Factor King, LLC v. Housing Authority

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FACTOR KING, LLC v. HOUSING AUTHORITY
FOR THE CITY OF MERIDEN ET AL.
(AC 42270)
Lavine, Keller and Bishop, Js.
Syllabus
The plaintiff appealed from the judgment of the trial court granting summary
judgment in favor of the defendant. The plaintiff and A Co., a nonparty
entity, entered into a factoring and security agreement under which
the plaintiff received the option to purchase any of A Co.’s accounts
receivable that it deemed to be eligible accounts, and, additionally,
received a security interest in all of A Co.’s accounts receivable. There-
after, the plaintiff sent a notice to the defendant asserting that A Co.
had assigned to it an invoice due to A Co. from the defendant. The
defendant remitted payment directly to A Co. The plaintiff commenced
this action, claiming that payment should have been made to it pursuant
to statute (§ 42a-9-406), and not to A Co. The trial court granted the
defendant’s motion for summary judgment and denied the plaintiff’s
motion for summary judgment, from which the plaintiff appealed to this
court. Held:
1. The trial court properly granted the defendant’s motion for summary
judgment, that court having properly held that the plaintiff was not
entitled to a direct payment of a receivable due to A Co. from an account
not purchased through its agreement with A Co., but in which the plaintiff
had a security interest; the factoring agreement did not constitute an
outright sale of A Co.’s accounts but, rather, it gave to the plaintiff the
sole discretion to purchase certain of A Co.’s accounts, the agreement
did not indicate that either party to that agreement intended for the
unpurchased accounts to be subject to collection upon the notice and
demand of the plaintiff in the absence of a breach by A Co., and the
agreement’s security interest provision had no direct relationship to its
separate provisions authorizing the plaintiff to purchase and collect on
certain accounts; moreover, although the plaintiff was assigned a secu-
rity interest in all of A Co.’s accounts receivable, including that of the
defendant, there was no assignment of the amount due or to become
due such as to trigger the payment provision of § 42a-9-406, and, thus,
because the plaintiff had not been assigned that particular receivable
it had no right to the proceeds from that account and the plaintiff
incorrectly imported its status as an assignee of a security interest in
A Co.’s accounts receivable into the term ‘‘assignee,’’ as used in § 42a-
9-406.
2. The trial court properly denied the plaintiff’s motion for summary judg-
ment; the court determined that there was no genuine issue of material
fact that the plaintiff had never been assigned a specific legal right to
recover on the specific invoice related to the payment and, this court
having determined that an actual assignment of the amount due or to
become due is a precondition to collecting on an invoice pursuant to
§ 42a-9-406, agreed with the trial court that there was no genuine issue
of material fact that the requisite assignment of the defendant’s invoice
never occurred.
Argued January 16—officially released May 26, 2020
Procedural History
Action to recover damages for, intera alia, breach of
contract, brought to the Superior Court in the judicial
district of New Haven, where the court, McNamara, J.,
denied the plaintiff’s motion for summary judgment and
granted the defendant’s motion for summary judgment
and rendered judgment thereon, from which the plain-
tiff appealed to this court. Affirmed.
Bruce Loren, pro hac vice, with whom was Kasey
Procko Burchman, for the appellant (plaintiff).
Kent J. Mancini, for the appellee (named defendant).
Opinion
BISHOP, J. The plaintiff, Factor King, LLC, appeals
from the judgment of the trial court granting summary
judgment in favor of the defendant Housing Authority
for the City of Meriden.1 The question presented in this
appeal is whether, pursuant to a factoring and security
agreement between a factor (purchaser) and a seller,
the purchaser is entitled to direct payment of a receiv-
able due to the seller from an account not purchased
through the agreement, but in which the purchaser has
a security interest to secure the seller’s obligations as
delineated in the agreement. Because we answer that
question in the negative, we affirm the judgment of
the trial court granting summary judgment in favor of
the defendant.
