Technolojoy, LLC v. BHPH Consulting Services, LLC

UNITED STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF FLORIDA

Miami Division

Case Number: 19-23770-CIV-MORENO

TECHNOLOJOY, LLC, and IBRAHIM F.

ALGAHIM,

Plaintiffs,

vs.

BHPH CONSULTING SERVICES, LLC,

d/b/a BHPH CAPITAL SERVICES; SEAN

FOUZAILOFF, and ANATOLIY SLUTSKIY,

Defendants.

/

ORDER GRANTING IN PART AND DENYING IN PART CROSS-MOTIONS FOR

SUMMARY JUDGMENT AND DENYING MOTION IN LIMINE WITHOUT

_PREJUDICE

This dispute stems from a business relationship where Plaintiff Technolojoy, LLC

purchased used cellular phones from the Defendant BHPH Consulting Services, LLC. It is

undisputed that BHPH sent nonconforming shipments of phones, for which Technolojoy prepaid.

BHPH remedied the breaches by providing credits toward future orders. The credits got carried

over and increased over time from invoice to invoice. Eventually, the business relationship ended

and the Plaintiffs sought chargebacks from American Express to mitigate damages.

Plaintiffs, Technolojoy, LLC and its principal Ibrahim F. Algahim, are suing for breach

of contract, quantum meruit, unjust enrichment, fraud, violation of the Florida Deceptive and

Unfair Trade Practices Act, and open account. Defendants move for summary judgment, but the

Court only grants the motion as to the equitable claims because the parties do not dispute the

existence of a valid contract for the purchase and sale of goods. The Court finds there are

disputed issues of material fact precluding summary judgment on the other claims.

Defendants filed a counterclaim for breach of contract, unj ust enrichment, defamation,

violation of the Florida Deceptive and Unfair Trade Practices ‘Act, and common law indemnity.

The Court finds that the equitable claim for unjust enrichment survives summary judgment as

there is a disputed issue of material fact as to whether the chargebacks Plaintiffs obtained from

American Express, the shipments of phones Plaintiffs received, and other refunds surpassed the

amount Plaintiffs were owed.

THIS CAUSE came before the Court upon Defendants? Motion for Summary Judgment

(D.E. 113), Plaintiffs’ Motion for Summary Judgment (D.E. 138) filed on July 28, 2021, and

Defendants’ Motion in Limine (D.E. 148) filed on August 25, 2021.

THE COURT has considered the motions, the responses, the pertinent portions of the

record, and being otherwise fully advised ‘in the premises, it is

ADJUDGED that Defendants’ Motion for Summary Judgment is DENIED as to the

Plaintiffs’ claims for breach of contract (Count 1), the fraud claims (Counts 4-6), and the Florida

Deceptive and Unfair Trade Practices Act claim (Count 7). The Court notes that Defendants did

not move for summary judgment on Plaintiffs’ claim for Open Account (Count 8). It is also

ADJUDGED that Defendants’ motion for summary judgment is GRANTED as to the

equitable claims for unjust enrichment and quantum meruit (Counts 2 and 3). It is also

ADJUDGED that Plaintiffs’ Motion for Summary Judgment is DENIED as to the

Counterclaim for unjust enrichment (Count 2). Itis ~~

ADJUDGED that Plaintiffs’ Motion for Summary Judgment on the Counterclaim is

GRANTED as to the breach of contract claim (Count 1), the defamation claim (Count 3), the

Florida Deceptive and Unfair Trade Practices Act claim (Count 4), and the common law

indemnity claim (Count 5).

2.

ADJUDGED that Plaintiffs’ Motion for Summary Judgment on their own breach of

contract claim is DENIED. It is

ADJUDGED that Defendants’ motion for summary judgment on their counterclaims for

breach of contract, unjust enrichment, violation of the Florida Deceptive and Unfair Trade

Practices Act and common law indemnity is DENIED. Finally, it is

ADJUDGED that Defendants’ motion in limine is DENIED without prejudice with leave

to reargue at trial.

I. Factual Background

Plaintiff, Technolojoy, LLC is a consumer electronic wholesale company. Defendant

BHPH Capital Services sells electronics, including cell phones, to wholesalers. From December

2018 to July 8, 2019, Technolojoy and BHPH were in a business relationship where Technolojoy

would prepay BHPH for the purchase of cell phones and other electronics so that Technolojoy

could resell them. Technoloj oy’s principal is Ibrahim Algahim and BHPH’s principals are Sean

Fouzailoff and Anatoliy Slutskiy.

There are three means of communication between the parties during this business

relationship. BHPH would send invoices to Technolojoy. There are over a hundred invoices

exchanged between the parties. The parties exchanged text messages to dispute the pricing and

condition of the cellular phone shipments. The parties also created a Google sheet to document

the issues.

A. Nonconforming Shipments

Technolojoy became aware that BHPH was not sending conforming shipments to it.

Technolojoy’s principal, [brahim F. Algahim, testified that he would advise BHPH about the

nonconforming goods — shipments contained incorrect quantities or did not match the invoice’s

product descriptions. Algahim Affidavit at 6. Defendant’s principal, Sean Fouzailoff, testified at

his deposition that BHPH invoiced Technolojoy for cell phones it did not yet have in its

possession. Fouzailoff Depo. at 42. BHPH would acquire the phones it sold to Technolojoy from

Smarter Phone, a company located in the United Kingdom. Jd. at 29, Technolojoy would fully

prepay the phones, and at times, would use these funds to purchase the phones it would then send

to Technolojoy. Jd. at 37,41. .

