman (12) Motion for Attorney s Fees by London Fruit, Inc. (DE #116, Case No ); (13) Motion for Attorney s Fees by London Fruit, Inc. & Triple H Produce, LLC (DE #307, Case No ); Fowler White Boggs, P.A. (14) Claim for Attorneys Fees filed by Harllee Packing, Inc. (DE #113, Case No ); (15) Claim for Attorneys Fees filed by Harllee Packing, Inc. (DE #304, Case No ); Meuers Law Firm, P.L. (16) Omnibus Claim for Attorneys Fees and Costs filed by C&R Fresh, LLC, Duckwall Fruit Co., Eco-Farms Sales, Inc., Fresh Start Produce Sales, Gargiulo, Inc., Henry Avocado Corp., and Sunriver Sales (DE #112, Case No ); (17) Omnibus Claim for Attorneys Fees and Costs filed by Eco-Farms Sales, Inc., Gargiulo, Inc., Henry Avocado Corp., and Rio Queen Citrus, Inc. (DE #303, Case No ); EXHIBIT A, PAGE 2 OF 3