Beach Community Bank v. Disposal Services, LLC

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
BEACH COMMUNITY BANK, NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Appellant, DISPOSITION THEREOF IF FILED
v. CASE NO. 1D15-5330
DISPOSAL SERVICES, LLC,
Appellee.
_____________________________/
Opinion filed September 21, 2016.
An appeal from the Circuit Court for Okaloosa County.
William F. Stone, Judge.
Charles F. Beall, Jr., of Moore, Hill & Westmoreland, P.A., Pensacola, for
Appellant.
Bill R. Hutto of Hutto & Bodiford, Panama City, for Appellee.
B.L. THOMAS, J.
Appellant, Beach Community Bank (Beach), appeals the trial court’s order
granting final summary judgment in favor of Appellee, Disposal Services, LLC
(Disposal), with respect to Beach’s claim of conversion, and the trial court’s denial
of Beach’s motion to amend its complaint to add a cause of action for replevin.
Beach contends that the trial court erred in interpreting section 679.3151, Florida
Statutes, to preclude a claim for conversion where replevin is still an available
remedy. Beach argues that a claim for conversion is appropriate when the
elements for conversion are satisfied, regardless of whether replevin is an available
remedy. We reverse the trial court’s order granting final summary judgment,
because conversion remains a valid cause of action here. In light of our reversal
of final summary judgment, we decline to address Beach’s argument that the trial
court abused its discretion in denying Beach’s motion to amend.
Beach is the successor in interest of creditors that made loans to Solid Waste
Haulers of Florida (Debtor), which were secured by 308 roll-off containers
(Containers) worth a total of $400,800. 1 The original creditor properly filed a
UCC-1 with the Florida Secretary of State perfecting its security interest in the
Containers. Through a series of transactions, and without notice to Beach, Debtor
sold the Containers to Disposal; however, Debtor did not apply the sale proceeds to
the loans and subsequently defaulted on its loan obligations to Beach. Following
Disposal’s acquisition of the Containers and Debtor’s default on the loans, Beach
made written demand to Disposal for either repayment of the loans in full or return
of the Containers. When Disposal neither paid Beach nor returned the Containers,
Beach filed a complaint against Disposal alleging that Disposal converted
1
This court agrees that these Containers are non-fungible goods.
2
the Containers.
In response, Disposal filed a motion for summary judgment. The trial court
granted the motion, finding that Beach could not sue for conversion as a matter of
law, because the option of replevin was still available as a remedy, as the
Containers are non-fungible goods that could be located and subject to
repossession. In response, Beach moved for rehearing and leave to amend its
complaint to add a cause of action for replevin. Both motions were denied. The
trial court accepted the facts as alleged in Beach’s complaint, but found, as a
matter of law, that Beach could not pursue a cause of action for conversion.
When reviewing a trial court’s grant of final summary judgment, the
standard of review is de novo. S. Nat’l Track Servs. v. Gilley, 152 So. 3d 13, 16
(Fla. 1st DCA 2014). Furthermore, “[i]t is well settled that when ruling on a
motion for summary judgment, courts must construe the facts in a light most
favorable to the non-moving party.” Courtney v. Fla. Transformer, Inc., 549 So.
2d 1061, 1065 (Fla. 1st DCA 1989). “Summary judgment is proper if there is no
genuine issue of material fact and if the moving party is entitled to judgment as a
matter of law.” Black Bus. Inv. Fund of Cent. Fla., Inc. v. State, Dep’t of Econ.
Opportunity, 178 So. 3d 931, 933 (Fla. 1st DCA 2015).
“A conversion claim is based on a ‘positive, overt act or acts of dominion or
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authority over the money or property inconsistent with and adverse to the rights of
the true owner.’” Columbia Bank v. Turbeville, 143 So. 3d 964, 969 (Fla. 1st
DCA 2014) (quoting S.S. Jacobs Co. v. Weyrick, 164 So. 2d 246, 250 (Fla. 1st
DCA 1964)). In Turbeville, this court held that a bank’s allegations were sufficient
to allege conversion when the bank pled that “‘[the defendant] intentionally
engaged in unauthorized conduct when she (a) withdrew funds from the accounts
at issue’ depriving [the victim] of her ‘immediate right to possess the funds’ and
(b) failed to return the funds upon demand.” 143 So. 3d at 969 (emphasis added).
