Hyduke's Valley Motors v. Lobel
Financial





















Filed 9/29/10 Hyduke's Valley Motors v. Lobel Financial
CA4/3











>NOT TO BE PUBLISHED IN OFFICIAL REPORTS



California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying
on opinions not certified for publication or ordered published, except as
specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.



IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA



FOURTH
APPELLATE DISTRICT



DIVISION
THREE




>

HYDUKE'S VALLEY MOTORS, Plaintiff and Respondent, v. LOBEL FINANCIAL CORPORATION, et al., Defendants and Appellants.

G042220 (Super. Ct. No. 7CC10613) O P I N I O N

Appeal from a judgment
of the Superior Court
of Orange
County, Gregory Munoz, Judge.
Affirmed.

Gary Dean Lobel and
Ronald J. Green, Jr., for Defendant and Appellant Lobel Financial Corporation.

Ludwig
Law Center,
Eric S. Ludwig for Defendant and Appellant Automotive Funding Group, Inc., dba
County Financial Services.

Law Offices of Jeffrey
B. McMillen, Jeffrey B. McMillen for Plaintiff and Respondent Hyduke's Valley
Motors.



A wholesale used car
dealer sold vehicles to a second used car dealer with the agreement the second
dealer would pay for the cars when title was available for transfer. The second dealer sold the vehicles to
consumers under conditional sales contracts, sold (and assigned) the
conditional sales contracts to two finance companies, and went bankrupt before
paying the wholesale dealer for the cars and obtaining certificates of title as
required by the terms of the conditional sales contracts. The wholesale dealer filed this action
against the finance companies seeking a declaration they were required to pay
the wholesale dealer for the vehicles to obtain certificates of title. In a bench trial, the trial court followed
this court's decision in Quartz of
Southern California, Inc. v. Mullen Bros., Inc. (2007) 151 Cal.App.4th 901
(Quartz), which on largely identical
facts held as between the wholesale dealer and the finance company, the
wholesale dealer was the legal owner of the title certificates and the finance
companies were required to purchase the titles from the wholesale dealer for
transfer to the consumer buyers. The
finance companies appeal from the judgment raising a variety of contentions,
none of which have merit. We affirm the
judgment.

THE QUARTZ DECISION

Because it formed the
basis for the trial court's ruling, and controls our decision here, we depart
from our usual custom of first setting forth the facts and instead summarize
this court's opinion in Quartz, supra,
151 Cal.App.4th 901.

Quartz was a licensed
wholesale used auto auction that would acquire vehicles and sell them to other
dealers at auction. ( >Quartz, supra, 151 Cal.App.4th at
p. 904.) For various reasons, title
was generally not available at the time of auction. (Ibid.) While Quartz customarily required buying
dealers to pay before taking possession, with some dealers it allowed the
buying dealer to take the car after agreeing to return and pay for title when
it became available. ( >Ibid.)
Mohawk was a licensed used car dealer that had such an arrangement with
Quartz. (Ibid.)

Mohawk took possession
of 17 vehicles from Quartz without paying pursuant to their standing
agreement. (Quartz, supra, 151 Cal.App.4th at p. 904.) With Quartz's knowledge, Mohawk sold the vehicles
to consumers through conditional sales contracts. (Ibid.) Mohawk then sold and assigned the contracts
to Mullen, a finance company. ( >Ibid.)

When Quartz purchased
and received title certificates to all 17 vehicles, it notified Mohawk payment
was due, but Quartz discovered Mohawk had gone out of business. (Quartz,
supra, 151 Cal.App.4th at p. 904.) Mullen refused Quartz's demand for payment
for the title certificates. ( >Ibid.)
Subsequently, Quartz agreed to surrender the title certificate to each
consumer who paid off his indebtedness while preserving its right to pursue a
remedy against Mullen. ( >Id. at p. 905.)

The trial court found
Quartz to be the lawful holder of title to the vehicles but would not direct
Mullen to pay for the certificates of title.
(Quartz, supra,
151 Cal.App.4th at p. 906.)
On appeal, we affirmed the former part of the judgment but reversed the
latter.

We concluded the Uniform
Commercial Code did not govern transfer of title to or perfection of security
interest in the cars. â€