Wells Fargo Bank v. Levin Professional Services, Inc.

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-1468
WELLS FARGO BANK, Indenture Trustee,
Plaintiff - Appellee,
versus
LEVIN PROFESSIONAL SERVICES, INCORPORATED, t/a
Washington Professional Systems,
Defendant - Appellant,
and
HENNINGER MEDIA SERVICES, INCORPORATED, Lessee
of Lease No. 4023,
Defendant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. James C. Cacheris, Senior
District Judge. (CA-03-427-A)
Argued: May 26, 2006 Decided: July 12, 2006
Before WILKINSON and WILLIAMS, Circuit Judges, and Glen E. CONRAD,
United States District Judge for the Western District of Virginia,
sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: John Holt Harman, COGGINS, HARMAN & HEWITT, Silver Spring,
Maryland, for Appellant. Robert A. Jaffe, KUTAK ROCK, L.L.P.,
Washington, D.C., for Appellee. ON BRIEF: Jeffrey S. Jacobovitz,
KUTAK ROCK, L.L.P., Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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PER CURIAM:
Levin Professional Services, Inc. (“Levin”) appeals the ruling
of the district court granting summary judgment for Wells Fargo
Bank (“Wells Fargo”) and denying Levin’s cross motion for summary
judgment.* The action was brought by Wells Fargo, an indenture
trustee, against Levin, an equipment vendor, alleging that Levin
improperly garnished lease payments owed to Wells Fargo. We affirm
the well-considered opinion of the district court.
Factual and Procedural Background
Levin is a Maryland corporation engaged in the sale of
equipment. In the course of its business, Levin sold equipment to
Terminal Marketing Company, Inc. (“Terminal”), which leases
equipment. Terminal then leased the equipment purchased from Levin
to Henninger Media Services, Inc. (“Henninger”) in Lease 4023.
On August 1, 2000, Terminal sold the lease to Terminal Finance
Corporation II (“TFC II”), a special purpose corporation created to
facilitate the sale and assignment of leases. TFC II then sold the
lease to Wells Fargo for cash payments from noteholder
beneficiaries for whom Wells Fargo is trustee. Terminal received
*Oral argument and consideration of this appeal were postponed
pending the U.S. Supreme Court’s review of Wachovia Bank v.
Schmidt, 388 F.3d 414 (4th Cir. 2004). The Supreme Court held that
a national bank is a citizen of the state in which its main office,
as designated in the articles of association, is located. Wachovia
Bank v. Schmidt, 126 S. Ct. 941, 952 (2006). The jurisdictional
question having been resolved, this case was rescheduled for oral
argument during this term.
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payments of $294,098 for the lease, and Wells Fargo took possession
of the lease.
On March 5, 2001, Levin filed suit in the U.S. District Court
for the District of Maryland against Terminal for failure to pay
invoices, including an invoice for the property delivered to
Henninger. Default judgment was granted on July 17, 2001. Levin
registered the default judgment in the U.S. District Court for the
District of Columbia and that court issued a Writ of Attachment to
Asgard Entertainment Group, Inc. (“Asgard”), another entity that
had leased equipment from Terminal which Terminal had purchased
from Levin. On October 18, 2001, Levin entered its foreign
judgment against Terminal in the U.S. District Court for the
Eastern District of Virginia. Shortly thereafter, Wells Fargo was
advised of the default judgment and garnishment entered against
Asgard. Wells Fargo’s counsel advised Asgard that Wells Fargo had
the right to receive payment on Lease 4056, because of the previous
purchase from Terminal. On December 5, 2001, Levin served a
garnishment summons on Henninger.
On January 14, 2002, Wells Fargo intervened in the Asgard
garnishment action by filing its opposition to a motion for
condemnation of property. Henninger answered its summons by
stating that it was obligated to pay Terminal under Lease 4023, but
a magistrate judge later ordered Henninger to deliver those
payments to Levin. On July 15, 2002, Henninger filed for Chapter
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11 bankruptcy. The bankruptcy court eventually granted Wells Fargo
relief from the automatic stay, allowing Wells Fargo to bring suit
to enjoin Henninger from making further payments to Levin. Wells
Fargo brought the instant action on April 7, 2003.
Discussion
We conduct a de novo review of the district courts’ summary
judgment rulings, viewing the record in the light most favorable to
the nonmoving party. Bryant v. Bell Atlantic Md., Inc., 288 F.3d
124, 132 (4th Cir. 2002). Cross motions for summary judgment are
given the same standard of review and “we consider and rule upon
each party’s motion separately and determine whether summary
judgment is appropriate as to each under the Rule 56 standard.”
Monumental Paving & Excavating, Inc. v. Pa. Mfrs’ Ass’n Ins. Co.,
176 F.3d 794, 797 (4th Cir. 1999).
Plaintiff’s Motion for Summary Judgment
In the present case, the district judge considered both of the
motions for summary judgment, granted the plaintiff’s motion, and
denied the defendant’s motion. Wells Fargo Bank Minn., N.A. v.
Levin Prof’l Servs., Inc., 348 F. Supp. 2d 638 (E.D. Va. 2004). In
its motion for summary judgment, Wells Fargo asserted that the
defendant could not meet its burden to show a genuine issue as to
any material fact, and that Levin’s garnishment of the payments
under Lease 4023 was improper because Terminal lacked rights to
both the lease and the lease payments at the time of the
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garnishment. Levin stipulated that the transfer of Lease 4023 to
Wells Fargo occurred prior to any default by Terminal.
We agree with the district court as to the plaintiff’s motion
for summary judgment. Wells Fargo was a bona fide purchaser for
value who took possession of the lease prior to Levin’s garnishment
action. The assignment of the lease from TFC II to Wells Fargo was
valid under New York law, which was the parties’ choice of law to
govern the assignment, and predated Levin’s garnishment action.
See Leon v. Martinez, 638 N.E.2d 511, 513, 84 N.Y.2d 83, 614
N.Y.S.2d 972 (1994) (noting that New York law does not require any
particular phraseology to effect an assignment, “it is only
required that there be a perfected transaction between the assignor
and assignee, intended by those parties to vest in the assignee a
present right in the things assigned”). No genuine issue of
material fact exists as to the validity of the lease assignment.
In granting the plaintiff’s motion for summary judgment, the
district court correctly applied the well-established tenet of
Virginia law that when the judgment debtor has no interest in the
property held by the garnishee, the writ does not create a valid
lien on that property. See, e.g., Int’l Fidelity Ins. Co. v.
Ashland Lumber Co., Inc., 250 Va. 507, 511, 463 S.E.2d 664 (1995)
(“[W]hen the judgment debtor has no interest in the property held
by the suggested garnishee, the writ does not create a valid lien
on that property, and the suggestion for summons in garnishment
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must fail.”); Lynch v. Johnson, 196 Va. 516, 84 S.E.2d 419 (1954).
Levin’s garnishment of the Lease 4023 payments was therefore
improper, and summary judgment was appropriately granted to the
plaintiff.
Defendant’s Motion for Summary Judgment
We also conclude that the district court properly denied
defendant’s motion for summary judgment. We agree that the
defenses asserted by Levin, including laches, res judicata, and
collateral estoppel, are without merit.
Conclusion
A de novo review of the competing motions for summary judgment
here requires the conclusion that the district court properly
granted the plaintiff’s motion for summary judgment and denied the
defendant’s motion.
The judgment of the district court is hereby
AFFIRMED.
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