Woven Treasures, Inc. and Mina Esfahani v. Hudson Capital, L.L.C.

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REL: 12/18/2009 REL: 04/09/2010 As M o d i f i e d on D e n i a l o f R e h e a r i n g Notice: T h i s o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , A l a b a m a A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ( ( 3 3 4 ) 2 2 9 ¬ 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA OCTOBER TERM, 2009-2010 1080296 Woven T r e a s u r e s , I n c . , and M i n a E s f a h a n i v. Hudson C a p i t a l , Appeal SMITH, We from M o b i l e C i r c u i t (CV-07-900102) Court Justice. Woven T r e a s u r e s , court's L.L.C. summary affirm. I n c . , andMina E s f a h a n i judgment i n f a v o r o f Hudson appeal the t r i a l Capital, L.L.C. 1080296 Facts The of action a retail a r i s e s from s t o r e known Hudson C a p i t a l . and Esfahani, referred and P r o c e d u r a l as O l d M o b i l e owner to c o l l e c t i v e l y Capital i n the Mobile Capital improperly they had trespass to of F u r n i t u r e by a seller Woven of the inventory of o r i e n t a l Treasures Court, rugs, (hereinafter as " t h e p l a i n t i f f s " ) , Circuit defendant sued that asserting Hudson Hudson p o s s e s s e d and s o l d rugs t h e p l a i n t i f f s say consigned Richard Clarke. the l i q u i d a t i o n Woven T r e a s u r e s , the History to t h e owner The p l a i n t i f f s property, of O l d Mobile Furniture, asserted claims of conversion, unjust enrichment, negligence, and wantonness. Old known Mobile F u r n i t u r e was t h e name u n d e r w h i c h a s TSR I m p o r t s , Imports defaulted secured i n part on with I n c . ,operated. a loan from Sometime Compass the inventory Bank Capital, a company engaged business, t o see whether purchasing the inventory in Hudson that TSR i t had Furniture. contacted Hudson the i n v e n t o r y - l i q u i d a t i o n Capital of O l d Mobile 2 company i n 2005 of O l d Mobile A r e p r e s e n t a t i v e o f Compass B a n k s u b s e q u e n t l y a was interested i n Furniture. 1080296 Hudson Mobile Capital, after F u r n i t u r e and regarding the interested Furniture. a Uniform merchandise in conducting at purchasing On A u g u s t 2 6 , a walk-through of Old C o m m e r c i a l Code ("UCC") s e a r c h the the store, decided inventory 2 0 0 5 , TSR Imports, that Old of i t Mobile Compass Bank, was and Hudson C a p i t a l e n t e r e d i n t o a t r i p a r t i t e "Agreement to Conduct a 'Going to pay Out Compass liquidation and to and of S a l e ' " whereby Hudson C a p i t a l $385,000 the the continue to for the merchandise a l l proceeds rights agreement, 2005, Bank sale retain unencumbered the of B u s i n e s s of a l l unsold sale f o r 10 would the at Old sale to The on or conduct Mobile as as to August 29, states: "This letter shall serve as the agreement b e t w e e n Hudson C a p i t a l , LLC ... a n d TSR Imports, I n c . , d / b / a O l d M o b i l e F u r n i t u r e ... w i t h r e s p e c t t o t h e c o n d u c t o f a ' G o i n g Out o f B u s i n e s s ' s a l e ( t h e 'Sale') at [ O l d Mobile F u r n i t u r e ' s ] r e t a i l store l o c a t e d a t 967 H i l l c r e s t R o a d , M o b i l e , A l a b a m a 3 6 6 9 5 (the 'Store'). "... [TSR Imports] hereby appoints [Hudson C a p i t a l ] as i t s a g e n t f o r t h e p u r p o s e o f c o n d u c t i n g the Sale i n accordance with the terms of this Agreement. In c o n s i d e r a t i o n of the r i g h t to conduct the Sale, [Hudson Capital] shall pay to [TSR Imports] ( o r as [TSR Imports] shall designate i n [substituted p. 3] the Pursuant about agreement a Furniture well merchandise. begin weeks. right agreed 1080296 writing) the sum of $385,000 (the 'Guaranteed Amount'). A f t e r payment o f t h e G u a r a n t e e d Amount and a l l S a l e E x p e n s e s , [Hudson C a p i t a l ] s h a l l r e t a i n a l l P r o c e e d s o f t h e S a l e as i t s f e e f o r c o n d u c t i n g t h e S a l e h e r e u n d e r . ... [ H u d s o n C a p i t a l ] s h a l l p a y t o [TSR I m p o r t ' s ] s e c u r e d l e n d e r , C o m p a s s B a n k , t h e G u a r a n t e e d A m o u n t on t h e S a l e Commencement D a t e . If [Hudson Capital] has been unable to sell any M e r c h a n d i s e d u r i n g t h e S a l e Term, s u c h M e r c h a n d i s e s h a l l become t h e p r o p e r t y o f [Hudson C a p i t a l ] , f r e e and c l e a r o f a l l l i e n s , c l a i m s and encumbrances." The agreement Imports'] Sale defines owned r e t a i l entered August into Mobile arising the Capital and interest therefrom Capital TSR merchandise Furniture were Reproduction to "all of [TSR S t o r e on the i n and to " file in The Imports also granted to ( i ) a l l of P r o c e e d s , and the ( i i i ) to agreement expressly financing a UCC order Imports statement