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Express Working Capital LLC v. One World Cuisine Group, LLC

United States District Court, N.D. Texas, Dallas Division

April 10, 2019

EXPRESS WORKING CAPITAL, LLC, Plaintiff,
v.
ONE WORLD CUISINE GROUP, LLC; MANRAJ, INC.; PAVAN RESTAURANT GROUP, INC.; SHALIMAR, INC.; MANPRIY A, INC, ; LIBBY'S MARKET, INC.; MELA GROUP, INC.; AMRIK SINGH PABLA; SURINDER SINGH; and JASWINDER SINGH PABLA, Defendants.

          FINDINGS, CONCLUSIONS, AND RECOMMENDATION

          IRMA CARRILLO RAMIREZ UNITED STATES MAGISTRATE JUDGE.

         By electronic order of reference dated May 18, 2018 (doc. 82), this case has been referred for full case management. Before the Court for recommendation is Plaintiff/Counter-Defendant's (1) Motion to Dismiss, (2) Motion for Default Judgment; and (3) Motion for Final Judgment and Brief in Support, filed September 26, 2018 (doc. 87). Based on the relevant filings, evidence, and applicable law, the motions should be GRANTED.

         I. BACKGROUND [1]

         On November 24, 2015, Express Working Capital, LLC (Plaintiff) filed this action against One World Cuisine Group, LLC (OWC), Manraj, Inc. (Manraj), Pavan Restaurant Group, Inc. (Pavan), Shalimar, Inc. (Shalimar), Manpriy A, Inc. (Manpriy), Libby's Market, Inc. (Libby's), Mela Group, Inc. (Mela), (collectively Makers), and Amrik Singh Pabla (Amrik), Surinder Singh (Surinder), [2] and Jaswinder Singh Pabla (Jaswinder) (collectively Guarantors). (doc. 1.) Its amended complaint asserts claims for breach of contract and promissory estoppel against all defendants, and a claim for fraud against the Mantra Group Corp. (Mantra) and Amrik.[3] (doc. 13 at 1, 9-11.)[4]

         Plaintiff's amended complaint alleges that on December 28, 2011, it entered into a Future Receivables Sale Agreement (FRSA) with Makers and various other entities to purchase future credit card receivables worth $1, 986, 897.74, for the price of $1, 439, 780.97 (2011 Agreement). (Id. at 6.) Guarantors assumed and guaranteed Makers' obligations under this agreement. (Id. at 6-7.) On August 24, 2012, Makers failed to meet the terms of the 2011 Agreement, and an outstanding balance of $498, 564.80 remained. (Id.) On August 29, 2012, “Plaintiff, Makers, and Guarantors negotiated a settlement and entered into a promissory note” that established a payment plan for the remaining outstanding balance on the 2011 Agreement (2012 Promissory Note). (Id. at 7.) In 2013, Makers subsequently “missed several payments and/or made multiple partial payments . . . in breach of the 2012 Note.” (Id.) On May 15, 2014, “Plaintiff, Makers, and Guarantors negotiated and entered into a new and superceding promissory note” for $965, 000 (2014 Promissory Note). (Id.) The 2014 Promissory Note had a maturity date of May 16, 2016, and required Makers to make 52 weekly payments of $6, 800.00 beginning on May 15, 2014, followed by weekly payments of $8, 200.00 until they paid the full amount owed. (Id.) The 2014 Promissory Note provided that in the event of a breach or default, interest on the unpaid amount left owing would accrue at a rate of 18%. (doc. 13-2 at 3.) “Makers consistently made partial payments despite their obligations under the 2014 Note and Plaintiff's demand for full payment, ” and failed to make any more payments after October 29, 2015. (doc. 13 at 8.) The outstanding balance remaining on the 2014 Promissory Note is $498, 564.80. (Id.) On October 7, 2014, Plaintiff entered into a new FRSA with Mantra to purchase future credit card receivables worth $93, 750.00, for $75, 000.00 (2014 Agreement). (Id.) Amrik unconditionally guaranteed Mantra's performance under this agreement, but Mantra failed to perform its obligations. (Id. at 8-9.) The outstanding balance under the 2014 Agreement is $88, 213.36. (Id. at 9.)

         On October 6, 2016, Amrik and Jaswinder separately filed identical pro se answers to Plaintiff's amended complaint, asserting usury as an affirmative defense to the claims for breach of the Agreements, and asserting counterclaims for usury and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). (docs. 37 at 1, 6-12; 38 at 1, 6-12.) On December 16, 2016, default was entered against Makers. (docs. 45; 49.) On June 15, 2017, Plaintiff filed its partial motion for summary judgment on its claims for breach of contract on the 2014 Promissory Note and 2014 Agreement, and on Defendants “affirmative defense of usury and counterclaims for usury and RICO violations.” (doc. 69 at 7-8, 13-30.) On September 4, 2018, Plaintiff was granted partial summary judgment and the counterclaims against it were dismissed. (doc. 85.)

         Currently remaining for trial are Plaintiff's fraud claim against Amrik, its breach of contract claim related to the 2011 Agreement, and its promissory estoppel claims. (See docs. 13; 85.)[5] On September 26, 2018, Plaintiff moved to dismiss these remaining claims and for default judgment against Makers. (See doc. 87.) None of the defendants responded to this motion, and it is now ripe for recommendation.

