1

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

GLOBALTRANZ ENTERPRISES,

INC.,

Plaintiff,

v. 

PNC BANK, N.A.,

Defendant.

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) C.A. No. N19C-09-144 MAA

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Submitted: February 21, 2020

Decided: June 25, 2020

Upon Defendant PNC Bank, National Association's 

Motion to Dismiss Plaintiff’s Complaint: 

Granted

MEMORANDUM OPINION

Sabrina M. Hendershot, Esq. and Donna L. Culver, Esq., MORRIS NICHOLS 

ARSHT & TUNNELL LLP, Wilmington, Delaware, Anthony J. Dutra, Esq. and

Neal L. Wolf, Esq., HANSON BRIDGETT LLP, San Francisco, California, 

Attorneys for Plaintiff.

Jose F. Bibiloni, Esq., BLANK ROME LLP, Wilmington, Delaware,John E. Lucian, 

Esq., BLANK ROME LLP, Philadelphia, Pennsylvania, Attorneys for Defendant.

Adams, J.
2

Pending before the Court is PNC Bank, N.A.’s (“PNC”) Motion to Dismiss 

the Complaint. The Motion requires the Court to examine whether California law 

allows unjust enrichment claims by unsecured creditors against secured creditors 

under the particular circumstances presented here. For the reasons stated herein, the 

Court finds that Plaintiff GlobalTranz, Inc. (“GlobalTranz”) has failed to state a 

claim for unjust enrichment under California substantive law. The Court will, 

therefore, grant PNC’s Motion to Dismiss.

Facts and Procedural Background

Unless otherwise stated, the Court accepts as true the following facts alleged 

in the Complaint for the purpose of reviewing the Motion to Dismiss under Rule 

12(b)(6).1 Plaintiff GlobalTranz is a freight brokerage company incorporated in 

Delaware. Defendant PNC is also incorporated in Delaware. Kraco Enterprises, 

LLC (“Kraco”), a now-defunct Illinois automobile accessory company

headquartered in California, was one of GlobalTranz’s customers from December 

2015 until Kraco’s breakup in 2018. PNC was one of Kraco’s secured creditors 

during the time GlobalTranz provided services to Kraco. 

GlobalTranz contracted with various freight carriers to transport and deliver 

Kraco’s products from Kraco’s facilities in California to distributors that purchased 

 

1 See Bowden v. Pinnacle Rehabilitation and Health Center, 2015 WL 1733753, at 

*1 (Del. Super. April 8, 2015); Stayton v. Clariant Corp., 10 A.3d 597, 601 (Del. 

2010).
3

the products from Kraco. GlobalTranz paid the underlying freight carriers directly 

and billed Kraco for these services. GlobalTranz provided Kraco about $800,000 

in contracted services between January 1, 2018 and May 2, 2018. GlobalTranz 

alleges that it has not been paid for these services. 

GlobalTranz alleges that PNC was spearheading the corporate liquidation and 

breakup of Kraco in early 2018 without GlobalTranz’s knowledge. GlobalTranz 

further alleges that PNC received tens of millions of dollars in proceeds either by 

diverting payments made to Kraco by distributors on shipments brokered by 

GlobalTranz or by retaining the proceeds when Kraco’s assets were sold off, 

depriving Kraco’s ability to pay for the services GlobalTranz performed during the 

liquidation. These services allegedly were “essential” to the liquidation and 

provided revenue from which PNC paid itself to GlobalTranz’s detriment. 

From January 1, 2018 through May 2, 2018, PNC “knew or should have 

known” that GlobalTranz was providing freight brokerage services to Kraco. PNC 

also “knew or should have known” that Kraco’s values upon liquidation would be 

higher if GlobalTranz provided those services, and even higher if Kraco did not pay 

GlobalTranz for the services. PNC “acquiesced” in GlobalTranz’s provision of 

those services to Kraco and/or “encouraged” Kraco to obtain services from 

GlobalTranz, without disclosing the poor financial condition of Kraco. If PNC had 

foreclosed on its security interest prior to or during the time that GlobalTranz was 
4

providing services to Kraco, PNC would have had to incur these expenses itself. 

GlobalTranz was the “unwitting conduit” by which PNC generated cash flow to pay 

itself to GlobalTranz’s detriment. 

