Young v. Amer Honda Fin Corp

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30088
RUDY O. YOUNG, on behalf of A. Angelle, Inc., Chapter 7 Trustee,
Appellee-Cross-Appellant,
VERSUS
HIBERNIA NATIONAL BANK, formerly known as Calcasieu
Marine National Bank of Lake Charles,
Appellant-Cross-Appellee,
VERSUS
AMERICAN HONDA FINANCE CORPORATION,
Appellee-Cross-Appellee-Cross-Appellant,
and
WALTER UMPHREY; JEFF BRANICK,
Appellees-Cross-Appellees,
* * * * *
HIBERNIA NATIONAL BANK, formerly known as Calcasieu
Marine National Bank of Lake Charles,
Appellant-Cross-Appellee,
VERSUS
AMERICAN HONDA FINANCE CORPORATION,
Appellee-Cross-Appellee-Cross-Appellant,
and
WALTER UMPHREY; JEFF BRANICK,
Appellees-Cross-Appellees,
VERSUS
RUDY O. YOUNG, on behalf of A. Angelle, Inc., Chapter 7 Trustee,
Appellee-Cross-Appellant,
* * * * *
AMERICAN HONDA FINANCE CORPORATION,
Appellee-Cross-Appellant,
VERSUS
HIBERNIA NATIONAL BANK, formerly known as Calcasieu
Marine National Bank of Lake Charles,
Appellant-Cross-Appellee.
Appeals from the United States District
Court for the Western District of Louisiana
(98-CV-1727)
February 29, 2000
Before POLITZ and DAVIS, Circuit Judges, and RESTANI,* Judge.
PER CURIAM:**
We affirm the judgment of the district court affirming the
bankruptcy court’s opinion in this matter, essentially for the
reasons stated both by the district court and the bankruptcy
court in their thorough opinions, except as to one issue.
Neither the bankruptcy court nor the district court resolved
American Honda Finance Corporation’s (“AHFC”) claim that it is
entitled to a conversion judgment based on the proceeds from used
car sales which were received by Hibernia National Bank
*
Judge of the United States Court of International Trade,
sitting by designation.
**
Pursuant to 5th Cir. R. 47.5, the Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5th Cir. R.
47.5.4.
2
(“Hibernia”) from the Debtor. We find no reason to set aside the
lower courts’ conclusion that Hibernia did not have a purchase
money security interest (“PMSI”) in the used cars pursuant to La.
Rev. Stat. Ann. § 10:9-107 (West 2000), and that AHFC had a first
ranking security interest in the used car proceeds.1 But the
bankruptcy court did not proceed further and find AHFC’s proceeds
were or were not converted by Hibernia. While neither party
offers an explanation for the lack of a judgment for either party
as to this claim, Hibernia asserts, alternatively, as it did
before the district court, that if it did not have a PMSI, a
conversion judgment should not be entered against it because the
payments it received were made “in ordinary course,” pursuant to
Comment 2(c) to La. Rev. Stat. Ann. § 10:9-306 (West 2000).2
The court remands this matter for a determination of AHFC’s
claim against Hibernia for conversion of used car proceeds. Upon
remand, this court’s opinion in ITT Commercial Fin. Corp. v. Bank
of the West, may be of assistance in analyzing the complicated
facts of this case, particularly if it becomes necessary to
determine whether Hibernia knew, or should have known, that AHFC
had a first ranking security interest in the used cars. See 166
F.3d 295, 308 (5th Cir. 1999) (interpreting Texas UCC and
1
Hibernia appealed the determination that it lacked a PMSI
as to the used cars. AHFC appealed the absence of a conversion
judgment in its favor as to used car proceeds.
2
The bankruptcy court should consider whether it should
hear Hibernia’s alternative argument, which Hibernia apparently
did not raise until AHFC appealed the lack of a conversion
judgment to the district court. Because of the muddled record on
this issue, we cannot conclude that this issue was waived.
3
determining that for purposes of Comment 2(c) to § 9-306, “a
payment is within the ‘ordinary course’ if made in the operation
of the debtor’s business and if the recipient of the payment
acted in good faith and without knowledge of or recklessness
about whether the payment violated a third party’s security
interest.”)
Accordingly, we REMAND this case to the district court for
further proceedings consistent with this opinion.
4