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Wells Fargo Financial Leasing, Inc. v. Pope

United States District Court, S.D. Mississippi, Eastern Division

January 11, 2017

WELLS FARGO FINANCIAL LEASING, INC. PLAINTIFF
v.
WALTER T. POPE DEFENDANT

          MEMORANDUM OPINION AND ORDER

          KEITH STARRETT UNITED STATES DISTRICT JUDGE

         For the reasons below, the Court grants both Plaintiff's Motion for Summary Judgment [18] on its conversion claim and its Motion for Summary Judgment [19] on Defendant's counterclaims.

         I. Background

         Defendant's son, Aaron Pope, was an independent poultry farmer in Covington County, Mississippi, under contract with Sanderson Farms, Inc. Aaron Pope financed his operation by sale-leaseback arrangements and/or loans secured by farm equipment from Defendant, Wells Fargo Financial Leasing, Inc. See Exhibits A-L to Complaint, Wells Fargo Fin. Leasing, Inc. v. Pope, No. 2:15-CV-160-KS-MTP (S.D.Miss. Dec. 10, 2015), ECF Nos. 1-2, 1-3, 1-4, 1-5, 1-6, 1-7, 1-8, 1-9, 1-10, 1-11, 1-12, 1-13. He repaid Wells Fargo via a “Poultry Proceeds (Security Agreement) And Notice to Buyer, ” pursuant to which Sanderson Farms remitted $17, 540.00 from the proceeds of every poultry flock grown by Aaron Pope directly to Wells Fargo, while paying the remaining balance to Pope. See Exhibit G, ECF No. 1-8.

         Around 2013, Aaron Pope filed for bankruptcy in the United States Bankruptcy Court for the Southern District of Mississippi. Before he filed for bankruptcy, he transferred his grower contract with Sanderson Farms to Defendant, Walter Pope. Aaron Pope grew four poultry flocks for Sanderson Farms under Defendant's grower contract, using the equipment which Wells Fargo either owned and/or in which it possessed a security interest. Sanderson Farms did not deduct and remit payments to Wells Fargo from the proceeds of these final four flocks because Defendant, Walter Pope, was not subject to a proceeds assignment. Defendant then transferred the funds to his son or used them to pay his son's other creditors.

         Plaintiff filed this action against Defendant, asserting claims of conversion, tortious interference with contract, tortious interference with business relations, and unjust enrichment. Defendant asserted counterclaims of negligence, defamation, “bad faith prosecution, ” abuse of process, and malicious prosecution. Plaintiff filed Motions for Summary Judgment [18, 19] as to its conversion claim and Defendant's counterclaims.

         II. Standard of Review

         Rule 56 provides that “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see also Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010). “An issue is material if its resolution could affect the outcome of the action.” Sierra Club, Inc., 627 F.3d at 138. “An issue is ‘genuine' if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party.” Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir. 2010).

         The Court is not permitted to make credibility determinations or weigh the evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009). When deciding whether a genuine fact issue exists, “the court must view the facts and the inference to be drawn therefrom in the light most favorable to the nonmoving party.” Sierra Club, Inc., 627 F.3d at 138. However, “[c]onclusional allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not adequately substitute for specific facts showing a genuine issue for trial.” Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002).

         III. Discussion

         A. Conversion

         Plaintiff contends that Defendant converted proceeds from the sale of poultry flocks which it was owed under the various security and financing agreements entered into by Aaron Pope. “To make out a conversion, there must be proof of a wrongful possession, or the exercise of a dominion in exclusion or defiance of the owner's right, or of an unauthorized and injurious use, or of a wrongful detention after demand.” Smith v. Franklin Custodian Funds, Inc., 726 So.2d 144, 149 (Miss. 1998). The plaintiff must present “proof that the defendant either did some positive wrongful act with the intention to appropriate the property to himself, or to deprive the rightful owner of it, or destroyed the property.” Greenline Equip. Co. v. Covington County Bank, 873 So.2d 950, 955 (Miss. 2002). Phrased differently, the defendant must have exercised “some unlawful assumption of dominion over the personal property involved, in defiance or exclusion of the plaintiff's rights, or else a withholding of the possession under a claim of right or title inconsistent with that of plaintiff.” Id. The plaintiff's interest in the property must have been “made known and resisted . . . .” Id. In summary, to prove a conversion claim, Plaintiff must demonstrate that it had a right or interest in the disputed property, that Defendant knew of its right or interest, and that he exercised control or dominion over the property in exclusion of its right or interest. Id.; see also Cmty. Bank, Ellisville, Miss. v. Courtney, 884 So.2d 767, 773-74 (Miss. 2004).

         First, the Court must determine whether Plaintiff had any right to the disputed poultry flock proceeds. According to the Poultry Proceeds (Security Agreement), Aaron Pope was obligated pay Plaintiff “the sum of $17, 540.00 per flock, 5 flocks per year, payable . . . UNTIL FURTHER NOTICE.” Exhibit G, [1-8]. It is undisputed that Aaron Pope failed to make four payments to Plaintiff from the final four flocks he raised, defaulting on his obligations under the Poultry Proceeds (Security Agreement).

         Aaron Pope also entered into various Security Agreements [1-4, 1-5, 1-6, 1-7] related to his leases with Plaintiff. Under three of the Security Agreements, an event of default was “[a]ny default under the Lease or other obligations due under any other Lease Agreements or other financing agreements, or other indebtedness when due . . . .” Exhibits D-F, [1-5, 1-6, 1-7]. Likewise, a fourth Security Agreement [1-4] “secure[d] the payment and performance of each and every debt, liability and obligation of every type and description that Debtor may now or at any time hereafter owe to” Plaintiff, and defined a default as “fail[ing] to pay any or all” such obligations when due. Exhibit C, [1-4]. Therefore, Aaron Pope's failure to make the required payments to Plaintiff upon sale of his four ...


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