The parties also created a Google Sheet to keep track of invoice numbers, models of cell

phones, and any deductions from the sales prices due to the conditions of the phones. Fouzailoff

Depo. at 77. Algahim also had access to the Google Sheet, and he could note nonconforming

shipments and problems with cell phones. Fouzailoff’s testimony confirms that BHPH shipped

non-conforming goods to Technolojoy. Fouzailoff Depo. at 12, 33.

BHPH would correct the issue by sending a new invoice to reflect actual goods delivered

and rather than refund the monies paid, BHPH would provide Technolojoy with a credit toward a

future order. For example, the discount for Invoice #144 is reflected on the next Invoice #145.

On Invoice #144, Algahim requested a discount of $2,500 because the phones were delivered

without the original Apple iPhone boxes. As a result, BHPH applied this discount to Invoice

#145 to reduce the total from $10,480 to $7,980. Fouzailoff Decl. at 417. This process repeated

with complaints about nonconforming goods and discounts given on future orders. Jd. This

resulted in Technolojoy accumulating credits. Fouzailoff Depo. 54-60; Algahim Affidavit at

18, 20. Technolojoy claims it never received the credits because BHPH would carry them over

from one invoice to the next. Algahim Affidavit at { 18. Fouzailoff testified that the credits were

interrelated from invoice #150 to invoice #260. Fouzailoff Depo. at 96-97.

BHPH contends that some credits were sent to third parties at Plaintiff's request. Algahim

testified that he directed BHPH to send a credit to a third party called MacBookDaddy via

□ 4 ,

PayPal. Algahim Depo. Vol. 1 at 56-57. As to invoice #159, BHPH contends that Plaintiff

received the phones, received the credit via PayPal, and also received a chargeback from the

eredit card company for $14,440. Id at 134-136, 139. Algahiin disputes that Technolojoy

received a $14,440 windfall and that it “triple dipped” on invoice 159. Algahim Affidavit at J 26.

Over the course of the business relationship, the parties exchanged text messages. In a

text message dated July 6, 2019, Fouzailoff admitted that BHPH owed Technolojoy $118,000.

Fouzailoff Depo. at Exh. A at 521. BHPH separately admits in its Counterclaim that it owed

$105,995 to Technolojoy at the time it ended the business relationship. Counterclaim at J 22

(D.E. 39). Defendants explained that the amount owed was for Invoice Nos. 235, 236, 241, and

249, which they did not deliver to Technolojoy. Id. Fouzailoff also testified that he did not

deliver $25,500 in goods on invoice 228 and $22,620 on Invoice 229. Fouzailoff Depo. at 140-

166.

During the first week of July 2019, Technoloj oy requested the balance of the cell phones

that were prepaid by Technolojoy, but remained outstanding. Algahim Affidavit at 10. On July

6, 2019, Fouzailoff sent a text message to Algahim explaining that BHPH was notable to ship

néw inventory to Technolojoy or return Technolojoy’s funds due to lack of revenue, Fouzailoff

Depo. at 146-148, Exh. A at 517.

B. The Chargeback Requests □□

On july 6, 2019, BHPH instructed Technolojoy in a text message to seek a chargeback

with American Express in the amount of $52,000. Fouzailoff Depo. at Exh. A at 520 (The text

message reads: “When you do the chargeback for 52k make sure you tell Amex you did not get

the product.”); Jd. at 187. American Express did not, however, grant this request for chargeback

because BHPH objected to it. Algahim Affidavit at § 23; Fouzailoff Depo. at 185-187. -

Defendants’ Counterclaim also statés that they instructed Technolojoy to seek chargebacks in the

amount of $105,995 for Invoice Nos. 235, 236, 241 and 249. Counterclaim at 22. Algahim

states that Technolojoy did not receive full chargebacks due to BHPH’s objections. Algahim

Affidavit at 23. Exhibit E to Defendants’ Motion for Summary Judgment, however, shows that

BHPH consented to at least some of the chargeback requests. The May 22, 2020 letter from

American Express to Algahim states: “Thank you again for contacting us about the charge(s)

from Bhph Consulting Services in the amount of $119,270. We are pleased to inform you that _

Bhph Consulting Services has issued credit(s) to-your account in the amount of $72,080. The

credits will appear as “$27,180, $24,300 and $20,600.” Exhibit E contains a second letter stating

that Algahim requested review of charges totaling $101,910, and BHPH consented to crediting

$29,160. .

BHPH terminated the business relationship on July 8, 2019. Fouzailoff Depo. at 131;

-Algahim Affidavit at ¢ 15. Algahim testified that as of July 8, 2019, Technolojoy had prepaid

approximately $1,292,046 to BHPH and received approximately $587,471 worth of cell phones,

some of which were nonconforming. Algahim Affidavit at { 28. To mitigate its damages,

Algahim testified that Technolojoy instituted chargebacks on all invoices. Algahim Affidavit at |

28; Algahim Depo. at 126. The reason Technolojoy requested chargebacks on all invoices, even

though Technolojoy received some conforming shipments, was because Technolojoy prepaid

BHPH for all invoices and the invoices and discounts were interrelated. Jd. Algahim testified that

Technolojoy succeeded in obtaining $260,000 in chargebacks. Algahim Depo. at 126. He

calculates that Technolojoy is still owed $444,575 by BHPH. BHPH disputes this figure and

claims that after receiving phones and chargeback requests that Technolojoy was unjustly

enriched by $266,192. .

