Blue Ridge Bank and Trust Co. v. Hart

• Decision Date: 11 January 2005
• Docket Number: No. WD 62720.,WD 62720.
• Citation: 152 S.W.3d 420
• Parties: BLUE RIDGE BANK AND TRUST COMPANY, Appellant, v. John A. HART, Respondent Pro Se, Precision Automotive Corp., d/b/a Superior Acura, Respondent.
• Court: Missouri Court of Appeals

152 S.W.3d 420

BLUE RIDGE BANK AND TRUST COMPANY, Appellant, v. John A. HART, Respondent Pro Se Precision Automotive Corp., d/b/a Superior Acura, Respondent.

No. WD 62720.

Missouri Court of Appeals, Western District.

January 11, 2005.

Steven H. Mustoe, Kansas City, MO, for appellant.

John A. Hart, Kansas City, MO, pro se.

Robert O. Jester, Brandon D. Mizner, Co-Counsel, Kansas City, MO, for respondents Precision Automotive Corp., d/b/a Superior Acura.

Before ELLIS, P.J., LOWENSTEIN and BRECKENRIDGE, JJ.

PATRICIA BRECKENRIDGE, Judge.

Blue Ridge Bank and Trust Company appeals the trial court's judgment in favor of Superior Acura on Blue Ridge Bank's claim for conversion of a 2001 Cadillac that was originally purchased by John Hart, financed by Blue Ridge Bank, and subsequently sold to Superior Acura. On appeal, Blue Ridge Bank claims that the trial court erred in finding that Blue Ridge Bank failed to prove its claim of conversion because its lien was not perfected when Superior Acura purchased the vehicle. Blue Ridge Bank asserts that it properly perfected its security interest by filing a notice of lien prior to Superior Acura's purchase of the vehicle; Blue Ridge Bank was not required to file a financing statement for its lien to remain perfected because section 400.9-311(d), RSMo Cum.Supp.2003,¹ was not applicable since the vehicle was not held for sale as inventory; Blue Ridge Bank had no statutory duty to ensure the filing of an application for a new title; and the buyer-in-the-ordinary-course defense was inapplicable. Because this court finds that Blue Ridge Bank was required to file a financing statement for its lien on the vehicle to remain perfected, which Blue Ridge Bank conceded it did not do, the judgment of the trial court is affirmed.

Factual and Procedural Background

On September 27, 2001, Enterprise Leasing of Kansas sold a 2001 Cadillac through P & S Auto Auction. On the back of the vehicle's certificate of title, "Better Than New LLC" was recorded as the purchaser and John Hart signed the title as its agent. The title further indicated that, on or about October 17, 2001, Better Than New LLC, through its agent, Tom Sudik, sold the vehicle to Mr. Hart.

To finance the purchase of the vehicle, Mr. Hart applied for a loan from Blue Ridge Bank on October 19, 2001. The vehicle was still at the auto auction at that time. Mr. Hart presented Blue Ridge Bank with the vehicle's title. On his credit application, Mr. Hart indicated that he was employed, as general manager, by "BTN Auto." On Blue Ridge Bank's disbursement request and authorization form, Mr. Hart checked a box indicating that the primary purpose of the loan was for "Personal, Family, or Household Purposes or Personal Investment." The income tax returns, which Mr. Hart provided to Blue Ridge Bank in support of his application, stated that his occupation was "Auto Sales" and his spouse's occupation was "Automobile Dealer." In addition, Mr. Hart's tax documents reported income loss from Better Than New LLC. Mr. Hart's credit report obtained by Blue Ridge Bank also indicated that he was the owner of Better Than New Auto.

Based on the documents provided by Mr. Hart in support of his loan application, Blue Ridge Bank agreed to loan Mr. Hart $30,700 to purchase the vehicle. To secure the loan, Mr. Hart and Blue Ridge Bank entered into a security agreement, whereby Mr. Hart granted Blue Ridge Bank a security interest in the vehicle. Blue Ridge Bank disbursed the loan proceeds in two checks: one check payable to "P and S Auto Auction" for $25,575; and one check payable to John A. Hart for the balance of the loan, $5,075, less a $50 loan closing fee. Thereafter, on October 25, 2001, Blue Ridge Bank filed a notice of lien with the Missouri Director of Revenue. Blue Ridge Bank did not file any other documents with the Director, such as a financing statement. Neither Mr. Hart nor Blue Ridge Bank ever filed an application for new title.

On November 10, 2001, application was made to the Director for a duplicate title for the vehicle. The application indicated that the owner of the vehicle was Enterprise Leasing, that no liens existed on the vehicle, and that the duplicate title should be sent to Pitts Title Service in Independence. Consequently, the Director issued a duplicate title for the vehicle, which named Enterprise Leasing as the owner. The duplicate title did not indicate Blue Ridge Bank's lien.

