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Phoenix Capital Group, LLC v. Western Express Inc.

United States District Court, M.D. Tennessee, Nashville Division

January 24, 2017

PHOENIX CAPITAL GROUP, LLC, Plaintiff,
v.
WESTERN EXPRESS INC., and AMAZON.COM, INC., Defendants.

          MEMORANDUM AND ORDER

          WAVERLY D. CRENSHAW, JR. UNITED STATES DISTRICT JUDGE.

         Phoenix Capital Group, LLC (“Phoenix”), filed this action against Western Express, Inc. (“Western”), and Amazon.com, Inc. (“Amazon”), alleging state law causes of action. The Court has jurisdiction over this matter under 28 U.S.C. § 1332(a). (Doc. No. 34 at 1-2.) Before the Court are Western's and Amazon's motions to dismiss the Amended Complaint for failure to state a claim. (Doc. Nos. 37, 38.) For the following reasons, Amazon's motion is GRANTED IN PART and DENIED IN PART, and Western's motion is DENIED.

         I. ALLEGATIONS

         On April 8, 2014, Phoenix and FJ Logistics, LLC (“FJ Logistics”), entered into a factoring agreement (the “Original Agreement”). (Doc. No. 34 at 2.) On February 9, 2015, Phoenix and FJ Logistics executed a First Amendment to the Original Agreement. (Id.) On June 3, 2015, Phoenix and FJ Logistics entered into an Amended and Re-Stated Factoring Agreement, which combined with the Original Agreement to create the full contract (the “Agreement”). (Id.) Under the Agreement, FJ Logistics agreed to sell Phoenix its accounts. (Id. at 3.) Phoenix is the absolute and legal owner of any account purchased under the Agreement. (Id.)

         Western is a transportation company that coordinates shipping for various companies. (Id.) Western arranged for FJ Logistics to provide shipping services to certain companies, including Amazon. (Id.) FJ Logistics sent invoices to Western for its shipping services, and Western was required to pay the invoices. (Id.)

         On September 19, 2014, Phoenix notified Western in writing that it had purchased FJ Logistics' account, and all future payments on invoices should be sent to Phoenix. (Id.) Western then sent payment for FJ Logistics' invoices to Phoenix starting in 2014 and continuing through the present. (Id.) However, Western has fallen behind on its payments to Phoenix. (Id. at 4.) Around the time Western began to fall behind on its payments, Amazon decreased the amount it paid Western for its transportation services. (Id.) As of January 15, 2016, the total principal amount due on the outstanding invoices for services rendered by FJ Logistics for the benefit of Amazon was $2, 140, 002.80. (Id.)

         In January 2016, Western attempted retroactively to renegotiate with FJ Logistics the method for calculating its payments on previously-issued invoices, including invoices covering transportation services from October 1, 2015, through December 31, 2015. (Id.) Phoenix was not a party to these discussions, even though it owned the funds due on the outstanding invoices. (Id.) On January 15, 2016, Western wired a payment directly to Phoenix in the amount of $1, 387, 119.20. (Id.) No remittance information was provided, and Phoenix applied this amount toward the total balance of Western's obligations to Phoenix. (Id.) After the January 15 payment, Western still owed a principal amount of $752, 883.60. (Id.)

         Around the same time, Phoenix received a copy of a January 12, 2016 amendment to the Agreement between FJ Logistics and Western (the “Amendment”). (Id.) The Amendment purports to release Western of its liability for payment of the remaining principal amount it owes Phoenix. (Id.) The Amendment references Amazon's decision to make a downward adjustment to the amounts it paid to Western in conjunction with transportation services as a factor relevant to the execution of the Amendment. (Id. at 5.)

         On January 20, 2016, Phoenix sent a letter to Western demanding that it pay the remainder of the principal. (Id.) It notified Western that any attempt to alter the principal amount without the consent of Phoenix was void as a matter of law. (Id.) On January 27, 2016, Western replied that it did not owe Phoenix anything based on the Amendment. (Id.) As of the date of the Amended Complaint, neither Western nor Amazon has paid the principal amount that Western owes Phoenix under the Agreement. (Id.)

         II. STANDARD OF REVIEW

         For purposes of a motion to dismiss under Rule 12(b)(6), the Court must take all the factual allegations in the Amended Complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id. at 679. A legal conclusion couched as a factual allegation need not be accepted as true on a motion to dismiss, nor are recitations of the elements of a cause of action sufficient. Fritz v. Charter Township of Comstock, 592 F.3d 718, 722 (6th Cir. 2010).

         III. ANALYSIS

         The Amended Complaint alleges two causes of action: (1) breach of contract against both Western and Amazon, and (2) breach of a quasi-contract, or unjust enrichment, or a constructive trust against Amazon. (Doc. No. 34 at 5-6.) Amazon and Phoenix move to dismiss both claims for failure to state a claim upon which relief may be granted. (Doc. Nos. 37-38.) Further, Western moves to dismiss the Amended Complaint for ...


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