Kirk Excavating & Construction, Inc. v. Columbus Equipment Co.

704 F. App'x 492
CourtCourt of Appeals for the Sixth Circuit
DecidedAugust 9, 2017
Docket16-4114
StatusUnpublished
Cited by2 cases

This text of 704 F. App'x 492 (Kirk Excavating & Construction, Inc. v. Columbus Equipment Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kirk Excavating & Construction, Inc. v. Columbus Equipment Co., 704 F. App'x 492 (6th Cir. 2017).

Opinion

RALPH B. GUY, JR., Circuit Judge.

The appeal in this procedurally convoluted case boils down to a priority dispute between two creditors over interpleaded funds. The controversy is between (1) Columbus Equipment Company, which was found to be the first-priority lienholder; and (2) Highway Equipment Company, which argues on appeal that Columbus’s garnishment and creditor’s bill liens were defective and therefore subordinate to its own creditor’s bill lien. Highway Equipment also argues that it was error to have made the priority determination without first allowing it to conduct discovery. The interpleaded funds — $440,198.73—remain on deposit with the court because disbursement to Columbus Equipment was stayed until further order. We review the magistrate judge’s decision under the “collateral order doctrine,” and affirm the determination that Columbus’s claim to the interpleaded funds was entitled to priority. 1

I.

A. Interpleader Action

This action began in October 2014 when Kirk Excavating & Construction, Inc., sued in Ohio state court to recover for unpaid work it had performed for AYS Oilfield, a dba of RKJ Enterprises, LLC dba At Your Service (“RKJ Enterprises”). Kirk Excavating also asserted equitable claims against amounts allegedly owed to RKJ Enterprises by Access Midstream Partners, LP, and its general partner Access Midstream Partners, GP, LLC. The Access Midstream Partners defendants removed the case to federal court, and Texas State Bank intervened to assert claims against the same funds as Kirk Excavating. Those funds represented amounts that had been retained under a contract for construction services to be performed by “At Your Service Construction, Inc.,” which later admitted to being another dba of RKJ Enterprises. It would become apparent that, those funds were actually being held by Access MLP Operating, LLC — an entity that described itself as a subsidiary of Access Midstream Partners, LP.

The interpleader came about because, in April 2015, Access MLP Operating intervened in this action as a defendant and a counter-, cross-, and third-party claimant for statutory interpleader seeking to have the court resolve the various competing claims to the funds it was holding. To that end, Columbus Equipment, Highway Equipment, Horizon Supply Company, and At Your Service Construction were added as third-party defendants. In an order entered in October 2015, the magistrate judge determined that interpleader was proper and ordered that, upon deposit of the full amount, the parties would be enjoined from initiating or pursuing any other proceeding with respect to the inter-pleaded funds. The funds — initially declared to be $196,000 and later revised to $440,198.73 — were deposited with the court in November 2015.

After a status conference in April 2016, at which Highway Equipment claims it *495 asked to be allowed to conduct discovery, the magistrate judge ordered simultaneous briefing and responses from any party asserting priority to the interpleaded funds. Only Columbus Equipment, Highway Equipment, Texas State Bank, and Access MLP Operating submitted briefs. On September 12, 2016, the magistrate judge: (1) rejected Access MLP Operating’s claim that it was entitled to recover costs it incurred to complete unfinished work or for attorney fees expended; (2) found that Texas State Bank did not have a perfected security interest in the funds; and (3) concluded that Columbus Equipment’s liens were valid and superior to Highway Equipment’s lien. Because the balance due to Columbus exceeded the amount of the interpleaded funds, the relative priority of the remaining claims was not determined. The order directed disbursement to Columbus, and solicited Kirk Excavating’s intentions with respect to its remaining claims. Kirk declared that it intended to dismiss its claims under Fed. R. Civ. P. 41, although dismissal still has not been entered. Highway Equipment appealed and obtained a stay of the disbursement.

B. Facts Relevant to the Priority Determination

At the time that Kirk Excavating was initiating this action in October 2014, Columbus Equipment and Highway Equipment had each already obtained a state court judgment against RKJ Enterprises. Columbus conducted debtor’s examinations, and both Columbus and Highway Equipment took actions to secure liens against what would become the interplead-ed funds in this case. The details of the three relevant judgment creditor actions are summarized below.

Columbus’s Garnishment. Columbus filed a garnishment action directed to “Access Midstream” on October 3, 2014, which was served by certified mail on October 14, 2014. “Access Midstream” answered on October 21, 2014, admitting that it was holding $196,128 due under contracts it had with “RKJ Enterprises, LLC dba At Your Service and/or AYS Oilfield.” Through corporate counsel, “Access Midstream” also declared: (1) that those amounts had been “retained” and were not due under the contract until “completion of all punch list items”; (2) that it had received “competing claims against the same contract funds earmarked for the debtor”; and that consolidation of all the competing claims in one federal court action was anticipated. In other words, “Access Midstream” admitted that it held the funds at issue but refused to pay. Columbus promptly moved for an order to pay, which “Access Midstream” opposed for the same reasons given in its answer.

It was not until May 2015, that the state court granted Columbus’s motion and ordered that “Access Midstream” pay the funds to the Franklin County Clerk of Courts. Access MLP Operating — which had by then filed the instant interpleader claims — moved for reconsideration of the order to pay. Access MLP Operating’s motion repeated the claim that the funds were not due at the time of the garnishment, clarified that it was the entity that held the retained funds, and stated that there was “no such entity” as “Access Midstream.” That motion was never decided, and the action was stayed by the inter-pleader order.

Columbus’s Creditor’s Bill Action. Columbus also filed a separate creditor’s bill and complaint on October 6, 2014, which asserted a lien against equitable or other interests that RKJ Enterprises had in the possession of “Access Midstream” “by way of a contract, breach of contract, and other claims, including but not limited to retain-age amounts.” Columbus served “Access *496 Midstream” on October 8,2014, and served RKJ Enterprises (and Ryan Jones dba At Your Service) on October 9, 2014. “Access Midstream” removed that case to federal court on October 27, 2014, stating that “Access Midstream” was not a legal entity, but that the entity Columbus was “likely referring to [was] Access MLP Operating, LLC.” (N.D. Ohio, No. 14-CV-2389, Doc. 1, ¶ 1.) Columbus filed a motion to remand for reasons not relevant to this appeal, which was granted on August 24, 2015.

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704 F. App'x 492, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kirk-excavating-construction-inc-v-columbus-equipment-co-ca6-2017.