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AKF INC. v. Sonny's Enterprises LLC

United States District Court, S.D. Florida

January 3, 2020

AKF INC., a New York Corporation doing business as FundKite, Plaintiff,

          Valle Judge



         THIS CAUSE is before the Court upon Defendant Sonny's Enterprises, LLC (“Sonny's” or “Defendant”) Motion to Dismiss, ECF No. [11] (the “Motion”). Plaintiff AKF INC. d/b/a FundKite (“FundKite” or Plaintiff”) filed a Response, ECF No. [16] (“Response”), to which Sonny's filed a Reply, ECF No. [18] (“Reply”). The Court has carefully considered the Motion, the Response and Reply, the record in this case and the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is granted in part.

         I. BACKGROUND

         FundKite commenced this case on September 25, 2019, asserting claims against Sonny's arising from an underlying dispute involving a company called Daniels Wholesale Sign & Plastics, Inc. (“DWSP”). ECF No. [1] (“Complaint”). According to the Complaint, FundKite entered into a Purchase and Sale of Future Receipts agreement (“Agreement”) with DWSP on August 3, 2018, through which FundKite purchased DWSP's future revenue and receivables. Daniel Singer (“Singer”), the owner of DWSP, also executed a guaranty in which he and an entity named Six Point Financial Services, LLC guaranteed DWSP's obligations under the Agreement. DWSP was in the business of plastic forming, sheet metal work and welding, and canopy work. In or about the summer of 2018, Sonny's purchase orders that were placed constituted approximately 50% of DWSP and Singer's revenue base.

         On or about November 7, 2018, DWSP and Daniels defaulted under the terms of the Agreement. Immediately after the default, Singer transferred his interest in an entity named Daniels Wholesale LLC (“Daniels Wholesale”) to his wife with the intention of avoiding FundKite's ability to collect amounts owed under the Agreement. Also in November, 2018, Sonny's took steps to cancel all pending orders placed with DWSP and resubmitted the canceled orders to Daniels Wholesale. Sonny's paid Daniels Wholesale for orders that had previously been placed with DWSP. On December 13, 2018, FundKite obtained a judgment against DWSP and Singer.

         On or about December 26, 2018, Sonny's was sent a UCC lien notice alerting Sonny's to FundKite's lien and security interest in receivables and demanding that Sonny's make all further payments to FundKite. Sonny's knew that Daniels Wholesale is related to and affiliated with DWSP. On or about December 27, 2018, a New York City marshal levy was served on Sonny's, alerting Sonny's to FundKite's judgment and demanding that any property of DWSP and Singer in Sonny's possession be turned over to the marshal. Even so, Sonny's continued to conduct business with Singer and DWSP, but wrongfully paid Daniels Wholesale for its orders. To date, FundKite has not received any payments toward the judgment, despite the fact that Sonny's has paid not less than $155, 000.00 to Daniels Wholesale.

         As a result, FundKite asserts claims against Sonny's for breach of assignment of accounts receivables (Count 1), wrongful payment (Count 2), breach of account stated (Count 3), and violation of UCC § 9-406 (Count 4). In the Motion, Sonny's seeks dismissal with prejudice of FundKite's claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure.


         A pleading in a civil action must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although a complaint “does not need detailed factual allegations, ” it must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining that Rule 8(a)(2)'s pleading standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation”). Nor can a complaint rest on “‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (alteration in original)). “[A] complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570).

         When reviewing a motion to dismiss, a court, as a general rule, must accept the plaintiff's allegations as true and evaluate all plausible inferences derived from those facts in favor of the plaintiff. See Chaparro v. Carnival Corp., 693 F.3d 1333, 1337 (11th Cir. 2012); Miccosukee Tribe of Indians of Fla. v. S. Everglades Restoration Alliance, 304 F.3d 1076, 1084 (11th Cir. 2002); AXA Equitable Life Ins. Co. v. Infinity Fin. Grp., LLC, 608 F.Supp.2d 1349, 1353 (S.D. Fla. 2009) (“On a motion to dismiss, the complaint is construed in the light most favorable to the non-moving party, and all facts alleged by the non-moving party are accepted as true.”); Iqbal, 556 U.S. at 678. A court considering a Rule 12(b) motion is generally limited to the facts contained in the complaint and attached exhibits, including documents referred to in the complaint that are central to the claim. Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009); see Maxcess, Inc. v. Lucent Techs., Inc., 433 F.3d 1337, 1340 (11th Cir. 2005) (“[A] document outside the four corners of the complaint may still be considered if it is central to the plaintiff's claims and is undisputed in terms of authenticity.”) (citing Horsley v. Feldt, 304 F.3d 1125, 1135 (11th Cir. 2002)). Although the court is required to accept as true all allegations contained in the complaint, courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 678.


         In the Motion, Sonny's argues that FundKite's claims should be dismissed because there is no privity or contractual relationship between Sonny's and FundKite and Sonny's did not have an obligation to continue purchasing products from DWSP. In addition, Sonny's argues that there is no private cause of action under UCC § 9-406. In response, FundKite argues that the Complaint sufficiently states claims premised upon the theory that Daniels Wholesale is the alter ego and business continuation of DWSP, and that by virtue of the Agreement, FundKite is the assignee of DWSP. By paying Daniels Wholesale when Sonny's knew of the assignment, FundKite reasons that Sonny's is liable to FundKite for wrongfully paying Daniels Wholesale. FundKite also argues that there is a private cause of action under UCC § 9-406.

         A. The Complaint is ...

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