Mills Int'l, Inc. v. Archie Randall Holmes & Holmes Agribiz, Inc. (In re Mills Int'l, Inc.)
| Decision Date | 15 March 2017 |
| Docket Number | CASE NO. 15–00976–5–DMW,ADVERSARY PROCEEDING NO. 16–00040–5–DMW |
| Citation | 570 B.R. 169 |
| Court | U.S. Bankruptcy Court — Eastern District of North Carolina |
| Parties | IN RE: MILLS INTERNATIONAL, INC., Debtor Mills International, Inc., Plaintiff v. Archie Randall Holmes and Holmes Agribiz, Inc., Defendants |
Matthew W. Buckmiller, Stubbs & Perdue, P.A., Raleigh, NC, Joseph Zachary Frost, Stubbs & Perdue, P.A., Raleigh, NC, for Plaintiff.
J.M. Cook, J.M. Cook, P.A., Raleigh, NC, Walter L. Schmidlin, Stewart, Schmidlin & Bullock, PLLC, Smithfield, NC, for Defendant.
This matter comes on to be heard upon the Notice of Removal filed by Mills International, Inc. ("Plaintiff") on May 16, 2016. The Notice of Removal removed from the Johnston County District Court to this court a civil action ("Removed Action") captioned "Mills International, Inc. vs. Archie Randall Holmes; Holmes Agribiz, Inc.; L & W Farms, Inc.; and E.B. Harris, Inc./ Auctioneers," Case Number 12 CVD 000867. The remaining defendants are Archie Randall Holmes ("Holmes") and Holmes Agribiz, Inc. ("Holmes Agribiz"). Prior to the removal to this court, the Johnston County District Court dismissed E.B. Harris, Inc./Auctioneers ("Harris") as a party, and the parties have stipulated that L & W Farms, Inc. ("L & W")1 is no longer a party to this action.
The court conducted a trial ("Trial") of the Removed Action in Raleigh, North Carolina on September 29, 2016. Matthew W. Buckmiller, Esq. and Joseph Z. Frost, Esq. appeared for the Plaintiff, and J.M. Cook, Esq. and Walter L. Schmidlin, Esq. appeared for Holmes and Holmes Agribiz (collectively "Defendants").
1. While the details of the Removed Action will be provided later, the Removed Action first began in the Johnston County District Court as an action by the Plaintiff for the return of certain tractors and equipment, or in the alternative to collect under a breach of contract by the Defendants. The Defendants counterclaimed under several causes of action including abuse of process and violations of the North Carolina Debt Collections Act ("NCDCA").
2. The Johnston County District Court ultimately entered a judgment against the Plaintiff in the sum of $222,500.00 for substantive damages, the sum of $445,000.00 for punitive damages and the sum of $548,000.00 for damages related to the alleged continuous nature of Plaintiff's violation of the NCDCA over a 136–week time period following the initial occurrence, at a rate of $4,000.00 in damages per week.2 As explained later, the Johnson County District Court credited the Plaintiff for the $96,000.00 it previously paid and awarded a net judgment against the Plaintiff in the amount of $1,119,500.00.
3. The Plaintiff filed a Notice of Appeal3 of the judgment on January 29, 2015. On April 5, 2016, the North Carolina Court of Appeals ("NCCOA") entered an unpublished Opinion finding that the Johnston County District Court correctly dismissed as a matter of law all of Plaintiff's claims except its breach of contract claim and incorrectly entered summary judgment in favor of the Defendants on their counterclaims against the Plaintiff. The NCCOA remanded the issues of the Plaintiff's breach of contract claim and the Defendants' counterclaims to the Johnston County District Court for further proceedings consistent with the NCCOA's Opinion. That remand prompted the removal to this court.
4. The Plaintiff and the Defendants have stipulated the remaining claims and affirmative defenses as follows:
5. At the Trial, the Plaintiff presented the testimony of the following individuals:5
6. Holmes testified for the Defendants.
7. The Plaintiff introduced 44 exhibits that the court admitted into evidence. The Defendants introduced three exhibits that the court admitted into evidence.
