Court Opinion

ID: 4361258
Source: CourtListenerOpinion
Date Created: 2019-01-23 21:05:31.158666+00
Date Added: 2024-06-11T14:48:14.579269
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

Rapid Capital Finance, d/b/a .
Rapid Capital Funding, : C.A. No. K17C-01-017 WLW

Plaintiff,

V.

Golden Chariot Motors, LLC and

Olukayode Adamolekun a/k/a

Kayode Adamolekun,

Defendants.
Subrnitted: January 1 l, 2019
Decided: January 23, 2019
ORDER
Upon Defendant Olukayode Adamolekun’s

Motion for Summary Judgment.
Granted.

Patrick Scanlon, Esquire of Patrick Scanlon, P.A., Milford, DelaWare; attorney for
Plaintiff.

Tasha M. Stevens, Esquire of Fuqua Willard Stevens & Schab, P.A., Georgetown,
Delaware; attorney for Defendants.

WITHAM, R.J.

Rapid Capital Finance v. Golden Charl`ot Motors, et al.
C.A. NO. Kl7C-01-017 WLW
January 23, 2019

INTRODUCTION

Upon consideration of the Motion for Summary Judgment filed by one of the
Defendants in this case, Olukayode Adamolekun, also known as Kayode
Adamolekun, the opposition of the Plaintiff, Rapid Capital Finance, LLC d/b/a Rapid
Capital Funding and oral arguments presented by the parties, it appears that:

FACTUAL AND PROCEDURAL HISTORY

l. The Plaintiff, Rapid Capital Finance, LLC d/b/a Rapid Capital Funding
(“RCF”), is a business that finances companies by buying their future receivables at
a discount.

2. One of the named Defendants, Golden Chariot Motors, LLC, (“Golden
Chariot”) was previously in the used car business. Golden Chariot was solely owned
by the Co-Defendant, Olukayode Adamolekun, also known as Kayode Adamolekun,
(“Adamolekun”).

3. Golden Chariot entered into several business transactions with RCF during
its span of operations. In each transaction, Golden Chariot, sold, at a discount, credit
card payments that the organization would receive in the future.

4. The transaction at issue is a May 4, 2016 Merchant Agreement
(“Agreement”) where Golden Chariot sold $91,000.00 worth of future receivables to
RCF for $70,000, for which Golden Chariot received $35,795.00 in total.l

5. Per the Agreement, Golden Chariot was required to make weekly payments

 

l Pre-trial stipulation at 2. $35,795.00 was the amount of deposit because approximately
$3 5 ,000.00 of the $75,000.00 was used by the Defendant to pay off a previous merchant agreement.

2

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

to RCF totaling approximately $1,900.00 until the $91,000.00 balance had been paid.
These payments were to be automatically withdrawn from an identified bank account
with Citizens Bank,2 that RCF was authorized to access and make automatic clearing
house withdrawals from on a weekly basis.

6. In the event of Golden Chan`ot’s default, Rapid Capital was contractually
entitled to immediately collect the entire unpaid balance.3 However, in addition to the
Agreement, Adamolekun entered into an accompanying Security and Guaranty
Agreements with RCF.4 The security agreement stated:

[t]o secure Guarantor’s payment and performance obligations under this
Security Agreement and Guaranty, Guarantor hereby grants [RCF] a security
interest in [Gola'en Chariot] LLC...(the “Additional Collateral”).5

Additionally, the Guaranty stated:

[t]he undersigned Guarantor(s) hereby guarantees to [RCF] Merchant’s
performance of all the representations warranties, covenants made by
Merchant in this Agreement and the Merchant Agreement... Guarantor’s
obligations are due at the time of any breach by Merchant of any
representation, warranty or covenant made by Merchant in this Agreement

 

2 The last four digits of` the Citizens Bank account were 2984.

3 Paragraph l.l 1. The Agreement also provided that Rapid Capital was entitled to recover
other associated charges, attorneys’ fees, and court costs.

