Gangloff Industries v. Generic Financing
| Decision Date | 16 June 2009 |
| Docket Number | No. 09A02-0809-CV-797.,09A02-0809-CV-797. |
| Citation | 907 N.E.2d 1059 |
| Parties | GANGLOFF INDUSTRIES, INC. Appellant-Defendant, v. GENERIC FINANCING AND LEASING, CORPORATION, Appellee-Plaintiff. |
| Court | Indiana Appellate Court |
Jeffry G. Price, Peru, IN, Attorney for Appellant.
William B. Bryan, Angola, IN, Attorney for Appellee.
Gangloff Industries, Inc. appeals the trial court's judgment on Generic Financing and Leasing Corp.'s complaint for immediate possession and damages filed after Gangloff took possession of a certain truck of which Generic claimed ownership. Gangloff raises six issues for our review, which we consolidate and restate as two: 1) whether the agreement between Generic and Robert Bougher was a lease or a security interest in the truck, and 2) if it was a security interest, whether the possessory lien Gangloff asserted took priority. Concluding that the agreement is a security interest and that Gangloff's possessory lien had priority, we reverse and remand.
On September 23, 2005, Robert Bougher entered into an agreement titled "Lease Agreement" with Generic concerning a 2000 Western Star semi-truck. The agreement provides, in relevant part, as follows:
This lease agreement made on this 23rd day of September 2005 between Generic Financing and Leasing, Corp. (hereinafter called Lessor) and Robert N. Bougher Jr. (hereinafter called lessee) ....
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3. Rental: Lessee shall pay to Lessor a Rental of $43,051.95 payable in installments of $1,099.00 per month, the first payment being due and payable on the 23rd day of October 2005, and a like sum due and payable on the same date of each succeeding month during the term of this lease....
Should Lessee be in default of any payments including taxes, insurance, licensing, rent, and any other under this lease, said delinquent payment shall bear interest at the rate of 18% per annum.
4. Ownership: It is expressly understood that this is an agreement for lease only, and that the Lessee acquires no right, title, or interest in or to the Leased property other than the right to the possession and use of the same in accordance with the terms of this lease.
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6. Repair: Lessee shall, at it's [sic] own expense, provide suitable and adequate garage space and service for said truck ... and shall maintain said truck in good repair, mechanical condition, and running order.... Repair shall include any and all work needed to be done on the truck completely overhaul if the engine blows or any other, all at the expense of the Lessee.
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9. Licenses: Lessee shall provide and maintain, at his own expense, all necessary owner's vehicle licenses and license tags for said truck. Lessee shall be responsible for all permits regarding the truck or it's [sic] operation.
10. Highway Use Tax and Licenses: Lessee shall provide and maintain, at his own expense, all necessary owner's vehicle licenses and license tags for said truck and shall also be responsible for the highway use tax and all permits regarding the truck or it's [sic] operation.
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12. Insurance:
A) Lessee will, at it's [sic] own expense, provide and maintain for the term of this lease, public liability and physical damage insurance on the Leased Property covering both the Lessee and the Lessor....
Such policies of insurance shall be carried with a company or companies approved by the Lessor. Such policies of insurance shall also be issued in the name of the Lessor and the Lessee, as their respective interests may appear. ...
13. Default: That if there is any default by the Lessee in the payments required hereunder when due or any breach of covenants or conditions in this agreement by the Lessee ... the Lessor may hold, take possession of, or repossess the vehicle(s) until such default is cured.... In case of any such default or breach, the Lessor shall also have the right, to terminate this agreement.... The Lessor shall be entitled to repossess the vehicle and to dispose of the vehicle in any reasonably commercial fashion. ... The Lessor shall be entitled to reimbursement for expenses including reasonable attorney fees in enforcing this lease.
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24. If the Lessee fails or neglects to comply with any term or condition of this lease, or to make any payment provided for herein, when due or payable, or violate any of the provisions hereof, or if the Lessor should feel insecure or deem the property in danger of misuse or confiscation, or if the Lessee makes any misrepresentation as to his name, address, or occupation, the Lessor at his option and without notice to the Lessee may declare the whole amount unpaid hereunder immediately due and payable.
