United States District Court, M.D. Georgia, Albany Division
J. ABRAMS, JUDGE UNITED STATES DISTRICT COURT.
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.
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.
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
December 15, 2016, Plaintiff and Defendants AT&L and
Adams moved for partial summary judgment and summary judgment
respectively. 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.
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.
The Cairo Project
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
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.
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.
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. Doc. 69-2 ¶ 30.
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
Docs. 66-2 ¶ 23; 55-3 at 2-5; 1-3 at 2-5.
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
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.
The Jackson Project
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.
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.
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.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
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
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 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.
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.
Discovery of the Scheme
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 ¶
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.
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.
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.
MOTIONS FOR SUMMARY JUDGMENT LEGAL STANDARD
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).
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.
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.
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).
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).
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