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IN THE UNITED STATES BANKRUPTCY COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

IN RE: DELTA PRODUCE, L.P.,1 DEBTOR.

CASE NO. 5:12-BK-50073-LMC (CHAPTER 11) JOINTLY ADMINISTERED

____________________________________________________________________________ SPECIAL PACA COUNSELS RESPONSE TO VARIOUS OBJECTIONS TO SPECIAL PACA COUNSELS FIRST INTERIM APPLICATION FOR ATTORNEYS FEES & COSTS ____________________________________________________________________________ NOW COMES Stokes Law Office LLP serving as Special Counsel pursuant to the Courts order dated January 25, 2012 [D.E. no. 25, and amended by D.E. no. 82] (the PACA Order) and in response to the objections filed by Kingdom Fresh Group2, Rio Bravo Group3 [D.E. no. 294] and International Bank of Commerce (IBC) [D.E. no. 298]. For its response, Special Counsel states as follows: A. Introduction 1. Special Counsel filed its Interim Fee Application on August 15, 2012, as

permitted by the PACA Order at paragraph 15. [D.E. no. 284] 2. Kingdom Fresh Group and Rio Bravo Group filed an objection to Special

Counsels fee application on September 4, 2012. [D.E. no. 294] 3. [D.E. no. 298]
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IBC filed a response asserting a limited objection on September 12, 2012.

Debtors are the following entities: Delta Produce, L.P. Case No. 12-50073-LMC, Superior Tomato-Avocado, Ltd. Case No. 12-50074-LMC, Atled, Ltd. Case No. 12-50075-LMC and Staci Properties, Ltd. Case No. 12-50110LMC. Kingdom Fresh Group consists of Kingdom Fresh Produce, Inc., I. Kunik Company, Inc. and Five Brothers Jalisco Produce Co. Inc d/b/a Bonanza 2001 Rio Bravo Group consists of Rio Bravo Produce Limited, LLC. and G.R. Produce, Inc.

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4.

Kingdom Fresh Group and Rio Bravo Groups objections are based upon the

following grounds: a. The PACA Trust is for benefit of PACA trust creditors only, and so cannot be used to pay Special Counsels attorneys fees; b. Special Counsel is Debtors counsel and cannot seek payment from PACA trust to defend Debtors from the claims asserted by the PACA trust creditors; c. Safeguarding of trust assets is the Debtors responsibility under the PACA and although attorneys fees relating to safeguarding are allowable, they cannot be paid from PACA trust; and d. Special Counsels fees are unreasonable because (i) they combine both safeguarding of PACA trust assets and defending Debtors against PACA claims and (ii) paralegal costs are not recoverable; e. Certain miscellaneous objections relating to alleged typos and calculations in billing statement. 5. IBCs limited objection is based upon the ground that Special Counsel should be

paid from funds in the PACA trust, and not from funds in the estate. B. Summary of Argument The PACA Order expressly provides that the Special Counsel is entitled to be paid from PACA trust assets for the services rendered pursuant to the order. Counsel for Kingdom Fresh and Rio Bravo Group had an opportunity to make comments to the proposed PACA Order, and in fact made comments, and did not oppose the Motion for Orders Establishing a Deadline to File PACA Trust Claims, and for Procedures to Resolve those Claims, and for the Appointment of Special PACA Counsel [D.E. no. 31]. Accordingly, said parties cannot now assert a contradictory position under the principles of judicial estoppel. Kingdom Fresh Group and Rio Bravo Groups objections regarding the use of PACA trust funds for payment of Special Counsels services rendered pursuant to the PACA Order should therefore be denied.

