Finch v. Constar et al

1 This memorandum opinion constitutes findings of fact and
conclusions of law as required by Rule 7052 F.R.B.P.
2 This list is taken from the list of items on Plaintiff
Exhibit 2, pp. 4-5. 	At the outset of the trial Defendants
asserted that the Trustee was limited in this adversary
proceeding to seeking only the items listed in the complaint.
The items identified in paragraph 6 of the complaint are the same
as in Plaintiff Exhibit 2, including in the same order. 	The
Trustee did not contest Defendants’ position about what items
were subject to dispute, thereby effectively agreeing not to
conform the complaint to the evidence presented at trial. 	See
Rule 7015 F.R.B.P., incorporating Rule 15(b), F.R.Civ.P.
However, Defendants during the opening statement colloquy
announced that the Trustee could take the Clement end dump,
effectively amending the complaint.
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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
NEWCO AGGREGATE COMPANY, LLC,
Debtor. 	No. 7-03-11787 SF
ROBERT L. FINCH,
Plaintiff,
v. 	Adv No. 05-1063 S
CONSTAR, et al.,
Defendants.
MEMORANDUM OPINION IN SUPPORT OF JUDGMENT
This matter came before the Court for a trial on the merits
on December 13, 2006. 1 	The parties are as follows: Plaintiff
Robert L. Finch, Trustee; and Defendants Constar, an
unincorporated entity and purported Nevada common law trust,
Geoff McMahon and Raymond W. White. 	Plaintiff was represented by
Robert Finch and Defendants by Gary Ottinger. 	The following
items (the “Property”) 2 were the subject of the dispute:
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3 Defendants conceded during the opening statement colloquy
that the estate could take possession of this item, and stated
that in fact they had so informed the Trustee months ago. 	Mr.
Slade testified that Plaintiff Exhibit 7 apparently is the
certificate of title for this vehicle, even though the title
lists the vehicle as a 1984 Peterbilt while the cement mixer is
listed as a 1986.
4 Almost no vehicle identification numbers were presented
for any of these items. 	The VINs listed come from various trial
exhibits. 	The Court has included the available VINs to minimize
future litigation between the parties.
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1986 Peterbilt cement mixer truck 3
1984 Superior trailer
1972 White COE
1965 Kenworth
1985 Chevrolet C20
*CPS belly dump trailer (NM 98105516A072530) 4
1989 Ford 1-ton
Donsey [sic – should be Dorsey] control trailer
Fruehauf 40' storage trailer
Schwartz Lowboy
1976 International cab over [sic] truck
1965 Kenworth tandem dump
*1985 International tandem dump
1984 White Freightliner tandem dump
*LTL 9000 Ford semi truck
Ingersoll Rand 185 cfm compressor
White Star tractor
1996 Peterbilt tractor
1998 Peterbilt 379
2000 Roadmaster belly dump
1996 Peterbilt tandem dump truck
Fruehauf end dump
Two 1985 Kenworth trucks
1988 Ford tractor
1985 Peterbilt truck
*1979 Ford truck with crane
1978 Lufkin dump
Additional:
1980 Clement frame-type end dump trailer (NM ES2S30268T)
At the conclusion of the trial, Defendants announced that
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5 To the extent that it matters, the Court finds that Mr.
Slade’s contribution of vehicles was supposed to be exactly that;
namely, a capital contribution to the company rather than a sale
of assets to it.
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they made no claim to any of the Property with the exception of
the asterisked items. 	Therefore, because the Trustee has claimed
all the non-asterisked items without opposition, the Trustee’s
claim of ownership for the estate has been established as to all
but the asterisked items vis-a-vis these three defendants.
Part of the Trustee’s case was the testimony of Curtis
Slade, the manager of Newco. 	Mr. Slade testified that he
contributed or sold a number of the vehicles to Newco.
Defendants argued that the vehicles were supposed to be his
capital contribution to Newco; he asserted that he was to be
paid. 	That issue is a red herring; either way, the vehicles
belong to Newco, even if Mr. Slade retains some of the titles. 5
Constar claims ownership of the CPS belly dump. 	The
unchallenged testimony from Gilbert Marquez was that he sold the
item to Newco and was paid $5,000 in cash by Newco. 	(He also
testified that he was supposed to receive an additional $1,500 of
“material” – sand, gravel or other aggregate – but never did
receive it.) 	Plaintiff Exhibits 9 and 10 back up this testimony.
Mr. White testified that Constar has a bill of sale from Mr.
Marquez for this item, but it was not produced at trial; Mr.
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6 Why Constar would have claimed this item, given these
facts, is not clear to the Court, unless, as Defendants’ counsel
argued, being in title is the only indicium of ownership that the
Court is allowed to consider. 	This surely cannot be the law.
