Wells Fargo Vendor Fin. Servs. v. Naval Coating, Inc., 4:19-cv-00261-JAJ-HCA

• Decision Date: 19 September 2019
• Docket Number: 4:19-cv-00261-JAJ-HCA
• Parties: WELLS FARGO VENDOR FINANCIAL SERVICES, L.L.C., Plaintiff, v. NAVAL COATING, INC., Defendant.
• Court: U.S. District Court — Southern District of Iowa

WELLS FARGO VENDOR FINANCIAL SERVICES, L.L.C., Plaintiff, v. NAVAL COATING, INC., Defendant.

4:19-cv-00261-JAJ-HCA

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION

September 19, 2019

REPORT AND RECOMMENDATION

I. INTRODUCTION

Before the undersigned is Plaintiff Wells Fargo Vendor Financial Services, L.L.C.'s ("Wells Fargo") Application for Immediate Writ of Replevin and Request for Expedited Hearing. [2]. Wells Fargo seeks an immediate writ of replevin to recover four Doosan Air Compressors, pursuant to the terms of a lease agreement and a loan agreement between Wells Fargo and Defendant Naval Coating, Inc. ("Naval Coating"). See (Pl. Application for Writ and Expedited Hearing [2] at 1-2). Naval Coating has yet to file anything in this case, nor have counsel entered an appearance on its behalf.

The undersigned granted Wells Fargo's request for an expedited hearing on the immediate writ for replevin on August 23, 2019. [6]. Pursuant to the undersigned's Order granting the expedited hearing, Naval Coating was served with the Order granting the request for the expedited hearing on August 27, 2019. [7]. The undersigned held the hearing on September 17, 2019. [11]. Naval Coating did not appear. The undersigned considers the Application for Immediate Writ of Replevin on the papers filed and oral submissions made during the hearing.

II. BACKGROUND

Wells Fargo brings the instant action as a result of Naval Coating defaulting on a lease agreement as well as a loan agreement. Wells Fargo brings two counts against Naval Coating. Wells Fargo brings an action for replevin to recover four Doosan air compressors which were collateral under the agreements. Wells Fargo also brings a breach of contract claim to recover a money judgment for amounts owed under the agreements. The instant Motion concerns Wells Fargo's attempt to secure pre-judgment possession of the air compressors.

Wells Fargo entered into two separate agreements with Naval Coating, a California corporation with its principal place of business in San Diego that provides industrial and maritime painting and coating services to various businesses including the U.S. Navy. Wells Fargo believes that the air compressors it seeks to recover are still in Naval Coating's control in San Diego County, California. Wells Fargo is a single-member LLC, and its sole member is incorporated and has its principal place of business in Iowa. Both the lease and loan agreements entered by the parties specify that they are governed by Iowa law, and that any legal action or proceeding will be brought exclusively in the federal or state courts of Iowa.

On September 27, 2017, Wells Fargo and Naval Coating entered into a lease agreement whereby Wells Fargo agreed to acquire and lease to Naval Coating one Doosan Air Compressor bearing serial number 472399. On December 19, 2018, Wells Fargo and Naval Coating entered into a loan agreement whereby Wells Fargo agreed to finance Naval Coating's purchase of three Doosan Air Compressors bearing serial numbers 472147, 472612, and 478153. Wells Fargo retained security interests in the air compressors, and later perfected those interests by filing UCC Financing Statements with the California Secretary of State on October 6, 2017 and December 26, 2018. Naval Coating apparently defaulted on the terms of the two agreements by failing to makethe required payments. Wells Fargo sent Naval Coating notice of defaults on June 13, 2019, and thereafter sent demand letters for amounts due under the agreements on July 23, 2019.

Wells Fargo now seeks to take possession of the air compressors. Wells Fargo believes that Naval Coating is in possession of the four air compressors somewhere in San Diego County, California. Wells Fargo represents that the value of the air compressors is depreciating and thus its ability to recoup its damages through sale or lease of the compressors diminishes daily. Finally, Wells Fargo asserts that Naval Coating is in such financial stress that its employees are not being paid.

III. APPLICABLE LAW AND ANALYSIS

Wells Fargo seeks an immediate writ of replevin to the U.S. Marshall in the Southern District of California, San Diego office, to repossess the four air compressors. Because of the nature of the requested relief, the undersigned has opted to submit her proposed findings and recommendation for the disposition of the Motion to the presiding district judge in this matter, Chief District Judge John A. Jarvey. See 28 U.S.C.A. § 636(b)(1) (discussing limited matters on which a magistrate judge may not issue a final determination but allowing a magistrate judge to submit a report and recommendation on those matters). Accordingly, the undersigned will proceed by analyzing the applicable law, making relevant proposed findings, and finally offering a proposed recommendation for the disposition of the Motion based on the foregoing.