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Special Counsel concurs with the position asserted by IBC that its fees and costs should be drawn from the PACA trust fund alone, as provided under the PACA Order. C. Argument Objection to payment of Special Counsel fees is barred by judicial estoppel Judicial estoppel is a set of equitable doctrines that prevent a party from gaining advantage by taking inconsistent positions. Wright, Miller & Cooper, Fed. Prac. & Proc. Juris., 18B 4477 (2d ed.). Courts have held that a party should not in the absence of a good explanation be allowed to gain advantage on one theory and then seek inconsistent advantage by pursuing an incompatible theory. New Hampshire v. Maine, 121 S.Ct. 1808, 1814 (2001). In the present matter, paragraph 15(b) of the PACA Order states: By Special PACA Counsel. Special PACA Counsel shall be entitled to paid attorneys fees and costs from the PACA trust funds for the services rendered pursuant to this Order. The Court will determine the reasonable amount of such attorneys fees and costs. To be paid, Special PACA Counsel shall file a motion(s) for attorneys fees and costs should attach time sheets that have reasonably detailed time entries and which reflect time in increments of .1 of an hour. Stokes may file interim motions for attorneys fees and costs. (emphasis added) Debtor, Special Counsel, and various counsel to the PACA creditors all collaborated in preparation of the PACA Order. Drafts of the proposed order were circulated for review and comment by the Debtor, Special Counsel and counsel for the various creditors, including the PACA trust beneficiaries. Attached hereto as Exhibit A is correspondence with counsel from Kingdom Fresh Group and Rio Bravo Group regarding the proposed PACA Order. At no time did Counsel for Kingdom Fresh Group and Rio Bravo Group object to the proposed use of PACA trust assets to pay Special Counsel from PACA trust funds.

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Kingdom Fresh Group and Rio Bravo Group had an opportunity to object to the requested entry of the PACA Order and elected not to do so. Rather, they proceeded to file their respective PACA claims and fully participated in the negotiation of the claims procedure order, including appointment of Special PACA Trust Counsel. Special Counsel reviewed the PACA claims asserted by Kingdom Fresh Group and Rio Bravo Groups. The parties negotiated and stipulated to various motions resolving the various objections affecting these claims. Litigation concerning the validity of objecting parties claims is now essentially completed. Having gained advantage of the timely consideration of their claims through from the PACA Order as well as expedited and consolidated review of all other claims upon the PACA trust and collections of PACA trust assets, Kingdom Fresh Group and Rio Bravo Group cannot now seek to take an inconsistent position solely for the purpose of gaining further advantage. Although payment of the Special Counsels fee from the PACA trust would reduce the amounts of funds available to their respective claims, the Kingdom Fresh Group and the Rio Bravo Group previously agreed to such payment by virtue of their non-objection to the Motion seeking the entry of the PACA Order. The objecting parties cannot now take the contradictory position for further gain. The objecting parties essentially seek to have it both ways. Kingdom Fresh Group and Rio Bravo Groups objections relating to the use of PACA trust funds to pay Special Counsel for services provided pursuant to the PACA Order are barred by judicial estoppel. See e.g., In re Thorne, 471 B.R. 496, 505 (Bankr. N.D. Miss.2012) (creditor judicially estopped from attacking fee procedures to which its counsel consented). Special Counsel agrees with the position taken by IBC. Perhaps in an abundance of caution, IBC asserts that the payment of Special Counsels fee should be paid from the PACA

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trust fund as provided under the PACA Order, and not from the funds in the estate. That is what Special Counsel has sought in its pending fee application. PACA Order provides that Special Counsel be paid from the PACA trust for services rendered pursuant to the order Kingdom Fresh Group and Rio Bravo Groups objection to Special Counsels fee application on grounds of reasonableness is similarly flawed. The objecting parties contend that Special Counsels fee request should not combine entries for time spent marshalling and preserving the PACA trust assets with time spent defending the Debtor against the PACA claims. They also object to Special Counsels inclusion of paralegal costs in the fee application. Once again, the objecting parties are barred by judicial estoppel from taking a contradictory position for purposes of further gain. The objecting parties collaborated in preparing the PACA Order, filed their respective PAC claims, and have taken full advantage of the streamlined claims review process. The PACA Order expressly provides that Special Counsel is to be paid from PACA trust funds for services rendered pursuant to the PACA Order. It also directs Special Counsel to provide services that include marshalling and preserving the PACA trust assets as well as reviewing the various PACA claims in the interest of the Debtor and the various PACA trust beneficiaries. Kingdom Fresh Group and Rio Bravo Group cannot now revise their position so as to take the contradictory position and challenging the use of PACA trust funds to pay Special Counsel. All time incurred by Special Counsel collecting PACA trust assets and responding to PACA trust claims asserted benefits the PACA beneficiaries even if it also benefits Debtor. Moreover, with regard to the objecting parties regarding the recovery of paralegal costs, the PACA Order included at paragraph 14(g) expressly provides for the payment of time spent by a legal assistant. Paragraph 14(g) states: 5