GlobalTranz alleges that because PNC obtained the proceeds from Kraco’s 

liquidation and breakup, PNC knowingly accepted the benefit of GlobalTranz’s 

services and is obligated to pay for those services in order to “avoid injustice.” 

According to GlobalTranz, an implied-in-law contract existed between PNC and 

GlobalTranz, under which GlobalTranz performed all of its obligations. The 

services GlobalTranz provided substantially benefitted PNC to GlobalTranz’s 

detriment. GlobalTranz alleges that PNC breached the implied-in-law contract by 

not paying GlobalTranz for its services. GlobalTranz alleges damages in the amount 

equal to the value of the services provided to Kraco between January 1, 2018 and 

May 2, 2018.

GlobalTranz filed the Complaint on September 16, 2019 against PNC Bank, 

N.A. (“PNC”) alleging breach of an implied covenant and unjust enrichment. PNC 

filed its Motion to Dismiss on October 30, 2019 pursuant to Delaware Superior Court 

Civil Rule 12(b)(6) for failure to state a claim, arguing that an unsecured creditor 

cannot assert a claim for unjust enrichment against a secured creditor. The Court 

held oral argument on the pending Motion to Dismiss on February 21, 2020.
5

Analysis2

I. California substantive law applies to the present action. 

The Court must now determine the appropriate choice of law.3 The first step 

in Delaware’s conflict of law analysis is to determine whether there is an actual 

conflict.4 In making this determination, “Delaware state courts answer a single and 

simple query: does the application of the competing laws yield the same result?”

5

 

PNC argues that the Court does not need to make a choice of law 

determination in this case because there is no actual conflict between the unjust 

enrichment elements under Delaware law and California law. The key issue here, 

however, is the relationship between unjust enrichment and UCC Article 9. 

 

2 Although not raised in briefing on the Motion to Dismiss, during oral argument, 

the parties made arguments regarding whether this Court had subject matter 

jurisdiction for GlobalTranz’s unjust enrichment claim. The Court finds that it has 

subject matter jurisdiction for the claims made in this action because GlobalTranz is 

seeking compensatory monetary damages only. Prospect Street Energy, LLC v. 

Bhargava, 2016 WL 446202, at *8 (Del. Super. Jan. 27, 2016). See also Grace v. 

Morgan, 2004 WL 26858, at *3 (Del. Super. Jan. 6, 2004) (holding that the Superior 

Court has subject matter jurisdiction over unjust enrichment claims when a plaintiff 

only seeks “money damages in order to be made whole”).

3 See Landis v. Science Management Corp., 1991 WL 19848, at *3 (Del. Ch. Feb. 

15, 1991) (citing Hurst v. General Dynamics Corp., 583 A.2d 1334 (Del. Ch. 1990)); 

Pharmathenes, Inc. v. Siga Technologies, Inc., 2008 WL 151855, at *6 (Del. Ch. 

Jan. 16, 2008) (citing Travelers Indem. Co. v. Lake, 594 A.2d 38, 47 (Del. 1991); 

Nat’l Acceptance Co. of Cal. v. Mark S. Hurm., M.D., P.A., 1989 WL 70953, at *2 

(Del. Super. June 16, 1989)). See Restatement (Second) of Conflicts of Laws §§ 6, 

221.

4 Caballero v. Ford Motor Company, 2014 WL 2900959, at *2 (Del. Super. June 24, 

2014).

5

Id.
6

California law provides certain exceptions from the general rule of its Article 9 

priority scheme. GlobalTranz alleges that its claim against PNC falls under these 

exceptions that allow an unsecured creditor to bring an unjust enrichment claim 

against a secured creditor. 

At oral argument, counsel for PNC suggested that “the reason there is a dearth 

of [Delaware] case law that preempts the Uniform Commercial Code, it is because 

the Uniform Commercial Code is a comprehensive statutory scheme that’s designed 

to allow credit markets to operate smoothly without interference from claims of 

junior or subordinate creditors like the plaintiff.”6 Delaware law, unlike California 

law, does not provide a framework under which an unsecured creditor may pursue 

an unjust enrichment claim against a secured creditor. The differences in how each 

jurisdiction handles unjust enrichment claims under the circumstances presented 

here is sufficient to result in different outcomes depending on which jurisdiction’s 

substantive law applies. Therefore, the Court finds that an actual conflict exists and 

will complete a conflict of law analysis.

