KORTE TOWING AND RECOVERY LLC LLC v. UNITED LEASING INC (2026)

MEMORANDUM DECISION

[1] In this case, a borrower allegedly defaulted on its finance/security agreement with a lender in two ways: (1) by failing to retain possession of the collateral; and (2) by failing to ensure the lender had a first-priority lien thereon. As a result of the borrower's alleged defaults, the lender accelerated the borrower's payments under the agreement and, when the borrower failed to pay, sued the borrower for breach of contract. The trial court entered summary judgment in the lender's favor, and the borrower appeals.

[2] The borrower claims it did not have a duty to ensure the lender's lien priority as a matter of law and, alternatively, that there remain genuine issues of material fact as to whether it failed to perform that alleged duty. The borrower, however, does not dispute that it defaulted on the finance/security agreement by failing to retain possession of the collateral. Because this default alone authorized the lender to accelerate the borrower's payments under the agreement, and there is no dispute that the borrower failed to pay, we affirm.

Facts

[3] United Leasing, Inc. (Lender) and Korte's Towing and Recovery, LLC (Borrower) entered into a written finance/security agreement (Agreement) in April 2022. Pursuant to the Agreement, Lender loaned Borrower $89,500 to finance Borrower's purchase of a “Vehicle Recovery Robot” (Equipment). App. Vol. II, p. 22. In exchange, Borrower granted Lender a security interest in the Equipment and agreed to pay Lender $112,920 in 60 monthly installments.

[4] The Agreement also included the following pertinent provisions:

1.  SECURITY INTEREST ․ Borrower shall ensure that [Lender's] security interest is and remains a sole first priority lien security interest as additional security for this Agreement․

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6.  LOCATION; INSPECTION; USE. Borrower will keep ․ all Equipment in Borrower's possession and control at [Borrower's principal place of business] or such other location to which Lender may consent in writing․

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15. DEFAULT. [I]f Debtor fails to make any payment provided for hereunder when due, or is in breach of any of its agreements contained herein, ․ all remaining payments hereunder shall become immediately due and payable ․

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17. REMEDIES. If the Borrower is in default under this Agreement, Lender may, at its option, ․ accelerate the remaining payments and any other amounts due under the Agreement․

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Lender's Comp., pp. 7-11 (Exh. A); see App. Vol. II, pp. 22-23 (designating and authenticating Exhibit A to Lender's Complaint for summary judgment).¹

[5] After purchasing and taking delivery of the Equipment, Borrower began making monthly payments to Lender pursuant to the Agreement. But at some point, Borrower relinquished its possession and control of the Equipment to a third party “for use at a towing exhibition.” App. Vol. II, p. 22. While the Equipment was in this third party's possession and control, it was repossessed by a bank that purportedly held a lien on it with superior priority to Lender's lien.

[6] Upon learning of the Equipment's repossession, Lender notified Borrower that it had defaulted on the Agreement by failing to retain possession and control of the Equipment and by failing to ensure Lender had a first-priority lien thereon. Lender further advised Borrower that it was accelerating Borrower's remaining payments under the Agreement. When Borrower failed to pay, Lender sued Borrower for breach of contract.²

[7] Lender eventually moved for summary judgment on its complaint, designating evidence of the following pertinent facts:

• Borrower relinquished its possession and control of the Equipment to the third party, resulting in its repossession by the bank;

• The bank purportedly held a lien on the Equipment with superior priority to Lender's lien; and

• Borrower failed to pay its outstanding balance of $97,877.20 after Lender accelerated Borrower's remaining payments under the Agreement.

Lender also filed a memorandum in support of summary judgment, arguing: “Pursuant to the terms of the Agreement ․, [Borrower] failed to maintain possession and control of the Equipment and refused to pay monies owed to [Lender].” Lender's S.J. Mem., p. 5.

[8] Borrower opposed Lender's motion for summary judgment, asserting in its own memorandum: “Evidence will show that [Lender] had knowledge of and acquiesced in the [E]quipment's temporary relocation [to the third party] for promotional or business purposes.” Borrower's S.J. Mem., p. 2. Borrower, however, designated no evidence to support this assertion. All of Borrower's evidence—as well as its legal argument—related to the issue of Lender's lien priority alone. See, e.g., App. Vol. II, p. 29 (Borrower's affidavit stating, “At no time did [Borrower] make any representation to [Lender] regarding the existence or absence of prior liens on the equipment.”).

[9] The trial court ultimately determined that “[Borrower] defaulted in the payment and performance of the Agreement.” Id. at 19. The court therefore entered summary judgment in Lender's favor and against Borrower in the principal sum of $97,877.20. Borrower appeals.

Discussion and Decision

[10] “When reviewing a summary judgment ruling, we use the same standard as the trial court.” State Auto. Mut. Ins. Co. v. Flexdar, Inc., 964 N.E.2d 845, 848 (Ind. 2012). “The court must accept as true those facts alleged by the nonmoving party and resolve all doubts against the moving party.” Auto-Owners Ins. Co. v. Harvey, 842 N.E.2d 1279, 1289 (Ind. 2006) (internal quotation omitted). Summary judgment is appropriate only if “the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Ind. Trial Rule 56(C).

[11] Borrower argues that summary judgment in Lender's favor was inappropriate on two alternative grounds. First, Borrower claims it did not have a duty to ensure Lender's lien priority as a matter of law. And second, Borrower claims there remain genuine issues of material fact as to whether it failed to perform that alleged duty. We understand both claims to contest whether Borrower defaulted on the Agreement by failing to ensure Lender's lien priority, thereby authorizing Lender to accelerate Borrower's remaining payments under the Agreement.

[12] Borrower's claims, however, are misguided. Lender did not seek summary judgment based on Borrower's failure to ensure Lender's lien priority. As argued in its summary judgment memorandum, Lender only sought summary judgment based on Borrower's failure to retain possession and control of the Equipment. And even if we assume Lender asserted both failures as bases for summary judgment, Borrower's failure to retain possession and control of the Equipment alone would have authorized Lender to accelerate Borrower's remaining payments under the Agreement.

[13] Because Borrower makes no argument on appeal regarding its failure to retain possession and control of the Equipment, it has not met its appellate burden of proving summary judgment in Lender's favor was inappropriate. See Bewley v. Town of Speedway, 222 N.E.3d 1013, 1017 (Ind. Ct. App. 2023) (“The appellant bears the burden of proving the trial court erred in granting a motion for summary judgment.”). We therefore affirm the trial court's entry of summary judgment.

[14] Affirmed.

FOOTNOTES

1.   The parties did not include their pleadings or summary judgment memoranda in an appendix on appeal, but we were able to review the trial court filings via our Odyssey Case Management System.

2.   Lender also sued Michael Korte, Angela Korte, and Rick Schaefer's Towing, LLC, each of whom/which had executed a written guaranty of Borrower's payment under the Agreement. This appeal was jointly filed by Borrower and the Kortes. Rick Schaefer's Towing does not participate.

Weissmann, Judge.

Bradford, J., and DeBoer, J., concur.