6

As a result of the many chargeback requests, BHPH was sued by Electronic Merchant

Systems, the processor. BHPH settled that case, Francis David Corp. d/b/a Electronic Merchant

Systems v. BHPH Consulting Services d/b/a BHPH Phones Services, et al , Case No, 19-920921

in the Cuyahoga County Court of Common Pleas. BHPH settled the case and was placed on a

“Match” list or terminated merchant list, such that no credit card processor would accept their

business. BHPH was blocked from accepting credit card orders for an unspecified time.

C. Messages Relevant to Defendants’ Defamation Counterclaim

As a result of the termination of this business relationship, Algahim sent a message on the

Better Business Bureau’s messaging board, which is private and cannot be publicly accessed.

Fouzailoff Depo. at 206, Exh. W (D.E. 138-10). Algahim’s message was sent to the automated

email system, donotreply@bluebbb.org, then forwarded to Slutskiy, who then forwarded it to

Fouzailoff. Slutskiy Depo. at 92-93, Exh. W. In the August 9, 2019 message, Algahim made the

following statements: “These documents are fake. The refunds were never given. Aside from

these fake refunds, there are multiple more invoices that were not sent or credited. I was

defrauded by both Anatoliy Slutskiy and Sean Fouzailoff.” The message further enumerated

several potential crimes: fraud, credit card frauds, extortion, forgery, honest service fraud, money

laundering, ponzi scheme, racketeering and wire fraud. Exh. W.

Slutskiy testified that he did not know the identity of any person that had access to the

Better Business Bureau message that Algahim sent. Slutskiy Depo. at 94. Although the content

board is publicly available, Slutskiy did not know who could access the message or whether

anyone accessed the message on any given date. He added that he did not see anyone comment

on the message that Algahim posted on the Better Business Bureau board. Slutskiy Depo. at 95.

Exhibit W also contains an email from Technolojoy to Slutskiy. Exh. W at 4; Fouzailoff

Depo. at 210-211. In the email, Algahim states that Slutskiy and Fouzailoff defrauded his

7 .

company and that he reported the matter to law enforcement. Fouzailoff acknowledged that no

one was copied on the email and he was the recipient. He iridicated someone could be blindly

copied, but that did not happen to his knowledge. Slutskiy Depo. at 96. □

The last message relating to the defamation claim is a social media post by someone

named David. Exh. W at 5; Slutskiy Depo. at 211. Neither Algahim’s name nor Technolojoy

appear on the social media post. . . .

Finally, there is a screenshot of a text exchange that was posted on Facebook by a David

Becerra. /d. at 6-7. Becerra’s post shows that Algahim texted saying: “Although I prefer not to

text, I believe you were scammed by BHPH/Sean/Tony.” Slutskiy Depo. at 216.

I. - Legal Standard -

Federal Rule of Civil Procedure 56 provides, “summary judgment is appropriate where.

there ‘is no genuine issue as to any material fact’ and the moving party is ‘entitled to judgment as

a matter of law.’” See Alabama v. N. Earolina, 130 S. Ct. 2295, 2308 (2010) (quoting Fed. R.

Civ. P. 56(a)). The existence of some factual disputes between litigants will not defeat an

otherwise properly ground motion for summary judgment; “the requirement is that there be no

genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)

(emphasis added). Mere “metaphysical doubt as to the material facts” will not suffice.

Matsushita Elec. Indus, Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

The basic issue before the court on a motion for summary judgment is “whether the

evidence presents a sufficient disagreement to require submission to a jury or whether it is so

one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251 (1986). The

moving party has the burden of showing the absence of a genuine issue as to any material fact, □

in deciding whether the movant has met this burden the court must view the movant's

evidence and all factual inferences atising from it in the light most favorable to the nonmoving

3 oo

party. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997). “If reasonable minds could

differ on the inferences arising from undisputed facts, then a court should deny summary

judgment,” Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir. 1992),

. IL Legal Analysis

The parties filed cross-motions for summary judgment. Defendants move for summary

judgment’on Plaintiff's Complaint: Count 1 for breach of oral contract, Count 2 for quantum

meruit, Count 3 for unjust enrichment, Count 4 for fraudulent misrepresentation, Count 5 for

fraudulent inducement, Count 6 for fraud, and Count 7 for violation of Florida’s Deceptive and

Unfair Trade Practices Act. Defendants do not move for summary judgment on Count 8 for open

account. Plaintiffs separately move for summary judgment on their own breach of contract claim,

Count 1 of the Amended Complaint, requesting the Court find liability and damages. □

Plaintiffs move for summary judgment as to the Defendants? Counterclaim: Count 1 for

breach of contract, Count 2 for unj ust enrichment, Count 3 for defamation, Count 4 for violation

of the Florida Deceptive and Unfair Trade Practices Act, and Count 5 for common law

indemnity. Defendants separately move for summary judgment on their Counterclaim requesting

the Court find Plaintiffs liable on Counts 1, 2, 4 and 5 — all but Count 3’s defamation claim.

