Opinion
Civil Action No. 9:16-cv-2520
07-21-2017
CNH INDUSTRIAL CAPITAL AMERICA, LLC f/k/a CNH CAPITAL AMERICA, LLC, Plaintiff, v. ABLE CONTRACTING, INC. and CHANDLER M. LLOYD, Defendants.
ORDER AND OPINION
This matter is before the Court on Plaintiff CNH Industrial Capital America, LLC's ("CNH") motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure (Dkt. No. 58) and motion for judgment on the pleadings under Rule 12(c). (Dkt. No. 57.) For the reasons set forth below, the Court requires supplementary briefing from the parties about the alleged agency relationship between CNH and Border Equipment to decide both motions. The parties shall submit supplementary briefing on this issue on or before August 25, 2017.
The parties have also filed a joint motion to extend the deadline to conduct mediation. (Dkt. No. 69.) The deadline for mediation is hereby extended from August 3, 2017 to September 8, 2017 to allow time for the parties to comply with this order.
I. Relevant Facts
Able Contracting, Inc. ("Able") is a South Carolina business based in Jasper County South Carolina. (Dkt. No. 18 at 10.) G, J & L Inc. d/b/a/ Border Equipment ("Border"), a dealer in heavy machinery and equipment, is incorporated and has its principal place of business in Georgia. (Id.) CNH is a limited liability company incorporated in Delaware with its principal place of business in Wisconsin. (Id.)
This case arises out of three retail installment sales contracts ("RISCs") executed between Able and Border in 2013 and 2014 (Dkt. No. 1 at 2) and a personal guaranty executed between Chandler Lloyd ("Lloyd"), the President of Able, and Border in 2013. (Dkt. No. 1 at 9-10.) Border entered into three separate RISCs with Able on October 25, 2013, November 19, 2013, and September 28, 2014. (Dkt. No. 1 at 2, 4, 8.) With the exception of price and equipment covered, each RISC had the same general terms and granted Border and assignees a "purchase money security interest" in the pieces of equipment. (Dkt. No. 1 at 2, 5, 8.)
Each of the RISCs includes an assignment provision assigning the RISCs to CNH, and it appears the assignment occurred immediately upon execution of each RISC. (Dkt. No. 1 at 3, 5, 8.) The RISCs specify that upon assignment "all rights and benefits but no obligations (if any) of Seller" are transferred to CNH; that Able "will not assert against Assignee any claim or defense which [Able] may have against Seller, the manufacturer of the equipment, or any other person"; that the equipment is sold "as is and with all faults"; and that "seller and manufacturer make no other representation or warranty, express or implied, and specifically disclaim the implied warranties of merchantability and fitness for particular purposes." (Dkt. Nos. 1-1 at 3, 1-5 at 3, 1-9 at 3.) The RISCs indicate that a default occurs when the "Buyer fails to pay when due any of the Obligations." (Dkt. Nos. 1-1 at 4, 1-5 at 4, 1-9 at 4.) Upon default, the seller or assignee can, among other things: (1) "declare all obligations immediately due"; and (2) "sell . . . all Collateral at public or private sale." (Dkt. Nos. 1-1 at 4, 1-5 at 4, 1-9 at 4.) On April 24, 2014, Able and CNH agreed to modify the payment schedules outlined in the first two RISCs. (Dkt. No. 1 at 3, 5.)
CNH alleges that Able failed to make required payments under the RISCs and thus defaulted. (Dkt. No. 1 at 3, 6, 9.) In January 2016, Able restored possession of all but one piece of equipment to CNH. (Dkt. No. 1 at 3, 6, 9; Dkt. No. 59 at 3, 6, 9.) A John Deere tractor covered by the November 19, 2014 RISC remains in the possession of Able and Lloyd. (Dkt. No. 1 at 6.) CNH has represented that some of the equipment was damaged when returned (Dkt. Nos. 59-3, 59-8, 59-9, 59-13), and that CNH has mitigated or has attempted to mitigate damages for the equipment in its possession by listing the equipment on a website for private sale (Dkt. No. 59 at 3, 7, 10).
Able disputes whether it owed the money and has defaulted. (Dkt. No. 18 at 2.)
CNH recorded this as a "voluntary repossession" to credit agencies (Dkt. No. 18 at 13) while Able alleges this constituted "revocation of acceptance" (Dkt. No. 18 at 22.)