Delaware courts apply the “most significant relationship” test in determining 

which jurisdiction’s substantive law to apply.7 The Restatement (Second) of 

 

6 Tr. 10:20–11:4.

7 Landis, 1991 WL 19848, at *3 (citing Hurst, 583 A.2d 1334); Pharmathenes, 2008 

WL 151855, at *6 (citing Travelers Indem. Co. v. Lake, 594 A.2d 38, 47 (Del. 1991); 

Nat’l Acceptance Co, 1989 WL 70953, at *2). See Restatement (Second) of 

Conflicts of Laws §§ 6, 221.
7

Conflicts of Laws § 221 sets forth the factors to consider in making this 

determination in an unjust enrichment case:

(a) the place where a relationship between the parties was centered, 

provided that the receipt of enrichment was substantially related 

to the relationship,

(b) the place where the benefit or enrichment was received,

(c) the place where the act conferring the benefit or enrichment was 

done,

(d) the domicil residence, nationality, place of incorporation and 

place of business of the parties, and

(e) the place where a physical thing, such as land or chattel, which 

was substantially related to the enrichment, was situated at the 

time of the enrichment.8

The relationship between GlobalTranz and PNC stems from their dealings 

with Kraco. This involved GlobalTranz’s provision of transportation of products 

from Kraco facilities in California to distributors, which GlobalTranz alleges was 

for PNC’s benefit because these are services PNC would have had to arrange and 

pay for itself in order to complete the liquidation. The first factor weighs in favor of 

applying California law because California is the “place where the relationship 

between [PNC and GlobalTranz] was centered.” The second and third factors also 

weigh in favor of applying California law for the same reasons. The place “where 

the act conferring the benefit or enrichment” was California, where GlobalTranz 

provided its transportation services. The benefit was also received in California, 

 

8 Restatement (Second) of Conflicts of Laws § 221.
8

where the products were transported from Kraco facilities and where PNC liquidated 

Kraco. 

The only factor that does not weigh in favor of applying California substantive 

law is the fourth factor. Kraco is not a party to this action and the fact that it was 

headquartered in California has no bearing on the analysis of this factor. 

GlobalTranz and PNC are both incorporated in Delaware. GlobalTranz’s principal 

place of business is in Arizona. PNC’s principal place of business is in 

Pennsylvania. This factor weighs most in favor of applying Delaware substantive 

law.

The fifth factor, “the place where a physical thing [...] was situated at the time 

of the enrichment,” weighs in favor of applying California law. As discussed, 

GlobalTranz alleges that the unjust enrichment occurred when it provided 

transportation services for Kraco products from Kraco’s California facilities. The 

“physical thing[s]” in this case are the automobile accessory products GlobalTranz 

was transporting, which were located in California at the time the services were 

provided, which is when GlobalTranz alleges the enrichment occurred.

In consideration of the factors under the Restatement (Second) Conflicts of 

Law § 221, the Court will apply California substantive law to this matter.
9

II. GlobalTranz fails to state a claim for unjust enrichment under California 

substantive law.

A. Delaware Superior Court Civil Rule 12(b)(6)

On a motion to dismiss under Delaware Superior Court Civil Rule 12(b)(6), 

the Court “will accept all well-pleaded factual allegations in the complaint as true, 

and will accept even vague allegations as ‘well-pleaded’ if they provide defendants 

notice of a claim.”9 The Court “will draw all reasonable inferences in favor of the 

plaintiff” and will deny the motion “unless the plaintiff could not recover under any 

reasonably conceivable set of circumstances susceptible of proof.”10

The Court, however, is only required to accept “those reasonable inferences 

that logically flow from the face of the complaint” and not “every strained 

interpretation of the allegations proposed by the plaintiff.”11 The Court also will not 

accept as true conclusory statements unsupported by specific factual allegations.12 

B. Unjust Enrichment Under California Law

The elements of unjust enrichment under California law are the “receipt of a 

benefit and unjust retention of the benefit at the expense of another.”13 The benefit 

 

9 Central Mortg. Co. v. Morgan Stanley Mortg. Capital Holdings, LLC, 27 A.3d 531, 

536 (Del. 2011).