Suppose that A accepts full payment from B for a vehicle, and
delivers the title to B, or is supposed to deliver title to B,
but before a new title can be obtained from the Motor Vehicle
Department the issue of ownership arises. 	Or suppose that A as
agent for B registers the vehicle in his own name instead of in
B’s name. 	In these circumstances no one would seriously argue
that A had thereby retained or obtained valid ownership. 	In
consequence, the Court has some doubts about Mr. White’s
credibility.
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White also admitted that Constar had not paid for the item. 6 	The
Court finds that the estate is the owner of this item.
Constar claims the 1985 International tandem dump. 	Mr.
White testified that Morningstar (predecessor to Constar)
purchased six chassis cabs and that one of those became this
item. 	This item was listed by Mr. White as belonging to Newco in
his hand-written list (second from bottom on the first page)
attached to Plaintiff Exhibit 4 (the verified complaint filed in
the state court action). 	The Court finds that at that time Mr.
White listed many items as belonging to Newco and others as
belonging to Constar. 	The Court also finds that because the
state court action was directed against Mr. Slade on behalf of
Newco, Mr. White at that time had no incentive to dissemble about
the ownership of the items listed. 	For example, the Clement end
dump trailer appears on the Newco list rather than the Constar
list, and in fact Constar conceded at the trial that the Trustee
could take the Clement end dump. 	Similarly, the CPS belly dump
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trailer, which the Court has found belongs to Newco for other
reasons, appears on the Newco list. 	The Court finds Mr. White’s
listing of the item on Plaintiff Exhibit 4 more persuasive than
his subsequent testimony, and therefore finds that the 1985
International tandem dump belongs to the estate rather than to
Constar.
Constar claims the LTL 9000 Ford semi truck. 	Mr. Slade
testified in detail that this vehicle was a 1988 Ford tractor
that had been obtained from Highway 64 Auto Sales owned by Hector
Rangel (spelling?). 	In a three-way transaction, Newco used
aggregate to pay for some “dozer” or dirt work that was done for
Mr. Rangel by a third party. 	Mr. Rangel delivered the title to
Mr. Slade for Newco, who delivered it to Mr. White (apparently to
be held or registered for Newco). 	Mr. White testified that
Constar had a title to this vehicle; Mr. Slade’s explanation
would explain why Constar, or more accurately, Mr. White, had the
title. 	Mr. White did not deny Mr. Slade’s account of how the
title came to be in the possession of Constar. 	The Court finds
that the estate is the owner of the LTL 9000 Ford semi truck.
Constar claims the 1979 Ford truck with crane. 	Mr. Slade
testified specifically that this item was obtained from Frank
Santoro of F and S Services by Constar but billed to Newco; that
is, Newco paid for the truck with gravel and services. 	However,
this item was listed by Mr. White as belonging to Constar in his
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hand-written list attached to Plaintiff Exhibit 4. 	The handling
of this item somewhat resembles that of the CPS belly dump or,
perhaps a better example, the 1978 Lufkin dump trailer, which is
listed as belonging to Constar in Plaintiff Exhibit 4. 	Based on
the testimony of Messrs Brown and Marquez respectively (both of
whom the Court found to be eminently credible), it is clear that
Newco paid for the items but they ended up being titled in
Constar. 	The Court finds that it is more likely than not that
the 1979 Ford truck with crane belongs to the estate.
The conclusion that the various items belong to the estate
rather than Defendants does not mean that all the items exist or
do not belong to someone else. 	For example, there was testimony
that the 1965 Kenworth and the 1965 Kenworth tandem dump were
wrecked, that the Lufkin trailer was wrecked and cannibalized,
that the 1989 Ford 1-ton (listed in Plaintiff Exhibit 4) was
delivered to Wilford Harrison in payment for services, and that
the Dorsey controls trailer is still titled in the name of Johnny
Dollar (spelling?) even though Newco had purchased the $250,000
worth of equipment that was in the trailer. 	Nothing in this
decision is intended to adjudicate the rights of any party other
than Plaintiff and Defendants to any of the property listed.
Therefore the Court finds that, vis a vis the Defendants,
the Property is property of the estate, and the estate is
entitled to have turned over to the Trustee as the representative
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of the estate any items of the Property that are in the custody,
control or possession of any of the Defendants, including turning
over titles to any of the items listed of the Property.
The Honorable James Starzynski
United States Bankruptcy Judge
COPY TO:
Robert L Finch
555 E. Main Street
Farmington, NM 87401-2742
Gary B Ottinger
PO Box 1782
Albuquerque, NM 87103-1782
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