Exec. Cars, LLC v. W. Funding Ii, Inc.

• Decision Date: 14 March 2019
• Docket Number: A18A2076,A19A0874
• Citation: 826 S.E.2d 370,349 Ga.App. 517
• Parties: EXECUTIVE CARS, LLC v. WESTERN FUNDING II, INC. Executive Cars, LLC v. Western Funding II, Inc.
• Court: Georgia Court of Appeals

349 Ga.App. 517

826 S.E.2d 370

EXECUTIVE CARS, LLC

v.WESTERN FUNDING II, INC.

Executive Cars, LLC

v.Western Funding II, Inc.

A18A2076

A19A0874

Court of Appeals of Georgia.

March 14, 2019

Kermit S. Dorough Jr., Albany, for Appellant

Benjamin M. Rachelson, Atlanta, for Appellee

Gobeil, Judge.

Western Funding II, Inc. sued Executive Cars, LLC in the Superior Court of Gwinnett County, asserting that it stood in the shoes of a good-faith buyer of a 2011 Toyota Camry to which Executive Cars held title. Western Funding, which was in possession of the Camry, sought a declaratory judgment that it retained a first priority lien in the car and an order requiring Executive Cars to transfer title to it. Claiming that the car had been stolen from its inventory, Executive Cars asserted counterclaims for conversion and trover and sought an order requiring Western Funding to return possession of the Camry to Executive Cars, as well as damages for loss of use and depreciation. Additionally, Executive Cars sought punitive damages and attorney fees. The parties filed cross-motions for summary judgment, and the trial court granted Western Funding’s motion and denied Executive Cars’s motion. After Executive Cars appealed that order in Case No. A18A2076, the trial court granted Western Funding’s motion for supersedeas and entered an order requiring Executive Cars to post a $10,000 supersedeas bond. Executive Cars appealed that order in Case No. A19A0874, and we consolidated the appeals.

In Case No. A18A2076, Executive Cars asserts that because the evidence showed that the Camry was stolen from it, the trial court erred both in granting summary judgment in favor of Western Funding and in denying Executive Cars’s cross-motion for summary judgment. For reasons explained more fully below, we agree with Executive Cars and we therefore reverse the order of the trial court in Case No. A18A2076 and remand for entry of judgment in favor of Executive Cars. Additionally, we find that Executive Car’s appeal from the order requiring it to post a supersedeas bond is mooted by resolution of the appeal in Case No. A18A2076. We therefore dismiss as moot the appeal in Case No. A19A0874.

Summary judgment is proper when the record discloses no genuine issue of material fact and, in light of the undisputed material facts, the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). "In reviewing a grant or denial of summary judgment, we owe no deference to the trial court’s ruling and we review de novo both the evidence and the trial court’s legal conclusions. Moreover, we construe the evidence and all inferences and conclusions arising therefrom most favorably toward the party opposing the motion." Bryant v. Optima Int'l, Inc ., 339 Ga. App. 696, 696, 792 S.E.2d 489 (2016) (citation and punctuation omitted).

The evidence of record is not in conflict and shows that Western Funding provides financing to automobile dealerships throughout the United States. Specifically, Western Funding purchases retail installment contracts and security agreements that dealerships enter into with customers who purchase a vehicle. Western Funding purchases these contracts at a discount, providing the dealership with cash and receiving both repayment of the full amount of the car loan and the interest charged thereon.

Executive Cars is a used car dealership located in Albany. On April 30, 2015, Executive Cars purchased the 2011 Toyota Camry at issue at a wholesale auction. Sometime in the month after Executive Cars took delivery of the Camry, that vehicle, together with four other cars, was stolen from Executive Cars’s premises by Kabron Little, who had at times worked as an independent contractor for the dealership. All five of these cars were subsequently sold to third parties by another used car dealer located in Albany, Good Lyfe Imports, Inc. Good Lyfe was managed by William Holt, who had previously operated a different used car dealership at the same physical location as Good Lyfe. Little had previously worked for Holt, and the two men were friends.

