Davis v. F.W. Financial Services, Inc.

In the event that a debtor has unresolvable financial problems, a secured party has not waived its priority by allowing the debtor to attempt to cure default.

The plaintiffs are judgment creditors who garnished Dryer Electric, Inc.'s (Dryer) accounts receivable. The respondent is a commercial lender who claimed it held a perfected security interest in Dryer's accounts receivable, that its interest was superior to the plaintiff's interest, and that the plaintiffs were liable for conversion of the funds they collected plus judgment interest. The trial court entered a general judgment granting the respondent a monetary award for funds garnished by the plaintiffs from Dryer's accounts receivable. The plaintiffs appealed the trial court’s decision to grant the respondent’s motion for summary judgment, and the respondent cross-appealed assigning error to the trial court's denial of prejudgment interest. The Court held the trial court correctly granted summary judgment for the respondent, and did not err in denying prejudgment interest. The respondent had priority over the funds garnished by the plaintiffs at the time of garnishment pursuant to an earlier perfected security interest. Accordingly, the trial court correctly found that the plaintiffs converted the funds after refusing to return them. Affirmed.