ASCENTIUM CAPITAL LLC v. ADAMS TANK & LIFT INC et al
ORDER granting in part and denying in part 66 Motion for Partial Summary Judgment; granting in part and denying in part 69 Motion for Summary Judgment; granting 72 Motion to Dismiss Party. Plaintiff is O RDERED to provide supplemental briefing on the amount of damages consistent with this order within thirty (30) days of the issuance of this order. Defendants shall have fourteen (14) days thereafter to respond. Ordered by US DISTRICT JUDGE LESLIE J ABRAMS on 09/15/2017. (mdm)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ASCENTIUM CAPITAL LLC,
ADAMS TANK & LIFT INC, et al.,
CASE NO.: 1:15-CV-123 (LJA)
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,
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
On December 12, 2016, the Court granted the parties’ Joint Motion, Doc. 64, for extension of the
page limit—each side seeking an additional ten (10) pages—on their motions for, and responses to, summary
judgment. Docs. 64 & 65. As noted in the Local Rule 7.4, such an extension is warranted when good cause is
shown. There appeared to be no such need for a page extension in this matter as the most basic editing to
limit inapposite citations to authority, painful hyperbole, and unnecessary metaphors and asides would have
allowed the parties to present cogent arguments within the parameters set by the Local Rules. For example,
Defendant wasted sixty (60) words on this passage:
Not without parallels to the mythical story, this case at its heart is about the rise, fall and
crash of a Phoenix, the defendant Phoenix Petroleum LLC (“Phoenix”). The pilot for its
flight was its sole member and President Ataollah Masoodzadehgan (“Ataollah”). . . . At the
apex of its flight in 2014, the sales of Phoenix were over $100,000,000.
Doc. 69-1 at 1. This added absolutely nothing to the legal analysis and did not address Defendants’ case in the
least. Defendants’ briefs are replete with such unnecessary verbiage, and Plaintiff’s briefs are not without fault
either. The parties are admonished to be more diligent with the Court’s time and their clients’ money in future
Falcon neither responded to Plaintiff’s Motion nor joined Defendants AT&L and Adams’
Motion. See Docket.
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
The relevant facts are derived from the parties’ statements of material facts and responses thereto,
and the record in this case. Docs. 66, 69, 78, 81, 84, 85. Where relevant, this factual summary also contains
undisputed facts derived from the pleadings, the discovery and disclosure materials on file, and any affidavits,
all of which are construed in the light most favorable to Plaintiff as the non-moving party. See Fed. R. Civ. P.
56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
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.
Plaintiff recorded two UCC-1 financing statements in Barrow County, Georgia on January 24, 2013,
and January 25, 2013, with the intention of perfecting a security interest in the Cairo equipment. Doc. 66-2
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
Plaintiff recorded a UCC-1 financing statement in Barrow County, Georgia on June 28, 2013, with
the intention of perfecting a security interest in the Jackson equipment. Doc. 66-2 ¶ 40.
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 Phoenix5 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
After receiving Strach’s email outlining the parties’ agreement for application of the loan funds, later
on July 3, 2013, A.M. forwarded Strach’s message to Adams and directed “I am traveling do not order any
pumps until I get back.” Doc. 69-2 ¶ 62. A.M. sent Adams an e-mail that said, “Hold up I might have to send
the money back.” Doc. 69-2 ¶ 63.
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 thirdparty 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
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 prejudgment 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
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 nonmoving 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
judgment, the court must consider each motion separately, drawing all inferences in favor of
each non-moving party in turn.”).
A. Plaintiff’s Motion for Summary Judgment
1. Claims I, II, and III Against Phoenix and American: Breach of Contract
Plaintiff alleges that Phoenix and American breached three equipment finance
agreements and their attendant guaranties. “Under Georgia law, the elements of a right to
recover for a breach of contract are the breach and the resultant damages to the party who
has the right to complain about the contract being broken.”6 Shiho Seki v. Groupon, Inc., 775
The contracts at issue prepared by Plaintiff have choice of law clauses that designate New Jersey law
as the governing law for the contracts. However, in their Motions, the parties cite Georgia law for the breach
of contract claims. While “the law of the jurisdiction chosen by parties to a contract to govern their
contractual rights will be enforced unless application of the chosen law would be contrary to the public policy
or prejudicial to the interests of this state,” CS-Lakeview at Gwinnett, Inc. v. Simon Prop. Grp., Inc., 659 S.E.2d
359, 361 (Ga. 2008), the elements for breach of contract are identical in New Jersey and Georgia, compare
Globe Motor Co. v. Igdalev, 139 A.3d 57, 64 (N.J. 2016), with Shiho Seki v. Groupon, Inc., 775 S.E.2d 776, 779 (Ga.
