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Aquent, LLC v. Atlantic Energy Services

September 7, 2010

AQUENT, LLC, PLAINTIFF,
v.
ATLANTIC ENERGY SERVICES, INC., ATLANTIC ENERGY SOLUTIONS INC., ATLANTIC HOLDING COMPANY OF SARATOGA, INC.,TERRI J. BROCK AND TIMOTHYJ. BROCK, DEFENDANTS.



MEMORANDUM-DECISION AND ORDER

On May 4, 2009, Plaintiff Aquent, LLC ("Plaintiff" or "Aquent") commenced this action against Defendants Atlantic Energy Services, Inc., Atlantic Energy Solutions, Inc., and Atlantic Holding Company of Saratoga, Inc. (collectively, "Atlantic Energy Defendants"), and against Terri J. Brock and Timothy J. Brock ("the Brocks"). As against all Defendants, Plaintiff asserts claims for unjust enrichment and for an account stated in a specified amount. Compl. (Dkt. No. 1) ¶¶ 46--53. Additionally, Plaintiff brings a claim for breach of contract against the Atlantic Energy Defendants. Id. ¶¶ 22--45. As against the Brocks, Plaintiff asserts claims for breach of guarantee, conversion, and fraud. Id. ¶¶ 54--67. Aquent is a Delaware limited liability company with a principal place of business in Boston, MA. The Atlantic Energy Defendants are New York corporations with a principal place of business in Saratoga Springs, NY; the Brocks personally reside in Saratoga Springs. Id. ¶¶ 1--8; Pl.'s Statement. of Material Facts ¶¶ 2-7 ("Stat. of Facts") (Dkt. No. 10). The Court exercises diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a).

Presently before the Court is Plaintiff's Motion for partial summary judgment on the claims of breach of contract, unjust enrichment and breach of guarantee. Dkt. No. 10. The Motion is unopposed. For the reasons that follow, Plaintiff's Motion is granted.

I. BACKGROUND

In January 2007, the Atlantic Energy Defendants entered into a Line of Credit Agreement ("LOCA") with Plaintiff. Compl. (Dkt. No. 1) ¶ 11. With the LOCA, Plaintiff agreed to provide Atlantic Energy Defendants with accounts receivable financing and other financing through the purchase of the Atlantic Energy Defendants' accounts receivable pursuant to a Merchants Services Agreement ("MSA") entered into at the time of the LOCA. Id. The LOCA provided for loans to Atlantic Energy Defendants in an amount up to $500,000. Id. ¶ 12.

Under its terms, the MSA is governed and enforced by the laws of the State of New York. Id. ¶ 13. Under the MSA, Atlantic Energy Defendants were prohibited from collecting any of the receivables assigned to Plaintiff directly from a customer. Id. ¶ 27. If Atlantic Energy Defendants received any of these "misdirected payments," they were required to immediately remit the payments to Plaintiff. Id. The MSA stated that any violation of this requirement would be considered an illegal conversion of Plaintiff's funds, with the result that Defendants would be obligated to pay Plaintiff, as a penalty, the greater of either $100 or 15% of the value of each "misdirected payment." Id. ¶ 29. The MSA also provided that, in the event of default or a dispute between the parties, the prevailing party would be entitled to recover expenses incurred to enforce the agreement, including costs and reasonable attorney's fees. Id. ¶ 35.

As part of the transaction, Plaintiff and Timothy Brock, on behalf of the Atlantic Energy Defendants, entered into a Security Agreement granting Plaintiff a security interest in all assets of the Atlantic Energy Defendants. Id. ¶¶ 14, 16. The secured loans were evidenced by a Promissory Note executed at the same time as the LOCA and MSA by Timothy Brock for the Atlantic Energy Defendants. Id. ¶ 17. The Atlantic Energy Defendants agreed to pay the Note upon demand by Plaintiff of all outstanding principal amounts, together with all accrued and unpaid interest set at a rate of 18% and other charges. Id. ¶¶ 37, 25. Additionally, in order to provide further security, the Brocks executed a Personal Guarantee rendering them jointly and severally liable for the debts of the Atlantic Energy Defendants. Id. ¶ 55. By amendment to the LOCA on January 5, 2008, the agreement was extended up to and including June 5, 2008. Id. ¶ 19.

