128 Ohio App. 3d 599 | Ohio Ct. App. | 1998
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *601 This is an appeal and a cross-appeal from the disposition of an action in replevin by Daniel S. Corner in his capacity as the trustee of the Comer family trust. The action concerned assets in the possession of Precision Swage, Ins. ("PSI"), a company owned by Comer in his individual capacity. The trust sought to establish that it had a prior lien on the assets superior to that of Aman J. Calim. Calim had sold PSI to Comer and was asserting a judgment lien against the same assets as a result of a lawsuit arising out of the sale. The trial court ruled in favor of Calim despite the fact that the trust's security interest was first in time. In its sole assignment of error, the trust argues that the trial court erred in rendering judgment in favor of Calim. In his cross-appeal, Calim argues that the trial court erred by amending its entry granting him a monetary judgment against the trust to one giving him only a first-priority lien. For the *602 reasons that follow, we find no error in either the appeal or the cross-appeal and thus affirm the trial court.
The trust subsequently brought an action in replevin against both PSI and Calim in which it sought judgment against PSI for $827,362.09, plus interest, an entry declaring its lien senior and superior to all other claims, and permanent possession of PSI's assets. Calim counterclaimed that PSI's transfer of the assets to the trust was fraudulent under the Ohio Fraudulent Transfer Act.
Both the trust and Calim filed motions for summary judgment. The trial court granted Calim's motion and denied the trust's.
Calim, on the other hand, argues that the trial court correctly concluded that the transfer was fraudulent under R.C.
It is Calim's position that the transfer was not effected until the trust belatedly filed a UCC financing statement to perfect its interest in the assets — a filing that even the trust admits was motivated by Calim's receiving a favorable decision from the Shelby County Court of Common Pleas against PSI. The statutory basis of Calim's argument is R.C.
"For the purposes of this chapter:
"(A)(1) A transfer is made if either of the following applies:
"* * *
"(b) With respect to an asset that is not real property or that is a fixture, when the transfer is so far perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than under this chapter that is superior to the interest of the transferee."
According to Calim, transfer of PSI's assets to the trust was not "so far perfected" as to defeat any subsequent creditor until the filing of the financing statement. Hence, Calim argues, because the financing statement was not filed until after he received a favorable decision from the Shelby County Court of Common Pleas, the transfer to the trust occurred only after his claim arose. Further, Calim asserts that it cannot be said that the transfer was part of a series in the "ordinary course of business or financial affairs" between PSI and the trust because no other financing statement had ever been filed. *604
The trust, on the other hand, argues that the transfer of assets in this case occurred long before the filing statement was ever filed. In the trust's view, PSI's assets were being transferred to the trust over the entire six-year period that it was loaning money to the business and accepting the assets as collateral. In support of its position, the trust cites the definition of "transfer" set forth in R.C.
"`Transfer' means every direct or indirect, absolute or conditional, and voluntary or involuntary method of disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, and creation of a lien or other encumbrance."
According to the trust, the above language was satisfied when PSI parted with an interest in its inventory and substantially all of its assets by signing a series of security agreements pledging its assets to secure the payment of the demand notes to the trust. As the trust correctly points out, the absence of a 11CC financing statement did not in any way diminish the enforceability of the security agreements between the trust and PSI. Lojek v. Pedler (1986),
We agree with both the trial court and Calim. The trust's argument is based entirely upon the isolated definition of the word "transfer" as it appears in the definitional section of the Ohio Fraudulent Transfer Act. However, R.C.
Further, the trust's position is inconsistent with the Act's definition of an encumbered asset. "Assets" are broadly defined in R.C.
Finally, the principle that a transfer is not complete until it is perfected is incorporated into R.C.
We hold, therefore, that, for purposes of the Ohio Fraudulent Transfer Act, the transfer of the assets to the trust did not occur until the filing of the UCC financing statement. Accordingly, we further hold that, as a matter of law, the course of business between the trust and PSI did not involve a series of transfers, but only one. The one transfer was anomalous, not ordinary, and was, by the trust's own admission, accomplished for the purpose of defeating Calim's existing claim to the assets.
According to the trust, all the loans it made to PSI were for the purpose of providing money to supplement PSI's cash requirements for continuing and expanding the various facets of the business. The trust further emphasized that the transfer effected by the filing of the UCC financing statement was to secure both a present and an antecedent debt and that there was no element of bad faith in doing any of this. *606
The trust's argument, however, fails to grasp that, under R.C.
Although both parties have briefed this issue in the context of the court's inherent authority to alter its original judgment, we find the issue controlled more readily by recourse to the Rules of Civil Procedure. The original entry dated May 21, 1997, granting Calim a monetary judgment, failed to include certification under Civ.R. 54 (B) that there was no just reason for delay. The absence of that language is dispositive because the May 21, 1997 entry also continues Calim's motion for a hearing on his claims for punitive damages and attorney fees; According to Civ.R. 54 (B), in the absence of a determination that there is no just reason for delay, any order that adjudicates fewer than "all the claim or the rights and liabilities of fewer than all the parties" is "subject to revision at any time."
Finally, we note that a first-priority lien was part of the relief prayed for in Calim's counterclaim, and therefore the trial court clearly did not grant a form of relief that was not asked for.
Accordingly, the assignments of error in both the appeal and the cross-appeal are overruled, and the judgment of the trial court is affirmed.
Judgment affirmed.
MARIANNA BROWN BETTMAN and PAINTER, JJ., concur. *607