BANKWELL BANK v. BRAY ENTERTAINMENT, INC.
2:20-cv-00049
D.N.J.Jan 21, 2021Background
- In 2016 Bankwell loaned $1,500,000 to entities controlled by Christopher Bray and took a perfected security interest in the borrowers’ personal property; Bray and Mirayam Solomon also granted a mortgage on Palisade Street property as loan security.
- Bankwell alleges the borrowers defaulted on February 1, 2019, and that Bray sold the mortgaged property without disclosure to Bankwell.
- Bankwell contends a software product called “ReleaseME” was originally associated with Bray entities (Brayniac/Bray Entertainment) under a Terms of Use stating Brayniac (doing business as “BiG”) owned or licensed platform trademarks.
- In March–June 2019 BiG-branded materials marketed ReleaseME and, in June 2019, BiGMedia.ai, Inc. filed USPTO trademark applications for “RELEASEME.”
- Bankwell’s Fifth Amended Complaint reasserted four fraudulent-transfer counts (Counts 11–14) and an unjust-enrichment count (Count 15) based on alleged transfers of ReleaseME, and added veil-piercing/alter-ego claims (Counts 16–17); defendants moved to dismiss counts 11–17.
- The court dismissed Counts 11–15 without prejudice (granting Bankwell one 30‑day opportunity to replead), dismissed Counts 16–17 with prejudice (improperly added and factually inadequate), and ordered Bankwell to show cause within 30 days why the case should not be dismissed for lack of diversity jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraudulent-transfer claims (Counts 11–14): whether AC5 plausibly alleges a transfer of the ReleaseME software | AC5 alleges the software was transferred to BiGMedia as evidenced by trademark filings and marketing materials | Trademark filings alone do not show an actual transfer of the software; BiGMedia created its own products and trademarks | Dismissed for failure to plead plausibly under Rule 8 and for lack of particularity under Rule 9(b); dismissal without prejudice and leave to replead granted |
| Unjust enrichment (Count 15): whether AC5 adequately pleads unjust enrichment tied to the alleged transfer | Same factual allegations supporting the fraudulent-transfer counts suffice to show unjust enrichment | Allegations are conclusory and rest on the same deficient foundation as the fraudulent-transfer claims | Dismissed without prejudice; leave to replead granted |
| Veil-piercing / alter-ego claims (Counts 16–17): whether these new claims were properly added and adequately pled | Plaintiff added claims seeking to reach BiGMedia’s assets to satisfy debt | Counts were added without leave and lack factual support for veil‑piercing/alter‑ego relief | Dismissed with prejudice: improperly filed and amendment would be futile |
| Subject-matter jurisdiction: adequacy of citizenship allegations for diversity jurisdiction | Complaint alleges Bankwell is a banking association with principal place of business in Connecticut | Defendants note citizenship not adequately pled for diversity jurisdiction | Court ordered Bankwell to show cause within 30 days why the action should not be dismissed for lack of federal subject-matter jurisdiction |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (establishes plausibility standard under Rule 8)
- Bell Atlantic v. Twombly, 550 U.S. 544 (2007) (pleading must raise claims above speculative level)
- Frederico v. Home Depot, 507 F.3d 188 (3d Cir. 2007) (Rule 9(b) requires date, time, place or other particularity in fraud pleadings)
- In re Asbestos Prods. Liab. Litig. (No. VI), 822 F.3d 125 (3d Cir. 2016) (courts deciding 12(b)(6) motions generally consider only the complaint’s allegations)
- New York v. Hill, 528 U.S. 110 (2000) (dismissing with prejudice is a harsh remedy)
- Grayson v. Mayview State Hosp., 293 F.3d 103 (3d Cir. 2002) (courts must give leave to amend unless amendment would be futile or inequitable)
- Connelly v. Steel Valley Sch. Dist., 706 F.3d 209 (3d Cir. 2013) (same principle on leave to amend applies even if plaintiff did not seek leave)
- U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383 (3d Cir. 2002) (trial courts must examine subject-matter jurisdiction sua sponte)
- Ray v. Eyster (In re Orthopedic "Bone Screw" Prods. Liab. Litig.), 132 F.3d 152 (3d Cir. 1997) (cases filed in federal court lacking subject-matter jurisdiction must be dismissed)