On June 9, 2015, after speaking with Holt over the telephone, Kaley Jordan Turner visited Good Lyfe and, working with Holt as her salesman, purchased the Camry for $15,025. Turner made a $1,700 down payment and financed the balance of the purchase price through a "Retail Installment Contract and Security Agreement" ("RISA") she entered with Good Lyfe. Pursuant to the terms of the RISA, Good Lyfe sold the RISA and assigned all of its rights thereunder to Western Funding, and the finance company thereby obtained a security interest in the Camry.

When she went to register the car and obtain a license plate, Turner learned that Good Lyfe did not hold title to the Camry. Turner called Holt about the issue, and he told her that he "was waiting on the bank," which Turner assumed meant that the dealership had not secured funding for her car loan. Turner based this assumption, in part, on the fact that at the direction of Holt, all of her payments under the RISA were made directly to Good Lyfe. Over the next several weeks, Turner continued to call Holt regularly to ask about her ability to register the car and after a few weeks, Holt quit accepting her calls. Turner had been in possession of the Camry for less than three months when Holt appeared at her apartment, claimed that Turner was behind on payments, and repossessed the car on behalf of Western Funding.

In early October 2015, Executive Cars discovered that five vehicles, including the Camry and a 2008 Dodge Avenger, were missing from its on-site inventory. Upon making this discovery, Executive Cars’s manager, Shawanda Hill, checked the online system that maintains the title and registration information for all vehicles registered in Georgia and discovered that three of the five missing vehicles (not including the Camry or the Avenger) had been sold at Good Lyfe. The fact that the sale of these vehicles appeared in the online database indicated that whomever had taken the cars had also stolen the cars' physical titles from Executive Cars. Hill instantly suspected Little of being involved in the thefts, as she knew that Holt was managing Good Lyfe and knew of Holt’s and Little’s professional and personal ties. Hill immediately contacted Little by text message, and he eventually admitted to stealing the three cars shown in the online registration system.¹ Little asked Hill and Executive Cars to refrain from calling the police, telling them that he would be able to reimburse Executive Cars for the three vehicles within a few weeks.²

After speaking with Little, Hill contacted Holt to inquire about the three cars shown in the online registration system. Holt insisted that he did not know the vehicles were stolen, and claimed that he had purchased the vehicles from Little unaware that they belonged to Executive Cars. According to Holt, Little told him that he had purchased the cars himself at an auction. Holt agreed to provide Executive Cars with the paperwork evidencing his purchase of the cars from Little. Despite repeated requests from Executive Cars for such paperwork, however, Holt never provided any and he eventually quit taking Hill’s calls.

Given that neither the Camry nor the Avenger was listed in the online registration system as having been sold by Good Lyfe, and because Executive Cars was still in possession of the physical titles to those vehicles, the dealership was unsure as to whether Little had also stolen them. Sometime between October 2015 and January 2016, however, an individual who had purchased the Avenger from Good Lyfe contacted Executive Cars after discovering that Executive Cars held title to the vehicle. During that same time frame, Western Funding contacted Executive Cars and demanded title to the Camry, at which point Executive Cars learned that Little had also stolen the Camry and delivered it to Good Lyfe. On January 21, 2016, Executive Cars reported to the police the theft of the five vehicles taken by Little. The police report reflects that as of January 2016, Good Lyfe was no longer in business.

When Executive Cars refused to transfer title to the Camry to Western Funding, that company initiated the lawsuit giving rise to these appeals.

Case No. A18A2076

In Case No. A18A2076, Executive Cars appeals both the trial court’s grant of summary judgment in favor of Western Funding on its claim for title to the Camry and the denial of Executive Cars’s motion for summary judgment on its claims for trover and conversion. At issue in this appeal is the application of OCGA § 11-2-403, which is identical to § 2-403 of the Uniform Commercial Code adopted throughout the United States. That statute provides, in relevant part:

(1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faith purchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though: (a) The transferor was deceived as to the identity of the purchaser; or (b) The delivery was in exchange for a check which is later dishonored; or (c) It was agreed that the transaction was to be a "cash sale"; or

(d) The delivery was procured through fraud punishable as larcenous under the criminal law. (2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business. (3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor’s disposition of the goods have been such as to be larcenous under the criminal law.

OCGA § 11-2-403.

1. The...