10 Id.

11 In re General Motors (Hughes) Shareholder Litig., 897 A.2d 162, 168 (Del. 2006) 

(internal citations omitted).

12 Id.

13 Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc., 29 Cal. App. 5th 230, 

238 (2018) (citing Lectrodryer v. Seoulbank, 77 Cal. App. 4th 723, 726 (2000)). 
10

“may take any form, direct or indirect. It may consist of services as well as property. 

A saved expenditure or a discharged obligation is no less beneficial to the recipient 

than a direct transfer.”14

PNC argues that any benefit it derived from GlobalTranz’s services to Kraco 

was not “unjust” because PNC was a secured creditor of Kraco under California’s 

version of UCC Article 9. GlobalTranz alleges that its claim falls under the 

exceptions under California law allowing for an unsecured creditor to pursue an 

unjust enrichment claim against a secured creditor. 

The exceptions under California’s UCC Article 9 priority scheme are quite 

narrow. The Supreme Court of California has not yet ruled on the issue of whether 

California permits unjust enrichment claims by unsecured creditors against secured 

creditors. The California Court of Appeal, however, has recognized unjust 

enrichment claims brought by unsecured creditors against secured creditors since the 

late 1980’s when the court decided Producers Cotton Oil Co. v. Amstar Corp.

15

 

 

Although there appears to be some confusion and disagreement as to whether in 

California a court may recognize a claim for unjust enrichment as a separate cause 

of action, see Nordberg v. Trilegiant Corp., 445 F.Supp.1082, 1100 (N.D. Cal. 

2006), SewChez Int’l Ltd. v. CIT Group/Commercial Services, Inc., 2007 WL 

9753114, at *7 (C.D. Cal. Sept. 20, 2007), defendant PNC makes no attempt to 

challenge the existence of such a claim, but rather challenges its applicability to the 

facts of this case.

14 Professional Tax Appeal, 29 Cal. App. 5th at 238 (quoting Restatement (Third) 

Restitution and Unjust Enrichment, § 1, comm. d, p. 7).

15 197 Cal. App. 3d 638, 242 Cal. Rptr. 914 (1988).
11

In order to overcome California’s Article 9 priority scheme, a plaintiff must 

show “something more” than gain to the secured creditor.

16 This “something more”

only occurs under “unusual circumstances.”

17

 Plaintiff is required to show these 

unusual circumstances are present because of either: (1) certain conduct by the 

secured creditor in relation to the transaction; or (2) the nature of the unsecured 

creditor’s contribution to the collateral, such as the preservation of perishable food 

products.

18 A review of the applicable case law interpreting these limited exceptions 

is helpful to put GlobalTranz’s claim in context.

In Producers Cotton, the California Court of Appeal held that “when a party 

possessing a security interest in a crop and its proceeds has knowledge of and 

acquiesces in expenditures made which are necessary to the development of the 

crop, and ultimately benefits from the expenditures, a party who, through mistake, 

pays such costs without first obtaining subordination, is entitled to recover.”19 The 

main issue in the present case is the application of Producers Cotton and its progeny 

to the facts alleged in the Complaint. PNC argues that the holding in Producers 

Cotton is limited to agricultural contexts involving perishable crops. GlobalTranz 

 

16 Knox v. Phoenix Leasing, Inc., 29 Cal. App. 4th 1357, 1365, 35 Cal. Rptr.2d 141 

(1994).

17 Knox, 29 Cal. App. 4th at 1359.

18 Id. at 1365.

19 Producers Cotton, 197 Cal. App. 3d at 660. 
12

argues that California law does not specify such a limitation and that the present case 

is not distinguishable from Producers Cotton on that point. 

Soon after the decision in Producers Cotton, the Supreme Court of Colorado 

in Ninth District Production Credit Ass’n v. Ed Duggan, Inc.20 addressed the issue 

of “whether a creditor that holds a perfected security interest in collateral can be held 

liable to an unsecured creditor based on a theory of unjust enrichment for benefits 

that enhance the value of the collateral.”

