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UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION In re: DELTA PRODUCE, L.P.,1 Debtor, ) ) ) ) ) ) ) ) ) Chapter 11 Case No.: 12-50073-LMC Jointly Administered Hon. Leif M. Clark

RESPONSES TO THE OBJECTIONS CONCERNING THE RIO BRAVO GROUPS APPLICATION FOR FEES

Counsel for Rio Bravo Produce Limited, LLC. (Rio Bravo) and I. Kunik Company, Inc.(I.Kunik) (collectively the Rio Bravo Group), collectively respond to the objections made against its pending application for attorneys fees. In support of these responses, the Rio Bravo group states as follows: PROCEDURAL HISTORY 1. Delta Produce, LLP. (Delta) filed this voluntary petition for Chapter 11 Bankruptcy

(the Petition) and Superior Tomato-Avocado Ltd., Inc. (Superior Tomato) filed its voluntary chapter 11 petition in the jointly administered case # 12-cv-50074 (the Superior Bankruptcy), on January 3, 2012 (Delta and Superior Tomato are collectively referred to as the Debtors). 2. On January 25, 2012, this Honorable Court entered an order establishing claims

procedure to preserve trust assets pursuant to the Perishable Agricultural Commodities Act, 1930, 7 U.S.C. 499a-499t (2009 & Supp. 2011)(the PACA) (D.E. # 52) (the Claims Procedure).

Debtors are the following entities: Delta Produce, L.P. - Case No. 12-50073 LMC, Superior Tomato-Avocado, Ltd. - Case No. 12-50074-LMC, Atled, Ltd. Case No. 12-50075-LMC and Staci Properties, Ltd. - Case No. 12-50110-LMC

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3.

This Honorable Court entered a nearly identical claims procedure, in the Superior

Tomato Bankruptcy (D.E.#43 of the Superior Bankruptcy docket), to preserve Superior TomatoAvocado, LLCs PACA trust assets. 4. On August 23, 2012, this Honorable Court entered an order to amend the PACA

claims procedure and allow for the filling of contractually approved attorneys fees (D.E.# 287). This Honorable Court entered a similar order in the Superior Bankruptcy (D.E. # 105 of the Superior Bankruptcy Docket). 5. I.Kunik filed its timely application for attorneys fees on September 13, 2012 (D.E.

# 305) and Rio Bravo filed its timely application for attorneys fees in the Superior Bankruptcy (D.E. #114 of the Superior Bankruptcy Docket). 6. On October 02, 2012, Walter Scott Jensen (Jensen) filed Jensens Omnibus

Objections to Paca Trust Creditors Application for Attorneys Fees (D.E. # 331) (the Jensen Objection). The Jensen Objection claims all PACA Creditors attorneys fees should not be paid from the PACA trust assets despite the fact this Honorable Court even allowed the Debtors to pay its own lawyers out of the PACA trust assets. 7. On October 12, 2012, Debtors Counsel filed its Debtors Trust Counsels Omnibus

Objection to PACA Creditors Fee Applications (D.E. # 347) (Debtors Objection), on behalf of the Debtors. 8. The same day, the Pumpkin Patch, LLP, Juniper Tomato Grower, Inc., Greenhouse

Produce Company, LLC., London Fruit, Inc. and Triple H Produce, LLC (collectively the Pumpkin Patch Group) filed their objection (D.E.# 348) (the Pumpkin Patch Groups Objection) to I.Knunks application for attorneys fees.

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9.