Ct. App. 2015), as is the rule barring double recovery, compare Pope v. Craftsman Builders, Inc., 2013 WL 105283,
S.E.2d 776, 779 (Ga. Ct. App. 2015) (citations and punctuation omitted). “A breach occurs if
a contracting party . . . fails to perform . . . as specified in the contract.” Id. Further, a
guaranty is a contract “whereby a person obligates himself to pay the debt of another in
consideration of a benefit . . . or in consideration of . . . benefit given to his principal, the
principal in either instance remaining bound therefor. [G]uarantors[ ] are jointly and severally
liable with their principal unless the contract provides otherwise.” O.C.G.A. § 10-7-1. A
creditor in possession of a guarantee establishes a prima facie case for repayment by producing
a valid guarantee and showing that it was executed. CSS Real Estate Dev. I, LLC v. State Bank
& Trust Co., 749 S.E.2d 773, 774 (Ga. Ct. App. 2013). After a prima facie case is established,
summary judgment may be granted if the guarantor is unable to establish a defense in
Plaintiff has put forth evidence showing that valid contracts existed between Plaintiff
and Phoenix and between Plaintiff and American. Phoenix and Plaintiff executed three
equipment finance agreements with repayment terms of sixty (60) payments of $3,069.00,
$2,046.00, and $4,632.53.00 respectively. Plaintiff has shown that Phoenix breached these
three agreements by failing to make the required payments starting in October 2014.
Phoenix has not responded to Plaintiff’s Motion, and the record does not indicate that
Phoenix has a defense against Plaintiff’s breach of contract claims. Likewise, Plaintiff has
shown that American signed a guaranty relating to the three equipment finance agreements
between Plaintiff and Phoenix. The record does not indicate that American has a defense for
its breach.7 Accordingly, summary judgment is appropriate on these claims.
at *7 (N.J. Super. Ct. App. Div. Jan. 10, 2013), with Graybill v. Attaway Constr. & Assocs., LLC, 2017 WL
2628442, at *5 (Ga. Ct. App. June 19, 2017). Thus, for the sake of consistency, the Court will apply Georgia
The three equipment finance agreement guaranties in question state that American and Falcon are
liable for Phoenix’s obligations under the equipment finance agreements “upon demand.” Docs. 66-2 ¶ 23;
55-3 at 2-5; 1-3 at 2-5; 66-2 ¶ 28; 55-6 at 4-5; 1-6 at 4-5. The agreements do not specify what constitutes a
demand. The demand requirement is essentially a notice requirement. See Lockwood v. Fed. Deposit Ins. Corp.,
767 S.E.2d 829, 832-33 (Ga. Ct. App. 2014). Thus, Plaintiff’s first Complaint is construed as a demand
pursuant to the guaranties. Cf. id. (“[N]otice, [in the form of a pleading], under [O.C.G.A. § 13-1-11] may be
given any time between the maturity of the obligation and ten days prior to judgment.”).
2. Claim IV Against AT&L: Money Had and Received
Plaintiff asserts a claim for money had and received8 against AT&L for funds Plaintiff
wired AT&L pursuant to the contract between Phoenix and Plaintiff, the agreement between
Phoenix and AT&L, and the communications between Plaintiff and AT&L. “In order to
sustain an action for money had and received, a party must show . . . that an entity has
received money justly belonging to another, [and] that [the party] made a demand for
payment and was refused.” City of Atlanta v. Hotels.com, 710 S.E.2d 766, 770 (Ga. 2011). “Such
action is a legal action based upon equitable principles for implied assumpsit as a substitute
for suit in equity.” Taylor v. Powertel, Inc., 551 S.E.2d 765, 770 (Ga. Ct. App. 2001). Thus, a
claim for money had and received is a claim grounded in the existence of an implied-in-fact
contract. Cantrell v. Henry Cty., 301 S.E.2d 870, 872 (Ga. 1983) (“The form of the action of
assumpsit . . . is founded on what the law terms an implied promise on the part of the
defendant to pay what in good conscience he is bound to pay the plaintiff.”). When
analyzing claims for money had and received, Georgia courts have held that “[w]hen the
special purpose for which defendant held plaintiff’s funds failed, it became defendant’s duty
to return same to plaintiff.” Fed. Emp. Credit Union v. Capital Auto. Co., 183 S.E.2d 39, 40-41
(Ga. Ct. App. 1971). It is no defense that a defendant no longer has a plaintiff’s funds or that
the defendant gave the funds to a third party. Id. at 41.