The record in this matter reveals the following undis-
puted facts and procedural history. The plaintiff is a
factoring company.2 The defendant is a public housing
authority located in Meriden. In June, 2016, the defen-
dant and AEG of New England, LLC (AEG), a nonparty
entity, entered into a contract pursuant to which AEG
would perform certain labor and provide certain materi-
als in connection with construction projects being over-
seen by the defendant. On August 30, 2016, the plaintiff
and AEG entered into a factoring and security agree-
ment (agreement) under which the plaintiff received
the option to purchase any of AEG’s accounts receiv-
able that it deemed to be eligible accounts,3 and, addi-
tionally, received a security interest in all of AEG’s
accounts receivable, purchased or unpurchased.
In salient parts, the language of the agreement pro-
vides that AEG will provide the plaintiff with a schedule
of certain of AEG’s accounts available for purchase.
Additionally, the agreement provides that the plaintiff
may, but will not be required to, purchase any of those
accounts that it deems eligible. The financial require-
ments for such purchases are set forth in detail else-
where in the agreement.
Importantly, the agreement also contains security
provisions. Section 7.1 of the agreement provides: ‘‘As
collateral securing the [o]bligations, [AEG] grants to
[the plaintiff] a continuing first priority security interest
in the [c]ollateral.’’ Collateral is defined under the agree-
ment as ‘‘all [AEG’s] now owned and hereafter acquired
[a]ccounts, [c]hattel [p]aper, [i]nventory, [e]quipment,
[i]nstruments, [p]roperty, [d]ocuments, [l]etter of
[c]redit [r]ights, [c]ommercial [t]ort [c]laims, and [g]en-
eral [i]ntangibles.’’ The obligations secured by the col-
lateral are defined in the agreement as ‘‘all present and
future obligations owing by [AEG] to [the plaintiff]
whether arising hereunder or otherwise, and whether
arising before, during or after the commencement of
any bankruptcy case in which [AEG] is a debtor.’’
With that factual background, we turn next to a
review of relevant occurrences after the date of the
agreement. The record reveals that the plaintiff pur-
chased from AEG two accounts receivable pursuant to
the option terms of the agreement. The debtor with
respect to both of the purchased invoices was an entity
known as Bristol Enterprises, LLC, and the invoices
were for work performed by AEG in conjunction with
two projects located in Bristol: the Bingham School
project invoice, in the amount of $228,019.10, and the
O’Connell School project invoice, in the amount of
$265,980.90. Having exercised its option to purchase
these two accounts, and pursuant to Uniform Commer-
cial Code (UCC) § 9-406, codified in similar language
as General Statutes § 42a-9-406,4 notice of the plaintiff’s
purchase of these accounts was sent to Bristol Enter-
prises, LLC, and, subsequently, Bristol Enterprises, LLC,
paid these two amounts to the plaintiff. In the present
appeal, the parties agree that these two accounts receiv-
able were the only ones purchased by the plaintiff pur-
suant to the terms of the agreement.
Nevertheless, by letter dated September 19, 2016, the
plaintiff sent notice to the defendant asserting that AEG
had assigned to the plaintiff all of its present and future
accounts receivables.5 The notice purported to be
issued pursuant to § 9-406 of the UCC. On November
9, 2016, the defendant remitted payment in the amount
of $2,217,750 directly to AEG, and not to the plaintiff,
in response to an invoice sent by AEG for work AEG
had performed for the defendant. The plaintiff com-
menced the present action, claiming that, pursuant to
its notice, and in accordance with the terms of its agree-
ment with AEG, the plaintiff was the entity to whom
the payment of $2,217,750 should have been made.
The parties filed competing motions for summary
judgment. In its opposition to the plaintiff’s motion for
summary judgment, the defendant argued that because
the plaintiff had not purchased the invoice between
itself and AEG, it was under no obligation to pay the
invoice amount to the plaintiff and, instead, it complied
with its contractual obligation to AEG. From the judg-
ment of the trial court granting summary judgment in
favor of the defendant, and from the court’s denial of
the plaintiff’s own motion for summary judgment, the
plaintiff now appeals. Additional facts will be set forth
as necessary.