Also on October 2, 2012, the Willson Davis Company, Averitt Brokerage Co., Inc,

A&A Concepts, LLC., Juniper Tomato Grower, Inc., Greenhouse Produce Company, LLC. and London Fruit, Inc (collectively the Willson Group) filed their objection to Rio Bravos application for attorneys fees (D.E.# 127 of the Superior Bankruptcy Docket) (the Willson Groups Response). I. PACA CREDITORS ARE ABLE TO SEEK ATTORNEYS FEES FROM THE PACA TRUST AS A SUM OWING IN CONNECTION The PACA allows a quailed PACA beneficiary to recover not just the cost of the Produce itself but all sums owing in connection with the transaction 7 U.S.C. 499e(c)(2). Section 499e(c)(2) directs that commodities received . . . in all transactions, and all inventories of food or other products derived (therefrom), and any receivables or proceeds from the sale of such commodities or products, shall be held . . . in trust for the benefit of all unpaid suppliers or sellers of such commodities or agents involved in the transaction, until full payment of the sums owing in connection with such transactions has been received. William E. McBryde, v. Rodriguez, 2007 U.S. Dist. LEXIS 12272, 11-12 (W.D. Tex. Feb. 13, 2007). Sums owing in connection with a transaction have consistently included contractual interest and collection costs, including attorneys fees. PACA does allow for recovery of sums owing in connection with perishable commodities transactions. 7 U.S.C. 499e(c)(2). Several claimants argue that they have a contractual right to attorneys' fees based on language providing for such fees included in the relevant invoices. Additional terms included in an invoice become part of the contract unless the opposing party can establish that "(a) the offer expressly limits acceptance to the terms of the offer; (b) the terms materially alter it; or (c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received." U.C.C. 2-207. . . Accordingly, the claimants have established a contractual right to attorneys' fees based on the language of the invoices. The question remains whether the contractual claim for attorneys' fees can be satisfied with PACA funds. Several Circuits have determined that it can 3

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and have affirmed awards of attorneys' fees under circumstances that are identical to those presented here. Ruby Robinson Co., Inc. v. Kalil Fresh Mktg., Inc., 2009 U.S. Dist. LEXIS 96366, 5-7 (S.D. Tex. Oct. 16, 2009) Internal citations omitted. Both I.Kunik and Rio Bravo filed copies of their unpaid invoices with their timely filed PACA proofs of claim (Claim # 46 and Claim # 53 respectfully). Both sets of invoices included language requiring Debtors to pay the Rio Bravo Group for unpaid collection costs, including attorneys fees. Since neither the Debtors or Jensen objected to the attorney fee language on the invoices, the Rio Bravo Group is entitled to attorneys fees from the PACA trust. The only question remaining is the reasonable amount. Payment for the Rio Bravos attorneys fees should be paid from the PACA Trust assets and not the assets of the Debtors bankruptcy estate. Therefore the Jensen Objection should be denied. II. THE PUMPKIN PATCH GROUPS OBJECTION TO I.KUNIKS ATTORNEYS FEES The Pumpkin Patch Groups Objection concerns fees for the Rio Bravo Groups previous local counsel. The Rio Bravo Group will leave any and all responses to the Pumpkin Patch Groups Objection to the Rio Bravo Groups former local counsel. III. RIO BRAVO IS ENTITLED TO THE FULL AMOUNT OF ITS ATTORNEYS FEES Prior to this bankruptcy proceeding, Rio Bravo filed for a temporary restraining order against the Debtors in Case No. 5:11-cv-01126-XR, before the Honorable Xavier Rodriguez (the District Court Action). Rio Bravo incurred $13,803.39 in attorneys fees for work done in the District Court Action. Both Debtors Counsel and the Willson Group filed similar objections regarding Rio Bravos fees for this work. 4

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DEBTORS COUNSEL AND THE WILLSON GROUP FAIL TO RAISE A PROPER OBJECTION TO RIO BRAVOS PRE-PETITION FEES The objections of Debtors Counsel and the Willson Group fail to state any specifics of what tasks were alleged to be unreasonable of what amounts were excessive. To determine the reasonableness of attorneys fees the 5th Circuit held: In order to establish an objective basis for determining the amount of compensation that is reasonable for an attorney's services, and to make meaningful review of that determination possible on appeal, we held in Johnson v. Georgia Highway Express,, 488 F.2d at 717-19, that a district court must consider the following twelve factors in awarding attorneys' fees: (1) The time and labor required; (2) The novelty and difficulty of the questions; (3) The skill requisite to perform the legal service properly; (4) The preclusion of other employment by the attorney due to acceptance of the case; (5) The customary fee; (6) Whether the fee is fixed or contingent; (7) Time limitations imposed by the client or other circumstances; (8) The amount involved and the results obtained; (9) The experience, reputation, and ability of the attorneys; (10) The "undesirability" of the case; (11) The nature and length of the professional relationship with the client; (12) Awards in similar cases. Although Johnson involved a suit brought under 42 U.S.C.A. 2000e, the guidelines we established there are equally useful whenever the award of reasonable attorneys' fee is authorized by statute. In re First Colonial Corp., 544 F.2d 1291, 1298-1299 (5th Cir. La. 1977). Both Debtors Counsel and the Willson Group claim Rio Bravos pre-petition fees should just generally be limited to what the Willson Groups billed. This argument fails to cite any of the factors the In Re First Colonial Corp court upheld. Also, Debtors Counsel and the Willson Group fail to point to any of Rio Bravos time entries as unreasonable and instead state arbitrary numbers to the total amount they think Rio Bravos fees should be. Debtors Counsel and the Willson Groups objections should be overruled, for failure to make an actual objection to the reasonableness of Rio Bravos fees.