Here, Plaintiff and AT&L had an implied-in-fact contract whereby Plaintiff agreed to
fund the Jackson Project—to which AT&L was a party. Plaintiff wired funds to AT&L to
facilitate the Jackson Project to the benefit of Phoenix and AT&L. In exchange for
providing the money, Plaintiff was to receive a secured interest in the equipment which was
the subject of the Jackson Agreement. In the event of a default, Plaintiff would have had the
Again, the parties cite Georgia law in their Motions and Responses regarding the claim for money
had and received. Plaintiff is a Texas corporation, see Doc. 1, but a claim for money had and received in Texas
is nearly identical to such a claim in Georgia. Compare H.E.B., L.L.C. v. Ardinger, 369 S.W.3d 496, 507 (Tex.
App. 2012) (Texas “courts use [the] term “money had and received” interchangeably with other terms for
similar claims, including assumpsit, [and] unjust enrichment.”), with Taylor v. Powertel, Inc., 551 S.E.2d 765, 770
(Ga. Ct. App. 2001) (“Money had and received, while a legal doctrine is based on principles of equity.”).
Under conflict of law principles, Georgia law would apply as money had and received is essentially an
equitable doctrine. Simpson Consulting, Inc. v. Barclays Bank PLC, 490 S.E.2d 184, 193 (Ga. Ct. App. 1997),
overruled on other grounds by Williams Gen. Corp. v. Stone, 614 S.E.2d 758 (Ga. 2005). Thus, the Court will apply
authority to sell that equipment. By cancelling the Jackson order and diverting the loan
funds, Plaintiff was deprived of the security interest and the value of said interest upon
Phoenix’s default. Thus, as discussed below, with respect to AT&L, Plaintiff is entitled to
damages from AT&L’s breach.
The record is clear that AT&L was aware that Plaintiff was loaning money to Phoenix
for the purchase of equipment at the Jackson site. AT&L negotiated with Plaintiff for the
loan, specifying that it was for the purchase of equipment for the Jackson Project. This is
evidenced through the emails between Adams and Baccaro to secure the loan for the
Jackson Project and the proposal Adams sent to Plaintiff. Pursuant to these emails and the
proposal, Plaintiff wired $216,000.00 to AT&L. It strains credulity to assert, as AT&L does,
that Plaintiff did not intend those funds to be applied to Phoenix’s equipment purchase or
that AT&L did not understand the purpose of the funds. AT&L provided quotes, prepared
documents used to secure the Jackson loan, and accepted the wired funds in order to reap
the benefit of completing a sale to Phoenix. There is no evidence that Plaintiff agreed to the
loan with the understanding that the funds would be used to settle the financial disputes
between AT&L and Phoenix or to pay for equipment covered under the Cairo
Agreements—neither of which gave Plaintiff the security interest promised under the
Under Georgia law, once the purpose of the loan failed (or was cancelled), AT&L
should have returned the funds to Plaintiff. See Capital Auto. Co., 183 S.E.2d at 40-41. In
Capital Auto, a party in receipt of loan funds from a bank failed to apply those funds as
intended and was held liable. Id. The Court of Appeals of Georgia discussed Capital Auto in a
subsequent case, writing:
[A] bank issued a check for its customer to buy a car. The dealer cashed the
check with the conditional endorsement but gave the money to the customer
rather than selling him the car. The bank never obtained a perfected security
interest in the car, and the customer defaulted and absconded. The court held
that the dealer was liable to the bank under the doctrine of money had and
received because the dealer should have returned the money when the
purpose for the check, buying the car, failed, and it could not now, in good
conscience, retain the money.
Suntrust Bank, Atlanta v. Atlanta Classic Cars, Inc., 549 S.E.2d 523, 525 (Ga. Ct. App. 2001)
(citing Capital Auto. Co., 183 S.E.2d at 40-41). Another Court of Appeals of Georgia case,
Time Ins. Co. v. Fulton-DeKalb Hosp. Auth., 438 S.E.2d 149 (Ga. Ct. App. 1993), upon which
AT&L relies, is inapposite. The court in Time held that payments made by an insurer for
services rendered at or close in time to when the payments for such services were made
could not be recouped against the hospital that provided the services under a theory of
money had and received, as such recoupment would be inequitable. 438 S.E.2d at 151-152.
AT&L admits that it retained funds for the payment of charges unrelated to or incurred
prior to the purchase or installation of equipment contemplated by agreement between the
parties. The wired funds were for the purchase of the equipment set forth in the Jackson
Agreement, and there is no evidence to support AT&L’s argument that the wired funds were
meant to pay for anything other than what was detailed in the Jackson Agreement.
AT&L’s argument that Plaintiff was not the true owner of the funds also misses the
mark. AT&L relies on William N. Robbins, P.C. v. Burns, 488 S.E.2d 760, 763 (Ga. Ct. App.
