Deere & Company v. Rebel Auction Company, Inc. et al

Filing 27

ORDER granting 24 Motion for Partial Summary Judgment. The Court will conduct an evidentiary hearing on the issue of damages, the hearing will be on July 20, 2016 at 11AM in the Dublin Courthouse. Signed by Judge Dudley H. Bowen on 6/3/16. (cmr)

ORIGINAL
IN THE UNITED STATES DISTRICT COURT FOR

U.S. DISTRICT S
AUGytSTASIV.
THE

SOUTHERN DISTRICT OF GEORGIA

2016 JUN-3 PM3:ol

DUBLIN DIVISION

GLERKn

DEERE & COMPANY,

OFGA.
Plaintiff,
CV 315-072

V.

REBEL AUCTION COMPANY, INC.

and FOUR-D, INC.,
Defendants.

ORDER

Presently before the Court in the captioned case is
Plaintiff's motion for partial summary judgment.

For the

reasons that follow, Plaintiff's motion is GRANTED.

I.

BACKGROUND

The following facts are not in dispute.

On May 30, 2012,

a non-party to this litigation and resident of Virginia, Mr.

Benny

F.

Hall,

Jr.,

executed

a

Loan

Contract-Security

Agreement in favor of Plaintiff Deere & Company and granted a
security interest in certain items of agricultural equipment
to include: (1) JD 616C Combine {Corn Head), Serial Number

745283 (hereinafter referred to as the "Combine"); and (2)
Horst

Welding

CF

45

Transport,

Serial

(hereinafter referred to as the "Transport").

Number

120307

(McMains Aff.

of Apr. 13, 2016, Ex. A.)

Plaintiff perfected its security-

interest by recording a UCC financing statement in Virginia.
(Id.. Ex. B.)

On January 6, 2014, Mr. Hall consigned the Combine and
Transport to Defendant Rebel Auction Company, Inc. ("Rebel
Auction") for auction.

(Pl.'s Mot. for Partial Summ. J., Ex.

6c (Bates 168); Dep. of George Larry Davis, at 6-7 & Ex.1.)
Nevertheless,

a

few

weeks

later.

Defendant

Four-D,

Inc.

("Four-D") purchased the equipment directly from Mr. Hall for
$49,500.

(Pl.'s Mot. for Partial Summ. J., Ex. 6c (Bates

169); Davis Dep. at 22.)

Mr. George Larry Davis is the

President of Rebel Auction.

He is also the Vice-President and

a 50% shareholder of Four-D.

(Davis Dep. at 5, 24.)

On March 15, 2014, Defendant Rebel Auction auctioned the

equipment, selling it to Randall Brothers of Holgate, Ohio,
along

with other items of

equipment.

The

Combine and

Transport sold as one unit to the Randall Brothers for
$60,000. (Pl.'s Mot. for Partial Summ. J., Ex. 6c (Bates 94);
Davis Dep. at 25-26.)
Plaintiff

had

no

notice

of

either

the

sale

of

the

equipment to Four-D or the sale to Randall Brothers. (McMains
Aff. of Apr. 13, 2016, f 8.)

Moreover, it is undisputed that

neither Rebel Auction or Four-D performed a UCC search prior
to the referenced sales.

In fact, Mr. Davis testified that

Rebel Auction does not typically perform UCC searches.

(Davis

Dep. at 28.)
On October 2, 2014, a check for a payment in the amount

of

$350,834.12

was

posted

on

Mr.

Hall's

account

Plaintiff. (McMains Aff. of Apr. 13, 2016, Ex. D.)

with

However,

the payment was reversed on October 9, 2014, leaving a balance
owed on the account in the amount of $345,616.73 as of October

20, 2014.

(Id.)

On October 17, 2014, having been made aware of the sale

of the equipment. Plaintiff notified Randall Brothers of its
security interest.
(Bates 101).)

(Pl.'s Mot. for Partial Summ. J., Ex. 6c

Subsequently, by check dated October 24, 2014,

Defendant Rebel Auction refunded the purchase price on the

equipment to Randall Brothers.

