PLUS 352, S.A

v.

LICENSED ACCESSORIES USA LLC

Before the Court is Plaintiff’s Motion for Entry of a Default Judgment against Defendant Accessory 4G LLC (“Accessory 4G”) (Dkt. 106), the response and reply (Dkts. 109, 112), Plaintiff’s Motion for Summary Judgment against Defendant Natalia Turok and Motion for Partial Summary Judgment against Defendant Philippe Giraud and undisputed facts (Dkts. 110, 111), and the response and reply (Dkts. 113, 114). After careful review of all the parties’ submissions and the entire file, the Court concludes summary judgment should be granted and default judgment entered.

BACKGROUND

The Underlying Action

The original defendants in the underlying action in this case prior to proceedings supplemental are Licensed Accessories USA LLC (“Licensed Accessories”) and B2B Tech USA LLC (“B2B”). Plaintiff, a Luxembourg entity,

is a supplier and vendor of goods (memory cards and USB flash drives) to Amazon in the United Kingdom, Italy, and France. Dkts. 26, 50. B2B Tech and Licensed Accessories are vendors for Amazon in various countries including the United States. Id. The parties entered into agreements whereby B2B and Licensed

Accessories sold the goods and Plaintiff shipped those goods directly to the Amazon fulfillment center. Id. Plaintiff was to receive payment from B2B Tech and Licensed Accessories based on an agreed formula once Amazon paid B2B and

Licensed Accessories. Id.1 Plaintiff did not receive payment, despite the parties agreeing to a discounted invoice price. Dkts. 29, 53. The amended and operative complaints alleged against Licensed Accessories breach of express and implied-in-fact contract, unjust enrichment, account stated,

and fraud; and against B2B Tech breach of express and implied-in-fact contract, unjust enrichment, and account stated. Dkts. 26, 50. The companies did not

B2B to Mr. Giraud (Counts X–XII);⁵) from B2B to Ms. Turok (Counts XIII–XV); and⁶) from B2B to Accessory 4G (Counts XVI–XVIII). Dkt. 94 at 1–83. The individual Defendants (Ms. Turok and Mr. Girard) filed an Amended Answer pro se. Dkt. 103.

A clerk’s default was entered against the business entity Accessory 4G on November 29, 2021. Dkt. 102. Plaintiff moved for a default final judgment against Accessory 4G on January³, 2022. Dkt. 106.

In response to the motion for default, and for the first time, counsel appeared for all three Defendants on January⁵, 2022. Dkt. 107. Seven days later, on January 12, Defendants’ counsel filed a substantive response to the motion for default final judgment against the corporate Defendant Accessory 4G. Dkt. 109.

On January 14, Plaintiff’s counsel filed a motion for summary judgment against the individual Defendants. Dkt. 110. Defendants’ counsel filed a response on behalf of the individual Defendants. Dkt. 113.

SUMMARY JUDGMENT

AGAINST INDIVIDUAL DEFENDANTS

Legal Standard Summary judgment is appropriate where there is no genuine dispute regarding any material fact. Fed. R. Civ. P. 56(a). Materiality is defined by the substantive law concerning the elements of the claim which might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);

Allen v. Tyson Foods, Inc., 121 F. 3d 642, 646 (1997). If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, then there is no genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The Court must view the record, and all its inferences, in the light most favorable to the nonmoving party, in this case the individual Defendants. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). Neither credibility determinations nor weighing the evidence may play any role in summary judgment proceedings. Anderson, 477 U.S. at 249. A nonmovant’s response cannot consist of a conclusory affidavit and expect to survive summary judgment. United States v. Stein, 881 F. 3d 853, 857 (11th Cir. 2018) (noting a nonmovant’s affidavit cannot be conclusory, even though it may be self-serving). A sworn denial of a material fact, however, may create a genuine issue that would require a credibility determination best left for the trier of fact. Claims at Issue: Mr. Giraud Plaintiff moves for partial summary judgment against Mr. Giraud on Count I for actual fraudulent transfers of funds from Licensed Accessories. Dkt. 110 at 6. Plaintiff received its last payment from Licensed Accessories in April 2019. Dkt. 110-1 at 1. The transfers at issue from Licensed Accessories to Mr. Giraud occurred from June⁵, 2019, through May⁶, 2020, and total $95,535.85. Dkt. 110 at 4. During this period, Licensed Accessories received a total of $157,104.98 from Amazon for goods Plaintiff had shipped to Amazon in fulfillment of Licensed Accessories’ sales to Amazon. Id.; Dkt. 110-1 at 2. Plaintiff was Licensed

Accessories’ sole supplier during this time. Dkt. 110-1 at 3. Plaintiff also moves for partial summary judgment against Mr. Giraud on Count X for actual fraudulent transfers of funds from B2B Tech. Dkt. 110 at 6.

