ARA Incorporated v. City of Glendale

          ORDER

          DOMINIC W. LANZA, UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         In 2015, the City of Glendale (the “City”) entered into a six-figure contract with a staffing company operated by Michelle and Jeffery Griffin to obtain temporary workers for various municipal projects. What was the name of the staffing company? That's the key disputed issue.

         The Griffins are actually affiliated with two different staffing companies with very similar names. The first, JG Staffing, Inc., is a Texas corporation that was formed in 2005, and the second, JG Staffing Arizona, LLC, is an Arizona limited liability company that was formed in 2012. Here, although the original bid for the contract was submitted by Mr. Griffin, who identified himself as the CEO of “JG Staffing, Inc.”, and although the City responded by sending a notice of intent to award the contract to “JG Staffing. Inc.”, Ms. Griffin later informed the City that she “would prefer everything be under JG AZ since this is an Arizona account” and Mr. Griffin submitted a “Best and Final Offer” on behalf of “JG Staffing AZ.” Thus, the final contract identified the City's counterparty as “JG Staffing Inc., a Arizona Corporation” and the contract was signed by Ms. Griffin as the vice president of “JG Staffing Inc., an Arizona corporation.” There is, unfortunately, no such company as “JG Staffing Inc., an Arizona corporation”-this appears to be a jumble of the two real companies' names. About a year later, Ms. Griffin sent the City a letter stating that “JG Staffing Inc. . . . was incorrectly used by our sales manager to bid on the contract” and that “the correct entity” was “JG Staffing AZ.”

         How does Plaintiff ARA Incorporated (“ARA”) fit into all of this? In 2011, ARA entered into a factoring agreement with JG Staffing, Inc. (the Texas corporation). In July 2016, following a default under the factoring agreement, ARA sent a letter to the City. This letter explained that ARA, as a secured creditor of JG Staffing, Inc., was entitled to receive all future payments owed to JG Staffing, Inc. under the staffing contract. The City, however, failed to remit the future payments to ARA-it kept sending them to a bank account associated with JG Staffing Arizona, LLC. This lawsuit ensued.

         Now pending before the Court are cross-motions for summary judgment filed by ARA (Docs. 54 & 56) and the City (Doc. 67).^[1] In addition to quarreling over whether ARA actually had a security interest in the staffing contract, whether ARA properly notified the City of that interest, and whether this lawsuit was filed within the statute of limitations, the parties ask the Court to determine, as a matter of law, the identity of the City's counterparty under the staffing contract-ARA argues it had to be JG Staffing, Inc. and the City argues it had to be JG Staffing Arizona, LLC.

         As explained below, the Court will deny both parties' motions in significant part.^[2]This case involves an array of conflicting evidence concerning the identity of the City's counterparty. Although ARA and the City have each identified certain pieces of evidence that tend to support their position, it should be a factfinder-not the Court at summary judgment-that decides how to weigh those pieces of evidence and resolve any conflicts.

         BACKGROUND

         I. The JG Entities

         JG Staffing, Inc. is a Texas corporation that was incorporated in 2005. (Doc. 68-3 [Griffin Decl.] at 2 ¶ 3.) It provides temporary staffing services. (Id.) JG Staffing Arizona, LLC is a limited liability company that was organized and formed in Arizona in 2012. (Id. at 2-3 ¶ 4.) It also provides temporary staffing services. (Id.) Ms. Griffin was involved with the management and operations of JG Staffing, Inc. and was a member of JG Staffing Arizona, LLC. (Id. at 2 ¶ 2.) Her husband, Mr. Griffin, is the President of JG Staffing, Inc. (Id.)

         II. The Factoring Agreement

         On or about May 4, 2011, ARA and JG Staffing, Inc. entered into the Factoring Agreement, under which ARA received “[a]s security for the Obligations [under the Factoring Agreement], ” “a security interest in [JG Staffing, Inc.'s] business assets, including, without limitation, all accounts, contract rights and other rights to payment, and all proceeds of the foregoing.” (Doc. 58-5 at 31, 33 § 8, 37.)

         In March 2015, ARA learned that JG Staffing, Inc. breached the Factoring Agreement. The parties thereafter sued each other in Minnesota state court. The jury found JG Staffing, Inc. liable on multiple claims and found ARA was not liable on any of JG Staffing, Inc.'s claims. (Doc. 57-2.)

         III. The Staffing Contract

         In November 2014, the City issued a request for proposal with the solicitation number “RFP 15-17” and the description “Temporary Workers for Recycling Facility, Landfill and Public Works Department.” (Doc. 58-6 at 46-70.)

         On December 1, 2014, “JG Staffing Inc.” submitted a proposal for RFP 15-17. (Doc. 58-6 at 74-114.) This proposal was signed by “Jeffery Griffin” as “CEO” of “JG Staffing Inc.” and included the email address “jgriffin@jgstaffinginc.com” and the federal taxpayer ID number 20-1936759. (Id. at 76.) Every page of this proposal also noted “JG Staffing Inc.” in the footer. (Id.)