1997), for the proposition that Phoenix, not Plaintiff, was the owner of the funds. However,
Burns merely stands for the proposition that a plaintiff must be entitled to the money she
seeks in a money had and received claim. In Burns, the court held that a law firm was not the
true owner of funds sent to a former associate of that firm, by clients of the associate, for
work done by that associate after he had left the firm’s employment. Id. The court held that,
while the firm may have had a breach of contract claim for the associate’s failure to adhere
to a file organization arrangement, the funds sent by the associate’s clients were not intended
to be sent to the firm. Id. Thus, the firm was not the “true owner” of the funds, and a claim
for money had a received failed. Id. Here, however, Plaintiff intended that the funds be sent
to AT&L for the purchase of the equipment, and, for these purposes, was the true owner of
While a failure to send the funds to either AT&L or Phoenix would have put Plaintiff
in breach of the contract it had with Phoenix, this does not change the fact that once the
purpose of the wired funds was altered, AT&L was obligated to return the funds to Plaintiff.
Accordingly, there is no genuine issue of material fact with regard to the implied-in-fact
contract between Plaintiff and AT&L, and Plaintiff is entitled to recover under a theory of
money had and received.
3. Claim V Against AT&L: Conversion
Plaintiff also asserts a claim for conversion against AT&L for funds Plaintiff wired
AT&L pursuant to the contract between Phoenix and Plaintiff for the Jackson Project. In
Georgia, “[c]onversion involves the unauthorized assumption and exercise of the right of
ownership over personal property belonging to another, contrary to the owner’s rights. Any
distinct act of dominion wrongfully asserted over another’s property . . . inconsistent with
[the owner’s rights], is a conversion.” Deere & Co. v. Miller-Godley Auction Co., 549 S.E.2d 762,
764 (Ga. Ct. App. 2001). “To establish a claim for conversion, a plaintiff must show (1) title
to the property or the right of possession, (2) actual possession in the other party, (3)
demand for return of the property, and (4) refusal by the other party to return the property.”
City of Atlanta v. Hotels.com, L.P., 775 S.E.2d 276, 279 (Ga. Ct. App. 2015) (citation and
punctuation omitted). “Right of possession means either actual possession or the right to
immediate possession.” Habel v. Tavormina, 597 S.E.2d 645, 648 (Ga. Ct. App. 2004)
(citations and punctuation omitted). Funds disbursed via wire transfer are a proper subject
for a conversion claim. Trey Inman & Assocs., P.C. v. Bank of Am., N.A., 702 S.E.2d 711, 717
(Ga. Ct. App. 2010) (holding that funds disbursed via wire transfer were specific and
Here, AT&L argues that, because either Plaintiff did not have a secured interest in
the Jackson equipment or because AT&L was not aware of Plaintiff’s security interest in the
Jackson equipment, Plaintiff’s conversion claim must fail. Plaintiff’s claim is, however, for
the conversion of the wired funds that should have been used for the purchase of equipment
at the Jackson site. The evidence establishes that: (1) in order to facilitate the Jackson
transaction, Plaintiff agreed to lend Phoenix $216,000.00 for the purchase of equipment; (2)
Plaintiff wired $216,000.00 to AT&L for the purchase of the equipment by Phoenix; (3)
unbeknownst to Plaintiff, AT&L cancelled the Jackson equipment order and redirected
$136,328.03 to Phoenix without notifying Plaintiff; (4) AT&L kept $79,671.97 of the funds
provided by Plaintiff; (5) once Plaintiff became aware that no equipment had been
purchased, Plaintiff demanded the return of its funds; and (6) AT&L refused this demand.
The issue, then, is whether or not Plaintiff had title or the right of possession to the
funds at the time of the alleged conversion, that is, whether Plaintiff owned the funds that it
wired to AT&L at the time Phoenix cancelled the Jackson equipment order. The parties do
not cite mandatory authority on this issue, and the Court has found none. An analysis of
relevant case law indicates that once a loan is made and the proceeds disbursed, the actual
funds cease to be the property of the lender. “The word ‘loan’ is defined . . . as the allowing
of the use on a condition for the return of the equivalent in kind, such as to lend money.”
Kirkland v. Bailey, 155 S.E.2d 701, 703 (Ga. Ct. App. 1967) (physical precedent only); see
Calcasieu-Marine Nat. Bank of Lake Charles v. Am. Emp. Ins. Co., 533 F.2d 290, 296 (5th Cir.