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26. Option to Purchase: Upon the expiration of this lease and with the exercising of the option of purchase, the lessee may purchase from the Lessor the vehicle for the amount of $3,190.00.
Appellant's Appendix at 72-74.
On September 27, 2005, Bougher's wife, Kathy, and Gangloff entered into an "Owner Operator Service Contract" by which Kathy agreed to "furnish to [Gangloff], exclusively and continuously, during the term of this contract, the [2000 Western Star 3-axle semi-truck]," id. at 131; to pay all costs of operation, including maintenance costs and repairs; and to operate the equipment herself or "furnish sufficient employees to operate said equipment," id. at 134. Thereafter, Bougher began operating the truck to haul goods for Gangloff.
On March 13, 2007, the truck broke down and required repairs costing over $6,000. Gangloff paid for the repairs and Bougher was to re-pay Gangloff. On July 19, 2007, Bougher was re-fueling his truck at a truck stop when he suffered a heart attack from which he ultimately died. Kathy contacted Gangloff to recover the truck and trailer from the truck stop, which it did. Gangloff took possession of the truck and placed it in a secure location pending Kathy's removal of the truck and payment for its recovery and storage. Gangloff retained possession of the truck until January 7, 2008, on which date a court order granted Generic immediate possession.
On August 3, 2007, Generic filed in Steuben County a Complaint for Immediate Possession and Damages against Gangloff, alleging that it was the owner of the truck, that Bougher had defaulted under the terms of the lease, and that Gangloff was unlawfully holding the truck for debts Bougher owed it. Generic sought treble damages and attorney fees for theft and conversion. The case was subsequently transferred to Cass County as a preferred venue. Gangloff filed a counterclaim alleging that it had a possessory lien on the truck for the repairs it paid for and for the recovery and storage of the truck. Gangloff also asserted a claim for quantum meruit. On January 7, 2008, the trial court issued an order for immediate possession, finding that Generic was likely to prevail at trial and should be awarded possession of the truck. Gangloff ceded possession of the truck to Generic as ordered.
Following a trial on March 26, 2008, the trial court issued the following judgment:
This matter came before the Court for trial on March 26, 2008. [Generic] was present by employee, Tim [Lawton], and by counsel, William Bryan. [Gangloff] was present by Chief Executive Officer, Randy Ferguson and by counsel, Jeff Price. Evidence was presented. At the close of evidence, counsel were given the opportunity to submit written arguments. A schedule was set up for filing. [Generic] filed a memorandum, [Gangloff] filed a memorandum, and [Generic] filed a response. Subsequently, on April 21, 2008, [Generic] filed a motion to strike [Gangloff's] memorandum of law on the basis that it was filed late. That motion to strike [Gangloff s] memorandum is hereby denied. Having taken the matter under advisement the Court now finds and rules as follows:
It is the judgment of the Court that [Generic] shall recover from [Gangloff] as follows:
1. Excess Repossession Expenses (1/2 of
the total for expense of repossession) $ 504
2. Lost lease income (Due to improper
withholding of the truck for the period
From 7/24/07 to 1/7/08) 6,034
3. Travel expenses for witnesses to appear
at Court hearings 264
4. Attorney Fees 6,849
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TOTAL $13,651
[Gangloff] filed a counter claim against [Generic]. Judgment is entered for [Generic] on the counter claim filed by [Gangloff].
Total amount of the judgment ordered by the Court is as indicated above. [Generic] has asked the Court to award treble damages under I.C. 34-24-3-1. The Court specifically denies that request.
[Gangloff] points out in the memorandum submitted that Steuben Superior Court granted [Gangloff's] motion to transfer the erroneous venue of the case on August 5, 2007, without ruling on [Gangloff's] request for attorney fees. This Court will consider that issue upon motion and further hearing if necessary.
Both parties filed motions to correct error and both motions were denied. The trial court did note, however, that a hearing on Gangloff's request for attorney fees occasioned by the motion to transfer "will now be set by a separate Order." Id. at 197. Gangloff now appeals.1
The parties disagree as to the appropriate standard of review to apply to this case. Gangloff contends the trial court sua sponte issued findings of fact and conclusions of law and we should apply the two-tiered standard of reviewing whether the evidence supports...
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