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Wells Fargo Vendor Financial Services, L.L.C. v. Naval Coating, Inc.

United States District Court, S.D. Iowa, Central Division

September 19, 2019

WELLS FARGO VENDOR FINANCIAL SERVICES, L.L.C., Plaintiff,
v.
NAVAL COATING, INC., Defendant.

          REPORT AND RECOMMENDATION

          HELEN C. ADAMS, CHIEF U.S. MAGISTRATE JUDGE

         I. INTRODUCTION

         Before the undersigned is Plaintiff Wells Fargo Vendor Financial Services, L.L.C.'s (“Wells Fargo”) Application for Immediate Writ of Replevin and Request for Expedited Hearing. [2]. Wells Fargo seeks an immediate writ of replevin to recover four Doosan Air Compressors, pursuant to the terms of a lease agreement and a loan agreement between Wells Fargo and Defendant Naval Coating, Inc. (“Naval Coating”). See (Pl. Application for Writ and Expedited Hearing [2] at 1-2). Naval Coating has yet to file anything in this case, nor have counsel entered an appearance on its behalf.

         The undersigned granted Wells Fargo's request for an expedited hearing on the immediate writ for replevin on August 23, 2019. [6]. Pursuant to the undersigned's Order granting the expedited hearing, Naval Coating was served with the Order granting the request for the expedited hearing on August 27, 2019. [7]. The undersigned held the hearing on September 17, 2019. [11]. Naval Coating did not appear. The undersigned considers the Application for Immediate Writ of Replevin on the papers filed and oral submissions made during the hearing.

         II. BACKGROUND

         Wells Fargo brings the instant action as a result of Naval Coating defaulting on a lease agreement as well as a loan agreement. Wells Fargo brings two counts against Naval Coating. Wells Fargo brings an action for replevin to recover four Doosan air compressors which were collateral under the agreements. Wells Fargo also brings a breach of contract claim to recover a money judgment for amounts owed under the agreements. The instant Motion concerns Wells Fargo's attempt to secure pre-judgment possession of the air compressors.

         Wells Fargo entered into two separate agreements with Naval Coating, a California corporation with its principal place of business in San Diego that provides industrial and maritime painting and coating services to various businesses including the U.S. Navy. Wells Fargo believes that the air compressors it seeks to recover are still in Naval Coating's control in San Diego County, California. Wells Fargo is a single-member LLC, and its sole member is incorporated and has its principal place of business in Iowa. Both the lease and loan agreements entered by the parties specify that they are governed by Iowa law, and that any legal action or proceeding will be brought exclusively in the federal or state courts of Iowa.

         On September 27, 2017, Wells Fargo and Naval Coating entered into a lease agreement whereby Wells Fargo agreed to acquire and lease to Naval Coating one Doosan Air Compressor bearing serial number 472399. On December 19, 2018, Wells Fargo and Naval Coating entered into a loan agreement whereby Wells Fargo agreed to finance Naval Coating's purchase of three Doosan Air Compressors bearing serial numbers 472147, 472612, and 478153. Wells Fargo retained security interests in the air compressors, and later perfected those interests by filing UCC Financing Statements with the California Secretary of State on October 6, 2017 and December 26, 2018. Naval Coating apparently defaulted on the terms of the two agreements by failing to make the required payments. Wells Fargo sent Naval Coating notice of defaults on June 13, 2019, and thereafter sent demand letters for amounts due under the agreements on July 23, 2019.

         Wells Fargo now seeks to take possession of the air compressors. Wells Fargo believes that Naval Coating is in possession of the four air compressors somewhere in San Diego County, California. Wells Fargo represents that the value of the air compressors is depreciating and thus its ability to recoup its damages through sale or lease of the compressors diminishes daily. Finally, Wells Fargo asserts that Naval Coating is in such financial stress that its employees are not being paid.

         III. APPLICABLE LAW AND ANALYSIS

         Wells Fargo seeks an immediate writ of replevin to the U.S. Marshall in the Southern District of California, San Diego office, to repossess the four air compressors. Because of the nature of the requested relief, the undersigned has opted to submit her proposed findings and recommendation for the disposition of the Motion to the presiding district judge in this matter, Chief District Judge John A. Jarvey. See 28 U.S.C.A. § 636(b)(1) (discussing limited matters on which a magistrate judge may not issue a final determination but allowing a magistrate judge to submit a report and recommendation on those matters). Accordingly, the undersigned will proceed by analyzing the applicable law, making relevant proposed findings, and finally offering a proposed recommendation for the disposition of the Motion based on the foregoing.

         Federal Rule of Civil Procedure 64 provides the procedures available to a litigant seeking to “seiz[e] a person or property to secure satisfaction of the potential judgment.” Fed.R.Civ.P. 64(a). In totality, Rule 64 provides:

(a) Remedies Under State Law--In General. At the commencement of and throughout an action, every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment. But a federal statute governs to the extent it applies.
(b) Specific Kinds of Remedies. The remedies available under this rule include the following--however designated and regardless of whether state procedure ...

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