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Commercial Credit Group Inc. v. AMH Logistics, Inc.

United States District Court, E.D. California

November 6, 2019

COMMERCIAL CREDIT GROUP INC., Plaintiff,
v.
AMH LOGISTICS, INC., et al., Defendants. Equipment Description Serial Number

          FINDINGS AND RECOMMENDATIONS RECOMMENDING THAT PLAINTIFF'S APPLICATION FOR A WRIT OF POSSESSION BE GRANTED (ECF NO. 7)

         Plaintiff, Commercial Credit Group Inc., (“Plaintiff”) filed this Complaint against Defendants, AMH Logistics, Inc. aka AMH Logistics Inc., (“AMH”); AM2 Logistic Inc., aka AM2 Logistic Inc. (“AM2”); Karnvir Singh (“Singh”); Maninder Kaur Bains (“Bains”); AMK Transport Inc. (“AMK”); and BKSG Transportation, LLC (“BKSG”) (collectively “Defendants”) on August 6, 2019. (ECF No. 1.) Plaintiff alleges that it issued various loans (“the Loans”) to AMH and AM2 and that the remaining Defendants guaranteed performance of these loans. Plaintiff alleges that Defendants have breached their obligations and Plaintiff now seeks an order for a writ of possession pursuant to California Code of Civil Procedure section 512.010, et. seq. (“writ application”), allowing it to possess certain vehicles (referred to herein as the “repossession vehicles”) pledged as collateral for the Loans.

         For the reasons set forth below, the Court recommends Plaintiff's writ application be granted.

         The Court further recommends that Plaintiff's request for a turnover order and private place order in connection with the writ of possession be granted.

         I. BACKGROUND

         Plaintiff's writ application is supported by the Complaint; declaration of Don Pokorny, Plaintiff's senior vice President (“Pokorny Declaration”); and accompanying exhibits. To date, despite service, no Defendant has appeared in this action or offered any opposition to the writ application and evidence in support thereof. The Pokorny Declaration and the exhibits attached to same establish the following:

         A. The Original Loans

         BKSG obtained several loans secured by personal property collateral from Plaintiff. These loans were as follows:

• A negotiable promissory note dated March 10, 2014, to Plaintiff in the original sum of $325, 680.00. In connection with the loan, BKSG executed a security agreement granting a lien to Plaintiff in certain personal property described therein.
• A negotiable promissory note dated June 16, 2014, payable to Plaintiff in the sum of $162, 912.00 and a security agreement granting Plaintiff a lien on various personal property described therein.
• A negotiable promissory note dated February 27, 2017, payable to Plaintiff in the sum of $1, 627, 968.00 and a security agreement granting Plaintiff a lien on various personal property described therein.
• A negotiable promissory note dated March 14, 2017, payable to Plaintiff in the sum of $642, 000.000 and a security agreement granting Plaintiff a lien on various personal property described therein.

         Additionally, Bains[1], Singh[2], AMK, and AM2 all guaranteed the obligations due from BKSG to Plaintiff.

         On November 27, 2017, the BKSG loans referred to above were restructured in accordance with various loan restructuring agreements (“Loan Restructuring Agreements”). Plaintiff submits authenticated copies of the Loan Restructuring Agreements as attachments to the Pokorny Declaration. See (ECF No. 7-4, Exhibit 1.) The loans were restructured because BKSG was in default as to all of the loans and BKSG and AMH asked Plaintiff to transfer and restructure the obligations and indebtedness owed to Plaintiff. AMH then became a Texas corporation which sought to assume existing obligations of BKSG to Plaintiff. BKSG and AMH then entered into various transfer and assumption agreements (“Transfer and Assumption Agreements”) (Id. at Exhibit 2.), authenticated copies of which are attached to the Pokorny Declaration. BKSG remained liable to Plaintiff pursuant to the terms of the Transfer and Assumption Agreements.

         At the time of the Loan Restructuring Agreements, the titles to the various items of personal property, including the repossession vehicles, were in the name of BKSG. Pursuant to the terms of the Loan Restructuring Agreements, BKSG acknowledged that with respect to all titles to the vehicles in which Plaintiff was granted a security interest, Plaintiff was to be the lien holder on the new titles in favor of AMH. Defendants, however, failed to retitle the vehicles pledged as collateral by AMH, thus, according to Plaintiff, breaching the terms of the Loan Restructure Agreements and Transfer and Assumption Agreements. According to the Pokorny Declaration, the titles to the repossession vehicles remain in the name of BKSG, with Plaintiff remaining the lien holder on those titles.

         Because of the aforementioned Loan Restructuring Agreements and Transfer and Assumption Agreements, Plaintiff entered into new loans with AMH and AM2 which are the subject of this lawsuit (collectively referred to herein as “the Loans”) with respect to the claim and delivery of the personal property pledged as collateral for the Loans.

