Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Sperro LLC v. Ford Motor Credit Company LLC

Court of Appeals of Indiana

November 17, 2016

Sperro LLC d/b/a Sperro Towing and Recovery, Fenner & Associates LLC, Brian Fenner, and AMI Asset Management, Inc., Appellants-Defendants,
v.
Ford Motor Credit Company LLC, Appellee-Plaintiff and Indiana Bureau of Motor Vehicles, Declaratory Defendant,

         Interlocutory Appeal from the Marion Superior Court Trial Court Cause No. 49D06-1512-PL-40415 The Honorable Thomas J. Carroll, Judge

          ATTORNEY FOR APPELLANTS SPERRO LLC D/B/A SPERRO TOWING AND RECOVERY, FENNER & ASSOCIATES LLC, AND BRIAN FENNER Hilary Bowe Ricks Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE Harley K. Means John J. Petr Steven E. Runyan Kroger, Gardis & Regas, LLP Indianapolis, Indiana

          Crone, Judge.

         Case Summary

         [¶1] Sperro LLC d/b/a Sperro Towing and Recovery ("Sperro") is in the business of transporting and storing collateral. Sperro towed and stored certain vehicles that had been financed by Ford Motor Credit Company LLC ("FMCC"). Sperro sought to assert possessory mechanic's liens on the vehicles pursuant to Indiana Code Section 9-22-6-2 and sold the vehicles. FMCC filed a complaint against Sperro, Fenner & Associates LLC, and Brian Fenner (collectively "Appellants"), and AMI Asset Management, Inc. ("AMI"), [1] for civil conversion, replevin, tortious interference with a contractual relationship, and conspiracy to commit fraud. FMCC also filed a petition for a preliminary injunction. Following a hearing, the trial court issued a preliminary injunction granting FMCC prejudgment possession of specific vehicles in Sperro's and AMI's possession, ordering Appellants to turn over to FMCC any known or not yet identified FMCC-financed vehicles that may be in Appellants' possession, and enjoining Appellants from taking or maintaining possession of any vehicle on which FMCC is the lienholder.

         [¶2] Appellants now bring this interlocutory appeal of the trial court's entry of preliminary injunction. Appellants challenge the trial court's conclusions that they did not comply with Indiana Code Section 9-22-6-2 and that they intentionally induced the vehicles' purchasers to breach their retail installment contracts with FMCC or proceeded with reckless disregard of their contractual relationship. We conclude that the trial court's conclusions are not clearly erroneous, and therefore we affirm.

         Facts and Procedural History

         [¶3] The following facts are undisputed.[2] Brian Fenner is the sole owner and employee of Sperro, an Indiana limited liability company established in February 2015, which is in the business of transporting and storing collateral. Sperro's principal office address, as provided in its articles of organization, is P.O. Box 163 in Camby, Indiana, 46113. The 46113 zip code covers parts of Marion, Morgan, and Hendricks Counties. Fenner testified that P.O. Box 163 is located in Hendricks County. However, Sperro transports vehicles to and stores them at 2534 Bluff Road and 2334 South California Street in Indianapolis, Marion County (collectively "the Storage Yards"). Also, Sperro advertises that its lien auction sales are held at the Bluff Road property. Fenner & Associates LLC is an Indiana limited liability company with its articles of incorporation signed by Fenner, and its principal office address is the Bluff Road address.

         [¶4] Fenner was a former employee of AMI, a Wisconsin corporation registered to do business in Indiana. Dennis Birkley is the sole shareholder of AMI. Fenner and Birkley both worked as repossession/recovery agents and have known each other for over twenty years. Birkley was Fenner's mentor at one time.

         [¶5] FMCC financed some of the vehicles that Sperro transported to and stored in the Storage Yards. Seven of these vehicles ("the Vehicles") are the subject of this lawsuit. The Vehicles' purchasers ("the Borrowers") financed their vehicles through loans from FMCC pursuant to retail installment contracts ("Installment Contracts"). The Borrowers have contractually defaulted on their payments due to FMCC under the Installment Contracts. The Installment Contracts granted to FMCC a continuing security interest in the Vehicles, and FMCC perfected its security interest in each of the Vehicles by placing its liens on the certificates of title. The Installment Contracts required the Borrowers to keep the Vehicles free from the claims of others; not expose the Vehicles to misuse, seizure, confiscation, or involuntary transfer; and not sell, rent, lease, or transfer any interest in the Vehicles or the Installment Contracts without FMCC's written permission. Plaintiff's Ex. 28(d). Upon a Borrower's default under the Installment Contract, FMCC was entitled to demand the full amount owed and take possession of the Vehicle. However, FMCC was not contacted by the Borrowers or Sperro prior to transportation of the Vehicles to the Storage Yards and did not consent to Sperro taking possession of and transporting the Vehicles hundreds of miles from their surrender points. Sperro transported the Vehicles from New Mexico, California, Louisiana, and Arizona to its Storage Yards in Indianapolis.