Plaintiff received its last payment from B2B Tech on April³, 2019. Dkt. 110-1 at 1. The transfers at issue from B2B Tech to Mr. Giraud began on April⁴, 2019, and continued through January 29, 2020, and totaled $40,316.10. Dkt. 110 at 5. During this period, B2B Tech received payments from “Currency Direct Inc,” a foreign exchange provider, representing Amazon payments to B2B Tech for goods supplied by Plaintiff and sold by B2B Tech. Dkt. 110-1 at 3. Claims at Issue: Ms. Turok Plaintiff moves for summary judgment against Ms. Turok on Counts IV and

XIII for actual fraudulent transfers of funds from the same two entities. Dkt. 110 at 6. Only two transfers were made to Ms. Turok—one from Licensed Accessories for $10,000, and the other from B2B Tech for $39,000, both on July 12, 2019. Id.

at 5. Actual Fraudulent Transfers Plaintiff argues that Licensed Accessories and B2B Tech’s subject transfers to the individual Defendants were made with the actual intent to defraud Plaintiff.

Id. at 8. Under FUFTA, a transfer made by a debtor is fraudulent as to either a present or future creditor if the transfer was made with the “actual intent to hinder, delay, or defraud any creditor of the debtor.” Fla. Stat. § 726.105(1)(a). To establish a prima facie case of actual fraud, a plaintiff must prove that there was a creditor to be defrauded, there was a transfer of property, and there was a debtor intending fraud. Isaiah v. JPMorgan Chase Bank, 960 F. 3d 1296, 1302 (11th Cir. 2020) (citing Wiand v. Lee, 753 F. 3d 1194, 1199–1200 (11th Cir. 2014)).

A creditor is a person who has a claim. Fla. Stat. § 726.102(5). A claim includes a right to payment, and this statutory language is “extremely broad.” Id. § 726.102(4); Dillon v. Axxsys Int’l, Inc., 185 F. App’x 823, 830 (11th Cir. 2006). It is uncontested that Plaintiff was a creditor under FUFTA of both Licensed Accessories (since at least April 25, 2018) and B2BTech (since at least February⁴, 2019). Dkt. 110 at 9.

A transfer includes the payment of money. Fla. Stat. § 726.102(14). It is undisputed that the transfers from Licensed Accessories and B2B Tech to Mr. Giraud and Ms. Turok are transfers under FUFTA. The last element—the intent of the debtor to hinder, delay, or defraud—is difficult to prove through direct evidence. Given this obstacle, courts review the statutory “badges of fraud” to determine whether actual fraud occurred. Chase Bank USA, N.A. v. Jacucci, No. 19-62318-Civ-Singhal/Valle, 2021 WL 2689995,

at *6 (S.D. Fla. Feb. 22, 2021) (citing Fla. Stat. § 726.105(2)(a)-(k)); In re McCarn’s Allstate Fin., Inc., 326 B.R. 843, 849–50 (Bankr. M.D. Fla. 2005). This non-exhaustive list of badges includes whether, for example, the transfer was to an insider, the debtor retained control of the property after transfer, the transfer was concealed, the debtors had been threatened with a lawsuit before the transfer, and the debtors received less than reasonably equivalent value. Fla. Stat. § 726.105(2)(a)–(d), (h). The existence of several badges of fraud, as opposed to one badge of fraud, creates a prima facie case and raises a rebuttable presumption that the transaction is void. Wiand, 753 F. 3d at 1200 (citation omitted). Apart from the statutory factors, courts may also consider other relevant circumstances surrounding the transfer. Id. “The standard to determine whether a transfer is fraudulent under Florida law is the preponderance of the evidence standard.” In re Young, 235 B.R. 666, 669 (Bankr. M.D. Fla. 1999) (citation omitted). Badges of Fraud—Transfers to Insiders The statutory definition of insiders is non-exhaustive.³ Fla. Stat. §

726.102(8); In re Bifani, 580 F. App’x 740, 745 (11th Cir. 2014) (citation omitted). “A close relationship between a transferor debtor and a transferee is a factor equivalent to a badge of fraud which should be considered in determining fraudulent intent.” In re Bifani, No. 8:13-cv-2197-JDW, 2014 WL 272920, at *5 (M.D. Fla. Jan. 23, 2014) (quoting Gen. Trading Inc. v. Yale Materials Handling Corp., 119 F. 3d 1485, 1499 (11th Cir. 1997)). A close business relationship may constitute a badge of fraud. Id. (citation omitted).

