United States District Court, E.D. Arkansas, Western Division
OPINION AND ORDER
LEON HOLMES UNITED STATES DISTRICT JUDGE
Credit Group, Inc., claims that it has perfected security
interests in equipment originally owned by Uniserve, LLC,
that Uniserve transferred the equipment to Process, Inc., and
that Process, Inc., later transferred the equipment to ABC
Salvage & Scrap Metal, Inc. Commercial Credit asserts
replevin and conversion claims against Process and ABC
Salvage. It also asserts unjust enrichment and punitive
damages claims against Process. Process moves for summary
judgment, which ABC Salvage joins. The motions are denied.
should enter summary judgment if the evidence, viewed in the
light most favorable to the nonmoving party, demonstrates
that there is no genuine dispute as to any material fact and
that the moving party is entitled to judgment as a matter of
law. Fed.R.Civ.P. 56(a); see also Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511,
91 L.Ed.2d 202 (1986); Torgerson v. City of
Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en
banc). A genuine dispute of material fact exists only if the
evidence is sufficient to allow a jury to return a verdict
for the nonmoving party. Anderson, 477 U.S. at 249,
106 S.Ct. at 2511.
Credit provided Uniserve financing to purchase two Exodus
Material Handlers-equipment used in the scrap metal industry.
Document #27-1. Uniserve granted Commercial Credit security
interests in each of the Exodus handlers to secure the
financing. Document #27-2. Commercial Credit filed financing
statements in Tennessee and Arkansas to provide notice of its
security interest in the Exodus handlers. Document #5 at
¶11. Sometime around July 17, 2013, Uniserve transferred
the Exodus handlers to Process in exchange for a Sennebogen
850M Material Handler. Id. ¶12; Document #18 at
¶12. Process later sold one of the Exodus handlers to
ABC Salvage. Id. ¶23. Uniserve defaulted on its
loan obligations to Commercial Credit and ultimately filed
for bankruptcy. Id. ¶¶25, 59. Before
Uniserve filed for bankruptcy, Commercial Credit sought an
order of delivery against Uniserve in this Court. After an
evidentiary hearing, this Court ordered Uniserve to deliver
certain specified personal property to Commercial Credit,
among which was the Sennebogen handler. Document #16-1 at
36-40. Commercial Credit purchased the Sennebogen handler at
a public auction on a credit bid. Document #16-4. Commercial
Credit maintains that Uniserve's debts have not been
fully satisfied and it retains a security interest in the
offers three independent reasons why Commercial Credit does
not have priority in the Exodus handlers. First, it argues
that Commercial Credit failed to perfect its security
interest. Second, it argues that even if Commercial Credit
perfected its security interest, Commercial Credit has
received proceeds from the collateral and cannot also
maintain control over the collateral. Third, it argues that
it is a buyer in ordinary course of business and so took the
equipment free of Commercial Credit's security interest.
first and third reasons are foreclosed by its pleadings.
Commercial Credit's amended complaint alleges the
8. Uniserve, LLC . . . is headquartered in Arkansas and at
all relevant times was engaged in the business of collection,
processing and sale of scrap metal and products derived
therefrom. It purchases equipment solely for use in its scrap
metal business, and has never been engaged in the business of
sale or lease of commercial equipment.
* * *
11. CCG perfected its security interests in the Collateral,
including the Exodus Machine, by filing financing statements
with the Tennessee and Arkansas Secretaries of State, thereby
providing notice to all of the world that CCG has security
interests in all equipment belonging to Uniserve, LLC.
#2. Process admitted the allegations in both of these
paragraphs without qualification. Document #5 at
¶¶8, 11. As a rule, “[a]dmissions in the
pleadings . . . are in the nature of judicial admissions
binding upon the parties, unless withdrawn or amended.”
