Hockensmith v. Fifth Third Bank

Filing 48

REPORT AND RECOMMENDATIONS re 37 MOTION for Summary Judgment. IT IS RECOMMENDED THAT: Plaintiff's motion for summary judgment (Doc. 37) be GRANTED in part. Objections to R&R due by 11/13/2012. Signed by Magistrate Judge Stephanie K. Bowman on 10/26/12. (sct1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

RANDALL HOCKENSMITH,

Case No. 1:11-cv-173

Plaintiff,

Beckwith. J.
Bowman, M.J.

vs.
FIFTH THIRD BANK,
Defendant.
REPORT AND RECOMMENDATION
This is a diversity action in which Plaintiff’s complaint and amended complaint
asserts claims for conversion and replevin against Defendant Fifth Third Bank. This matter
is before the Court pursuant to Plaintiff’s motion for summary judgment, or in the
alternative, motion for order of possession of property (Doc. 37), the parties’ responsive
memoranda (Docs. 41, 43), and the arguments of counsel at the motion hearing on
October 15, 2012. Plaintiff’s motion for summary judgment has been referred to the
undersigned for initial consideration and a report and recommendation. 28 U.S.C. §
636(b)(1)(B). For the reasons set forth below, the undersigned recommends that Plaintiff’s
motion for summary judgment should be GRANTED, in part.
I. Background and Facts.
A. Plaintiff’s relationship with Performance Plus and the Vehicles at Issue
Plaintiff is a collector of classic and exotic automobiles. (Doc. 37, Ex. A, Affidavit of
Randall Hockensmith,¶ 2).

Between roughly 2002 and 2009, Plaintiff engaged

Performance Plus Motor Sports, Inc., d/b/a Corvettes & Classics by Performance Plus
(“Performance Plus”), in assisting him with enhancing his car collection. Id. at ¶ 3; (Doc.

41, Ex. B, Affidavit of Noel Grace, ¶ 3). Noel Grace, the owner of Performance Plus,
helped locate, purchase, sell, and trade certain cars on behalf of Plaintiff. (Doc. 37,
Hockensmith Aff. at ¶¶ 3-8; Grace Aff. at ¶¶ 3-8).
Typically, Plaintiff would advance the funds necessary to acquire and/or restore the
vehicles and Performance Plus would: (1) locate the vehicles, (2) restore the vehicles and
(3) market and sell the vehicles (Doc. Ex. 4, Hockensmith dep.60-61, 64-66). The profits
would be split between Plaintiff and Performance Plus. Id. at 65-66. Plaintiff’s share of the
profits from prior sales of the vehicles would be rolled into the purchase of the next vehicle.
Id. at 44.
This action involves the acquisition of the following three classic Corvettes using a
strategy of cash payments, profit rollover and trades between Plaintiff and Performance
Plus:
“Vehicle One” - 1967 Project 435 HP Corvette convertible, Vin #
194677S106186. The evidence shows that Plaintiff wired $140,000.00 to Performance
Plus on January 12, 2007 for the purchase of a blue 1967 Corvette.1 (Doc. 37, Ex. C).
Performance Plus purchased the vehicle with the funds sent by Plaintiff and then made
improvements to the vehicle. That car was ultimately sold for $180,000. Performance Plus
kept half of the profit and Plaintiff used the remaining half of the profit from the sale, along
with other sale proceeds totaling $135,000, to purchase Vehicle One. (Doc. 37, Ex. A.,
Hockensmith Aff ¶ 9) (Doc. 12 at 10-16).
“Vehicle Two” 1967 black Corvette coupe, Vin # 194377S100405. With respect

1

A different 1967 Corvette from Vehicle One.