The Court finds the statutory insider familial relationship between husband and wife is sufficient to make the transfer from Licensed Accessories and B2B Tech to Ms. Turok a transfer to an insider. See Fla. Stat. § 726.102(8), (13). Ms.

Turok performed no meaningful services for either Licensed Accessories or B2B Tech. She was not an employee or shareholder of either entity; she did not know about the dealings of the entities. Dkt. 95 at 2. The two transfers to Mr. Giraud’s wife are indicia of the close relationships between Mr. Giraud and the entities, and

Mr. Giraud may not skirt his close relationship with the debtors by having those companies transfer money to his wife. Defendants do not contest these relationships. Defendants rely on the general premise that summary judgment is proper in the context of badges of fraud only “if no other evidence is proffered to plausibly suggest another explanation for the transfer.” Dkt. 113 at 3 (citing Zurich Servs. Corp. v. Pro. Mgmt. Servs. Grp.,

Inc.,⁸:13-cv-1896-T-30AAS, 2016 WL 7974653, at *5 (M.D. Fla. Oct. 21, 2016) (quoting German Am. Cap. Corp. v. Morehouse, No. 13-80704-Civ, 2014 WL 2511307, at *2 (S.D. Fla. June 2014)), adopted in part, 2016 WL 6695079 (M.D.

Fla. Nov. 15, 2016)). The courts in Zurich and Morehouse, however, each determined that the defendants failed to suggest any plausible or legitimate explanation for the transfers and therefore could not overcome the strong inference of fraud created by the evidence. Mr. Giraud and Ms. Turok have not provided any explanation as to why they would not be considered insiders for purposes of FUFTA. The only argument that could apply to the insider badge is Defendants’ claim that the same-day transfers to Ms. Turok were mistakenly made to her. Dkt. 113 at 4. The only explanation for this mistake is that the transfers were intended for Mr. Giraud as compensation “in the ordinary course of the operations of B2B Tech.” Dkt. 113-1 ¶¶ 7, 10. Even if the money was meant for Mr. Giraud, he remains an insider, and the transfers were made from the debtors to insiders. Badges of Fraud—Debtors threatened with lawsuit Licensed Accessories and B2B Tech were threatened with the filing of a lawsuit in June 2019. Dkt. 111 ¶¶ 11, 21. The underlying lawsuit here was filed in late August 2019. Dkt. 1. The two transfers to Ms. Turok took place on July 12, 2019, which was after this lawsuit was threatened. Dkt. 111 ¶¶ 12, 22. The transfers to Mr. Giraud took place from Licensed Accessories from June⁵, 2019, to May⁶, 2020, and from B2B Tech from April⁴, 2019, to January 29, 2020. Dkt. 110 at 13–14. Specifically, on July 11, 2019, B2B Tech received $20,000 from

Licensed Accessories, and B2B Tech transferred $15,000 to Mr. Giraud and $3,750 to Mr. Giraud’s immigration lawyer for E-2 visa services. Dkt. 111 ¶ 20. Defendants do not contest the fact they had been threatened with a lawsuit in July 2019.4 Rather, they claim Mr. Bulent Yilmaz, the head of sales and purchasing of Plaintiff, threatened them physically in April or May 2019. Dkt. 113-1 ¶¶ 4, 7, 13. Mr. Giraud avers the transfers “were due to fear of physical harm from Bulent Yilmaz due to an incident in April or May of 2019 when, over the phone, [he] told me he would send a bunch of Mexicans to beat me, my wife,

Whether the physical threat occurred is contested. Assuming in the light most favorable to the Defendants as nonmoving parties that there was a physical threat, Defendants have cited no authority in support of a physical threat having any effect on the outcome of this action under FUFTA. Thus, while the existence of a physical threat is disputed, it is not a material fact that creates a genuine issue sufficient to defeat summary judgment because the evidence otherwise supports a finding of fraud.

