Jarnicki v. Dillon et al

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re 	) 	Case No. 05-23127
)
Thomas D. Dillon 	) 	Adversary No. 06-1078
Amanda S. Dillon 	)
)
Debtor 	) 	Chapter 7
)
Harold Jarnicki 	)
)
Plaintiff 	) 	Judge Burton Perlman
vs. 	)
)
Thomas D. Dillon 	)
Amanda S. Dillon 	)
)
Defendant 	)
)
Consumer Portfolio Services 	)
)
Defendant 	)
__________________________________ 	)
)
Consumer Portfolio Services 	)
)
Third-Party Plaintiff 	)
)
vs. 	)
)
Cronin Dodge, Inc. 	)
)
Third-Party Defendant 	)
Order Denying Motion For Summary Judgment
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: April 03, 2007
____________________________________________________________
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In 	this 	adversary 	proceeding, 	plaintiff/trustee 	filed 	a
complaint for the purpose of avoiding a lien as a preference, which
lien is held by Consumer Portfolio Services (“CPS”), defendant in
this adversary proceeding. 	(Debtors are also named defendants, but
the real party in interest is CPS.) 	Plaintiff’s position is that
the 	lien 	of 	CPS 	is 	avoidable 	because 	it 	was 	not 	perfected 	within
the 	applicable 	twenty-day 	safe 	harbor 	provision 	provided 	by
statute. 	Defendant CPS filed an answer to the complaint on April
5, 	2006. 	On 	April 	14, 	2006, 	CPS 	filed 	a 	third-party 	complaint
against 	third-party 	defendant 	Cronin 	Dodge, 	Inc.(“CD”). 	Third-
party defendant CD filed an answer to the third-party complaint on
May 17, 2006. 	On October 6, 2006, third-party defendant CD filed
a Motion to Dismiss the Third-Party Complaint. 	On October 9, 2006,
third-party 	plaintiff 	CPS 	filed 	a 	Motion 	for 	Summary 	Judgment 	on
the third-party complaint. 	On November 28, 2006, this Court denied
the 	Motion 	to 	Dismiss 	the 	Third-Party 	Complaint. 	On 	January 	5,
2007, 	this 	Court 	issued 	an 	order 	suspending 	action 	on 	the 	Motion
for 	Summary 	Judgment 	filed 	by 	third-party 	plaintiff 	pending 	a
determination of liability on the trustee’s complaint.
On 	March 	16, 	2007, 	plaintiff 	and 	defendant 	CPS 	submitted 	an
agreed 	order 	which 	was 	signed 	by 	the 	Court, 	in 	which 	the 	parties
agreed 	that 	the 	lien 	on 	the 	vehicle 	in 	question 	was 	not 	timely
perfected, 	and 	the 	matter 	raised 	by 	the 	third 	party 	complaint
should now go forward. 	Thus, now before the Court is the motion by
third-party 	plaintiff 	CPS 	for 	summary 	judgment, 	which 	had
heretofore been held in suspense by our Order of January 5, 2007.
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In support of its third party complaint, CPS has presented as
an 	exhibit 	Automobile 	Dealer 	Agreement 	dated 	July 	5, 	2005, 	which
was entered into between CPS and CD. 	As an additional exhibit, CPS
offered a Retail Installment Sale Contract regarding the purchase
of 	a 	2004 	Jeep 	Liberty, 	entered 	into 	between 	debtors 	and 	CD. 	A
third exhibit is Ohio Certificate of Title which reflects a lien in
favor 	of 	CPS 	dated 	August 	1, 	2005. 	Finally, 	CPS 	supports 	its
motion by attaching Answers to Request for Admissions of Fact which
was executed by CD.
CD filed a Memorandum in Opposition to the motion, filing in
support 	thereof 	the 	Affidavit 	of 	Pat 	Cronin; 	relevant 	answers 	to
interrogatories; pertinent documents supplied by CPS in response to
request for production of documents by CD; and the same Automobile
Dealer 	Agreement 	which 	had 	been 	presented 	by 	CPS 	as 	one 	of 	its
exhibits.
The 	positions 	of 	the 	respective 	parties 	may 	be 	briefly
summarized. 	CPS contends that pursuant to an express provision in
the Automobile Dealer Agreement, CD is contractually obligated to
indemnify CPS for the loss which was occasioned by the failure of
CD to timely perfect its security interest. 	The position of CD in
response to the motion is that the Automobile Dealer Agreement had
not been effected at the time that the Dillon deal was completed.
CPS then filed a reply to CD’s answer to its motion. 	In reply, CPS
no longer relies upon the executed agreement between the parties.
Instead, 	CPS 	argues 	that 	it 	is 	entitled 	to 	succeed 	on 	its 	motion
because there was a verbal agreement between the parties prior to
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July 1, 2005.
Motions 	for 	summary 	judgment 	are 	governed 	by 	F.R.Civ.P. 	56
which 	is 	incorporated 	into 	bankruptcy 	practice 	by 	F.R.B.P. 	7056.