4 See D. Ex. C; Pl. Ex. D at 6-7. The Court uses the Word “allegedly” for reasons it will
discuss below.

5 Ia'. (Emphasis added.)

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

and the Merchant Agreement,6

7. Af`ter a time, Golden Chariot desired to enter into renegotiations with Rapid
Capital regarding the payment schedule and amount per payment that Golden Chariot
was bound contractually to make.7 Adamolekun, as the owner of Golden Chariot, led
those efforts and after he failed to receive affirmation from RCF regarding Golden
Chariot’s request for re-negotiations, Adamolekun closed Golden Chariot’ s business
bank account with Citizens Bank, the account that RCF had previously been granted
access, despite the terms of the Agreement prohibiting such an action. Only one
payment had been withdrawn from the account from RCF. Neither Golden Chariot,
nor Adamolekun (individually), ever disclosed to RCF that the Citizens Bank account
had been closed, nor granted them access to a new bank account in Golden Chariot’s
name established at WSFS Bank. As a result, RCF was unable to withdraw payments
owed by Golden Chariot.

8. RCF has received no further payments since the closing of the Citizens
Bank account in May 2016. Golden Chariot permanently closed its business and no
further collection of its accounts receivables was conducted.

9. RCF filed the present complaint on January 20, 2017, and initially claimed
that both Golden Chariot and Adamolekun were liable, joint and severally, for the

outstanding principle amount of $86,5 5 0.00, plus 6% pre-judgment interest from May

 

6 D. Ex. C; Pl. Ex. D at 6-7 (emphasis added).

7 Adamolekun, as the sole owner of Golden Chariot, led those renegotiation efforts.

4

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A.No.K17C-01-017 WLW
January 23, 2019

16, 2016, 6% post-judgment interest per annum, and 15% of the amount awarded by
the Court for principle and interest as attorneys fees and costs.8 Golden Chariot and
Adamolekun filed their joint reply in opposition on March 30, 2017.

10. Adamolekun alone subsequently filed the present motion for summary
judgment on November 7, 2018. RCF filed its timely response in opposition to the
motion on November 21, 2018. The Court heard oral arguments on January 1 l, 2019
and reserved its decision.

STANDARD OF REVIEW

ll. Superior Court Civil Rule 56(c) provides that summary judgment will be
granted when “there is no genuine issue of material fact and the moving party is
entitled to judgment as a matter of law.”9 The moving party initially bears the burden
of establishing both of these elements; if there is such a showing, the burden shifts
to the non-moving party to show that there are material issues of fact.10 Summary
judgment will only be appropriate when, upon viewing all of the evidence in a light

most favorable to the non-moving party, the Court finds there is no genuine issue of

 

8 Rapid Capital then subsequently filed a motion to amend its initial complaint on August 29,
2017 and on September 18, 2017 the parties entered into a stipulation amending the initial complaint
to read "Rapid Capital Finance, LLC d/b/ a Rapid Capital Funding. " Their claims against both
Defendants remained the same.

9 Del. Super. Ct. Civ. R. 56(c).

10 VIII-Hotel 11 P Loan Portfolio Holdz'ngs, LLC v. Zimmerman, 2013 WL 5785290, at *2
(Sep. 19, 2013) (citing Moore v. Sizemore, 405 A.2d 679, 680 (Del.l979) (citations omitted)).

5

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

material f`act.11 In its full consideration of a motion for summary judgment, the Court
shall consider “pleadings, depositions, answers to interrogatories, and admissions on
file, together with other affidavits, if any” in making its determination to grant or
deny the motion.12 If material facts are in dispute, or the Court determines it
"desirable to inquire more thoroughly into the facts, to clarify the application of the
law to the circumstances," summary judgment will not granted.13
DISCUSSION

12. As a preliminary matter, both parties agree that New York law governs the
Agreement,14 With that in mind, the Court will apply the law of New York.

A. The Court will Consider the Motion as a Motion for Summary

Judgment Based on the Parties’ Agreement,

13. ln his motion for summary judgment, Adamolekun argues that RCF did not
adequately plead, or plead at all, that he is liable under the Guaranty agreement and

further contends that the Court should not consider that part of RCF’s amended

 

11 Zimmerman, 2013 WL 5785290, at *2 (citing Singletary v. Amer. Dept. Ins. Co., 2011 WL
607017, at *2 (Del. Super. Ct. Jan. 31, 2011) (citing Gill v. Nationwia'e Mut. Ins. Co., 1994 WL
150902, at *2 (Del. Super. Ct. Feb. 22, 1994)).