Badges of Fraud—Concealed transfers Mr. Yilmaz avers the subject transfers were concealed from Plaintiff. Dkt. 110-1 ¶¶ 13, 14. Defendants do not contest that the transfers were concealed from

Plaintiff. Badges of Fraud—Debtors received less than reasonably equivalent value Mr. Giraud contends that some of the transfers to him represented either his compensation for his services to B2B Tech and Licensed Accessories or were in exchange for services he provided to them. Dkt. 113 at 4; Dkt. 113-1 ¶¶ 6, 9, 12. He avers that the two transfers to his wife were also for his compensation. Dkt.

Neither Mr. Giraud nor Ms. Turok were employees of either Licensed Accessories or B2B Tech. Licensed Accessories had no employees. Dkt. 114-2 at 37–38 (excerpts of Mr. Giraud’s deposition); Dkt. 111 ¶ 8. B2B Tech had only had one employee. Dkt. 114-2 at 38; Dkt. 111 ¶ 15. The transfers to Mr. Giraud were distributions. Dkt. 114-3 at 19 (excerpts from the debtors’ CPA’s deposition). Under Florida law, distributions do not include “amounts constituting reasonable compensation for past or present service.” Fla. Stat. § 605.0102(17)(b).

Therefore, the transfers to Mr. Giraud or his wife did not represent compensation for services but transfers to Mr. Giraud in his capacity as a member of the debtor companies. See Id. Distributions based on an owner’s equity interest do not hold a reasonably equivalent value. In re Brentwood Lexford Partners, LLC, 292 B.R. 255, 267–68 (Bankr. N.D. Tex. 2003) (finding cash distributions were not part of compensation

Transfer Act. [citing In re Brentwood]”). Based on the undisputed facts that neither Mr. Giraud nor Ms. Turok were employees of either debtor and that the husband and wife did not stand to receive compensation for any services, the Court finds the transfers were made absent the debtors receiving reasonably equivalent value. That Mr. Giraud avers that the transfers were compensation does not alter

Based on the four statutory badges of fraud discussed above, the Court finds actual fraud. Mr. Giraud and Ms. Turok have not provided a plausible explanation for the transfers sufficient to overcome the strong inference of fraud and sufficient to avoid summary judgment. Partial summary judgment is entered against Mr. Giraud and summary judgment is entered against Ms. Turok for the specific transfers sought, with the uncontested amounts substantiated by Mr. Giraud’s deposition and bank invoices attached. The amounts are calculated as follows:¹) transfers from Licensed Accessories to Mr. Giraud total $94,732.56 ($95,535.85 minus $803.29 transferred from Mr. Giraud to Licensed Accessories); transfers from B2B Tech to Mr. Giraud total $18,296.10 ($40,316.10 minus $22,020.00 from Mr. Giraud to B2B Tech); one transfer from Licensed Accessories to Ms. Turok of $10,000.00; and one transfer from B2B Tech to Ms. Turok of $39,000.00.

330593, at *9 (M.D. Fla. Jan. 25, 2019). Ms. Turok’s liability is joint and several with Mr. Giraud’s liability. Cont’l Cas. Co. v. Hardin, No. 8:16-cv-322-17TGW, 2016 WL 11234458, at *8 (M.D.

Fla. Dec.⁵, 2016) (citing authority for joint and several liability under FUFTA), adopted by 2017 WL 979098 (M.D. Fla. Mar. 14, 2017). Recovery may not exceed the amount of the underlying judgments for Licensed Accessories ($681,663.55) and for B2B Tech ($51,223.38), respectively. Fla. Stat. §

726.109(2) (“the creditor may recover judgment for the value of the asset transferred . . . or the amount necessary to satisfy the creditor’s claim, whichever is less”); TTT Foods Holding Co. v. Namm, No. 16-cv-81798, 2017 WL 2901329, at

*12, 16 (S.D. Fla. May 19, 2017) (holding joint liability up to amount of entire judgment of $233,593.59). Because the total amount of transfers from B2B Tech ($57,296.10) exceeds the amount of the underlying judgment ($51,223.38), the judgment here is limited against B2B Tech to $51,223.38. The amount of this judgment will be reduced by $6,072.72 with respect to transfers from B2B Tech. It is therefore ORDERED AND ADJUDGED as follows:¹) Plaintiff’s Motion for Summary Judgment against Defendant Natalia Turok and Motion for Partial Summary Judgment against Defendant Philippe

Giraud (Dkt. 110) is granted.²) Partial summary judgment is entered in favor of Plaintiff and against Mr. Giraud in the amount of $113,028.66 ($94,732.56 of transfers from Licensed

Accessories plus $18,296.10 of transfers from B2B Tech).³) Summary judgment is entered in favor of Plaintiff and against Ms. Turok in the amount of $42,927.28 ($10,000.00 of transfers from Licensed Accessories plus $39,000.00 of transfers from B2B Tech minus the overage of

$6,072.72 from the underlying judgment against B2B Tech). Mr. Giraud and Ms. Turok are jointly and severally liable up to $42,927.28. 4) The Clerk is directed to enter final summary judgments in accordance with paragraphs² and³ and include the language “for which sum let execution issue.”