perfect the lien Imports. the consigned TSR a g r e e m e n t w h e r e b y TSR merchandise t o i t by Among Hudson "a s e c u r i t y Hudson describing granted at the l o c a t e d i n the Store, ( i i ) a l l proceeds authorized located as " 2005, a security Hudson C a p i t a l Merchandise 26, "Merchandise" inventory Commencement D a t e On all the term Richard Galleries, Hudson rugs the Clarke a Capital plaintiffs individually furniture 4 o b t a i n e d from store had Old allegedly and/or Clarke to had 1080296 previously o w n e d a n d t h a t was o p e r a t e d Reproduction Galleries Galleries, and Woven pursuant to which provided b y Woven agreement Inc. 1 In January Treasures Reproduction Treasures by an e n t i t y on entered Galleries a known a s 2001, Reproduction into would consignment an agreement display basis. rugs That states: "Woven T r e a s u r e s h e r e w i t h e n g a g e s R e p r o d u c t i o n G a l l e r i e s , I n c . , t o p r o v i d e space f o r t h e s a l e o f inventory provided by Woven Treasures on an individual consignment b a s i s i n exchange for a commission amount s e t and agreed upon by both parties and i n accordance t o each rug sold by Reproduction Galleries, Inc. Such individual consignments of rugs will b e made by separate documents which a r e s u b j e c t t o t h e terms h e r e i n , and those separate documents shall contain specific reference to the s e l l i n g p r i c e , commission, delivery and i d e n t i f i c a t i o n o f e a c h i n d i v i d u a l r u g . "Once t h e i t e m ( s ) h a v e b e e n s o l d t o a c u s t o m e r by R e p r o d u c t i o n G a l l e r i e s , I n c . , Woven Treasures s h a l l be e n t i t l e d t o t h e p u r c h a s e p r i c e a g r e e d upon by t h e P a r t i e s w h e t h e r o r n o t t h e c u s t o m e r has p a i d C l a r k e was t h e s o l e o w n e r o f TSR I m p o r t s , d o i n g b u s i n e s s as Old Mobile Furniture, and b e f o r e opening Old Mobile Furniture, Clarke had owned another furniture store, Reproduction G a l l e r i e s . The r e c o r d d o e s n o t i n d i c a t e t h a t TSR Imports and R e p r o d u c t i o n G a l l e r i e s , I n c . , were r e l a t e d . The amended complaint asserts that "Woven Treasures and/or Esfahani had consigned to Rick Clarke ('Clarke') doing business as Reproduction Galleries and/or Reproduction G a l l e r i e s , I n c . ... a n u m b e r o f o r i e n t a l c a r p e t s w i t h a t o t a l f a i r market v a l u e o f $89,470.00." 1 5 1080296 in full. Woven T r e a s u r e s shall be e n t i t l e d t o receive the purchase price agreed upon by t h e Parties hereto, less the commission amount f o r R e p r o d u c t i o n G a l l e r i e s , I n c . , w i t h i n t e n (10) d a y s of each s a l e , whether or not t h e customer has p a i d Reproduction G a l l e r i e s , I n c . ,i n f u l l . " Pursuant to this agreement, consignment slips that each consignment slips varied as four s l i p s l i s t e d "Reproduction one slip listed Reproduction "Reproduction two y e a r s had that furniture store "[T]hat's a Clarke to transfer testified Mobile the out that consignee: with would new location and that Esfahani further me." rugs to Old Mobile be opening she a replied, testified rugs and t h a t d i d not that she t o l d personally Furniture, b u t she a t t h e new l o c a t i o n " a n d she r e g u l a r l y sent h e r employees t o O l d M o b i l e 6 Esfahani he w o u l d move t h e c o n s i g n e d Esfahani " I s e e [ s i c ] my agreement, business. he her that listed Furniture." consignment of The G a l l e r i e s and her that told the consigned that rugs. 9 " R e p r o d u c t i o n " ; and told idea." specifically " i t ' s fine executed of the r u g s t o t h e new s t o r e , O l d M o b i l e F u r n i t u r e , him, 11 after Reproduction went in a great listed Gallery/Old executed Galleries testified 4 t o t h e name G a l l e r y " ; one s l i p Treasures Clarke listed Treasures "Reproduction G a l l e r i e s " ;three s l i p s Approximately Woven Woven Furniture 1080296 to inventory that she Furniture the consigned believed was a that of continuation the consigned Old Mobile with the inventory Capital of bank walked H u d s o n C a p i t a l was i n TSR TSR Hudson C a p i t a l , F u l t o n Stokes Clarke further whether any Old agreement 2 Imports i t s loan defaulted to s e l l Furniture, through i t sinterest in and the store on several with Hudson Clarke when whether to purchase the bank's The chief operating officer that during testified the that rugs responded that he in specifically the store of the walk¬ w h e t h e r any o f t h e m e r c h a n d i s e of Mobile location s t o r e was on c o n s i g n m e n t a n d t h a t C l a r k e not. at consignment Stokes, t e s t i f i e d t h r o u g h he a s k e d C l a r k e rugs testified