CA - Delinquent Wholesale Account

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jcfones
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CA - Delinquent Wholesale Account

#1 Post by jcfones » April 12th, 2018, 1:34 pm

Hello all - looking for some advice or experience in this area. I have a local wholesale account (restaurant) that is very delinquent and now refusing to pay their invoice. No dispute about receiving the wine, quality or anything like that. Just not paying.

I have heard that presenting a complaint with the local ABC office was a valid mechanism for obtaining relief. Something regarding as we all are supposed pay our bills net 30, any licensed alcohol provider that didn't (without a valid reason for withholding payment) would be subject to some type of enforcement action against their license. I have seen the threat of going to the ABC work twice before with colleagues but I tried it without success. [snort.gif] So, I just called the SF ABC and they're telling me there is no such mechanism and they do not get involved with payment disputes.

Does anyone have any knowledge of experience with this in particular? I'm certainly aware of my legal remedies in small claims court and right now it looks like that's where I'm heading but before I move away from this "remedy" I thought I would inquire. Thanks!

John
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Merrill Lindquist
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CA - Delinquent Wholesale Account

#2 Post by Merrill Lindquist » April 12th, 2018, 2:21 pm

jcfones wrote:Hello all - looking for some advice or experience in this area. I have a local wholesale account (restaurant) that is very delinquent and now refusing to pay their invoice. No dispute about receiving the wine, quality or anything like that. Just not paying.

I have heard that presenting a complaint with the local ABC office was a valid mechanism for obtaining relief. Something regarding as we all are supposed pay our bills net 30, any licensed alcohol provider that didn't (without a valid reason for withholding payment) would be subject to some type of enforcement action against their license. I have seen the threat of going to the ABC work twice before with colleagues but I tried it without success. [snort.gif] So, I just called the SF ABC and they're telling me there is no such mechanism and they do not get involved with payment disputes.

Does anyone have any knowledge of experience with this in particular? I'm certainly aware of my legal remedies in small claims court and right now it looks like that's where I'm heading but before I move away from this "remedy" I thought I would inquire. Thanks!

John
I feel your pain. The only non-payer I had was Oakville Grocery, and they declared bankruptcy. Sold 3 cases of my first commercial release (which was 100 cases), took the profit, and gave me nothing. A few of us here were hurt by that deal.

I would say sit on their doorstep and beg for your money before something like this happens.
I am not certain how much money you are talking about, but before you get nothing, can you get gift certificates or something...get something out of it? I think Oakville Grocery never really closed - they are still humming. Just filed for bankruptcy, sold the assets to someone who did not assume the debt, and life goes on. Wish I had gotten gift certificates at least, because Oakville Grocery is continuing to thrive. Sandwiches instead money for wine would have beat the 13 cents on the dollar that we vendors received (or similarly stinging amount).
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jcfones
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CA - Delinquent Wholesale Account

#3 Post by jcfones » April 12th, 2018, 3:05 pm

Thanks, Merrill. It's a nice chunk but certainly doesn't threaten my business life. That being said, it really burns me when I go in there and they are rocking and they refuse to pay me. If I was still living in Baltimore, let's just say I knew people who could resolve this for me but I run with a different crowd here in jolly San Francisco.
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CA - Delinquent Wholesale Account

#4 Post by Joe B » April 12th, 2018, 3:30 pm

jcfones wrote:Thanks, Merrill. It's a nice chunk but certainly doesn't threaten my business life. That being said, it really burns me when I go in there and they are rocking and they refuse to pay me. If I was still living in Baltimore, let's just say I knew people who could resolve this for me but I run with a different crowd here in jolly San Francisco.
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CA - Delinquent Wholesale Account

#5 Post by Evan Pontoriero » April 12th, 2018, 3:43 pm

[popcorn.gif]

I have a couple of these. Had some in the past that took over a year. Just kept pestering them till they either paid or went out of business.
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CA - Delinquent Wholesale Account

#6 Post by H Wallace Jr » April 12th, 2018, 4:03 pm

For clarification, how late is really late?
and
Is this a first invoice? Or have they paid you before?