That rule provides in part that a motion for summary judgment is to
be granted “if pleadings, depositions, answers to interrogatories,
and admission on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the
moving 	party 	is 	entitled 	to 	a 	judgment 	as 	a 	matter 	of 	law.” 	The
moving party bears the initial burden of showing that there is no
issue 	of 	material fact. 	Celotex Corp. v. Catrett , 	477 	U.S. 	317,
323-324 (1986). 	The nonmoving party, however, bears that ultimate
burden of showing that a genuine issue of material fact exists. 	In
doing 	so, 	the 	nonmoving 	party 	cannot 	rest 	on 	its 	pleadings, 	but
must, in response, offer some evidence which demonstrates a genuine
issue of material fact for trial. 	Id.
We 	find 	the 	following 	facts 	from 	the 	evidence 	presented 	on
this motion. 	On July 6, 2005, CD entered into a Retail Installment
Sale Contract with debtors for the purchase of a 2004 Jeep Liberty
(hereafter “vehicle”). 	Debtors filed a bankruptcy petition October
14, 2005. 	CPS was in the business of buying purchase contracts and
security interest from automobile dealers such as CD. 	CD had not
prior 	to 	the 	Dillon 	transaction 	done 	business 	with 	CPS. 	July 	1,
2005, 	prior 	to 	the 	time 	that 	CD 	entered 	into 	a 	contract 	with 	the
debtors, 	CPS received a loan application from CD in regard to the
prospective 	Dillon 	transaction. 	CPS 	on 	July 	1, 	2005 	gave
preliminary 	approval 	to 	the 	loan, 	subject 	to 	receipt 	of 	the
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remaining 	required 	documentation, 	including 	debtors’ 	proof 	of
income, proof of residence, proof of insurance, and references. 	An
Automobile Dealer Agreement had been provided to CD by CPS on a CPS
form. 	CD 	executed 	the 	Agreement 	on 	July 	5, 	2005 	and 	sent 	it 	to
CPS. 	CPS had given preliminary approval of financing of the Dillon
loan on July 1, 2005, with final approval subject to the provision
of 	certain 	information 	by 	CD. 	CPS, 	after 	CD 	had 	provided
information 	to 	it, 	gave 	final 	approval 	for 	financing 	the 	Dillon
transaction on July 19, 2005. 	CD perfected the security interest
in the vehicle on August 1, 2005. 	On July 1, 2005, when CD sought
approval of the Dillon transaction, the Automobile Dealer Agreement
between 	CPS 	and 	CD 	had 	not 	been 	executed 	by 	the 	parties. 	In 	the
affidavit 	of 	Pat 	Cronin 	submitted 	by 	CD 	in 	opposition 	to 	the
motion, 	Cronin 	remarks 	that 	“CPS 	had 	sought 	to 	do 	business 	with
Cronin 	and 	Cronin 	agreed 	to 	enter 	into 	an 	agreement 	with 	CPS.”
Cronin 	also 	states 	that 	when 	he 	signed 	the 	Automobile 	Dealer
Agreement 	there 	was 	no 	signature 	on 	it 	on 	behalf 	of 	CPS, 	and
because 	this 	is 	unanswered, 	the 	Court 	assumes 	that 	the 	signature
for 	CPS 	was 	applied 	at 	some 	date 	later 	than 	July 	5, 	2005. 	The
record 	is 	silent 	as 	to 	the 	date 	when 	the 	Automobile 	Dealer
Agreement form was supplied by CPS to CD, though it must have been
before July 5, 2005.
Because CPS is movant in this Motion for Summary Judgment, it
has the burden to establish its right to the relief sought. Wright,
Miller & Kane Federal Practice and Procedure: Civil 3d § 2727. The
Court 	has 	reached 	the 	conclusion 	that 	the 	motion 	must 	be 	denied
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because movant has failed to meet the standard required by F.R.B.P.
7056, that there be no “genuine issue of material fact.” 	The Court
finds that issues of material fact on the record before it exists.
These include:
1. 	Is 	the 	Dillon 	transaction 	subject 	to 	the 	terms 	of
the Automobile Dealers Contract?
This issue would seem to involve subsidiary questions of fact such
as what was the effective date of any agreement between CPS and CD.
2. 	If 	there 	was 	a 	meeting 	of 	the 	minds, 	and 	hence 	a
contract 	between 	the 	parties, 	apart 	from 	the
Automobile 	Dealers 	Agreement, 	what 	were 	the 	terms
of that agreement?
The 	motion 	of 	CPS 	for 	summary 	judgment 	on 	its 	third 	party
complaint against CD is denied.
SO ORDERED.
Copies to:
Marc A. Melamed
Javitch, Block & Rathbone
1300 East 9th Street
Cleveland, Ohio 44114
Cronin Dodge, Inc.
Atten: Terrence M. Vieth
Statutory Agent
830 Main Street Suite 200
Cincinnati, Ohio 45202
Harold Jarnicki, Esq.
576 Mound Court, Suite B
Lebanon, Ohio 45036
U.S. Trustee
36 E. 7th Street, Suite 2030
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Cincinnati, OH 45202
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