Missouri Hous. Dev. Comm'n v. Brice,
919 F.2d 1306, 1314 (8th Cir. 1990) (alterations in original)
(citations omitted). This is true “even if the
post-pleading evidence conflicts with the evidence in the
pleadings.” Id. at 1315.
first argument by Process is devoted entirely to whether
Commercial Credit properly perfected its security interest
under Tennessee law. As noted above, Process admitted in its
answer that Commercial Credit “perfected its security
interests in the Collateral, including the Exodus Machine, by
filing financing statements with the Tennessee and Arkansas
Secretaries of State.” In light of this admission,
Process' argument on perfection fails. The third argument
by Process is similarly precluded. Process acknowledges that
for it to receive buyer-in-ordinary-course protection, it
must have purchased the collateral from “a person . . .
in the business of selling goods of that kind.”
Document #17 at 13. Process admitted that it purchased the
equipment from Uniserve and that Uniserve “has never
been engaged in the business of sale or lease of commercial
equipment.” ABC Salvage, then, also lacks protection
because, based on Process' admission, Process was not a
buyer in ordinary course of business and because Process was
not the seller that created the security interest.
See Tenn. Code Ann. § 47-9-320, cmt. 3
(buyer-in-ordinary-course protection “applies only to
security interests created by the seller of the goods to the
buyer in ordinary course”); Ark. Code Ann. §
4-9-320, cmt. 3 (same).
attempts to avoid the consequences of its judicial
admissions. It relies on Eighth Circuit precedent that
requires judicial admissions to “be deliberate, clear,
and unambiguous.” Acciona Windpower N. Am., LLC v.
City of W. Branch, Iowa, 847 F.3d 963, 968 (8th Cir.
2017). According to Process, its admissions were not clear
and unambiguous because they were not made “in the
context of application of the UCC” nor were they were
made with sufficient knowledge. Document #33 at 4. The
admissions are not ambiguous. Paragraph 11 of the amended
complaint cites to “Exhibit 2, UCC Financing
Statements.” Moreover, the Court is hard-pressed to
imagine in what context other than the UCC that admissions
would be made regarding “financing statements [filed]
with the Tennessee and Arkansas Secretaries of State”
and “security interests.” Last, insufficient
knowledge is no defense to an admission. Federal Rule of
Civil Procedure 8(b)(5) requires “[a] party that lacks
knowledge or information sufficient to form a belief about
the truth of an allegation” to “so state, ”
which gives “the statement the effect of a
also argues that any interest Commercial Credit had in the
Exodus handlers has been extinguished because Commercial
Credit was made whole when it received the Sennebogen
handler, which constituted proceeds of the Exodus handlers.
Process says this is so because Commercial Credit “has
not stated a liquidated deficiency as to any debt for which
such proceeds were collateral.” Document #17 at 12.
Commercial Credit states an aggregate remaining debt of $551,
491.86, but Process contends that Commercial Credit has
failed to show whether the proceeds of the Exodus handlers
leaves Commercial Credit indebted with respect to those
moving party, Process bears the burden of showing that there
are no material facts in dispute. Under the UCC, a secured
creditor “may claim both any proceeds and the original
collateral but, of course, may have only one
satisfaction.” Tenn. Code Ann. § 47-9-315 cmt. 2.
Process bears the burden of showing that there is no dispute
over whether Commercial Credit has received a full
satisfaction. After an evidentiary hearing conducted by this
Court in a case between Commercial Credit and Uniserve, its
order of delivery stated that the actual value of the
Sennebogen handler was $110, 000.00. Document #16-1 at 38.
Commercial Credit bought it on a credit bid of $80, 000.00.
The invoices from Uniserve's purchase of the two Exodus
handlers reflect a list price of $523, 000 each. One of the
Exodus handlers was pledged as security on a note in the
amount of $589, 152, and the other Exodus handler was pledged
as security on a separate note in the amount of $461, 568.
Document #27-2. Process has not met its burden of showing
there is no genuine dispute as to any material fact
concerning whether the Sennebogen handler fully satisfied the
debt, secured by the ...