United States District Court, W.D. Washington, Seattle
ORDER DENYING MOTION TO DISMISS
L. ROBART UNITED STATES DISTRICT JUDGE.
the court is Defendant and Third-Party Plaintiff Ericsson,
Inc.'s ("Ericsson") motion to dismiss Plaintiff
United Capital Funding Corp.'s ("United")
Uniform Commercial Code ("UCC") § 9-406 claim.
(MTD (Dkt. # 140).) United opposes the motion. (Resp. (Dkt.
#141).) The court has considered the motion, the parties'
submissions in support of and in opposition to the motion,
the relevant portions of the record, and the applicable law.
Being fully advised,  the court DENIES the motion.
case concerns four businesses: United, Ericsson, Third-Party
Defendant Kyko Global, Inc. ("Kyko"), and non-party
Prithvi Solutions, Inc. ("Prithvi"). (See MTD;
Resp.) The dispute centers on the legitimacy of assignments
that Prithvi made to United. (See Compl. (Dkt. # 1).) The
court details the factual background of this case before
turning to the procedural background.
is in the business of "factoring"-purchasing
accounts receivable from other entities. (Compl. (Dkt # 1)
¶ 7.) On September 27, 2010, United purchased some of
Prithvi's accounts, including accounts receivable Prithvi
had with Ericsson. (Id. ¶¶ 10, 12.)
Specifically, United purchased, among others, 22 invoices
totaling $184, 539.50. (Id. ¶ 12.) Pursuant to
that purchase, United sent a letter to Ericsson "giving
notice that Prithvi's present and future [a]ccounts had
been assigned to United, and providing that all present and
future payments owing to Prithvi should instead be paid by
Ericsson to and only to United." (Id.
¶\\\see also id., Ex. 1 (Dkt. #1-1) ("Notice
Letter") at 1 ("[Prithvi has] assigned [its]
present and future Accounts Receivable to [United]. . ..
Payments should be made payable to [United]. Payment to any
other party will not discharge this obligation.").)
did not pay United any of the amounts due on the 22
outstanding invoices. (Compl. ¶ 15.) Instead, Ericsson
paid another creditor, Kyko, in satisfaction of a writ of
garnishment Kyko obtained on June 14, 2014, in state court.
(12/15/15 Order (Dkt. # 98) at 3; 4/26/18 Order (Dkt. # 118)
at 2; 9th Cir. Order (Dkt. # 133) at 3.)
November 2014, United brought suit against Ericsson for $184,
539.50 in unpaid payments that United claims it is owed under
the assignment from Prithvi. (See Compl.) United asserts that
Ericsson "failed to fulfill its obligation to make
payment to United under the terms of the invoices and as
statutorily required by [§] 9-406 of the UCC."
(Id. ¶ 17.) United alleges that "its claim
against Ericsson is for damages that have arisen in
connection with an oral or written agreement between Ericsson
and its vendor, Prithvi, the rights to which now lie with
United." (Id. ¶ 18.) United sues Ericsson
for "breach of Ericsson's [s]tatutory [d]uty to
[p]ay United." (Id. at 1.)
December 15, 2015, the Honorable John C. Coughenour granted
summary judgment to Ericsson and dismissed United's
claim. (See 12/15/15 Order.) Specifically, the
court agreed with Ericsson that Prithvi's assignments to
United were invalid and that Ericsson is immune from suit as
a garnishee who paid in accordance with a court judgment;
both grounds entitled Ericsson to summary judgment.
(Id. at 5-7.) United appealed. (Not. of Appeal (Dkt.
Ninth Circuit Court of Appeals reversed the grants of summary
judgment and remanded the matter. (See 9th Cir. Order.) The
Ninth Circuit found that there was a genuine dispute of
material fact regarding whether the assignment was invalid
and that Ericsson was not entitled to immunity. (Id.
at 5-7.) The Ninth Circuit further declined to address
Ericsson's argument, raised for the first time on appeal,
that UCC § 9-406 does not create a private right of
action for assignees. (Id. at 6 n.3.) The court
explained that it "will not address this contention as
Ericsson failed to raise it below and, thus, did not
adequately preserve it." (Id.)
remand, Judge Coughenour recused himself, and this matter was
reassigned to the undersigned judge. (See Min. Order (Dkt.
#135).) Ericsson subsequently filed the instant motion to
dismiss pursuant to Rule 12(b)(6), raising the argument that
the Ninth Circuit declined to address: whether UCC §
9-406 provides United a private cause of action to bring its
claim against Ericsson. (See MTD; see also Jt. Statement
(Dkt. #138) ...