Crouse et al v. Citizens National Bank of Albion

Filing 18

ORDER affirming judgment of bankruptcy court. Signed by Judge G. Patrick Murphy on 1/23/2012. (ktc)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS

In re:

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JASON M. CROUSE, et al,
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Debtors.
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JASON M. CROUSE and REGINA L. )
CROUSE,
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Appellants,
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vs.
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CITIZENS NATIONAL BANK OF )
ALBION,
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Appellee.
)

CIVIL NO. 11-477-GPM

MEMORANDUM AND ORDER
MURPHY, District Judge:
This bankruptcy appeal came before the Court for oral argument on January 23, 2012. Having
fully considered all the papers on file and the arguments presented, the Court rules as follows: the
Judgment of the Bankruptcy Court is AFFIRMED.
The Crouses filed a voluntary Chapter 13 bankruptcy petition on November 4, 2010. Appellee
Citizens National Bank of Albion (“Citizens”) filed objections to the Debtors’ valuation of certain
propertySover which it is undisputed that Citizens had security interests. In response to Citizens’s
objections, Bankruptcy Judge Altenberger held a valuation hearing on April 19, 2011. At the valuation
hearing, the parties adduced evidence as to the value of three vehicles: a 2003 Dodge Ram, a 2003 Case
40XT Skid Steer, and a 2008 Felling Flat Bed Trailer. As to the Dodge Ram, Gregory Ellis, an

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insurance appraiser, testified on behalf of the Debtors, valuing the Dodge Ram at $7,690.00. Seth
Fearn, an employee of Citizens and an agricultural loan officer, testified for Citizens that the Dodge
Ram was worth $16,975.00. Mr. Fearn’s opinion was based on National Automobile Dealer
Association guides. Judge Altenberger determined the value of the Dodge Ram to be $10,000.00. As
to the 2003 Skid Steer, Edward Baylis, a licensed auctioneer, testified for the Debtors that the value was
between $5,000.00 and $10,000.00. Mr. Fearn testified for Citizens that the value of the Skid Steer was
$11,761.00. Judge Altenberger determined the value of the Skid Steer to be $11,400.00. Mr. Baylis
also testified for Debtors as to the 2008 Felling Trailer–valuing it at $7,000.00. Mr. Fern valued the
Trailer for Citizens at $22,000.00. Judge Altenberger determined the value of the Trailer to be
$19,000.00.
Debtors now argue that Judge Altenberger improperly considered Citizens’s evidence of
“replacement value.” According to Debtors, the Bankruptcy Court indicated that evidence of auction
value (the evidence Debtors presented on the Skid Steer and the Trailer) could “never” constitute
replacement value (Doc. 8). Debtors complain that Citizens’s witnesses did not closely inspect the
vehicles, and their lack of inspection forecloses the possibility that Citizens’s witnesses correctly valued
the vehicles “warts and all,” as is required by Rash and its progeny. See In re Gonzalez, 295 B.R. 584,
591 (N.D.Ill. 2003), citing Associates Commercial Corp. v. Rash, 520 U.S. 953, 959 (1997).
The Supreme Court’s Rash decision was codified in 11 U.S.C. 506(a)(2), as the statute now
directs that replacement value is basis for valuing secured claims on property and that “replacement
value shall mean the price a retail merchant would charge for property of that kind considering the age
and condition of the property at the time value is determined.” 11 U.S.C. § 506(a)(2). The Court
cannot say from the record that the Bankruptcy Court erred in application of this legal standard to the
valuation of the above-detailed property. As Citizens points out in its appellate response, Judge
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Altenberger acknowledged at the valuation hearing that an auction value could constitute the
replacement value–the Bankruptcy Court did not make the blanket repudiation of auctioneer valuation
that Debtors suggest (Doc. 12). As the Bankruptcy Court correctly sought the replacement value of the
vehicles, this Court’s review is limited to whether the Bankruptcy Court’s adjudgment of the witnesses
at the valuation hearing was in clear error. See Kovacs v. United States, 614 F.3d 666, 672 (7th Cir.
2010) (“A finding is clearly erroneous when although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and firm conviction that a mistake has been
committed.”) (internal citations and quotations omitted). Though on appeal the Court finds Debtors’
argument–that an auctioneer might be able to more accurately relay the value of farm equipment than
an expert consulting dealer guides–persuasive, the Court cannot and will not find that there is any clear
error in the Bankruptcy Court’s valuation finding. Judge Altenberger heard the testimony of both
parties’ witnesses and was able to make an in-person credibility determination. The Court is not firmly
convinced that any mistake was made as to the valuation of these vehicles.
The Judgment of the Bankruptcy Court will therefore be AFFIRMED. The Clerk of Court is
DIRECTED to enter Judgment in this case accordingly.
IT IS SO ORDERED.
DATED: January 23, 2012
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G. PATRICK MURPHY
United States District Judge

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