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to Vehicle Two, the evidence shows that Plaintiff initially transferred $150,000.00 to
Performance Plus on April 4, 2007 for the purchase of a red Corvette convertible. (Doc.
37, Ex. E). Performance Plus restored the red Corvette and it was sold for $230,000.00.
In exchange for this red Corvette, Plaintiff received $100,000.00 and Vehicle Two on trade.
“Vehicle Three” - 1967 white Corvette convertible, Vin # 194377S117307. Also
in April 2007, Plaintiff transferred $215,000.00 to Performance Plus, who then purchased
a 1967 white HP Corvette.2 This car was ultimately sold and the proceeds used to
purchase Vehicle Three. (Doc. 12, ¶ 29-36).
B. Fifth Third’s Interest in Performance Plus and the Vehicles
On or about August 3, 2007, Performance Plus executed and delivered to Fifth Third
a Master Secured Promissory Note (the “Note”). (Doc. 41, Ex. 1 at Ex. A). The Note was
issued pursuant to a Dealer Floor Plan Agreement that Performance Plus executed and
delivered to Fifth Third on August 2, 2007 (the “Floor Plan”). (Id. at Ex. B)
The Floor Plan secured the obligations of the Note by granting Fifth Third a security
interest in all assets owned by Performance Plus, including but not limited to, “all Accounts,
all Inventory, all Equipment, all General Intangibles. . .” The Floor Plan’s definition of
Inventory includes the Vehicles, “all now owned, or hereafter acquired . . . all new and used
automobiles, trucks, vans and other motor vehicles . . . whether held for sale or lease . . .
. Fifth Third perfected its security interest in Performance Plus’ assets by filing UCC
financing statements in accordance with Ohio law.
In 2009, Noel Grace, the owner of Performance Plus, contacted Plaintiff and told him

2

This 1967 white Corvette is different than Vehicle Three.

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that Fifth Third wanted him to find alternative financing for his business. At that time,
Plaintiff requested that the titles to Vehicles One, Two and Three be transferred to his
name. Prior to this request, Performance Plus held the title to the vehicles.3
The titles were transferred to Plaintiff on August 10, 2009. (Doc. 37, Exs. D, F. H.).
According to the Titles, one vehicle was purchased for $50,000 and the other two vehicles
were purchased for $0.00. Id. Although the titles to the three vehicles were transferred to
Plaintiff, the vehicles remained in storage at Performance Plus.
Performance Plus defaulted on its obligations to Fifth Third by, inter alia, failing to
make the August 2, 2009 payment. (Doc. 41, Ex. 1, ¶ 7). As a result of the default, on or
about October 29, 2009, Fifth Third obtained a judgment against Performance Plus.
Thereafter, Fifth Third executed upon the Judgment, by requesting the Court to issue an
Order allowing the Butler County Sheriff to seize certain personal property of Performance
Plus. The Court issued the Order and the Butler County Sheriff seized the personal
property of Performance Plus. Notably, on December 21, 2009, Fifth Third seized Vehicles
One, Two and Three. Plaintiff made multiple demands for the return of these vehicles.
(Doc. 37, Hockensmith Aff. at ¶ 14). However, Fifth Third did not return them.
Thereafter, on March 22, 2011, Plaintiff filed the instant action against Fifth Third for
replevin, conversion and liquidated damages pursuant to Ohio Rev. Code § 2307.61(A).
(Doc. 1).4 Fifth Third’s answer to the complaint also included counterclaims against Plaintiff

3

According to Plaintiff, leaving the title initially in the name of Performance Plus was
advantageous especially for competition purposes because, per judging rules, a car will only be
graded if showcased by its titled owner. (Doc. 37, Hockensmith Aff. at ¶ 4; Grace Aff. at ¶ 4).
4

Plaintiff filed an amended complaint on May 31, 2011. (Doc. 112).