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Special PACA Counsels rate will be $350.00 an hour, and when he believes that it would be cost-effective to do so, he will delegate tasks to his associate attorney Jessie Lopez, who may act on his behalf and who will bill at $200.00 per hour, or to his legal assistant who will bill at $100.00 per hour. Kingdom Fresh Group and Rio Bravo Groups objection on grounds of reasonableness should accordingly be denied. Fee application should be corrected to address typographical errors Finally, Kingdom Fresh Group and Rio Bravo Group also assert miscellaneous objections to two time entries. Both appear to be typographical errors. The first involves Special Counsels time entry dated February 21, 2012. The time entry description includes a time for each of the tasks performed and total .80 hours. However, the entry was incorrectly entered as 9.80 hour s. The second typographical error involves the total hours performed by Jessie Lopez. The fee application incorrectly states the total hours for Mr. Lopez. However, the total amount of legal fees is correctly stated. Special Counsels total fee application should accordingly be revised to correct the typographic errors. Special Counsel fee application should be revised as follows: NAME Craig Stokes Jessie Lopez Rosa Barrera Legal Fees: Expenses: Total Fee: $92,828.00 $ 2,492.97 $95,320.97 D. Conclusion Kingdom Fresh Group and Rio Bravo Group have objected to the payment of Special Counsel with PACA trust funds. However, the PACA Order expressly provides that Special Counsel is to be paid for all services rendered pursuant to the order. The objecting parties 6 TOTAL HOURS 188.60 86.64 94.90 RATE $350.00/hr $200.00/hr $100.00/hr TOTAL FEE $66,010.00 $17,328.00 $ 9,490.00

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participated in the negotiations surrounding drafting of the PACA Order. They did not lodge any objection to the PACA Order throughout the claims review process and fully participated in the claims review process. Kingdom Fresh Group and Rio Bravo Group only now, following the submission of Special Counsels fee application, seek to revise their position to take a contradictory position. Judicial estoppel bars a party, absent a good explanation, from gaining advantage on one theory and then seeking inconsistent advantage by pursuing an incompatible theory. Kingdom Fresh Group and Rio Bravo Groups objections should therefore be denied. The objecting parties notice regarding two typographical errors is duly noted. Special Counsels fee application should accordingly be revised. DATED: September 19, 2012. Respectfully submitted, STOKES LAW OFFICE LLP 3330 Oakwell Court, Suite 225 San Antonio, TX 78218 Telephone (210) 804-0011 Facsimile (210) 822-2595 By: /s/ Craig A. Stokes______________ Craig A. Stokes SBN 19267700 cstokes@stokeslawoffice.com

Special PACA Counsel for Delta Produce, L.P. CERTIFICATE OF SERVICE I hereby certify that on the 19th day of September, 2012, I electronically filed the foregoing Response to Objections to Special Counsels Interim Application for Attorneys Fee and Costs with the Clerk of the Court using the CM/ ECF system which will send a notice of electronic filing to all parties of record. I further certify that a copy of the foregoing pleading was mailed to all of Debtors produce creditors, listed in the Attached Exhibit B.

/s/ Craig A. Stokes_____________________ Craig A. Stokes

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Jessie Lopez Subject:

FW: Delta: Re: In re Delta Produce; In re Superior Tomato-Avocado, Ltd.

From: Robert Goldman

Sent: Tuesday, January 17, 2012 4:02 PM To: 'R. Glen Ayers'; Craig Stokes Subject: FW: Delta: Re: In re Delta Produce; In re Superior Tomato-Avocado, Ltd.

Glen I Craig - please let me know when we can have a conference call to discuss the below email. Thanks, Robert
From: Kevin P. Kelley, Esq. [mailto:kelley@pacatrust.com]

Sent: Tuesday, January 17, 2012 3:39 PM To: Robert Goldman; Pat Rynn; Steven Nurenberg; Larry Meuers; Lou Diess; Bart Botta; Jason Read; Mike Keaton (Email); Bruce Akerly; Craig Stokes; Klinowski, Jason R.; R. Glen Ayers

Subject: Delta: Re: In re Delta Produce; In re Superior Tomato-Avocado, Ltd.

