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Caterpillar Financial Services Corp., v. Redbud Dock, LLC

United States District Court, E.D. Kentucky, Northern Division

March 1, 2019

CATERPILLAR FINANCIAL SERVICES CORP., PLAINTIFF,
v.
REDBUD DOCK, LLC, APPALACHIAN MINING AND RECLAMATION, PRODUCERS DOCK, LLC, PRODUCER'S COAL, INC., DENNIS JOHNSON and MARK PINSON, DEFENFDANTS.

          MEMORANDUM OPINION AND ORDER

          HENRY R. WILHOIT. JR. UNITED STATES DISTRICT JUDGE.

         This matter is before the Court upon Plaintiff Caterpillar Financial Services Corporation's Motion for Partial Summary Judgment [Docket No. 36]. The matter has been fully briefed by the parties and for the reasons set forth herein, the Court will sustain the motion.

         I.

         Plaintiff filed this civil action seeking to enforce certain guaranty and security agreements pertaining to the purchase of various heavy machinery. The primary obligor is Defendant Redbud Dock, LLC. Defendants Appalachian Mining and Reclamation, LLC, Producers Dock, Inc, Producer's Coal, Inc, Dennis Johnson and Mark Pinson are each guarantors on the various debt instruments.

         Plaintiffs instant motion pertains only to Defendant Mark Pinson and the claim alleged against him in Count V of the Complaint. As set forth in Count V of the Complaint, on or about December 19, 2014, Redbud, by and through Defendant Johnson, executed an Installment Sale Contract with Cecil I. Walker Machinery Co. ("Walker Machinery"), for the purchase of a Caterpillar CM210 continuous miner, Serial No. GEA00813 (the "Continuous Miner"), for the aggregate amount of $1, 601, 900.49, with installment payments and finance charges as set out therein. [Affidavit of Jamie Jarrett, Special Accounts Representative, Caterpillar Financial Services Corporation, Docket No. 36-2, ¶ 7.]

         Pursuant to the terms of the contract, Redbud granted a valid and enforceable lien upon and a security interest in the Continuous Miner to Walker Machinery, in order to secure payment of its indebtedness and the performance of all of Redbud's obligations under the contract. Id. The security interest granted to Walker Machinery included all attachments, accessories and optional features for the Continuous Miner and all substitutions, replacements, additions and accessions thereto and proceeds thereof. Id.

         In order to further secure payment of the contract, Defendant Pinson executed and delivered to Walker Machinery his guaranty agreement (the "Pinson Guaranty"). Id., ¶ 10. Pursuant to the explicit terms of the Pinson Guaranty, Defendant Pinson absolutely and unconditionally guaranteed to Walker Machinery "the prompt payment, performance and satisfaction of all present and future indebtedness and obligations of Redbud due in connection with or arising out of Contract #731535, Transaction Number 2499257, of any kind or nature, present or future, whether direct or indirect (including those acquired by assignment, or otherwise), absolute or contingent, joint or several, due or to become due, existing or hereafter arising, including all amendments, modifications, or superseding documents to each of the foregoing, all charges, expenses, fees, including but not limited to reasonable attorneys' fees, and any other sums chargeable to under any of the foregoing." Id. Exhibit B, § 1.

         Subsequently, Caterpillar Financial provided the purchase money financing, and Walker Machinery executed an Assignment of Installment Sale Contract [Without Recourse] in favor of Caterpillar Financial as assignee (the "Assignment"). Id. Exhibit. C. As a result of the Assignment, Caterpillar Financial became the holder and beneficiary of contract and of the Pinson Guaranty. Pursuant to the terms of the contract and the Pinson Guaranty, Redbud and Pinson were required to make payments to Caterpillar Financial as the assignee of Walker Machinery.

         Caterpillar Financial perfected its security interest in the Continuous Miner by filing a UCC-1 financing statement with the Kentucky Secretary of State on January 9, 2015. Id., ¶ 18.

         The record reveals that Redbud failed to make the payments to Caterpillar Financial as required under the contract and, as such, was in default under the contract. Id., ¶ 19. Pinson, also, failed to make the payments to Caterpillar Financial as required under the Pinson Guaranty. Id., ¶ 26. Therefore, Pinson was also in default of the terms of the Pinson Guaranty.

         The plot then thickens. Defendants Johnson, Redbud, Appalachian Mining and Producer's Coal filed for bankruptcy. Plaintiff was involved in the bankruptcy actions and the appurtenant negotiations for the recovery and sale of its collateral. Among the collateral sold in those proceedings was the Continuous Miner. The final sale price of which was $785, 000.00 and Plaintiff has received the proceeds of the sale. Id., ¶ 23.

         On August 21, 2018, Plaintiff sent Pinson notice of the deficiency, stating that following the above-described bankruptcy court sale of the Continuous Miner and application of the sale proceeds received by Caterpillar Financial, as of August 21, 2018, there is a remaining unpaid balance due and owing thereon to Caterpillar Financial of $1, 004, 062.42, with interest thereon at the rate of 5.95% annual percentage rate or $253.42 per diem from August 21, 2018 until paid, plus late charges and such other costs, expenses and damages incurred. Id. Exhibit E.

         Plaintiff seeks summary judgment against Pinson, arguing that no issues of fact remain as it to validity and enforceability of the Pinson Guaranty and that ...


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