1976) (citation and punctuation omitted) (“The classic definition of a loan is . . . a contract
by which one delivers a sum of money to another and the latter agrees to return at a future
time a sum equivalent to that which he borrows.”). While there is no Georgia law directly on
point, case law in the Eleventh Circuit reasons that “‘loan proceeds do not remain the
property of the lender.’” United States v. Ross, 131 F.3d 970, 981 (11th Cir. 1997) (quoting
United States v. Kristofic, 847 F.2d 1295, 1296 (7th Cir. 1988)) (distinguishing Kristofic, where
conversion happened after funding of loan, because appellants’ in Ross defrauded
Government before obtaining loan). Likewise, our sister court in the Western District of
Washington held that “under Washington law, upon signing a loan agreement and the
disbursal of those funds, the borrower is deemed to ‘own’ the loan proceeds.” Montclair
United Soccer Club v. Count Me In Corp., 2010 WL 2376229, at *5 (W.D. Wash. June 9, 2010).
Further, in a case applying Alabama law, the Fifth Circuit held that “[w]hen there is no
obligation to return the identical money, but only a relationship of debtor or creditor, an
action for conversion of the funds representing the indebtedness will not lie against the
debtor.” Lyxell v. Vautrin, 604 F.2d 18, 21 (5th Cir. 1979).
Here, the wired funds Plaintiff sent to AT&L were loan disbursements. Once
Plaintiff disbursed Phoenix’s loan proceeds, Plaintiff no longer had title or a right of
possession to those exact proceeds. That the funds were disbursed to AT&L instead of
Phoenix, the debtor, does not alter this conclusion. Thus, Plaintiff cannot meet the first
element of its claim for conversion, and Plaintiff’s claim for conversion fails.
4. Claim VI Against AT&L: Unjust Enrichment
Plaintiff asserts a claim for unjust enrichment against AT&L for funds Plaintiff wired
AT&L. “The theory of unjust enrichment is basically an equitable doctrine that the
benefitted party equitably ought to either return or compensate for the conferred benefits
when there was no legal contract to pay.” Bedsole v. Action Outdoor Advert. JV, LLC, 750
S.E.2d 445, 452 (Ga. Ct. App. 2013) (punctuation omitted). However, “[a] claim for unjust
enrichment is not a tort, but an alternative theory of recovery if a contract claim fails.”
Wachovia Ins. Servs., Inc. v. Fallon, 682 S.E.2d 657, 665 (Ga Ct. App. 2009). Here, Plaintiff has
alleged only an implied-in-fact contract with AT&L. Doc. 55 at 20-21. Thus, because
Plaintiff asserted unjust enrichment against AT&L as a separate tort and not as an alternative
theory of recovery for a failed contract, the claim against AT&L for unjust enrichment fails
as a matter of law.
5. Plaintiff’s Damages
a. Damages Against Phoenix and American for Breach of Contract
In Georgia, “the measure of damages for breach of contract is the amount which will
compensate the injured party” and which will allow the party to be “placed in the position he
would have been in had the contract been performed.” Goody Prod., Inc. v. Dev. Auth. of City of
Manchester, 740 S.E.2d 261, 270 (Ga. Ct. App. 2013) (citation and punctuation omitted).
Phoenix and American (and Falcon as discussed below) are jointly and severally liable to
Plaintiff for the remaining principal and any interest and fees on the remaining principal.
Plaintiff has submitted evidence showing that it is entitled to $287,578.88 in remaining
principle and interest under the Cairo and Jackson Agreements. Pre-judgment interest began
accruing on the unpaid balance of the three agreements on September 14, 2016, at the
default rate of 16.00% per annum.
“[D]ouble recovery for the same injury is inappropriate even if it is sought from
different parties.” Adler v. Hertling, 451 S.E.2d 91, 98 (Ga. Ct. App. 1994). As discussed
below, Plaintiff is entitled to default judgment against Falcon for breach of the same contract
as Phoenix and the same guarantees as American. Plaintiff is also entitled to recover from
AT&L the funds lent to Phoenix and wired to AT&L through a claim of money had and
received. Thus, any contract damages against Phoenix, American, or Falcon must be offset
by Plaintiff’s recovery as to these claims. See, e.g., Kent v. A.O. White, 559 S.E.2d 731, 735 (Ga.
Ct. App. 2002), overruled on other grounds by Time Warner Entm’t Co. v. Six Flags Over Georgia,
LLC, 563 S.E.2d 178 (Ga. Ct. App. 2002). As such, Plaintiff is entitled to recover from
Phoenix, American and Falcon, jointly and severally, the accelerated balance of the three
contracts between itself and Phoenix along with applicable late charges and interest offset
from any amount recovered from AT&L as discussed below.
b. Damages Against AT&L for Money Had and Received
Plaintiff cannot recover $216,000.00 both from AT&L under money had and
received and from Phoenix, Falcon, or American for breach of contract. See White v.