(Id. (Bates 95).)

Plaintiff initially pursued recovery of the equipment.

In fact, on February 17, 2015, it brought a writ of possession

action against Rebel Auction for return of its collateral in
the Superior Court of Georgia. (Pl.'s Mot. for Partial Summ.
J., Ex. 6c (Bates 2-4).)

During the course of that state

court proceeding, the depositions of Mr. Davis and of his
administrative assistant at Rebel Auction, Mr, Stan White,

were taken.
Both

(Pl.'s Mot. for Partial Summ. J., Exs. 7 & 8.)

men testified

that Defendants did

equipment from the Randall Brothers.

not reacquire

the

(Davis Dep. at 27; Dep.

of

Stan

White,

at

26-27.)

The

disposition

of

this

state

action, if any, is unknown to this Court.
On August 31, 2015, Plaintiff brought the instant case
against Defendants seeking recovery of damages on its sole
claim-a

tort

claim

for

conversion.

On

April

27,

2016,

Plaintiff moved for partial summary judgment, asking that
judgment as a matter of law be entered against Defendants on
its conversion claim.^

Of note, after filing the instant lawsuit. Plaintiff sold
all of the collateral securing Mr. Hall's three loan accounts

with Plaintiff except the Combine and the Transport. Plaintiff
then obtained a Consent Judgment against Mr. Hall for the
balance of his loan account in the amount of $59,359.78 from

a Circuit Court in Virginia.

{McMains Aff. of Apr. 13, 2016,

H 4 & Ex. C.)

II.

STANDARD OF REVIEW

The Court should grant summary judgment only if "there is
no genuine issue as to any material fact and . . . the movant

is entitled to a judgment as a matter of law."
P. 56(a).

^

Fed. R. Civ.

The purpose of the summary judgment rule is to

Plaintiff

also

contends

that

the

Court

may enter

judgment in its favor on the issue of damages. Because the
issue of damages is a fact-intensive matter, the Court will
schedule an evidentiary hearing on the issue of damages.

dispose of unsupported claims or defenses which, as a matter
of law, raise no genuine issues of material fact suitable for
trial. Celotex Corp. v. Catrett. 477 U.S. 317, 322-23 (1986).

In considering a motion for summary judgment, all facts
and reasonable inferences are to be construed in favor of the

nonmoving party.

Hogan v. Allstate Ins. Co.. 361 F.3d 621,

625 (11th Cir. 2004).

Moreover,

[t]he mere existence of some factual dispute will
not defeat summary judgment unless the factual

dispute

is

material

outcome

of

the

substantive

law

disputed fact.

to

an

case.

issue

The

dictate

the

affecting

relevant

the

rules

materiality

of

of

a

A genuine issue of material fact

does not exist unless there is sufficient evidence

favoring the nonmoving party for a reasonable jury
to return a verdict in its favor.

Chapman v. AI Transp.. 229 F.3d 1012, 1023 (11"^^ Cir. 2000) (en

banc) (quoted source omitted) (emphasis supplied).

The party

opposing the summary judgment motion, however, "may not rest

upon the mere allegations or denials in its pleadings.
Rather, its responses . . . must set forth specific facts

showing that there is a genuine issue to be tried."

Walker v.

Darbv. 911 F.2d 1573, 1576-77 (11*^^ Cir. 1990).

In this case, the Clerk gave Defendants appropriate
notice of the motion for partial summary judgment and informed

them of the summary judgment rules, of the right to file
affidavits

or

other

materials

consequences of default.

in

opposition,

(Doc. No. 25.)

and

of

the

Therefore, the

notice requirements of Griffith v. Wainwriaht. 772 F.2d 822,
825 {11th Cir. 1985) (per curiam), are satisfied.

The time

for filing materials in opposition has expired, and the motion
is ripe for consideration.

III.

LEGAL ANALYSIS

The issue of liability on Plaintiff's conversion claim is
straightforward and virtually conceded by Defendants.

