Silver Lining Enterprises, LLC v. CAC Projects, Inc.

CourtDistrict Court, N.D. Georgia
DecidedApril 7, 2025
Docket1:24-cv-00354
StatusUnknown

This text of Silver Lining Enterprises, LLC v. CAC Projects, Inc. (Silver Lining Enterprises, LLC v. CAC Projects, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Silver Lining Enterprises, LLC v. CAC Projects, Inc., (N.D. Ga. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

SILVER LINING ENTERPRISES,

LLC,

Plaintiff,

v. CIVIL ACTION FILE

NO. 1:24-CV-354-TWT CAC PROJECTS, INC., et al.,

Defendants.

OPINION AND ORDER This is a breach of contract case. It is before the Court on Defendant Greg Smith’s Motion to Dismiss [Doc. 34]. For the reasons set forth below, Defendant Smith’s Motion to Dismiss [Doc. 34] is GRANTED in part and DENIED in part. I. Background1 Plaintiff Silver Lining Enterprises, LLC (“Silver Lining”) is an apparel business that “sourc[es] and distribut[es] soft goods and apparel for . . . retailers to sell direct to consumers through brick-and-mortar businesses.” (Am. Compl. ¶ 6.) Defendant CAC Projects, Inc. (“CAC”) is Silver Lining’s broker and supplier, acquiring apparel directly from manufacturers. ( ¶ 7.) According to the Complaint, Silver Lining agreed to pay CAC for apparel up front, and CAC agreed to use those funds to “place orders for bulk amounts of

1 The Court accepts the facts as alleged in the Amended Complaint as true for purposes of the present Motion to Dismiss. , 941 F.3d 1116, 1122 (11th Cir. 2019). apparel items directly from manufacturers.” ( ¶ 8.) CAC would then receive the apparel from the manufacturers and ship it to Silver Lining. ( ) Pursuant to this agreement, Silver Lining wired eight payments to CAC between

November 2019 and August 2020, totaling $358,339.79. ( ¶ 9.) Ultimately, Silver Lining never received the ordered apparel from CAC. Silver Lining alleges that it followed up with Defendant Greg Smith of CAC multiple times and was met with “various excuses as to why the manufacturers refused to fulfill the orders, and why the manufacturers also refused to refund the prepayments.” ( ¶ 13.) In September 2020, Smith sent a text message to

Silver Lining stating: “Will get your money wired back to you ASAP.” ( ¶ 14.) In April 2021, Smith responded to Silver Lining’s request regarding the status of the yet-to-be wired refund by stating: “we need to share in the expenses and try to move on.” ( ¶ 17.) “Smith then offered to pay [Silver Lining] $48,180.12 to settle the matter.”2 ( ) But Silver Lining claims that CAC owes it at least $146,236.12. ( ¶ 18.) The Amended Complaint alleges that “CAC and Smith received [Silver Lining’s] prepayments with no intention of placing orders with

the manufacturers on [Silver Lining’s] behalf,” ( ¶ 21), and that Smith “fraudulently misrepresented conversations he purportedly had with the manufacturers[ ],” ( ¶ 20).

2 Smith explained that the offer “included a $40,000.00 reduction . . . to reimburse for alleged legal fees [he] purportedly incurred while attempting to get reimbursements from the manufacturers.” (Am. Compl. ¶ 17.) 2 At the outset, the Court notes that the Amended Complaint contains two “Count XIIIs,” so the Court hereby renumbers the second “Count XIII” as “Count IX” and so on. Silver Lining seeks relief against the Defendants for

breach of contract (Count I), unjust enrichment (Count II), fraud (Counts III– IV), negligent misrepresentation (Count V), and conversion (Count VI). ( ¶¶ 24–65.) As relief for these claims, it requests compensatory damages of no less than $146,236.13, a constructive trust (Count VII), suit on account (Count VIII, formerly the first Count XIII), equitable accounting (Count IX, formerly the second Count XIII), punitive damages (Count X, formerly

Count IX), and attorney’s fees (Count XI, formerly Count X). ( ¶¶ 60, 65, 81–83, 66–80, 84–86.) Silver Lining additionally requests that the Court pierce the corporate veil with respect to CAC and make Smith liable for CAC’s debts (Count XII). Now before the Court is Defendant Smith’s Motion to Dismiss.3 Defendant CAC did not file a responsive pleading, but it did notify the Court that it filed for Chapter 7 bankruptcy in the Northern District of Georgia in April 2024. [Doc. 17].

3 As Smith points out, Silver Lining untimely filed its response brief to Smith’s Motion to Dismiss. L.R. 7.1(B), NDGa (requiring a response within fourteen days). The Court will consider the response brief in this instance but cautions that Silver Lining must adhere to the local rules going forward. 3 II. Legal Standard A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a “plausible” claim for relief.

, 556 U.S. 662, 678 (2009); Fed. R. Civ. P. 12(b)(6). A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is “improbable” that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely “remote and unlikely.” , 550 U.S. 544, 556 (2007). In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in

the light most favorable to the plaintiff. , 711 F.2d 989, 994–95 (11th Cir. 1983); , 40 F.3d 247, 251 (7th Cir. 1994) (noting that, at the pleading stage, the plaintiff “receives the benefit of imagination”). Generally, notice pleading is all that is required for a valid complaint. , 753 F.2d 974, 975 (11th Cir. 1985). Under notice pleading, the plaintiff need only give the

defendant fair notice of the plaintiff’s claim and the grounds upon which it rests. , 551 U.S. 89, 93 (2007) (citing , 550 U.S. at 555).

4 III. Discussion4 A. Breach of Contract (Count I) Silver Lining’s Amended Complaint seeks to hold Smith personally

liable for CAC’s alleged breach of contract (Count I) by piercing the corporate veil. (Am. Compl. ¶¶ 88–93.) Smith’s Motion to Dismiss seeks to dismiss Count I as to Defendant Smith for failure to adequately plead its veil-piercing theory. Corporations are distinct legal entities from their officers and shareholders. , 199 Ga. App. 303, 306 (1991). However, a “corporate entity may be disregarded for liability purposes when it is shown

that the corporate form has been abused.” , 279 Ga. 288, 289 (2005). This piercing of the corporate veil is an equitable remedy that may be granted only “in the absence of adequate remedies at law.” at 290 (quoting , 276 Ga. 880, 882 (2003)). Georgia courts further instruct that piercing the corporate veil is appropriate “where a party has over extended his privilege in the use of a corporate entity in order to defeat justice, perpetuate fraud or to evade contractual or tort responsibility.”

(quoting , 199 Ga. App. at 306). Overextension occurs when a defendant has “disregarded the separateness of legal entities by commingling on an interchangeable or joint basis or confusing the otherwise separate properties,

4 For each of the below claims and alleged contracts, the parties do not appear to dispute that Georgia law applies. 5 records or control.” (quoting , 279 Ga. at 306). Smith argues that the veil-piercing theory fails, including due to Silver Lining’s failure to plead (1) CAC’s insolvency at the time of the transaction,

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