In February 2009, Plaintiff sent a notice to Defendants that they were in default for failing to make payments on the unpaid principle balance of the loans, and advised Defendants that they owed Plaintiff $469,434.08 together with interest of 18%, all of which was immediately due pursuant to the parties' agreements. Id. ¶ 21. Defendants admitted they had breached their obligations under the agreements. Id. ¶ 20; Answer (Dkt. No. 6) ¶ 2.

Plaintiff alleges that the Atlantic Energy Defendants have failed to cure their default and are in breach of the terms and conditions of the various agreements. Compl. ¶ 42. In its first claim, Plaintiff is seeking damages for breach of contract in the amount of $469,434.08 plus $80,743.68 of interest as of January 10, 2010, as well as seeking to recover 15% of any misdirected payments and the costs for commencing this action, including reasonable attorney's fees. Id. ¶ 45; Stat. of Facts (Dkt. No.10) ¶ 33. In its second claim, Plaintiff asserts that Defendants were unjustly enriched by Plaintiff's monetary advances, and, as such, Defendants are jointly and severally liable to Plaintiff for the above amounts, not including the 15% fee for misdirected payments. Compl. ¶¶ 48-49. Plaintiff's third claim alleges that Defendants are liable for an account stated in the amount of $469,434.08, plus interest and costs, including reasonable attorney's fees. Fourth, Plaintiff claims that Defendants Timothy Brock and Terri Brock have failed to abide by the terms of their Guarantee and, therefore, that they are liable to Plaintiff for $469,434.08, plus interest, costs and disbursements. Id. ¶¶ 56--57. As a fifth claim, Plaintiff alleges that Defendants are jointly and severally liable for the illegal conversion of Plaintiff's funds for "misdirected payments" under the terms of the MSA. Id. ¶ 62. On the basis of this conversion claim, Plaintiff asserts entitlement to damages in the amount of a 15% penalty for each converted payment, plus interests, costs, reasonable disbursements due and attorney's fees. Id. Plaintiff's sixth cause of action alleges a fraud claim against the Brocks for willfully and fraudulently misdirecting their customers' payments. Id. ¶ 66. Plaintiff alleges the Brocks are liable to it under the Guarantee in the amount of $469,434.08, plus interest, costs and disbursements. Id. ¶ 67.

On January 27, 2010, Plaintiff moved for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) on the claims for breach of contract and unjust enrichment against all Defendants and on the claim for breach of guaranty against the Brocks. Dkt. No. 10. In a telephone conference with counsel for all parties on January 13, 2010, Defendants' counsel represented to the Honorable David R. Homer, Magistrate Judge in this case, that Defendants would not oppose Plaintiff's anticipated dispositive Motion. Accordingly, on January 14, 2010, the Honorable Magistrate Judge David R. Homer denied reopening discovery, of which none had been conducted by any party at that time.

II. STANDARD OF REVIEW

Pursuant to Rule 12(d), "[i]f, on a motion under Rule . . . 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. FED. R. CIV. P. 12(d). Federal Rule of Civil Procedure 56 provides that summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). Summary judgment is appropriate "only when no reasonable trier of fact could find in favor of the nonmoving party." Taggart v. Time, Inc., 924 F.2d 43, 46 (2d Cir. 1991).

Once the moving party meets its initial burden of showing there is no genuine issue of material fact, it is then up to the non-moving party to do "more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Corp., 475 U.S. 574, 586 (1986). "The non-moving party may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that its version of the events is not wholly fanciful." D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998).

When considering a motion for summary judgment, the court must resolve all ambiguities and draw all reasonable inferences in favor of the non-moving party. Nora Beverages, Inc. v. Perrier Group of America, Inc., 164 F.3d 736, 742 (2d Cir. 1998). "[T]he trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are any genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to ...


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