w e r e m o v e d t o t h e new considering Imports. the sought Old Mobile employees interest The of the further into with Reproduction G a l l e r i e s . rugs Furniture, Compass Bank. Esfahani displaying Woven T r e a s u r e s h a d e n t e r e d After rugs. i n the i t was asked were on During a deposition, Esfahani was asked "from your perspective [ d i s p l a y of the consigned rugs at Old Mobile F u r n i t u r e ] was j u s t a c o n t i n u a t i o n o f t h e d o c u m e n t t h a t y o u had s i g n e d w i t h R e p r o d u c t i o n G a l l e r i e s ? " To w h i c h Esfahani responded, "Yes, uh-huh." L a t e r i n a d e p o s i t i o n , however, Esfahani t e s t i f i e d that " I p e r s o n a l l y consigned rugs to Rick Clarke." C o u n s e l f o r Hudson C a p i t a l t h e n a s k e d , " W e l l , t h e contract states that you c o n s i g n e d them t o R e p r o d u c t i o n Galleries; correct?" To w h i c h E s f a h a n i r e s p o n d e d , " Y e s . " 2 7 1080296 consignment had that Clarke some r u g s on those rugs conducted Mobile by and consignment but the a previous search of truth." In conducted an search or on behalf TSR Indeed, i t i s undisputed Imports statements In August an a d v e r t i s e m e n t an Imports i n v e n t o r y was testified, attorney represented that the firm and/or Old Mobile that the r e l a t e d to plaintiffs the consigned f o r the Esfahani on, where testified described her a never with no debtor. filed any rugs. liquidation t h a t she saw and rugs?" Esfahani went t o the employee of Hudson conversation 8 found attempt to speak t h a t , when s h e that Press-Register [ a r e ] my F u r n i t u r e i n an the Treasures as testified s a l e i n the Mobile going Mobile Esfahani firm Woven Furniture deal telling law Esfahani Old claimed "when y o u the up then and not with s p o k e w i t h A n g e l o N i c h o l s , an Esfahani TSR had picked Capital n e v e r know i f t h e y ' r e Furniture. "[w]hat's t h e n went to O l d Clarke. l a d y " had 2005, Hudson C a p i t a l commenced t h e s a l e at Old Mobile thought, or the previously of UCC naming for Stokes you the by financing as affidavit, filings "the he Hudson records F u r n i t u r e to ensure that someone e l s e b e c a u s e , that that evening. UCC with people i n d i s t r e s s , she responded Nichols as with store, Capital. follows: 1080296 " I w e n t up t h e r e a n d I s a i d , I want t o see [Clarke]. A n d [ N i c h o l s ] s a i d ... h e ' s n o t h e r e o r he's no l o n g e r h e r e o r s o m e t h i n g l i k e t h a t . And t h e r e was some l a d y c l e a n i n g t h e f l o o r , a n d I t h i n k she s a i d , h e ' s n o t h e r e anymore. A n d I s a i d , I n e e d t o ... I t h i n k I s a i d I w a n t t o s e e [ C l a r k e ] , my rugs are here. And [ N i c h o l s ] s a i d s o m e t h i n g l i k e , oh, t h o s e r u g s a r e gone, s o m e t h i n g l i k e t h a t . " Esfahani point represented during recall this conversation t h e 10-week l i q u i d a t i o n the date After that o r month the sale, i n which Hudson sale, Capital perfected i n the merchandise proceeds arising therefrom by t h e Alabama Secretary of State. requested market t h a t Hudson C a p i t a l value of the rugs Reproduction In alleging of Old Mobile Galleries. January that consigned 2007, Hudson rugs in security interest. asserted claims enrichment, tender they had Hudson the which they Furniture and t h e statement later a sum e q u a l to the f a i r - originally consigned sued Hudson possessed earlier, trespass to refused. maintained and wantonness. 9 i t s security The p l a i n t i f f s Capital referenced occurred. financing improperly of conversion, negligence, a plaintiffs Capital As filing a t some b u t she c o u l d n o t the conversation interest with occurred an the Capital and sold unperfected plaintiffs to property, unjust 1080296 H u d s o n C a p i t a l s u b s e q u e n t l y moved f o r a summary b a s e d upon cannot the f o l l o w i n g arguments: e s t a b l i s h that consigned rugs; perfected Hudson a for C a p i t a l took the p l a i n t i f f s possession of the ( i i ) t h a t Hudson C a p i t a l p r o p e r l y o b t a i n e d security Capital purchaser Hudson (1) t h a t judgment interest obtained i n the rugs; title value. t o the rugs Hudson and as Capital a and ( i i i ) that good-faith later filed a " s u p p l e m e n t a l m o t i o n f o r summary j u d g m e n t " a s s e r t i n g t h a t t h e p l a i n t i f f s ' claims of j u d i c i a l against estoppel because judgment a g a i n s t C l a r k e to the consigned Hudson testimony Capital consigned and moved r u g s was motion. disputed deposition certain had submitted that an deposition i n response Hudson C a p i t a l inventory of the r e g u l a r l y at Reproduction G a l l e r i e s Furniture d