Rebel Auction Co. v. Citizens Bank, 343 Ga. App. 81(Ct. App. Ga. 2017)
The Citizens Bank (the “Bank”) filed a petition for writ of possession against Big Metal Construction, Inc. (“Big Metal”) and Gina R. Bryant (collectively, the “Borrowers”), alleging that the Borrowers had defaulted on two promissory notes in favor of Bank and seeking possession of the property that served as collateral for the loans. The property included several forklifts described on a financing statement. Bank filed an amended complaint that included claims for tortious conversion and fraudulent misrepresentation claiming the Borrowers sold all of the machinery that had been pledged as collateral. Subsequently, Bank amended its suit to add Rebel Auction Company Inc. (the “Defendant”)—arguing that the auction house acted as an agent in selling the collateral to Four-D (the “Buyer”). Thereafter, Bank filed a motion for summary judgment against the Defendant when it failed to respond to its request for admissions. The Defendant conceded that all of the allegations made by the Bank in its requests for admissions were admitted due to its failure to respond within 33 days. Nevertheless, the Defendant filed a motion to withdraw its admissions—supported only by a self-serving affidavit.
The Defendant argued that its cross-motion for summary judgment should be granted because it did not commit a conversion and because the financing statement upon which the Bank relies is invalid under O.C.G.A. § 11-9-506. Specifically, the financing statement listed the borrower’s name as “Big Metal Construction Inc. Payroll Account” rather than its actual name, “Big Metal Construction, Inc.” Bank contended, however, that the mistake in name was not seriously misleading as a standard Uniform Commercial Code (“UCC”) search would still reveal the statement. The trial court found for Bank—refusing to allow the Defendant to withdraw its admissions.
On appeal, the Georgia Court of Appeals reversed the trial court’s grant of summary judgment in favor of the Bank as to the financing statement issue. The appellate court found that an issue of material fact existed as to whether the financing statement was valid and the Bank’s security interest perfected. The appellate court also denied the Defendant’s request for summary judgment as to the conversion claim because the Defendant failed to invalidate the underlying security agreement.
