In re Fields
| Decision Date | 24 September 1984 |
| Docket Number | Bankruptcy No. 82-01820-BKC-JAG,Adv. No. 82-1140-BKC-JAG-A. |
| Citation | 44 BR 322 |
| Parties | In re Lester FIELDS, Debtor. TAKEUCHI MFG. (U.S.), LTD., Plaintiff, v. Lester FIELDS, Defendant. |
| Court | U.S. Bankruptcy Court — Southern District of Florida |
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Donald A. Bacek, Atlanta, Ga., Alan R. Stone, Coral Gables, Fla., for plaintiff.
Reggie David Sanger, Fort Lauderdale, Fla., for defendant.
Plaintiff, Takeuchi Mfg. (U.S.), Ltd. ("Takeuchi") commenced this adversary proceeding by filing a complaint against the defendant, Lester Fields ("Fields"), seeking to have Fields' debt to Takeuchi declared nondischargeable. Following discovery and three amendments to the complaint, trial of this adversary proceeding was held on July 24, 1984, on Takeuchi's Third Amended Complaint. Pursuant to the Third Amended Complaint Takeuchi sought to except Fields' debt from discharge on the basis that his debt was for obtaining an extension, renewal, or refinance of credit by a false representation or fraud, in accordance with § 523(a)(2)(A) of the Bankruptcy Code; fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny, in accordance with § 523(a)(4) of the Bankruptcy Code; or willful and malicious injury to property, in accordance with § 523(a)(6) of the Bankruptcy Code.
1. Takeuchi is in the business of selling excavation equipment and has its offices in Atlanta, Georgia. During the years 1980 through 1982, Takeuchi made sales of excavation equipment to a customer located in Hallandale, Florida, named Ray's Equipment Co. of South Florida, Inc. d/b/a Bobcat of South Florida ("Bobcat"), which filed a petition under Chapter 7 of the Bankruptcy Code on September 28, 1982.
2. At all times relevant to this action Fields, who likewise filed a petition under Chapter 7 of the Bankruptcy Code on September 28, 1982, was the owner and President of Bobcat. In such capacity Fields supervised the operation of Bobcat on a daily basis.
3. Beginning in March 1980 and ending in June 1982, Takeuchi sold and delivered to Bobcat on credit six backhoes. At the time of the commencement of Bobcat's Chapter 7 case, the principal balances owed by Bobcat on each of the backhoes purchased from Takeuchi were as follows:
TB1200, Serial No. 10092 and
TB1200, Serial No. 10093 $15,344.88
TB2200, Serial No. 22016 $28,083.90
TB2200, Serial No. 22009 $28,782.00
TB0800, Serial No. 8028 $15,410.00
TB1200, Serial No. 10125 $12,100.02
The total principal amount owing by Bobcat to Takeuchi as of the commencement of Bobcat's Chapter 7 case was, therefore, $99,720.80. At the time of trial this entire amount remained unpaid.
4. The Court takes judicial notice of the Proof of Claim filed by Takeuchi in Bobcat's Chapter 7 case on April 14, 1983, to collect the aforesaid indebtedness directly from Bobcat, but the evidence shows that as of the time of trial no distributions had been made to Takeuchi on account of its Proof of Claim.
5. To induce Takeuchi to make certain of the foregoing sales to Bobcat on credit, Bobcat entered into with Takeuchi a Purchase Money Security Agreement, dated March 17, 1981 (the "Security Agreement"), covering the above TB1200, Serial No. 10092, and TB1200, Serial No. 10093, and a Distributor's Floor Plan Agreement, dated March 17, 1981 (the "Floor Plan Agreement"), covering sales of excavation equipment by Takeuchi to Bobcat, including TB800's, TB1200's and TB2200's. Both agreements were signed on behalf of Bobcat by Fields as its President.
6. Pursuant to the Security Agreement, Bobcat agreed to grant Takeuchi a security interest in the above TB1200, Serial No. 10092, and TB1200, Serial No. 10093, to secure all liabilities of Bobcat to Takeuchi, including the indebtedness described in paragraph 3 above. The Security Agreement also provided in relevant part as follows:
The Security Agreement further provided as follows: "Debtor will give Secured Party immediate notice of any authorized sale of any of the Collateral."
