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IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION IN RE: DELTA PRODUCE, L.P., 1 DEBTOR. CASE NO. 5:12-BK-50073-LMC (CHAPTER 11) JOINTLY ADMINISTERED

____________________________________________________________________________ RESPONSE OF ECO-FARMS SALES, INC., GARGIULO, INC., HENRY AVOCADO CORP., RIO QUEEN CITRUS, INC., C&R FRESH, LLC, DUCKWALL FRUIT CO., FRESH START PRODUCE SALES AND SUNRIVER SALES TO JENSENS OMNIBUS OBJECTIONS TO PACA TRUST CREDITORS APPLICATIONS FOR ATTORNEYS FEES ____________________________________________________________________________ Eco-Farms Sales, Inc., Gargiulo, Inc., Henry Avocado Corp., Rio Queen Citrus, Inc., C&R Fresh, LLC, Duckwall Fruit Co., Fresh Start Produce Sales and Sunriver Sales, 2 collectively the Meuers Group, trust beneficiaries of Delta Produce, L.P. (Delta) and Superior Tomato-Avocado, Ltd. (Superior) under the trust provisions of the Perishable Agricultural Commodities Act, 1930, as amended (PACA), 7 U.S.C. 499e(c), by and through their undersigned attorneys, and in response to Jensens Omnibus Objections to PACA Trust Creditors Applications for Attorneys Fees [DE 331], state as follows:

Debtors are the following entities: Delta Produce, L.P. Case No. 12-50073-LMC, Superior TomatoAvocado, Ltd. Case No. 12-50074-LMC, Atled, Ltd. Case No. 12-50075-LMC and Staci Properties, Ltd. Case No. 12-50110-LMC. 2 C&R Fresh, LLC, Duckwall Fruit Co., Fresh Start Produce Sales and Sunriver Sales have asserted their claims for attorneys fees in In re Superior Tomato-Avocado, Ltd., Case No. 5:12-BK-50074-LMC.
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PROCEDURAL HISTORY 1. Delta filed its Voluntary Petition for protection under Chapter 11 of the

Bankruptcy Code on January 3, 2012 [DE 1]. Superior also filed its Voluntary Petition on January 3, 2012, assigned Case No. 12-50074-LMC. 2. On January 19, 2012, an Order Directing Joint Administration of

Bankruptcy Cases was entered by the Court, under Lead Case No. 12-50073 [DE 29]. 3. On January 25, 2012, the Court entered an Order Establishing a Deadline

to File PACA Trust Claims, for Procedures to Resolve Those Claims, and for Appointment of Special PACA Counsel [DE 52]. 4. On February 29, 2012, the Court entered an Amended Order Establishing

a Deadline to File PACA Trust Claims, for Procedures to Resolve Those Claims, and for Appointment of Special PACA Counsel [DE 124]. 5. On March 1, 2012, Eco-Farms Sales, Inc., Gargiulo, Inc., Henry Avocado

Corp. and Rio Queen Citrus, Inc. filed their PACA Proofs of Claim with supporting documentation in the instant matter [Claim ##50-53]. 6. Also on March 1, 2012, C&R Fresh, LLC, Duckwall Fruit Co., Fresh Start

Produce Sales and Sunriver Sales filed their PACA Proofs of Claim with supporting documentation in In re Superior Tomato-Avocado, Ltd., Case No. 5:12-BK-50074-LMC [Claim ##58-64]. 7. On August 23, 2012, the Court entered an Order modifying the Claims

Procedure Order [DE 288], requiring all PACA trust beneficiaries claiming a right to attorneys fees to file such claims within 21 days of entry of the Order. 2

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8.

On September 13, 2012, Eco-Farms Sales, Inc., Gargiulo, Inc., Henry

Avocado Corp. and Rio Queen Citrus, Inc. filed their claims for attorneys fees and costs in the instant matter [DE 303]. C&R Fresh, LLC, Eco-Farms Sales, Inc., Fresh Start

Produce Sales, Gargiulo, Inc., Henry Avocado Corp. and Sunriver Sales filed their claims for attorneys fees and costs in the In re Superior Tomato-Avocado matter. Duckwall Fruit Co. did not have a contract with the Superior for recovery of attorneys fees and costs. 9. Walter Scott Jensen (Jensen) filed an objection to the PACA trust

creditors applications for attorneys fees on the grounds that PACA trust creditors are unsecured creditors and as such, are not entitled to post-petition attorneys fees [DE 331]. 10. For the reasons stated below, Jensens objection is without merit and the

relief requested therein should be denied. DISCUSSION A. Unsecured creditors may claim post-petition fees on pre-petition contracts. 11. Jensen argues that the Western District of Texas has held that an

unsecured creditor is not entitled to post-petition attorneys fees from a bankrupt estate, purportedly on the strength of the U.S. Supreme Court decision in Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., 549 U.S. 443 (2007). 12. In Travelers Casualty & Surety, the Bankruptcy Court rejected Travelers'

claim for post-petition fees on the basis that where the issues [are] peculiar to federal

