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Bank Capital Services LLC v. Chef's Depot Inc.

United States District Court, S.D. New York

December 30, 2019




         Plaintiff Bank Capital Services LLC d/b/a F.N.B. Equipment Finance, a subsidiary of First National Bank of Pennsylvania, brings this diversity action against defendant Chef's Depot Inc. d/b/a Culinary Depot, to recover money advanced to defendant in connection with an equipment purchase and lease agreement between plaintiff and a non-party. Specifically, plaintiff brings state law claims for unjust enrichment, imposition of a constructive trust, and replevin and trover.

         Now pending is defendant's motion to dismiss the amended complaint pursuant to Rule 12(b)(6). (Doc. #15).[1]

         For the following reasons, the motion is DENIED.

         The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a).


         For the purpose of ruling on the motion to dismiss, the Court accepts as true all well-pleaded allegations in the amended complaint and draws all reasonable inferences in plaintiff's favor, as summarized below.

         Non-party Seasons Cleveland LLC (“Seasons Cleveland”) planned to develop and operate a supermarket in South Euclid, Ohio. To do so, it needed supermarket equipment. In November 2017, defendant, a commercial kitchen equipment merchant, provided Seasons Cleveland with a list of necessary equipment and a price estimate (the “project summary”). Defendant's project summary estimated the total cost of equipment to be $3, 962, 999.98.

         On June 11, 2018, plaintiff and Seasons Cleveland entered into a Master Equipment Lease (the “equipment lease”), whereby plaintiff agreed to purchase, and Seasons Cleveland agreed to lease, supermarket equipment for Seasons Cleveland to develop and operate the South Euclid supermarket. Non-party Zvi Bloom, the principal of Seasons Cleveland, guaranteed full performance of the equipment lease by executing an equipment lease guaranty. On June 13, 2018, plaintiff filed a UCC-1 Financing Statement with the Ohio Secretary of State to secure its interest in the equipment.

         On June 11, 2018, Seasons Cleveland also executed a Progress Payment Addendum, which authorized plaintiff to advance funding to purchase the equipment for Seasons Cleveland's use, and a “Progress Payment Request Form” (the “progress payment form”), which authorized and directed plaintiff to advance to defendant $1, 505, 500 (the “progress payment”) as a deposit for the equipment purchase. The next day, defendant sent Seasons Cleveland LLC an invoice indicating the total cost of equipment, $3, 962, 999.98, and the then-due $1, 505, 500 progress payment. Plaintiff remitted the progress payment to defendant that day.

         Seasons Cleveland defaulted on its obligations under the equipment lease by failing to make any payments to plaintiff. Seasons Cleveland's financial troubles, however, were much deeper than its default. In May 2018-prior to Seasons Cleveland's execution of the equipment lease and progress payment form-an $8, 325, 000 judgment was entered against Seasons Cleveland's parent company, various affiliates, and Bloom. Seasons Cleveland and Bloom allegedly failed to notify plaintiff of this judgment prior to the execution of the equipment lease and plaintiff's remittance of the progress payment to defendant. According to plaintiff, it would never have consummated or finalized the equipment lease, or advanced the progress payment to defendant, had it known of the May 2018 judgment and Seasons Cleveland's and Bloom's financial difficulties.

         On September 16, 2018, Seasons Cleveland, its parent company, and its affiliates filed a Chapter 11 voluntary petition for bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of New York. By that time, the only equipment identified in the June 12 invoice that defendant had delivered to Seasons Cleveland were floor troughs, valued at $6, 000.[2]

         On February 15, 2019, plaintiff commenced an action against Bloom in the U.S. District Court for the Middle District of Pennsylvania to enforce the equipment lease guaranty. Specifically, plaintiff sued Bloom for breach of contract, fraud, and negligent misrepresentation. Bloom failed to appear, and on May 8, 2019, plaintiff obtained a default judgment against Bloom. On September 10, 2019, the judgment was amended to reflect a corrected judgment amount of $1, 610, 717.30.

         At some time prior to the commencement of the instant action, plaintiff demanded that defendant return the $1, 505, 500 progress payment. Defendant has allegedly refused to do so.


         I. Standard of Review

         In deciding a Rule 12(b)(6) motion, the Court evaluates the sufficiency of the operative complaint under the “two-pronged approach” articulated by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).[3] First, a plaintiff's legal conclusions and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are not entitled to the assumption of truth and are thus not sufficient to withstand a motion to dismiss. Id. at 678; Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). Second, “[w]hen there are well-pleaded factual ...

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