On appeal, the plaintiff argues that the court erred
in ruling that (1) § 42a-9-406 applies only to invoices
actually purchased by the party assigned an account,
and (2) the plaintiff is not considered an ‘‘assignee’’ of
the account in question under the agreement such as
to trigger the protection of § 42a-9-406. The plaintiff also
challenges the court’s denial of its motion for summary
judgment. In response, the defendant argues that (1)
§ 42a-9-406 contemplates the purchase of specific
invoices in order for those amounts to become collect-
ible by the plaintiff, and (2) the plaintiff is not an
‘‘assignee’’ of the account in question for purposes of
triggering § 42a-9-406 because the plaintiff had only
been ‘‘assigned’’ a security interest in the account, and
had not been assigned the specific amount due on the
invoice sent to the defendant. We agree with the defen-
dant and, accordingly, affirm the judgment of the
trial court.
We first set forth the appropriate standard of review
and governing legal principles. ‘‘The standard of review
of a trial court’s decision granting summary judgment
is well established. Practice Book § 17-49 provides that
summary judgment shall be rendered forthwith if the
pleadings, affidavits and any other proof submitted
show that there is no genuine issue as to any material
fact and that the moving party is entitled to judgment
as a matter of law. In deciding a motion for summary
judgment, the trial court must view the evidence in the
light most favorable to the nonmoving party. . . . The
courts are in entire agreement that the moving party
. . . has the burden of showing the absence of any
genuine issue as to all the material facts . . . . When
documents submitted in support of a motion for sum-
mary judgment fail to establish that there is no genuine
issue of material fact, the nonmoving party has no obli-
gation to submit documents establishing the existence
of such an issue. . . . Once the moving party has met
its burden, however, the [nonmoving] party must pres-
ent evidence that demonstrates the existence of some
disputed factual issue. . . .
‘‘Our review of the trial court’s decision to grant the
defendant’s motion for summary judgment is plenary.
. . . On appeal, we must determine whether the legal
conclusions reached by the trial court are legally and
logically correct and whether they find support in the
facts set out in the memorandum of decision of the
trial court.’’ (Internal quotation marks omitted.) Smith
v. Marshview Fitness, LLC, 191 Conn. App. 1, 8, 212
A.3d 767 (2019). In analyzing the plaintiff’s claim, we
must interpret both the contract between the parties
and the language of § 42a-9-406.
I
A
We look first to the language of the contract between
AEG and the plaintiff in order to determine the nature
of the agreement as it pertains to the plaintiff’s option
to purchase accounts receivable, the security interest
held by the plaintiff in all of AEG’s accounts, and
whether the contract provides the plaintiff with the
right to receive payment on those AEG accounts that
it has not purchased pursuant to the agreement.
‘‘When the language of a contract is ambiguous, the
determination of the parties’ intent is a question of fact
. . . . [W]here there is definitive contract language,
[however], the determination of what the parties
intended by their contractual commitments is a ques-
tion of law. . . . It is implicit in this rule that the deter-
mination as to whether contractual language is plain
and unambiguous is itself a question of law subject to
plenary review. . . .
‘‘In determining whether a contract is ambiguous, the
words of the contract must be given their natural and
ordinary meaning. . . . A contract is unambiguous
when its language is clear and conveys a definite and
precise intent. . . . The court will not torture words
to impart ambiguity where ordinary meaning leaves no
room for ambiguity. . . . Moreover, the mere fact that
the parties advance different interpretations of the lan-
guage in question does not necessitate a conclusion
that the language is ambiguous. . . .
‘‘In contrast, a contract is ambiguous if the intent of
the parties is not clear and certain from the language
of the contract itself. . . . [A]ny ambiguity in a contract
must emanate from the language used by the parties.