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DEBTORS COUNSEL CITED CASES ARE NOT APPLICABLE TO THIS CASE In support of its claims, Debtors Counsel cites three (3) cases which all relates to different fact patterns in other cases2. Debtors Counsel first cites Chip Berry Produce v. Thomas Horowitz, 2007 U.S. Dist. LEXIS 54697 ( E.D. Mich. July 25, 2007), which concerned the sharing of attorneys fees among other PACA creditors. The Chip Berry case addressed the issue of a common fund application, not a PACA claimants contract right to fees as part of the PACA trust claim. Debtors Counsel second case, Wescott Agri-Products, v. Sterling State Bank, 682 F.3d 1091 (8th Cir. Minn. 2012) dealt with the PACA claimants ability to hold the defendants bank liable for the fee shifting provision between the seller and the buyer. Neither of these situations is present in this current case. Debtors Counsel fails to explain how the facts of those cases are applicable to this matter. Therefore, the Debtors Objection should be denied for failing to set proper grounds for an objection. THE WILLSON GROUPS OBJECTION SHOULD BE DENIED BECAUSE RIO BRAVO DID NOT HIRE DEBTORS COUNSEL The Willson Group further states Rio Bravos post-petition fees should be reduced as well. Again, the Willson Group fails to cite any specifics to support their objection. Instead, the Willson Group merely claims the Debtor hired Special PACA Counsel to limit all other PACA creditors time and efforts in representing their own claims. In fact, the Debtors Special PACA Counsel has fought such claims and filed objections to such claims. Incredibly, the Debtors Special PACA Counsel has the temerity to demand that Rio Bravo pay the bill for its opposing counsel. The Rio Bravo Group did not hire nor consent to Debtors Counsel representing any of its claims, particularly since Debtors Counsel is counsel for the Debtor. Since the Rio Bravo Group did not consent to the

In the Debtors Objection, Debtors Counsel improperly cites its third case, so the Rio Bravo Group is unable to respond. 6

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Debtors Counsels representation, the Rio Bravo group is free to represent its claims as it sees fit. Therefore, the Willson Groups objection must be denied in full and the Rio Bravo Groups attorneys fee application should be granted in whatever amount this Honorable Court deems reasonable. WHEREFORE, the Rio Bravo Group respectfully requests this Honorable Court to: (1) Dismiss the Jensen Objection, Debtors Counsel Objection, the Pumpkin Patch Group Objection and the Willson Group Objection in full; (2) Grant the Rio Bravos fee application in the amount this Honorable Court deems reasonable, and; (3) Provide such other and further relief as the Court deems appropriate upon consideration of this matter. Dated: November 1, 2012 Respectfully Submitted, KINGDOM FRESH PRODUCE, INC., I.KUNIK CO., INC., FIVE BROTHERS JALISCO PRODUCE CO. INC d/b/a BONANZA 2001, RIO BRAVO PRODUCE LTD. CO., LLC, & G.R. PRODUCE, INC. By: /s/ Kevin P. Kelley, Esq. One of Their Attorneys Kevin P. Kelley, Esq. KEATON LAW FIRM, P.C. 707 Lake Cook Road, Suite 300 Deerfield, Illinois 60015 Tel: 847/934-6500 Fax: 847/ 934-6508 E-mail: kelley@pacatrust.com Counsel for the Appellants

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CERTIFICATE OF SERVICE I hereby certify that on November 1, 2012, I electronically filed the foregoing with the Clerk of the Court using the CM/ ECF system which will send a notice of electronic filing to all parties of record:

By: / s/ Kevin P. Kelley, Esq.