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Ascentium Capital LLC v. Adams Tank & Lift Inc

United States District Court, M.D. Georgia, Albany Division

September 15, 2017

ASCENTIUM CAPITAL LLC, Plaintiff,
v.
ADAMS TANK & LIFT INC, et al., Defendants.

          ORDER

          LESLIE J. ABRAMS, JUDGE UNITED STATES DISTRICT COURT.

         Before the Court are Plaintiff Ascentium's Motion for Partial Summary Judgment (Plaintiff's Motion), Doc. 66, and Defendants Adams Tank & Lift Inc. and Andrew J. Adams' Motion for Summary Judgment (Defendants' Motion), Doc. 69. Plaintiff has also moved to dismiss Defendant Ataollah Masoodzadehgan as a party. Doc. 72. For the reasons stated below, Plaintiff's Motion for partial summary judgment, Doc. 66, is GRANTED in part and DENIED in part, and Defendants' Motion for summary judgment, Doc. 69, is GRANTED in part and DENIED in part. Plaintiff's Motion to dismiss a party, Doc. 72, is GRANTED.

         I. BACKGROUND

         Plaintiff Ascentium Capital, LLC (Ascentium) initiated this action on July 24, 2015. Doc. 1. On September 14, 2016, with leave from the Court, Plaintiff filed an Amended Complaint, which is now the operative Complaint as to Defendants Phoenix Petroleum, LLC (Phoenix), Adams Tank & Lift, Inc. (AT&L), Andrew J. Adams (Adams), Great American Travel Center, LLC (American), and Ataollah Masoodzadehgan (A.M.). Doc. 55. Plaintiff's Complaint as amended asserts nine causes of action: (1) three claims of breach of contract against Defendants Phoenix, American, Falcon Entity, LLC (Falcon), and A.M.; (2) money had and received against AT&L; (3) conversion against Phoenix and AT&L; (4) unjust enrichment against AT&L; (5) breach of contract against AT&L; (6) fraud against Phoenix, A.M., AT&L, and Adams; and (7) attorney's fees against all Defendants.

         Plaintiff Ascentium is a lending company. See Doc. 66-2 ¶ 5. Phoenix is the owner and operator of several gas stations. See Doc. 66-2 ¶ 3. American and Falcon are LLCs owned by A.M. Docs. 66-2 ¶¶ 22-23; 55 ¶ 11. A.M. is the principle member and operator of Phoenix, American, and Falcon. American, Falcon, and A.M. were guarantors on loans between Phoenix and Plaintiff. Docs. 66-2 ¶¶ 22-23; 55 ¶ 11. AT&L operates a business that sells, installs, and services fuel and service station-related equipment in Georgia to operators such as Phoenix. Doc. 66-2 ¶ 1. Adams is the President of AT&L and communicated directly with Plaintiff during the course of AT&L's business dealings with Plaintiff and Phoenix. Doc. 66-2 ¶ 2. AT&L and Adams had an ongoing business relationship with both Phoenix, as a supplier of equipment, and Plaintiff, as a vendor with whom Plaintiff had a preferred status as a lender. See Doc. 66-2.

         On December 15, 2016, Plaintiff and Defendants AT&L and Adams moved for partial summary judgment and summary judgment respectively.[1] Docs. 66 & 69. Plaintiff seeks summary judgment (1) on claims I, II, and III against Phoenix, American, and Falcon and (2) on claims IV, V, and VI against AT&L. Doc. 66-1 at 22. Defendants AT&L and Adams seek summary judgment against Plaintiff as to claims IV, V, VI, VII, VIII, and IX. Doc. 69-1 at 29. Plaintiff and Defendants AT&L and Adams filed timely responses and replies to the respective Motions. Docs. 78, 81, 84, 85. Defendants Phoenix, American, and Falcon neither responded to Plaintiff's Motion nor joined Defendants AT&L and Adams' Motion. See Docket.