         The “Best and Final Offer” (likely mistakenly dated April 7, 2014) submitted in connection with this proposal was signed by “Jeff Griffin” as “Sales Manager” of “JG Staffing AZ.” (Doc. 58-6 at 196-203.)

         On April 30, 2015, the City wrote a letter to “Mr. Jeffery Griffin, ” as “CEO” of “JG Staffing, Inc., ” notifying him that the City was offering JG Staffing, Inc. a “Notice of Intent to Award” a contract under RFP 15-17, pending any bid protests. (Id. at 115-16.)

         On June 29, 2015, Ms. Griffin sent the City an email requesting to change the Employer Identification Number for the submitting party. The email stated: “The reason I want to change the EIN is because our sales person used the 20-number and I would prefer everything be under JG AZ since this is an Arizona account.” (Doc. 68-3 at 73.)

         On or about August 25, 2015, there was a request for the City Council “to authorize the Acting City Manager to enter into an agreement with J.G. Staffing, Inc., to provide temporary staffing services for the Public Works Department in an amount not to exceed $875, 153 annually.” (Doc. 58-6 at 117.) The City's 30(b)(6) designee testified in her deposition that this authorization was provided and that “[t]he City Council approved the City Manager to enter into a contract with JG Staffing, Inc.” (Id. at 29:2-12, 43:5-6).

         On August 28, 2015, the City entered into a contract (the “staffing contract”) with “JG Staffing Inc., a Arizona Corporation, ” which incorporated RFP 15-17. (Id. at 119.) Ms. Griffin signed the contract as “Vice President” of “JG Staffing Inc., an Arizona corporation.” (Id. at 128.)

         On September 16, 2015, Ms. Griffin submitted a form to the City identifying JG Staffing Arizona, LLC's EIN and bank account information, so that payments under the staffing contract could be deposited into that account. (Doc. 68-3 [Griffin Decl.] at 4-5 ¶ 15; 76.)

         On or about July 1, 2016, the City stated that it wished to renew the staffing contract for a second year. (Doc. 58-4.) On July 12, 2016, Mr. Griffin executed the one-year contract extension on behalf of “J G Staffing, Inc.” (Id.)

         On July 16, 2016, ARA became aware of the staffing contract. (Doc. 58-5 [Reid Dep.] at 43:22-45:2, 58:9-14.) On July 19, 2016, ARA sent the City a letter. (Doc. 58-6 at 204.) The letter indicated in the first line that it was regarding the “Agreement for Temporary Workers for Recycling Facility, Landfill & Public Works.” (Id.) The next paragraph stated: “ARA has a pre-existing relationship with JG Staffing Inc. as a source of capital funding. Related to this relationship, JG Staffing Inc. has pledged a security interest in its business assets (including, without limitation, rights to payment on JG Staffing Inc. invoicing) to ARA.” (Id.) The letter went on to state that “ARA has teamed with AGR Funding Inc., a specialist in the staffing industry, to manage payments related to JG Staffing Inc. Please make all payments for JG Staffing Inc. to [AGR Funding Inc.]. . . . The foregoing irrevocable payment instructions shall not be modified without ARA's prior written consent.” (Id.)

         On July 21, 2016, the City sent ARA an email acknowledging receipt of ARA's letter and notifying ARA that “[i]n order for [the City] to accept this update into [the City's] system, ” the City needed to “receive a completed COG TIN to support this change, ” which was available at the link provided in the email. (Id. at 205.) AGR filled out the initial form, but the City asked for the form to be corrected. (Doc. 68-1 at [Reid Dep.] 67:2-10.) In a July 26, 2016 email, the City again asked ARA, in filling out the COG TIN form, to “confirm that the tax liability of the JG Staffing invoices will be the responsibility of ARA.” (Id. at 82.) ARA returned a COG TIN form dated July 26, 2016 with JG Staffing Inc.'s TIN listed, but without a signature of anyone representing JG Staffing, Inc. (Id. at 68:24-71:21, 80, 82.)

         In a July 29, 2016 email exchange, Mr. Griffin told a City employee that the EIN the City should be using for the staffing contract is the number for JG Staffing Arizona, LLC, not JG Staffing, Inc. (Doc. 58-6 at 212.)

         On August 1, 2016, Ms. Griffin sent the City a letter stating that “JG Staffing Inc. (20-1936759) was incorrectly used by our sales manager to bid on the contract” and that “[p]rior to the inception of the contract this was formally changed to the correct entity JG Staffing AZ (46-0807153).” (Doc. 58-2.) She further claimed that “[t]he correct TIN number 46-0807153 has been used by finance etc., since the inception of the contract” and that “[i]t appears as if there may be a miscommunication and it was not changed in another area.” (Id.)

         On September 21, 2016, the City issued a second amendment to the staffing contract. (Doc. 58-6 at 214-17.) This amendment purported to formally change the contracting party from “JG Stafing [sic] Inc., TIN 20-1936759” ...