Date: 11-04-2013

Case Style: AIM Business Capital, LLC v. Madison Plate Processing, Inc. and Lance P. McGuire

Case Number: CJ-2013-2018

Judge: Daman H. Cantrell

Court: District Court, Tulsa County, Oklahoma

Plaintiff's Attorney: Dustin Lynn Perry and James M. Reed

Defendant's Attorney: Robert J. Bartz and Ryan J. Fulda

Description: AIM Business Capital, LLC sued Madison Plate Processing, Inc. and Lance P. McGuire on conversion, declaratory judgment and equitable relief theories claiming:

1. Plaintiff is a Louisiana limited liability company doing business in Louisiana, with its registered office being located in the Parish of Lafayette, State of Louisiana.

2. Defendant, Madison Plate Processing, LLC (sometimes referred to as “Madison”) is an Oklahoma corporation doing business in Tulsa, Tulsa County Oklahoma.

3. Defendant, Lance P. MeGuire (sometimes referred to as “McGuire”) is an individual resident of Tulsa, Oklahoma.
Facts

4 On or about November 28, 2011, Madison Machine Companies, Jnc (“MMC”) a Wyoming corporation, entered into a Purchase of Accounts and Sepkrit.y Agreement (“Purchase Agreement”) with Plaintiff in which Mlvi C granted a security interest
in all of MMC’s equipment in exchange for Plaintiffs agreement to loan MMC money
pursuant to the terms and conditions set forth in the Purchase Agreement. A copy of the Purchase Agreement is attached hereto as Exhibit A.

5. Plaintiff properly perfected its security interest by filing a UCC- 1 financing statement in Wyoming on November 29, 2011. See Exhibit B.

6, Pursuant to the Purchase Agreement, MMC represented and warranted to Plaintiff that (i) the invoices being purchased represented accounts that were and would remain bona fide existing obligations created by the sale and delivery of goods or the rendition of services in the ordinary course of MIv1C’s business, (ii) the amounts of said invoices were unconditionally owed and would be paid to Plaintiff without defenses, disputes, offsets, counterclaims or rights of return or cancellation, and (iii) the Accounts represent bona fide obligations of the account debtors, free and clear of any set-off, compensation, counterclaim, defense, allowance or adjustment other than for prompt payment shown on the invoice and arose in the ordinary course of business, as well as such other representations and warranties set forth in the Purchase Agreement.

7. On October 9, 2012, Plaintiff placed IvllvlC in default for the reasons stated in its Notice of Default, a true and correct copy of which is attached as Exhibit C.

8. Upon information and belief McGuire owns or owned an interest in MIvIC. In May and June of 2012, MMC sold to McGuire, without the knowledge or consent of Plaintiff, equipment burdened by the security interest granted by MMC to Plaintiff This equipment was sold without Plaintiffs security interest in same being released. The known equipment sold is set forth in the three Bills of Sale attached as Exhibit D. The statement made by MMC’s President, Richard L. Caudle, in the attached Bills of Sale, that we “certify that the equipment is free of any liens or encumbrances . . .,“ was and remains false. On information and belief, there were other equipment transfers from MIvIC to McGuire that preceded these three, all of which transferred equipment burdened by the security interest granted by MMC to Plaintiff

9. According to McGuire, he or Madison sold all or some portion of said equipment transferred to him by MIvIC to a third party. If such sales did take place, the equipment was again transferred without the knowledge or consent of Plaintiff, and was transferred subject to Plaintiffs security interest as same has never been released.
10. In addition to a security interest over all the MMC equipment sold without its knowledge or consent, Plaintiff has a security interest over all proceeds of said sales pursuant to its perfected security interest, of which all defendants either had actual or constructive knowledge (by virtue of the Plaintiffs UCC-l filing perfecting its security interest and puffing third parties on notice of its secured position).

COUNT I

Injunction

For Plaintiffs First Cause of Action against all Defendants, Plaintiff incorporates by reference paragraphs 1 through
10 above, as if set forth more filly herein.

