Winners Circle Group LLC v. Pdm Racing Inc

Winners Circle Group, LLC, Plaintiff,

v.PDM Racing, Inc., and Paul Diatlovich, Defendants.

NO.: 1:10-cv-334-JMS-WGH

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF INDIANA

INDIANAPOLIS DIVISION

FILED: December 10, 2010

ORDER

Presently before the Court is Plaintiff Winners Circle Group, LLC's ("WCG"), Motion for Partial Summary Judgment on the issue of the possession of certain disputed property. [Dkt. 40.]

I.Summary Judgment Standard

A motion for summary judgment asks that the Court find that a trial based on the uncon-troverted and admissible evidence would, as a matter of law, conclude in the moving party's fa-vor and is thus unnecessary. See Fed. R. Civ. Pro. 56(c). When evaluating a motion for sum-mary judgment, the Court must give the non-moving party the benefit of all reasonable infe-rences from the evidence submitted and resolve "any doubt as to the existence of a genuine issue for trial... against the moving party." Celotex Corp. v. Catrett, 477 U.S. 317, 330 n.2 (1986). Nevertheless, "the Court's favor toward the non-moving party does not extend to drawing infe-rences that are supported by only speculation or conjecture." Singer v. Raemisch, 593 F.3d 529, 533 (7th Cir. 2010). The non-moving party must set forth specific facts showing that there is a material issue for trial. Fed. R. Civ. Pro. 56(e); Celotex, 477 U.S. at 323. The key inquiry is the existence of evidence to support a plaintiffs claims or affirmative defenses, not the weight or credibility of that evidence, both of which are assessments reserved to the trier of fact. See Schacht v. Wis. Dep't of Corrections, 175 F.3d 497, 504 (7th Cir. 1999).

II.Background

This case involves ownership and possession of Indy Pro Series racecar chassis No. IP-2015 (the "Racecar"), related equipment (the "Equipment"), ¹ and a carbon fiber camera stand (the "Stand") (collectively, the "Property"). Pursuant to a preliminary injunction previously entered by this Court, the Property is currently in the possession of Defendant PDM Racing, Inc., which is owned by Defendant Paul Diatlovich (collectively, "PDM"). [Dkt. 29.]

On March 10, 2009, PDM filed a "Verified Notice of Intention to Hold Common Law Lien" over the Racecar for work PDM performed for the Racecar's alleged owner. [Dkt. 9-1 at 5.] The same day, PDM filed a Complaint in Marion County Superior Court to foreclose on the lien. [Id. at 8.] The filing documents listed the owner of the Racecar as "American Spirit Capi-tal d/b/a ASR/Nelan Motorsports, LLC" ("AS Capital"). [Id. at 5.]

On March 20, 2009, WCG entered into a settlement agreement with AS Capital to pur-chase the Racecar and the Equipment as part of the termination of a prior contract. [Dkt. 41-3 at 3.] The purchase agreement and accompanying bill of sale transferred ownership of the Racecar and the Equipment from American Spirit Holdings, LLC ("AS Holdings") to WCG. [Id.] AS Holdings is a related company to AS Capital. [Id.] At the time WCG purchased the Racecar and the Equipment, the Property was located at PDM's facility. [Id.]

Following the sale of the Racecar and the Equipment to WCG, WCG member Junior Str-ous participated in a number of races² in the 2009 Firestone Indy Lights racing series using the Property. [Id.; Dkt. 9-1 ¶ 10.] The parties disagree whether Mr. Strous participated in the races as a joint representative of WCG and PDM or solely on WCG's behalf. In addition to WCG's use of the Property, PDM tested and ran the Racecar with a non-WCG driver in early 2010. [Dkt. 21 ¶ 32.]

The parties do not dispute that WCG legally owned the Racecar and the Equipment at all times following the transfer from AS Holdings. [Dkt. 41-3.] WCG also owned the Stand, which was stored at PDM's facility. [Id. at 2.] WCG made multiple requests for PDM to hand over the Property, all of which were refused. [Id.] On June 24, 2010, this Court entered a preliminary injunction order enjoining PDM from "moving, transporting, selling, using, testing, racing, re-pairing, modifying or otherwise altering" the Property beyond actions necessary to properly and safely store the Property. [Dkt. 29.] In its request for partial summary judgment, WCG asks the Court to declare which party is entitled to possession of the Property. [Dkt. 40.]

The Court adds additional facts below as needed.

