CONCLUSION
“The single most persuasive factor in determining whether to impose individual liability in spite of the protection of the corporate structure is when fiduciary duties are not carried out by a business or corporation, but instead by those individuals responsible for the operation of the corporation,” wrote Botta.
The increasing number of cases addressing the issue of individual liability for corporate debts under PACA show a judicial trend to broaden the protections afforded to unpaid produce suppliers. Although Botta wrote these remarks back in 1997, Amendola confirms his predictions.
Botta’s conclusion, despite being nearly two decades old, still holds: “Because the case law interpreting the 1984 PACA trust amendments continues to grow and evolve, predicting just how far courts will go to protect the public interest and to remedy the burden on commerce caused by such credit arrangements is difficult. One thing is certain, by continuing to supplement PACA, originally enacted in 1930, with such weapons as personal liability for corporate debt and non-dischargeability in bankruptcy, the balance of power in recent years has clearly shifted in favor of produce suppliers and sellers.”
Commenting on the current state of the law on personal liability for breach of the PACA trust and predicting where we may be headed, Botta states: “Personal liability and non-dischargeability for PACA trust debts are firmly set as the law. These legal principles and the appellate court decisions are not going away. However, what has been seen more in recent years is litigation over what facts and circumstances are necessary to avoid personal liability.”
“In other words, many cases are addressing attempts by individuals to poke holes in the reach and power of the PACA trust. Although some limited success has been seen in these attempts to weaken the law on personal liability under PACA (particularly when the individual in question is a mere figurehead having no management authority whatsoever), it is unlikely these developments constitute a reversal of the trend—but time will tell,” Botta concludes.
