Plaintiff Picazo contracted in 2020  with Aptos Berry Farms, Inc. (“Aptos”) to farm strawberries in 2021 that Driscoll's, Inc. (“Driscoll's”) later sold. Initially the contract was oral, but a written contract was executed in July 2021 stating an effective date of October 1, 2020. Driscoll’s was identified as a third-party beneficiary to the contract. However, Driscoll’s delivered the strawberries and routinely inspected Picazo’s operation. The payment terms were not a set price per crate, instead Picazo would receive a portion of the sale proceeds which was influenced by a pooling arrangement with other growers’ strawberries. Several months after harvest of the strawberries, Picazo had not received a full accounting and was unsure of how Aptos and Driscroll’s calculated his payments. Picazo did eventually receive an accounting, but only after he sent a demand letter in December 2022.  Picazo was not satisfied with the accounting and brough suit against Aptos and Driscoll’s alleging violations of the Perishable Agricultural Commodities Act (PACA) and bringing claims for an accounting and conversion.  Aptos filed a 12(b)(6) motion to dismiss.

The court granted the motion to dismiss, but allowed plaintiff leave to amend. The PACA claims relied on Section 499b(4) which makes it illegal for a “merchant, dealer, or broker” to not pay or make an accounting under an agricultural goods contract. The court found that Aptos is not a merchant, dealer or broker because it does not market or sell the strawberries. Further, the court found that Aptos was not an agent of Driscoll’s. Therefore, PACA does not apply to Aptos. The court found that Driscoll’s is subject to PACA. However, PACA requires contractual privity between plaintiff and defendant and there was no contract between plaintiff and Driscoll’s. Driscoll’s status as a third-party benefit was irrelevant. Ultimately, no PACA claim survived. On the issue of the conversion claim, the court found that the “[p]laintiff does not sufficiently allege a right to receive the payment he seeks” since contractual rights cannot lead to a conversion claim under California law. Finally, the court found that accounting claim moot since an accounting was provided to Plaintiff in December 2022.

Picazo v. Aptos Berry Farms, Inc., No. 23-cv-02735-SVK (N.D. Cal. Nov. 2, 2023).