Owner Operator Ind. Drivers Ass'n v. Comerica Bank

Citation615 F.Supp.2d 692
Decision Date16 March 2009
Docket NumberNo. 05-00056.,05-00056.
PartiesOWNER OPERATOR INDEPENDENT DRIVERS ASSOCIATION, INC., et al., Plaintiffs, v. COMERICA BANK, Defendant.
CourtU.S. District Court — Southern District of Ohio

Guy Robert Humphrey, Chester Willcox & Saxbe, Columbus, OH, Joyce E. Mayers, Paul D. Cullen, Sr., The Cullen Law Firm, Washington, DC, Lisa Marie Ellis, Reisenfeld & Associates, LPA LLC, Mark Alan Greenberger, Katz Greenberger & Norton, Paul B. Martins, Helmer, Martins, Rice & Popham Co., L.P.A., Cincinnati, OH, for Plaintiffs.

Michael Gary Long, Alycia N. Broz, Tiffany Strelow Cobb, Vorys, Sater, Seymour and Pease LLP, Columbus, OH, for Defendant.

OPINION AND ORDER

ALGENON L. MARBLEY, District Judge.

I. INTRODUCTION

This matter is before the Court on Defendant Comerica Bank's ("Comerica") Motion for Summary Judgment (doc. no. 54) and Plaintiffs Owner-Operator Independent Drivers Association's ("OOIDA"), Carl Harp's, and Michael Wiese's (collectively, "Plaintiffs") Motion for Summary Judgment (doc no. 55). For the reasons set forth below, the Court GRANTS Comerica's Motion and DENIES Plaintiffs' Motion.

II. BACKGROUND
A. FACTUAL BACKGROUND

Plaintiffs seek to enforce the final judgment entered by this Court on July 16, 2004, in OOIDA v. Arctic Express, Inc., No. 97-750 (the "Arctic Litigation"). Harp and Wiese are "owner-operators" of trucking equipment and OOIDA is an owner-operator industry association with more than 141,000 members. Arctic Express, Inc. ("Arctic") is a regulated motor carrier engaged in the business of providing transportation services to the shipping public, and was sued by Plaintiffs in the Arctic Litigation. Comerica is a bank through which Arctic maintained several accounts, as well as a revolving line of credit.

1. The Arctic Litigation

The Arctic Litigation was filed June 30, 1997, and among other claims, sought the return of maintenance escrow funds pursuant to the federal Truth-in-Leasing regulations enacted in 1978 for the protection of owner-operator truckers. The escrow provisions of the Truth-in-Leasing regulations provide specific requirements for the treatment of escrow funds, including an accounting of transactions related to the funds collected, and the return of escrow balances within 45 days of the termination of the relationship with the carrier.

Arctic and its equipment leasing affiliate, D & A Associates ("D & A"), entered into agreements whereby Plaintiffs leased their trucking equipment to Arctic. As part of these agreements, Arctic deducted nine cents per mile from the compensation owed to each owner-operator for purposes of repairing and maintaining the leased trucking equipment. Arctic recorded the amounts in maintenance escrows deducted from owner-operator compensation on settlement statements issued weekly to owner-operators, and recorded the total in maintenance contributions accrued to the owner-operators on the settlement statements.

This Court held that these "maintenance escrow funds" were subject to the requirements of the federal Truth-in-Leasing regulations, 49 C.F.R. § 376.12. This Court found that these funds were collected for the sole purpose of maintaining the individual owner-operator's leased equipment prior to the owner-operator's termination of his lease, and these funds were not available to be used for any other obligation. And pursuant to the Truth-in-Leasing regulations, Arctic and D & A were required to return to individual owner-operators unused amounts remaining after termination of the leases. This Court also certified the Arctic Litigation as a class action.

On July 16, 2004, this Court granted final approval to a settlement between Plaintiffs, Arctic, and D & A, awarding the Class $5,583,084, which equaled the total amount of maintenance escrow funds Arctic owed, plus interest. Pursuant to the settlement agreement, Plaintiffs agreed that Arctic/D & A would pay no more than $900,000. Defendants assert that Plaintiffs accepted this lower amount with the express purpose of seeking the remainder of the settlement amount from Comerica.

2. Arctic's Revolving Credit Loan Agreements and Accounts with Comerica

Arctic and Comerica entered into three revolving credit loan agreements (which established a revolving line of credit), one dated February 4, 1991, one dated May 3, 1993, and the other dated April 29, 1998. The loan arrangement between Arctic and Comerica was in operation continuously from February 1991 through November 1998.

For the 1991 loan agreement, Comerica agreed to lend Arctic up to $500,000 wherein several variables, including the amount of eligible collateral, determined how much Arctic could request be advanced by Comerica at any given time. By May 1993, the revolving loan agreement increased the commitment amount to $2,000,000. By April 1998, the revolving loan agreement increased the commitment amount to $5,500,000. D & A acted as a guarantor in the event of default by Arctic. D & A was not, however, and has never been, a customer of Comerica's and never had an account with Comerica.

