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Hockensmith v. Fifth Third Bank
United States District Court for the Southern District of Ohio
79 UCC Rep. Serv. 2d 176 (2012)
Randall Hockensmith (plaintiff) collected and sold classic cars. Hockensmith often advanced funds to Performance Plus Motor Sports, Inc. (Performance Plus) so that Performance Plus could find, restore, and sell classic cars on Hockensmith’s behalf. Hockensmith and Performance Plus would then split the profits from the sales. Performance Plus had a financing agreement with Fifth Third Bank (Fifth Third) (defendant) that gave Fifth Third a security interest in all goods, including new and used cars, owned or acquired by Performance Plus. Performance Plus had bought several classic Corvette cars on Hockensmith’s behalf and was in the process of restoring them when Fifth Third asked Performance Plus to obtain a different lender for its business. Performance Plus, which held title to the Corvettes, informed Hockensmith of Fifth Third’s request. Hockensmith asked Performance Plus to move the cars and to title them in Hockensmith’s name. Performance Plus immediately transferred title but did not immediately move the cars. Title to two of the cars listed $0 as the purchase price. Performance Plus subsequently defaulted on its financing agreement with Fifth Third, and Fifth Third obtained a judgment against Performance Plus. The Corvettes were still at Performance Plus when the sheriff seized all property on Performance Plus’s premises to satisfy Fifth Third’s judgment. Fifth Third then sold the Corvettes and applied the proceeds to Performance Plus’s debts. Hockensmith sued Fifth Third for conversion and replevin. Asserting that he was a buyer in the ordinary course of business, Hockensmith moved for summary judgment. Fifth Third argued that it had been entitled to seize and sell the Corvettes because it had a perfected security interest in property on Performance Plus’s premises. A perfected security interest is secure against other creditors claiming a competing interest in the collateral. The trial court determined that Hockensmith’s title to the Corvettes was not dispositive and considered whether Hockensmith was a buyer in the ordinary course of business.
Rule of Law
Holding and Reasoning (Beckwith, J.)
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