         [¶6] Fenner operated Sperro according to a certain business plan that the trial court referred to as "the Sperro Plan." Appellants' App. at 27. Under the Sperro Plan, Sperro established contacts with numerous consumer bankruptcy attorneys throughout the United States, who would notify Sperro when a prospective bankruptcy client had a financed vehicle that he or she could no longer afford to make the payments on. Although such vehicles would normally be voluntarily surrendered to the secured creditor, Sperro would offer to pay the client's bankruptcy legal fees in exchange for the client's agreement to have the vehicle towed to Indiana and stored pursuant to a Transporting and Storage Authorization Agreement ("TSAA"). The TSAA authorized Sperro to make the following charges: $1.85 per mile to transport a vehicle to the Bluff Road property; a $75 loading fee and a $75 unloading fee; a $45 per day outdoor storage fee; a $250 preventive maintenance care package; up to an $800 fee if a lien sale proceeding commenced; and a $175 administrative fee if the owner defaulted under the TSAA. Plaintiff's Ex. 36. The TSAA also provided that the storage fees began to accrue on the date that the bankruptcy client entered into the agreement and were due in arrears on the first day of each month. Id. Upon declaring a default under the TSAA, Sperro would issue a notification of lien to the owner of the vehicle and the lienholder, stating that if the demanded amount was not paid within fifteen days, the vehicle would be considered abandoned and any lien or interest in the vehicle would be forfeited. By signing the TSAA, the client acknowledged that Sperro had a security interest in the vehicle and a "right to claim a lien to recover transport/storage and other charges incurred." Id. The Borrowers' execution of the TSAAs and surrender of the Vehicles to Sperro constituted a default on their promises in the Installment Contracts to keep the Vehicles free from the claims of any others, not to expose the Vehicles to seizure, and not to transfer any interest in the Vehicles without FMCC's written permission.

         [¶7] Since Fenner implemented the Sperro Plan, approximately 40% of the vehicles towed by Sperro to Indianapolis have been redeemed by lienholders who paid the towing and storage fees. The people who surrendered vehicles to Sperro pursuant to TSAAs have rarely, if ever, picked up or redeemed a vehicle. Sperro has sold the remaining vehicles at "purported lien auctions" for the alleged towing and storage fees. Appellants' App. at 14. An auctioneer has never been present at any of the lien auctions. Although Sperro purportedly held the lien auctions at the Bluff Road property in Marion County, Sperro advertised the lien auctions in the Hendricks County Flyer, which is not in general circulation in Marion County. Since January 2015, the Indiana Bureau of Motor Vehicles ("BMV") has issued forty-nine new certificates of title for vehicles sold at Sperro's purported lien auctions, and of these, forty-three were sold to AMI, three were sold to Sperro, two were sold to Fenner, and one was sold to William Boger, Fenner's neighbor.

         [¶8] On August 9, 2015, Sperro took possession of three of the Vehicles ("the Group 1 Vehicles") that are the subject of this lawsuit. On August 26 and 27, 2015, Sperro sent a notice of lien for each of these Vehicles to FMCC. The notices of lien failed to correctly identify the proper statutory authority for Sperro's asserted liens. On August 29, 2015, Sperro published a notice of sale for the Group 1 Vehicles in the Hendricks County Flyer. The notice of sale was published within thirty days after Sperro took possession of the Group 1 Vehicles. On September 14 and 15, 2015, AMI purchased the Group 1 Vehicles. On November 9, 2015, Sperro sent notice of lien correction statements to FMCC, asserting possessory mechanic's liens on the Group 1 Vehicles under Indiana Code Section 9-22-6-1.

         [¶9] Also in August and September 2015, Sperro took possession of three more Vehicles ("the Group 2 Vehicles"). On August 24, 2015, Sperro took possession of one of these Vehicles. On September 13, 2015, Sperro sent FMCC a notice of lien. On October 1, 2015, Sperro published a notice of sale for it in the Hendricks County Flyer, and on October 9, 2015, Sperro sold it to Collateral Services of Indiana LLC ("CSI"). Fenner is the sole member of CSI. On August 24 and September 30, 2015, Sperro purchased the other two Group 2 Vehicles. On November 9, 2015, Sperro sent notices of lien to FMCC. On November 14, 2015, Sperro published notices of sale in the Hendricks County Flyer, and on November 28, 2015, Sperro purchased them. The sales of all the Group 2 Vehicles occurred less than fifteen days after the notices of sale were published. Lastly, Sperro took possession of the seventh Vehicle, a Fiesta, on October 7, 2015. Sperro did not send notice to FMCC of its intent to hold a mechanic's lien and has not sold this Vehicle.