         B. The Loans and Guarantees

         1. AMH Loans

         On or about November 27, 2017, in accordance with the pertinent Loan Restructure Agreement and Transfer and Assumption Agreement, Plaintiff entered into a negotiable promissory note with AMH whereby AMH was obligated to pay Plaintiff the sum of $646, 812.00 (“Note 1”). In connection with Note 1, AMH granted Plaintiff a blanket lien on all of its assets including all goods, chattels, and property described in an attached Schedule A to a security agreement (ECF No. 7-4, Exhibit 5) and any and all of its accounts, accounts receivable, chattel paper, contract rights, documents, equipment, fixtures, general intangibles, goods, instruments, inventory, securities, deposit accounts, investment property and all other property of whatever nature and kind wherever located, including all attachments, accessories, tooling, substitutions, replacements, replacement parts, additions, software and software upgrades, and all cash and non-cash proceeds. (“the Collateral”). The vehicles that were part of the Collateral in connection with Note 1 are referred to as the “Note 1 vehicles.”

         On or about November 27, 2017, in accordance with the pertinent Loan Restructure Agreement and Transfer and Assumption Agreement, Plaintiff entered into a negotiable promissory note with AMH whereby AMH was obligated to pay Plaintiff the sum of $605, 826.00 (“Note 2”).

         In connection with entering into Note 2, AMH executed a security agreement once again granting Plaintiff a blanket lien on the Collateral together with a security interest in the specific vehicles set forth on Schedule A to the accompanying security agreement. See (Id. at Exhibit 9.) These vehicles are referred to as the “Note 2 vehicles.” On or about November 27, 2017, in accordance with the pertinent Loan Restructure Agreement and Transfer and Assumption Agreement, Plaintiff entered into a negotiable promissory note with AMH whereby AMH was obligated to pay Plaintiff the sum of $694, 322.00 (“Note 3”).

         In connection with entering into Note 3, AMH executed a security agreement once again granting Plaintiff a blanket lien on the Collateral together with a security interest in the specific vehicles set forth on Schedule A to the accompanying security agreement. See (ECF No. 7-5, Exhibit 13.) The specific vehicles pledged as collateral in connection with Note 3 are referred to as the “Note 3 vehicles.”

         On or about November 27, 2017, in accordance with the pertinent Loan Restructure Agreement and Transfer and Assumption Agreement, Plaintiff entered into a negotiable promissory note with AMH whereby AMH was obligated to pay Plaintiff the sum of $737, 640.00 (“Note 4”).

         In connection with entering into Note 4, AMH executed a security agreement once again granting Plaintiff a blanket lien on the Collateral together with a Security Interest in the specific vehicles set forth on Schedule A to the accompanying security agreement. See (Id. at Exhibit 18.) The specific vehicles pledged as collateral in connection with Note 4 are referred to as the “Note 4 vehicles.”

         2. AM2 Loans

         On or about June 26, 2018, Plaintiff made a loan to AM2 in the sum of $1, 645, 076.00 (“AM2 Note 1”). Pursuant to the terms of AM2 Note 1 and the accompanying security agreement (Id. at Exhibit 20.), AM2 granted Plaintiff a security interest in its personal property, which is the same description of property as set forth in the security agreements executed by AMH and also referred to collectively as “the Collateral.” In connection with AM2 Note 1, Plaintiff was also granted a specific security interest in certain vehicles (“the AM2 Note 1 vehicles”).

         On or about June 29, 2017, Plaintiff made a loan to AM2 in the sum of $401, 760.00 (“AM2 Note 2”). Pursuant to the terms of AM2 Note 2 and the accompanying security agreement (ECF No. 20), AM2 granted Plaintiff a lien on the same collateral as did AMH. Additionally, Plaintiff was granted a lien on three vehicles set forth in AM2 Note 2 (“AM2 Note 2 Vehicles”).

         3. Guarantees related to the AM2 Loans

         In connection with AM2 Note 1 and AM2 Note 2, Defendants BKSG and AMH executed secured guarantees whereby they agreed that they would guaranty the obligations due from AM2 to Plaintiff. In connection with the granting of the credit by Plaintiff to AM2, BKSG and AMH also granted a further lien in all of their personal property assets. See (ECF No. 7-5, Exhibits 26 and 27.)

         In connection with AM2 Note 1 and AM2 Note 2, Defendants Bains, Singh, and AMK executed guarantees individually obligating themselves to pay all sums due and payable by AM2 to Plaintiff. See (Id. at Exhibit 28.)

         4. Guarantees related to the AMH loans

         In connection with Note 1, Note 2, Note 3, and Note 4, Defendants AM2, BKSG, AMK, and AMH executed a secured guaranty individually obligating these Defendants to pay all sums due and payable to Plaintiff by AMH. In connection therewith, these Defendants also granted Plaintiff a lien on all of their personal property assets. See (Id. at Exhibit 29.)

         Further in connection with Note 1, Note 2, Note 3, and Note 4, Defendants Bains, Singh, and AMK executed guarantees obligating themselves to pay all sums due ...


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