Lloyd disputes the condition of some pieces of equipment. (Dkt. No. 62-1 at 2.) --------
CNH alleges breach of contract under each of the three RISCs and under Lloyd's personal guaranty for failure to make the scheduled payments. (Dkt. No. 1.) CNH has moved for summary judgment based on the terms of the RISCs and Defendants' failure to pay. (Dkt. No. 58.) CNH claims it is entitled to the remaining balance under the RISCs plus interest and possession of the John Deere tractor. (Dkt. No. 1 at 10-11.) Able and Lloyd have asserted several defenses and counterclaims in response and claim they are entitled to actual, consequential, special, punitive, treble and statutory damages plus interest, as well as attorneys' fees and costs. (Dkt. No. 18.) Defendants' arguments rely in part on their allegation that the equipment was in poor condition upon delivery and began to frequently break down almost immediately after delivery. (Dkt. No. 18 at 12.) CNH has moved for judgment on the pleadings on these counterclaims. (Dkt. No. 57.)
II. Legal Standard
A. Judgment on the Pleadings
A Rule 12(c) motion for judgment on the pleadings is assessed by "applying the same standard . . . as motions made pursuant to Rule 12(b)(6)." Burbach Broad. Co. of Delaware v. Elkins Radio Corp., 278 F.3d 401, 406 (4th Cir. 2002) (citing Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). Rule 12(b)(6) permits the dismissal of an action if the complaint fails "to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Such a motion tests the legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits of the claim, or the applicability of defenses. . . . Our inquiry then is limited to whether the allegations constitute 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citation omitted). In a Rule 12(b)(6) motion, the Court is obligated to "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). However, while the Court must accept the facts in a light most favorable to the non-moving party, it "need not accept as true unwarranted inferences, unreasonable conclusions, or arguments." Id.
To survive a motion to dismiss, the complaint must state "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the requirement of plausibility does not impose a probability requirement at this stage, the complaint must show more than a "sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the pleading "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.
B. Summary Judgment
To prevail on a motion for summary judgment, the movant must demonstrate that there is no genuine issue of any material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The party seeking summary judgment has the burden of identifying the portions of the "pleadings, depositions, answers to interrogatories, any admissions on file, together with the affidavits, if any, which show there is no genuine issue as to any material fact that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The Court will construe all inferences and ambiguities against the movant and in favor of the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). The existence of a mere scintilla of evidence in support of the non-moving party's position is insufficient to withstand a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). However, an issue of material fact is genuine if the evidence is such that a reasonable jury could return a verdict in favor of the non-movant. Id. at 257.
"When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "In the language of the Rule, the nonmoving party must come forward with 'specific facts showing that there is a genuine issue for trial.'" Id. at 587. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Id. (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968))
III. Discussion
Defendants support several of their counterclaims and defenses by arguing that Border had actual authority or at minimum apparent authority to act as an agent of CNH. (Dkt. Nos. 18 at 11, 62 at 7-8.) Specifically, Defendants allege that CNH had the "right and ability to control Border via Retail Finance Agreements, Program Procedures, Dealer Handbooks, Retail Installment Sales Contracts, and other indicia of control." (Dkt. No. 18 at 11.) Defendants also allege that these documents created the "implicit representation of agency." (Dkt. No. 62 at 8.)
The standard for determining actual agency is "whether the purported master has the right or power to direct and control the servant in the performance of his work and in the manner in which the work is to be done." Jamison v. Morris, 684 S.E.2d 168, 171 (S.C. 2009) (quoting Watkins v. Mobil Oil Corp., 352 S.E.2d 284, 286 (S.C. Ct. App. 1986)). "Agency is a question of fact . . . [and] may be, and frequently is, implied from the words and conduct of the parties and the circumstances of the particular case." Gathers v. Harris Teeter Supermarket, Inc., 317 S.E.2d 748, 752 (S.C. Ct. App. 1984).
Defendants have asserted that certain contracts and other materials establish an actual agency relationship between Border and CNH. Only the RISCs have been filed with the Court. The Court is unable to determine whether there is a genuine issue of material fact about whether an agency relationship exists between Border and CNH without first reviewing the other relevant documents and receiving the parties' supplemental briefings on the issue of agency.
IV. Conclusion
For the reasons set forth above, the Court requires supplementary briefing from the parties regarding the alleged agency relationship between CNH and Border to decide both the motion for summary judgment and the motion for judgment on the pleadings. The parties shall file supplementary briefing on this issue on or before August 25, 2017.
The parties have also filed a joint motion to extend the deadline to conduct mediation. (Dkt. No. 69.) The deadline for mediation is hereby extended from August 3, 2017 to September 8, 2017 to allow time for the parties to complete their supplementary briefings.
AND IT IS SO ORDERED.
/s/_________
Richard Mark Gergel
United States District Court Judge July 21, 2017
Charleston, South Carolina