Rackwise Inc. & Rackwise Funding Moves to Dismiss Trustee Kapila’s Complaint Allegedly Seeking to Clawback Over $38M Towards Damages, Breach of Contract & as Preference & Fraudulent Transfers
June 7, 2021, Middle District of Florida – Earlier this month, Defendants Rackwise, Inc. and Rackwise Funding II, LLC, moved for dismissal of a complaint filed by Plaintiff, Soneet R. Kapila, as Chapter 7 Trustee for the substantively consolidated bankruptcy estate of Richert Funding, LLC, Dwight Donald Richert and Holly Berry Richert (“Debtors”) under Rule 12 of the Federal Rules of Civil Procedure, as adopted by Fed.R.Bankr.P. 7012.
The issue in the case allegedly revolves around three factoring agreements and a promissory note. The complaint alleges that many of the accounts which the Debtors purchased remained unpaid by the obligors on the accounts. Thus, the Debtors purportedly owned unpaid accounts totalling $16,021,134.72 for Rackwise, Inc. and $6,886,987.86 for Rackwise Funding II, LLC. The Trustee brought a complaint for a breach of a promissory note, breach of contract, and also sought to foreclose on a lien pursuant to Fla. Stat. § 679.601(1). The Trustee sued Defendants for avoidance and collection of fraudulent transfers as well as unjust enrichment.
In their Motion to Dismiss, the Defendants argue that the claims for fraudulent transfers (Counts 6–13) and preferential transfers (Count 15) are allegedly time-barred under 11 U.S.C. § 546(a)(1) because the adversary proceeding was filed more than two years after the order for relief and more than one year after the Trustee was appointed. The Defendants next allege that actual fraud claims should be dismissed under Rule 9(b)’s heightened pleading standard because they do not specify any alleged misrepresentation or other facts supporting a fraud claim. The Defendants also argue that the alleged contract and foreclosure claims, are irreconcilable with the Debtor’s schedules and hence must be dismissed.
The case is Kapila v. Rackwise, Inc., et al ( Adversary Proceeding Number: 6:21-ap-00056-KSJ) in the United States Bankruptcy Court for Middle District of Florida. Honorable Bankruptcy Judge Karen S. Jennemann is overseeing the Debtors’ bankruptcy case. The Pre-Trial conference in the case is scheduled for July 15, 2021.