I have at least the following major concerns with the proposed order: 1) Non-pmiy procedure: Corporations cannot appear pro se. Every time we have tried one of these pro se claims procedures, it has doubled the costs and significantly increased the screw ups. There is no reason to depart from the FRCP requirements for appearances and proper representation of every claim. 2) Filing- Having the Clerk upload claims for pro se claimants will not work. I would prefer claims get served on each counsel of record so we have them for a single review process. 3) Fee Claims- fees are included in the claim itself and cannot be relegated to a second round of distributions. 4) Special PACA Counsel- Not opposed to Craig working the A/Rs, but that is usually on a contingency basis, not hourly. 5) POC Form - The POC should include licensing info so we don't have to go track that clown for each claimant. 6) BK Rules - FRBP require 20 clay notice on any resolution of a claim or controversy. Ignoring that is only asking for an appeal that will further delay a disbursement

Sincerely, Kevin P. Kelley, Esq. KEATON & ASSOCJA TES, P.C. Tel: 847/934-6500 Fax: 847/934-6508

This e-mail message is for the sole use of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies ofthe original message.
----- Original Message ----1 From: Robert Goldman
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EXHIBIT A

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To: Pat Rynn ; Steven Nurenberg ; Larry Meuers; Lou Diess; Bart Botta; Jason Read ; Mike Keaton (E-mail) ; Bruce Akerly; Kevin P. Kelley, Esq. ; Craig Stokes; Klinowski, Jason R. ; R. Glen Ayers Sent: Sunday, January 15, 2012 7:52PM Subject: In re Delta Produce; In re Superior Tomato-Avocado, Ltd.

Dear Counsel, Attached please find a draft of a document entitled "Order Establishing a Deadline to file PACA Trust Claims, and for Procedure to Resolve Those Claims: Delta Produce, L.P." The document has been worked on by bankruptcy counsel Glen Ayers and some of the attorneys at his firm, Craig A Stokes, and I. Some of you will have claims against Delta Produce, L.P., some will have claims against Superior Tomato-Avocado, Ltd., and some will have claims against both. For those with claims against only Superior, I request that you read the draft Order as if it pertained to Superior and not Delta, since the proposed Order for Superior would be identical, except for paragraph "4" which addresses Delta's alleged sale of $550,000 worth of produce to Superior, and Delta's filing a trust claim against Superior for same. The proposed Order is 11 pages long, and deals with both PACA and bankruptcy issues. It anticipates future events and requirements, and aims to set forth an efficient procedure for dealing with them. The appointment of Craig A Stokes to lead collection efforts is a sensible one. He has the working relationship with the Debtor, and it is in the Debtors' and its principal's interest to maximize collections for the trust, so there is no conflict of interest. There is the usual asset of the "accounts receivables." We would continue to rely upon two current employees' assistance in collecting the receivables, but when those efforts are no longer making sufficient progress (i.e., when what remains are recalcitrant account debtors), then collections would shift to Craig's office, and within his office there would be a division of labor to help keep fees and costs down. There are also other assets, which include the real properties that are owned by related companies, which appear to have substantial equity and for which the Debtors Superior and Delta possess documents and knowledge regarding their PACA trust status, and there are trucks. With respect to Delta, there is also the recently filed lawsuit against HEB which is being handled by an attorney other than Craig. Please provide me with your comments by Tuesday at 4 pm. EST. If you have questions, you're welcome to call me-an explanation of why something is a certain way may alleviate an initial concern. Afterwards, the bankruptcy counsel for Delta and Superior intends to file the Motion for the entry of the attached Order, which would be served on all produce creditors, but there would probably be a shortened amount of notice to respond to it.

Regards, ROBERT E. GOLDMAN, ESQ.

1 East Broward Blvd., Ste. 700 Fort Lauderdale, FL 33301 (954) 745-7450; (954) 745-7460 Fax

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you are hereby notified that any reading, distribution, copying, or other use of this message or its attachments is prohibited. If you have received this message in error, please notify the sender immediately by e-mail or by telephone (954) 745-7450 and delete this message and copies or backups. Thank you.

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Vaughan Foods, Inc. Ms. Sonya Logan 216 NE 12th Street Moore, OK 73160 Visalia Produce Sales Mr. George M. Matoian PO Box 190 Kingsburg, CA 93631

B. Catalani, Inc. 1500 South Zarzamora, Unit #326 San Antonio, TX 78207

M & P Produce Co., Inc. Mr. Michael Lopez, Jr. 1500 S. Zarzamora Street, Unit 308 San Antonio, TX 78207

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Exhibit B