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for fraudulent transfer and for an Order from the court permitting Fifth Third to liquidate the
Vehicles to partially satisfy its Judgment against Performance Plus. (Doc. 17).
Plaintiff now moves for summary judgment, or in the alternative, for an order of
possession of property. Plaintiff asserts that he is the sole titled owner of the Vehicles and
is therefore entitled to judgment in his favor. Fifth Third, however, maintains that it has a
superior security interest in the Vehicles pursuant to its Floor Plan agreement with
Performance Plus.
II. Analysis
A. Standard of Review
In a motion for summary judgment, “a court must view the facts and any inferences
that can be drawn from those facts ... in the light most favorable to the nonmoving party.”
Keweenaw Bay Indian Comm. v. Rising, 477 F.3d 881, 886 (6th Cir. 2007) (internal
quotation marks omitted). “Summary judgment is only appropriate ‘if the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.’” Id. (quoting Fed. R. Civ. P. 56(c)) (internal
quotation marks omitted). “Weighing of the evidence or making credibility determinations
are prohibited at summary judgment-rather, all facts must be viewed in the light most
favorable to the non-moving party.” Id.
The requirement that facts be construed in the light most favorable to the Plaintiff,
however, does not mean that the court must find a factual dispute where record evidence
contradicts Plaintiff’s wholly unsupported allegations. After a moving party has carried its

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initial burden of showing that no genuine issues of material fact remain in dispute, the
burden shifts to the non-moving party to present specific facts demonstrating a genuine
issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986). “The ‘mere possibility’ of a factual dispute is not enough.” Mitchell v. Toledo Hosp.,
964 F.2d 577, 582 (6th Cir.1992) (citing Gregg v. Allen-Bradley Co., 801 F.2d 859, 863 (6th
Cir.1986)). In order to defeat the motion for summary judgment, the non-moving party must
present probative evidence that supports its complaint. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-50 (1986). The non-moving party's evidence “is to be believed, and all
justifiable inferences are to be drawn in his favor.” Id. at 255 (emphasis added). The court
determines whether the evidence requires submission to a jury or whether one party must
prevail as a matter of law because the issue is so one-sided. Id. at 251-52.
Although reasonable inferences must be drawn in favor of the opposing party, see
Matsushita, 475 U.S. at 587, inferences are not to be drawn out of thin air. To demonstrate
a genuine issue, the opposing party “must do more than simply show that there is some
metaphysical doubt as to the material facts .... Where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for
trial.’”Matsushita, 475 U.S. at 587 (citation omitted).
B. Plaintiff’s motion for Summary Judgment
Because this is a diversity action arising out of events and transactions taken place
in Ohio, the Court should apply the substantive law of Ohio in deciding this matter. The
parties, however, disagree as to which Ohio law is applicable. Plaintiff asserts that the
Ohio Certificate of Motor Vehicle Title Act controls in this matter. Applying the Act, Plaintiff
asserts that as title holder of the Vehicles in question, he has the sole claim to the Vehicles.
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Fifth Third, however, contends that the Ohio Uniform Commercial Code (“UCC”) should be
applied in determining the claims to the Vehicles. Under the UCC, Fifth Third asserts
Plaintiff’s interest in the Vehicles is subordinate and/or subject to Fifth Third’s superior
security interest in the Vehicles.
I. The parties’ competing claims to the Vehicles
Plaintiff argues first that the Ohio Certificate of Motor Vehicle Title Act mandates that
only those listed in the certificate of title have any claim, rights, title or interest to a motor
vehicle in any court. In support of this assertion, Plaintiff cites to O.R.C § 4505.04, which
proves in relevant part:
(A) No person acquiring a motor vehicle from its owner, whether the owner
is a manufacturer, importer, dealer, or any other person, shall acquire any
right, title, claim, or interest in or to the motor vehicle until such person has
had issued to him a certificate of title to the motor vehicle, or delivered to him
a manufacturer's or importer's certificate for it * * *.
(B) Subject to division (C) of this section, no court shall recognize the right,
title, claim, or interest of any person in or to any motor vehicle sold or
disposed of, or mortgaged or encumbered, unless evidenced:
(1) By a certificate of title, an assignment of a certificate of title made
under section 4505.032 of the Revised Code, a manufacturer's or importer's
certificate, or a certified receipt of title cancellation to an exported motor
vehicle issued in accordance with sections 4505.01 to 4505.21 of the
Revised Code;
(2) By admission in the pleadings or stipulation of the parties;
(3) In an action by a secured party to enforce a security interest
perfected under Chapter 1309 of the Revised Code in accordance with
division (A) of section 4505.13 of the Revised Code, by an instrument
showing a valid security interest.