DEFAULT JUDGMENT AGAINST ACCESSORY 4G

In response to Plaintiff’s motion for default final judgment against

Accessory 4G, Accessory 4G requests to vacate the Court’s order striking the entity’s answer to the original complaint for proceedings supplemental, which was filed without counsel. Dkt. 109. Accessory 4G now desires to file an answer through counsel, long after the time for amending pleadings (October¹, 2021) has passed. Dkt. 78. No “good cause” argument to extend the time for amendment is made pursuant to Federal Rule of Civil Procedure 16(b)(4). See Thorn v. Blue

Cross & Blue Shield of Fla., Inc., 192 F.R.D. 308, 309 (M.D. Fla. 2000) (stating Rule 16(b) governs motions for leave to amend filed beyond the time prescribed by scheduling order). Only after good cause is shown may the court consider whether leave should be granted under Rule 15. Id. at 309–10. The good cause standard under Rule 16(b)(4) “precludes modification unless the schedule cannot ‘be met despite the diligence of the party seeking the extension.’” Harris v. Reverse Mortg. Sol. Inc., 800 F. App’x 708, 711 (11th Cir. 2020) (citation omitted).

Considering only Rule 15(a) “would render scheduling orders meaningless and effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure.” Id. (citation omitted).⁹

Here, no good cause has been shown under Rule 16(b) to permit Accessory 4G to file its answer.10 No diligence has been demonstrated on the part of Accessory 4G. The entity has known since early August 2021 that it was required to secure counsel to file pleadings. See Dkt. 80. Accessory 4G failed to heed this

In any event, the proposed answer attached to the response sets forth no affirmative defenses other than to add verbiage in its denials about Plaintiff providing counterfeit goods to Amazon. Such allegations serve only to collaterally attack and relitigate the underlying judgment asserting claims of the original debtors. Plaintiff cites authority for the proposition that transferees cannot challenge the underlying lawsuit in a proceedings supplemental. See, e.g., Mansfield v. Pierce, 153 F. 3d 721 (4th Cir. 1998) (table) (“[a] judgment which has been obtained by a defrauded creditor is, as against the transferee of the property, conclusive as to the fact of indebtedness on which it is based”) (quotation citation omitted). Although an independent search has not revealed binding authority, the very nature of a proceedings supplemental under Florida law is founded on “retriev[ing] money that a judgment debtor passed to a third-party.” Wiand v. Lee, No. 8:10-cv-210-T-17MAP, 2014 WL 12684528, at *1 (M.D. Fla. Jan. 30, 2014) (citation omitted). Nothing under FUFTA changes the focus of retrieving money under a judgment, and nothing permits the transferee to challenge the underlying judgment in the FUFTA case. Plaintiff seeks $4,953.11 in transfers from both Licensed Accessories ($4,410.00) and B2B Tech ($543.11), which is supported by bank statements of Accessory 4G. Dkt. 106 at 4-6. Having shown no good cause and having provided no defenses under FUFTA, Accessory 4G cannot avoid a money judgment sought against it. The amount of judgment against Accessory 4G is limited to $4,410.00 representing transfers from Licensed Accessories because the limit of the underlying judgment against B2B Tech has been reached against the individual Defendants. It is therefore ORDERED AND ADJUDGED as follows:¹) + Defendant’s opposition, which includes a motion to file an answer (Dkt. 109), is denied.²) Plaintiff's motion for default final judgment against Accessory 4G (Dkt. 106) is granted.³) Final default judgment is entered in favor of Plaintiff and against Accessory 4G in the amount of $4,410.00 (4,953.11 minus $543.11). Accessory 4G’s liability is joint and several with the individual Defendants Mr. Giraud and Ms. Turok.⁴) The Clerk is directed to enter a default final judgment in accordance with paragraph³, to include the language “for which sum let execution issue.” DONE AND ORDERED at Tampa, Florida on March 29, 2022. me,

UNITED STATES DISTRICT JUDGE

COPIES FURISHED TO: Counsel of record