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CNH Industrial Capital America LLC v. Able Contracting, Inc.

United States District Court, D. South Carolina, Charleston Division

September 28, 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

          RICHARD MARK GERGEL UNITED STATES DISTRICT COURT JUDGE.

         This matter is before the Court on Plaintiff CNH Capital Industrial America, LLC's f/k/a CNH Capital America, LLC ("CNH"), motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure and for summary judgment under Rule 56. (Dkt. Nos. 57, 58.) For the reasons set forth below, the motion for judgment on the pleadings is granted and the motion for summary judgment is granted as to liability only.

         I. Background and Relevant Facts

Plaintiff CNH is a Delaware limited liability company with its principal place of business in Wisconsin. Defendant Able Contracting, Inc. ("Able") is a South Carolina corporation that does business in Ridgeland, South Carolina. Defendant Chandler Lloyd is the President of Able. Former third-party defendant G, J & L Inc. d/b/a/ Border Equipment ("Border") is a dealer in heavy machinery and equipment.

         A. The Retail Installment Sales Contracts

         This dispute arises out of Border's sale to Able of several pieces of heavy construction machinery (including excavators, a wheel loader, and a tractor) in 2013 and 2014. Those sales were executed pursuant to three retail installment sales contracts ("RISCs"). The First RISC was executed on or about October 25, 2013 for Abie's purchase of a new Case Excavator. (Dkt. No. 1-1.) Defendant Lloyd, the President of Able, executed a Personal Guaranty with Border to guarantee payment under the First RISC. (Dkt. No. 1-1 at 5.) The Second RISC was executed on or about November 19, 2013 for Abie's purchase of a Case Wheel Loader, a Case Excavator, a used John Deere tractor, and several attachments for larger pieces of equipment (for example, the bucket that attaches to the end of an excavator). (Dkt. No. 1-5.) The Third RISC was executed on or about September 28, 2014 for Abie's purchase of a new Case Excavator. (Dkt. No. 1-9.)

         With the exception of price and equipment covered, the RISCs contain the same general terms and grant Border and any contractual assignees a "first priority purchase money security interest" in the piece(s) of equipment covered by the contracts.

         B. Assignment to CNH

         Each of the RISCs includes a provision assigning the contract to CNH. (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"; and that the equipment is sold "as is and with all faults" and "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. No. 1-1 at 3.)

         C. Alleged Default and Breach

         The RISCs indicate that a default occurs when the "Buyer fails to pay when due any of the Obligations." (Dkt. No. 1-1 at 4.) Upon default, the seller or assignee can, among other things, "declare all obligations immediately due" and "sell ... all Collateral at public or private sale." (Dkt. No. 1-1 at 4.) CNH alleges that Able defaulted when it failed to make required payments under all three RISCs. (Dkt. No. 1 at 3, 6, 9.) Able does not dispute that it stopped making payments under the three RISCs shortly before restoring possession to CNH of all of the equipment except for the John Deere tractor covered by the November 19, 2014 RISC. (Dkt. No. 1 at 3, 6, 9; Dkt. No. 59 at 3.) Able claims it is not responsible for any additional payments because it revoked acceptance by returning the equipment to CNH.[1] (Dkt. No. 18 at 22.) CNH claims Abel's return of equipment was "voluntary repossession." (Dkt. No. 18 at 13)

         CNH filed this lawsuit in July 2016 alleging that Able is in default under all three RISCs for failure to pay and that Lloyd had breached his Personal Guaranty by failing to pay the balance on the first RISC. (Dkt. No. 1.) CNH claims that Able must return the John Deere Tractor and owes $93, 017.89 under the first RISC, $209, 772.38 under the second RISC, and $178, 590.48 under the third RISC. (Dkt. No. 1 at 3, 6, 9.) CNH also claims it is entitled to interest on the balance of the RISCs and attorney's fees and costs. CNH claims Defendant Lloyd is also responsible under the Personal Guaranty for the remaining balance on the first RISC of $93, 017.89. CNH acknowledges that it had a duty to mitigate damages and claims it has taken steps to sell the repossessed equipment in private sales. (Dkt. No. 1 at 4, 6, 9).

         CNH has moved for summary judgment based on Abie's failure to comply with the terms of the RISCs and Lloyd's failure to perform under the Personal Guaranty. (Dkt. No. 58.) Able and Lloyd have asserted several counterclaims. (Dkt. No. 18.) CNH has moved for judgment on the pleadings on Defendants' 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, 411 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., 447 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 ...


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