An assignment of the vehicle was subsequently made on the back of the duplicate title from Enterprise Leasing to Poor Boys Auto. On November 30, 2001, Mr. Hart drove the car to Superior Acura and met with Christopher Exposito, Superior Acura's general manager, whom Mr. Hart had known for ten years. Although Mr. Exposito was familiar with Mr. Hart, Mr. Exposito had not previously done business with him. Mr. Hart represented himself as a car dealer to Mr. Exposito and told him that he had a customer who wanted a car that Superior Acura had for sale. Mr. Hart proposed trading the Cadillac for Superior Acura's car. Mr. Exposito observed that the Cadillac had Missouri used-car-dealer's tags. An agreement was reached, and Mr. Hart sold the vehicle to Superior Acura for $23,500. Mr. Hart signed the duplicate title as an agent of Poor Boys Auto. Unaware of the existence of Blue Ridge Bank's lien, Superior Acura sold the vehicle to Superior Buick Cadillac for $24,100 on December 11, 2001. Superior Buick Cadillac then sold the vehicle to a Kansas resident. Blue Ridge Bank had no knowledge of and received no proceeds from any of the sales.

In early 2002, Blue Ridge Bank learned of the sales of the Cadillac. Eventually, it was discovered that both the application for duplicate title and the assignment on the back of the duplicate title contained the forged signatures of individuals from Enterprise Leasing. On March 18, 2002, Blue Ridge Bank filed a three-count petition.² In Count I, Blue Ridge Bank sought a judgment against Mr. Hart on its promissory note.³ In Count II, Blue Ridge Bank sought damages in the amount of $32,000 from Superior Acura for conversion of the car. In Count III, Blue Ridge Bank sought punitive damages from Mr. Hart for fraud.

On January 16, 2003, the trial court conducted a bench trial. Mr. Hart, who was in default for failing to answer, failed to appear at trial. Blue Ridge Bank and Superior Acura appeared and offered evidence. On January 31, 2003, the trial court entered a default judgment in favor of Blue Ridge Bank and against Mr. Hart on Counts I and III for principle and interest in the sum of $32,605.09; $14,369 in attorney's fees and expenses; and $32,605.09 in punitive damages. The trial court granted judgment in favor of Superior Acura on Blue Ridge Bank's claim in Count II for conversion.

Regarding its judgment in favor of Superior Acura, the trial court found that Blue Ridge Bank had not proved its cause of action for conversion. First, it found that Blue Ridge Bank had not perfected its lien on the vehicle. Specifically, the court found that Blue Ridge Bank failed to file a financing statement, which was required by section 400.9-311(d) because the collateral was inventory, held by a person in the business of selling vehicles. The trial court also found that, even if a financing statement was not required, Blue Ridge Bank had not perfected its lien because it never ensured that an application for a new title was filed with the Director, as required by sections 301.600 and 301.620. Alternatively, the trial court found that even if Blue Ridge Bank's lien on the vehicle was perfected, Superior Acura was a purchaser in the ordinary course of business and, consequently, took the vehicle free of even a perfected lien. Finally, the trial court found that Blue Ridge Bank did not have the right to possess the vehicle until after Superior Acura had already resold it. Following the trial court's denial of Blue Ridge Bank's motion to amend and reconsider the judgment, Blue Ridge Bank filed this appeal.⁴

Notice of Appeal was Timely

Before reaching the merits of Blue Ridge Bank's appeal, it is necessary to address Superior Acura's argument, contained in its jurisdictional statement, that Blue Ridge Bank's notice of appeal was untimely, thereby divesting this court of jurisdiction. "The filing of a timely notice of appeal is mandatory and jurisdictional." Gollehon v. Branson, 603 S.W.2d 56, 57 (Mo.App.1980). A notice of appeal must be filed not later than ten days after the judgment or order appealed from becomes final. Rule 81.04(a). "For the purpose of ascertaining the time within which an appeal may be taken ... [a] judgment becomes final at the expiration of thirty days after its entry if no timely authorized after-trial motion is filed." Rule 81.05(a).

When a party files an authorized after-trial motion, the judgment becomes final at the end of ninety days, if the trial court fails to rule on the after-trial motion. Rule 81.05(a)(2)(A). If the court rules on the motion, the judgment becomes final on "the date of ruling of the last motion to be ruled or thirty days after entry of judgment, whichever is later." Rule 81.05(a)(2)(B). There are six after-trial motions authorized under the Supreme Court Rules:

[A] motion to dismiss without prejudice after the introduction of evidence is commenced under Rule 67.01; a motion for a directed verdict under Rule 72.01(a); a motion for judgment notwithstanding the verdict under Rule 72.01(b); a motion to amend the judgment [under then] Rule 73.01(a)(3), [now Rule 78.04]; a motion for relief from judgment or order under Rule 74.06(a) and (b), but see, Rule 74.06(c);⁵ and a motion for a new trial under Rule 78.

Taylor v. United Parcel Serv., Inc., 854 S.W.2d 390, 392 n. 1 (Mo. banc 1993).

On March 3, 2003, Blue Ridge Bank filed a motion titled, "Motion to Amend and Reconsider Judgment." In the motion, Blue Ridge Bank argued that the trial court should amend its judgment to...