A. The Contract Claims

1, Count 1 of the Amended Complaint: Breach of Contract

To establish a breach of contract, there must be a (1) valid contract; (2) a material breach,

and (3) damages. Am. Aeronautical Corp., Inc. v. Aviation Engine Serv. Ine., Case No. 12-

21276-ClV, 2013 WL 1499353 (S.D. Fla. April 10, 2013), It is undisputed that the pattieshada

contract for the purchase and sale of cellular phones. Plaintiffs assert Defendants materially

breached the contract by failing to provide goods that conformed to the invoiced prices.

. . .

Plaintiffs assert they paid for phones not received and phones not meeting invoice specifications.

Plaintiffs claim they are damaged as a result because they overpaid for phones by $444,575.

Defendants agree that at times the phone shipments did not meet the invoices’ quantity or

product specifications. Defendants, however, assert that Plaintiffs received refunds when that

occurred and ultimately, obtained chargebacks from the credit card companies. Defendants’

position is that Plaintiffs, rather than being damaged by the breaches, received refunds exceeding

what they were owed totaling $266,192. Whether or not the refund amounts sufficiently

compensated Plaintiffs for the breach is a disputed issue of material fact. Accordingly, the Court

denies Defendants’ motion for summary judgment as to Plaintiffs’ breach of contract claim in

Count 1. Because the Court finds there is an issue of fact as to damages, the Court also denies

Plaintiff's motion for summary judgment as to its breach of contract claim in Count 1.

2: Counterclaim Count 1: Breach of Contract ~~

Plaintiffs also moved for summary judgment on Count 1 of the Counterclaim for breach

of contract. In Count 1 of the Counterclaim, BHPH argues that Technolojoy breached the

contract “for the sale and purchase of the Apple iPhones and Apple Watches, memorialized by

the invoices” by “not paying the full amount owing thereunder when it wrongfully initiated

chargebacks against BHPH.” BHPH alleges that it suffered damages of at least $264,000 as a

direct and proximate result of Technolojoy’s alleged breach. “In breach of contract actions, a

plaintiff may recover only if the damages were a proximate result of the breach.” Cibran Enters.

Inc. v. BP Products N. Am., Inc., 365 F. Supp. 2d 1241, 1254-(S.D. Fla. 2005) (citing Chipman v.

Chonin, 597 So. 2d 363, 364 (Fla..3d DCA 1992)).

First, the Court must determine whether Plaintiffs breached the contract. Plaintiffs’

obligation under the contract is to pay for cell phones and other items purchased from BHPH.

Fouzailoff testified that Technolojoy fully prepaid each invoice submitted by BHPH. Fouzailoff

Depo. at 41-42. In fact, BHPH acquired the cell phones it sold to Technoloj oy with

Technolojoy’s funds, Id. at 37. Thus, Technolojoy did not materially breach the contract.

BHPH’s claim that Technolojoy breached the contract by seeking chargebacks is belied

by the record evidence that BHPH agreed that Technolojoy seek those chargebacks.

Counterclaim at § 22 (conceding in its pleadings that it agreed Technolojoy seek chargebacks in

the amount of $105,995 for Invoice Nos, 235, 236, 241, and 249).

The record also shows that Technolojoy sought chargebacks on July 16, 2019, which is 8

days after BHPH terminated the business relationship. Algahim Affidavit at 28; Fouzailoff

Depo. at 13 1 (testifying that relationship ended on July 8, 2019). At the time it sought the

chargebacks, there was no contract in place between the parties, which Technolojoy and

Algahim breached. Accordingly, the Court finds the record evidence does not show that

Plaintiffs breached the contract by requesting chargebacks from American Express.

Because the record eviderice does not show that Technolojoy breached the contract when

it requested the chargebacks, the Defendants are unable to-establish that the purported breach is

the proximate cause of damages suffered by Defendants. The Court finds that Defendants are

unable to establish a counterclaim for breach of contract where they cannot show Plaintiffs

breached by requesting chargebacks they themselves authorized. Accordingly, the Court grants

Plaintiffs’ motion for summary judgment as to Count 1 of the Counterclaim and denies

Defendants’ motion for summary judgment on Count | of the Counterclaim.

B. The Equitable Claims .

i. Amended Coniplaint Counts 2. and 3: Quantum Meruit and Unjust Enrichment

Defendants move for summary judgment by stating that the quantum meruit and unjust

enrichment claims are duplicative of the breach of contract claim. Plaintiffs’ claims for quantum

□□□ 11

meruit and unjust enrichment are based on the evidence that Technolojoy prepaid BHPH for cell

phones, but BHPH failed to deliver the cell phones or refund the funds received from

Technolojoy. . .

The existence of an express contract generally extinguishes the equitable claims of unjust

enrichment and quantum meruit. * [Tn unjust enrichment claim can only be pled in the

alternative if one or more parties the existence of an express contract.” Zarrella Pacific

Life Ins. Co., 755 F. Supp. 2d 1218,,1227 (S.D. Fla. 2010) (citing Jn re: Managed Care Litig.,

185 F. Supp. 2d 1310, 1337 (S.D. Fla. 2002)). Plaintiffs rely on Harden v. TRW, Inc., 959 F.2d

201, 204 (11th Cir. 1992) to argue that they should be able to submit express contract, quantum

meruit, and unjust enrichment theories to the jury if there is sufficient evidence to support them.

