Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Walmart Stores, Inc v. First American Corp

August 30, 2012

WALMART STORES, INC., INTERPLEADER-PLAINTIFF,
v.
FIRST AMERICAN CORP.,
-AND- FAUNUS GROUP INTERNATIONAL, INC., D/B/A FGI FINANCE, INTERPLEADER-DEFENDANTS.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:

OPINION & ORDER

Interpleader-plaintiff Walmart Stores, Inc. ("Walmart") brings this interpleader action against defendants First American Corp. ("First American") and Faunus Group International, Inc. ("FGI") for a determination of ownership of an outstanding account payable in the amount of $334,372.58 (the "Funds"), to which both First American and FGI assert an ownership interest. First American and FGI cross-move for summary judgment under Federal Rule of Civil Procedure 56. For the reasons that follow, summary judgment is entered in FGI's favor.

I.Background*fn1

The Funds subject to the interpleader action are $334,372.58 owed by Walmart to its vendors, Magla Products, LLC and Magla International, LLC (collectively, "Magla"), for inventory received by Walmart. The Funds are subject to multiple adverse claims asserted by First American and FGI. The facts detailed herein are undisputed.

A.First American's Claim

First American is a non-U.S. corporation with its principal place of business in Florida. Magla is a New Jersey corporation. FA Mem. ¶ 3. In the relevant period, First American contracted with Magla to manufacture gloves for purchase. Id. In late 2010, Magla was in arrears, owing money to First American on various outstanding purchase orders. As of March 7, 2011, Magla owed First American $661,449.60. Id.

In January 2011, because of the outstanding balance owed by Magla, First American blocked the release of the merchandise which formed the basis of two outstanding purchase orders. Id. ¶¶ 4, 10; Affidavit of Mort Finkelstein (Weber Aff. Ex. 1) ¶ 2. On March 10, 2011, in exchange for First American's agreement to release the merchandise, Magla sent $255,487.68, by check, to First American. Finkelstein Aff. ¶ 2. The check soon was rejected by Magla's bank on account of insufficient funds. FA Mem. ¶ 5. In a letter dated April 4, 2011, First American demanded payment of the $255,487.68, but Magla did not make that payment. Id. ¶ 20.

On March 21, 2011, First American sued Magla for breach of contract in Florida state court. FA Mem. ¶ 6; FGI Mem. ¶ 11. On June 30, 2011, First American obtained a judgment against Magla from that court. FA Mem. ¶ 6; FGI Mem. ¶ 11. Judgment was entered against Magla for $1,429,912.64, which included $661,449.60 in unpaid invoices from 2010, the $255,487.68 that remained unpaid after Magla's March 2011 check was rejected by the bank, and $766,463.04 in treble damages under Florida law for the bounced check. FA Mem. ¶ 6.

In July 2011, First American sought a writ of garnishment against Walmart in connection with the judgment against Magla obtained from the Florida court. FA Mem. ¶ 7; FGI Mem. ¶ 12. On July 14, 2011, the Hon. Meenu Sasser issued the writ of garnishment against Walmart for all property belonging to Magla in Walmart's possession. Dkt. 25-1.

B.FGI's Claim

FGI is a Delaware corporation with its principal place of business in New York.

On January 25, 2011, FGI and Magla entered into a Sale of Accounts and Security Agreement (the "Agreement"). FGI Mem. ¶ 4; Altaher Aff. Ex. 1. The Agreement provides: "[Magla] hereby offers to sell, assign, transfer, convey and deliver to [FGI], as absolute owner, in accordance with the procedure detailed herein, all of [Magla's] right, title and interest in and to [Magla's] Accounts . . . ." Altaher Aff. Ex. 1 at 5. It further provides that "[i]t is the intention of the Parties hereto that as to all purchased Accounts, the transactions contemplated hereby shall constitute a true purchase and sale of Account(s) under § 9-318 of the UCC and as such, [Magla] shall have no legal or equitable interest in the Accounts sold." Id. at 8.

Also on January 25, 2011, in accordance with the Agreement, Magla granted FGI a security interest in and a lien upon all of Magla's right, title and interest in all of its assets. The Agreement provided: "In order to secure the payment of all indebtedness and obligations of [Magla] to [FGI] (including the Obligations), in addition to the sale of Purchased Accounts, [Magla] hereby grants to [FGI] a security interest in and Lien upon all of [Magla's] right, title and interest in and to all of Seller's Collateral." Agreement at 13. The Agreement defined "Collateral" as "all of [Magla's] right, title and interest in and to all of the following, wherever located and whether now or hereafter existing or now owned or hereafter acquired or arising: (a) all Accounts . . . and (n) all cash and non-cash proceeds of the foregoing, including insurance proceeds." Id. at 1. The Agreement provided that the terms "Account(s)" and "Account Debtor" were to have the definition contained in the UCC. See id.; FGI Mem. ¶ 10.

On January 26, 2011, FGI filed a UCC-1 financing statement against Magla with the Secretary of State of New Jersey ("Financing Statement"). ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.