Collecting Attorneys Fees Under PACA
Frequently our clients tell us that they want to collect their costs and attorney’s fees of filing a collection suit when they need to collect from their receiver. Generally, state laws do not allow a seller to collect attorney’s fees unless the buyer and seller have signed a contract which provides for attorney’s fees to be paid in the event that a collection suit is necessary. The principal exceptions to this general rule are Arkansas, Idaho, Alaska, Oklahoma, Texas and Arizona.
However, in many cases PACA licensees who use the PACA trust legend have been successful in collecting attorney’s fees when they include these additional sentences as part of their PACA trust legend on their invoices:
“The perishable agricultural commodities listed on this invoice are sold subject to the statutory trust authorized by Section 5(c) of the Perishable Agricultural Commodities Act, 1930 (7 USC 499(e)(c)). The seller of these commodities retains a trust claim over these commodities, all inventories of food or other products derived from these commodities, and any receivables or proceeds from the sale of these commodities until full payment is received. NOTICE: Past due invoices shall accrue annual interest at the rate of 12% or at the maximum legal rate, whichever is lower. The receiver agrees that the shipper shall be entitled to collect reasonable attorney’s fees and expenses as part of an action to collect on this invoice. Actual attorney’s fees incurred in bringing any action to collect on this invoice and/or enforcing any judgment granted and interest shall be considered as additional sums owed in connection with this transaction. “
Note that only US shippers who hold a PACA license can preserve a chance to collect attorney’s fees by using this legend. Non-US shippers and US shippers that do not have a PACA license CANNOT preserve a right to collect attorney’s fees by using this legend.