Harden, itself, recognizes that “where the evidence is overwhelming, a court may find the

existence of an express contract, as a matter of law, and thereby preclude a quantum meruit

recovery.” Jd. The record is undisputed that the parties had a valid, enforceable contract. The

Plaintiffs allege the existence of an oral contract, and BHPH admitted to it as well. Because

neither side contests the validity of the contract, summary judgment is due on Plaintiffs’

equitable claims that stem from the same subject matter as Plaintiffs’ contract claim. Where there

is an adequate remedy at law, courts routinely disallow claims in equity. White Const. Co. v.

Martin Marietta Materials, Inc., 633 F: Supp. 2d 1302, 1332 (M.D. Fla. 2009) (stating it is well

settled that Florida law will not imply a contract where an express contract exists concerning the

same subject matter); ThunderWave, Inc. v. Carnival Corp., 954 F. Supp. 1562, 1566 (S.D. Fla.

1997) (stating that conclusive proof of valid express contract precludes suit for recovery in

quantum meruit and unjust enrichment since “the law will not imply a contract where a valid

express contract exists.”’). □□

. 0 12

□

Attempting to survive summary judgment, Plaintiffs contend that BHPH relied on

fraudulent invoices to dispute the terms of the contract between the parties. Algahim Affidavit at

4 23. Algahim testified that BHPH altered the invoices it filed with the Court. Jd. at 27 (citing

D.E. 28-1). Two weeks after filing the invoices with the Court, BHPH contacted Zoho Legal

Team requesting it confirm the invoices are “true and accurate and have not been altered or

changed since the time they were created.” Fouzailoff Depo. at Exh. II, E-mail dated December

10, 2019. Fouzailoff attached a draft “Declaration of Representative of Zoho Corporation” for

execution. Jd, at Exh. JJ. Zoho Legal Team sent an email in response stating: “Unfortunately, we

will not be able to sign the Affidavit as is for the following reasons. Zoho will not be able to

authorize the authenticity of the data added in the invoices[.]* Fouzailoff Dep. Ex. I, Email

dated Jan. 6, 2020.! Given this contention of fraudulent behavior, the Plaintiffs claim they are

entitled to pursue their equitable claims. Plaintiffs have not provided support that this evidence

would allow them to pursue multiple theories of recovery at trial, especially where Plaintiffs do

not contest that there exists a valid contract. Accordingly, the Court grants summary judgment on

Counts 2 and 3 for quantum meruit and unjust enrichment because there is an adequate remedy at

law. ©

Defendants’ Counterclaim Count 2: Unjust Enrichment

Defendants’ counterclaim for unjust enrichment does not stem from the same subj ect

matter as the parties’ contractual relationship. The unjust enrichment claim stems from Plaintiffs’ |

conduct after the contractual relationship ended when it requested the chargebacks from

American Express. Defendants contend that Plaintiffs received chargebacks exceeding what □□□□

were owed and were thus, unjustly enriched.

| The Zoho email chain is the subject of a motion in limine, where Defendants argue that it is unfairly prejudicial

under Federal Rule of Civil Procedure 403 to allow the Plaintiffs to argue that Zoho refused to certify the invoices □

because there was fraud. The Court denies the motion in limine with leave to reargue at trial. □

13--

Both sides have moved for summary judgment on this claim. Certainly, to the extent that

BHPH is moving as a matter of law for the Court to find that Technoloj oy was unjustly enriched,

the motion is denied as there are material issues of fact’as to whether Technolojoy received more

in chargebacks than it was owed. The Court must then examine whether there is sufficient record

evidence for BHPH to survive summary judgment on this counterclaim. Notably, this claim

differs from Technolo} oy’s unjust enrichment claim as it does not arise out of the subj ect matter

of the contract. Indeed, the Court granted summary judgment as to Defendants? contractual

counterclaim finding that the chargebacks were not part of the subject matter of the parties’ .

contract. The chargebacks were a remedy for Technoloj oy to potentially mitigate its damages

for goods paid for but not received.

To recover under an unjust enrichment theory, a plaintiff must demonstrate: “(1) a benefit

conferred upon a defendant by the plaintiff, (2) the defendant’s appreciation of the benefit, and

(3) the defendant’s acceptance and retention of the benefit under circumstances that make it

inequitable for him to retain it without paying the value thereof.” Vega v. T-Mobile USA, Inc.,

564 F.3d 1256, 1274 (11th Cir. 2009). □□

The record evidence undisputedly shows that Technolojoy received chargebacks totaling

$260,000. There is an issue of material fact as to whether the amount received by Technolojoy

exceeds what it was owed or whether it received cellular phones or other remuneration as

consideration for its payments to BHPH. Accordingly, the Court denies Plaintiffs’ motion for

summary judgment as to BHPH’s counterclaim for unjust enrichment.