Find out if they are paying other wineries / distributors. (Look at their wine list and make some calls)

Find out how much wine they still have, if any. See if you can get it back and they pay a partial.

Do you want to eat there? Ring up an equal sized bill and leave your invoice as payment (but still tip your server in cash). Downside, you could get arrested.

During the day show up near the end of lunch shift and nag them. Afternoon / evening show up before lineup... You probably won't get paid if you don't show your face over and over.

Are they willing to go on a payment plan?

Last step, take legal action.
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CA - Delinquent Wholesale Account

#7 Post by jcfones » April 12th, 2018, 4:10 pm

Thanks, Hardy but we're well past most of all of that. They were paying, then stopped. But what difference would it make if it was their first invoice? They owe the money for the product which they sold in its entirety. It's been 6 months. They're paying others, I know for a fact.

I just received a call from someone pointing me to the relevant code provisions detailing the fines and penalties they could face from ABC enforcement action and I have contacted the Trade Enforcement Unit with ABC. As an ex-lawyer, I'm damn comfortable in a court room but not comfortable with the law's delays. Hopefully, this will be faster.
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CA - Delinquent Wholesale Account

#8 Post by jcfones » April 12th, 2018, 4:13 pm

Well, looks like its small claims court after all. Just received the following from ABC:

Dear Mr. Fones,



Section 25509 of the Business and Professions Code requires suppliers, such as yourself, to add a 1% fee to any retailer’s account for balances that remain unpaid 42 days after the date of delivery. In addition, the statute prohibits a supplier from selling to that retailer on credit until the outstanding balance has been paid. The statute does not require the retailer to pay the supplier, it requires the supplier to add the fee. There is nothing in the ABC Act or our business regulations that would impose fines or suspend the license of a retailer who has not paid a supplier for alcoholic beverages that have been delivered. I have included the text of the statute for your reference.



25509.

(a) A distilled spirits manufacturer, a brandy manufacturer, a beer manufacturer, a winegrower, a wine blender, a distilled spirits rectifier, a wine rectifier, a distilled spirits wholesaler or a beer and wine wholesaler who sold and delivered beer, wine, or distilled spirits to a retailer and who did not receive payment for such beer, wine, or distilled spirits by the expiration of the 42nd day from date of delivery shall charge the retailer 1 percent of the unpaid balance for such beer, wine, and distilled spirits on the 43rd day from date of delivery and an additional 1 percent for each 30 days thereafter.

(b) A distilled spirits manufacturer, a brandy manufacturer, a beer manufacturer, a winegrower, a wine blender, distilled spirits rectifier, a wine rectifier, distilled spirits wholesaler or beer and wine wholesaler who sold and delivered beer, wine, or distilled spirits to a retailer and who did not receive payment in full by the expiration of the 30th day from date of delivery or who has not received payment of the 1 percent charge at the expiration of the 30th day from the day the charge became due shall thereafter sell beer, wine, or distilled spirits to said retailer either for cash or by receiving payment in advance of delivery until such time as all payments are received for the beer, wine, or distilled spirits sold and delivered to the said retailer more than 30 days previously.

(c) The 42-day period and the 30-day period provided for in this section shall commence with the day immediately following the date of invoice and shall include all successive days including Sundays and holidays to and including the 42nd or 30th day as the case may be. When the 42nd day from date of invoice or the expiration of each additional 30-day period falls on Saturday, Sunday, or legal holiday, the next business day shall be deemed to be the expiration day.

(d) All moneys received from a retailer in payment for any beer, wine, or distilled spirits sold and delivered to him or her shall be first applied to the payment of the oldest balance on beer, wine, or distilled spirits. All checks received for such payments shall be deposited for collection not later than the second business day following receipt of said check. A promissory note, postdated check or check dishonored on presentation shall not be deemed payment.

(e) In enacting the act that amends this section by adding this subdivision, the Legislature finds that it is necessary and proper to remove the retailer from financial or business obligations to suppliers or wholesalers by the extension of credit beyond the terms contained in this section. The Legislature further finds that the exception established by this section to the general prohibition against tied interests shall be limited to its express terms so as not to undermine the general prohibition, and intends that this section shall be construed accordingly.