12 Del. Super. Ct. Civ. R. 56(c).

13 Ebersole v. Lowengrub, 180 A.2d 467, 468-69 (Del.1962) (citing Knapp v. Kinsey, 249
F.2d 797 (6th Cir.l957)).

14 D. EX. B at § 4.5.

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-Ol7 WLW
January 23, 2019

complaint.15

l4. However, it appears to the Court that Adamolekun’s argument is more akin
to a motion to dismiss pursuant to Superior Court Rule of Civil Procedure 12(b)(6)
(“Rule l2(b)(6)”).16 At oral argument, the Court asked both parties, and both, much
to the Court’s surprise, agreed that the Court should treat Adamolekun’s motion as
one for summary judgment, rather than a 12(b)(6) motion.

15. ln light of the fact that Adamolekun has not properly submitted a motion
to dismiss pursuant to Rule 12(b)(6), nor provided RCF notice of its intention to do
so, the Court will analyze the motion under summary judgment legal standards.

B. Adamolekun’s Motion for Summary Judgment.

i. The Parties ’ Contentions.

16. Tuming to the merits of the motion for summary judgment, Adamolekun
first argues that no facts are in dispute regarding the express terms of the Guarantor
agreement and that the document, as constructed, is unenforceable against him
pursuant to New York law.17 RCF contends that while the Guarantor agreement,
signed by Adamolekun, is not one of payment, but of performance, it nevertheless
guaranteed Adamolekun would insure Golden Chariot’s performance of its

Agreement with RCF, specifically in regards to access to Golden Chariot’s bank

 

15 D. Mot. at 1111 5-6.

16 Super. Ct. C. R. 12(b)(6) is a motion to dismiss based on a failure to state a claim upon
which relief can be granted,

17 D. Mot. at 2.

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

account for payments.18
ii. The Law of the State of New York Supports Adamolekun ’s Motion.

l7. Under New York law, an agent who signs an agreement on behalf of a
disclosed principal will not be individually bound to the terms of the agreement
“unless there is clear and explicit evidence of the agent's intention to substitute or
superadd his personal liability for, or to, that of his principal.”19 A guarantor’s
liability is strictissimijuris, meaning that liability shall not extend beyond the precise
stipulations of the guaranty.20

18. This presumption against personal liability prevails even when the officer
is a signatory to a contract purporting to bind him personally.21 The rationale behind
the New York rule is that, “[i]n modern times most commercial business is done
between corporations,” not individual stockholders or officers of the corporation,
who, in many instances, own little or no stock in the corporation.22 This presumption

further recognizes that “[t]he obligation of a guarantor is, admittedly, a heavy one and

 

18 Pl. Reply at 11 15. As will be mentioned below, RCF’s characterization of Adamolekun’s
liability appears to have changed from its original and amended complaint.

19 Mencher v. Weiss, 114 N.E.2d 177, 179 (N.Y. 1953); see also Lerner v. Amalgamated
Clothing & Textile Workers Union, 938 F.2d 2, 5 (2d Cir.l99l); Ainbinder v. Kelleher, 1997 WL
420279, at *12 (S.D.N.Y. 1997).

20 Savoy Record Co., Inc. v. Cardinal Export Corp., 203 N.E.2d 206, 207 (N.Y. 1964).
21 Ainbinder, 1997 WL 420279, at*12.