         II. FACTS[2]

         This case revolves around a deal to equip two gas stations in Cairo and Jackson, Georgia. Phoenix and its managing member, A.M., owned the gas stations and ostensibly wanted to purchase equipment for the stations from AT&L, an equipment vendor. Phoenix and A.M. needed financing for the deal and sought it from Plaintiff, AT&L's preferred lender, advising Plaintiff that the loans were for the purchase of equipment and promising Plaintiff a security interest in the equipment. Plaintiff provided the loans, but much of the equipment was never purchased. Instead, after AT&L received the money, Phoenix and A.M. asked AT&L to refund the loan proceeds to Phoenix. Although AT&L knew that the loan had been made for the express purpose of funding the equipment purchase, it nevertheless directed a large portion of the loan funds to Phoenix. Due in large part to its own sloppy procedures and failure to conduct due diligence, Plaintiff did not discover that it had been duped and had no security to protect its interests for two years. The details of this scheme are as set forth below.

         A. The Cairo Project

         In October 2012, AT&L prepared a proposal at Phoenix's request to provide fuel dispensers, related hardware and equipment, a POS system, an interior cooler, and canopies for Phoenix's location in Cairo, Georgia (the Cairo Project). Doc. 69-2 ¶ 13. The parties sought funding from Plaintiff, and on September 27, 2012, Len Baccaro, Plaintiff's Senior Vice President of Sales, sent Adams an email requesting information on the Phoenix transactions. Doc. 69-3 at 153. On November 14, 2012, Adams responded to Baccaro's email detailing $521, 908.17 worth of equipment and services for the Cairo Project proposal and for equipment for another project that had been delayed, a 2011 project in Jackson, Georgia. Docs. 69-3 at 152; 69-2 ¶ 16. In January 2011, AT&L entered into a contract with Phoenix to supply and install equipment at Phoenix's location in Jackson, Georgia for $340, 939.00 (the Jackson Project). Doc. 69-2 ¶ 7. In the Spring of 2011, AT&L while installing certain equipment, stopped work because of building and sewer issues with Butts County, Georgia, leaving a $22, 454.20 balance on the work done for Phoenix. Doc. 69-2 ¶¶ 8-10. According to AT&L, the remaining equipment and services were to be paid for at a later date once they were delivered and installed by AT&L. Doc. 69-2 ¶ 11.

         On November 26, 2012, AT&L sent Phoenix an unsigned proposal for the Cairo site totaling $143, 058.00 plus tax for fuel dispensers, related hardware and equipment, and a POS system. Docs. 69-2 ¶ 17, 19; 81-1 ¶ 17, 19. AT&L sent the Cairo proposal to Plaintiff on December 5, 2012. Docs. 69-2 ¶ 19; 81-1 ¶ 19. On or around December 11, 2012, upon receipt of the Cairo proposal from AT&L, Plaintiff emailed Adams stating: “So far [A.M. and Phoenix] have been approved for 250k without using any financials.” Doc. 69-2 ¶¶ 20, 21. On January 10, 2013, Baccaro emailed Adams indicating he “had a nice chat” with A.M. of Phoenix, and that “he should be calling [AT&L] about the invoices” for the Cairo site. Doc. 69-2 ¶ 23. Adams then included a cooler and canopies in the invoice Plaintiff was requesting in relation to the $250, 000.00 Plaintiff agreed to loan Phoenix. Doc. 69-2 ¶ 25. Thus, on January 18, 2013, Adams sent a single invoice to Phoenix and Plaintiff totaling $249, 995.00 for fuel dispensers, related equipment and hardware, a POS System, canopies, and a cooler for the Cairo site. Doc. 69-2 ¶ 27.

         On January 21, 2013, Plaintiff instructed Adams, via email, to split the invoice into two invoices-one for $150, 000.00, and one for $100, 000.00, which in total would equal the $250, 000.00 of financing Baccaro had stated Phoenix had previously been approved for by Plaintiff. Docs. 66-2 ¶ 8; 78-2 ¶ 8. Thereafter, AT&L forwarded invoice number 2640474 for $150, 000.00 and invoice number 2640475 for $100, 000.00 to Plaintiff. Doc. 69-2 ¶ 29.