Sincerely,



Lee Riegler

Supervising Agent

Alcoholic Beverage Control

Trade Enforcement Unit
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Randy Bowman
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CA - Delinquent Wholesale Account

#9 Post by Randy Bowman » April 12th, 2018, 7:21 pm

It is unfortunate that they will probably pay up the minute they are served for the civil case, hoping it keeps them out of court or gives them the upper hand and you are now out the filing and service fees.

I thought about having somebody hand out deadbeat notices in front of the restaurant for a few days, but that won't work.

Social media DOES have an impact, whether it be Yelp reviews or threads on wine boards that are accessible to the public. Start a deadbeat thread, name them, describe the details and responses you've got from them. If other distributors know they don't pay bills owed to small distributors or wineries, they might monitoring the restaurants payments.

One of our Southern Wine Reps spends two days a month trying to collect from their accounts who always push payment out 90 days or more, yet Southern still sells to them rather than cut them off. Occasionally, they will go COD on them. If these people aren't afraid of SW&S taking them to court, they aren't worried about small distributors and wineries.
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CA - Delinquent Wholesale Account

#10 Post by Kim Z » April 12th, 2018, 7:34 pm

My main business isn't wine (though I have a small winery), and in California the rules are heavily stacked in favor of non-paying slackers.

With most non-payers there are no means of cost effective recourse. I have won small claims judgements but was told I need to collect them myself. Debtors extinguish debts and actually come back asking to be (credit) customers again, claiming protection via bankruptcy law. (Be careful if any owners could claim "minority status")

My conclusion is this is the cost of doing business in California. Rioja anyone?
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#11 Post by H Wallace Jr » April 12th, 2018, 7:41 pm

jcfones wrote:Thanks, Hardy but we're well past most of all of that. They were paying, then stopped. But what difference would it make if it was their first invoice? They owe the money for the product which they sold in its entirety. It's been 6 months. They're paying others, I know for a fact.
You'd know whether or not this was a pattern, and if it paying late wasn't normal, you'd want to act a quickly and get in front of the other vendors in case they stop paying everyone or close up.
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Drew Goin
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CA - Delinquent Wholesale Account

#12 Post by Drew Goin » April 12th, 2018, 11:04 pm

Randy Bowman wrote:If other distributors know they don't pay bills owed to small distributors or wineries, they might monitoring the restaurants payments.

One of our Southern Wine Reps spends two days a month trying to collect from their accounts who always push payment out 90 days or more, yet Southern still sells to them rather than cut them off. Occasionally, they will go COD on them. If these people aren't afraid of SW&S taking them to court, they aren't worried about small distributors and wineries.

Here in a far-away three-tier state (mandated purchasing via a distributor), a company, be it on-premise or off-premise, who bounces a check or is delinquent on payments must do COD for all future purchases from ANY distribution company for a very long time.


The offending business is put on a statewide COD list for non-payment.



I am not an advocate of the three-tier system, and I would love nothing more than to see the whole mess obliterated "Teddy Roosevelt-style". :) However, I wish I could conjure up a suitable method of dealing with the sort of mess mentioned in the OP.

My heart goes out to you! It's very sad to see the little fellas getting the shaft and possible supporters of the monster of consolidated distribution systems given an opportunity to make ammo out of cases like this one. :x

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#13 Post by Joe Webb » April 19th, 2018, 2:28 pm

If you have exhausted all other reasonable choices then I would do the below.
H Wallace Jr wrote: Do you want to eat there? Ring up an equal sized bill and leave your invoice as payment (but still tip your server in cash). Downside, you could get arrested.
If your uncomfortable with that then off to small claims you go.
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CA - Delinquent Wholesale Account

#14 Post by Wes Barton » April 19th, 2018, 6:04 pm

Back in the Squires Board days a thread instigated a legislative change that went insanely easily. Someone just pointed out the right wine country legislator to bring it to. The looming threat of having to do COD, as Drew brought up, seems very reasonable, and easy to get passed.
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