Plaintiff, Innovative Telecom LLC, erroneously sent a large wire transfer to defendant 3667 Corp. After the transferred funds were credited to 3667 Corp.'s account, they were levied upon by defendant Spin Capital, LLC. Spin Capital holds a judgment against both 3667 Corp. and the remaining defendants, entered in a prior action in Supreme Court, Kings County. The funds transferred from plaintiff to 3667 Corp., and then levied on by Spin Capital, served to reduce the total amount that defendants here owe to Spin Capital under the Kings County judgment.

Plaintiff brought this action against (i) Spin Capital, seeking the return of the transferred [*2]funds under various common-law causes of action; and (ii) the remaining defendants, seeking reimbursement of the amount of the transferred funds on an unjust-enrichment theory.

On motion sequence 001, this court granted Spin Capital's motion to dismiss. This court held that under Uniform Commercial Code article 4A, once the transferred funds were credited to 3667 Corp.'s account, those funds became the property of 3667 Corp., rather than Innovative. (See Innovative Telecom LLC v Spin Capital LLC, 84 Misc 3d 989, 991-993 [Sup Ct, NY County 2024].) As a result, if, as here, a creditor of 3667 Corp., like Spin Capital, levied on the funds before plaintiff secured their return, plaintiff would have no recourse against the creditor—only against 3667 Corp. (See id. at 993.)

On this motion, plaintiff moves under CPLR 3215 for default judgment against the other defendants besides Spin Capital. The motion is granted with respect to 3667 Corp., and denied with respect to the remaining defendants for failure to establish the facts constituting plaintiff's claim against those defendants.^[FN1] (See CPLR 3215 [f]; Matter of Dyno v Rose, 260 AD2d 694, 698 [3d Dept 1999] [explaining that a court considering a CPLR 3215 motion must "determine whether the applicant has met the burden of stating a prima facie cause of action" before awarding judgment on default].)

With respect to the defendants other than Spin Capital and 3667 Corp., the only legal theory supported by the allegations of the complaint depends, again, on the premise that the funds levied on by Spin Capital still belonged to plaintiff. That is, plaintiff is claiming that because the funds were not Spin Capital's to levy on, properly speaking, the reduction in the judgment debt owed by those defendants as a result of the levy constituted an unjust windfall to them. (See NYSCEF No. 2 at ¶¶ 74-80 [complaint].) This claim, as alleged, does not state a cause of action for the same reason as plaintiff's claims against Spin Capital—once credited to 3667 Corp.'s account, the transferred funds belonged to 3667 Corp., not plaintiff. Because those funds could be properly levied on by Spin Capital to satisfy the judgment owed by all of the other defendants, the resulting reduction in the judgment debt did not unjustly enrich them.

With respect to 3667 Corp., this court reaches a different conclusion. For clarity, plaintiff's windfall-judgment-reduction theory of unjust enrichment as against 3667 Corp., as alleged, fails for the reasons just given. But in considering whether plaintiff has stated a cause of action, this court must consider not only the particular legal theory identified in the complaint, but whether the underlying factual allegations "fit within any cognizable legal theory." (Holder v Jacob, 231 AD3d 78, 86 [1st Dept 2024] [emphasis added].) And as this court itself held in deciding the prior motion, on the facts as pleaded, plaintiff has a cognizable claim against 3667 Corp. as the beneficiary of an erroneous wire transfer, based on a theory of payment by mistake. (See Innovative Telecom, 84 Misc 3d at 993, citing UCC 4-A-205 official comment 1.)

Accordingly, it is

ORDERED that plaintiff's default-judgment motion is granted as to defendant 3667 Corp. and otherwise denied; and it is further

ORDERED that plaintiff is awarded a judgment against 3667 Corp. for $999,974, with interest on that sum at the statutory rate running from November 29, 2022; and it is further

ORDERED that the balance of plaintiff's claims are severed and shall continue; and it is further

ORDERED that if plaintiff does not file a renewed default-judgment motion against the remaining defendants within 30 days of entry of this order, supported by evidence sufficient to establish a cause of action, the action will be dismissed as against those defendants; and it is further

ORDERED that plaintiff serve a copy of this order with notice of its entry on Spin Capital by e-filing on NYSCEF; on the other defendants by certified mail, return receipt requested, directed to those defendants' respective last-known addresses; and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/ljd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.