FCFS, Inc. v. Legion Electric Vehicles, LLC

CourtDistrict Court, N.D. Illinois
DecidedJune 12, 2025
Docket1:24-cv-12295
StatusUnknown

This text of FCFS, Inc. v. Legion Electric Vehicles, LLC (FCFS, Inc. v. Legion Electric Vehicles, LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
FCFS, Inc. v. Legion Electric Vehicles, LLC, (N.D. Ill. 2025).

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

FCFS, INC., d/b/a Gateway Trade Funding ) Company, an Illinois corporation, ) ) Case No. 1:24-CV-12295 Plaintiff, ) ) Judge Sharon Johnson Coleman v. ) ) LEGION ELECTRIC VEHICLES, LLC, a ) Colorado limited liability company, ) FREEDOM GOLF CARTS, LLC, a Colorado ) limited liability company, FREEDOM GOLF ) CARTS OPERATIONS LLC, a Colorado ) limited liability company, and KENNETH M. ) ARRINGTON, ) ) Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff FCFS, Inc., d/b/a Gateway Trade Funding Company (“FCFS”) brings a complaint against Defendants Legion Electric Vehicles, LLC (“Legion”), Freedom Golf Carts, LLC (“Freedom Carts”), Freedom Golf Operations LLC (“Freedom Operations”), and Kenneth M. Arrington (collectively, “Defendants”), alleging breach of contract and breach of guarantee by Defendants. Before the Court are three motions filed by FCFS. The first is a motion for summary judgment as to Defendants’ liability for breach of the agreements the parties entered into—of which Freedom Carts, Freedom Operations, and Arrington served as guarantors—under which FCFS provided funding to Legion for the purchase of golf cart parts and freight. In their motion, FCFS requests that the Court enforce the judgment the parties stipulated to in those agreements. The second and third motions seek to compel Defendants to comply with an order the Court entered that directed Defendants to provide FCFS and its agents access to their bank accounts and financial information and request that the Court find Defendants in contempt of that order. For the following reasons, the Court grants FCFS’s motion for summary judgment and motion finding Defendants in contempt and dismisses its motion to compel as moot. Background Though relatively short-lived, this case has a deep factual and procedural history that underpins FCFS’s motions for summary judgment, to compel, and to find Defendants in contempt. The Court initially sets the undisputed facts as they relate to FCFS’s motion for summary judgment

before recounting those that relate to the compel and contempt motions. A. Undisputed facts relevant to FCFS’s motion for summary judgment On May 22, 2023, the parties entered into a Master Purchase Order Agreement (the “Master PO Agreement”), and a Accounts Receivable Purchase Agreement (the “AR Agreement”), including Standard Provisions and Definitions, collectively termed the “Secured Agreement.” Pursuant to the Secured Agreement, FCFS provided funding to Legion to purchase golf carts and parts and paid freight on behalf of Legion in the amount of $6,226,760.02. FCFS retained a perfected security interest in the golf carts and proceeds, and Legion assigned customer purchase orders and resulting payments