7. The Floor Plan Agreement provided for Bobcat to pledge to Takeuchi the equipment financed pursuant to its terms and provided that Takeuchi "will have the unqualified right to possess and dispose of the financed Equipment, including additions to, substitutions for and proceeds from the sale of the Equipment." In addition, the Floor Plan Agreement provided for 18-month payment terms, with no interest for the first nine months, and further that "the total purchase price and any interest will be due earlier if the Distributor Bobcat sells or leases the Equipment." The undisputed testimony also confirmed that the unpaid purchase price of each backhoe was due and payable at the time of resale by Bobcat or within a few days thereafter.
8. Of the backhoes which are the subject matter of this action, Takeuchi filed a financing statement with the Secretary of State of Florida only with respect to TB1200, Serial No. 10092, and TB1200, Serial No. 10093, as shown in the exhibits to Takeuchi's Proof of Claim filed in Bobcat's Chapter 7 case.
9. In March 1980, Bobcat began selling backhoes purchased from Takeuchi without informing Takeuchi of the sales, without turning the proceeds of the sales or any part thereof over to Takeuchi, and without otherwise paying the unpaid balance of the purchase price of the machines. Each sale was either made or approved by Mr. David Carlson, the Sales Manager of Bobcat, and each sale was presented by Mr. Carlson in advance to Fields for final approval, who personally authorized and approved each sale. In March 1980 Bobcat sold TB1200, Serial No. 10093, to Sunland Crane Company; on May 4, 1981, Bobcat sold TB1200, Serial No. 10092, to Gail Scott d/b/a Scotty's Bobcat Service for $26,936.00; on September 4, 1981, Bobcat sold TB1200, Serial No. 10125, to Frye Tool Rental for $25,900.00; in August 1981, Bobcat sold TB2200, Serial No. 22016, to Held Plumbing Company; on September 10, 1981, Bobcat sold TB2200, Serial No. 22009, to Odell Googe for $38,900.00; and on July 2, 1982, Bobcat sold TB800, Serial No. 8028 to Seaboard Mechanical Corp. for $22,057.00.
10. In the case of each of the above sales, Bobcat was paid the purchase price in cash, either directly from the customer or from the proceeds of a loan made to the customer. In none of the cases did Bobcat turn over the proceeds to Takeuchi or any part thereof.
11. In January 1982, Mr. H.C. Smith, Eastern Regional Sales Manager of Takeuchi, telephoned Bobcat and informed Bobcat that he intended to visit Bobcat's premises in Hallendale, Florida, to inspect its inventory of Takeuchi machines. Upon learning of Mr. Smith's impending visit, Fields instructed Mr. Carlson and Mr. Norman Schlaak, Jr., a sales representative of Bobcat, to request the return to Bobcat's premises of certain Takeuchi backhoes previously sold by Bobcat. Fields instructed those individuals to state to Bobcat's customers as the reason for the requested return that the backhoes were to be inspected for turning mechanism problems. As a result, TB2200, Serial No. 22009, sold by Bobcat to Odell Googe in September of 1981, and TB2200, Serial No. 22016, sold to Held Plumbing Company in August 1981, were returned to Bobcat's premises. On or about January 19, 1982, Mr. Smith visited Bobcat's premises, inspected the inventory located there, and spoke to Fields. At no time did Fields or any other individual at Bobcat inform Mr. Smith that any of the machines located at Bobcat's premises had previously been sold.
12. Again in April 1982, Mr. Smith telephoned Bobcat and informed it that he intended to make another visit to Bobcat's premises to inspect Bobcat's inventory of Takeuchi machines. Again, upon learning of Mr. Smith's plan to visit, Fields requested individuals on his staff to obtain the return of Takeuchi backhoes previously sold. As a result, TB2200, Serial No. 22016, previously sold to Held Plumbing Company, was again returned to Bobcat's premises. Again, at Field's instructions, Held Plumbing Company was told that the machine was to be inspected for turning mechanism problems. When Mr. Smith arrived to make his inspection, that backhoe was on the premises, and Mr. Smith again was not informed that the backhoe had been sold.
13. At no time did Fields or his staff suspect that Takeuchi backhoes had turning mechanism problems, at no time did Fields or his staff intend to inspect Takeuchi backhoes for turning...
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