C. Amended Complaint Counts 4-6: Fraud Claims’

The individual Defendants, Fouzailoff and Slutskiy, move for summary judgment on the □

fraud claims. BHPH did not move for summary judgment. Counts 4 through 6 of the Amended

Complaint are for fraudulent misrepresentation, fraudulent inducement, and fraud. Defendants -

14

move for summary judgment under the independent tort doctrine. They argue summary judgment

is due because the fraud claims are not independent of Plaintiffs’ breach of contract claim and

the record evidence does not show Plaintiffs suffered separate damages for the purported fraud.

“Tt is well settled in Florida that, where alleged misrepresentations relate to matters

already covered in a written contract, such representations are not actionable in fraud.” Peebles □□

Puig, 223 So. 3d 1065, 1068 (Fla. 3d DCA 2017), “It is similarly well settled that, for an alleged

misrepresentation regarding a contract to be actionable, the damages stemming from that

misrepresentation must be independent, separate, and distinct from the damages sustained from

the contract’s breach.” /d. Florida’s independent tort doctrine “prohibits claims in tort for

damages, which are the same as for breach of contract so as to prevent plaintiffs from recovering

duplicative damages for the same wrongdoing.” Perez v. Scottsdale Ins. Co., No. 19-22761, 2019

WL 5457746, *3 (S.D. Fla. Oct. 24; 2019). The question is whether the allegations supporting

the fraud counts are “inextricably intertwined with the alleged breach of contract.” /d. (citing

Temurian v. Piccolo, No. 18-cv-62737, 2019 WL 1763 022°(S.D. Fla. April 22, 2019) (dismissing

fraud claims inextricably intertwined with contract claim)).

The record evidence sufficiently creates an issue of material fact as to whether the

invoicing system was transparent or whether it was intended to defraud Plaintiffs. There is

record evidence that Defendants issued fraudulent invoices, cancelled refunds after saying they

were being processed, and instructed Technolojoy to initiate chargebacks with American Express

while discrediting the same requests. Algahim Affidavit at J] 18, 20, 21, 22, and 23. Certainly,

there are issues of fact as to whether Plaintiffs were defrauded. , ,

Plaintiffs must also establish damages separate and apart from damages stemming from

breach of contract. Technolojoy seeks damages of $444,575 for damages stemming from the

. □ 15 :

breach of contract. Algahim also testified that as to the damages from fraud, Plaintiffs relied on

BHPH’s misrepresentations about the credit card refunds in the amount of $74,060 and paid

BHPH $44,100 for inventory the same day. Id. at ] 21. Additionally, Algahim testified that the

fake credits and discounts induced Technolojoy to continue the business relationship. Finally,

Algahim testified that American Express ultimately denied $444,575 in chargebacks due to

fraud. Jd. at § 23. As a result of the conduct, Algahim testified that Technolojoy had insufficient

funds to buy cellular phones from other sources. Jd. at § 24. The Court finds there is an issue of

fact as to whether Plaintiffs were damaged by the purported fraud, separate and apart from the

breach of contract. Accordingly, the motion for summary judgment is denied as to the fraud

counts.

D. Plaintiffs’ Amended Complaint Count 7 and Defendants’ Counterclaim Count 4: □

Florida Deceptive and Unfair Trade Practices Act:

The parties are each suing each other under the Florida Deceptive and Unfair Trade

Practices Act. Plaintiffs allege that BHPH violated the Florida Deceptive and Unfair Trade

Practices Act by “requesting and accepting funds from Plaintiff under knowingly false pretenses;

fraudulently representing to Plaintiff the status of their orders and refunds; and providing

Plaintiff with fraudulent documentation and statements to induce Plaintiff to continue making

payments for merchandise that BHPH had no intention of delivering.” Defendants move for

summary judgment stating that, Plaintiffs cannot establish actual damages. Alternatively,

Defendants argue summary judgment is appropriate to the extent the Plaintiffs’ claim is premised

on BHPH’s failure to deliver conforming goods or refund instances it failed to deliver. .

Defendants’ counterclaim under the Florida Deceptive and Unfair Trade Practices Act

alleges that Technolojoy violated the statute by “falsely claiming that BHPH did not ship and

deliver conforming products; falsely and fraudulently initiating chargebacks on all payments

16 . .

made to BHPH; and making false and defamatory statements about BHPH and its principals and

employees to third parties with whom BHPH had business relationships.” Plaintiffs move for

summary judgment-on this counterclaim arguing there is no record evidence that they committed

an unfair or deceptive practice that injured a consumer. oe

The Florida Deceptive and Unfair Trade Practices Act prohibits “[u]nfair methods of

competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the

conduct of any trade or commerce, . ..” § 501 204(1), Fla. Stat. A claim under the Act has three

elements: (1) a deceptive act or unfair practice; (2) causation; and (3) actual damages. See

Virgilio v. Ryland Corp., Inc., 680 F.3d 1329, 1338 n. 25 (11th Cir. 2012); Rollins, Inc. v. □

Butland, 951 So. 2d 860, 869 (Fla. 2d DCA 2006); Macias v. HBC of Fla., Inc., 694 So. 2d 88,

90 (Fla. 3d DCA 1997). □□ oe ee

An unfair practice is “one that ‘offerids established public policy’ and one that is

‘immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.’”

