United States District Court, M.D. Tennessee, Nashville Division
ALETAA.TRAUGER, UNITED STATES DISTRICT JUDGE
before the court is Defendants' Motion to Dismiss
Plaintiffs' Amended Complaint for Failure to State a
Claim (Doc. No. 38). For the reasons stated herein,
Defendants' Motion will be granted in part and denied in
Pineda Transportation, LLC (“Pineda”), Pineda
Investment Group, LLC, and Gulf Express, LLC, are companies
engaged in the trucking industry. Defendants FleetOne
Factoring, LLC (“FleetOne”) and WEX Bank are
companies engaged in the business of factoring. Plaintiffs
assert that FleetOne is a two-member limited liability
company whose members are WEX Bank (a corporation operating
in Tennessee as “Fleet Fuel”) and TransPlatinum
Services (a one-member limited liability company whose sole
member is SunTrust Bank). Defendant Sturm is the Chief Credit
Officer of FleetOne and of WEX Bank.
is the buying of accounts receivable at a discount.
Factoring, as described in the First Amended Complaint,
involves a company selling its invoices to a third party who
immediately pays a percentage of the invoices and then
invoices the company's customers and collects the funds.
Each of the Plaintiffs alleges that it had a contract with
Defendants under which Defendants bought Plaintiffs'
invoices for a percentage (90-98.5%) of their face value.
Plaintiffs contend that Defendants were supposed to invoice
Plaintiffs' customers and collect the payments.
Defendants were entitled to collect 1.5% for their service
fees and were supposed to place any balance over the face
value collected into reserve accounts for the Plaintiffs.
Plaintiffs allege that Defendants failed to invoice
Plaintiffs' customers; Defendants failed to pay out
reserve amounts collected on invoices to Plaintiffs;
Defendants failed to process and post payments made by
Plaintiffs' customers to Plaintiffs' accounts; and
Defendants charged back invoices for amounts greater than
Defendants advanced or were due. In the First Amended
Complaint, Pineda alleges breach of contract; Pineda and
Pineda Investment Group allege fraud (alternatively,
constructive fraud), and Pineda, Pineda Investment Group and
Gulf Express allege violations of civil RICO.
purposes of a motion to dismiss, the court must take all of
the factual allegations in the complaint as true.
Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to 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 1950. 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
Tennessee, a viable claim for breach of contract has three
essential elements: (1) the existence of an enforceable
contract; (2) nonperformance amounting to a breach of that
contract; and (3) damages caused by the breach of contract.
Carrigan v. Arthur J. Gallagher Risk Mgmt. Servs.,
Inc., 870 F.Supp.2d 542, 550 (M.D. Tenn. 2012);
Ingram v. Cendant Mobility Fin. Corp., 215 S.W.3d
367, 374 (Tenn. Ct. App. 2006).
argue that Plaintiffs have failed to state a claim for breach
of contract because they have not identified specific
contract language under which Defendants materially failed to
perform. Defendants assert that the agreements between them
and Plaintiffs contain no time requirements or standards for
the billing or collection of invoices. Defendants point out
that the sales of accounts to Defendants were “true and
actual sales of the accounts, ” and Defendants became
the “absolute owners” of those accounts.
Plaintiffs, on the other hand, contend that each of these
Agreements includes an implied covenant of good faith and
fair dealing that was breached by Defendants. Plaintiffs
argue that these contracts include an implied duty to invoice
the customers, not to charge excessive fees, and to properly
pay Plaintiffs' reserve amounts.
the contracts at issue was filed with the original Complaint
(Docket No. 1) or the First Amended Complaint (Docket No.
31). Defendants filed three contracts (plus amendments) with
their original Motion to Dismiss (Docket No. 27). The first
is a December 3, 2013 Accounts Purchase Agreement between
FleetOne and Pineda Investment Group d/b/a Pineda Transport.
Docket No. 27-1. The First and Second Amendments to that
Agreement are also between FleetOne and Pineda Investment
Group d/b/a Pineda Transport (Docket Nos. 27-2 and 27-3), but
the purported Third and Fourth Amendments to that Agreement
(Docket Nos. 27-4 and 27-5) are between WEX Bank and Pineda
Investment Group d/b/a Pineda Transport. Defendant Sturm
signed the Agreement and the Amendments as Chief Credit
Officer for both FleetOne and WEX Bank. The court has found
no contract between WEX Bank and any of the Plaintiffs in the
court record, and it appears that the parties treated
FleetOne and WEX Bank as the same entity.
second Accounts Purchase Agreement, dated December 31, 2015,
is between FleetOne and Pineda. Docket No. 27-6. Both the
First and Second Amendments to that Agreement, however, are
between WEX Bank and Pineda. Docket Nos. 27-7 and 27-8.
Again, Defendant Sturm signed as Chief Credit Officer of both
FleetOne and WEX Bank. Again, it appears that the parties
treated FleetOne and WEX Bank as the same entity. Finally,
the third Accounts Purchase Agreement is dated May 18, 2015,
and is between FleetOne and Gulf Express, LLC. Docket No.
27-9. No. Amendments to this Agreement were filed.
contracts at issue are essentially identical. They provide
that FleetOne “will forward all invoices to the
respective Customer.” Docket Nos. 27-1, 27-6 and 27-9
at § 3.3. The contracts provide that, from the date of
purchase until payment in full is received by FleetOne,
FleetOne is entitled to a discount fee of 1.50% for the first
thirty days and a discount fee of an additional 1.25% for
every sixty-day period that the invoice remains unpaid.
Id. at § 1.3. Thus, the discount fee received
by Defendants increases the longer the invoice goes unpaid.
The contracts also provide that, if the invoice remains
unpaid or subject to a dispute after ninety days from the
date of the invoice, then the amount of the account may be
charged back by FleetOne to Plaintiffs. Id. at
allege that Defendants have failed to send invoices and then
deducted the amounts of those invoices as “charge
backs” from Plaintiffs' reserve accounts, even
though the accounts were never invoiced. Plaintiffs also
contend that, instead of charging back the amounts they
advanced, Defendants charged back the full amounts (100% of
face value) on the invoices and retained all additional
amounts. In other words, Plaintiffs allege that Defendants
have benefitted from delaying and not sending the invoices,
causing Plaintiffs to lose money. Plaintiffs aver that
Defendants are profiting, whether they perform under the
contract or not. Plaintiffs allege that Defendants'
actions not only prevented Plaintiffs from receiving the