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Element Financial Corp. v. Marcinkoski Gradall, Inc.

Florida Court of Appeals, Fourth District

March 29, 2017

ELEMENT FINANCIAL CORP., Appellant,
v.
MARCINKOSKI GRADALL, INC., RAY A. MARCINKOSKI, KFIR BARANES, Individually, and THE BEST FLOOR CARE, INC., Appellees.

         Not final until disposition of timely filed motion for rehearing.

         Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Meenu Sasser, Judge; L.T. Case No. 2014CA008850 (AI).

          Eric B. Zwiebel of Emanuel & Zwiebel, PLLC, Plantation, for appellant.

          Peter M. Feaman and Nancy Guffey of Peter M. Feaman, P.A., Boynton Beach, for appellee Marcinkoski Gradall, Inc. and Ray A. Marcinkoski.

          Noah Tennyson and Gregory L. Scott of Nason, Yeager, Gerson, White & Lioce, P.A., Palm Beach Gardens, for appellee KFIR Baranes and The Best Floor Care, Inc.

          Kuntz, J.

         Element Financial Corp. appeals the trial court's final judgment in favor of appellees, where the court found that Element did not have a perfected security interest. The court first concluded that a guarantor is a debtor pursuant to section 679.3161(1)(b), Florida Statutes (2014), and therefore, that Element was required to perfect its lien in Florida within four months of the guarantor moving to this state. Next, the court concluded that the appellees were buyers in the ordinary course of business and, pursuant to the Uniform Commercial Code, section 679.320(1), Florida Statutes (2014), entitled to title free of the pre-existing security interest.

         We hold that the court erred in its interpretation of both statutory provisions. First, a guarantor is not a debtor within section 679.3161(1)(b). Therefore, Element was not required to perfect its security interest within four months of the guarantor moving to Florida; rather, it was required to perfect its security interest in Florida within one year of the goods being moved into Florida. See § 679.3161(1)(c), Fla. Stat. (2014). Second, section 679.320(1) allows a buyer to take goods purchased in the ordinary course of business free of a security interest "created by the buyer's seller." § 679.320(1), Fla. Stat. (2014) (emphasis added). Because the appellees' sellers did not create the security interests, that section does not apply to appellees' purchases.

         Element had a perfected security interest and the appellees took the goods subject to that perfected interest. Therefore, we reverse the court's judgment and remand for the entry of judgment in favor of Element.

         I. Background

         At issue in this appeal are three Bobcat utility vehicles purchased and financed in California between August 27, 2013 and October 21, 2013. The Bobcats were sold to Inland Empire Distribution, LLC, a California limited liability company, and financed by Element Financial Corp. With each transaction, Inland signed a promissory note and security agreement, and Omri Elkadar, the managing member of Inland, signed a personal guaranty.

         Elkadar moved the Bobcats to Florida shortly after the original sales to Inland. He listed them for sale in a local paper and all three Bobcats were sold by CM Global, Inc., a Nevada corporation, to Damage Services, Inc. Damage Services then sold two of the Bobcats to Marcinkoski Gradall, Inc.

         The various sales ...


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