         Plaintiff agreed to finance Phoenix's purchase of the Cairo equipment by advancing 100% of the purchase price of the equipment to AT&L on Phoenix's behalf. Doc. 66-2 ¶¶ 5, 6. Phoenix and Plaintiff entered into two written agreements, each labeled “EQUIPMENT FINANCE AGREEMENT, ” as part of Plaintiff's financing of Phoenix's purchase of the Cairo equipment-agreement numbers 2116122 and 2118557 (the Cairo Agreements). Docs. 66-2 ¶ 9; 55-1 at 2-5; 1-1 at 2-5. The Agreements had repayment terms of sixty (60) payments of $3, 069.00 and $2, 046.00 respectively. See Docs. 68; 55-1 at 2-5; 1-1 at 2-5. Subsequent to the signing of the Cairo Agreements, the invoices from AT&L were stamped by Plaintiff, labeled “Schedule A, ” and attached to the Cairo Agreements; and the agreement numbers were written on the invoices.[3] Doc. 69-2 ¶ 30.

         Falcon and American each executed two guaranties in Plaintiff's favor on the Cairo Agreements. Docs. 66-2 ¶ 22, 23; 55-2 at 2-5; 1-2 at 2-5; 55-3 at 2-5; 1-3 at 2-5. The guaranties, attached to the Complaint and Plaintiff's Motion, stated that the guarantors:

[H]ereby unconditionally guarantee and promise on demand (i) to pay [Plaintiff] . . . sums required to be paid under the terms of (A) the . . . equipment finance agreement . . . whose Agreement number is referenced above, . . . entered between [Plaintiff] and Phoenix Petroleum, LLC, . . . and (B) any document relating to such Agreement . . . in the amounts, at the times and in the manner set forth in such Agreement or Other Documents.

Docs. 66-2 ¶ 23; 55-3 at 2-5; 1-3 at 2-5.

         On January 25, 2013, and January 28, 2013, Plaintiff wired two payments to AT&L totaling $225, 000.00-90% of the purchase price of the Cairo equipment. Docs. 66-2 ¶ 13; 69-2 ¶ 32. Phoenix then requested that AT&L refund Phoenix $100, 000.00 of the wired funds since AT&L was not supplying Phoenix with the canopies or the cooler. Doc. 69-2 ¶ 37. Without notifying Plaintiff, AT&L sent $100, 000.00 of the loan funds to Phoenix. Docs. 69-2 ¶ 39; 66-2 ¶ 17; 78-2 ¶ 17. AT&L retained the remaining money necessary to pay for equipment and services AT&L provided at the Cairo site under the November 2012 contract proposal with Phoenix. Docs. 66-2 ¶ 16; 78-2 ¶ 16.

         Plaintiff did not learn of the cancellation of the Cairo orders or the diversion of funds to Phoenix until more than two years later. Doc. 66-2 ¶¶ 19, 20. On or around March 29, 2013, after receiving an email from Adams that inquired about further funding from Plaintiff and indicated that the dispensers were at the Cairo site, Plaintiff, unaware of the diversion of previously provided funds and cancelled purchases, wired $25, 000.00 to AT&L-the last 10% of the purchase price of the Cairo equipment. Docs. 66-2 ¶ 15; 69-2 ¶ 44.

         B. The Jackson Project

         Between August and September 2012, Len Baccaro of Ascentium requested information from AT&L about the Jackson Project which previously had been put on hold. Doc. 69-2 ¶ 12. Baccaro requested this information after a phone conversation Baccaro had with A.M. about financing the project. Doc. 69-2 ¶ 12. On January 2, 2013, while discussing the Cairo Project, Baccaro forwarded the prior Jackson contract from 2011 to Adams via email and inquired as to the status of the work at the Jackson site. Doc. 69-2 ¶ 22. On or about June 3, 2013, Plaintiff informed AT&L that it approved the financing of $240, 000.00 to Phoenix for the Jackson Project. Doc. 69-2 ¶ 46.

