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United Capital Funding Corp. v. Ericsson Inc.

United States District Court, W.D. Washington, Seattle

May 28, 2019

ERICSSON INC, Defendant.




         Before the court is Defendant Ericsson Inc.'s (“Ericsson”) motion for partial summary judgment. (See MPSJ (Dkt. # 165).) Specifically, Ericsson asks the court on summary judgment to (1) cap Plaintiff United Capital Funding Corp.'s (“United Capital”) potential damages at $107, 298.84; (2) declare that United Capital cannot recover prejudgment interest; and (3) declare that United Capital cannot recover any attorney's fees. (See Id. at 2.) United Capital opposes Ericsson's motion. (See Resp. (Dkt. # 179).) The court has considered the motion, all submissions in support of and opposition to the motion, the relevant portions of the record, and the applicable law. Being fully advised, [1]the court GRANTS in part and DENIES in part Ericsson's motion.


         In 2012, Ericsson and non-party Prithvi Solutions, Inc. (“Prithvi”) entered into a Master Services Agreement whereby Prithvi agreed to (1) provide staffing services to Ericsson, and then (2) issue invoices for those services for Ericsson to pay. (6/18/15 McCombs Decl. (Dkt. # 55) ¶ 2, Ex. 1; 1/17/19 Pierce Decl. (Dkt. # 166) ¶ 2, Ex. 1 (“UC Pretrial Statement”) ¶ 3(f)-(h); 3/4/19 Baker Decl. (Dkt. # 181) ¶ 5, Ex. 3 (attaching Master Services Agreement).) Article 24 of the Master Services Agreement states that the Agreement “shall be construed and enforced in accordance with and governed by the laws of the State of Texas, without regard to its conflict of law provisions.” (3/4/19 Baker Decl. ¶ 5, Ex. 3 at 26.)

         United Capital is in the factoring business, which entails contracting to purchase accounts receivable from a client. (Compl. (Dkt. # 1) ¶ 7; UC Pretrial Statement ¶ 3(a).) The client's invoices generally provide the terms of the accounts receivable, and the client generally pays a factoring fee to United Capital. (See Compl. ¶ 7.) On September 27, 2010, Prithvi and United Capital entered into a Factoring Agreement, under which United Capital purchased Prithvi's invoices for services Prithvi provided to Ericsson. (Id. ¶ 12; UC Pretrial Statement ¶¶ 3(a)-(c), (i); 3/4/19 Baker Decl. ¶ 5, Ex. 1 (attaching the Factoring Agreement).) United Capital states that between March 11, 2013, and May 29, 2014, Ericsson paid $3, 418, 711.96 to United Capital in accordance with Prithvi's assignment of its accounts receivable to United Capital. (See 3/4/19 Baker Decl. ¶ 11.)

         In 2013, former Third-Party Defendant Kyko Global, Inc. (“Kyko”)[2] obtained a judgment against Prithvi. (UC Pretrial Statement ¶ 3(q).) On May 5, 2014, Kyko applied to King County Superior Court for a writ of garnishment to be issued to Ericsson. (Id. ¶ 3(r).) On May 6, 2014, Kyko served Ericsson with a writ of garnishment. (Id. ¶ 3(s).) On May 12, 2014, Ericsson answered the Writ of Garnishment stating that it was indebted to Prithvi in the amount of $189, 640.84. (Id. ¶ 3(u).) On June 12, 2014, the King County Superior Court entered judgment and ordered garnishee Ericsson to pay Kyko $189, 640.84, which Ericsson did. (See Id. ¶¶ 3(x), (y).)

         On November 24, 2014, United Capital filed the present suit against Ericsson. (See Compl. (Dkt. # 1).) Specifically, United Capital alleges that Ericsson owes United Capital $184, 539.50, which sum represents the total of 22 unpaid Prithvi invoices dated March 24, 2014, to May 2, 2014. (Id. ¶¶ 12-16.) United Capital's complaint seeks “judgment in the amount of $184, 539.50, together with prejudgment interest, costs and as may be allowed, reasonable attorney's fees.” (Id. at 6; see also Id. ¶ 16 (“Ericsson owes United [Capital] the sum of $189, 539.50 plus prejudgment interest at the rate prescribed by law.”); id. ¶ 18 (“To the extent the substantive laws of the [s]tate of Texas may apply to this claim, United [Capital] is entitled to be reimbursed for all of its attorney's fees incurred pursuant to Tx. Civ. Proc. & Rem. Statute 38.001.”).) In its response to Ericsson's present motion, however, United Capital argues that it is entitled to recover $189, 640.84, which is the sum that Ericsson paid to Kyko in the garnishment proceeding and approximately $5, 000.00 more than United Capital claimed in its complaint. (Resp. at 6.)