21 Duggan also involved the agriculture 

business, where Ed Duggan, Inc., an unsecured creditor of a failing cattle feedlot 

business, sued Ninth District Production Credit Association, a creditor with a 

security interest in the proceeds of the feedlot’s accounts receivable, for 

compensation for corn delivered to the feedlot business.22 

The Duggan court surveyed case law from throughout the country, including 

Producers Cotton, and found that, with regard to the applicability of unjust 

enrichment in security interest cases, “this question cannot be answered 

categorically.”23 The court noted a common thread in the cases it reviewed in which 

the unjust enrichment claims were unsuccessful. “In each, the secured creditor had 

no more than general knowledge that an unsecured creditor was supplying goods to 

 

20 821 P.2d 788 (Colo. 1991).

21 Id. at 793.

22 Id. at 790.

23 Id.
13

the debtor.”24 “There were no facts to indicate that the secured creditor initiated or 

encouraged the transaction by which the unsecured creditor enhanced the value of 

the secured collateral when the unsecured creditor supplied goods or services to the 

debtor.”25 

Importantly, the Duggan court recognized that the central point of distinction 

was “the extent to which the secured creditor was involved in the transaction by 

which the unsecured creditor supplied goods or services that enhanced the value of 

the secured collateral.”26 When a secured creditor does not itself initiate or 

encourage the transaction creating the unsecured obligation giving rise to the unjust 

enrichment claim, such a claim “cannot be supported.”27 The Duggan court held 

that there was sufficient evidence regarding the secured creditor’s “active role in 

creating a perception that the corn would be paid for, its failure to inform the parties 

otherwise, and the need for the corn to feed the cattle in order to produce accounts 

receivable subject to [its] security interest.”28 

 

24 Id.

25 Id. at 796

26 Id. at 797.

27 Id. at 797. Subsequent cases indicate that a plaintiff is not required to allege 

wrongdoing in order to show that a defendant initiated or encouraged the transaction. 

See Frontier Station, Inc. v. Kloiber Real Estate Holdings, LLC, 2019 WL 4643683 

(D. Colo. Aug. 12, 2019); Bluebonnet Warehouse Co-op v. Bankers Trust Co., 89 

F.3d 292 (6th Cir. 1996).

28 Duggan, 821 P.2d at 798.
14

In Knox v. Phoenix Leasing Inc.,

29 the California Court of Appeal reaffirmed 

the availability of unjust enrichment claims against secured creditors under certain 

limited circumstances. In Knox, the seller of wine barrels brought an action for 

restitution against the buyer’s secured creditor. Although the Knox court 

acknowledged the availability of a remedy of unjust enrichment, the court noted that 

“[r]ecovery is clearly the exception, not the norm, and is subject to stern 

limitations.”30

The Knox court began its analysis by noting that because Article 9 establishes 

a comprehensive scheme to afford “maximum protection to the secured creditor who 

has followed its provisions,” a secured creditor “which has complied with all 

relevant code requirements to perfect its security interest, should therefore start with 

something like a presumption in its favor.”31 The court recognized that “victory for 

a secured creditor is not an immutable law of nature;” however, “something more” 

than mere gain to the secured creditor “is required to displace the creditor’s favored 

position.”32 This “something more” will only occur under “unusual circumstances” 

and “is either conduct by the secured creditor or the nature of the unsecured 

 

29 Knox, 29 Cal. App. 4th at 1357.

30 Id. at 1361.

31 Id. at 1364.

32 Id. at 1365. In other words, “Simply pointing to the benefit realized by the secured 

creditor will not suffice.” Id. at 1360, 1365.
15

creditor’s contribution to the collateral.”33 Under the reasoning in Knox, the Court 

should look to whether the secured creditor had an “active hand” in promoting the 

transaction in question.34 

The Knox court also recognized the unusual circumstances regarding 

collateral that is perishable and why those circumstances could support a claim for 

unjust enrichment against a secured creditor.35 “When an unsecured creditor 

provides goods or services that are necessary to preserve the collateral, this is an 

expense the secured creditor would ordinarily incur as part of the duty to use 

‘reasonable care in the custody and preservation of collateral in his possession.’”36