i d not observe Okay. moved a default action related Specifically, testimony taken Esfahani "Q: to strike the p l a i n t i f f s Esfahani's Old Mobile the doctrine had o b t a i n e d i n a breach-of-contract also of Esfahani that Esfahani under rugs. to i t s summary-judgment argued i t were b a r r e d was inadmissible the taking testimony When y o u your rugs hearsay because o f any i n v e n t o r i e s . states: m o v e d -- o r when M r . C l a r k e t o t h e new l o c a t i o n a t O l d 10 The 1080296 Mobile Furniture you said there i n v e n t o r y of your rugs conducted? "A: Uh-huh, "Q: Who "A: I d o n ' t r e m e m b e r who was remember I s e n t few t i m e s over t h e r e . "Q: D i d you c o n d u c t i n v e n t o r y o v e r F u r n i t u r e ] at a l l ? "A: I "Q: Okay. You d i d n o t . You and c o n d u c t i n v e n t o r y ? "A: In granted that inventory? my e m p l o y e e , b u t I s o m e o n e f r o m my s h o p [ a t Old Mobile not. d i d not p e r s o n a l l y go No." an order without the i n i t i a l a written motion, Consequently, trial the f a v o r of Hudson C a p i t a l plaintiffs now o p i n i o n , the summary-judgment motion, summary-judgment and court the the motion entered a trial supplemental to deposition of The on the testimony, Review admissibility trial c o u r t exceeded i t s d i s c r e t i o n i n e x c l u d i n g the Wal-Mart Stores, 11 the Inc., standard 827 So. is of as v. in appeal. reviewing a ruling Bowers strike. summary j u d g m e n t such In court as t o a l l t h e p l a i n t i f f s ' c l a i m s . Standard In an yes. conducted did was 2d evidence, whether 63, the evidence. 71 (Ala. 1080296 2001), this trial Court court admissibility the t r i a l are stated: reviewed of evidence judge "When e v i d e n t i a r y and will on appeal, are w i t h i n n o t be the disturbed rulings 'rulings of on of on an appeal absent ( Q u o t i n g Bama's B e s t P a r t y Inc. Inc., Tupperware, U.S., 723 the sound d i s c r e t i o n abuse of t h a t d i s c r e t i o n . ' " v. the So. 2d 29, 32 Sales, (Ala. 1998).) " T h i s C o u r t ' s r e v i e w o f a s u m m a r y j u d g m e n t i s de novo. W i l l i a m s v. S t a t e Farm Mut. A u t o . I n s . Co., 886 So. 2 d 7 2 , 74 ( A l a . 2 0 0 3 ) . We a p p l y t h e same standard of r e v i e w as the trial court applied. S p e c i f i c a l l y , we m u s t d e t e r m i n e w h e t h e r t h e m o v a n t h a s made a p r i m a f a c i e s h o w i n g t h a t no g e n u i n e i s s u e of material fact exists and that t h e movant i s e n t i t l e d t o a j u d g m e n t as a m a t t e r o f l a w . Rule 5 6(c), A l a . R. C i v . P.; B l u e C r o s s & B l u e S h i e l d o f A l a b a m a v . H o d u r s k i , 899 So. 2 d 9 4 9 , 9 5 2 - 5 3 ( A l a . 2004). I n m a k i n g s u c h a d e t e r m i n a t i o n , we must r e v i e w t h e e v i d e n c e i n t h e l i g h t most f a v o r a b l e t o t h e n o n m o v a n t . W i l s o n v . B r o w n , 496 So. 2d 7 5 6 , 758 (Ala. 1986). Once t h e movant makes a p r i m a facie s h o w i n g t h a t t h e r e i s no g e n u i n e i s s u e o f m a t e r i a l f a c t , the burden then s h i f t s t o t h e nonmovant t o produce ' s u b s t a n t i a l e v i d e n c e ' as t o t h e e x i s t e n c e of a genuine issue of m a t e r i a l fact. Bass v. S o u t h T r u s t B a n k o f B a l d w i n C o u n t y , 538 So. 2d 7 9 4 , 797-98 ( A l a . 1 9 8 9 ) ; A l a . Code 1975, § 1 2 - 2 1 - 1 2 . " Dow (Ala. v. Alabama Democratic Party, 2004). 12 897 So. 2d 1035, 1038-39 1080296 Discussion A threshold produced rugs issue substantial were i n this evidence The p l a i n t i f f s that merchandise at Old Mobile deposition saw sale or the several rugs weeks submitted at the store deposition she s t a t e d t h a t weeks o r months b e f o r e t h e s a l e " [ I ] could see t h e window from deposition employee, but they or door." from during and t h a t floor" have the from he s t a t e d that the store." that that also Hudson Another closed I could produced Capital Capital "[t]here employee s h e "saw r u g s o n of Old Mobile Furniture, p a r t i c u l a r l y 13 several was at Old Mobile Furniture, rugs throughout the Esfahani i n a Hudson at the time that liquidation the store Nichols, the produced Specifically, The p l a i n t i f f s of Hudson C a p i t a l , J o S w i n g l e , t e s t i f i e d the among individuals stated testimony Angelo Hudson evidence she went t o O l d M o b i l e F u r n i t u r e i n v e n t o r i e d the merchandise [were] oriental ever s e e my r u g s f r o m t h e d i s t a n c e testimony i n which and s o l d by were the sale. which but that rugs several before the consigned scant documentary Furniture, testimony i n which oriental plaintiffs consigned the p l a i n t i f f s that possessed produced indicating i s whether indicating among