11. The equipment described herein is subject to a valid and perfected security interest of Plaintiff, and Plaintiff is
entitled to possession thereof by virtue of the terms of its lien against said equipment.

12. Despite the existence of Plaintiffs properly perfected security interests, Defendants individually, or collectively, are either in wrongful possession of or have improperly transferred possession and control of said equipment to others, to the detriment and damage of Plaintiff 13. Plaintiff is likely to succeed on the merits of this action and is in danger of suffering irreparable harm should its collateral be sold, damaged or removed from the jurisdiction of this Court.

14. Plaintiff has no adequate remedy at law to preclude the loss of its collateral, as referenced herein, and it is therefore entitled to injunctive relief

15. Plaintiff requests an injunction enjoining said Defendants from transferring, hypothecating, transporting or otherwise disposing of its equipment collateral pending the outcome of this litigation.

COUNT 11

Conversion

For Plaintiffs Second Cause of Action against all Defendants, Plaintiff incorporates by reference paragraphs 1 through
15 above, as if set forth more filly herein,

16. •The equipment which is subject to Plaintiffs security interest has been wrongfully transferred, sold or otherwise withheld from Plaintiff, without Plaintiffs knowledge or consent.

17. Defendants knew or should have known of Plaintiffs security interest in and to said equipment, as well as its right to possession or control of same due to Madison’s default of its contractual obligations to Plaintiff Defendants have wrongfully, willfully, or negligently failed and refused to turn over Plaintiffs secured equipment to it, despite Plaintiffs demand for same.

18. Plaintiff has been damaged by Defendants’ willful or negligent refusal to turn over possession and control of the equipment subject to its liens, or the proceeds from the sale thereof 19. As a result of Defendants’ wrongful acts or omissions, Plaintiff is entitled to all damages resulting from said wrongful acts or omissions, in excess of the sum of $75,000.00, plus punitive damages in an amount to be determined hereafter.

COUNT III

Declaratory Judgment

For Plaintiffs Third Cause of Action against all Defendants, Plaintiff incorporates by reference paragraphs 1 through
19 above, as if set forth more flilly herein..

20. Plaintiff is the holder of a valid, first and prior security interest in all equipment referenced herein.

21. Any interest or claim adverse to Plaintiff, held by Defendants, or any of them, is subsequent and inferior to the interest of Plaintiff

22. Plaintiff if entitled to foreclose its security interest in and to all said equipment, and have the same sold with the proceeds applied toward satisfaction of the debt to which its lien secures.

23. Plaintiff is entitled to a declaratory judgment, declaring it to have a first and valid prior security interest in and to said equipment, or the proceeds thereof, superior to any and all liens or claims of Defendants, and ordering that any and all of said equipment, or the proceeds from the sale thereof, be immediately delivered to Plaintiff to be dealt with in accordance with all legal and equitable rights and remedies available to it.

WHEREFORE, premises considered, Plaintiff, prays the Court grant it judgment against all Defendants, jointly and severally, as follows:

Defendant Lance P. McGuire appeared and answered as follows:

1. Defendant McGuire admits the allegations contained in Paragraph 1 of the Petition.

2. Defendant McGuire admits the allegations contained in Paragraph 2 of the Petition.

3. Defendant McGuire admits the allegations contained in Paragraph 3 of the Petition.

4. Defendant McGuire is without sufficient information to admit or deny the allegations contained in Paragraph 4 of the Petition. Therefore, Paragraph 4 is denied.

5. Defendant McGuire is without sufficient information to admit or deny the allegations contained in Paragraph 5 of the Petition. Therefore, Paragraph 5 is denied.

6. Defendant McGuire is without sufficient information to admit or deny the allegations contained in Paragraph 6 of the Petition. Therefore, Paragraph 6 is denied.

7. Defendant MeGuire is without sufficient information to admit or deny the allegations contained in Paragraph 7 of the Petition. Therefore, Paragraph 7 is denied.