Samuels y, King Motor Co. of Fort Lauderdale; 782 So. 2d 489, 499 (Fla. 4th DCA 2001)

(citation omitted). “[D]eception occurs if there is ‘representation, omission, or practice that is

likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s

detriment.’” PNR, Inc. v. Beacon Prop. Mgmt., Inc., 842 So. 2d'773, 777 (Fla. 2003) (citation

omitted). “While an entity need not be a consumer to bring a-claim (under the Act], it still must

prove the elements of the claim, including injury to the consumer.” Stewart Agency, Inc. v.

Arrigo Enters., Inc., 266 So. 3d 207, 212 (Fla. 2019) (citing PNR, Inc., 842 So. 2d at 777).

The Court will examine the Plaintiffs’ claim under the Act and whether there is sufficient

record evidence of damages. Algahiin testified that:

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From March 2019 through July 2019, BHPH implemented a fraudulent scheme whereby

it stated discounts on several invoices to induce Technolojoy to believe that BHPH was

curing deficienciés resulting from prior non-conforming shipments of cell phones.

However, Technolojoy was not getting any discount or credit as BHPH represented on its

invoices. The alleged discounts were carried from one invoice to the other as. BHPH

never fully applied any of the credits/discounts. In other words, BHPH, Fouzailoff, and -

Slutskiy, all of whom prepared and submitted invoices at one point or another between □

- March 2019 through July 2019, issued fake credits or discounts to Technolojoy.

e BHPH prepaid $1,292,046 to BHPH and received approximately $587;471 worth of cell

phones, some of which were nonconforming. Techonolojoy successfully received

$260,000 in chargebacks. To date, Technolojoy has not fully recovered the funds it lost

as a result of BHPH’s breaches; Technolojoy is still owed $445,575.

Algahim Affidavit at {¥ 18, 28..

There is sufficient record evidence from which a reasonable jury could find Technolojoy

was actually damaged by the Defendants’ actions. A reasonable jury could certainly find that

BHPH’s actions in carrying credits from invoice to invoice deceptively induced Technolojoy to

believe that deficiencies from prior shipments were being cured. There is sufficient evidence

that Technolojoy suffered actual damages because it prepaid $1,292,046 and received goods

valued at $587,471. To mitigate its damages of $704,575, Technolojoy instituted chargebacks

and obtained $ 260,000. The difference would be Technolojoy’s actual damages of $445,575. By.

the same ‘token, there is also record evidence that the Google Sheet was sufficiently clear as to

what was being provided and credited, and the invoice credits were not a deceptive practice

intended to mislead Technolojoy. Accordingly, the Court denies summary judgment as to the

Plaintiffs claim under the Florida Deceptive and Unfair Trade Practices Act claim because there

is a disputed issue of material fact as to whether Defendants’ actions were deceptive and whether

the Plaintiffs suffered actual damages as a result. : □ .

Defendants’ counterclaim under the Act, however, does not withstand summary judgment

scrutiny. There is no record evidence that Technolojoy committed an‘unfair and deceptive

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practice that injured a consumer. First, Defendants argue that Technolojoy falsely claimed that

BHPH did not deliver conforming phones. The uncontroverted record evidence belies this

contention. Undisputedly, BHPH sent nonconforming shipments of phones repeatedly. There

can be no violation of the Act in this context.

Second, BHPH argues that Technolojoy violated the Act by initiating chargebacks on all

invoices, The uncontroverted evidence shows that BHPH agreed that Technolojoy should initiate

the chargebacks. Therefore, the Court cannot say that Technolojoy engaged in an unfair practice,

when Defendants requested Plaintiffs engage in the very conduct, they now claim to be unfair.

Third, BHPH argues that Technolojoy violated the Act by making defamatory statements

to third parties with whom BHPH had business relationships. This also does not constitute an

unfair practice under the Act as the record evidence does not show that any comments made by

Technolojoy caused actual damages as required by the Act.

The Court finds there is insufficient record evidence to support the Counterclaim under

the Florida Deceptive and Unfair Trade Practices Act. There is no evidence that a consumer was

injured by Plaintiffs’ conduct or that Plaintiffs’ conduct caused Defendants actual damages. □

Accordingly, the Court grants Plaintiffs’ motion for summary judgment on the counterclaim for a

violation of the Florida Deceptive and Unfair Trade Practices Act. □□

E. Count 3 of Counterclaim: Defamation ~~ □

In Count 3 of the Counterclaim, BHPH alleges that Algahim and Technolo} oy made

defamatory statements. These include a statement that BHPH failed to ship products and that

BHPH defrauded them. Counterclaim at 46. Plaintiffs move for summary judgment on this

counterclaim arguing the defamation claim fails because it lacks specificity, the communications

i9 □□□

do not meet the publication requirement, and some of the messages were made or published by a □

third party named David Becerra. .

Defamation claims require specificity. “In a defamation case, a plaintiff must allege

certain facts such as the identity of the speaker, a description of the statement, and provide a time

frame within which the publication occurred.” F ive for Ent. SA. v. Rodrigues, 877 P. Supp. 2d

1321, 1328 (S.D. Fla. 2012) (dismissing the defamation claim for failure to plead when the

. allegedly defamatory statements were made and a sufficient description of those statements) . see □

Jackson v. N. Broward Cnty. Hosp. Dist., 766 So. 2d 256, 257 (Fla. 4th DCA 2000) (finding that.

the defamation count failed because it did not identify the persons to whom the allegedly

defamatory comments were made and to link a particular remark to a particular defendant). A

plaintiff “must set out the substance of each allegedly defamatory statement on which it is

proceeding; the date, place, and manner of publication; to whom each statement was made; and

facts showing the damages flowing from each statement:” Bezeau v. Cable Equip. Servs. Inc.,

No. 14-2453 8-CIV, 2015 WL 3540009, at *4 (S.D. Fla. May 27, 2015): .