22 Salzman Sign Co. v. Beck, 176 N.E.2d 74, 76 (N.Y. 1961).

8

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

the courts should refrain from foisting such an obligation upon a party, be he
individual or corporation, who simply signs as agent, absent the requisite clear and
unequivocal evidence...that [the agent] intended to assume such a liability.”23

19. In Warren.-Connolly Co., Inc. v. Saphin,24 the New York Appellate
Division, First Department, applied this presumption and held that a provision of an
“Authorized Dealer Franchise Agreement,” signed by the defendant as president of
the dealer corporation, that personally guaranteed payment of all obligations incurred
by the dealer pursuant to the agreement, did not constitute a personal guarantee
enforceable against him individually.25

20. While the presumption is not absolute, New York courts rarely find
individual liability in these types of cases. In those cases that defendants have been
found personally liable, the evidence of the signatory’s intention to assume personal
liability is overwhelming For example, in Paribas Properties, Inc. v. Benson,26 a
New York court found personal liability when it determined that the evidence
documenting the signatory’s personal liability was overwhelming, including (1) the
fact that the contract was only three pages long, and thus was not a trap for an unwary

signatory; (2) that the paragraph that assigned personal liability appeared directly

 

23 Savoy Record, 203 N.E.2d at 209.
24 128 N.Y.s. 2d 272 (N.Y. App. Div. 1954).
25 Warren-Connolly Co., Inc., 128 N.Y.S. 2d at 272.

26 536 N.Y.s. 2d 1007 (N.Y. App. Div. 1989).

9

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A.No.K17C-01-017 WLW
January 23, 2019

above the signature line; (3) that the signatory's name appeared in the agreement
itself; (4) that the parties negotiated the agreement in depth; and (5) that the signatory
was the president and principal shareholder in the corporation,27

21. ln this case, and unlike the situation in Paribas, the evidence of the
intention for individual liability is far from overwhelming The security and guaranty
agreements in question, appear to be complete, clear, and unambiguous on their face.
Neither contain language, express or implied, that a reasonable trier of fact could
conclude that Adamolekun intended to give RCF his personal guarantee against loss.
Indeed, the security agreement specifically states that Adamolekun, as the guarantor,
“hereby grants RCF a security interest in Golden Chariot Motors LLC.”28 In other
words, Adamolekun granted RCF a security interest in the business itself, not his
personal assets.

22. Assuming arguendo, that the guaranty agreement did contain language
tying Adamolekun’s guarantee to his personal assets, the guaranty agreement in this
case has only one signature line, and does not further indicate that Adamolekun

signed the guaranty agreement as an individual or officer of Golden Chariot.29

 

27 Id. at 1008-09.
28 D. EX. C.

29 Adamolekun’s name is clearly under the portion of the Guaranty and Security Agreement
that states: “Guarantor(s) and for the Merchant.” Because Adamolekun is identified as Golden
Chariot’s owner on page 5 of the Agreement, the Court finds that Adamolekun acted as Golden
Chariot’s agent in this matter. However, as such, the agreement should have been signed twice,
pursuant to New York law.

10

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

23. Thus, the Court finds that Adamolekun has set forth a prima facie showing
of entitlement of summary judgment as a matter of law. In light of this, the burden
now shifts to RCF, as the party opposing the motion for summary judgment, to
produce clear and explicit evidence sufficient to warrant judgment in their favor or
to, at least, establish the existence of material issues of fact which requires a trial of
the action.

24. In this case, RCF fails to demonstrate any such evidence. Rather, RCF
concedes that “[Adamolekun’ s] guaranty...is not one of payment, but performance”30
and that the only guarantee Adamolekun made was to ensure that Golden Chariot
would not impede RCF from withdrawing payments from the disclosed bank account.
While RCF may have a case for tortuous interference against Adamolekun, it
apparently has abandoned its claim that he is jointly and severely liable for the
outstanding balance owed by Golden Chariot. RCF has presented no evidence to the
Court to defeat New York’s strong presumption against imposing personal liability
on a company officer, without clear and explicit evidence of his intent to assume
personal liability. ln consideration of the strong presumption against personal
liability and RCF’s concession that Adamolekun’s guaranty agreement does not hold
him personally financially liable, Adamolekun’s motion for summary judgment must

be granted.

 

30 Pl. Reply at 11 15.

ll

Rapid Capital Finance v. Golden Chariot Motors, et al.
C.A. No. Kl7C-01-017 WLW
January 23, 2019

CONCLUSION
25. For the reasons discussed above, Adamolekun’s Motion for Summary
Judgment is GRANTED.
IT IS SO ORDERED.

/s/ William L. Witham Jr.
Resident Judge

 

WLW/dmh

12