The Supreme Court of Ohio has stated that O.R.C. § 4505.04 applies where parties
assert competing rights or competing interests in a motor vehicle. State v. Rhodes, 2 Ohio
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St.3d 74, 75; see also Walther v. Walther, 2d Dist. No. 20545, 2005–Ohio–907, ¶ 17;
Grogan Chrysler–Plymouth, Inc. v. Gottfried, 59 Ohio App.2d 91, 94 (6th Dist.1978); and
Rucker v. Alston, 2d Dist. No. 19959, 2004–Ohio-2428, ¶ 9. “R.C. 4505.04 was intended
to apply to litigation where the parties were rival claimants to title, i.e., ownership of the
automobile; to contests between the alleged owner and lien claimants; to litigation between
the owner holding the valid certificate of title and one holding a stolen, forged or otherwise
invalidly issued certificate of title; and to similar situations.” Hughes v. Al Green, Inc., 65
Ohio St.2d 110, 115–116 (1981), quoting Grogan Chrysler–Plymouth, Inc., 59 Ohio App.2d
at 94–95. See also Saturn of Kings Automall, Inc. v. Mike Albert Leasing, Inc., 92 Ohio
St.3d 513, 518 (2001). As noted by Plaintiff, in Saturn of Kings, the Court held that “[i]n
determining competing claims of ownership of a motor vehicle, R.C. 4505.04(A) controls
over the provisions of the Uniform Commercial Code.” Saturn of Kings, supra, at the
syllabus.
Most recently, on October 17, 2012, the Ohio Court of Appeals determined that
O.R.C. 4505.04 controlled the resolution of a dispute between an alleged owner of a
vehicle and a lien claimant.

See La Gar Mktg., Inc. v. W. Fin. & Lease, Inc.,

2012-Ohio-4800, 2012 WL 4898785.

In La Gar, Western Finance entered into an

“Equipment Finance Agreement” with Mark's Akron and Medina Truck Sales, Inc.
Pursuant to the agreement, Mark's Akron purchased a 2000 Mack Truck and agreed to pay
Western Finance $2117 per month for 24 months. Several weeks later, La Gar bought the
truck in question from Mark's Akron. La Gar paid Mark's Akron $7000 upfront and agreed
that it would pay an additional $970 per month for 18 months. Although La Gar was in
possession of the vehicle for approximately nine months, La Gar never received a
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certificate of title for the truck. While La Gar made its payments to Mark's Akron, Mark's
Akron apparently defaulted on its obligation to Western Finance.
After La Gar had made approximately nine of the monthly payments, Western
Finance repossessed the truck and subsequently sold it at auction. La Gar filed a
complaint against Western Finance seeking a declaratory judgment of its superior title, and
damages for conversion, trespass of chattel, and negligence. In affirming the trial’s court’s
decision granting summary judgment in favor of Western Finance, the Court stated:
As this case involves a dispute between the purchaser of an automobile, and
the creditor for the seller who alleges to have perfected a security interest,
this is a contest “between the alleged owner and lien claimant,” and R.C.
4505.04 applies. Stahl at ¶ 6. La Gar maintains that R.C. 4505.04 is
inapplicable because this case does not involve a dispute between two
alleged owners of a vehicle asserting competing claims to the vehicle.
However, because the precedent established in Ohio holds that R.C. 4505.04
applies in disputes “between the alleged owner and lien claimant,” we are
compelled to find R.C. 4505.04 applicable in this matter.
The ultimate issue in this case is whether the provisions of Article 9 of the
Uniform Commercial Code (UCC) that protects buyers in the ordinary course
prevail over the certificate of title requirement in R.C. 4505.04. The Supreme
Court of Ohio interpreted and applied R.C. 4505.04 in Saturn of Kings, 92
Ohio St.3d at syllabus, and held that “[i]n determining competing claims of
ownership of a motor vehicle, R.C. 4505.04(A) controls over the provisions
of the Uniform Commercial Code.”
***
Thus, this case involves a dispute between an alleged owner and a lien
claimant, and R.C. 4505.04 is controlling. While it may seem unjust that a
buyer is unable to benefit from the Article 9 provisions protecting a buyer in
the ordinary course, that is a matter left to the discretion of the legislature.
There is no dispute that La Gar does not possess a certificate of title to the
truck. As the clear language of R.C. 4505.04 mandates that a court may not
recognize a “right, title, claim, or interest of any person in or to any motor
vehicle” unless evidenced by a certificate of title, the trial court properly
concluded that it was unable to litigate this matter and awarded summary
judgment to Western Finance.

