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Gunderson Amazing Fireworks, LLC v. Merrick Bank

United States District Court, E.D. New York

March 31, 2017

GUNDERSON AMAZING FIREWORKS, LLC, Plaintiff,
v.
MERRICK BANK, MERRICK BANK MERCHANT SERVICES DIVISION, CARDWORKS, L.P., and PINNACLE PROCESSING GROUP, INC., Defendants. FIREWORKS UNLIMITED, LLC, Plaintiff,
v.
MERRICK BANK, MERRICK BANK MERCHANT SERVICES DIVISION, CARDWORKS, L.P., and PINNACLE PROCESSING GROUP, INC., Defendants. KENACO SALES, LLC, Plaintiff,
v.
MERRICK BANK, MERRICK BANK MERCHANT SERVICES DIVISION, CARDWORKS, L.P., and PINNACLE PROCESSING GROUP, INC., Defendants. FIREWORKS CENTER 25, LLC, Plaintiff,
v.
MERRICK BANK, MERRICK BANK MERCHANT SERVICES DIVISION, CARDWORKS, L.P., and PINNACLE PROCESSING GROUP, INC., Defendants. LADY LUCKS WHOLESALE & RETAIL FIREWORKS, LLC, Plaintiff,
v.
MERRICK BANK, MERRICK BANK MERCHANT SERVICES DIVISION, CARDWORKS, L.P., and PINNACLE PROCESSING GROUP, INC., Defendants.

          For Plaintiffs: Courtney K. Davy, Esq. Law Office of Courtney Davy LLP

          For Defendants: Merrick Bank Corporation, Merrick Bank Merchant Services Division and Cardworks, L.P. Dirk O. Julander, Esq. Julander, Brown & Bollard Jesse Strauss, Esq. Strauss Law PLLC

          For Pinnacle Processing Group, Inc. No appearance

          MEMORANDUM & ORDER

          Joanna Seybert, U.S.D.J.

         Plaintiffs Gunderson Amazing Fireworks, LLC, Fireworks Unlimited, LLC, Kenaco Sales, LLC, Fireworks Center 25, LLC and Lady Lucks Wholesale & Retail, Fireworks LLC (collectively “Plaintiffs”) commenced this action against Defendants Merrick Bank Corporation, Merrick Bank Merchant Services Division, Cardworks, L.P., and Pinnacle Processing Group, Inc. (collectively “Defendants”) alleging that Defendants violated certain merchant agreements between the parties (the “Merchant Agreements”). (See generally Sec. Am. Compl., Docket Entry 82.) Currently pending before the Court is Plaintiffs' motion to join Jetpay Merchant Services, LLC (“Jetpay”) as a party to this action (Pls.' Mot., Docket Entries 157, 158).[1] For the following reasons, Plaintiffs' motion is DENIED.

         BACKGROUND

         I. Factual Background

         Plaintiffs are “retailer[s] and/or wholesaler[s] of consumer fireworks.” (Consol. Sec. Am. Compl. ¶ 13.) In 2010, Plaintiffs entered into the Merchant Agreements with Defendants and their agents, pursuant to which Defendants agreed to authorize and process Plaintiffs' credit card transactions. (Consol. Sec. Am. Compl. ¶¶ 14-20.) In other words, when a customer purchased fireworks from one of the Plaintiffs, Defendants would process the payment and after deducting processing fees, deposit the balance in Plaintiffs' accounts. (Consol. Sec. Am. Compl. ¶ 22.) Plaintiffs allege that after Jetpay began performing processing services on Defendants' behalf in March 2012, they began receiving complaints from customers about duplicate and unauthorized charges to their credit cards. (Consol. Sec. Am. Compl. ¶¶ 23-24.) Plaintiffs claim that the pattern of unauthorized charges constitutes a material breach of the Merchant Agreements and that they “suffered substantial losses, injuries and continual disruptions to their various business operations” as a result of Defendants' conduct. (Consol. Sec. Am. Compl. ¶¶ 25, 30.)

         II. Procedural History

         Plaintiffs Gunderson Amazing Fireworks, LLC, Fireworks Unlimited, LLC, Kenaco Sales, LLC and Fireworks Center 25, LLC filed Complaints against Defendants on August 3, 2012. (Compl., 12-CV-3869, Docket Entry 1; Compl., 12-CV-3871, Docket Entry 1; Compl., 12-CV-3872, Docket Entry 1; Compl., 12-CV-3873, Docket Entry 1.) Plaintiff Lady Lucks Wholesale & Retail Fireworks filed its Complaint on August 13, 2012. (Compl., 12-CV-4019, Docket Entry 1.) Because the cases involved similar allegations, they were consolidated under Docket Number 12-CV-3869 on February 11, 2013. (Consolidation Order, Docket Entry 27.) After the Court granted Defendants' motion to dismiss and granted Plaintiffs leave to file a consolidated amended complaint, Defendants requested that the Court stay the case because Pinnacle Processing Group, Inc. (“Pinnacle”) filed for bankruptcy. (Sept. 2013 Order, Docket Entry 65; Stay Mot., Docket Entry 66.) The Court granted the request, and the case was administratively closed on October 3, 2013. (Oct. 2013 Order, Docket Entry 67.)

         On February 2, 2015, Plaintiffs advised the Court that Pinnacle's bankruptcy case was dismissed and requested that the case be re-opened. (Pls.' Mot. to Reopen, Docket Entry 68.) The Court granted the motion and directed Plaintiffs to file an Amended Complaint, which Plaintiffs filed on February 26, 2015. (Feb. 2015 Order, Docket Entry 69; Consol. Am. Compl., Docket Entry 70.)

         On April 29, 2015, Magistrate Judge A. Kathleen Tomlinson so ordered a Stipulation on Consent for Plaintiffs to serve a consolidated second amended complaint, (Order, Docket Entry 81), which was filed on May 8, 2015. The Consolidated Second Amended Complaint asserts five causes of action: (1) breach of agreement, (2) unfair business practice, (3) breach of fiduciary duty, (4) indemnification and (5) negligent performance under Washington law.[2] (See, generally, Consol. Sec. Am. Compl.) Defendants answered the Second Amended Complaint on May 28, 2015 and asserted counterclaims against Plaintiffs and Sandra K. Kueck, Kent Herzog, and Monty Kapchinsky, guarantors of the Merchant Agreements. (Answer, Docket Entry 85.) The parties proceeded with discovery.

         Separately, in March 2015, Defendants' counsel withdrew as counsel for Pinnacle. (Minute Order, Docket Entry 76.) Plaintiffs subsequently filed a motion for a default judgment against Pinnacle, and the motion was denied without prejudice.[3](Pls.' Default Mot., Docket Entry 98; March 2016 Order, Docket Entry 142.) Plaintiffs have not taken any further action against Pinnacle, and it remains unrepresented.

         On June 10, 2016, Plaintiffs filed a motion to join Jetpay as a defendant. (See, Pls.' Mot.) On June 13, 2016, Defendants advised the Court that they did not oppose the motion. (Defs.' Resp., Docket Entry 159.) Discovery closed on June 27, 2016.[4] On September 16, 2016, while the motion to join Jetpay was pending, Plaintiffs filed a Stipulation of Voluntary Dismissal dismissing Defendants ...


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