         Ericsson denies that it owes $184, 539.50 to United Capital. (See Am. Answer (Dkt. # 20) ¶ 15.) Ericsson pleaded affirmative defenses, including that it had paid the $189, 640.84 it owed to Prithvi via the garnishment proceeding. (Id. ¶ 23 & Counterclaim ¶ 6.) Ericsson also counterclaimed alleging that it had already paid United Capital more than $3, 000, 000.00, including overpayments while the writ of garnishment was pending. (Id. Counterclaim ¶¶ 8-9.)

         On June 18, 2015, Ericsson moved for summary judgment on United Capital's claim. (1st Ericsson MSJ (Dkt. # 52).) In support of that motion, Ericsson filed two declarations from employees calculating the amount that Ericsson paid to United Capital. (See 6/18/15 McCombs Decl. (Dkt. # 55); 6/18/15 Sanchez Decl. (Dkt. # 54).) Ericsson provided testimony that it paid $189, 640.84 in response to the writ of garnishment, and then continued paying on the same invoices after the garnishment because its accounting department inadvertently failed to create a “payment block” in its computer system for some of the invoices that Ericsson paid through the garnishment. (6/18/15 McCombs Decl. ¶ 6.) Ericsson further provided testimony and evidence indicating that it paid $82, 342.00 to United Capital's bank account following the May 5, 2014, garnishment. (See id.) Accordingly, Ericsson argues in its present motion that United Capital's maximum possible recovery against Ericsson is $107, 298.84 ($189, 640.84, presently claimed by United Capital (see Resp. at 6), minus $82, 342.00). (See MPSJ at 2.)

         On July 16, 2015, United Capital filed its own motion for summary judgment seeking resolution of its claim and Ericsson's counterclaim. (UC MSJ (Dkt. # 74).) In a supporting declaration, United Capital's Chief Financial Officer testified that Ericsson owed United Capital $182, 474.50 for the 22 invoices listed in the complaint. (7/16/15 Baker Decl. (Dkt. # 76) ¶ 25.) This is a different amount than the $184, 539.50 listed in United Capital's complaint. (Compare Id. with Compl. ¶¶ 12-16.) In its response to Ericsson's present motion for partial summary judgment, United Capital asserts that it is entitled to recover the entire $189, 640.84 that Ericsson paid to Kyko. (Resp. at 6.) However, United Capital also provides testimony that it made an inadvertent “scriveners error” in calculating the amount Ericsson allegedly owes and subsequently determined the Ericsson owes United Capital a total of $190, 566.30 for the 22 invoices listed in its complaint. (Id. (citing 3/4/19 Baker Decl. ¶ 32).) Thus, over the course of the litigation, United Capital has asserted at least four different amounts that Ericsson allegedly owes.

         On December 15, 2015, the court granted summary judgment in favor of Ericsson on United Capital's claim as well as on Ericsson's counterclaim. (12/15/15 SJ Order (Dkt. # 98).) In so ruling, the court determined as a preliminary matter that Washington law applies to this litigation:

[United Capital] argues that Texas law should apply to this dispute because it was the choice of law in the contract between Ericsson and Prithvi ..... However, this litigation is only tangentially related to the contract between Ericsson and Prithvi which was to be governed by Texas law and the UCC ..... Rather, this litigation pertains to [United Capital's] attempt to attack a garnishment judgment from King County Superior Court based on an assignment of rights that occurred in Washington from a Washington resident ..... Accordingly, the Court applies Washington law and the UCC.

(Id. at 4 (docket citations omitted).)

         United Capital appealed. (See Not. of App. (Dkt. # 123).) The Ninth Circuit reversed the district court's grant of summary judgment to Ericsson but affirmed the ...

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