Botman International, B.v v. International Produce Imports, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-3651
BOTMAN INTERNATIONAL, B.V.
v.
INTERNATIONAL PRODUCE IMPORTS, INC.;
DIRK J. KEIJER; CLARE A. KEIJER
International Produce Imports, Inc.;
Dirk J. Keijer,
Appellants.
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
District Court No. 99-cv-05088
District Judge: Hon. R. Barclay Surrick
Argued on July 14, 2006
Before: SMITH, WEIS, and ROTH, Circuit Judges
(Opinion Filed: October 31, 2006)

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Kenneth D. Federman, Esquire
Melvin C. McDowell, Esquire (Argued)
Rothberg & Federman
3103 Hulmeville Road
Suite 200
Bensalem, PA 19020
Counsel for Appellee
Clare A. Keijer, Esquire (Argued)
2201 Pennsylvania Avenue
Suite 709
Philadelphia, PA 19130
Counsel for Appellants
O P I N I O N
ROTH, Circuit Judge:
This dispute arises out of the nonpayment of a debt between merchants and dealers
in produce. For the reasons set forth below, we will affirm the District Court’s grant of
summary judgment in favor of Botman International, B.V., on all claims except for
imposition of the constructive trust, on which we vacate the District Court’s order and
remand for further proceedings consistent with this opinion.
I. Background
Botman International is a Dutch corporation which exports perishable agricultural
commodities into the United States. From November, 1997 until August, 1999, it sold
and shipped over 460 individual shipments of produce to International Produce Imports,

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1Under 7 U.S.C. 499e(c)(2), “[p]erishable agricultural commodities received by a
commission merchant, dealer, or broker . . . and any receivables or proceeds from the sale
of such commodities . . . shall be held by such commission merchant, dealer, or broker 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
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Inc. (IPI). IPI was originally a Pennsylvania corporation with its sole shareholders
consisting of Dirk J. Keijer and his wife, Clare, but in mid-1999, Dirk Keijer acquired full
ownership and directorship of IPI, which he reincorporated in Delaware. Dirk Keijer is a
Dutch national and citizen.
IPI and Botman International began trading in the fall of 1997. In January 1998,
Dirk Keijer and Adri Botman, president of Botman International, entered into an
agreement for IPI and Botman International to continue trading. In particular, they
agreed to written terms contained in the “Conditions of Sale Governing Export
Transactions” (Conditions of Sale). Under this agreement, IPI purchased produce from
Botman International. For each purchase, Botman International prepared a detailed
invoice. During the course of these trades, IPI began to incur substantial debt to Botman
International. In May, 1999, IPI's weak financial situation worsened considerably when
IPI lost its major account as a supplier for Giant Foods. The Keijers subsequently met
with Adri Botman to discuss the situation. After reaching a temporary resolution, IPI
continued to purchase produce from Botman International until August 30, 1999.
Because of IPI’s significant unpaid debt, Botman International sought protection in
the form of a trust under the Perishable Agricultural Commodities Act (PACA), 7 U.S.C.
§ 499a, et seq.1 On September 9, 1999, Botman International sent IPI written notice of its

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transactions has been received by such unpaid suppliers, sellers, or agents.”
2In order to preserve the benefits of a PACA trust, the unpaid beneficiary must
provide the indebted party with written notice of intent to preserve the benefits of the trust
within thirty days of the time prescribed for payment. 7 U.S.C. 499e(c)(3).
3The following counts remained unadjudicated: Count V - Action on Account
Stated, Count VI - Unjust Enrichment, Count VII - Fraudulent Misrepresentation, Count
VIII - Constructive Trust, Count XII - Dissipation of Trust Assets - PACA, Count XIII -
Piercing Corporate Veil, Count XIV - Fraudulent Conveyance Against Individual
Defendant D. Keijer, Count XV - Breach of Fiduciary Duty/Conversion - Constructive
Trust Against Individual Defendant C. Keijer, Count XVI - Dissipation of Trust Assets -
Constructive Trust Against Individual Defendant C. Keijer, Count XVII - Breach of
Fiduciary Duty/Conversion - PACA Against Individual Defendant C. Keijer, Count
XVIII - Dissipation of Trust Assets - PACE Against the Individual Defendant C. Keijer,
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intent to preserve the trust benefits, covering a total of $433,079.54 in unpaid invoices
from July 20, 1999, through August 25, 1999. 2 Ultimately, by September 29, 1999, IPI
owed Botman International a then-undisputed balance of $1,464,233.75.
Botman International filed suit in the District Court on October 15, 1999, naming
as defendants IPI, Dirk Keijer, and Clare Keijer. On November 4, 1999, the District
Court entered a preliminary injunction against the defendants to enforce the PACA trust.
In turn, IPI and the Keijers filed six counterclaims, alleging that Botman International had
charged illegally inflated amounts on the transactions and breached an oral agreement to
compensate IPI for its loss of the Giant Foods account. The District Court granted
summary judgment against IPI on Botman International’s claims of breach of contract,
failure to maintain the PACA trust, and breach of fiduciary duty, and against Dirk Keijer
on Botman International’s claims for breach of fiduciary duty and to impose a
constructive trust.3 The District Court also granted summary judgment in favor of

