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Regions Bank v. Lenox

United States District Court, E.D. Kentucky, Central Division, Lexington

January 24, 2019

REGIONS BANK, Counter-Claimant,
v.
STEVEN K. LENOX, Counter-Defendant.

          MEMORANDUM OPINION AND ORDER

          Danny C. Reeves United States District Judge

         Regions Bank (“Regions”) loaned Steven Lenox (“Lenox”) $465, 000.00 to buy a houseboat. After Lenox defaulted on the loan, Regions repossessed the houseboat and sold it at a private sale for $287, 500.00. Regions now seeks $1');">140, 682.32, which it claims is the deficiency Lenox owes under the terms of the loan agreement. Lenox contends that Regions may not collect the deficiency because the sale of the houseboat was not commercially reasonable. The parties have filed cross-motions for summary judgment [Record Nos. 47, 49], which will be denied because the Court cannot determine as a matter of law whether the sale of collateral was commercially reasonable.

         I.

         Lenox filed a Complaint in January 201');">18, alleging that Regions Bank harmed him by violating provisions of the Fair Credit Reporting Act (“FCRA”), 1');">15 U.S.C. § 1');">1681');">1 et seq.[1');">1" name="FN1');">1" id= "FN1');">1">1');">1]Lenox reported that after he fell “one or two payments behind” on his loan from Regions, Regions repossessed the houseboat and sold it. When Lenox subsequently applied for a loan with a different lender, he learned that Regions had furnished information to credit reporting agencies indicating that his loan for the houseboat was charged-off and that payment was $1');">10, 942.00 past due. Lenox maintained that, because Regions failed to dispose of the collateral in a commercially reasonable manner, it forfeited the right to collect a deficiency balance and violated the FCRA by providing this information to credit reporting agencies.

         Regions denied these allegations and filed a Counterclaim against Lenox, alleging that it sold the houseboat in a commercially reasonable manner on August 27, 201');">14, and that Lenox remains indebted to Regions in the amount of $1');">140, 682.32. [Record No. 1');">17] In November 201');">18, the Court granted Lenox's unopposed motion to dismiss his claims against Regions, without prejudice. [Record Nos. 44, 45] At that point, Regions' Counterclaim against Lenox became the only remaining issues to be resolved.

         II.

         Summary judgment is appropriate when the moving party demonstrates that there is no genuine dispute regarding any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). See also Celotex Corp. v. Catrett, 1');">17');">477 U.S. 31');">17, 322-23 (1');">1986). When the moving party will bear the ultimate burden of proof at trial, summary judgment is appropriate only when it submits evidentiary materials to establish all elements of the claim or defense. United States v. McCain, No. 06-1');">13830, 2007 WL 2421');">1471');">1, at *3 (E.D. Mich. Aug. 22, 2007) (collecting cases). Put differently, in this situation, the moving party “must satisfy both the initial burden of production on the summary judgment motion-by showing that no genuine dispute exists as to any material fact-and the ultimate burden of persuasion on the claim-by showing that it would be entitled to a directed verdict at trial” Id. (quoting William W. Schwarzer, et al., The Analysis and Decision of Summary Judgment Motions, 1');">139 F.R.D. 441');">1');">1');">139 F.R.D. 441');">1, 477-78 (1');">1991');">1)).

         Conversely, when the moving party does not bear the ultimate burden of proof, it has the initial burden of showing the absence of evidence on an essential element of the non-moving party's case. Celotex Corp., 477 U.S. at 323. And once the movant satisfies that burden, the burden shifts to the non-moving party to “set forth specific facts showing a triable issue.” Matsushita Elec. Indus. Co., Ltd. V. Zenith Radio Corp., 475 U.S. 574, 587 (1');">1986). The Court ultimately must determine “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251');">1-52 (1');">1986). See also Harrison v. Ash, 1');">10');">539 F.3d 51');">10, 51');">16 (6th Cir. 2008).

         The standards for evaluating motions for summary judgment do not change simply because “both parties seek to resolve [the] case through the vehicle of cross-motions for summary judgment.” Craig v. Bridges Bros. Trucking LLC, 823 F.3d 382 (6th Cir. 201');">16) (quoting Taft Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1');">1991');">1)).

The fact that both parties have moved for summary judgment does not mean that the court must grant judgment as a matter of law for one side or the other; summary judgment in favor of either party is not proper if disputes remain as to material facts. Rather, the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.

Id. (internal citation omitted).

         III.

         A secured party may recover a deficiency judgment from a defaulting debtor after selling the collateral for less than the amount the debtor owes. Rexing v. Doug Evans Auto Sales, Inc., 1');">1');">703 S.W.2d 491');">1, 493 (Ky. Ct. App. 1');">1986). It typically is required to establish that “it acted with commercial reasonableness in the holding and disposition of the collateral in question.” Bailey v. Navistar Fin. Corp., 1');">1');">709 S.W.2d 841');">1, 842 (Ky. Ct. App. 1');">1986) (quoting Bank of Josephine v. Conn, 599 S.W.2d 773, 774 (Ky. Ct. App. 1');">1980)). However, Regions contends that Lenox must prove that Regions' sale of the houseboat was commercially unreasonable because he initiated litigation against Regions in the first instance.

         Regions' burden-shifting theory is based largely on the Sixth Circuit's decision in Pivnick v. White, Getgey & Meyer Co., LPA, 552 F.3d 479 (6th Cir. 2009). There, a client brought a legal malpractice claim against a law firm following the firm's failure to prosecute the client's underlying action against a creditor for the allegedly commercially unreasonable sale of a horse that had been repossessed. The law firm stipulated that it failed ...


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