Western Surety Company v. Intrust Bank

• Decision Date: 20 June 2000
• Citation: 20 S.W.3d 566
• Parties: (Mo.App. W.D. 2000) Western Surety Company, Plaintiff, v. Intrust Bank, N.A., et al., Respondent-Appellant, Robert Hernandez, Appellant-Respondent. WD57179 and WD57219 0
• Court: Missouri Court of Appeals

20 S.W.3d 566 (Mo.App. W.D. 2000)

Western Surety Company, Plaintiff, v. Intrust Bank, N.A., et al., Respondent-Appellant, Robert Hernandez, Appellant-Respondent.

WD57179 and WD57219

Missouri Court of Appeals Western District

06/20/2000

Appeal From: Circuit Court of Jackson County, Hon. Jon R. Gray

Counsel for Appellant: Dale K. Irwin

Counsel for Respondent: Steven A. Mauer

Opinion Summary: Western Surety Company, as surety, brought an interpleader action seeking to determine the rights of opposing claimants to a twenty-five thousand dollar ($25,000) motor vehicle dealer bond. VanFran, Inc., d/b/a Car-Biz (Car-Biz), a motor vehicle dealership doing business in Missouri, was principal under the bond agreement. Intrust Bank, N.A., and Robert Hernandez filed complaints against Car-Biz in two separate actions. Each was awarded judgment against Car-Biz for damages in their respective cases. Each sought to collect its judgment against the motor vehicle dealer bond proceeds. Mr. Hernandez appeals from the judgment granting Intrust Bank's motion for summary judgment on the interpleader action and apportioning pro rata the proceeds of the motor vehicle dealer bond to Intrust Bank and to Mr. Hernandez. Intrust Bank cross-appeals the trial court's pro rata apportionment of the bond proceeds.

REVERSED AND REMANDED.

Division IV holds: (1) The trial court erred in granting summary judgment in favor of Intrust Bank. Intrust Bank's breach of contract judgment against Car-Biz is not a judgment on a ground listed in section 301.562.2, RSMo Cum. Supp. 1999, for suspending or revoking Car-Biz's motor vehicle dealer's license. Therefore, Intrust Bank is not entitled to be indemnified by Car-Biz's motor vehicle dealer bond under section 301.560.1, RSMo Cum. Supp. 1999.

(2) The determination that Intrust Bank does not have a right to indemnity renders moot the remaining issues raised on appeal.

PER CURIAM

Western Surety Company, as surety, brought an interpleader action seeking to determine the rights of opposing claimants to a twenty-five thousand dollar ($25,000) motor vehicle dealer bond. VanFran, Inc., d/b/a Car-Biz (Car-Biz), a motor vehicle dealership doing business in Missouri, was principal under the bond agreement. Intrust Bank, N.A., and Robert Hernandez filed complaints against Car-Biz in two separate actions. Each was awarded judgment against Car-Biz for damages in their respective cases. Each sought to collect its judgment against the motor vehicle dealer bond proceeds. Mr. Hernandez appeals from the judgment granting Intrust Bank's motion for summary judgment on the interpleader action and apportioning pro rata the proceeds of the motor vehicle dealer bond to Intrust Bank and to Mr. Hernandez. Intrust Bank cross-appeals the trial court's pro rata apportionment of the bond proceeds. The summary judgment of the trial court is reversed, and the case is remanded.

Factual and Procedural History

Car-Biz operates a used car dealership in Missouri specializing in second-chance financing. As required by all used car dealers in Missouri, Car-Biz secured a motor vehicle dealer bond in the amount of $25,000 from Western Surety naming Car-Biz as the principal and the State of Missouri as the obligee. Under the bond, Western Surety agreed to indemnify "any person dealing or transacting business with [Car-Biz] for any loss sustained by any person by reason of the acts of [Car-Biz], provided such acts of [Car-Biz] constitute grounds for suspension or revocation of [Car-Biz's] license."

