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Prestige Capital Corp v. Colt's Manufacturing Co., LLC

United States District Court, D. Connecticut

September 7, 2018

PRESTIGE CAPITAL CORPORATION, Plaintiff,
v.
COLT'S MANUFACTURING COMPANY, LLC, Defendant.

          RULING ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

          CHARLES S. HAIGHT, JR. Senior United States District Judge.

         Plaintiff Prestige Capital Corporation brings this action against Defendant Colt's Manufacturing Company, LLC, which allegedly owes $500, 001.35 to Plaintiff. Plaintiff provides accounts receivable financing, also known as factoring, to companies who are in need of immediate cash flow. A third party company sold and assigned the Defendant's accounts receivable to Plaintiff.

         Plaintiff has moved for partial summary judgment on its breach of contract claim, pursuant to Rule 56 of the Federal Rules of Civil Procedure. This Ruling resolves the motion.

         I. STANDARD OF REVIEW

         A motion for summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party must "demonstrate the absence of any material factual issue genuinely in dispute" to be entitled to summary judgment. Am. Int'l Grp., Inc. v. London Am. Int'l Corp., 664 F.2d 348, 351 (2d Cir. 1981) (citing Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317, 1319-20 (2d Cir. 1975)) (internal quotation marks omitted). All inferences and ambiguities must be viewed in the light most favorable to the nonmoving party. Rogoz v. City of Hartford, 796 F.3d 236, 245-46 (2d Cir. 2015).

         "In order to defeat a summary judgment motion that is properly supported by affidavits, depositions, and documents as envisioned by [Rule 56], the opposing party is required to come forward with materials envisioned by the Rule, setting forth specific facts showing that there is a genuine issue of material fact to be tried." Gottlieb v. Cty. of Orange, 84 F.3d 511, 518 (2d Cir. 1996). The non-moving party cannot "defeat the motion by relying on the allegations in his pleading, or on conclusory statements, or on mere assertions that affidavits supporting the motion are not credible." Id. (citations omitted). In other words, "[w]hen the moving party has carried its burden under Rule 56[], its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The nonmoving party "must present specific evidence demonstrating a genuine dispute." Gannon v. UPS, 529 Fed.Appx. 102, 103 (2d Cir. 2013) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). "An issue of fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is material if it might affect the outcome of the suit under the governing law." Fincher v. Depository Tr. & Clearing Corp., 604 F.3d 712, 720 (2d Cir. 2010) (internal quotation marks and citation omitted); see also Anderson, 477 U.S. at 248 ("Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted.").

         II. FACTUAL BACKGROUND

         The following undisputed or indisputable facts are derived from the parties' submissions pursuant to Local Rule 56(a) and the affidavits and exhibits attached to the parties' submissions. All reasonable inferences have been drawn in Defendant's favor.

         Plaintiff Prestige, a commercial finance company, provides accounts receivable financing for other companies. Doc. 29-2 ("Pl. 56(a) Stmt.") ¶ 1. A company called Chazkat, LLC, doing business as Bold Ideas, entered into a Purchase and Sale Agreement ("PSA") with Plaintiff on or about September 17, 2014, causing the sale of certain accounts receivable to Plaintiff. Id. ¶¶ 2-3. This practice is called factoring and enables companies to have access to immediate cash flow. Doc. 1 ("Compl.") ¶ 9. Bold Ideas sold rifles and rifle subassemblies to Defendant Colt. Those purchases are governed by a Manufacturing and Sales Agreement ("MSA") that was signed in November 2015. Pl. 56 (a) Stmt. ¶ 5. Beginning on August 5, 2016, the PSA included accounts due and owing from the Defendant, meaning that, although Defendant would normally pay Bold Ideas under the MSA terms, the PSA's factoring arrangement directed Defendant to pay Plaintiff any amounts it owed and would owe to Bold Ideas. Id. ¶¶ 4-6.

         For several months until March 2017, Bold Ideas remitted invoices to Defendant, and Defendant made payments on those invoices in the amount of $6, 000, 292.89 to Plaintiff. Id. ¶¶ 8-9. However, Defendant notified Plaintiff on March 16, 2017, that it would "not be making any payments on [the Bold Ideas] account." Doc. 29-7. Defendant indicated they stopped payments because "[Bold Ideas] is significantly past due on the reduction of their obligations/payments due to [Defendant]." Id.

         Plaintiff, through its counsel, demanded that Defendant pay the alleged outstanding balance of $1, 173, 750.71 on March 23, 2017. Pl. 56(a) Stmt. ¶ 12. Defendant then made two payments to Plaintiff: $303, 812.88 on March 31, 2017, and $299, 641.16 on April 7, 2017. Id. ¶ 13. Parties dispute the amount of the remaining balance that is owed to Plaintiff. Plaintiff calculates that Defendant still owes $500, 001.35, id. ¶ 15, whereas Defendant denies it owes Plaintiff any further sum. Doc. 38-3 ("Def. 56(a) Stmt.") ¶ 15.

         Plaintiff based its calculation on the two aforementioned payments in 2017 and a provision in the MSA limiting Defendant's setoff amount. Pl. 56(a) Stmt. ¶ 11. The relevant part (the "10% Provision") in Section 2(a) of the MSA states:

COLT and BOLD IDEAS acknowledge and agree that COLT, beginning April 1, 2016, shall have the right of setoff for any amounts due COLT whatsoever against any amounts COLT is obligated to pay under this Agreement. Specifically, COLT shall have the right to setoff up to ten percent (10%) of any invoice with respect to any amounts due from BOLD IDEAS to COLT, including royalty payments BOLD IDEAS owes to COLT under the License Agreement dated as of April 29, 2013, any warranty or service work for rifles ...

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