Under

Georgia law, conversion is "an unauthorized assumption and
exercise of the right of ownership over personal property

belonging to another, in hostility to his rights; an act of

dominion over the personal property of another inconsistent
with his rights; or an unauthorized appropriation."
Gas. Ins. Co. v.

Welchel.

(quoted source omitted).

Maryland

356 S.E.2d 877, 880 (Ga. 1987)

"Any distinct act of dominion

wrongfully asserted over one's property in denial of his
right, or inconsistent with it, is a conversion." Id. (quoted
source omitted).

Under similar circumstances involving a conversion claim

against an auction company, the Georgia Court of Appeals held
that an auctioneer, as an agent of the property seller, is
"liable

to

auctioneer,

a

secured

without

creditor

the

secured

for

conversion

creditor's

when

knowledge

the

or

consent, sells goods in which the secured creditor holds a

perfected security interest."

Deere & Co. v. Miller-Godlev

Auction Co.. 549 S.E.2d 762, 763 {Ga. Ct. App. 2001).

Indeed,

the Georgia Court of Appeals reached this conclusion even
though the auctioneer had not conducted a UCC search.

The

auctioneer had argued, and the trial had held, that it was

against public policy to require auctioneers to verify the
title of the goods they sell.

Id. at 765.

In reversing the

trial court, the Georgia Court of Appeals determined that

allowing auctioneers to ignore financing statements would
undermine

the

purpose of

the

Uniform

Commercial Code

to

provide a dependable system to protect secured transactions.
Id. at 765-66.

The court further noted that auctioneers who

do not have the foresight to protect themselves can seek
indemnity from the principals who offer their goods for sale.
Id. at 766.

In the case at bar. Defendants are in the same position
as the auctioneer in the Miller-Godbev case.

Defendants, as

agents of Mr. Hall, sold the equipment in derogation of
Plaintiff's

security

interest.

It

is

immaterial

that

Defendants did not conduct a UCC search and therefore had no

notice of Plaintiff's security interest.

In response to Plaintiff's motion for partial summary

judgment on the issue of liability. Defendants do not dispute
the facts or disagree with the application of Miller-Godbev.

Rather, Defendants point out Mr. Hall's culpability in the
situation.

{Defs. Opp'n to Mot. for Partial Summ. J., at 3
'

("Defendants show little concern for the idea that the seller,

Benny F. Hall, Jr., essentially committed a criminal act by
fraudulently conveying the items without reference to any

security interest being included thereon . . . .").)^

The

Miller-Godbev court, however, accounted for the role of the
fraudulent seller when it stated that the auctioneer could

seek indemnity from its principal. Simply put, the culpability
of the seller does not diminish the obligation of auctioneers

to perform UCC searches to protect themselves from liability
for conversion.

Defendants also assert that the relevant account Mr. Hall

had with Plaintiff may have been satisfied at the time of the
conversion.

Defendants also add that there exists an escrow

account arising out of litigation in Virginia that could

satisfy Plaintiff's financial interest without resorting to
this

tort

mitigation

claim.

of

These

damages.

arguments,

They

do

however,

not

affect

sound

or

in

alter

Defendant's liability on the conversion claim.

^

There is also some dispute about whether the serial

number tag on the Combine was switched at some point.
However, there is no genuine dispute that the equipment sold
at auction to the Randall Brothers is the equipment in which
Plaintiff held a valid security interest.

IV.

Upon

the

foregoing,

CONCLUSION

Plaintiff's

motion

for

partial

summary judgment on the issue of liability on its tort claim
for conversion (doc.

conduct

an

no.

evidentiary

24) is GRANTED,

hearing

on

the

The

issue

Court

of

will

damages

(including Defendants' claims of mitigation and Plaintiff's

claims for attorney's fees and punitive damages) at a hearing
at the J. Roy Rowland United States Courthouse, at Dublin,

Georgia, at 11:00 a.m., on Wednesday, July 20, 2016.
ORDER ENTERED at Augusta, Georgia, this

yy
day of

June, 2016.

UNITED STAGES DISTRICT JUDGE