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bankruptcy law, attorney's fees generally will not be awarded. Travelers, 127 S.Ct. at 1200. On appeal, the District Court and the Ninth Circuit affirmed. 13. The Supreme Court, however, held that the bankruptcy law does not

disallow contract-based claims for attorney's fees based solely on the fact that the fees were incurred litigating bankruptcy law issues. Travelers, 127 S.Ct. at 1200. The

Supreme Court held that the Ninth Circuit erred in disallowing Travelers claim and remanded the case for further proceedings. See, Travelers, 127 S.Ct. at 1207-08. 14. In the subsequent case of In re SNTL Corp., 571 F.3d 826 (9th Cir. 2009), the

Ninth Circuit discussed the Supreme Courts decision in Travelers, holding that postpetition fees can be fairly contemplated when the parties have provided for them in their contracts and thus are contingent claims as of the petition date. They cannot be disallowed merely because they are contingent. Id. at 844; citing, Qmect, Inc. v.

Burlingame Capital Partners II (In re Qmect, Inc.), 368 B.R. 882 (Bankr.N.D.Cal.2007) (unsecured creditor was entitled to include its contract-based attorneys' fees incurred post-petition in its pre-petition claim). 15. In the instant matter, Eco-Farms Sales, Inc., Gargiulo, Inc., Henry Avocado

Corp. and Rio Queen Citrus, Inc. all included provisions on their invoices their sales contracts entitling them to recover attorneys fees from the Delta, in the event collection of their outstanding invoices became necessary. See, Exhibits A to Claim ##50-53. C&R Fresh, LLC, Fresh Start Produce Sales and Sunriver Sales included

similar provisions in their sales contracts, as alleged in their claims for attorneys fees

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and costs filed in the In re Superior Tomato-Avocado matter. See, Exhibits A to Claim ##58, 60-64. 16. Since post-petition fees can be fairly contemplated when provided for in

the contracts, Eco-Farms Sales, Inc., Gargiulo, Inc., Henry Avocado Corp., Rio Queen Citrus, Inc., C&R Fresh, LLC, Fresh Start Produce Sales and Sunriver Sales had contingent claims as of the petition dates that cannot be disallowed merely because they were contingent at that time. B. The Meuers Group is entitled to fees under PACA. 17. The PACA provides that a dealer who receives perishable agricultural

commodities, or 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." See, 7 U.S.C. 499e(c)(2). 18. In addition to the principal amounts of such claims, attorney fee and

interest provisions can be enforceable as additional contract terms under the Uniform Commercial Code Country Best v. Christopher Ranch, LLC, 361 F.3d 629, 631 (11th Cir. 2004). 19. In fact, the Second, Ninth and Eleventh Circuits have held that if

provisions for the payment of attorneys fees are included in the produce sales contract, they are sums owing in connection with the transactions and are included as part of the sellers underlying PACA trust claim. Country Best, 361 F.3d 629; Coosemans Specialties,

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Inc. v. Gargiulo, 2007 U.S. App. Lexis 10520 (2d Cir., 2007); and, Middle Mountain Land and Produce, Inc. v. Sound Commodities, Inc., 307 F.3d 1220 (9th Cir. 2002). 20. As stated above, the members of the Meuers Group, with the exception of

Duckwall Fruit Co., all included provisions on their invoices their sales contracts entitling them to recover attorneys fees, in the event collection of their outstanding invoices became necessary. Thus, each has a valid claim for recovery of its attorneys fees and cost in connection with its collection efforts. WHEREFORE, the members of the Meuers Group respectfully pray that Jensens Omnibus Objections to PACA Trust Creditors Applications for Attorneys Fees be denied, insofar as they seek to disallow the fees sought by the Meuers Group. Respectfully submitted on Thursday, October 25, 2012. MEUERS LAW FIRM, P.L. /s/Steven E. Nurenberg Steven E. Nurenberg Pro Hac Vice 3 5395 Park Central Court Naples, FL 34109-5932 Telephone: (239) 513-9191 Facsimile: (239) 513-9677 snurenberg@meuerslawfirm.com Attorneys for Eco-Farms Sales, Inc., Gargiulo, Inc., Henry Avocado Corp., Rio Queen Citrus, Inc., C&R Fresh, LLC, Duckwall Fruit Co., Fresh Start Produce Sales and Sunriver Sales

Steven E. Nurenberg is admitted pro hac vice in the jointly administered cases of In re Delta Produce, Inc., Case No. 12-50073-LMC, In re Superior Tomato-Avocado, Ltd., Case No. 12-50074-LMC, In re Alted, Ltd., Case No. 12-50075-LMC, and In re Staci Properties, Ltd., Case No. 12-50110-LMC.
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CERTIFICATE OF SERVICE I HEREBY CERTIFY that this response to Jensens Omnibus Objections to PACA Trust Creditors Applications for Attorneys Fees was filed with the Clerk of the Court and served via the Courts CM/ECF system upon all attorneys of record and parties receiving such service this Thursday, October 25, 2012. By: /s/Steven E. Nurenberg Steven E. Nurenberg