8. At the conclusion of the Trial, the court took the matter under advisement. This Opinion sets forth the court's findings of fact and conclusions of law after considering the evidentiary testimony and exhibits in concert with the record of the Removed Action and the arguments of counsel at the Trial.
9. The Plaintiff owns and operates a farming and outdoor equipment dealership located in Kinston, Lenoir County, North Carolina.
10. Holmes Agribiz was formed as a North Carolina Corporation on March 19, 2002, and Holmes has represented himself to be the president of Holmes Agribiz on documents filed with the North Carolina Secretary of State.7
11. On March 30, 2006, Holmes met with Mills regarding the purchase of the following tractors and farm equipment for a total purchase price of $222,500.00:8
12. The parties' original intent was for Holmes Agribiz to purchase the disk harrow and field cultivator ("Equipment") for $26,500.00 in cash and for Holmes Agribiz to obtain financing from CNH Capital ("CNH") for the purchase of the three tractors ("Tractors"). On March 30, 2006, Holmes gave a check ("Equipment Check") payable to the Plaintiff in the amount of $26,500.00 drawn on a Ranholm Investments LLC bank account ("Ranholm Account") with KS Bank.
13. In connection with the purchase of the Tractors, Holmes signed three undated Retail Order Forms on which Mills wrote only the total purchase price for each of the Tractors and in the "Schedule of Instalments" wrote in the advance payment amount for each of the Tractors. No other installment payments were listed on the Retail Order Forms for the Tractors. The Retail Order Forms for the Tractors did not contain any reference to Holmes Agribiz.
14. Holmes signed a credit application ("Credit Application") dated March 30, 2006 on behalf of Holmes Agribiz that included Holmes Agribiz's business information but did not include any information regarding the items to be purchased or the purchase price. The Credit Application was then triplicated to create a Credit Application for each of the Tractors, but the Plaintiff failed to add additional sale terms to those forms after they were copied.9
15. Holmes also executed a Streamlined Sales Tax Agreement Certificate of Exemption in his capacity as President of Holmes Agribiz on March 30, 2006, although the Certificate of Exemption did not indicate Holmes Agribiz's type of business or reason for exemption.
16. On March 31, 2006, Mills submitted to CNH through an online process the three Credit Applications that contemplated a combined down payment of $50,000.00 for the Tractors, leaving $146,000.00 to be financed at a 4.9% interest rate with five yearly payments due on April 1st of 2007 through 2011. The proposed yearly payment amounts were calculated based on the final payment being 10% of the purchase price of each Tractor. The contemplated payment terms ("CNH Terms") for the Tractors were as follows:
Terms and Payment Case IH MXM190 Case IH MXM120 Case IH MXM130
Purchase price $81,500.00 $62,500.00 $52,000.00
Down payment $23,000.00 $14,500.00 $12,500.00
April 1, 2007 $14,660.28 $12,125.46 $ 9,965.71
April 1, 2008 $14,660.28 $12,125.46 $ 9,965.71
April 1, 2009 $14,660.28 $12,125.46 $ 9,965.71
April 1, 2010 $14,660.28 $12,125.46 $ 9,965.71
April 1, 2011 $ 8,150.00 $ 6,250.00 $ 5,200.00
17. On March 31, 2006, CNH declined all three Credit Applications related to the Tractors.
18. After the denial of the CNH Credit Applications, Mills and Holmes agreed10 that the Plaintiff would finance the purchase of the Tractors under the CNH Terms. In support of the amended agreement, Holmes executed three checks ("Tractor Checks") totaling $96,000.00 and payable to the Plaintiff drawn on the Holmes Agribiz account with KS Bank. The checks dated March 31, 2006 in the amounts of $45,000.00, $28,000.00 and $23,000.0011 were advance payments for the Case IH MXM190, Case IH MXM120 and Case IH MXM130, respectively.
19. The Plaintiff deposited the Tractor Checks and the Equipment Check into the Plaintiff's bank account on April 3, 2006 and April 4, 2006, respectively. KS Bank failed to honor any of the checks. KS Bank returned the Tractor Checks to the Plaintiff with a notation that the Holmes Agribiz account had been closed. KS Bank returned the Equipment Check to the Plaintiff for insufficient funds in the Ranholm...
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