Weinberg, 759 S.E.2d 903, 908 n.3 (Ga. Ct. App. 2014) (“[Plaintiff] is not permitted a double
recovery of the same damages for the same wrong.”). Absent a showing that Plaintiff cannot
recover the loan proceeds from Phoenix, Falcon, or American, which it has not made,
Plaintiff must elect a remedy prior to the entry of judgment. See Graybill v. Attaway Constr. &
Assocs., LLC, 2017 WL 2628442, at *5 (Ga. Ct. App. June 19, 2017) (“[A]n election of
remedies should be made before the entry of judgment” unless there is no risk of double
B. Defendant AT&L’s Motion for Summary Judgment
1. Claims IV and VII: Money Had and Received and Breach of Contract
As explained above, Plaintiff is entitled to recover for money had and received
because there was an implied-in-fact contract between Plaintiff and AT&L by which Plaintiff
would provide funds to facilitate the Jackson transaction and would receive, in turn, a
secured interest in the equipment sold under AT&L’s contracts with Phoenix. AT&L
breached its contract with Plaintiff by cancelling the sale and negating Plaintiff’s security
interest. Accordingly, summary judgment in favor of AT&L is not appropriate on either of
2. Claim V: Conversion
As discussed above, Plaintiff is not entitled to recover under a theory of conversion
against AT&L because it cannot show an essential element of its claim—that it had “title to
the property or the right of possession.” Hotels.com, L.P., 775 S.E.2d at 279 (citation and
punctuation omitted). Plaintiff had a contract to loan money to Phoenix for the purchase of
equipment from AT&L. Once Plaintiff disbursed Phoenix’s loan proceeds, Plaintiff no
longer had title or right of possession to those exact proceeds. That the funds were
disbursed to AT&L instead of to Phoenix, the debtor, does not alter this conclusion.
Accordingly, Plaintiff’s Conversion claim fails as a matter of law.
3. Claim VI: Unjust Enrichment
As discussed above, Plaintiff cannot recover under a theory of unjust enrichment
because Plaintiff alleged only an implied-in-fact contract with AT&L. Doc. 55 at 20-21.
Thus, because Plaintiff asserted unjust enrichment against AT&L as a separate tort and not
as an alternative theory of recovery for a failed contract, that claim against AT&L fails as a
matter of law. See Wachovia Ins. Servs., Inc., 682 S.E.2d at 665.
4. Claim VIII: Fraud
AT&L and Adams move for summary judgment on Plaintiff’s claim of fraud against
them. In Georgia, “[t]he tort of fraud has five elements: (1) a false representation or
omission of a material fact; (2) scienter; (3) intention to induce the party claiming fraud to
act or refrain from acting; (4) justifiable reliance; and (5) damages.” ReMax N. Atlanta v.
Clark, 537 S.E.2d 138, 141 (Ga. Ct. App. 2000). “In fraudulent concealment actions the
allegedly defrauded party must prove that the alleged defrauder had actual, not merely
constructive, knowledge of the fact concealed.” Id. at 142 (punctuation omitted). “[M]ere
concealment of a material fact, unless done in such as matter to deceive or mislead,” will not
support an action for fraud. O.C.G.A. § 51-6-2. Further, “[e]xcept in plain and indisputable
cases, scienter in actions based on fraud is an issue of fact for jury determination.” ReMax N.
Atlanta, 537 S.E.2d at 142. “For an action for fraud to survive a motion for summary
judgment, there must be some evidence from which a jury could find each element of the
tort.” Pyle v. City of Cedartown, 524 S.E.2d 7, 9 (Ga. Ct. App. 1999).
Here, Defendants admit that they did not inform Plaintiff that the Cairo and Jackson
equipment orders were delayed or cancelled. The evidence establishes that Defendants
requested the final 10% funding for the Cairo Project nearly two months after AT&L
refunded a large portion of the wired funds for the Cairo Project back to Phoenix. The
parties dispute whether or not Adams or AT&L knew that Plaintiff was unaware of the
cancellations. There is also, however, evidence weighing against scienter in the form of a lack
of industry standards governing the manner in which Plaintiff funded the loans to Phoenix
and the necessity of site inspections, as well as Plaintiff’s failure to perform basic due
diligence. Thus, there is a genuine issue of material fact as to the scienter element of the
fraud claim, and summary judgment is not appropriate.
5. Claim IX: Attorney’s Fees
Defendants move for summary judgment on Plaintiff’s bad faith claim for attorney’s
fees. “[T]he element of bad faith that will support a claim for litigation expenses under
O.C.G.A. § 13-6-11 must relate to the acts in the transaction itself prior to the litigation, not
to the conduct during or motive with which a party proceeds in the litigation.” Fresh Floors,
Inc. v. Forrest Cambridge Apartments, L.L.C., 570 S.E.2d 590, 592 (Ga. Ct. App. 2002).