. . . The contract must be viewed in its entirety, with
each provision read in light of the other provisions . . .
and every provision must be given effect if it is possible
to do so.’’ (Citations omitted; footnotes omitted; inter-
nal quotation marks omitted.) Cruz v. Visual Percep-
tions, LLC, 311 Conn. 93, 101–103, 84 A.3d 828 (2014).
We do not find the contract terms to be ambiguous
and, accordingly, we undertake a plenary review of the
agreement’s provisions.
It is important to an understanding of the parties’
transactional relationship that the agreement contains
both factoring provisions (factoring agreement) and
security provisions (security agreement). The factoring
agreement provides that ‘‘[AEG] shall offer to [the plain-
tiff] as absolute owner certain of [AEG’s] [a]ccounts
and list same [in] [s]chedules of [a]ccounts. Upon pur-
chase . . . [the plaintiff] will assume the risk of [non-
payment] on [p]urchased [a]ccounts up to the [i]nitial
[p]urchase [p]rice . . . .’’ The contract further provides
that ‘‘[the plaintiff] may, but need not purchase from
[AEG] such [a]ccounts as [the plaintiff] determines to
be [e]ligible [a]ccounts.’’ The language makes clear that
the factoring agreement did not constitute an outright
sale of AEG’s accounts but, rather, it gave to the plaintiff
the sole discretion to purchase certain of AEG’s
accounts if it so desired. Notably, the provisions of the
factoring agreement contain no language authorizing
the collection the plaintiff seeks here, in the absence
of some default by AEG on any of its obligations to
the plaintiff. Nowhere does the agreement indicate that
either party intended for unpurchased accounts to be
subject to collection upon the notice and demand of
the plaintiff in the absence of a breach by AEG. Instead,
the plaintiff had the discretion to purchase accounts,
after which purchase it could then send notice and
collect on the chosen invoices. That is the process
which the parties agreed to and followed regarding
Bristol Enterprises, LLC’s invoices.
With regard to the security agreement, the agreement
provides that ‘‘as collateral securing the [o]bligations,
[AEG] grants to [the plaintiff] a continuing first priority
security interest in the [c]ollateral.’’ This provision,
viewed in conjunction with the relevant definitions in
the agreement, makes clear that AEG has provided a
security interest to the plaintiff in all of its accounts
receivable, including the account in question, regardless
of whether the plaintiff purchased the accounts receiv-
able pursuant to the factoring portion of the agreement.
This interest in the accounts receivable secures the
performance of AEG’s obligations to the plaintiff,
whether those obligations are then extant or may come
into existence in the future. The agreement’s security
interest provision, however, has no direct relationship
to its separate provisions authorizing the plaintiff to
purchase certain accounts and collect on those debts.
In short, the security agreement provisions and the fac-
toring agreement provisions, although included in the
same agreement, appear to operate independently.
Accordingly, we conclude that the agreement between
AEG and the plaintiff does not directly assign the
account receivable at issue in the present appeal to the
plaintiff beyond the interest created by the security
agreement.
B
We next address the plaintiff’s argument that the
language of § 42a-9-406 referring to an ‘‘assignee’’ autho-
rizes the plaintiff’s collection on the invoice in this
matter. ‘‘When construing a statute, [o]ur fundamental
objective is to ascertain and give effect to the apparent
intent of the legislature. . . . In other words, we seek
to determine, in a reasoned manner, the meaning of the
statutory language as applied to the facts of [the] case,
including the question of whether the language actually
does apply. . . . [General Statutes §] 1-2z directs this
court to first consider the text of the statute and its
relationship to other statutes to determine its meaning.
