Fin. Sec. Credit Union v. Porter (In re Porter)
| Decision Date | 13 April 2020 |
| Docket Number | Adv. Pro. no. 19-1052-t,Case no. 19-10544-tr7 |
| Citation | 618 B.R. 307 |
| Parties | IN RE: Stephen PORTER and Tische Lynae Porter, Debtors. Financial Security Credit Union, Plaintiff, v. Stephen Porter and Tische Lynae Porter, Defendants. |
| Court | U.S. Bankruptcy Court — District of New Mexico |
Justin S Raines, Tabor & Byers, L.L.P., Carlsbad, NM, for Plaintiff.
E. C. Mike Gomez, Roswell, NM, for Defendants.
Before the Court is the plaintiff credit union's motion for summary judgment that its loans to Ms. Porter are secured by a 2016 Toyota 4Runner, that a proper payoff tender for the loans was never made, that defendants cannot "lien strip," and for related relief. Defendants oppose the motion and primarily seek a ruling that the 4Runner is collateral only for the original purchase money loan. The Court concludes that the credit union is entitled to summary judgment that its loans are all secured by the 4Runner and that the tendered payoff amount was inadequate. The credit union's other requested relief must be denied.
The following facts are not in dispute:1
On or about March 2, 2016, Ms. Porter (fka Tische Bierle) and Joslyne M. Longoria borrowed $24,827.43 from the credit union so they could buy the 4Runner.2 Ms. Porter and Ms. Longoria signed the credit union's standard loan and security documents, under which they, inter alia, granted the credit union a security interest in the 4Runner.
On March 9, 2016, the New Mexico Motor Vehicle Division ("MVD") issued a certificate of title for the 4Runner. It showed that the owners were "Joslyne M. Longoria or Tische Bierle" and that the first lienholder was the credit union.
On May 6, 2016, Ms. Porter took out a second loan from the credit union, this time without Ms. Longoria as a co-borrower. The loan amount was $21,000.
Ms. Porter took out a third loan, again by herself, on June 23, 2016. The loan amount was $4,872.93.
The loan documents for the loans have different loan amounts, interest rates, repayment terms, and collateral descriptions, but otherwise are identical. In particular, they all have the following terms:
For the first loan, the 4Runner was described in detail as the collateral. The other two loans had no similar description.
Defendants filed this bankruptcy case on March 14, 2019. On their schedule A/B they listed the 4Runner as owned by them, with a value of $14,000. On schedule D Defendants listed the credit union's $14,747 claim as secured by a lien on the 4Runner. Defendants also scheduled the credit union has having three general unsecured claims, for $19,688, $2,001, and $15,866.
In their Statement of Intention Defendants said they wished to "Retain & Pay" the 4Runner. They did not surrender, redeem, or reaffirm. The case was a "no asset" case. Defendants received their discharge on July 8, 2019. The case was closed the same day.
The credit union filed this adversary proceeding on June 17, 2019. In the complaint the credit union asked the Court to:
On or about September 13, 2019, before Defendants had answered the complaint, Ms. Longoria took the 4Runner to Carlsbad Ford Lincoln and attempted to trade it in on a 2019 Ford F-250 pickup truck. The purchase price was $90,612.60. The dealership called a credit bureau, which informed the dealership that the payoff was $11,989. When the dealership sent the credit union that amount, however, the tender was rejected. The credit union told the dealership that the payoff was $29,609.23.
Defendants answered the complaint on November 21, 2019. They admitted that all three loans to Ms. Porter were secured by the 4Runner. Defendants asserted that they tendered a payoff for the "loan(s)" on or about September 16, 2019, but admitted that they did not know whether the credit union accepted the tender.
The credit union moved for summary judgment on January 14, 2020. Defendants timely responded, asserting their payoff theory and purporting to take back their admission about cross-collateralization.
"Summary judgment may be granted 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 judgment as a matter of law." In re Giron , 610 B.R. 670, 673–74 (Bankr. D.N.M. 2019) (citing Fed. R. Civ. P. 56 and Fed. R. Bankr. P. 7056 ). "The admissions in a party's answer to a complaint are binding for purposes of determining whether the movant has made such a showing." Doe v. City of Albuquerque , 2010 WL 11505938, at *2 (D.N.M.) (citing Missouri Housing Dev. Comm'n v. Brice , 919 F.2d 1306, 1314–15 (8th Cir. 1990) ; Cf. Underberg v. U.S. , 362 F. Supp. 2d 1278, 1283 (D.N.M. 2005) ().
"On summary judgment, ‘[a]lthough we must draw all factual inferences in favor of the nonmovant, those inferences must be reasonable.’ " Deherrera v. Decker Truck Line, Inc. , 820 F.3d 1147, 1159 (10th Cir. 2016) (quoting Allen v. Muskogee , 119 F.3d 837, 846 (10th Cir.1997) ).
The federal Declaratory Judgment Act allows federal courts to enter declaratory judgments. 28 U.S.C. § 2201(a). In the Tenth Circuit, there is an issue whether bankruptcy courts are "courts of the United States." See Jones v. Bank of Santa Fe, (In re Courtesy Inns, Ltd.) , 40 F.3d 1084, 1086 (10th Cir. 1994). Nevertheless, the fact that the parties consented to the jurisdiction of the Court in this proceeding means that the Court may enter a final declaratory judgment. See, e.g. , In re Dragnea , 609 B.R. 239, 258-59 (Bankr. E.D. Cal. 2019) ().
1. Defendants admitted the loans are cross-collateralized. The credit union alleged in paragraphs 11, 12, 14, and 15 of its complaint that loans two and three were secured by a lien on the 4Runner. The credit union attached the loan documents for each loan to the complaint. In their answer, Defendants admitted each of these paragraphs. Defendants have not asked the Court for permission to withdraw or amend their answer. See Underberg , 362 F. Supp. 2d at 1283 (). Defendants therefore admitted that the 4Runner is collateral for all three loans.
2. The loan documents provide for cross-collateralization. In all three loans, the security block on the Truth in Lending Disclosure; paragraph 4 of the Loan Agreement; and paragraph 2 of the Security Agreement all state that collateral securing one loan also secures other loans to the same borrower. There is no requirement that the cross collateral be separately described. Defendants' primary argument, i.e., that loans two and three are unsecured because the 4Runner was not specifically described in the documents for those loans, fails.
3. Ms. Porter had the right to encumber the 4Runner. While the issue was not raised by the Defendants, the Court holds that Ms. Porter had the right to encumber the 4Runner with or without Ms. Longoria's signature, consent, or knowledge. The MVD's online procedure manual3 states: "[w]hen the owners' names on the Title are joined by the word ‘or,’ only one signature is required to apply for, assign or encumber the vehicle." New Mexico's Uniform Commercial Code contains an analogous provision concerning negotiable instruments:
[i]f an instrument is payable to two or more persons...
To continue reading
Request your trial