United States District Court, D. Kansas
MEMORANDUM AND ORDER
Crow, U.S. District Senior Judge.
case comes before the court on the motion for summary
judgment (Dk. 17) filed by the individual third-party
defendants, Mark A. Reser, Patricia J. Reser, and Paul A.
Leavy; on the motion for leave to file two exhibits under
seal (Dk. 25) filed by the plaintiff Reser's Fine Foods,
Inc. (“Reser's”) and the individual
third-party defendants; and on the motion for leave to file a
surreply or conduct oral argument (Dk. 33) filed by the
third- party plaintiff H.C. Schmieding Produce Co., LLC.
(“Schmieding”). The court will take up the
motions in reverse order.
September of 2016, Reser's filed this declaratory
judgment action asking for an offset of $269, 519.87, as the
alleged damages incurred from first a “recall”
and then a “hold” being placed on a load of
celery supplied by Schmieding and C & E Farms, Inc. in
November of 2015. Reser's complaint alleges that it did
not receive notice of the recall and hold until after it had
used the celery in fresh food products that were ready for
shipment. Reser's also alleges it did not receive notice
of the hold being lifted until after it had been required to
destroy the finished product containing the celery and to
replace the destroyed product. (Dk. 1).
filed an answer and four counterclaims against Reser's
including two counterclaims for failure to pay trust funds
and failure to make prompt payment pursuant to the Perishable
Agricultural Commodities Act (“PACA”), 7 U.S.C.
§§ 499a, et seq. Schmieding also filed a
cross-claim for indemnification against C & E Farms, Inc.
Most important to the summary judgment motion now pending,
Schmieding filed third-party claims against Mark A. Reser,
Patricia J. Reser, and Paul A. Leavy for unlawful dissipation
of PACA trust assets. These three individual third-party
defendants are seeking summary judgment arguing that
Reser's has adequate and readily available trust assets
which mean that as a matter of law there has been no
dissipation of trust assets and there is no basis for
secondary personal liability.
for Leave to File a Surreply (Dk. 33).
early filing of a summary judgment motion in this case has
created some unique procedural issues. It also has generated
some evidentiary objections on matters about which discovery
has yet to occur. In response to Schmieding's memorandum
opposing summary judgment, the individual third party
defendants did submit arguments and evidence in their reply
memorandum which the court regards as new even if offered in
reply to Schmieding's arguments. The court finds these
unusual circumstances justify Schmieding's filing of its
attached surreply. The court has considered the surreply in
its summary judgment ruling.
for Leave to File Exhibits Under Seal (Dk. 25).
seek leave to file under seal two exhibits: Reser's
consolidated balance sheet that reflects October totals for
the years of 2015 and 2016 and the second affidavit of Paul
A. Leavy that discusses, in part, figures from the balance
sheet. (Dk. 25-1 and 25-2). As a privately held corporation,
Reser's submits this balance sheet contains
“confidential business information” that includes
sensitive details about its financial condition which
Reser's retains as private business information. While
these allegations certainly leave room for more detail and
explanation in the future, the court accepts for the limited
purpose of these summary judgment proceedings that
Reser's general interest in keeping its financial
condition private currently outweighs the public's
presumed right of access to this information. This conclusion
is largely influenced by Reser's general financial
condition not having a significant or central issue in these
immediate proceedings. Should this change, the court may
invite an additional showing on confidentiality and
reconsider its decision to seal. For now, the court grants
the motion on this condition.
for Summary Judgment (Dk. 17).
judgment is appropriate only if ‘the movant shows that
there is no genuine issue as to any material fact and the
movant is entitled to judgment as a matter of
law.'” Tolan v. Cotton, ___ U.S. ___, 134
S.Ct. 1861, 1866 (2014)(quoting Fed.R.Civ.P. 56(a)). A
factual dispute is “material” only if it
“might affect the outcome of the suit under the
governing law.” Anderson v. Liberty Lobby, 477 U.S.
242, 248 (1986). A “genuine” factual dispute
requires more than a mere scintilla of evidence in support of
a party's position. Id. at 252.
moving party has the initial burden of showing “the
absence of a genuine issue of material fact, ” and, if
carried, the non-moving party then “must bring forward
specific facts showing a genuine issue for trial as to those
dispositive matters for which [it] carries the burden of
proof.” National American Ins. Co. v. American
Re-Insurance Co., 358 F.3d 736, 739 (10th Cir. 2004)
(internal quotation marks and citation omitted). At the
summary judgment stage, the court is not to be weighing
evidence, crediting some over other, or determining the truth
of disputed matters, but only deciding if a genuine issue for
trial exists. Tolan, 134 S.Ct. at 1866. The court
performs this task with a view of the evidence that favors
most the party opposing summary judgment. Id.
Summary judgment may be granted if the nonmoving party's
evidence is merely colorable or is not significantly
probative. Liberty Lobby, 477 U.S. at 250-51.
Essentially, the inquiry is “whether the evidence
presents a sufficient disagreement to require submission to
the jury or whether it is so one-sided that one party must
prevail as a matter of law.” Id. at 251-52.
for Schmieding has filed a declaration which includes a
review of the procedural posture of this case. (Dk. 19-1).
The declaration notes that the movants filed for summary
judgment before filing their answer to the third-party
claims. Additionally, there is no scheduling order in place,
and Schmieding has yet to obtain discovery from the movants.
At paragraph ten, Mr. Brown declares:
Without such discovery, Schmieding is unable to test the
assertions in the Leavy Affidavit, including the allegations
concerning Reser's liquidity, Reser's preservation of
PACA trust assets and its ability to pay any judgment entered
in Schmieding's favor. As a result, Schmieding is wholly
unable to present facts essential to justify its opposition
on factual grounds. Notwithstanding the foregoing, Schmieding
believes the Motion can and should be dismissed on legal
19-1, ¶ 10). Schmeiding opposes summary judgment, in
part, by asking that it “be permitted to engage in
discovery to review evidence exclusively in the control of
the movant which evidence the movant contends establishes
undisputed material facts. Fed.R.Civ.P. 56(d)(2).” (Dk.
19, p. 7).
Tenth Circuit recently addressed the operation of Rule 56(d):
Rule 56(d) allows a nonmovant to show by affidavit or
declaration that, for a specified reason, it cannot present
facts essential to justify opposition to a motion for summary
judgment. That is, it provides a means for a nonmovant to
“ask the court to refrain from acting on the summary
judgment request until additional discovery can be
conducted.” Been v. O.K. Indus., Inc., 495
F.3d 1217, 1235 (10th Cir. 2007). Thus, Rule 56(d) serves a
noticing function that “safeguards against an
improvident or premature grant of summary judgment.”
See 10B ...