At the same time as the loan agreements were in effect, Arctic maintained three accounts with Comerica: (1) a depository/operating account, (2) a zero-balance checking account (also called a controlled disbursement account), and (3) a cash collateral account. The lending relationship was as follows: when Arctic completed a shipment for a customer, Arctic would generate an invoice. If the invoice qualified as an "Eligible Account," as defined in the loan documents, Arctic would include the invoice on its next Borrowing Base Certificate and present it to Comerica.1 Upon receipt of the Borrowing Base Certificate, and to the extent that the invoiced amounts were "Eligible Accounts," Comerica would make available to Arctic 80% of the eligible invoice for its line of credit, regardless of whether Arctic intended to use funds advanced. Arctic would then request those funds be advanced to its depository/operating account. So, for instance, if Comerica had an invoice for an Eligible Account worth $100, Comerica would extend credit of up to $80 to Arctic which would be transferred at Arctic's request to its depository/operating account before receipt of any payments from the customer.

When payments from customers were collected on the accounts receivables, they went directly into Arctic's cash collateral account. Comerica had control over the funds in the cash collateral account, and Arctic could not make withdrawals from the cash collateral account. The collections from customers were applied directly to the loan balance, which increased the availability to draw on the line. The cash collateral account was monitored daily by Comerica, and the balance was applied to the loan on a daily basis. When the invoice amounts were collected in full, Comerica would make available to Arctic the remaining 20% of the Eligible Account through its line of credit. At that point, Arctic would have 100% of the invoice amount available in its line of credit. So, for instance, in the above scenario, if the customer paid the entire invoice, then the full $100 would be available for Arctic to draw on through its line of credit. Arctic could request those funds be transferred into its depository/operating account and use them in any manner it saw fit and for any legitimate purpose necessary to run its business.

Arctic automatically transferred money from the depository/operating account into its zero-balance account to cover checks it wrote. At all other times, the zero-balance account did not carry a balance. Arctic wrote checks from its zero-balance account for any purpose it deemed necessary. Arctic authorized Comerica to debit the depository/operating account once per month to pay for accrued interest and bank fees. Otherwise, the money in the depository/operating account was for Arctic's unencumbered use and remained at its disposal. No loan payments to Comerica were ever deducted from the depository/operating account.

Pursuant to the loan agreements, Arctic pledged as collateral for the loans, among other assets, all accounts receivable for motor carrier services provided to customers and proceeds from the accounts receivable.2 The primary purpose of the collateral was to provide a source for recovery of the loan balance in the event Arctic defaulted on its loan and the collateral had to be sold. Though accounts receivable collections were credited against Arctic's loan balance, this collateral was never liquidated, as liquidation occurs in the event of a default, and there was no default by Arctic.

Comerica asserts that it made available to Arctic 100% of accounts receivable that were collected, and Arctic could use these funds to pay the owner-operators' compensation and to contribute to the maintenance escrow fund. Therefore, Comerica asserts, it did not use or retain Plaintiffs' maintenance escrow funds. Plaintiffs allege that Comerica collected the maintenance escrow funds from the cash collateral account and from them to pay down Arctic's loan obligations to Comerica.

At all times while the loan agreements were in effect, the loan balance was never zero. At the time the loan from Comerica was initiated, Arctic had a loan relationship with Ohio State Bank. When the loan with Comerica was executed in 1991, Arctic drew on its line of credit with Comerica to pay off the balance of its loan from Ohio State Bank. The outstanding loan balance to Comerica increased from that date forward until the loan relationship terminated in late 1998 when Arctic transferred its loan relationship to Congress Financial ("Congress"). At the time the loan relationship terminated, the outstanding balanced owed to Comerica was approximately $4.7 million. Arctic opened a new line of credit with Congress, and any availability in Arctic's line of credit with Comerica and any money in its accounts was at that time moved to Congress. Funds...

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4 cases
  • In re Inc.
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • March 3, 2011
    ...as liquidation occurs in the event of a default, and there was no default by Arctic.Owner Operator Indep. Drivers Ass'n, Inc. v. Comerica Bank, 615 F.Supp.2d 692, 695–96 (S.D.Ohio 2009) (footnotes omitted).3 In January 2004, plaintiffs commenced an adversary proceeding against Arctic, D & A......
  • Owner–Operator Indep. Drivers Ass'n v. Comerica Bank
    • United States
    • U.S. District Court — Southern District of Ohio
    • March 20, 2012
    ...Plaintiffs that would have alerted them to their claim against Comerica more than four years before they brought this suit.” Owner Operator, 615 F.Supp.2d at 698. The partiesfiled cross-motions for summary judgment. Regarding the statute of limitations defense, the Court held the following:......
  • Owner-Operator Indep. Drivers Assoc., Inc. v. Comerica Bank
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • April 2, 2014
    ...then Comerica would be liable for the entire amount of trust property (provided Comerica is not a bona fide purchaser)." Owner Operator, 615 F. Supp. 2d at 705. The Sixth Circuit subsequently held that both of these conditions existed as a matterof law. In re Arctic Express, Inc., 636 F.3d ......
  • Owner-Operator Indep. Drivers Ass'n v. Comerica Bank
    • United States
    • U.S. District Court — Southern District of Ohio
    • December 1, 2011
    ...the Arctic Litigation, Plaintiffs can seek restitution of the judgment amount from Comerica." Owner Operator Indep. Drivers Ass'n, Inc. v. Comerica Bank, 615 F. Supp. 2d 692, 703 (S.D. Ohio 2009). Plaintiffs appealed that order to the Sixth Circuit. On March 3, 2011, the Sixth Circuit affir......

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