The elements of a defamation’ claim under Florida law are (1) publication; (2) falsity; (3)

that the actor made the statements with kriowledge or reckless disregard as to the falsity ona

matter concerning a public official, or at least negligently on a matter concerning ‘a private

person; (4) actual damages; and (5) that the statement is defamatory. Jd. (citing Jews for Jesus,

Inc. v. Rapp, 997 So. 2d 1098, 1106 (Fla. 2008)). “A defamatory statement does not become □

actionable, however, until it is published or communicated ‘to a third person; statements made to □

the person alleging the defamation do not qualify.” American Airlines v. Geddes, 960°So. 2d 830,

833 (Fla. 3d DCA 2007).

□□□ 20

Paragraph 46 of the Counterclaim states that Algahim made the defamatory statements to

“PayPal, EMS, American Express, law enforcement officials and government, and others.”

BHPH fails to state the dates, the place of publication, the manner of publication, the identity of

the individuals who read, heard or saw the alleged statements, and any facts showing the

damages flowing from each statement set forth in paragraph 46 of the Counterclaim, The claim

therefore lacks specificity.

Additionally, Exhibit W to Fouzailoff’s deposition, does not show how Plaintiffs

published the defamatory comments. The August 9, 2019 message Algahim sent on the Better

Business Bureau’s automated mailing system does not show how it was published to a third

party. There is no record evidence that a third party accessed it. In fact, Slutskiy testified that he

did not see any third parties comment on the thread. Slutskiy Depo. at 93-95. The July 11, 2019

email from Technolojoy to Slutskiy does not show that any third party was copied or blind-

copied. The social media posting was by someone named David Becerra, and accordingly,

Algahim and Technolojoy are not the publishers.

‘The only message that meets the publication requirement could be the text message

exchange where Algahim wrote to David Becerra. The publication of a statement in

a defamation claim only requires the dissemination of a false statement to a person other than the

defamed person. Klayman v. Jud. Watch, Inc., 22 F. Supp. 3d 1240, 1251 (S.D. Fla. 2014). Even

if the publication requirement is met in this one instance, the Defendants did not show evidence

of being damaged by the defamatory comments. Indeed, Slutskiy testified that BHPH’s customer.

base increased after BHPH terminated its relationship with Technoloj oy. Slutskiy Depo. at 110.

Accordingly, Plaintiffs’ motion for summary judgment is granted as to the defamation claim.

F. Counterclaim Count 5: Common Law Indemnity

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BHPH seeks indemnity from Technolojoy for monies it paid EMS and Elavon stemming

from chargebacks Technolo} oy received. A claim for common law indemnity “shifts the entire

loss from one who, although without active negligence or fault, has been obligated to pay,

because of some vicarious, constructive, derivative, or technical liability, to another who should

bear the costs because it was the latter’s wrongdoing for which the former is held liable.”

Houdaille Indus. Inc. v. Edwards, 374 So. 2d 490, 493 (Fla. 1979). The party seeking indemnity

must allege three elements: “(1) that he is wholly without fault; (2) that the party from whom he

is seeking indemnity is at fault; and (3) that he is liable to the injured party only because he is

vicariously, constructively, derivatively, or technically liable for the wrongful acts of the party

from whom he is seeking indemnity.” Fla. Farm Bureau Gen. Ins. Co. v. Ins. Co. of N. Am., 763

So. 2d 429, 435 (Fla. 5th DCA 2000). □ . eS

The record evidence does not support this claim. First, the uncontroverted evidence

shows that BHPH sent nonconforming shipments of cellular phones, and therefore is not “wholly

without fault.” Fouzailoff admitted the Google Sheet accurately listed the problems with the cell

phones it shipped to Technolojoy. He also admitted to owing Technolojoy money before the

relationship ended. Second, the record evidence does not support that Technolojoy was “at

fault” in seeking the chargebacks. The record evidence is beyond dispute that BHPH instructed

Technoloj oy to institute the chargebacks to mitigate the monies owed by BHPH to Technolojoy.

Third, BHPH cannot satisfy the third element of the claim for common law indemnity because it

is directly liable to EMS and/or Elavon. EMS and Elavon process credit card payments for

BHPH. Technoloj oy instituted chargebacks from American Express. There is no relationship

where Technolo} oy would be directly liable to EMS and/or Elavon, which would then make

BHPH vicariously liable. Rather, BHPH’s liability to EMS and/or Elavon is direct because those

: □□

companies processed chargebacks. stemming from BHPH’s nonconforming shipments.

Accordingly, the Court, grants Plaintiffs’ motion for summary judgment as to the counterclaim □

for common law indemnity. fe

DONE AND ORDERED in Chambers at Miami, Florida, this. of March 2022.

. FEDERICO tie

UNITED STATES DISTRICT JUDGE

Copies furnished to: .

Counsel of Record -

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