Car-Biz had a business relationship with Intrust Bank whereby Car-Biz would clean, repair, and sell vehicles repossessed by Intrust Bank. Under the terms of the consignment, Intrust Bank would place the repossessed vehicles on Car-Biz's lot for sale. Car-Biz would then sell the vehicles for the best price it could obtain, but for no less than the minimum sale price agreed to by Intrust Bank. Intrust Bank would retain possession of the vehicle's certificate of title until the car sold and Car-Biz paid Intrust the agreed minimum price. Intrust Bank would then assign the vehicle's certificate of title to the customer who purchased the car from Car-Biz's lot.

During a routine check, in December of 1997, for the presence of vehicles placed on Car-Biz's car lot, Intrust Bank found that two vehicles it had placed were missing. Intrust Bank later discovered that Car-Biz failed to pay Intrust Bank for eight of Intrust Bank's repossessed vehicles sold by Car-Biz. Intrust Bank never released the certificates of title to seven of those vehicles. Thus, the customers who purchased these vehicles did not receive the certificates of title from Intrust Bank for the vehicles they purchased on Car-Biz's lot.

Intrust Bank filed suit against Car-Biz on March 20, 1998, alleging conversion, fraud, breach of contract, and unjust enrichment. Car-Biz appeared on June 4, 1998, and stipulated and consented to judgment on Intrust Bank's breach of contract claim in the amount of $63,500. All other counts of Intrust Bank's petition were dismissed with prejudice, along with Car-Biz's counterclaims against Intrust Bank. On the same day of the consent judgment, Intrust Bank sent the judgment to the Missouri Department of Revenue seeking payment of twenty-five thousand dollars from Car-Biz's motor vehicle dealer bond. The Missouri Department of Revenue thereafter forwarded a copy of Intrust Bank's judgment to Western Surety on June 10, 1998.

Meanwhile, Mr. Hernandez purchased a vehicle from Car-Biz in March of 1997. As part of the transaction, Car-Biz agreed that if Mr. Hernandez paid $2,784 and made installment payments to Car-Biz for the balance of the purchase price, Car-Biz would pay off the existing outstanding vehicle lien held by The Money Store Auto Finance, Inc. (The Money Store). When Car-Biz failed to pay the lien as promised, The Money Store repossessed Mr. Hernandez's vehicle.

Mr. Hernandez filed his petition alleging fraud and deceptive merchandising practices against Car-Biz on April 20, 1998. Car-Biz failed to appear, and a hearing on damages was set for June 10, 1999. Evidence was heard and judgment was entered in favor of Mr. Hernandez for $19,874.08 in damages and $1,778.00 in attorney's fees. On June 12, 1998, Mr. Hernandez sent his judgment to the Missouri Department of Revenue seeking payment from Car-Biz's bond. The Missouri Department of Revenue thereafter forwarded a copy of Mr. Hernandez's judgment to Western Surety on June 30, 1998.

Western Surety filed an interpleader action on August 6, 1998, to settle the conflicting claims of Intrust Bank and Mr. Hernandez to the proceeds of the bond. Intrust Bank filed a motion for summary judgment. After hearing arguments on the motion, the court sustained it, in part, and apportioned the bond proceeds pro rata, directing payment of $17,897.39 to Intrust Bank and $6,102.61 to Mr. Hernandez. Mr. Hernandez appeals from the trial court's grant of summary judgment in favor of Intrust Bank. Intrust Bank appeals from the trial court's pro rata distribution of the bond proceeds.

Standard of Review

Appellate review of the propriety of summary judgment is essentially de novo. ITT Commercial Fin. Corp. v. Mid-America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). The record is viewed in the light most favorable to the party against whom summary judgment was entered, and that party is afforded all reasonable inferences that may be drawn from the evidence. Id. The grant of summary judgment will be affirmed when no genuine issues of material fact exist and the movant has a right to judgment as a matter of law. State ex rel. Webb v. Hartford Cas. Ins. Co., 956...