Court Opinion

ID: 4388914
Source: CourtListenerOpinion
Date Created: 2019-04-19 09:05:40.859985+00
Date Added: 2024-06-11T14:50:33.981892
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                          STATE OF MICHIGAN

                           COURT OF APPEALS

DR. SENA YADDEHIGE,                                                 UNPUBLISHED
                                                                    April 18, 2019
               Plaintiff-Appellant,

v                                                                   No. 341035
                                                                    Oakland Circuit Court
XPERT TECHNOLOGIES, INC.,                                           LC No. 2016-155158-CB

               Defendant-Appellee.

Before: JANSEN, P.J., and METER and GLEICHER, JJ.

PER CURIAM.

       Plaintiff appeals as of right the trial court’s order granting summary disposition to
defendant and dismissing plaintiff’s Uniform Commercial Code (UCC) and unjust-enrichment
claims. We affirm.

       This case concerns certain assets of Legacy Group Lighting, LLC, doing business as
Creative Lighting Solutions (CLS) that were dispersed to defendant out of CLS’s deposit
account. Plaintiff alleges that he loaned CLS $3 million in 2013 and that, as collateral for the
loan, CLS granted plaintiff a security interest in “all assets of CLS.” In 2016, defendant obtained
a judgment against CLS for $199,680 in a separate action. CLS satisfied this judgment with
money from the deposit account.

        Plaintiff then sued defendant, arguing that he held a perfected, first-priority security
interest in the money used to satisfy the judgment. Plaintiff alleged that defendant’s retention of
the money would amount to unjust enrichment and sought an injunction preventing defendant
from collecting on the judgment with collateral securing plaintiff’s loan. The trial court granted
summary disposition in defendant’s favor, concluding, in pertinent part, that MCL 440.9332
protects persons who receive transfers of money from a debtor when those funds are subject to a
preexisting security interest. This appeal followed.

        On appeal, plaintiff argues that the trial court erred in its conclusion that MCL 440.9332
precluded plaintiff’s UCC and unjust-enrichment claims. “We review de novo a trial court’s
grant or denial of summary disposition.” Tomra of North America, Inc v Dep’t of Treasury, 325
Mich. App. 289, 293-294; ___ NW2d ___ (2018). “A motion for summary disposition under
MCR 2.116(C)(10) tests the factual sufficiency of the claim, and is appropriately granted when,
except as to the amount of damages, there is no genuine issue as to any material fact, and the
moving party is entitled to judgment as a matter of law.” Id. at 294. MCL 440.9332 provides:

               (1) A transferee of money takes the money free of a security interest
       unless the transferee acts in collusion with the debtor in violating the rights of the
       secured party.

               (2) A transferee of funds from a deposit account takes the funds free of a
       security interest in the deposit account unless the transferee acts in collusion with
       the debtor in violating the rights of the secured party.

        Plaintiff does not argue that defendant colluded with CLS to violate plaintiff’s security
interests. Additionally, plaintiff does not argue that defendant does not qualify as a “transferee”
for the purposes of MCL 440.9332. 1 Rather, plaintiff argues that the protections set forth in
MCL 440.9332(2) apply only to a security interest in the deposit account itself. As a necessary
corollary to this argument, plaintiff appears to concede, as he must, that under MCL 440.9332(2)
defendant accepted the transfer free of plaintiff’s alleged security interest in the deposit account
itself.

        Plaintiff, however, alleges that his secured interest in “all assets of CLS” extends to
CLS’s “accounts receivable” and “cash.” Plaintiff points out that, under MCL 440.9315(b), a
“security interest attaches to any identifiable proceeds of collateral.” According to plaintiff, the
money in the deposit account was the “proceeds” of CLS’s accounts receivable and cash,
meaning that plaintiff’s security interest extends to these funds under MCL 440.9315(b).
Plaintiff argues that, because MCL 440.9332(2) applies only to a security interest in the deposit
account itself, defendant’s judgment interest in the money in the deposit account must yield to
plaintiff’s higher-priority interest in that money as proceeds of secured collateral. Plaintiff’s
argument is without merit.

        First, plaintiff has failed to set forth any evidence establishing that the money in the
deposit account is actually identifiable cash proceeds of collateral securing his loan. Plaintiff
argues that the affidavit of CLS’s vice president establishes that the money in the deposit account
was the proceeds of secured collateral but this affidavit only states that CLS and plaintiff entered
into a loan agreement. The deposit account is mentioned nowhere in the affidavit.

        Second, assuming arguendo that the money in the deposit account was the proceeds of
secured collateral, plaintiff fails to acknowledge MCL 440.9332(1), which provides that a
“transferee of money takes the money free of a security interest unless the transferee acts in
collusion with the debtor in violating the rights of the secured party.” (Emphasis added).
Subsection (1) provides the same protection as subsection (2), but is not limited to a security
interest in the deposit account. See MCLA 440.9332, comment 2. Rather, subsection (1)

1
  See Orix v Kovacs, 167 Cal App 4th 242 (2008) (concluding that a judgment creditor qualifies
as a transferee).

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protects a transferee from a security interest in the money itself. To the extent that defendant
argues that MCL 440.9315(b) compels a different result when the money is cash proceeds,
comment 7 to MCLA 440.9315 belies that argument, clarifying that in many cases “a purchaser
or other transferee of the cash proceeds will take free of the perfected security interest”—citing
MCL 440.9332(1) and (2) as examples. Accordingly, assuming arguendo that plaintiff held a
first-priority security interest in the cash proceeds contained in the deposit account, defendant
was protected from that security interest under MCL 440.9332(1). Therefore, because there is no
material question that plaintiff accepted transfer of the money in the deposit account free of any
security interest alleged by plaintiff, the trial court properly dismissed plaintiff’s UCC-related
claims.

        Regarding plaintiff’s remaining claim, unjust enrichment “is defined as the unjust
retention of money or benefits which in justice and equity belong to another.” Tkachik v
Mandeville, 487 Mich. 38, 47-48; 790 NW2d 260 (2010) (internal citation and quotation marks
omitted). As already explained, plaintiff has not established that the transfer at issue violated his
alleged security interests. Moreover, plaintiff has not shown that the transfer has caused him any
harm. Plaintiff acknowledges that CLS has made “regular monthly payments” to him against the
loan “over the past several years” and does not argue that the transfer will prevent CLS from
continuing to do so. Similarly, plaintiff has not argued that the transfer left CLS with insufficient
collateral to fully secure the loan. Accordingly, plaintiff has failed to set forth a genuine issue of
material fact that defendant’s retention of the transfer resulted in an inequity to plaintiff. See
Karaus v Bank of New York Mellon, 300 Mich. App. 9, 22-23; 831 NW2d 897 (2012). Thus, the
trial court properly dismissed plaintiff’s unjust-enrichment claim under MCR 2.116(C)(10).

       Affirmed.

                                                              /s/ Kathleen Jansen
                                                              /s/ Patrick M. Meter
                                                              /s/ Elizabeth L. Gleicher

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