         Also in June 2013, Phoenix placed an order with AT&L for the purchase and installation of additional equipment for the Jackson Project. Doc. 66-2 ¶ 24. On June 11, 2013, Adams sent Plaintiff and Phoenix a revised proposal for the Jackson Project dated June 4, 2013, for $240, 000.00 as requested by Phoenix, which included a portion of the equipment and work from the prior Jackson contract dated January 25, 2011, that had not been completed. Doc. 69-2 ¶ 47. On June 24, 2013, Plaintiff forwarded notification of its formal approval of the loan to AT&L. Doc. 69-2 ¶ 48. On June 27, 2013, Adams and AT&L were asked by Plaintiff to create an invoice for $240, 000.00 for the AT&L work described in the June 4, 2013 proposal. Docs. 69-2 ¶ 50; 81-1 ¶ 50; 66-2 ¶ 32; 78-2 ¶ 32. AT&L, at the direction of Adams, submitted an itemized invoice to Plaintiff. Doc. 69-2 ¶ 51. AT&L provided the requested invoice dated June 27, 2013, to Plaintiff. Id.

         On or around June 28, 2013, Plaintiff and Phoenix entered into an agreement labeled “EQUIPMENT FINANCE AGREEMENT, ” agreement number 2118850 for the Jackson Project. Docs. 55-5 at 2-3; 1-5 at 2-3. The agreement had repayment terms of sixty (60) payments of $4, 632.53.00 (the Jackson Agreement). See Docs. 68; 55-5 at 2-3; 1-5 at 2-3. The invoices for the Jackson Project were not included as schedules to the Jackson Agreement when executed but later were added as “Schedule A” to the Jackson Agreement by Plaintiff.[4]Doc. 69-2 ¶ 53. Phoenix also signed and submitted a delivery and acceptance certificate to Plaintiff in connection with the Jackson Agreement. Doc. 66-2 ¶ 34. The delivery certificate stated that AT&L delivered and installed all of the Jackson equipment at the Jackson facility. Doc. 66-2 ¶ 35. Plaintiff admits that it often had customers sign a delivery and acceptance certificate to be made part of each agreement before equipment was actually delivered to a project site. Doc. 69-2 ¶ 93.

         Plaintiff agreed to finance Phoenix's purchase of the Jackson equipment by advancing 100% of the purchase price of the equipment to AT&L on Phoenix's behalf. Doc. 66-2 ¶ 30. Plaintiff required Phoenix's authorization before it provided any funds to AT&L. Doc. 69-2 ¶ 94. Once authorized, Plaintiff advanced 90% of the purchase price of the Jackson equipment by wiring $216, 000.00 to AT&L on or about July 1, 2013. Doc. 66-2 ¶ 33. Falcon and American each executed a guaranty in Plaintiff's favor in relation to the Jackson Agreement. Docs. 66-2 ¶¶ 27, 28; 55-6 at 2-3, 4-5; 1-6 at 2-3, 4-5. The guaranties, attached to the Complaint and Plaintiff's Motion, were identical to those executed for the Cairo Agreements. Docs. 66-2 ¶ 28; 55-6 at 4-5; 1-6 at 4-5.

         After Plaintiff wired the Jackson funds to AT&L, Phoenix, AT&L, and Adams agreed that Phoenix would cancel the Jackson order, AT&L would disburse a portion of the wired funds to Phoenix, and AT&L would apply the balance of the Jackson funds-$79, 671.97- toward the payment of bills and items in dispute between AT&L and Phoenix. Doc. 66-2 ¶ 36. As outlined in a July 3, 2013 email from AT&L's controller Pauline Strach, Phoenix requested that 50% of the Cairo cooler price, minus installation costs, be paid out of its Jackson funds received by AT&L on July 3, 2013. Doc. 69-2 ¶ 58. As directed by Phoenix, of the $216, 000.00 AT&L received on July 3, 2013, AT&L applied $18, 543.88 as a payment on the contract for the Cairo cooler. Doc. 69-2 ¶ 59. AT&L then sent $36, 328.03 to Phoenix by a wire transfer Doc. 69-2 ¶ 61. On July 15, 2013, AT&L complied with a second request from Phoenix[5] and wired Phoenix an additional $100, 000.00. Doc. 69-2 ¶ 65. Thus, Adams and AT&L made two disbursements from the loan funds totaling $136, 328.03 to Phoenix. Docs. 66-2 ¶¶ 37, 38; 78-2 ¶¶ 38, 44. Plaintiff was not notified about this agreement or the disbursements. Id.