If, after such consideration, the meaning is plain and
unambiguous and does not yield absurd or unworkable
results, we shall not consider extratextual evidence of
the meaning of the statute. . . . Only if we determine
that the statute is not plain and unambiguous or yields
absurd or unworkable results may we consider extra-
textual evidence of its meaning such as the legislative
history and circumstances surrounding its enactment
. . . the legislative policy it was designed to implement
. . . its relationship to existing legislation and common
law principles governing the same general subject mat-
ter . . . . The test to determine ambiguity is whether
the statute, when read in context, is susceptible to more
than one reasonable interpretation.’’ Wozniak v. Col-
chester, 193 Conn. App. 842, 858–59, 220 A.3d 132, cert.
denied, 334 Conn. 906, 220 A.3d 37 (2019).
The plaintiff argues that it is the ‘‘assignee’’ to which
the language of § 42a-9-406 refers and, pursuant to its
status as the assignee of the security interest in AEG’s
accounts receivable, it is entitled to payment by the
defendant on the invoice. The defendant rejects this
position on the basis that the plaintiff’s security interest
in AEG’s accounts would entitle the plaintiff only to
payment by the defendant in the event that AEG
breached its obligations to the plaintiff, triggering the
security interest and allowing the plaintiff to foreclose.6
The defendant further disagrees with the plaintiff’s
interpretation of the term ‘‘assignee’’ in this context,
and argues that although the plaintiff was assigned a
security interest in all of AEG’s accounts receivable,
including that of the defendant, there was no assign-
ment of the amount due or to become due such as to
trigger the payment provision in § 42a-9-406. We agree
with the defendant.
Section 42a-9-406 provides in relevant part that ‘‘an
account debtor on an account, chattel paper or a pay-
ment intangible may discharge its obligation by paying
the assignor until, but not after, the account debtor
receives a notification, authenticated by the assignor
or the assignee, that the amount due or to become due
has been assigned and that payment is to be made
to the assignee. After receipt of the notification, the
account debtor may discharge its obligation by paying
the assignee and may not discharge the obligation by
paying the assignor. . . .’’ (Emphasis added.)
First, the statutory language is not vague or ambigu-
ous. Therefore, we need not consider legislative history
in order to ascertain the meaning of ‘‘assignee’’ and,
instead, need only consider its plain meaning. Black’s
Law Dictionary defines ‘‘assignee’’ as ‘‘[s]omeone to
whom property rights or powers are transferred by
another. Use of the term is so widespread that it is
difficult to ascribe positive meaning to it with any speci-
ficity. Courts recognize the protean nature of the term
and are therefore often forced to look to the intent of
the assignor and assignee in making the assignment—
rather than to the formality of the use of the term
assignee—in defining rights and responsibilities.’’
(Emphasis in original.) Black’s Law Dictionary (11th
Ed. 2019) p. 147. Although in this context we interpret
the use of the term ‘‘assignee’’ in the text of a statute,
and not only on the basis of the use of the term in the
agreement, the understanding that the term ‘‘assignee’’
should be construed in accordance with the context
surrounding its usage remains true here. Accordingly,
the ordinary meaning of the term ‘‘assignee’’ should be
applied to its use in § 42a-9-406.
In that regard, we find it instructive that decisional
law in the federal courts previously has interpreted
§ 9-406 of the UCC in a manner consistent with the
interpretation asserted by the defendant in this appeal.
Here, both parties cite to Platinum Funding Services,
LLC v. Petco Insulation Co., United States District
Court, Docket No. 3:09cv1133 (MRK), 2011 WL 1743417(D. Conn. May 2, 2011) (Petco). The plaintiff argues that
Petco is inapposite because, in the present case, it relies
on a security agreement that exists between the parties
to buttress its argument that it was entitled to collect
on the defendant’s invoice. The defendant argues that
Petco is squarely on point, and that the plaintiff’s secu-
rity interest in the account in question does not consti-
tute an assignment, as that term is utilized in § 42a-
9-406.