         II. MOTION TO DISMISS

         Plaintiff moves to dismiss its remaining fraud claim against Amrik, its breach of contract claim related to the 2011 Agreement, and its promissory estoppel claims. (doc. 87 at 3.) Although it does not specify any grounds for dismissal, the motion may be properly considered under Rule 41(a)(2) of the Federal Rules of Civil Procedure because two of the defendants, Amrik and Jaswinder, have answered, and Plaintiff has not filed a stipulation of dismissal signed by all parties who have appeared. See Fed. R. Civ. P. 41(a).

         Rule 41(a)(2) of the Federal Rules of Civil Procedure provides that after a defendant files either an answer or a motion for summary judgment, and if it does not consent to voluntary dismissal, an action may be dismissed on the plaintiff's request only by court order on terms it considers proper. Fed.R.Civ.P. 41(a)(2); In re FEMA Trailer Formaldahyde Products Liability, 628 F.3d 157, 162 (5th Cir. 2010); Hyde v. Hoffmann-La Roche, Inc., 511 F.3d 506, 509 (5th Cir. 2007); Elbaor v. Tripath Imaging, Inc., 279 F.3d 314, 320 (5th Cir. 2002). The decision whether an action should be dismissed under Rule 41(a)(2) is within the sound discretion of the court. Schwarz v. Folloder, 767 F.2d 125, 129 (5th. Cir. 1985) (citing La-Tex Supply Co. v. Fruehauf Trailer Division, 444 F.2d 1366, 1368 (5th Cir. 1971)). Notwithstanding this discretion, voluntary dismissals “should be freely granted unless the non-moving party will suffer some plain legal prejudice other than the mere prospect of a second lawsuit.” Elbaor, 279 F.3d at 317 (citing Manshack v. Southwestern Elec. Power Co., 915 F.2d 172, 174 (5th Cir. 1990)). The primary consideration is whether the non-movant would be prejudiced or unfairly affected. Id. at 317-18.

         Courts have found plain legal prejudice when the plaintiff moved to dismiss the case at a late stage of the proceedings after the parties had exerted significant time and effort, the plaintiff sought to avoid an imminent adverse ruling, or if dismissal would cause the defendant to be stripped of an otherwise available defense if the case were to be re-filed. See In re FEMA Trailer Formaldahyde Products Liab. Litig., 628 F.3d at 162-63; Hartford Acc. & Indem. Co. v. Costa Lines Cargo Lines Cargo Servs., Inc., 903 F.2d 352, 360 (5th Cir. 1990). In finding plain legal prejudice, courts have often noted a combination of these factors. See In re FEMA Trailer Formaldahyde Products Liab. Litig., 628 F.3d at 163 (affirming finding of prejudice based on the size and scope of a multiparty ligation where dismissal without prejudice was requested after trial date had been set for six months, it would require the court to re-align the parties, the re-alignment would almost surely add a different group of subsidiary defendants, the defendants would not be spared the continuing costs of legal defense because other plaintiffs remained, their investment in trial preparation would be wasted, and the other plaintiffs would be disadvantaged); U.S. ex rel. Doe v. Dow Chemical Co., 343 F.3d 325, 330 (5th Cir. 2003) (affirming a finding of prejudice where the plaintiff sought dismissal nine months after suit was filed, the parties had filed responsive pleadings, motions to compel, motions for expedited hearing, motions to dismiss, motions for oral arguments, and a motion for rehearing, the plaintiff's case could be construed as having been substantially weakened when the United States declined to intervene, and counsel had been sanctioned by the district court for failure to participate in the discovery process); Davis v. Huskipower Outdoor Equip. Corp., 936 F.2d 193, 199 (5th Cir.1991) (affirming finding of prejudice where motion to dismiss was filed after a year had passed since removal of the case, the parties had spent months filing pleadings, attending conferences, and submitting memoranda, and a magistrate judge had issued a recommendation adverse to the moving party's position); Hartford Acc. & Indem. Co., 903 F.2d at 360 (affirming finding of prejudice where dismissal was requested nearly ten months after removal of action, hearings had been conducted on various issues, significant discovery had occurred, a defendant had already been granted summary judgment, and a jury trial had been set for the remaining defendants); compare John M. Crawley, L.L.C. v. Trans-Net, Inc., 394 Fed.Appx. 76, 79 (5th Cir. 2010) (finding no prejudice where only seven months had elapsed between removal and the motion to dismiss, no dispositive motions had been filed, and depositions had not begun).

         In this case, none of the defendants have responded to Plaintiff's motion or alleged that they would be prejudiced or unfairly affected by a dismissal of its remaining claims after almost three years of litigation. Plaintiff filed this motion “to resolve each outstanding issue” remaining in this case and obtain a final judgment, not to avoid any imminent adverse ruling, and none of the defendants have filed any motions that would result in an adverse ruling against Plaintiff. While two of the defendants, Amrik and Jaswinder, have expended some time and effort to defend this case, the other defendants have not, and the facts in this case do not rise to same level of time and effort exerted in those cases where plain legal prejudice has been found. There is also no evidence of significant expenses that the defendants incurred during the discovery process or litigation. Nor is there any allegation that they would be deprived of any defense. No. plain legal prejudice to the defendants has been shown or is apparent under the circumstances, other than the mere prospect of a second lawsuit, and the voluntary dismissal of Plaintiff's remaining fraud claim against Amrik, breach of contract claim related to the 2011 Agreement, and promissory estoppel claims should be freely granted. Accordingly, these remaining claims should be dismissed without prejudice as to all defendants except for Surinder.[6]

         III. MOTION FOR ...


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