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La Gar Mktg., Inc., 2012 WL 4898785 at *3-4.
Here, it is undisputed that Plaintiff is the titled owner of the Vehicles. Thus, if the
Court determines that O.R.C 4504.04 should be applied to the facts in this case, Plaintiff
should be entitled to judgment as a matter of law.
However, unlike the facts in the cases cited above, in the present case, the Court
is asked to determine competing claims between an alleged holder of superior security
interest in the Vehicles and a current holder of title to the Vehicles - who acquired title
after the superior security interest was perfected.5 As such, the undersigned finds
persuasive Judge Belfance’s dissenting opinion in La Gar, wherein she disagreed with
the majority’s finding that O.R.C. § 4505.04 controls where parties assert competing
rights or competing interests in a motor vehicle.6 Judge Belfance’s dissent notes that the
opinion of the Court relied upon caselaw that was decided prior to an amendment of
O.R.C. 4505.13, and states in pertinent part:
The majority relies on the statement in Saturn of Kings that “O.R.C. 4505.04
was intended to apply to litigation where the parties were rival claimants to
title, i.e., ownership of the automobile; to contests between the alleged owner
and lien claimants[.]” Id. at 518, quoting Hughes v. Al Green, Inc., 65 Ohio
St.2d 110, 115-116 (1981), quoting Grogan Chrysler -Plymouth Inc. v.
Gottfried, 59 Ohio App.2d 91, 94-95 (1978). However, when the Supreme
Court decided Hughes, R.C. 4505.13 read, in pertinent part,
Sections 1309.01 to 1309.50, inclusive, and section 1701.66 of
the Revised Code, do not permit or require the deposit, filing,
5

Pursuant to the Floor Plan agreement, Fifth Third only has an interest in the vehicles if
Performance Plus can be considered the owner of the Vehicles at some point prior to Plaintiff’s taking title.

6

As noted above, section 4505.04 provides that no person acquiring a motor vehicle from its
owner, whether the owner is a manufacturer, importer, dealer, or any other person, shall acquire any right,
title, claim, or interest in or to the motor vehicle until such person has had issued to him a certificate of title
to the motor vehicle, or delivered to him a manufacturer's or importer's certificate for it.