         Plaintiff alleges that standard industry practice was for AT&L to notify Plaintiff that the Jackson equipment order was cancelled and for AT&L to refund all moneys not used to purchase said equipment. Doc. 69-2 ¶¶ 82, 83. Plaintiff, AT&L, and Adams agree that they had no record of any borrower, other than Phoenix, who has received a refund of a third-party lender's funds from AT&L after a cancellation of an order. Doc. 66-2 ¶ 48. The parties also agree that no one from Plaintiff met with anyone from Phoenix in person, or inspected the project sites before agreeing to loan and wire money for the Cairo or Jackson Projects. Doc. 69-2 ¶ 91. The parties dispute whether Plaintiff asked Adams or AT&L about Phoenix's use of the wired funds or the status of work at the Jackson site. Furthermore, Baccaro indicated that he and other sales people were charged with keeping track of financed projects, but noted that he paid little attention to these projects after funding the initial 90% and being paid his sales commission. Doc. 69-2 ¶ 92.

         C. Discovery of the Scheme

         In the Fall of 2014, AT&L supplied Phoenix with the fuel pump equipment and services listed in the January 2011 Jackson contract. Plaintiff alleges AT&L never delivered or installed the Jackson equipment that Plaintiff says was to be purchased under the Jackson Agreement. Adams and AT&L assert that, in 2014, another finance company paid for the equipment listed in the 2011 Jackson contract and then leased it back to Phoenix at the Jackson facility. Doc. 69-2 ¶ 74.

         Phoenix made monthly payments to Plaintiff until October 2014. Docs. 66-2 ¶ 42; 78-2 ¶ 42. Plaintiff asserts that it did not learn of the cancellation of the Jackson equipment order or the agreement between Phoenix and AT&L to use the Jackson funds for other purposes until more than two years later. Doc. 66-2 ¶ 39. AT&L and Adams deny this. Doc. 78-2 ¶ 39. On June 2, 2015, Plaintiff demanded return of the Jackson funds from AT&L. Doc. 66-2 ¶ 50. On June 29, 2015, AT&L refused Plaintiff's demand. Doc. 66-2 ¶ 51. Phoenix never responded to Plaintiff's demand or returned any of the Jackson funds. Doc. 66-2 ¶ 52. Plaintiff admits that any money paid to AT&L was paid “on behalf of the customer, ” and that “the vendor controls the money” once paid to the vendor. Doc. 69-2 ¶ 94.

         Phoenix made monthly payments to Plaintiff pursuant to the Cairo (and subsequent Jackson) Agreements, until October, 2014. Docs. 66-2 ¶ 42; 78-2 ¶ 42. As of September 14, 2016, the accelerated balance due Plaintiff under the first Cairo Agreement was approximately $45, 827.56 principal plus $7, 791.04 interest, totaling $53, 618.60. Doc. 66-2 ¶ 54. Plaintiff seeks pre-judgment interest accruing on the unpaid balance of the first Cairo Agreement from September 14, 2016, at the default rate of 16.00% per annum or $20.08 per day. Doc. 66-2 ¶ 55. As of September 14, 2016, the accelerated balance due Plaintiff under the second Cairo Agreement was approximately $30, 551.71 principal plus $2, 140.69 interest, totaling $32, 692.40-with pre-judgment interest accruing on the unpaid balance of the second Cairo Agreement from September 14, 2016, at the default rate of 16.00% per annum or $13.39 per day. Doc. 66-2 ¶ ¶ 56, 57. After Phoenix defaulted on its loans, all the equipment specified in AT&L invoice numbers 2640474 and 2640475 was sold by Plaintiff. Doc. 69-2 ¶ 98.