t h e m e r c h a n d i s e Capital. they case a very large 1080296 rug, which, testified as d e s c r i b e d b y S w i n g l e , r e s e m b l e d that Woven Treasures a rug Esfahani had consigned to Reproduction Galleries. The plaintiffs also that employees rugs at Old Mobile among contend o f Woven Treasures Furniture the merchandise that Esfahani's inventoried indicates possessed and s o l d T h i s t e s t i m o n y was s t r i c k e n b y t h e t r i a l hearsay, and t h e p l a i n t i f f s that testimony the consigned the rugs by Hudson were Capital. c o u r t as i n a d m i s s i b l e appeal that decision. We conclude that r e g a r d l e s s of whether E s f a h a n i ' s testimony concerning the inventories is viewed i s inadmissible i n a light plaintiffs genuine among have issue most produced exceeded we need i t sdiscretion Assuming that Capital possessed Hudson Capital possession. when t h e o t h e r evidence favorable to the p l a i n t i f f s , sufficient of material the merchandise Accordingly, hearsay, fact as t o w h e t h e r Hudson not evidence Capital decide to whether create the rugs possessed the and trial a were sold. court i n excluding Esfahani's testimony. t h e r u g s w e r e among t h e m e r c h a n d i s e and s o l d , wrongfully Although the the the issue then converted plaintiffs 14 the Hudson becomes whether rugs to i t s present numerous 1080296 arguments to the a s t o why rugs entering and, Hudson Capital lacks therefore, why the a summary j u d g m e n t i n f a v o r r i g h t s t o and trial court (2) d i d not acquire that Hudson a good-faith response, Hudson not err in entering because, i t contends, consigned security rugs interest. Imports granted merchandise consigned while asserting interest summary i t sperfected We agree. title and to the rugs as that the t r i a l judgment in court i t s favor s e c u r i t y i n t e r e s t i n the the plaintiffs' Stated at Old Mobile and Hudson plaintiffs unperfected another never filed w h e t h e r Hudson rugs, we Furniture Capital perfected i n t e r e s t i n the analyzing i n the a to displayed their C a p i t a l argues senior 3 Hudson way, TSR Hudson C a p i t a l a s e c u r i t y i n t e r e s t i n a l l t h e rugs), the In is in f o r value. In did (1) t h a t a s e c u r i t y i n t e r e s t i n the rugs; C a p i t a l d i d not acquire purchaser erred o f Hudson C a p i t a l , t h e s e a r g u m e n t s c o n s i s t o f two p r i m a r y c o n t e n t i o n s : Capital title begin a ( i n c l u d i n g the this interest, financing statement rugs. C a p i t a l obtained by examining a security TSR Imports' U n d e r § 7 - 9 A - 1 0 3 ( d ) , A l a . Code 1 9 7 5 , a c o n s i g n o r h a s a purchase-money s e c u r i t y i n t e r e s t i n t h e goods t h a t a r e t h e subject of a consignment. 3 15 1080296 ability to grant a security interest i n the consigned As r e f e r e n c e d i n t h e f a c t s , TSR I m p o r t s the Old Mobile Consequently, a consignee the title under § provides Furniture TSR I m p o r t s store was o f t h e r u g s , TSR to the rugs 7-9A-319, as a Imports Code the rugs consignment a consignee identical Ala. on displayed rugs. basis. as t o t h e r u g s . obtained the r i g h t s to those 1975. at of the Section As and plaintiffs 7-9A-319(a) follows: "(a) Consignee has c o n s i g n o r ' s r i g h t s . Except as otherwise provided i n subsection (b), for purposes of d e t e r m i n i n g the r i g h t s of c r e d i t o r s o f , and p u r c h a s e r s f o r v a l u e o f goods f r o m , a c o n s i g n e e , while t h e goods are i n the possession of the c o n s i g n e e , t h e c o n s i g n e e i s deemed t o have r i g h t s and title t o t h e goods i d e n t i c a l to those the c o n s i g n o r had o r had power t o t r a n s f e r . " [4] The Official consequence acquire 4 Comment of t h i s judicial Section § 7-9A-319 notes section, creditors of the consignee liens to and s e c u r i t y 7-9A-319(b) p r o v i d e s as interests that "[a]s can i n the goods." follows: "(b) A p p l i c a b i l i t y of o t h e r law. For purposes of determining the r i g h t s of a c r e d i t o r of a consignee, law other than t h i s a r t i c l e determines the r i g h t s and t i t l e o f a c o n s i g n e e w h i l e goods a r e in the consignee's p o s s e s s i o n i f , under t h i s p a r t , a p e r f e c t e d s e c u r i t y i n t e r e s t h e l d by t h e c o n s i g n o r would have priority over the rights of the creditor." 