Court Opinion

ID: 20245
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:32:29+00
Date Added: 2024-06-11T12:10:38.362485
License: Public Domain

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.

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