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Count XIX - Piercing Corporate Veil Against the Individual Defendant C. Keijer, Count
XX - Fraudulent Conveyance Against the Individual Defendant C. Keijer, Count XXI -
Interest and Attorneys Fees.
4Clare Keijer has appeared as the attorney for appellants.
5“The several district courts of the United States are vested with jurisdiction
specifically to entertain (i) actions by trust beneficiaries to enforce payment from the
trust, and (ii) actions by the Secretary to prevent and restrain dissipation of the trust.”
7 U.S.C. § 499e(c)(5).
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Botman International on all of IPI and the Keijers’ counterclaims. In June 2005, the
District Court entered a final judgment in favor of Botman International pursuant to FED .
R. CIV . P. 54(b) and denied IPI’s motion to compel additional discovery.
IPI and Dirk Keijer appealed, contending that (1) the District Court lacked subject
matter jurisdiction because the parties entered into a choice-of-law agreement, (2) the
District Court abused its discretion by entering a final judgment without allowing for
additional discovery, (3) IPI and Dirk Keijer had maintained the PACA trust in
accordance with applicable law, (4) the District Court lacked sufficient grounds to impose
a constructive trust, and (5) genuine issues of material fact existed such that the District
Court erred in granting summary judgment on five of the counterclaims.4
II. Jurisdiction and Standard of Review
The District Court had jurisdiction over this case pursuant to 28 U.S.C. § 1331, 7
U.S.C. § 499e(c)(5)(i), 5 and 28 U.S.C. § 1367. We have jurisdiction over this appeal
from a final judgment pursuant to 28 U.S.C. § 1291. Any choice-of-law agreement
between the parties “does not oust the jurisdiction of the courts; in effect it merely

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constitutes a stipulation in which the parties join in asking the court to give effect to their
agreement by declining to exercise its jurisdiction.” Central Contracting Co. v. Maryland
Cas. Co., 367 F.2d 341, 345 (3d Cir. 1966). Thus, the applicability of federal law in light
of a choice-of-law clause is itself a federal question to be determined on the merits.
In reviewing the District Court’s grant of summary judgment, our standard of
review is plenary. Hampe v. Butler, 364 F.3d 90, 93 (3d Cir.2004). On review the
appellate court is required to apply the same test a district court should have utilized
initially. Oritani Sav. and Loan Ass'n v. Fid. and Deposit Co. of Maryland, 989 F.2d 635,
637 (3d Cir.1993) (citation and quotations omitted). As such, we may uphold the grant of
summary judgment only if the submissions in the record show that “there is no genuine
issue as to any material fact . . ..” FED . R. CIV . P. 56(c).
III. Discussion
A. Choice of Law
Appellants IPI and Dirk Keijer contend that the District Court erred in deciding
this case under federal and Pennsylvania law in a United States court. They point to
clauses in the Conditions of Sale that require all disputes between the parties to be subject
to the exclusive jurisdiction and substantive laws of the Netherlands. Parties to a contract
may select, in advance of litigation, the forum and the law under which their disputes will
be settled. See Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190, 202 (3d
Cir. 1983); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 8-10 (1972). Although it is
not obvious to what extent parties contracting to deliver produce in the United States may