In such a case – like in Producers Cotton and Duggan – “the unsecured status of the 

creditor appears less important than the fact that the secured creditor directly benefits 

from expenditures the creditor is spared having to make on its own behalf.”37 On 

the other hand, “[m]atters become less clear when the unsecured creditor’s 

expenditures are not essential but merely useful, in the sense that the collateral 

available for liquidation is being increased.”38 

 

33 Id. at 1365.

34 Id.

35 Id. at 1366.

36 Id.

37 Id.

38 Id.
16

Taking all of this into account and finding that Phoenix’s conduct did not 

amount to fraud, the court looked to other allegations to see if they could fit within 

the unjust enrichment framework.39 The court noted that the contract for wine 

barrels was between Knox and the failed business (Domaine), the contract made no 

reference to Phoenix and it was executed prior to the Domaine-Phoenix relationship. 

The wine barrels were ordered by Domaine, shipped to Domaine and Knox initially 

looked to Domaine for payment. Moreover, the fact that Knox paid for the first 

shipment with a check from Phoenix did not establish that Phoenix encouraged the 

deal. 

The court further found that the barrels provided by Knox “were not necessary 

to preserve the collateral covered by Phoenix’s security interest in Domaine’s ‘after 

acquired’ property. The mere fact that the secured collateral was enhanced by the 

addition of the barrels [did] not support liability in these circumstances.”40 The 

court, therefore, found that the plaintiff did not state a claim for unjust enrichment. 

As the court held, while common sense would ordinarily dictate that because “Knox 

provided barrels; Phoenix ended up with the barrels[,] Phoenix should therefore pay 

Knox for their value [...] Article 9...compels a different conclusion.”41 “Phoenix

 

39 Id. at 1367.

40 Id. at 1368.

41 Id. 
17

complied with statutory provisions intended to immunize secured creditors from 

such claims in all but the rarest of cases.”42

The United States District Courts for the Eastern District and Central District 

of California have also addressed the interaction between unjust enrichment and the 

Article 9 priority scheme in Starlite Development v. Textron43 and SewChez Int’l 

Ltd. v. CIT Group/Commercial Services, Inc.,

44 respectively. Although both cases 

are unpublished and are not binding precedent on California substantive law, they

are persuasive authority and inform the Court’s analysis in the present case.45

In SewChez, the United States District Court for the Central District of 

California held that, while California law acknowledges “the possibility of claims 

for unjust enrichment against a secured creditor by an unsecured creditor when the 

unsecured creditor ‘provides goods or services that are necessary to preserve the 

 

42 Id. See also Atascadero Factory Outlets, Inc. v. Augustini & Wheeler LLP, 83 

Cal. App. 4th 717, 721, 99 Cal.Rptr.2d 911(2000) (affirming the narrow application 

of unjust enrichment to the UCC priority scheme, and that it only applies in 

“exceptional situations” and “[w]here a secured creditor does not itself initiate or 

encourage the transaction that creates the unsecured obligation giving rise to the 

unjust enrichment claim, retention of any benefit realized by the secured creditor 

without compensating the supplier is not unjust.”) (quoting Duggan, 821 P.2d at 

797).

43 2008 WL 2705395 (E. D. Cal. July 8, 2008).

44 2007 WL 9753114 (C. D. Cal. Sept. 20, 2007).

45 Under California law, “[w]hile unpublished opinions from the court of appeal or 

superior court appellate division may not be cited or relied upon, unpublished federal 

cases ‘are citable as persuasive, although not precedential, authority.’” Martinez v. 

California Pizza Kitchen, 30 Cal. App. 5th Supp. 14, 20 (2018) (citing Pacific Shore 

Funding v. Lozo (2006) 138 Cal. App. 4th 1342, 1352).
18

collateral,” this was inapplicable to the case before the court.46 The plaintiff, a 

Taiwanese manufacturer of swimwear, sold swimwear and related items to a 

company named Beach Patrol, Inc. on an open book account basis.47 By July 2004, 

Beach Patrol owed SewChez nearly six million dollars and SewChez, therefore,

insisted that all future shipments of goods to Beach Patrol be paid by letter of credit.48 

The defendant, CIT Group/Commercial Services, Inc., Beach Patrol’s lender, 

obtained letters of credit for Beach Patrol from co-defendant JPMorgan Chase Bank, 

N.A.49 Chase and CIT initially paid SewChez when SewChez presented late or 

discrepant documents, but then subsequently refused to waive discrepancies in 

documents ultimately submitted in connection with three letters of credit.50 In total, 

SewChez was denied payment on nearly two million dollars of goods shipped to 

Beach Patrol.51 SewChez brought claims for, among other things, unjust 

enrichment.52

The court found that “plaintiff’s shipment of goods [did not] in any way 

preserve[] CIT’s secured interest in Beach Patrol’s inventory. Beach Patrol’s 

 

46 SewChez, 2007 WL 9753114, at *8 (C.D. Cal. Sept. 20, 2007) (citing Knox, 29 

Cal. App. 4th at 722).

