United States District Court, W.D. Washington, Seattle
MOBILIZATION FUNDING, LLC, a South Carolina limited liability company, Plaintiff,
HALVORSON CONSTRUCTION GROUP, LLC; a Washington limited liability company; and CEC ELECTRICAL CONTRACTING, LLC, a Washington limited liability company, Defendants. HALVORSON CONSTRUCTION GROUP, LLC; a Washington limited liability company, Third Party Plaintiff,
JOHN and JANE DOE CHASE, individually and the marital community comprised thereof, Third Party Defendants.
ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL
Richard A. Jones, United States District Judge
Honorable Richard A. Jones This matter comes before the Court
on Plaintiff Mobilization Funding’s Motion for Partial
Summary Judgment (Dkt. #10). For the reasons stated below,
the Court DENIES the Motion.
Mobilization Funding (“Plaintiff” or
“Mobilization Funding”) is a South Carolina-based
company that provides startup financing to construction
subcontractors. Dkt. # 10 at 2. Defendant CEC Electrical
Contracting, LLC (“CEC”) is a Washington-based
electrical subcontractor that was retained by Defendant
Halvorson Construction Group, LLC (“Halvorson”)
to perform electrical work for three of Halvorson’s
construction projects (the “Halvorson projects”).
Dkt. # 1 at ¶¶ 8-10.
2017, Mobilization Funding agreed to advance CEC funds in
connection with its work on the three Halvorson projects.
Dkt. # 10 at 2. On May 10, 2017, CEC executed a promissory
note in favor of Mobilization Funding in the amount of $1,
904, 761.91. Dkt. # 1 at ¶ 21; Dkt. # 11, Ex. D. As
security for the loan, CEC also executed a security
agreement, granting Mobilization Funding a security interest
in all of CEC’s personal property and accounts. Dkt. #
11, Ex. E. The security agreement specifically identifies
CEC’s “contracts receivable” for the three
Halvorson contracts as part of the collateral. Id.
CEC and Mobilization Funding also notified Halvorson of
Mobilization Funding’s security interest and on May 15,
2017, the three parties executed a “Directive of Funds
for CEC Electrical Contracting, Inc.” (the
“Directive of Funds”), in which Halvorson agreed
to pay CEC’s receivables from the Halvorson projects
directly to Mobilization Funding. Dkt. # 11, Ex. G. On
October 17, 2017, Mobilization Funding also filed a UCC-1
financing statement with the Washington Department of
Licensing identifying CEC as the debtor and describing the
aforementioned collateral. Dkt. # 11, Ex. F.
on the projects progressed, Halvorson became aware that CEC
was not paying its vendors, suppliers, and employees. Dkt.
#17 at ¶ 6. As a result, in February 2018, Halvorson
advanced $65, 000 to CEC to allow it to pay its employees.
Id. During the course of CEC’s contract,
Halvorson also made other “advances to CEC to allow CEC
to meet its payroll obligations.” Dkt. # 17 at
¶¶ 22-23. Around the same time, Mobilization
Funding agreed to advance CEC additional funds and on March
27, 2018, CEC executed a second promissory note in the amount
of $908, 705.47 in exchange for the loan. Dkt. # 11, Ex. H.
CEC again executed a security agreement granting Mobilization
Funding a security interest in CEC’s “contract
receivables” for the three Halvorson projects. Dkt. #
11, Ex. I.
March 2018, the parties also modified the Directive of Funds,
authorizing Halvorson to divert $130, 000 of Mobilization
Funding’s collateral to Halvorson for the
“payroll Halvorson funded to CEC . . . .” Dkt. #
11, Ex. J. According to Mobilization Funding, Halvorson
“did not stop” with the initial $130, 000 and
continued to divert “significant amounts (likely
hundreds of thousands of dollars) of CEC’s
receivables” to repay its “own unsecured
loans.” Dkt. # 10 at 5; Dkt. 11 at ¶ 11. On June
20, 2018, Halvorson terminated its contract with CEC because
of CEC’s ongoing default. Dkt. # 11 at ¶ 11; Dkt.
# 17 at ¶ 20. Halvorson informed Mobilization Funding of
its decision and engaged new electrical subcontractors to
complete the work CEC was originally contracted to perform.
Dkt. # 17 at ¶¶ 20-21.
September 25, 2018, Plaintiff brought suit against CEC and
Halvorson alleging, among other things, conversion, replevin,
and fraud and requesting a declaratory judgment regarding
Mobilization Funding’s priority over CEC’s
contract receivables. Dkt. #1. On January 24, 2019, Plaintiff
moved for partial summary judgment on the discrete issue as
to whether its perfected security interest has priority over
any claim Halvorson may make to CEC’s account
receivables. Dkt. # 10.
judgment is appropriate if there is no genuine dispute as to
any material fact and the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving
party bears the initial burden of demonstrating the absence
of a genuine issue of material fact. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Where the moving
party will have the burden of proof at trial, it must
affirmatively demonstrate that no reasonable trier of fact
could find other than for the moving party. Soremekun v.
Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir.
2007). On an issue where the nonmoving party will bear the
burden of proof at trial, the moving party can prevail merely
by pointing out to the district court that there is an
absence of evidence to support the non-moving party’s
case. Celotex Corp., 477 U.S. at 325. If the moving
party meets the initial burden, the opposing party must set
forth specific facts showing that there is a genuine issue of
fact for trial in order to defeat the motion. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court
must view the evidence in the light most favorable to the
nonmoving party and draw all reasonable inferences in that
party’s favor. Reeves v. Sanderson Plumbing
Prods., 530 U.S. 133, 150-51 (2000).
the court need not, and will not, “scour the record in
search of a genuine issue of triable fact.” Keenan
v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996); see
also White v. McDonnell-Douglas Corp., 904 F.2d 456, 458
(8th Cir. 1990) (the court need not “speculate on which
portion of the record the nonmoving party relies, nor is it
obliged to wade through and search the entire record for some
specific facts that might support the nonmoving party’s
claim”). The opposing party must present significant
and probative evidence to support its claim or defense.
Intel Corp. v. Hartford Accident & Indem. Co.,
952 F.2d 1551, 1558 (9th Cir. 1991).
motion for summary judgment, Plaintiff argues that there is
no genuine issue of material fact as to Plaintiff’s
priority over CEC’s receivables. Dkt. #10 at 3.
Specifically, Plaintiff contends that it has a perfected
security interest and because it is the only party with a
perfected security interest, it has priority over any claim
Halvorson may make as to CEC’s receivables from the
Halvorson contracts. Id.
Court must first consider whether Mobilization Funding has a
perfected security interest. Under the Washington Uniform
Commercial Code, “a security interest attaches to
collateral when it becomes enforceable against the debtor
with respect to the collateral . . . .” RCW 62A.9A-203.
A security interest is enforceable if: (1) value is given,
(2) the debtor has a right in the collateral or power to