Petco is factually similar to the present case. Petco
involved a claim by a factoring company for payment
on an account that had not formally been assigned to
it through selection and purchase pursuant to the terms
of its factoring option agreement. Petco, supra, 2011
WL 1743417, *1. In Petco, the plaintiff, Platinum Funding
Services, LLC (Platinum Funding), a factoring company,
sought to recover payments it alleged were owed to it
as a result of a factoring agreement with the defendant,
Petco Insulation Co., Inc. (Petco Insulation). Id. The
relevant factoring agreement was structured similarly
to that in the present case, in that it provided Platinum
Funding with the option to purchase a number of Petco
Insulation’s accounts receivable, but included no
requirement that Platinum Funding actually do so. Id.,*1–2 The plaintiff in Petco, like the plaintiff in the pres-
ent case, sent notice to a third party who had performed
work for Petco Insulation—but whose invoice Platinum
Funding had not purchased—notifying it of the pur-
ported assignment of its account. Id., *2–3. When that
third party made payment to Petco Insulation and not to
Platinum Funding, Platinum Funding brought an action
against the third party seeking to recover the amounts
paid to Petco Insulation on the unpurchased invoices.
Id., *3. The third party then moved for summary judg-
ment. Id., *4.
The court in Petco determined, by a plain reading of
the agreement, as well as the use of logic and common
sense, that Platinum Funding could not recover from
the account debtor on its UCC § 9-406 claim because
the right to receive payment on the particular invoices
at issue had never actually been assigned to it. Id.,
*8,*13. Although we acknowledge that the plaintiff in
Petco did not rely on any security interest to justify
its claim of entitlement to payment from the account
debtor, the logic underpinning the court’s ruling is
readily apparent.7 Notably, the reasoning and conclu-
sion of Petco—that a creditor who has not been assigned
a particular receivable has no right to the proceeds
from that account—have been widely followed in other
jurisdictions. See Forest Capital, LLC v. BlackRock,
Inc., 658 Fed. Appx. 675, 680–81 (4th Cir. 2016) (‘‘[t]he
language of UCC § 9-406 . . . presumes that an
assignor has already assigned its rights to receive pay-
ment from an account debtor to an assignee’’ (internal
quotation marks omitted)); First Bank & Trust v. Cov-
entina Construction Corp., United States District
Court, Docket No. 18-civ-6648 (NGG) (VMS), 2019 WL
4120363, *5 n.4 (E.D.N.Y. July 23, 2019) (‘‘[p]laintiff has
standing to bring the account stated claim because the
rights to and amount owed under the relevant invoices
were assigned to [the plaintiff]’’ where ‘‘[t]he [f]actoring
[a]greements transfer all legal and equitable title in the
accounts to [the] plaintiff’’ (emphasis added; internal
quotation marks omitted)); Durham Commercial Capi-
tal Corp. v. Select Portfolio Servicing, Inc., United
States District Court, Docket No. 3:14-cv-877-J-34
(PDB), 2016 WL 6071633, *16 (M.D. Fla. October 17,
2016) (‘‘Of course, if the assignee did not in fact receive
an assignment, the account debtor cannot discharge
its obligation by paying a putative assignee who is a
stranger. . . . That statement suggests what common
sense also dictates—that a notice of assignment obli-
gates an account debtor to pay the purported assignee
only to the extent there is an actual, valid assignment
from the assignor.’’ (Citation omitted; internal quotation
marks omitted.))..
We agree with the interpretation of § 9-406 of the
UCC adopted by the learned judge in Petco that, in
order for a factoring company to collect on an account
receivable, it must have purchased that account, or
actually have been assigned its ownership, pursuant
to the relevant factoring agreement. Section 42a-9-406
clearly states that the duty placed upon an account
debtor to discharge its debt by paying the assignee, as
opposed to the assignor, hinges on ‘‘the amount due or
to become due [being] assigned . . . .’’ Our interpreta-
tion of ‘‘assignee’’ within the context of § 42a-9-406 nec-
essarily requires consideration of the language that pre-
cedes that term. The phrase ‘‘due or to become due’’
makes clear that, for the ‘‘assignee’’ to become the party
to whom payment must be made, the amount of that
payment—which is either currently due, or will become
due in the future—is what must be assigned to the
‘‘assignee.’’
