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

Background

Bank Capital Services LLC, doing business as F.N.B. Equipment Finance and identified as a subsidiary of First National Bank of Pennsylvania, brought state-law claims against Chef’s Depot Inc., doing business as Culinary Depot. The claims sought recovery of money advanced in connection with an equipment purchase and lease agreement between Bank Capital and non-party Seasons Cleveland LLC.

Seasons Cleveland planned to develop and operate a supermarket in South Euclid, Ohio, and Chef’s Depot provided it with an equipment list and price estimate totaling $3,962,999.98. On June 11, 2018, Bank Capital and Seasons Cleveland entered into a master equipment lease. Seasons Cleveland also signed documents authorizing Bank Capital to advance Chef’s Depot $1,505,500 as a deposit for the equipment purchase. Bank Capital made that payment to Chef’s Depot on June 12, 2018.

Seasons Cleveland later defaulted on its lease obligations and filed for bankruptcy protection. By then, Chef’s Depot had delivered only floor troughs valued at $6,000, according to the opinion’s summary of the allegations. Bank Capital alleged that the floor troughs may have been delivered before the lease and payment documents were signed, and that Chef’s Depot retained both the payment and the equipment. Bank Capital demanded that Chef’s Depot return the payment, but Chef’s Depot allegedly refused.

Motion and Legal Standards

Chef’s Depot moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Chef’s Depot also argued that the amended complaint failed to satisfy Rule 9(b), which requires fraud or mistake to be pleaded with particularity.

The court explained that Rule 9(b) did not apply because Bank Capital had not pleaded a fraud claim. The court also stated that, at the motion-to-dismiss stage, it had to accept well-pleaded factual allegations as true and draw reasonable inferences in Bank Capital’s favor. The allegations had to make the claims legally plausible, rather than merely possible.

Unjust Enrichment

Under New York law, unjust enrichment requires allegations that the defendant was enriched, that the enrichment came at the plaintiff’s expense, and that fairness and good conscience do not permit the defendant to keep the benefit.

The court found a sufficient connection between Bank Capital and Chef’s Depot because the payment request specifically directed Bank Capital to pay Chef’s Depot, and Chef’s Depot accepted the payment directly from Bank Capital. The court also found the allegations sufficient to plausibly show that Chef’s Depot was enriched at Bank Capital’s expense by retaining the payment for equipment that, apart from several floor troughs, was allegedly never delivered. The motion to dismiss the unjust enrichment claim was denied.

Constructive Trust

A constructive trust is an equitable remedy that can prevent someone from keeping property when doing so would be unjust. The court noted that New York courts consider factors including a confidential or fiduciary relationship, a promise, a transfer made in reliance on that promise, and unjust enrichment. The court also noted that courts differ on whether a constructive trust is an independent claim or only a remedy.

Because Bank Capital had plausibly alleged unjust enrichment, the court denied the motion to dismiss its claim seeking imposition of a constructive trust.

Replevin

Replevin is a claim seeking return of specific personal property. The plaintiff must generally allege that the defendant possesses property in which the plaintiff has a superior right, and that the plaintiff demanded its return and the defendant refused.

The court found the allegations sufficient at this early stage. Bank Capital alleged that it paid Chef’s Depot for equipment, had a perfected security interest in the equipment, that Chef’s Depot retained the payment without delivering the equipment, and that Chef’s Depot refused requests to return the payment. The court therefore concluded that Bank Capital had plausibly pleaded replevin. The opinion addressed the replevin theory in Count III; that count also referred to trover and money had and received.

Disposition

Judge Vincent L. Briccetti denied Chef’s Depot’s motion to dismiss. The court ordered Chef’s Depot to file an answer to the amended complaint by January 13, 2020, and directed the Clerk to terminate the motion. The order resolved only the pleading challenge; it did not determine the ultimate merits of Bank Capital’s claims.