“[S]tatutory recovery for stubborn litigiousness or causing unnecessary trouble and expense
is authorized if there exists no bona fide controversy or dispute regarding liability for the
underlying cause of action.” David G. Brown, P.E., Inc. v. Kent, 561 S.E.2d 89, 90-91 (Ga.
2002). Here, as discussed above, there is a genuine dispute as to AT&L and Adams’ liability
for the claims asserted in the Complaint, and Plaintiff cannot recover for stubborn
litigiousness. Therefore, the only basis for attorney’s fees under O.C.G.A. § 13-6-11 must be
a claim for bad faith. Viewing the evidence in the light most favorable to Plaintiff, the nonmoving party, there is evidence suggesting bad faith in the underlying transactions between
Defendants and Plaintiff. Thus, summary judgment is not appropriate here.
IV. DEFAULT JUDGMENT
Falcon is currently in default. Doc. 66 at 1; see Doc. 35. Thus, the Court construes
Plaintiff’s Motion for summary judgment against Falcon as a renewed motion for default
On August 4, 2015, Falcon was served with a summons and a copy of Plaintiff’s
Complaint9 by serving the Georgia Secretary of State pursuant to O.C.G.A. § 14-11-209(f).
Docs. 21 at 2; 16 at 3. Falcon has failed to plead or otherwise defend the instant suit. See
Docket. On September 22, 2015, Plaintiff filed an Application to the Clerk of This Court for
Entry of Default against Defendants. Doc. 21. On September 23, 2015, the Clerk of Court
entered default against Falcon. See Docket.
After a default has been entered, the Clerk may enter a default judgment on the
plaintiff’s request if the claim “is for a sum certain or a sum that can be made certain by
computation,” as long as the party is not a minor or incompetent and has not made an
appearance. Fed. R. Civ. P. 55(b)(1). In all other cases, the plaintiff must apply to the Court
for a default judgment. Fed. R. Civ. P. 55(b)(2).
The entry of default by the Clerk does not in itself warrant the entry of default
judgment by the Court. See Nishimatsu Constr. Co. Ltd. v. Houston Nat’l Bank, 515 F.2d 1200,
1206 (5th Cir. 1975). “Because of [the] strong policy of determining cases on their merits, [ ]
default judgments are generally disfavored.” Surtain v. Hamlin Terrace Foundation, 789 F.3d
1239, 1244-45 (11th Cir. 2015) (citation omitted). “The defendant is not held to admit facts
that are not well-pleaded or to admit conclusions of law. There must be sufficient basis in
the pleadings for the judgment to be entered.” Nishimatsu, 515 F.2d at 1206; see Surtain, 789
F.3d at 1245. A plaintiff establishes a sufficient basis for the entry of a default judgment by
pleading adequate facts to “survive a motion to dismiss for failure to state a claim” under
Fed. R. Civ. P. 12(b)(6). Nishimatsu, 515 F.2d at 1206.
To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead enough
facts to state a claim for relief that is plausible—not just conceivable—on its face. Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although a court must “take the factual
allegations in the complaint as true and construe them in the light most favorable to the
Defendant Falcon Entity, LLC is in default and was deemed so prior to the filing of the Amended
Complaint. Docs. 27 & 35. Thus, Plaintiff’s original Complaint, Doc. 1, is the operative Complaint as to
Defendant Falcon Entity, LLC. The Amended Complaint’s allegations against Falcon Entity, LLC are
identical in all material aspects. See Docs. 1 & 55.
plaintiffs,” it is not required “to accept the labels and legal conclusions in the complaint as
true.” Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010); see also Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (“Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice.”). At bottom, “the factual allegations in the
complaint must possess enough heft to set forth a plausible entitlement to relief.” Edwards,
602 F.3d at 1291 (punctuation omitted). In the 12(b)(6) context, “documents attached to a
complaint or incorporated in the complaint by reference can generally be considered by a
federal court.” Saunders v. Duke, 766 F.3d 1262, 1270 (11th Cir. 2014).
In ruling on a motion for default judgment, “the Court must consider (1) jurisdiction,
(2) liability, and (3) damages.” Johnson v. Rammage, 2007 WL 2276847, at *1 (M.D. Ga. Aug. 7,
2007) (citing Pitts v. Seneca Sports, Inc., 321 F. Supp. 2d 1353 (S.D. Ga. 2004)).
The Complaint establishes that the Court has subject-matter jurisdiction pursuant to
28 U.S.C. § 1332, as Plaintiff has alleged that the amount in controversy exceeds $75,000.00,
and there is complete diversity of citizenship between Plaintiff and Defendants. Doc. 1 ¶¶ 17. Further, the Complaint establishes that the Court has personal jurisdiction over Falcon, as
it alleges that Falcon is a Georgia limited liability company with its principal place of
business in Dawson, Georgia. Doc. 1 ¶ 6.
