October 16, 2006
Kelley Drye obtained summary judgment on behalf of client American Blind and Wallpaper Factory, Inc. ("ABWF"). ABWF, one of the nation's largest retailers of custom window treatments and wall coverings, was named as the defendant in a suit brought by Earl Racine, as successor to California Window Coverings ("CWC"), a former vendor of ABWF.
The plaintiff was sole shareholder and guarantor on a bank loan obtained by CWC that was secured by CWC's assets. CWC's financial problems ultimately led to an Assignment for the Benefit of Creditors. The Assignee chose not to bring any cause of action against ABWF for funds allegedly owed. Mr. Racine fulfilled his obligations under the guaranty to CWC's lender and filed suit alleging that ABWF breached a verbal contract with CWC by failing to pay for product ordered by ABWF, and inducing CWC to purchase inventory to support future business.
After a lengthy discovery dispute, Kelley Drye was able to obtain the documents assigning the assets of CWC to the Assignee and filed a motion for summary judgment. The USDC for the Eastern District of Michigan ruled that the plaintiff did not have standing as CWC assigned all of its assets to the Assignee and that the assets transferred to Racine by the bank were insufficient to create an interest in the asserted causes of action.