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Ericsson Inc v. Corefirst Bank & Trust

United States District Court, D. Kansas

July 19, 2017

ERICSSON INC., Plaintiff,


          CARLOS MURGUIA United States District Judge

         This case arises out of a dispute over an overpayment of funds paid by plaintiff Ericsson, Inc. to Stutler Technologies (“Stutler”). Plaintiff remitted the mistaken overpayment into an account Stutler maintained with defendant Corefirst Bank & Trust, who then withdrew the funds from Stutler's account and applied them to an outstanding debt Stutler owed to defendant. Plaintiff now seeks restitution from defendant under equitable claims for money had and received and unjust enrichment.

         The matter is now before the court on the parties' competing motions for summary judgment. (Docs. 30, 31). Defendant argues it is entitled to summary judgment because it is a bona fide payee under Restatement (Third) of Restitution and Unjust Enrichment § 67. Plaintiff claims the affirmative defense does not apply to defendant and therefore it is entitled to summary judgment as there are no disputed issues of material fact. For the following reasons, the court finds the bona fide payee defense applies to defendant and therefore grants its motion for summary judgment.

         I. Factual Background

         The facts surrounding the dispute are largely uncontested. Stutler-who is not a party to this litigation-sold plaintiff's products and/or services and plaintiff paid Stutler commissions for its sales. These commission payments were deposited into a bank account Stutler maintained with defendant.Defendant was also a secured creditor of Stutler. Stutler was indebted to defendant on two loans and six company credit cards. These debts were secured via a Commercial Security Agreement executed by Stutler in August 2005. The Security Agreement provided a right of setoff that stated:

Lender reserves a right of setoff in all Grantor s accounts with Lender (whether checking savings or some other account) . . . Grantor authorizes Lender to the extent permitted by applicable law to charge or setoff all sums owing on the Indebtedness against any and all such accounts and at Lender s option to administratively freeze all such accounts to allow Lender to protect Lender s charge and setoff rights provided in this paragraph.

         (Doc. 32-6, at 1.) On December 26, 2013, plaintiff remitted an electronic payment into Stutler's Corefirst bank account in the amount of $217, 028.29. The following day, defendant withdrew $191, 623.49 from Stutler's bank account and applied it to outstanding debts that Stutler had with defendant, including two loans and six credit cards. This payment satisfied all but one of Stutler's debts. There is a dispute between the parties as to whether any Stutler representative authorized defendant to withdraw the funds from its account. Stutler's president testified he did not direct defendant to take the money from the bank account and was not aware of any other representative that may have authorized the transaction. In an affidavit, David S. Fricke, the Executive Vice-President and General Counsel of CoreFirst, testified that Stutler had “knowledge of, consented to, and directed Corefirst to withdraw $191, 623.49 from Stutler's bank account at CoreFirst and apply it to Stutler's indebtedness.” (Doc. 32-2, at 2.) Additionally, Darrel Dougan, Jr., Senior Vice President of CoreFirst, testified in an affidavit that he confirmed with a Stutler representative via telephone before withdrawing the funds from Stutler's account. (Doc. 36-3, at 1.)

         At some point after the transaction, plaintiff discovered it had overpaid Stutler by $122, 801.97.On March 3, 2014, Stutler notified defendant of the overpayment. Plaintiff made two written demands on both Stutler and defendant for the return of the mistaken overpayment. On June 9, 2014, plaintiff filed suit against Stutler in Texas state court for breach of contract, conversion, violation of the Texas Theft Liability Act, money had and received, and for attorney's fees. Defendant was not part of the Texas litigation. Plaintiff obtained a judgment against Stutler for the amount of the mistaken overpayment plus attorney's fees and post-judgment interest. Plaintiff filed the current action against defendant on December 1, 2015 to recover the same overpayment.

         II. Legal Standards

         Summary judgment is appropriate if the moving party demonstrates that there is “no genuine issue as to any material fact” and that it is “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). In making the summary judgment determination, the court must view the evidence and reasonable inferences in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). Ultimately, the court evaluates “whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

         III. Analysis

         Both plaintiff and defendant have moved for summary judgment arguing they are entitled to judgment as a matter of law. Plaintiff claims it is undisputed that defendant withdrew the overpayment from Stutler's account and that plaintiff is entitled to recover the overpayment under equitable theories of money had and received and unjust enrichment. Defendant maintains it is a bona fide payee under Restatement (Third) of Restitution and Unjust Enrichment § 67 and therefore owes no restitution to plaintiff. Plaintiff argues § 67 does not apply because plaintiff did not mistakenly pay the funds to defendant, rather, defendant “unilaterally seized” the funds from Stutler.

         At the outset, the court notes that the parties have stipulated that Kansas law applies in this case. Kansas law allows for recovery under equitable remedies of money had and received and unjust enrichment. In an action for money had and received, “the question . . . is to which party does the money, in equity, justice and law, belong.” Coppock v. J.C. Nichols Inv. Co., 69 P.2d 701, 702 (Kan. 1937). An action for money had and received “is the proper form of action for the recovery of money paid under a mistake of facts.” Blair v. Haas, 273 P. 400, 401 (Kan. 1929).

         Similarly, the theory of unjust enrichment lies “in a promise implied in law that one will restore to the person entitled thereto that which in equity and good conscience belongs to him [or her].” Haz-Mat Response, Inc., v. Certified Waste Servs. Ltd., 910 P.2d 839, 846 (Kan. 1996). The elements of a claim based on unjust enrichment are: 1) a benefit conferred upon the defendant by the plaintiff; 2) an appreciation or knowledge of the benefit by the defendant; and 3) the acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without payment of its value. Id. at 847. Citing the Restatement (First) of Restitution § 20, the court noted that it has long been established “that a person who pays an excessive amount of money to another under the ...

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