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or other record of a security interest covering a motor vehicle.
Any security agreement covering a security interest in a motor
vehicle, if such instrument is accompanied by delivery of a
manufacturer's or importer's certificate and followed by actual
and continued possession of such certificate by the holder of
said instrument, or, in the case of a certificate of title, if a
notation of such instrument has been made * * * on the face of
such certificate, shall be valid as against the creditors of the
debtor * * * and against subsequent purchasers, secured
parties, and other lienholders or claimants.
(Emphasis omitted). In other words, when Hughes was decided, the way to
perfect a security interest in a motor vehicle was by noting the interest on the
certificate of title, and, thus, there was never a need to look beyond the
certificate of title because a security interest noted on it was valid against all
subsequent purchasers. See former R.C. 4505.13.
In 1984, the General Assembly amended R.C. 4505.13, making R.C. Chapter
1309 applicable to vehicles held as inventory for sale by a dealer. See R.C.
4505.13(A)(2); see also Heartland Bank v. Nat'l City Bank, 171 Ohio App.3d
132, 2007-Ohio-1940, ¶ 35 (10th Dist.) (concluding that R.C. 4505.14(B) is
“subject to” R.C. 4505.13(A)(2)'s specific designation of R.C. Chapter 1309
as applying to security interests in motor vehicles held as inventory for sale
by dealers, a finding that is consistent with the cross-reference within R.C.
Chapter 1309 citing R.C. Chapter 4505 as governing the perfection of
security interests in vehicles that are not held as inventory for sale by a
dealer). But see First Merit Bank v. Angelini, 159 Ohio App.3d 179, 2004Ohio-6045, ¶ 19-23 (3d Dist). Thus, a court may have to look beyond the
certificate of title to determine if a lien is valid, and, furthermore, a buyer in
the ordinary course of a vehicle held as inventory by a dealer takes the
vehicle free and clear of a lien. See R.C. 4505.13(A)(2), (B); R.C.
1309.320(A). Therefore, unlike when Hughes was decided, the certificate of
title is not dispositive of whether Western Finance had a valid lien. Thus,
because the dispute in Saturn of Kings was between alleged owners and did
not involve a lienholder and the Supreme Court did not examine the import
of the amendment to R.C. 4505.13, I do not believe Saturn of Kings is
dispositive of this case.

La Gar Mktg., Inc., 2012 WL 4898785 at*7 (emphasis added).
Based on the foregoing, Judge Belfance opined that the majority erred in relying
solely on the Certificate of Title Act and should have first applied O.R.C. §§4505.13 and

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1309.320 to determine whether the Plaintiff was a buyer in the ordinary course and
whether the vehicle was held as inventory. If the answer to those questions were yes,
Plaintiff could take the vehicle free and clear of a lien. See R.C. 4505.13(A)(2), (B); R.C.
1309.320(A). See also Heartland Bank v. Natl. City Bank, 2007-Ohio-1940, 171 Ohio
App. 3d 132, 869 N.E.2d 746 (Perfected security interests that automobile dealer's lender
had in two vehicles held by dealer as inventory for sale were extinguished, pursuant to
Uniform Commercial Code (UCC), by dealer's sale of the vehicles to two buyers who
were buyers in the ordinary course of business).
Notably, section 4505.13 provides:
(A)(1) Chapter 1309 and section 1701.66 of the Revised Code do not
permit or require the deposit, filing, or other record of a security interest
covering a motor vehicle, except as provided in division (A)(2) of this
section
(2) Chapter 1309 of the Revised Code applies to a security interest in a
motor vehicle held as inventory for sale by a dealer. The security interest
has priority over creditors of the dealer as provided in Chapter 1309. of the
Revised Code without notation of the security interest on a certificate of
title, without entry of a notation of the security interest into the automated
title processing system if a physical certificate of title for the motor vehicle
has not been issued, or without the retention of a manufacturer's or
importer's certificate.
(B) Subject to division (A) of this section, any security agreement covering
a security interest in a motor vehicle, if a notation of the agreement has
been made by a clerk of a court of common pleas on the face of the
certificate of title or the clerk has entered a notation of the agreement into
the automated title processing system and a physical certificate of title for
the motor vehicle has not been issued, is valid as against the creditors of
the debtor, whether armed with process or not, and against subsequent
purchasers, secured parties, and other lienholders or claimants…
Thus, pursuant to § 4505.13, a perfected security interest will often prevail over a
subsequent motor vehicle purchaser. However, an exception to this general rule is found
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in O.R.C. § 1309.320, which provides in relevant part:
(A). . . [A] buyer in the ordinary course of business, other than a person
buying farm products from a person engaged in farming operations, takes
free of a security interest created by the buyer's seller even if the security
interest is perfected and the buyer knows of its existence.
(B). . . [A] buyer of goods from a person who used or bought the goods for
use primarily for personal, family, or household purposes takes free of a
security interest, even if perfected, if the buyer buys:
(1) Without knowledge of the security interest;
(2) For value;
(3) Primarily for the buyer’s personal, family, or household purposes; and
(4) Before the filing of a financing statement covering the goods.