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waive the provisions of PACA, or whether the parties did so effectively in this case, if the
clauses in the Conditions of Sale were found to be valid and effective, they could bar
Botman International from prosecuting its claims in this country.
Nonetheless, we need not make such a determination because IPI and Dirk Keijer
have waived their choice of law defense. Although IPI and Dirk Keijer are correct that
subject matter jurisdiction cannot be waived, U.S. v. Cotton, 535 U.S. 625, 630 (2002),
the applicability of a forum selection or choice-of-law clause is not a jurisdictional issue
and a party may waive its right to enforce it. Neely v. Club Med Mgmt. Servs., 63 F.3d
166, 180 (3d Cir. 1995) (en banc). It is well settled that if a party opposing a summary
judgment motion fails to inform the trial judge of the reasons, legal or factual, why
summary judgment should not be entered, and that party loses the motion, it may not raise
the issue on appeal. E.g., Liberles v. County of Cook, 709 F.2d 1122, 1126 (7th Cir.
1983). Although IPI and Dirk Keijer initially argued (incorrectly) in a motion to dismiss
that the choice-of-law clause divested the District Court of subject matter jurisdiction,
they failed to follow up on this position at summary judgment by arguing on the merits
the choice-of-law clause. Instead, they prosecuted a series of counterclaims, based on
the laws of the United States, demonstrating thereby an acknowledgment by them that
their dealings with Botman International were now being subjected to United States law.
Together, these facts indicate that neither the District Court nor Botman International had
notice at summary judgment that IPI and Dirk Keijer intended to argue the merits of their
choice of law defense. They are therefore precluded from raising this argument on

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6Appellants also may be judicially estopped from arguing that the laws of the
United States do not apply to their dealings with Botman International. See Carley v.
Wheeled Coach, 991 F.2d 1117, 1133-34 (3d Cir. 1993). Although the best defense may
sometimes be a good offense, a defendant cannot prosecute its counterclaims under
federal law, then later, when unsuccessful on the merits, take the inconsistent position on
appeal that the federal court was precluded from adjudicating that very controversy.
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appeal.6
B. Rule 54(b) Certification
Appellants argue that the District Court erred in granting Botman International’s
motion for final judgment pursuant to FED . R. CIV . P. 54(b) without first allowing IPI to
conduct additional discovery. Under Rule 54(b), a district court “may direct the entry of
a final judgment as to one or more but fewer than all of the claims or parties only upon an
express determination that there is no just reason for delay and upon an express direction
for the entry of judgment.” FED . R. CIV . P. 54(b). We review a district court's Rule 54(b)
certification decision for abuse of discretion. Federal Home Loan Mortgage Corp. v.
Scottsdale Ins. Co., 316 F.3d 431, 441 (3d Cir. 2003). The district court must make an
“express determination” in which it “clearly articulate[s] the reasons and factors
underlying its decision to grant 54(b) certification.” Allis-Chalmers Corp. v. Philadelphia
Electric Co., 521 F.2d 360, 364 (3d Cir.1975). Five factors in particular are to be
considered, id., and in reviewing Botman International’s motion, the District Court gave
fair and explicit consideration to each. Particularly in light of the delay that Botman
International already has faced, the District Court was well within its discretion to enter a
final judgment under Rule 54(b) without making allowance for additional discovery.

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C. Liability on the PACA Trust
Dirk Keijer challenges the District Court’s determination that he violated his
fiduciary duties as a PACA trustee. A PACA trustee is responsible for ensuring that the
assets subject to the PACA trust actually are held in trust. In addition, an individual
corporate officer who fails to do so may be found to have breached the fiduciary duty of
care owed to the trust beneficiary. Weis-Buy Services, Inc. v. Paglia, 411 F.3d 415, 420-
21 (3d Cir. 2005). Trust assets need not be segregated, however, and accounts receivable
are included in the calculation of assets available to the beneficiary. 7 U.S.C. §
499e(c)(2); 7 C.F.R. § 46.46(b). The trustee must also see to it that the assets are made
“freely available to satisfy outstanding obligations to sellers of perishable agricultural
commodities.” 7 C.F.R. § 46.46(d)(1). In explaining its regulations, the Department of
Agriculture has noted that “[i]t is the buyer’s or receiver’s responsibiliy as trustee to
insure that it has sufficient assets to assure prompt payment . . ..” 49 Fed. Reg. 45738
(Nov. 20, 1984). Thus, the duty to ensure that the relevant receivables are collected must
fall squarely on the trustee, who is responsible for making the assets “freely available,”
not merely hypothetically reachable.
The District Court found that IPI’s accounts receivables totaled $581,774.00, an
amount sufficient to satisfy the PACA trust of $433,073.54. Accordingly, the District
Court denied summary judgment on Botman International’s claim of dissipation of trust
assets. Many of IPI’s assets were illiquid, however, and the District Court ruled that this
illiquidity meant that the assets were not “freely available,” so that IPI and Dirk Keijer –