16 a 1080296 Thus, Hudson C a p i t a l , as a c r e d i t o r Compass B a n k - - a c q u i r e d a security o f TSR Imports--by interest i n the way of consigned rugs under the s e c u r i t y agreement i t had e n t e r e d i n t o w i t h TSR Imports. The 9A-319 following explains corresponds example the to the from the O f f i c i a l operation facts of of t h i s the Comment o f statute and § 7- closely case: " E x a m p l e 1: SP-1 d e l i v e r s g o o d s t o D e b t o r i n a t r a n s a c t i o n c o n s t i t u t i n g a ' c o n s i g n m e n t ' as d e f i n e d i n S e c t i o n 9-102. SP-1 d o e s n o t f i l e a f i n a n c i n g statement. Debtor then grants a s e c u r i t y i n t e r e s t i n t h e goods t o SP-2. SP-2 f i l e s a proper financing s t a t e m e n t . A s s u m i n g D e b t o r i s a m e r e b a i l e e , as i n a 'true' consignment, Debtor would not have any r i g h t s i n the c o l l a t e r a l (beyond t h o s e of a b a i l e e ) s o as t o p e r m i t S P - 2 ' s s e c u r i t y i n t e r e s t t o a t t a c h to any g r e a t e r r i g h t s . N e v e r t h e l e s s , under this s e c t i o n , f o r purposes of d e t e r m i n i n g the r i g h t s of Debtor's creditors, Debtor i s deemed t o a c q u i r e SP-1's r i g h t s . A c c o r d i n g l y , SP-2's s e c u r i t y i n t e r e s t a t t a c h e s , i s p e r f e c t e d by t h e f i l i n g , and, under S e c t i o n 9-322, i s s e n i o r t o S P - 1 ' s i n t e r e s t . " Here, "SP-1" Galleries/TSR Following the i s the p l a i n t i f f s , Imports, example, and the "Debtor" "SP-2" the p l a i n t i f f s agreement w i t h R e p r o d u c t i o n G a l l e r i e s . then went t h a t had out of business, and is i s Reproduction Hudson executed a consignment Reproduction Galleries E s f a h a n i p e r m i t t e d the been c o n s i g n e d to R e p r o d u c t i o n G a l l e r i e s 17 Capital. t o be rugs moved 1080296 to O l d Mobile consignment. Furniture constituting financing with t h e example, statement relating the p l a i n t i f f s " ( i ) a l l of the Merchandise located P r o c e e d s ; and ( i i i ) a l l proceeds 5 Code "(A) filed rugs. TSR i n t e r e s t i n and i n the Store; (ii) a l l a r i s i n g therefrom." The term " c o n s i g n m e n t " i s d e f i n e d 1975, as "a t r a n s a c t i o n , person delivers of s a l e a n d : never to the consigned I m p o r t s then g r a n t e d Hudson C a p i t a l a s e c u r i t y to another 5 Continuing a i n a transaction Hudson i n § 7-9A-102(20), regardless of i t s form, i n which a goods t o a merchant f o r t h e p u r p o s e the merchant: " ( i ) d e a l s i n goods o f t h a t k i n d under a name o t h e r t h a n t h e name o f t h e p e r s o n making d e l i v e r y ; "(ii) i s n o t an a u c t i o n e e r ; a n d " ( i i i ) i s n o t g e n e r a l l y known b y i t s c r e d i t o r s t o be s u b s t a n t i a l l y e n g a g e d i n s e l l i n g t h e goods o f o t h e r s ; "(B) with respect to a g g r e g a t e v a l u e o f t h e goods the time o f d e l i v e r y ; each delivery, the i s $1,000 o r more a t "(C) the goods are not i m m e d i a t e l y b e f o r e d e l i v e r y ; and "(D) interest consumer t h e t r a n s a c t i o n does n o t c r e a t e t h a t s e c u r e s an o b l i g a t i o n . " 18 a goods security Ala. 1080296 Capital then interest filed i n the proceeds a r i s i n g the language Capital's] filing, proper merchandise security the of Old Mobile example, under Section interest." 9A-322(a)(2) ("A a perfected conflicting 9-322, The example make several § 7-9A-319 does not the p l a i n t i f f s argue arguments apply to that transfer t o Hudson C a p i t a l . and [the also has This that the that this as the TSR any r i g h t s i n t h e r u g s t h a t under individually to § 7- priority " ) . from the rugs i n v i o l a t i o n obtained Clarke the interest a c o n s i g n e e o f t h e r u g s and t h a t , t h e r e f o r e , contention See by of rugs. from plaintiffs' senior security First, case. [Hudson a p u r c h a s e r f o r v a l u e of goods r i g h t s to the plaintiffs is the Following i s perfected s e c u r i t y i n t e r e s t ... unperfected to i t s and "[a]ccordingly, a c o n s i g n e e , d i d n o t p o s s e s s and s e l l plaintiffs' as Furniture § 7 - 9 A - 3 1 9 O f f . Cmt. Thus, H u d s o n C a p i t a l , as the statement interest attaches, plaintiffs'] over financing from the s a l e of t h a t merchandise. of and, a to why facts Imports the of this never TSR I m p o r t s never § 7-9A-319 i t c o u l d a r g u m e n t i s p r e m i s e d on rugs were was consigned consignment never only the to expired. 