47 Id. at *1.

48 Id.

49 Id.

50 Id.

51 Id.

52 Id. at *7. 
19

inventory was not perishable in the manner of foodstuffs, for instance. Hence,

Plaintiff’s actions were in no way necessary to prevent the expiration of Beach 

Patrol’s inventory. Instead, Plaintiff’s shipments merely augmented the inventory 

of goods already held by Beach Patrol.”53 Although not discussed in the SewChez

court’s analysis, it is important to note that the plaintiff also did not present any facts 

indicating conduct by the defendant that would bring the circumstances of the case 

under the reasoning in Knox.

54

In Starlite, the United States District Court for the Eastern District of 

California found that the unsecured-creditor plaintiff, Starlite Development, which

sold calendars to Turner Company, sufficiently stated a claim for unjust 

enrichment.55 Turner Company eventually stopped paying for the calendars it had 

already ordered.56 Turner Company was nearly insolvent and Starlite discovered 

that Textron was Turner Company’s primary lender.

57 The plaintiff alleged that 

Textron closely monitored the finances and business operations of Turner Company 

beginning in January 2006 when Textron placed an agent on site at Turner 

 

53 Id. See also Weststeyn Dairy 2 v. Eades Commodities Co., 280 F. Supp.2d 1044, 

1088 (E.D. Cal. 2003) (“Plaintiffs, as unsecured creditors, did not provide goods or 

services that were necessary to preserve the collateral,” and therefore could “not 

show equities that override [the secured creditor’s] claim of priority as a perfected 

secured creditor under the UCC priority scheme.”).

54 See SewChez, 2007 WL 9753114, at *7–8.

55 Starlite, 2008 WL 2705395 at *31.

56 Id. at *1.

57 Id.
20

Company’s offices.

58

 The plaintiff also alleged that the defendants engaged in fraud 

and misrepresentation, including representing falsely to Starlite that Textron and 

Turner Company intended to repay Starlite for the calendars Turner Company 

ordered and for making pre-shipping payments to induce Starlite to fulfill orders 

Textron and Turner Company never intended to pay in full.59

After a review of Producers Cotton, Duggan and Knox, the court concluded, 

without much analysis, that a factual issue existed regarding whether Starlite 

provided any goods or services necessary to preserve collateral or whether Textron 

engaged any of the conduct alleged, other than to “resort to remedies permitted by 

the UCC and this Court.”

60

 While the Starlite court did not provide much reasoning 

in its decision, the facts set forth illustrate some aspects of the circumstances 

contemplated by the other Producers Cotton progeny cases. 

Based on the case law interpreting Producers Cotton, GlobalTranz has failed 

to state a claim for unjust enrichment under California law. GlobalTranz’s main 

argument in opposition to the Motion to Dismiss is that because this case is at the 

early pleading stage, it should be entitled to discovery on its unjust enrichment claim. 

Although this case is at the early pleading stage and Delaware’s Rule 12(b)(6) 

 

58 Id. at *3. 

59 Id. at *3, 30.

60 Id. at *31.
21

provides a low threshold, the Court is not required to accept conclusory allegations 

such as those contained in the Complaint here. 

No matter how much discovery is afforded to GlobalTranz, it will not change 

the fact that GlobalTranz began providing freight broker services to Kraco in or 

around December 2015 – well before PNC’s alleged “spearheading” of the breakup 

of Kraco in 2018.