As discussed, the plaintiff’s interpretation of the term
‘‘assignee’’ within the statute relies on its status as an
assignee of the security interest in AEG’s accounts
receivable pursuant to the security agreement. The
UCC, as adopted by our legislature, defines a security
interest, in part, as an interest in personal property or
fixtures which secures payment or performance of an
obligation. General Statutes § 42a-1-201 (35). Here, the
agreement provided collateral to the plaintiff in the
form of AEG’s accounts receivable as security for the
performance of its obligations, then or in the future, to
the plaintiff. Consequently, the plaintiff had a collateral
interest in the receivable due to AEG from the defen-
dant. Accordingly, the plaintiff is correct that, pursuant
to the security agreement, it is an ‘‘assignee’’ of the
secured interest in AEG’s accounts.
The plaintiff, however, incorrectly imports its status
as an assignee of the security interest into the term
‘‘assignee’’ as used in § 42a-9-406, which, as we have
noted, unambiguously refers to an assignee of an
amount due or to become due to the assignor—which
is not a proper characterization of the defendant’s
invoice in the present case. No amount due on the
subject account by the defendant was assigned to the
plaintiff. Rather, that account, along with other
accounts due to AEG and not purchased by the plaintiff,
served only as collateral securing the plaintiff’s rights
against any default by AEG of its obligations to the
plaintiff. Moreover, there is no evidence or claim that
AEG defaulted on any of its obligations pursuant to the
agreement, which would have been a precondition to
the plaintiff’s right to seek satisfaction from this receiv-
able due from the defendant to AEG. In sum, the fact
that the plaintiff has been ‘‘assigned’’ a security interest
does not assign any present interest in the defendant’s
accounts receivable.
The plaintiff asserts, however, that it sent a notice
of assignment of this account to the defendant. That
claim lacks merit. The fact that a notice of assignment
has been sent, alone, is not sufficient to trigger repay-
ment to the factoring company. See CapitalPlus
Equity, LLC v. Glenn Rieder, Inc., United States Dis-
trict Court, Docket No. 17-CV-639 (JPS), 2018 WL
276352, *4 (E.D. Wis. January 3, 2018) (noting, in case
in which no formal documentation of sale of accounts
receivable exists, that ‘‘the notice . . . sent to [the
account debtor] demanding payment would have no
force or effect unless the accounts had actually been
assigned to it’’). Thus, we conclude that in attempting to
equate its security interest in the defendant’s receivable
with actual assignment of ownership of the account,
the plaintiff is legally incorrect and, as a result, the
court properly granted the defendant’s motion for sum-
mary judgment.
II
Finally, the plaintiff claims that the court erred in
denying its motion for summary judgment. Ordinarily,
the denial of a motion for summary judgment is not
an appealable judgment. See, e.g., Westbrook v. ITT
Hartford Group, Inc., 60 Conn. App. 767, 774–75, 761
A.2d 242 (2000). Because, however, the court granted
the defendant’s motion for summary judgment and,
accordingly, the plaintiff was not afforded the opportu-
nity of a full trial on the merits, this claim is properly
before us. See Kindred Nursing Centers East, LLC v.
Morin, 125 Conn. App. 165, 169–70, 7 A.3d 919 (2010).
The court denied the plaintiff’s motion for summary
judgment because it determined that there was no genu-
ine issue of material fact that the plaintiff was never
assigned any specific legal right to recover on the spe-
cific invoice related to the alleged misdirected payment.
On the basis of our analysis as set forth in part I of this
opinion determining that an actual assignment of the
amount due or to become due is a precondition to
collecting on an invoice pursuant to § 42a-9-406, we
agree with the court that there is no genuine issue
of material fact that the requisite assignment of the
defendant’s invoice never occurred. Accordingly, we
affirm the court’s denial of the plaintiff’s motion for
summary judgment.