III.Discussion

A. Possession of the Equipment and Stand

WCG asserts that it is entitled to possession of the Equipment and the Stand because PDM's lien does not cover them and, therefore, PDM has no valid claim of possession over them. [Dkt. 41 at 7-8.] In PDM's lien documents, the property subject to the lien is described as "Indy Pro Series racecar chassis No. IP-2015." [Dkt. 47-1 at 6.] The Equipment and the Stand are not listed as personal property subject to PDM's lien anywhere in the lien documents. [Id.] WCG has introduced evidence that it owns both the Equipment and the Stand. [Dkt. 41-3 at 2 ¶ 9, 6-7.] PDM has not introduced evidence contesting WCG's ownership of the Equipment and the Stand or asserting that PDM has a possessory interest in either. Absent a claim with superior priority, the owner of property is entitled to possession of it. See Murphy v. State, 453 N.E.2d 219, 221 (Ind. 1983) (owner of property has right to possess it). Because the evidence unquestionably shows WCG to be the owner of the Equipment and the Stand, the Court concludes that there is no genuine issue of material fact as to which party is entitled to possession of those items. WCG is entitled to possession of the Equipment and the Stand.

B. Possession of the Racecar

WCG's ownership of the Racecar is uncontested, as is the fact that WCG purchased the Racecar after PDM's lien was filed. [Dkt. 41-3 at 1, 6.] Indiana law permits the acquisition of property subject to possessory lien. See State v. Mileff, 520 N.E.2d 123, 128 (Ind. Ct. App. 1988) (valid lien on personal property may be enforced against subsequent purchaser with notice of the lien). Therefore, the Court must determine whether PDM's lien on the Racecar is valid such that WCG's purchase of the Racecar is subject to it. In addition, the parties dispute whether PDM's post-filing conduct waived any lien it may have had.

1. Validity of PDM's Lien

WCG first contends that PDM's lien on the Racecar is invalid as a matter of law because PDM failed to name the correct owner in its filing documents. [Dkt. 41 at 9-10.] In its initial filings in Marion Superior Court, PDM claimed a common law possessory lien on the Racecar. [Dkt. 9-1 at 5.] To assert an enforceable common law possessory lien, the lien filer must file a "statement of intention to hold a common law lien" in compliance with Indiana Code Section 32- 28-13-5.³ This statement must include "the name of the property owner." Ind. Code § 32-28-13-5(b)(3)(C) (2010).

In this case, PDM's filing named the owner of the Racecar as AS Capital. [Dkt. 47-1 at 6.] However, the parties now agree that AS Holdings, rather than AS Capital, was the owner of the Racecar at the time PDM filed its lien. [Dkts. 41 at 9-10.] Although AS Holdings is a re-lated company to AS Capital with the same managers and owners, [see dkt. 41-3 at 3-5], WCG contends that filing against AS Capital rather than AS Holdings renders PDM's initial filing invalid as a matter of law.

The issue of precision of names for filing common law liens in Indiana appears to be a question of first impression. Neither party has directed the Court to case law interpreting the fil-ing requirements for common law liens, and the Court has not found any cases addressing the issue. Therefore, the Court must turn to the codified filing requirements for common law liens to determine whether PDM's filing is in compliance with those requirements. Apart from requiring the statement of intention to hold a common law lien to include "the name of the property own-er," the statute provides little guidance as to how precise the name requirement is. See Ind. Code § 32-28-13-5 (2010).

Examining the filing requirements for other types of liens provides some guidance, as "[s]tatutory provisions must not be construed standing alone, but must be considered with refer-ence to other sections." Selmeyer v. Se. Ind. Vocational Sch., 509 N.E.2d 1150, 1152 (Ind. Ct. App. 1987). The statutory mechanics lien has the closest filing requirements to those for a com- mon law lien. See Ind. Code § 32-28-3-3 (2010). However, despite the largely parallel lan-guage, the mechanics lien statute specifically provides that "[t]he name of the owner... will be sufficient if [it is] substantially as set forth" in the applicable property records. Ind. Code § 32-28-3-3(c) (2010). This substantial compliance safe harbor is not found in the filing requirements for common law liens. See Ind. Code § 32-28-13-5 (2010). It is clear that the General Assembly knows how to include a substantial compliance limitation when it wishes to do so. Cf. U.S. Gyp-sum, Inc. v. Ind. Gas Co., Inc., 735 N.E.2d 790, 797 (Ind. 2000). When language is present in one section of a statute and absent from another, courts presume that the omission was intention-al and purposeful. See Krause v. Ind. Univ.-Purdue Univ. at Indianapolis, 866 N.E.2d 846, 853 (Ind. Ct. App. 2007). Therefore, the Court concludes that, by failing to include a substantial compliance limitation in the filing requirements for common law liens, the General Assembly meant to preclude reliance on substantial compliance⁴ for property owner names and, instead, require strict compliance. Because AS Holdings is not the same as AS Capital, the Court is forced to conclude that PDM's lien is invalid as a matter of law because it lists the wrong own-er's name.

PDM asserts that even if the lien is invalid, estoppel should preclude WCG from taking advantage of the invalidity. [Dkt. 46 at 1-2.] First, PDM argues that WCG affirmatively ac-knowledged the existence and validity of PDM's lien in the purchase documents for the Racecar. [Id. at 2.] Second, PDM contends that...