Federal Rule of Civil Procedure 64 provides the procedures available to a litigant seeking to "seiz[e] a person or property to secure satisfaction of the potential judgment." FED. R. CIV. P. 64(a). In totality, Rule 64 provides:

(a) Remedies Under State Law--In General. At the commencement of and throughout an action, every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to securesatisfaction of the potential judgment. But a federal statute governs to the extent it applies.

(b) Specific Kinds of Remedies. The remedies available under this rule include the following--however designated and regardless of whether state procedure requires an independent action:

• arrest;

• attachment;

• garnishment;

• replevin;

• sequestration; and

• other corresponding or equivalent remedies.

FED. R. CIV. P. 64 (emphasis added).

Under Iowa law, an immediate writ of replevin is an available pre-judgment remedy. Iowa Code Section 643 details the procedures applicable to the remedy of replevin. The statute contains provisions running the gamut from the application of the writ to its execution in various circumstances. The undersigned will identify the relevant statutory sections below and analyze whether each section has been satisfied. In so doing, the undersigned keeps in mind that "[r]eplevin actions are highly specialized procedures, carefully designed for a narrow purpose: to restore the property to the party entitled to its immediate possession." Ankeny Cmty. Sch. Dist. v. Van Gorp, 501 N.W.2d 506, 507 (Iowa 1993). "A statute helps to limit the scope of the action to this special purpose . . . Iowa's scheme is to restrict the action to a sorting out of the right to immediate possession." Id. at 507-08.

Section 643.1 requires the litigant seeking a writ of replevin to file a verified complaint that as a general matter "require[s] a creditor to specify the nature and extent of the debt owing, the nature of any delinquency, and the extent of the creditor's security interest." Audio Odyssey, Ltd. v. Brenton First Nat. Bank, 245 F.3d 721, 733 (8th Cir. 2001), reconsideration en banc granted, judgment vacated (July 30, 2001), opinion reinstated sub nom. Audio Odyssey v. Brenton First Nat. Bank, 286 F.3d 498 (8th Cir. 2002). Section 643.1 states in its entirety:

An action of replevin may be brought in any county in which the property or some part thereof is situated. The petition must be verified and must state:

1. A particular description of the property claimed.

2. Its actual value, and, where there are several articles, the actual value of each.

3. The facts constituting the plaintiff's right to the present possession thereof, and the extent of the plaintiff's interest in the property, whether it be full or qualified ownership.

4. That it was neither taken on the order or judgment of a court against the plaintiff, nor under an execution or attachment against the plaintiff or against the property; but if it was taken by either of these modes, then it must state the facts constituting an exemption from seizure by such process.

5. The facts constituting the alleged cause of detention thereof, according to the plaintiff's best belief.

6. The amount of damages which the affiant believes the plaintiff ought to recover for the detention thereof.

Iowa Code § 643.1.

The undersigned finds that Wells Fargo has satisfied the requirements of section 643.1. The undersigned will first address the threshold issues identified in the two introductory sentences of the section before moving on to the numbered conditions that follow. The undersigned finds that the statutory requirement that the action "may be brought in any county in which the property or some part thereof is situated" is a permissive procedural requirement that does not prevent a federal district court sitting in diversity from issuing an immediate writ of replevin for property situated in a county outside of Iowa, in this case San Diego County, California. See CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2932 (3d ed. 2019) ("Although state law ordinarily determines when and how a provisional remedy is obtained, it has no effect on the underlying action to which the provisional remedy is incident. That action continues to be conducted under the Civil Rules regardless of what procedures the state may employ in suits in which provisional remedies have been obtained."). The undersigned further finds that Wells Fargo has filed a verified complaint which satisfies the numbered conditions of 643.1, and specifically finds as follows:

1. Each of the four individual Doosan Air Compressors have been particularly described so that they "may be identified by reasonable means." Prenger v. Baker, 542 N.W.2d 805, 810 (Iowa 1995) (quoting Lyons v. Shearman, 62 N.W.2d 196, 197-98 (1954)). Each compressor is identified by make, model, year, equipment type, and serial number. See (Pl. Verified Complaint [1] at 2-3); (Pl. Exhibit H ¶ 5).

2. The actual value of the four air compressors in...