David Jencks represents banks, factors, asset-based lenders and finance companies in commercial litigation in state and federal courts nationwide. He has tried lawsuits for claims of fraud, breach of contract, tortious interference, payment over statutory notice, detrimental reliance, conversion and conspiracy related to factoring transactions, and has litigated over 250 factoring suits as plaintiff’s and defendant’s counsel.

Factoring cases turn on operational facts: what was verified, when, and by whom; whether the notice of assignment was proper and received; how the account was managed. Knowing how factors, brokers and carriers actually work lets us find and present those facts.

Representative experience

• Successfully defended a factor against claims of fraud and conspiracy
• Obtained summary judgment for a factor against multiple guarantors in a million-dollar recovery
• Obtained a verdict and recovery of $600,000 for a factoring client against an account debtor and client for payment over assignment and breach of contract
• Obtained multiple verdicts for plaintiff factors recovering from account debtors and clients for breach of contract

Prior results do not guarantee a similar outcome.

Types of disputes we handle

Our litigation grows out of the same work we do on the transactional side. Typical disputes include:

Factor and lender claims against account debtors and brokers

• Payment-over-notice claims under UCC § 9-406 against account debtors and freight brokers that paid the wrong party after receiving a notice of assignment
• Demands and collection suits against brokers and shippers for unpaid freight receivables
• Claims against broker surety bonds (BMC-84)
• Disputes over broker and account debtor verifications, including detrimental reliance, estoppel and misrepresentation claims

Fraud recovery

• Fraudulent letters of release and altered notices of assignment sent to account debtors
• Fraudulent carriers, identity and authority fraud, and coordinated schemes affecting several finance companies
• Double factoring and other client fraud
• Hacked email and business accounts, bank-account change requests and redirected ACH payments
• Unauthorized UCC filings

UCC priority and competing creditors

• Competing claims by MCA funders, other factors and lenders to the same receivables
• UCC lien notices and demands to account debtors, and responses to them
• Lien releases, reassignment and termination of UCC filings
• Intercreditor and subordination disputes
• Enforcement of secured-party rights under Article 9, including notices under UCC § 9-607

Guaranties and loan collection

• Enforcement of validity and personal guaranties, and guarantor settlements
• Bank and lender loan collection actions in South Dakota state courts, through summary or default judgment

Equipment finance and collateral

• Equipment finance defaults and collection litigation
• Title, lien release and payoff disputes over financed equipment

Contract and business disputes

• Disputes over ending a factoring relationship: release requests, mutual release and transition agreements, and buyouts by a new funder
• Disputes with former clients
• Workout agreements and their enforcement
• Shareholder and closely held company disputes
• Merchant cash advance demands and settlements
• Settlement agreements and mutual releases

Bankruptcy litigation

• Defense of preference claims and adversary proceedings against factors and lenders
• Creditor representation in carrier and broker Chapter 11 cases: cash collateral, claims to receivables, plan voting and global settlements
• Guarantor and plan-related settlements

Judgment enforcement

• Default judgments and damages proof
• Domestication of judgments in other states
• Garnishment and other post-judgment collection
• Satisfactions of judgment

Federal and multi-party litigation

• Multi-party cases in the U.S. District Court for the District of South Dakota, including crossclaims and consolidation
• Coordination of related cases across districts, including multi-district litigation questions
• Amicus participation on industry issues

Transportation claims

• Cargo claims and freight charge recovery
• Cargo claims defense for insurers

Local counsel litigation

• South Dakota local counsel for out-of-state attorneys appearing pro hac vice in state court, federal district court and bankruptcy court
• Retaining and coordinating local counsel and pro hac vice admission for our clients’ cases in other states

The firm works with a network of local counsel across the country, chairing or co-chairing transportation factoring litigation, and serves as local counsel in South Dakota for out-of-state firms.

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