A guaranty is a contract “whereby a person obligates himself to pay the debt of
another in consideration of a benefit . . . or in consideration of . . . benefit given to his
principal, the principal in either instance remaining bound therefor. [G]uarantors[ ] are
jointly and severally liable with their principal unless the contract provides otherwise.”
O.C.G.A. § 10-7-1. A creditor in possession of a guarantee establishes a prima facie case for
repayment by producing a valid guarantee and showing that it was executed. CSS Real Estate
Dev. I, LLC, 749 S.E.2d at 774.
Here, on the facts as alleged in the Complaint, Plaintiff’s allegations show that valid
contracts existed between Plaintiff and Phoenix and between Plaintiff and Falcon. Plaintiff
has shown that Phoenix breached three agreements guaranteed by Falcon. Thus, Plaintiff has
stated a claim against Falcon for breach of contract in Claims I, II, and III.
Given that Plaintiff has alleged facts that state a claim against Falcon, Plaintiff has
adequately set forth Falcon’s liability. Thus, there is a “sufficient basis in the pleadings for
the [default] judgment to be entered,” against Falcon. Nishimatsu, 515 F.2d at 1206.
Even where the entry of default judgment is appropriate, the Court must hold an
evidentiary hearing to determine damages unless all essential evidence is already on the
record. See Fed. R. Civ. P. 55(b)(2); see also S.E.C. v. Smyth, 420 F.3d 1225, 1232 n.13 (11th
Cir. 2005). Here, the Complaint alleges that, as of September 14, 2016, the accelerated
balance due Plaintiff under the two Cairo Agreements and the Jackson Agreement total
$287,578.88 in remaining principle and interest. Plaintiff seeks pre-judgment interest
accruing on the unpaid balance of the three agreements from September 14, 2016, at the
default rate of 16.00% per annum. However, as discussed above, any amount that Plaintiff
can recover from Falcon will likely be offset by the amounts recovered from Phoenix,
American, and AT&L. Because the record is lacking in essential evidence regarding damages
against Falcon, the Court must hold an evidentiary hearing to determine damages unless,
after briefing, the Court can determine damages against Falcon.
V. PLAINTIFF’S MOTION TO DISMISS A PARTY
Before the Court is Plaintiff’s Motion to dismiss Ataollah Masoodzadehgan as a
party, Doc. 72. Plaintiff represents that service cannot be perfected on Ataollah
Masoodzadehgan because he cannot be located. Id. Defendants have not responded to the
Motion. For good cause shown, Plaintiff’s Motion, Doc. 72, is GRANTED.
Accordingly, Plaintiff’s Motion for partial summary judgment, Doc. 66, is
GRANTED in part and DENIED in part:
Plaintiff’s Motion for summary judgment on its claims for breach of contract
against Phoenix and American is GRANTED as to liability only.
Plaintiff’s Motion for summary judgment on its claim for money had and
received against AT&L is GRANTED as to liability only.
Plaintiff’s Motion for summary judgment on its claim for conversion against
AT&L is DENIED.
Plaintiff’s Motion for summary judgment on its claim for unjust enrichment
against AT&L is DENIED.
Plaintiff’s renewed Motion for default judgment against Falcon is
GRANTED as to liability only.
Defendants’ Motion for summary judgment, Doc. 69, is GRANTED in part and
DENIED in part:
Defendants’ Motion for summary judgment on Plaintiff’s money had and
received and breach of contract claims is DENIED.
Defendants’ Motion for summary judgment on Plaintiff’s conversion claim is
Defendants’ Motion for summary judgment on Plaintiff’s claim of unjust
enrichment is GRANTED.
Defendants’ Motion for summary judgment on Plaintiff’s claim of fraud is
Defendants’ Motion for summary judgment on Plaintiff’s claim for attorney’s
fees is DENIED.
Plaintiff’s Motion to dismiss a party, Doc. 72, is GRANTED.
Plaintiff is ORDERED to provide supplemental briefing on the amount of damages
consistent with this order within thirty (30) days of the issuance of this order. Defendants
shall have fourteen (14) days thereafter to respond. Finally, unless, after briefing, the Court
can determine damages against Falcon, the Court will hold a HEARING on damages as to
Defendant Falcon on a date to be specified in a forthcoming order from the Court.
SO ORDERED, this 15th day of September, 2017.
/s/ Leslie J. Abrams
LESLIE J. ABRAMS, JUDGE
UNITED STATES DISTRICT COURT
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?