461 F.Supp.3d 825
N.D. Ind.2020Background
- Evergreen RV manufactured and shipped 21 RVs to six related Boat‑N‑RV (BNRV) dealerships in April–May 2016; total invoices = $808,663.00, which were never paid. 20 of the 21 units were later sold by BNRV for ~$1,062,451.57.
- Evergreen had granted 1st Source Bank a first‑priority blanket security interest in its assets (including accounts receivable) under a 2009 loan agreement; 1st Source later assigned the Evergreen loan and its claims to KR Enterprises (owned by Kelly Rose) after KR/STCR paid ~ $1,010,947.80.
- BNRV responded to Evergreen’s insolvency by (a) instructing its floor‑plan lender not to pay Evergreen (June 8, 2016), (b) terminating dealership agreements, and (c) asserting counterclaims/offsets for unpaid rebates and warranty claims.
- KR sued BNRV on state‑law claims (Account Stated; Breach of Contract; Conversion) as 1st Source’s assignee; the case proceeded as a bench trial.
- Court found KR had standing as assignee, dismissed Counts I (account stated) and III (conversion), and found BNRV liable for breach of contract on each dealership’s purchase invoices.
- After applying rebate and warranty offsets that KR took subject to as‑sserted defenses, the court entered an aggregate judgment of $648,604.27 in favor of KR, allocated among the six defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of assignment / standing | 1st Source assigned the loan and lawsuit to KR; KR purchased the note and thus has standing to sue account debtors. | The payments made by KR in March 2018 satisfied the loan, so nothing remained to assign; assignment is a nullity. | Assignment was valid: payments were consideration for purchase of the loan, not satisfaction; KR has standing. |
| Account stated (Count I) | Invoices + demand letters + no timely objection = agreed final account owed. | BNRV had asserted rebate/warranty offsets and disputed balances, so no agreed final accounting. | Claim for account stated fails: no agreed, final adjusted balance; judgment for defendants on Count I. |
| Conversion (Count III) | Retention/sale of RVs after revocation of acceptance was wrongful; conversion of seller's property. | Initial possession lawful; no unqualified demand for return; dispute is contractual (debt) not tort; conversion requires criminal mens rea. | Conversion claim fails: retention/sale is a contract/debt dispute and lacks required intent/unqualified return demand. |
| Breach of contract, liability and damages (including setoffs and joint liability) | KR: enforce each invoice; seek full invoice price; treat defendants jointly. | BNRV: assert material breaches by Evergreen (rebates/warranties), setoffs (rebates, warranty claims, diminution), and argue defendants liable only severally. | Court found breaches of the individual sales contracts for each RV; rejected joint liability across separate corporate dealerships; applied setoffs for demonstrable rebates and warranty claims (but denied diminished‑value offsets); prejudgment interest denied. |
Key Cases Cited
- Alexander v. Linkmeyer Development II, LLC, 119 N.E.3d 603 (Ind. Ct. App. 2019) (contract interpretation principles).
- B.E.I., Inc. v. Newcomer Lumber & Supply Co., Inc., 745 N.E.2d 233 (Ind. Ct. App. 2001) (elements of account stated).
- Coffel v. Perry, 452 N.E.2d 1066 (Ind. Ct. App. 1983) (conversion requires demand for return when initial possession lawful).
- Old Nat’l Bank v. Kelly, 31 N.E.3d 522 (Ind. Ct. App. 2015) (refusal to pay a debt generally does not support conversion).
- Clark‑Silberman v. Silberman, 78 N.E.3d 708 (Ind. Ct. App. 2017) (courts reject tort labels for contract disputes).
- Greater Hammond Community Services, Inc. v. Mutka, 735 N.E.2d 780 (Ind. 2000) (presumption of corporate separateness; standards to pierce veil).
- Voris v. Ferrell, 103 N.E. 122 (Ind. Ct. App. 1913) (assignee takes rights subject to debtor’s defenses and equities).
- InfinaQuest, LLC v. DirectBuy, Inc., 18 F. Supp. 3d 959 (N.D.Ind. 2014) (assignment/priority and applicability of setoffs under UCC provisions).