(March 14, 11:46 a.m.) An attorney representing creditors involved in a Perishable Agricultural Commodities Act case against an Eastern repacker and distributor believes suppliers will be repaid in what could become one of the largest PACA cases.

The U.S. Department of Agriculture March 5 filed an administrative action against Carolina Tomato Inc., Columbia, S.C.. for $9.6 million owed to produce sellers. The USDA contends the company committed willful, repeated and flagrant violations of PACA from 2004 through 2006.

After Carolina Tomato closed in 2007, Michael Keaton, a partner in the Palatine, Ill.-based Keaton & Associates PACA law firm that represents suppliers owed $8 million, contended partners Phillip Jones and Gary Goodnight opened or began working for other operations and used proceeds from those enterprises to help repay Carolina Tomato’s creditors.

Keaton said the defendants paid $660,000 to creditors in November and that another $250,000 remains in a disbursement fund awaiting judicial action. Keaton said motions have been pending for the release for five months. Keaton said he believes creditors will receive 100% reimbursement.

Keaton alleged the defendants opened Carolina Veg, on the Columbia State Farmers Market, in the same storefront as Carolina Tomato. A person answering the telephone at Carolina Veg said Goodnight was not working at Carolina Veg.

“They are still making money, still buying and selling produce, through other entities,” Keaton said. “We will have to start grabbing their interest in other companies.”

Max Gardner III, a lawyer representing Carolina Tomato and Jones and Goodnight, said the discovery period in the case ended in December and that a court should hear motions by mid-May. He said he expected the case to go to trial in June or July.

Gardner declined to comment on other businesses the defendants may have been operating. On repayment, Gardner said the plaintiffs and defendants were not discussing any settlement.

Gardner claimed the USDA violated a court-ordered injunction prohibiting parties from taking action against the defendants. Gardner sent a letter to the USDA requesting the agency withdraw its complaint and end all proceedings against Jones and Goodnight.

Some of the major suppliers suing Carolina Tomato and Jones and Goodnight, according to court documents, include the Palmetto, Fla.-based Taylor & Fulton Packing LLC and West Coast Tomato Inc., and Six L’s Packing Co. Inc., Immokalee, Fla.

The USDA news release states Carolina Tomato can request a hearing. If the partners are found guilty, they can be barred from the produce industry for two years and that the principals could be prevented from working for or affiliated with other PACA licensees for one year.

The following are the Perishable Agricultural Commodities Act trust‘s biggest cases:

  • Fleming Cos. Inc., $44 million, 2003

  • Winn-Dixie Stores Inc., Jacksonville, Fla., $30 million, 2005

  • AmeriServe Food Distribution Inc., Dallas, $26.7 million, 2000

  • Fresh America Corp. Arlington, Texas, $13.8 million, 2003

  • Grand Union Co., Wayne, N.J., $10 million*, 1995

  • Carolina Tomato Inc., Columbia, S.C., $9.6 million, 2007

  • Zema Foods LLC, Chicago, $9 million*, 2000

  • Demma Fruit Co., Omaha, Neb., $4.6 million*, 2000

  • Dixie Produce & Packaging Inc., New Orleans, $4.3 million, 2005

  • Sun World International, Coachella, Calif., $4.5 million*, 1994

  • Continental Processors, Concord, Calif., $4.5 million, 1992

  • Boss Fruit, Caldwell, Idaho,/Jarrito’s, Los Angeles, $4.4 million, 1993

  • Southern Produce Distributors Inc., Faison, N.C., $4.2 million, 2004

  • Top Service Produce Inc., Adel, Ga., $2.9 million, 2005

  • Rawls Brokerage Inc., Birmingham, Ala., $2.1 million, 2005

  • Ellis Fleisher Produce Co., Philadelphia, $1.5 million, 2007

  • Do Ripe Farms LLC, Locust Grove, Ga., $1 million, 2003

*amount of settlement paid to PACA creditors