to FCFS. In connection with the Secured Agreement, Freedom Carts, Freedom Operations, and Arrington (collectively, the “Guarantors”) executed a Continuing Unconditional Guarantee pursuant to which the Guarantors unconditionally guaranteed, jointly and severally, all amounts due and owing to FCFS by Legion. Legion failed to perform under the Master PO Agreement. Subsequently, on June 19, 2024, the parties entered into a Mutual Release and Settlement Agreement (the “Supplemental Agreement”). Under this agreement, Legion and the Guarantors agreed that the amount then owed to Plaintiff was $3,362,176.98, and Legion agreed to pay FCFS $3,000,000.00 pursuant to a payment schedule set forth therein. Paragraph 2(i)(ii) of the Supplemental Agreement provides as follows: Entry of Stipulation; Amount; Remedies; Appointment of a Receiver. Legion’s material breach of this Agreement, as set forth in Sections 2(i), (ii) or otherwise, shall constitute and [sic] Event of Default under this Agreement and shall entitle FCFS to immediate entry of the stipulation to judgment (“Stipulation to Judgment”) attached hereto as Exhibit A, in an amount equal to less any Scheduled Payment(s) or Settlement Payment(s) received prior to the breach (“Stipulated Amount”). FCFS shall be entitled to entry of the Stipulation to Judgment on an ex parte basis without prior notice to Legion, Arrington, or Freedom. Legion and the Guarantors further expressly agree that upon an Event of Default, FCFS may, in addition to the entry of the Stipulations relating to monetary relief attached hereto, and without the necessity of giving prior notice (oral or written) to Legion or the Guarantors, apply to any court having jurisdiction for the appointment of a receiver for Legion and take any or all of the actions set forth herein to prevent dissipation of Legion’s assets. If FCFS elects to seek the appointment of a receiver for Legion at any time after an Event of Default has occurred and is continuing, Legion and the Guarantors, by their execution of this Agreement, expressly consent to the appointment of such receiver, including the appointment of a receiver ex parte. (Dkt. 35, Ex. 1.) Following Legion’s failure to perform under the Supplemental Agreement, as amended by the First Amendment, on September 12, 2024, the parties entered into a Second Amendment to the Supplemental Agreement (the “Second Amendment”; collectively with the Secured Agreement, the Supplemental Agreement, and the First Amendment, the “Agreement”). Under the Second Amendment, Legion agreed to obtain Plaintiff’s prior approval of any Credit Sale (as defined in the Second Amendment); the Supplemental Agreement otherwise remained intact. On November 12, 2024, FCFS sent Legion and the Guarantors a notification declaring that Defendants were in default of the Agreement and a demand that they pay all amounts then due and owing, which as of that date was $2,153,609.58. The letter outlined seven events that constituted default (the “Default Events”): 1. Consummating credit sales of golf carts and entering into consignment agreements with customers without approval from FCFS; 2. Failure to make a weekly minimum payment of $10,000 to FCFS on more than six consecutive or non-consecutive weeks; 3. Delivering proceeds from the sale of golf carts owned by FCFS to Northpoint Commercial Finance; 4. Failure to regularly provide invoices, inventory reports, status reports, and other financial information to FCFS; 5. Conversion of FCFS assets by selling golf carts subject to FCFS’s perfected security interest; 6. Changing control of Legion by appointing Travis Taylor as COO and removing Arrington’s

authorization to act unilaterally on behalf of Legion; and 7. Incurring indebtedness to a third-party creditor without FCFS’s knowledge or approval. (Dkt. 1, Ex. G.) For the purposes of FCFS’s motion for summary judgment to determine Defendants’ liability, Defendants do not dispute Default Events 2, 4, 6, and 7, but do dispute Default Events 1, 3, and 5. (Dkt. 47.) The parties do not dispute that the Agreement is a valid and enforceable contract between FCFS and Legion. Nor do the parties dispute that Legion and the Guarantors each stipulated

to entry of a judgment as evidenced by Exhibit A to the Supplemental Agreement. (Id.) B. Undisputed facts relevant to FCFS’s motion to compel and to find in contempt On November 27, 2024, two weeks after sending its demand letter to Defendants, FCFS filed its complaint before the Court alleging breach of the Agreement by Legion and the Guarantors and seeking the appointment of a receiver over Legion as provided by the Agreement. (Dkt. 1.) FCFS then filed an emergency motion for appointment of its agent from Creative Planning Business Alliance (“Creative Planning”) as the receiver on December 9, 2024. (Dkt. 9.) In addition to detailing the Default Events outlined in its demand letter in support for their motion, FCFS further noted that the Guarantors had been sued in Colorado state court by a creditor seeking replevin of approximately

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Bluebook (online)
FCFS, Inc. v. Legion Electric Vehicles, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fcfs-inc-v-legion-electric-vehicles-llc-ilnd-2025.