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Farm Claims Distributor Breached Contract Wrongfully Took Insurance Funds

A tractor spraying a field

Tractor spraying pesticides on soybean field with sprayer at spring

Runway Farms claimed in a Middle District of Florida suit on Tuesday that Oakes Farms, which it had contracted with to sell the produce it grows, had not followed the contract between the parties under the Perishable Agricultural Commodities Act (PACA) and took insurance money after the plaintiff’s crop was damaged by Hurricane Irma in September 2017.

Oakes, under the parties’ agreement, purchased quantities of produce from Runway to sell and distribute. The defendant is classified as a dealer under PACA where the plaintiff is classified as a grower. Under the parties’ contract, Runway would give 190 acres of produce to Oakes to sell and Oakes would receive costs for labor, a seven percent commission, $0.55 per case, and other box charges in exchange for providing funds and harvesting equipment. The parties reportedly initially agreed that Runway would receive 25 percent of sales, which is in the contract, but later modified the arrangement to give 40 percent of the proceeds to Runway and 60 percent to Oakes.  

Oakes provided an advance of almost $900,000 to Runway to cover growing expenses, and after the hurricane in 2017 took the amounts paid to Runway by the insurer “without the permission of Plaintiff … depriving Plaintiff of the funds and the ability to replant the lost crops,” according to the complaint. The defendant reportedly used this money to repay the advance it gave to the plaintiff.  Runway also purported that the defendant made false statements to lead the plaintiff to file the insurance claim in order to allow the defendant to not provide the contracted financial support. 

Runway argued that the growing agreement did not designate a requirement for the plaintiffs to meet in order for the defendant to accept its produce, and the defendant did not say it had concerns with the produce, therefore the plaintiff fulfilled its terms of the agreement.  The defendant, however, was supposed to provide “quality control personnel (and) harvesting labor and equipment,” which it reportedly did not do.

The plaintiff accused Oakes Farms of failing to fulfill its obligations with harvesting, not providing complete and accurate accounting within 40 days of the season’s end, rejecting produce without a cause, making false or misleading statements, breaching its fiduciary and good faith duties, and unjust enrichment. 

Runway is represented by Esquivel Law, Chartered

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