8. Defendant MeGuire denies all of the allegations in Paragraph 8 of the Petition.

9. Defendant McGuire denies he purchased, owned or sold any equipment from MMCI. Defendant MeGuire denies all other allegations contained in Paragraph 9 of the Petition insofar as they relate to him.

10, Paragraph 10 is a legal conclusion and requires no response; nonetheless, Defendant McGuire denies all allegations in Paragraph 10 of the Petition.

COUNT I

Injunction

11. Defendant McGuire denies the allegations contained in Paragraph 11 of the Petition.

12. Defendant MeGuire denies the allegations contained in Paragraph 12 of the Petition.

13. Defendant MeGuire denies the allegations contained in Paragraph 13 of the Petition.

14. Defendant McGuire denies the allegations contained in Paragraph 14 of the Petition.

15. Paragraph 15 of the Petition is a legal conclusion and requires no response; nonetheless, Defendant McGuire denies all allegations in Paragraph 15 of the Petition.

COUNT II

Conversion

16. Defendant MeGuire denies the allegations contained in Paragraph 16 of the Petition.

17. Defendant McGuire denies the allegations contained in Paragraph 17 of the Petition.

18. Defendant MeGuire denies the allegations contained in Paragraph 18 of the Petition.

19. Defendant McGuire denies the allegations contained in Paragraph 19 of the Petition.

COUNT Ill

Declaratory Judgment

20, Defendant McGuire denies the allegations contained in Paragraph 20 of the Petition.

21. Defendant McGuire denies the allegations contained in Paragraph 21 of the Petition.

22. Defendant McGuire denies the allegations contained in Paragraph 22 of the Petition.

23. Defendant McGuire denies the allegations contained in Paragraph 23 of the Petition.

AFFIRMATIVE DEFENSES AND ADDITIONAL AVERMENTS

24. Plaintiff has failed to state a claim upon which relief can be granted.

25. Plaintiffs claims are barred by the statute of limitations.

26. Plaintiffs security interest in the equipment at issue did not attach.

27. Plaintiff did not properly file its UCC Financing Statement.

28. Plaintiffs UCC Financing Statement did not adequately identify the equipment at issue.

29. Plaintiffs security agreement with Madison Machine Companies, Inc. does not adequately identify the equipment in which Plaintiff claims a security interest.

30. Defendant McGuire never owned any of the equipment identified in the three Bills of Sale referenced in Plaintiffs Petition.

31. Madison Machine Companies, Inc. was not the owner of all of the equipment identified in the three Bills of Sale attached to the Petition.

32. Plaintiff has not obtained judgment against Madison Machine Companies, Inc., therefore, any action to recover under its security agreement is premature.

33. Defendant McGuire reserves the right to raise additional affirmative defenses, as discovery is ongoing.

WHEREFORE, Defendant, Lance P. McGuire, respectfully requests that the Court grant judgment in his favor, and against Plaintiff, and award Defendant McGuire an amount for attorney fees and costs.

COUNTERCLAIM

1. On November 7, 2012, Plaintiff AIM Business Capital, LLC, filed suit against Defendant
Lance C. MeGuire (sic) in AIM Business Capital, L.L.C. v. Madison Machine
Companies, Inc., Richard Caudle, Brian T. Wernimont, Lance C. PvlcGuire and
Machinery Acquisitions International, Inc., Fifteen Judicial District Court, Parish of
Lafayette, Louisiana, Docket Number: C-20125999 D (hereinafter the “Louisiana
Lawsuit”).

2. On December 20, 2012, Defendant Lance P. McGuire (“McGuire”) filed a Declinatory Exception of Lack of Jurisdiction Over the Person, which argued Defendant MeGuire had no contacts with the state of Louisiana. In support of the declinatory exception, Defendant McGuire produced an Affidavit stating the following points demonstrating he has no contacts with Louisiana:

a. He has not engaged in any conduct in Louisiana related to the Louisiana Lawsuit.

b. He does not conduct business in Louisiana.

c. He does not have any ownership interest in Defendant MMCI.

d. He does not contract with any person or entity located in Louisiana.

e. He does not own any real property in Louisiana.

f. He does not hold any bank accounts in Louisiana.

g. He does not pay taxes in Louisiana.

h. All of the equipment at issue was located in Oklahoma.

