Rabbia v. Rocha

162 N.H. 734, 76 U.C.C. Rep. Serv. 2d (West) 111
CourtSupreme Court of New Hampshire
DecidedNovember 29, 2011
DocketNo. 2010-296
StatusPublished
Cited by8 cases

This text of 162 N.H. 734 (Rabbia v. Rocha) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rabbia v. Rocha, 162 N.H. 734, 76 U.C.C. Rep. Serv. 2d (West) 111 (N.H. 2011).

Opinion

Lynn, J.

The plaintiff, Salvatore Rabbia, appeals an order of the Superior Court {Sullivan, J.) directing that $37,000 plus interest currently being held in escrow be dispersed to the intervenor, Automotive Finance Corporation, instead of to the plaintiff, and denying the plaintiffs motion for attorney’s fees. We affirm in part, reverse in part and remand.

I. Background

Before going out of business in 2008, the corporate defendant, Harvard Auto Sales, Inc., d/b/a Hitcars.com (Harvard Auto), and its principals, defendants Max E. Rocha and Evangelos Karagianis, were in the salvage motor vehicle business. The intervenor and the plaintiff are two of Harvard’s creditors. The intervenor financed Harvard’s purchase of inventory; the plaintiff was involved in a long-standing dispute with Harvard, which settled in March 2008. The instant appeal concerns the plaintiffs and [736]*736the intervenor’s competing claims to funds the defendants gave to their counsel to hold in escrow in the summer of 2008, while settlement discussions with the plaintiff were ongoing.

A. Harvard and the Intervenor

The intervenor provided “floor plan financing” to Harvard, that is, Harvard borrowed money from the intervenor against a line of credit to purchase vehicles. See R. BILLINGS, JR., FLOOR PLANNING, RETAIL Financing & Leasing in the Automobile Industry §1.4, at 7 (2004). Pursuant to this arrangement, which began in 2002, Harvard was required to hold “in trust” a portion of the proceeds of any given vehicle sale for payment to the intervenor to amortize Harvard’s debt. In exchange for the intervenor’s financing, Harvard granted the intervenor a security interest in all of its assets, including its vehicles “and other inventory of any kind” owned or acquired by Harvard, “all documents, including but not limited to . . . accounts, . . . monies, . . . deposit accounts, . . . and general intangibles,” and “any and all proceeds, products, additions, accessions, accessories, and replacements of the foregoing.”

Harvard and the intervenor signed the first floor plan financing agreement in September 2002 and signed amended agreements in August 2004, September 2004, November 2005 and November 2006. The intervenor perfected its security interest by filing financing statements with the New Hampshire Secretary of State in October 2002, May 2004, August 2004, January 2007, April 2007 and June 2008. See RSA 382-A:9-310, -312 (Supp. 2010), -315 (2004). The intervenor’s perfected security interest applied to the following collateral, described in its October 2002 financing statement: “All now owned or hereafter acquired inventory including but not limited to inventory of motor vehicles, equipment, accounts, chattel paper, general intangibles and all additions, accessions, accessories, replacements and proceeds thereof.” See RSA 382-A:9-502 (2004).

At some point before November 19, 2008, the intervenor discovered that Harvard’s accounts were “out of trust,” meaning that Harvard had failed to pay the intervenor as required under the floor plan financing arrangement. See Billings, Jr., supra §1.4, at 7. As a result, the intervenor brought a replevin action to repossess Harvard’s cars subject to its security interest. As of December 1, 2009, Harvard owed the intervenor $1,523,664.14, including attorney’s fees.

B. Harvard and the Plaintiff

Until March 2008, the plaintiff was involved in a dispute with the defendants concerning $201,000 he claims to have given the defendants to become a shareholder in Harvard and $216,000 he claims to have lent them, [737]*737which they refused to repay. In March 2008, the dispute was settled. However, as a result of various challenges to the settlement, on May 27, 2008, the trial court ordered payments under the settlement to be made in escrow. On July 1, 2008, the defendants brought a $25,000 cashier’s check to their attorney, made payable to the attorney’s law firm. At a July 10,2008 hearing, the attorney informed the court about the check, and the court ordered him to put it in his client trust account or an escrow account. The following day, the court issued an order stating that “the previously ordered escrowed payments shall continue to be made.” As a result, in addition to the $25,000 cashier’s check, the defendants gave additional checks to their attorney, which the attorney placed into an escrow account. The total amount held in escrow was $37,000 plus interest.

On October 29, 2008, the trial court granted the plaintiffs motion to enforce the settlement and ordered defense counsel to place the previously escrowed funds into “an interest-bearing escrow account, to be disbursed to the plaintiff with interest following expiration of the appeal period, unless otherwise agreed by the parties.” In the event of an appeal, the trial court decided that its orders requiring payment, to the plaintiff would be stayed and the funds would continue to be held in escrow. The defendants appealed the trial court’s order enforcing the settlement, and we affirmed the trial court’s decision in an unpublished order, Salvatore Rabbia v. Max E. Rocha & a., No. 2008-0918 (July 31, 2009).

C. The Instant Dispute

In August 2009, the defendants paid the escrowed funds into court and filed a motion in the settlement action asking the court to decide whether they should be released to the plaintiff or the intervenor. In September 2009, the intervenor petitioned to intervene in the matter and to recover the escrowed funds. At a December 2009 hearing at which the trial court heard offers of proof, the plaintiff argued that he was the proper recipient of the escrowed funds because his interest in them predated any secured interest the intervenor may have had in them. The intervenor asserted that it was the proper recipient of the funds because its perfected security interest predated any interest the plaintiff may have had in them. Following the hearing, the trial court granted the intervenor’s petition to intervene and ruled that the escrowed funds belonged to the intervenor. This appeal followed.

II. Analysis

Addressing the parties’ arguments requires that we interpret Article 9 of the Uniform Commercial Code (UCC). See RSA 382-A, art. 9 (2004 & [738]*738Supp. 2010). To do so, we rely not only upon our ordinary rules of statutory construction, but also upon the official comments to the UCC. See RSA 382-A:l-103(a)(3)(2011) (UCC construed to make uniform the law in various jurisdictions); cf. In re Alex C., 161 N.H. 231, 240 (2010) (because our Criminal Code is largely derived from Model Penal Code, we have looked to Model Penal Code and its Commentaries when interpreting analogous New Hampshire statutes); In the Matter of Scott & Pierce, 160 N.H. 354, 359 (2010) (we rely upon official comments to Uniform Interstate Family Support Act); Bendetson v. Killarney, Inc., 154 N.H. 637, 643 (2006) (we will look to official comments of model act for guidance on intended meaning of election statute).

Under our ordinary rules of statutory construction, we are the final arbiters of the legislature’s intent as expressed in the words of the statute considered as a whole. In the Matter of Scott & Pierce, 160 N.H. at 359.

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Bluebook (online)
162 N.H. 734, 76 U.C.C. Rep. Serv. 2d (West) 111, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rabbia-v-rocha-nh-2011.