The judgment is affirmed.
In this opinion the other judges concurred.
1
In the underlying litigation, the plaintiff brought claims against two
additional defendants, Bristol Enterprises, LLC, and Maynard Road Corpora-
tion. On August 28, 2017, the plaintiff withdrew its claims as to those parties
and withdrew counts one and two of the complaint. Accordingly, we refer to
the Housing Authority for the City of Meriden as the defendant in this appeal.
2
The trial court found that ‘‘[f]actoring is a process wherein one business—
a factoring firm, purchases accounts receivable from another business at a
discounted price and in exchange, the factoring firm advances working
capital. See Forest Capital, LLC v. BlackRock, Inc., 658 Fed. Appx. 675, 677
(4th Cir. 2016); Brookridge Funding Corp. v. Northwestern Human Services,
175 F. Supp. 2d 355, 358 (D. Conn. 2001).’’ Although our understanding of
a factoring agreement, generally, does not differ from that of the trial court,
the agreement in the present case provided the plaintiff only an option to
purchase certain of the defendant’s receivables.
3
The agreement defines an ‘‘[e]ligible [a]ccount’’ as ‘‘an [a]ccount that is
acceptable for purchase as determined by [the plaintiff] in the exercise
of its reasonable sole credit or business judgment.’’ (Internal quotation
marks omitted.)
4
General Statues § 42a-9-406 (a) provides in relevant part: ‘‘an account
debtor on an account . . . may discharge its obligation by paying the
assignor until, but not after, the account debtor receives a notification,
authenticated by the assignor or the assignee, that the amount due or to
become due has been assigned and that payment is to be made to the
assignee. After receipt of the notification, the account debtor may discharge
its obligation by paying the assignee and may not discharge the obligation
by paying the assignor. . . .’’
5
The notice sent to the defendant on September 19, 2016, read in relevant
part: ‘‘AEG of New England, LLC has assigned all of its present and future
accounts receivables to FACTOR KING, LLC . . . . Enclosed is AEG of
New England, LLC’s Notice of Assignment and Change of Payee confirming
this assignment. FACTOR KING has a perfected first security interest in all
of AEG of New England, LLC’s accounts receivables pursuant to the attached
UCC-1 Financing Statement. All checks and other payments for any monies
owed by you to AEG of New England, LLC, for any reason including materials
provided or work performed by AEG of New England, LLC for you on any
construction project now or in the future, must be made payable only to
FACTOR KING, LLC . . . .’’ (Emphasis omitted.)
6
The plaintiff makes no claim of breach on the part of AEG, and is not
seeking to foreclose on the security interest in the present case.
7
The court in Petco alludes, in a footnote, to the existence of a security
agreement between the parties, stating, in relevant part: ‘‘The First Agree-
ment included a number of other terms which may be relevant later on in
this case. For example, it provided that if Petco Insulation . . . ‘receive[d]
any collections or other proceeds of the [a]ccounts [r]eceivable assigned
to Platinum [Funding], [s]ellers shall immediately deliver such payments
. . . to Platinum [Funding],’ and that ‘[f]ailure to deliver such payments
shall be deemed a default’ on related security agreements with Platinum
Funding. . . . However, Platinum Funding has not made any arguments
based on those other terms in opposition to the pending motion. Nor has
it made any arguments based on the terms in the related security agreements.
The [c]ourt therefore need not examine them in further detail here.’’ Petco,
supra, 2011 WL 1743417, *2 n.1.
The language of the footnote reveals that the relevant agreement or agree-
ments between Petco Insulation and Platinum Funding likely contained a
similar security agreement to the one at issue in the present case. Because
the factoring company in Petco did not rely on the security provisions to
justify its right to collect on the accounts, however, the court in Petco offered
no guidance as to the merits of doing so.