         [¶10] As of December 22, 2015, FMCC was owed $159, 141 under the Installment Contracts for the Vehicles. The estimated wholesale value of the Vehicles is $95, 000. The towing and storage liens on the Vehicles totaled $33, 799.50, or approximately $4800 per vehicle. The usual and customary cost of a voluntary surrender in the towing industry is less than $300.

         [¶11] FMCC wrote to the BMV to request that it stop and withhold any title transfer to Sperro or any alleged lien sale purchase of the Vehicles ("the Stop Title Requests"). FMCC sent copies of the Stop Title Requests, along with copies of the Installment Contracts, to Sperro and Fenner prior to the alleged sales of the Group 2 Vehicles.[3] FMCC made written demand for the return of the Vehicles from Sperro and Fenner, which was ignored or refused.

         [¶12] As a result of the Stop Title Requests, and other irregularities in the title applications submitted by Sperro, Fenner, AMI, and CSI, the BMV decided to apply a heightened degree of scrutiny based on the potential for fraud. Applying this additional scrutiny, the BMV rejected approximately forty title applications submitted by AMI for vehicles that it had purchased from Sperro.

         [¶13] Carla Resler, a legal assistant from the office of FMCC's counsel, attempted to monitor one of Sperro's lien auctions. Sperro advertised a lien auction in the Hendricks County Flyer to be held on December 4, 2015, at 6:30 a.m. at the Bluff Road property. At the specified time, Resler went to the Bluff Road property, but no lights were on at the sale site, and Fenner was not present. In fact, Resler was the only person there. She then went to the California Street property, but no one was there either. Nevertheless, Sperro submitted title applications to the BMV for twelve vehicles that it allegedly purchased for cash at the December 4, 2015 lien auction.

         [¶14] In December 2015, FMCC filed a complaint for damages, possession, temporary restraining order, and preliminary and permanent injunctions against Appellants and naming the BMV as a declaratory defendant. FMCC asserted causes of action against Appellants based on conversion, replevin, tortious interference with a contract, and conspiracy to commit fraud. The same day, FMCC also filed a petition for temporary restraining order and preliminary and permanent injunctions. The trial court held a hearing on FMCC's petition, at which FMCC submitted thirty-six exhibits and called four witnesses, and Sperro submitted ten exhibits and called two witnesses.

         [¶15] In January 2016, the trial court issued findings of fact, conclusions thereon, and entry of preliminary injunction and prejudgment possession ("Entry of Preliminary Injunction") in favor of FMCC. The findings of fact provide that since June 2015, five additional complaints have been filed and are being litigated in Marion Superior Court against Fenner, Sperro, CSI, and AMI based on facts similar to those set forth above and in FMCC's complaint ("the Sperro Plan Litigation"). The conclusions provide as follows:

6. Upon a request by a party for prejudgment possession, "the court shall consider the showing made by the parties appearing and make a preliminary determination which party, with reasonable probability, is entitled to possession, use, and disposition of the property, pending final adjudication of the claims of the parties." Ind. Code § 32-35-2-14.
7. FMCC is the superior, proper and first lien holder in the Vehicles, perfected by FMCC's liens noted on the certificates of titles, with priority over any alleged lien or right asserted by Sperro, Fenner, CSI and AMI.
8. Accordingly, in determining whether FMCC is entitled to prejudgment possession, the issue is whether there is a reasonable probability that FMCC's interests in the Vehicles by virtue of its perfected liens noted on the certificates of title are superior to Sperro's claimed interests, if any, by virtue of alleged statutory possessory liens and sales.

….

10. A vehicle subject to a possessory mechanic's lien cannot be advertised for sale sooner than thirty (30) days after the date the vehicle is left in, or comes into, the possession of the claimant and thereafter cannot be sold earlier than fifteen (15) days after the date the advertisement is published. Ind. Code § 9-22-6-2. Accordingly, there is a minimum time period of forty-five (45) days before a vehicle subject to a possessory lien can legally be sold.
….
12. Sperro advertised the sales of the [Group 1 Vehicles] less than thirty (30) days after the date the three vehicles came into the possession of Sperro. Accordingly, the alleged lien sales relating to the [Group 1 Vehicles] to AMI are invalid.
13. Sperro cited to inapplicable Indiana Code sections in the Notices relating to the [Group 1 Vehicles] and acknowledged these misstatements in the Corrected Notices. Accordingly, the lien sales relating to the [Group 1 Vehicles] to AMI are invalid for the additional reason that the Corrected Notices were not transmitted to FMCC prior to sale to AMI.
14. The mechanic's lien sales relating to the [Group 2 Vehicles] were less than (15) days after the date the advertisements were placed in the Hendricks County Flyer. Accordingly, the alleged lien sales purporting to ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.