61

 GlobalTranz therefore cannot allege that PNC in any way 

initiated the transaction.62 In another attempt to fit within the narrow framework of 

an unjust enrichment claim, GlobalTranz alleges that in early 2018, when PNC 

allegedly began to “spearhead[] and facilitate[] the corporate liquidation” of Kraco, 

Kraco stopped paying GlobalTranz.63 GlobalTranz also alleges that PNC 

“acquiesced in GlobalTranz’s provision of those services to Kraco and/or 

encouraged Kraco to obtain those services from GlobalTranz.” These allegations 

are conclusory and unsupported by facts.

64

 The Court is not required to accept such 

allegations as true on a motion to dismiss and the Court declines GlobalTranz’s 

invitation to do so here.

Allegations of PNC’s “mere acquiescence” to the actions of GlobalTranz and 

the purported enhancement to the collateral value of Kraco by GlobalTranz’s freight 

 

61 Compl. ¶ 7.

62 See Knox, 29 Cal. App. 4th at 1365-66.

63 Compl. ¶¶ 9-11.

64 See, e.g., In re General Motors (Hughes) Shareholder Litig., 897 A.2d at 168.
22

broker services are not sufficient to support a claim for unjust enrichment under 

California law.

65

 “Acquiescence liability, because it would upend [A]rticle 9’s 

interlocking notice-filing and priority provisions, cannot be accepted.”66 “Basing 

unjust enrichment liability on acquiescence would turn the filing system on its head, 

destroying existing creditors’ reliance on that system and substituting a prospective 

creditor’s duty to check with a new duty to warn and disclaim imposed on existing 

creditors.”67

Finally, GlobalTranz did not provide goods or services that were necessary to 

preserve the collateral. The situation here, where GlobalTranz provided freight 

brokerage services to Kraco for many years prior to PNC’s involvement, is most 

closely related to the circumstances in Knox and SewChez. The freight brokerage 

services were not necessary to preserve the collateral covered by PNC’s security 

interest and the “mere fact that the secured collateral was enhanced” by these 

services “does not support liability under these circumstances.”68 As in SewChez,

Kraco’s inventory “was not perishable in the manner of foodstuffs,” and “[i]nstead, 

Plaintiff’s [freight brokerage services] merely augmented the inventory of goods 

already held by” Kraco.69

 

65 Knox, 29 Cal. App. 4th at 1366.

66 Id. at 1367.

67 Id.

68 Id. at 1368.

69 SewChez, 2007 WL 9753114, at *8.
23

A secured creditor who has satisfied the statutory requirements for protecting 

its interest is entitled to a rebuttable preference for payment against an unsecured 

creditor.70 This preference is reinforced where an unsecured creditor has various 

non-statutory protections and fails to use them.71 “As courts and commentators have 

noted, the unsecured creditor could have (1) demanded cash payment on delivery, 

(2) perfected a purchase money security interest, (3) checked with the appropriate 

governmental office to determine if the debtor had already granted a security interest 

posing a possible threat to repayment, or (4) obtained a secured creditor’s agreement 

to subordinate its priority.”72 GlobalTranz had several options to ensure payment 

for the services it provided to Kraco and, apparently, failed to take advantage of 

these options. 

GlobalTranz provides nothing more than conclusory statements in language 

mirroring the standards set forth in the Producers Cotton progeny cases. Without 

providing any factual support, Plaintiff cannot meet Delaware’s pleading threshold 

under Rule 12(b)(6). Essentially, the most the Court can glean from Plaintiff’s 

factual allegations is that PNC knew about the transactions between GlobalTranz 

and Kraco. This is not sufficient, under the reasoning of any of the cases discussed 

above, to state a claim for unjust enrichment against Defendant. Plaintiff’s services 

 

70 Knox, 29 Cal. App. 4th at 1364.

71 Id.

72 Id.
24

were not necessary to preserve the automobile accessory products involved in its 

transaction with Kraco. Plaintiff did not allege any involvement by Defendant in its 

transaction with Kraco, or any conduct at all, beyond what is permitted and expected 

under Article 9. No facts alleged in the Complaint support a finding of fraud, 

misrepresentation, initiation, encouragement, or any other conduct by PNC that 

could give way to the “unusual circumstances” required in order for an unsecured 

creditor to state a claim for unjust enrichment against a secured creditor.

CONCLUSION

For the foregoing reasons, PNC’s Motion to Dismiss is GRANTED. IT IS 

SO ORDERED.