6 The p l a i n t i f f s , i n t h e i r r e p l y b r i e f , a s s e r t t h a t Hudson C a p i t a l has " a d m i t t [ e d ] t h a t [ t h e p l a i n t i f f s ] c o n s i g n e d t h e 6 19 1080296 This contention i s unsupported by the evidence because the consignment agreement c l e a r l y s t a t e s t h a t " [ t ] h i s agreement i s made a n d e n t e r e d into effective as o f t h i s the 15[th] J a n u a r y , 2 0 0 1 b y a n d b e t w e e n Woven T r e a s u r e s Galleries, Inc.," and C l a r k e signed day o f and R e p r o d u c t i o n t h e agreement only "as representing Reproduction G a l l e r i e s , Inc." A d d i t i o n a l l y , none of as the consignment whereas a t l e a s t Mobile slips a apart listed Mobile listed "Reproduction as t h e c o n s i g n e e . from the fact (Emphasis that between the p l a i n t i f f s Furniture) t h e rugs arose t o move Mobile F u r n i t u r e and t o d i s p l a y basis. from when Clarke consignment Clarke one the consignee, Galleries/Old added.) of the consignment O l d M o b i l e F u r n i t u r e a s a c o n s i g n e e , we f i n d consignment Old listed one s l i p Furniture" Even slips Under a n d TSR I m p o r t s the p l a i n t i f f s Reproduction the rugs Alabama law,a (d/b/a permitted Galleries at that that to Old s t o r e on a "consignee" i s "a C a r p e t s o n l y t o R i c k C l a r k e , " and they s u p p o r t t h i s a s s e r t i o n w i t h a c i t a t i o n t o page one o f Hudson C a p i t a l ' s b r i e f . See p l a i n t i f f s ' r e p l y b r i e f , a t p . 1. The p l a i n t i f f s ' assertion is without merit. Page one o f Hudson C a p i t a l ' s b r i e f m e r e l y s t a t e s t h a t " E s f a h a n i 'as r e p r e s e n t a t i v e f o r Woven T r e a s u r e s ' e n t e r e d i n t o a n a g r e e m e n t w i t h R i c k C l a r k e 'as r e p r e s e n t a t i v e for Reproduction G a l l e r i e s , I n c . ' f o r the consignment of r u g s , the d e s c r i p t i o n of which i s s e t out i n a d i f f e r e n t s e t of documents." H u d s o n C a p i t a l ' s b r i e f , a t p . 1. 20 1080296 merchant to w h i c h goods are d e l i v e r e d 9 A - 1 0 2 ( 1 9 ) , A l a . Code 1 9 7 5 , and i n a consignment," there i s no requirement a c o n s i g n m e n t be i n w r i t i n g ; t h e t e r m " c o n s i g n m e n t " in § 7-9A-102(20), regardless merchant also of i t s form, Black's "consign" as Dictionary "[o]ne Factors leaves Here, Hudson that the and transaction, added.) 2004) are See (defining consigned," rugs of the and of a c o n s i g n e e who their Thus, the p l a i n t i f f s we rugs will to that likewise Old Mobile conclude that t o Hudson C a p i t a l rugs a is a n d TSR I m p o r t s a r o s e . to t r a n s f e r to the to e s t a b l i s h delivered of s a l e . 21 where consignor."). attempt were plaintiffs. with exists t h e goods o f o t h e r s , and in their title goods t o a ed. 'consignment' possession the a b i l i t y rights (8th goods on b e h a l f their consignment between "a that to another's custody or c h a r g e " ) ; in selling f o r the purpose I m p o r t s had 327 h i s or her p r o p e r t y had as (Emphasis whom ("A the p l a i n t i f f s established 7-9A-319 1 the goods Capital Furniture to § s u b s t a n t i a l l y engaged work to s e l l 1975, of s a l e as " [ t ] o t r a n s f e r C.J.S. consignor Law Code 7- i s defined i n which a person d e l i v e r s f o r the purpose "consignee" 35 Ala. § identical under to those a TSR § of 1080296 The 319 plaintiffs a l s o c o n t e n d t h a t t h e e x a m p l e f r o m § 7-9A- i s inapplicable example this states case Mobile t o the p r e s e n t case that they "SP-1 d e l i v e r s d i d not a c t u a l l y F u r n i t u r e because does refers to possession Second, not use a the term situation term Here, i t i s transferred rugs, undisputed Such goods the because they s a y , TSR Hudson C a p i t a l a s e c u r i t y i n t e r e s t Furniture. "all that TSR I m p o r t s Imports d i d not i n the rugs. of the Merchandise "Merchandise" as grants a security located 22 owned § grant T h i s argument interest i n the Store" " a l lof Merchant's from d i d n o t own t h e i s b a s e d on t h e e x p r e s s t e r m s o f t h e s e c u r i t y a g r e e m e n t , state here. voluntarily the example TSR I m p o r t s the of possession." plaintiffs that in 7-1-201(15), to Old Mobile contend i t merely exists in § this o f § 7- are a situation i s defined that the p l a i n t i f f s therefore, "the to Old find text rather, as " v o l u n t a r y t r a n s f e r i s inapplicable and, which We the and i n the rugs the actual "deliver"; p o s s e s s i o n of the rugs Finally, 7-9A-319 in "delivery" "General D e f i n i t i o n s , " "deliver" First, of the consignee." the to Debtor," C l a r k e moved t h e r u g s . a r g u m e n t t o be w i t h o u t m e r i t . 