         Plaintiff alleges that, as of September 14, 2016, the accelerated balance due Plaintiff under the Jackson Agreement is approximately $166, 562.56 principal plus $3, 895.10 late charges and $30, 810.22 interest, totaling $201, 267.88. Doc. 66-2 ¶ 58. Plaintiff seeks pre-judgment interest accruing on the unpaid balance of the Jackson Agreement from September 14, 2016, at the default rate of 16.00% per annum or $73.01 per day. Doc. 66-2 ¶ 59. Defendants Adams and AT&L dispute these calculations.

         III. MOTIONS FOR SUMMARY JUDGMENT LEGAL STANDARD

         Federal Rule of Civil Procedure 56 allows a party to move for summary judgment when the party contends that no genuine issue of material fact remains and the party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. “Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Maddox v. Stephens, 727 F.3d 1109, 1118 (11th Cir. 2013). “A genuine issue of material fact does not exist unless there is sufficient evidence favoring the nonmoving party for a reasonable jury to return a verdict in its favor.” Grimes v. Miami Dade Cty., 552 F. App'x 902, 904 (11th Cir. 2014).

         “An issue of fact is ‘material' if it is a legal element of the claim under the applicable substantive law which might affect the outcome of the case.” Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997). “It is ‘genuine' if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party.” Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998 (11th Cir. 1992). On a motion for summary judgment, the Court must view all evidence and factual inferences drawn therefrom in the light most favorable to the non-moving party and determine whether that evidence could reasonably sustain a jury verdict in its favor. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Allen, 121 F.3d at 646.

         The movant bears the initial burden of showing, by reference to the record, that there is no genuine issue of material fact. See Celotex, 477 U.S. at 323; Barreto v. Davie Marketplace, LLC, 331 F. App'x 672, 673 (11th Cir. 2009). The movant can meet this burden by presenting evidence showing that there is no genuine dispute of material fact or by demonstrating that the non-moving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. See Celotex, 477 U.S. at 322-24; Barreto, 331 F. App'x at 673. Local Rule 56 further requires that “documents and other record materials relied upon by [the moving party] be clearly identified for the court.” M.D. Ga. L.R. 56. “Material facts not supported by specific citation to particular parts of materials in the record and statements in the form of issues or legal conclusions (rather than material facts) will not be considered by the court.” Id.

         “When that burden has been met, the burden shifts to the nonmovant . . . to go beyond the pleadings and to present competent evidence in the form of affidavits, answers to interrogatories, depositions, admissions and the like, designating specific facts showing a genuine issue for trial.” Lamar v. Wells Fargo Bank, 597 F. App'x 555, 556-57 (11th Cir. 2014) (internal citations omitted). “All material facts contained in the movant's statement which are not specifically controverted by specific citation to particular parts of materials in the record shall be deemed to have been admitted, unless otherwise inappropriate.” M.D. Ga. L.R. 56; see also Mason v. George, 24 F.Supp.3d 1254, 1260 (M.D. Ga. 2014).

         “In the Eleventh Circuit, a district court cannot grant a motion for summary judgment based on default or as a sanction for failure to properly respond.” U.S. v. Delbridge, 2008 WL 1869867, at *3 (M.D. Ga. Feb. 22, 2008) (citing Trs. of Cent. Pension Fund of Int'l Union of Operating Eng'rs and Participating Emp'rs v. Wolf Crane Serv., Inc., 374 F.3d 1035, 1039 (11th Cir. 2004)). Rather, the Court is “required to make an independent review of the record” and assess the merits of the arguments before deciding the summary judgment motion; however, “[t]here is no burden upon the district court to distill every potential argument that could be made based upon the materials before it on summary judgment.” Mason, 24 F.Supp.3d at 1260-61 (explaining that a court is not obligated to “read minds” or “construct arguments or theories” that a party did not raise).

         Courts must evaluate cross-motions for summary judgment separately, “as each movant bears the burden of establishing that no genuine issue of material facts exists, and that it is entitled to judgment as a matter of law.” Shaw Constructors v. ICF Kaiser Eng'rs, Inc., 395 F.3d 533, 538-39 (5th Cir. 2004); see also D & H Therapy Assocs., LLC v. Boston Mut. Life Ins. Co., 640 F.3d 27, 34 (1st Cir. 2011) (“When there are cross-motions for summary ...


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