Ohio Rev. Code § 1309.320 (A) & (B).
O.R.C § 1301.201(B)(9) defines a “buyer in ordinary course of business” as:
[A] person that buys goods in good faith, without knowledge that the sale
violates the rights of another person in the goods, and in the ordinary
course from a person, other than a pawnbroker, in the business of selling
goods of that kind. A person buys goods in the ordinary course if the sale
to the person comports with the usual or customary practices in the kind of
business in which the seller is engaged or with the seller's own usual or
customary practices. A person that sells oil, gas, or other minerals at the
wellhead or minehead is a person in the business of selling goods of that
kind. A buyer in ordinary course of business may buy for cash, by
exchange of other property, or on secured or unsecured credit, and may
acquire goods or documents of title under a preexisting contract for sale.
Only a buyer that takes possession of the goods or has a right to recover
the goods from the seller under Chapter 1302. of the Revised Code may be
a buyer in ordinary course of business. . . . .

Ohio Rev. Code § 1301.201.
Thus, a buyer in the ordinary course of a vehicle held as inventory by a dealer
takes the vehicle free and clear of a lien. See O.R.C. 4505.13(A)(2), (B); O.R.C.
1309.320(A).

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Here, Fifth Third argues that Plaintiff does not fall within the definition of a “buyer
in the ordinary course” because he never took possession of the Vehicles and the
issuance of the Titles occurred only after Performance Plus defaulted on its loan
obligations to Fifth Third and in an attempt to deprive Fifth Third of its rights as a secured
creditor. However, the statute requires possession, or the right to take possession, which
Plaintiff had. As to the alleged late titling of the Vehicles in Plaintiff’s name, the Court
does not find that this mandates a finding that Plaintiff is not a buyer in the ordinary
course. It is clear that only Plaintiff’s funds were used to purchase the Vehicles, only he
insured them and the Vehicles were restored to his preferences. (Doc. 37, Ex. A,
Hockensmith Aff. ¶ 4,Ex. B, Grace Aff.,¶ 4; Doc. 41, Ex. 4, Hockensmith dep. at 29).
Fifth Third further argues that a “sale” did not occur and therefore the buyer in the
ordinary course exception does not apply to terminate Fifth Third’s security interest in the
Vehicles. Fifth Third further argues that these transactions were investments and not
sales Fifth Third notes that there are no agreements to purchase and no bills of sales
were supplied by Plaintiff to support his claim to be an ordinary course buyer. Fifth Third
has not cited any case law in support of their argument that goods purchased as an
investment can not constitute a sale under the UCC and this Court has found none.
In addition, Fifth Third contends that the failure to timely apply for a certificate of
title or accurately set forth the alleged consideration “paid” for the Vehicles on the Titles
also supports the conclusion that Plaintiff was not an ordinary course buyer. Plaintiff
testified that these vehicles were purchased purely to enhance his collection of exotic and
classic automobiles. (Doc. 37, Ex. A, Hockensmith Aff. ¶ 2; Doc. 41, Ex. 4, Hockensmith
dep. 19-20). And the Plaintiff and Performance Plus had a history of buying, trading and
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selling cars in this manner. (Doc. 37, Ex. A, Hockensmith Aff., ¶ 3-8, Ex. B, Grace Aff. ¶
3-8). Fifth Third also notes that the only “evidence” that Plaintiff is an ordinary course
purchaser of the Vehicles are his self-serving statements and the Titles. However, the
Court finds that the titles are a significant piece of evidence in support of Plaintiff’s claim.
Upon careful review, the undersigned finds that the undisputed facts establish that
Plaintiff was a buyer in the ordinary course when he purchased the Corvettes at issue
through Performance Plus. Thus, Plaintiff is entitled take the Vehicles free and clear of
Fifth Third’s security interest.7 See R.C. 4505.13(A)(2), (B); R.C. 1309.320(A). See also
Heartland Bank v. Natl. City Bank, 2007-Ohio-1940, 171 Ohio App. 3d 132, 869 N.E.2d
746. Plaintiff is therefore entitled to judgment as a matter of law in this regard.
II. Plaintiff’s remaining claims
Plaintiff also claims that Fifth Third is liable to him for civil theft.