9A-319 goods by a r g u i n g t h a t i n and t o and then retail which define inventory 1080296 located at the Store (Emphasis added.) security agreement TSR Imports We as a this consignee title to the purposes In the own the goods the Commencement plaintiffs cover the argument of Sale short, does not d i d not find on the consigned unpersuasive rugs, is identical because "deemed to those to i s not but the "owned" term "own" is TSR have because Imports, and for of purchasers In agreement, rugs the rights § 7-9A-319(a) term that c o n s i g n o r had" the g o o d s s u c h as Hudson C a p i t a l . the argue " rugs. of d e t e r m i n i n g the r i g h t s addition, Date for value (emphasis d e f i n e d i n the defined in of added). security Black's Law D i c t i o n a r y as " [ t ] o r i g h t f u l l y h a v e o r p o s s e s s a s p r o p e r t y ; t o have legal 2004). Here, consignee, identical The to." TSR and B l a c k ' s Law Imports i t was Dictionary rightfully deemed to 1137 possessed the rugs as to the rugs have title (8th t o t h a t o f Woven T r e a s u r e s , t h e c o n s i g n o r . 9A-319(a). Capital title We conclude a security plaintiffs that TSR interest i n the further argue found t o have a s e c u r i t y interest Imports consigned that granted See ed. § a 7- Hudson rugs. i f Hudson Capital is i n the rugs, i t s i n t e r e s t i s i n f e r i o r t o t h e i r u n p e r f e c t e d s e c u r i t y i n t e r e s t b e c a u s e Hudson 23 1080296 Capital perfected its liquidation sale been Specifically, sold. had interest ended and the in some the of rugs or plaintiffs after a l l the rugs the had contend: "Since Hudson's p u t a t i v e s e c u r i t y i n t e r e s t i n the Carpets (the original putative collateral) was unperfected at a l l times through the Sale, and v a n i s h e d upon p u r c h a s e by c o n s u m e r s of e a c h C a r p e t during the Sale pursuant to § 7-9A-320(a) ... H u d s o n c a n n o t p e r f e c t a, or o b t a i n a p e r f e c t e d , security interest in the 'proceeds' after the C a r p e t s had p r e v i o u s l y been s o l d d u r i n g the S a l e . " [ 7 ] Plaintiffs' brief, a t p. 70. because Hudson Capital's attached before the had disposed been clearly in provides collateral thereof ... security on of. that began Section "(1) and (2) a proceeds § 7-9A-320(a) interest i n the and i s without interest continued 7-9A-315(a), in Ala. sale ... or interest collateral." to argue merchandise that the Code ... other rugs 1975, disposition to any plaintiffs' Hudson "vanished rugs continues attaches The merit the after a security interest security of argument security notwithstanding identifiable reliance sale This upon Capital's purchase by c o n s u m e r s " i s m i s g u i d e d b e c a u s e § 7-9A-320 s t a t e s o n l y that S e c t i o n 7-9A-320(a) p r o v i d e s , i n p e r t i n e n t p a r t : "[A] buyer i n ordinary course of b u s i n e s s ... takes f r e e of a s e c u r i t y i n t e r e s t c r e a t e d by t h e b u y e r ' s s e l l e r , even i f t h e s e c u r i t y i n t e r e s t i s p e r f e c t e d and t h e b u y e r knows o f i t s existence." 7 24 1080296 a buyer i n the ordinary course of business takes free of a seller's s e c u r i t y i n t e r e s t i n the goods, not t h a t the s e l l e r ' s security i n t e r e s t vanishes. perfected its i n t e r e s t i n any and t h e f a c t r e m a i n s financing when H u d s o n C a p i t a l i t s s e c u r i t y i n t e r e s t i n the rugs, security rugs, Accordingly, proceeds that statement r e f l e c t i n g from i t also the sale the p l a i n t i f f s their perfected never of the filed a s e c u r i t y i n t e r e s t i n the rugs. Based on foregoing, trespass conversion, the to negligence, and Capital a rugs. has Accordingly, summary judgment plaintiffs' claims. must security the t r i a l i n favor plaintiffs' property, wantonness superior the court unjust a l l fail interest claims enrichment, because i n the Hudson consigned d i d not e r r i n e n t e r i n g of Hudson Capital of as to a a l l the 8 We pretermit discussion of whether Hudson Capital c o n s t i t u t e d a g o o d - f a i t h p u r c h a s e r o f t h e r u g s u n d e r § 7-2¬ 4 0 3 , A l a . C o d e 1 9 7 5 , b e c a u s e we c o n c l u d e t h a t H u d s o n C a p i t a l had a s u p e r i o r s e c u r i t y i n t e r e s t i n t h e r u g s . Additionally, Hudson C a p i t a l does n o t r e s p o n d t o t h e p l a i n t i f f s ' arguments that the t r i a l court erred i n granting Hudson Capital's s u p p l e m e n t a l summary-judgment m o t i o n , i n w h i c h i t a r g u e d t h a t the p l a i n t i f f s ' c l a i m s were b a r r e d by t h e d o c t r i n e o f j u d i c i a l estoppel. This Court need not review the order of the t r i a l c o u r t i n s o f a r as i t g r a n t e d t h e s u p p l e m e n t a l summary-judgment m o t i o n b e c a u s e we a f f i r m t h e t r i a l c o u r t ' s i n i t i a l summary judgment and i t s d i s m i s s a l o f a l l t h e p l a i n t i f f s ' c l a i m s w i t h 8 25 1080296 Conclusion We Hudson affirm the t r i a l court's summary j u d g m e n t i n f a v o r o f Capital. AFFIRMED. Cobb, C . J . , and W o o d a l l , Parker, prejudice. 26 a n d Shaw, J J . , c o n c u r .

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