Generally, before a conversion can occur when a party was previously in
rightful possession of another’s property, the following three factors must be
present: first, the party in possession must be informed that continued possession
of the property is no longer permitted; second, the rightful owner must demand the
return of the property; and third, the party holding the property must fail to comply
with the demand. Black Bus. Inv. Fund, 178 So. 3d at 937.2 In the context of
secured transactions, once default has occurred, a secured creditor has the right to
possess the collateral and is authorized to take possession of the collateral.
Spellman v. Indep. Bankers’ Bank of Fla., 161 So. 3d 505, 508 (Fla. 5th DCA
2
We do not address whether Disposal was previously in rightful possession of
Beach’s property.
4
2014). See also Bel-Bel Int’l Corp. v. Cmty. Bank of Homestead, 162 F.3d 1101,
1108 (11th Cir. 1998) (holding that, under Florida law, a lienholder is considered
to be the “owner” of property for the purposes of conversion if he has the present
right to possession). In Spellman, a trustee appealed a summary judgment on a
claim for conversion. The trustee pledged stock certificates to the Bank as
collateral for securing a loan. After default, the bank sued the trust for a monetary
judgment. The trustee objected on the grounds that the bank should be required to
sell or otherwise dispose of the collateral and then pursue a deficiency judgment
against the trust. Spellman, 161 So. 3d at 507. The court rejected the trustee’s
argument, interpreting section 679.601, Florida Statutes, as neither dictating nor
proscribing the election of a particular remedy. The court held that a secured
creditor with present rights to possession could repossess collateral while
concurrently pursuing a monetary judgment to recover the full amount due and
then dispose of the collateral. Id. at 508. 3
Here, the following six facts were pled by Beach in its complaint and not
refuted in Disposal’s motion for summary judgment: (1) Debtor borrowed
$400,800, giving the Containers as security for the loan; (2) Beach, as the
3
However, a secured creditor “can obtain only one satisfaction of the debt.” 68A
Am. Jur. 2d Secured Transactions § 445 (2016).
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successor in interest of the creditor that made the loan, has a valid and enforceable
lien in the Containers; (3) without Beach’s authorization, Debtor sold the
Containers to Disposal; (4) some time after the unauthorized sale, Debtor defaulted
on its loan; (5) after becoming aware of the sale of the Containers, Beach
demanded that Disposal either turn over the Containers or pay the balance of the
loan in full; and finally (6) Disposal failed to comply with Beach’s demand. Taken
as true, these allegations are sufficient to plead an actionable claim for conversion.
Regardless of whether Disposal acquired rightful possession of the
Containers when it purchased them from Debtor, once the Debtor defaulted on its
loan obligations, Beach gained the right to possess the Containers as collateral
securing the debt. Once Beach informed Disposal that Beach was a creditor with
rights to possess the Containers and demanded their return, Disposal had the
opportunity to comply with the proper demand. By refusing to comply with
Beach’s lawful demand, Disposal took an overt action inconsistent with Beach’s
possessory rights, thereby completing the necessary elements for a claim of
conversion.
When an unauthorized disposition of collateral occurs, a secured party has
numerous cumulative remedies at its disposal; it is not forced to elect a single
remedy. See Taylor Rental Corp. v. J.I. Case Co., 749 F.2d 1526, 1529 (11th Cir.
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1985). Furthermore, merely because Disposal still has the Containers in its
possession and can return them to Beach does not preclude Beach from pursuing
conversion. See Seibel v. Soc’y Lease, Inc., 969 F. Supp. 713, 719 (M.D. Fla.
1997) (holding that debtor’s petition alleging that repossession agency wrongfully
took their truck and had control over it for period of time stated cause of action
under Florida law for conversion, even though agency did not permanently deprive
debtors of their truck and returned it in the same condition as it was at the time of
repossession); Mayo v. Allen, 973 So. 2d 1257, 1258 (Fla. 1st DCA 2008) (noting
the well-settled principle that “conversion is an unauthorized act which deprives
another of his property permanently or for an indefinite time”). Here, once
Disposal failed to comply with Beach’s demand to either return the Containers or
repay the balance of the loan, the alleged act of conversion was complete. Thus,
we reverse the trial court’s order granting final summary judgment.
REVERSED and REMANDED.
WETHERELL and WINSOR, JJ., CONCUR.
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