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7Liquidity may also be relevant to the question of whether the trust assets have
been dissipated. Because a PACA trust is “made up of a firm's commodity related liquid
assets,” Weis-Buy, 411 F.3d at 420 (emphasis added), it is possible that illiquid assets
should not be counted in a dissipation inquiry. This reading is further suggested by the
regulations, which define dissipation as “any act or failure to act . . .which could
prejudice or impair the ability of unpaid suppliers, sellers, or agents to recover money
owed in connection with produce transactions.” 7 C.F.R. § 46.46(a)(2). We need not
decide this issue, however, because the parties have not raised it on appeal.
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who maintained undisputed control over the trust assets – had violated their fiduciary
duties and failed to maintain the PACA trust.
Appellants IPI and Keijer challenge the District Court’s grant of summary
judgment on these two claims, arguing that liquidity is an improper benchmark when
analyzing maintenance of a PACA trust. To the contrary, liquidity of assets is an
essential feature of a PACA trust. Although the trust assets may be commingled to
include a firm’s accounts receivable, the trust ultimately is “made up of a firm's
commodity related liquid assets . . ..” Weis-Buy, 411 F.3d at 420 (emphasis added). See
also Sanzone-Palmisano Co. v. M. Seaman Enterprises, Inc., 986 F.2d 1010, 1013 (6th
Cir. 1993). This bright line of liquidity is sensible, because it prevents a trustee from
paying its obligation to collect receivables onto the trust beneficiary.7
D. Imposition of the Constructive Trust
In addition to its rulings on the PACA trust, the District Court also granted
summary judgment against Dirk Keijer on Botman International’s claim for imposition of
a constructive trust in the amount of IPI’s contractual debt, $1,464,233.75. This ruling is
remarkable for two reasons. First, neither party moved for summary judgment on this

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8Appellants do not contest the grant of summary judgment against them on their
sixth counterclaim, for breach of a contract to compensate IPI. Nonetheless, it is plain
from the record that no reasonable juror could have found the alleged contract to exist.
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claim. Second, the District Court provided no discussion on its ruling, which it simply
attached to the end of its discussion of Keijer’s personal liability on the PACA trust.
We do not agree with the District Court’s resolution of this issue. Although
Pennsylvania law provides, as Botman International argues, that a constructive trust may
be imposed on a theory of unjust enrichment, Kohr v. Kohr, 413 A.2d 687, 691 (Pa.
Super. Ct. 1979), the doctrine of unjust enrichment is by its nature inapplicable where the
parties’ dispute arises out of a written contract. E.g., Lackner v. Glosser, 892 A.2d 21, 34
(Pa. Super. Ct. 2006). Because the District Court did not discuss the constructive trust at
summary judgment, we cannot know the basis of its ruling – or, indeed, whether the
District Court’s decision was based on a dispute of material facts or on a ruling of law.
As such, we will vacate the District Court’s order imposing the constructive trust and
remand this issue for further proceedings.
E. Dismissal of Counterclaims
IPI and Dirk Keijer appeal the District Court’s grant of summary judgment against
them on five of their their six counterclaims.8 These five counterclaims all stem from
allegations that Botman International deceptively overcharged IPI for transportation costs.
In reviewing the factual submissions in relation to these allegations, the District Court
correctly concluded that the facts weighed so heavily in favor of Botman International

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that no reasonable juror could find in favor of IPI and Dirk Keijer. Accordingly, its grant
of summary judgment on these counterclaims was proper.
IV. Conclusion
For the foregoing reasons, we will affirm in part the judgment of the District Court
and we will vacate it in part. The case is remanded to the District Court for further
proceedings regarding imposition of the constructive trust.

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