I. The agreement to purchase equipment was located in Oklahoma.

j. The purchase itself took place in Oklahoma.

3. Thereafter, the Honorable Edward D. Rubin set the Declinatory Exception for hearing on February 19, 2013 at 10:00a.m.

4. On January 31, 2013, Plaintiff filed a Motion to Continue Hearing on Exceptions. Plaintiff requested the continuance because it needed additional time to conduct jurisdictional discovery.

5. On February 25, 2013, Plaintiff filed its First Supplemental and Amending Petition for Damages, which added Madison Plate Processing, Inc. (“MPP”), as a Defendant to the Louisiana Lawsuit.

6. On April 1, 2013, Defendant MPP filed its Declinatory Exception to Personal Jurisdiction, which argued that it was not subject to personal jurisdiction in Louisiana Courts because it did not have minimum contacts with the state of Louisiana.

7. On April 11, 2013, the Honorable Edward D. Rubin set the Declinatory Exceptions filed by Defendants McGuire and MPP for hearing on May 6,2013.

8. Thereafter, Defendant McGuire’s counsel spoke with Plaintiff’s counsel several times over the phone. During such conversations, Defendant McGuire’s counsel reiterated that there was absolutely no evidence Defendants MeGuire or MPP had any contacts with Louisiana. Plaintiffs counsel refused to address the merits of this issue and said that even if the Louisiana court dismissed Defendant MeGuire from the Louisiana Lawsuit, Plaintiff would sue Defendant McGuire in Tulsa.

9. On April 23, 2013, Plaintiff AIM Business Capital, LLC filed suit against Defendants MeGuire and MPP in the District Court of Tulsa County, State of Oklahoma. Plaintiff filed this lawsuit while Defendants McGuire and MPP were still parties to the Louisiana Lawsuit, luiowing full-well that the Louisiana Court would dismiss Defendants McGuire and MPP for lack of personal jurisdiction.

10. On May 6, 2013, the Honorable Edward D. Rubin held a hearing on the Declinatory Exceptions filed by Defendants McGuire and MPP. At that hearing, Plaintiff’s counsel requested a second continuance in order to perform additional discovery, because he did not have the evidence necessary to prove Defendant McGuire was subject to personal jurisdiction in Louisiana. This admission is critical because it demonstrates Plaintiff filed lawsuits against Defendants McGuire and MPP without the probable cause necessary for asserting personal jurisdiction over these defendants.

11. After hearing oral argument from both sides, the Honorable Edward D. Rubin entered an an order granting the Declinatory Exceptions filed by Defendants MeGuire and MPP, and dismissing both Defendants from the Louisiana Lawsuit.
Count 1: Malicious Prosecution

12. At the time Plaintiff filed the action, Plaintiff did not have probable cause to join Defendant McGuire in the original action, as evidence by statements made by Plaintiff’s own attorney at the Hearing on Declinatory Exceptions.

13. Plaintiffs bringing of the original action was malicious insofar as it was designed to force Defendant McGuire to defend a lawsuit in a forum in which it had no contacts, for the purpose of attempting to force Defendant McGuire to pay Plaintiff for resolution of the claims.

14. That as a result of the bringing of the original action, Defendant MeGuire sustained injury in the form of attorney fees and costs incurred in defending the Louisiana Action.

WHEREFORE Defendant, Lance P. MeGuire, respectfully requests that the Court grant judgment in its favor and against Plaintiff and award Defendant the full amount of damages requested, as well as all other recovery allowed under law.

Outcome: Settled and mutually dismissed with prejudice.

Plaintiff's Experts:

Defendant's Experts:

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