O.R.C.

§2913.02(A) provides that "[n]o person, with purpose to deprive the owner of property or
services, shall knowingly obtain or exert control over either the property or services in any
of the following ways: (1) Without the consent of the owner or person authorized to give
consent; (2) Beyond the scope of the express or implied consent of the owner or person
authorized to give consent; (3) By deception; (4) By threat; (5) By intimidation." Although
this Court found that Fifth Third does not have a valid security interest in the Vehicles, the
Court cannot conversely find that there are no genuine issues of material facts as to Fifth
Third's liability for civil theft. Other than the assertion that Fifth Third did not have

7

In light of the undersigned finding that Plaintiff is a buyer in the ordinary course of business,
Fifth Third’s assertion that it holds a superior interest because the Vehicles in question were held as
inventory for sale by Performance Plus is not well-taken. Even if the Court found the Vehicles to be
inventory, Plaintiff would still prevail.

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Plaintiff's consent, there is no evidence to support the contention that Fifth Third acted
knowingly when it obtained or exerted control over the Vehicles. In fact, there is evidence
that shows that Fifth Third held an honest belief that the Vehicles belonged to
Performance Plus and thus were covered under the Floor Plan. See Butler County
Common Pleas Court Seizure Order.
Plaintiff finally argues that he is entitled to immediate possession of the Vehicles
pursuant to O.R.C. §2737.01, et seq, which provides an avenue for requesting
possession of specific property in a civil action while awaiting judgment. However, since
this Court is recommending judgment as to Plaintiff on his claim of having a superior
interest in the Vehicles over that of Fifth Third, the Replevin statute is no longer applicable
and the Court recommends that immediate possession of the Vehicles be given to
Plaintiff.
C. Fifth Third’s Counterclaims
As noted above, Fifth’s Third’s answer to Plaintiff’s amended complaint included
counterclaims for fraudulent transfer and to establish interest in and rights to liquidate the
Vehicles to partially satisfy its Judgment against Performance Plus. In light of the
undersigned’s finding that the undisputed facts establish that Plaintiff is a buyer in the
ordinary course of business and the subsequent recommendation that he should take the
vehicles free and clear of Fifth Third’s security interest, Fifth Third’s counterclaims should
be dismissed.

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III. Conclusion
In light of the foregoing, IT IS THEREFORE RECOMMENDED THAT: Plaintiff’s
motion for summary judgment (Doc. 37) should be GRANTED in part, as outlined above.

s/Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

RANDALL HOCKENSMITH,

Case No. 1:11-cv-173

Plaintiff,

Beckwith. J.
Bowman, M.J.

vs.
FIFTH THIRD BANK,
Defendant.
NOTICE
Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written
objections to this Report & Recommendation (“R&R”) within FOURTEEN (14) DAYS of
the filing date of this R&R. That period may be extended further by the Court on timely
motion by either side for an extension of time. All objections shall specify the portion(s)
of the R&R objected to, and shall be accompanied by a memorandum of law in support
of the objections. A party shall respond to an opponent’s objections within FOURTEEN
(14) DAYS after being served with a copy of those objections. Failure to make objections
in accordance with this procedure may forfeit rights on appeal. See Thomas v. Arn, 474
U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).

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