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Tow company that seized, sold cars loses injunction appeal

November 17, 2016

An Indianapolis towing company whose owner worked with bankruptcy lawyers to take possession of cars when a buyer defaulted and then resell dozens of them lost its appeal of an injunction blocking the practice and ordering the cars be returned to the lienholder.

The Indiana Court of Appeals on Thursday affirmed a Marion Superior Court injunction that ordered Sperro LLC, which operates a tow lot on South Bluff Road and another location in Wisconsin, to immediately surrender vehicles in its possession to lienholder Ford Motor Credit Co. The order also invalidated several alleged lien sales the company conducted.

The trial court found Ford Motor Credit to be the superior, proper and first lienholder with priority rights over any mechanic’s liens asserted by Sperro or its affiliates. The trial court also found that vehicles were improperly advertised for sale and that the requirements for selling vehicles after obtaining mechanic’s liens weren’t followed, nor in some cases was the process for obtaining mechanic’s liens. Public notice of Sperro’s lien auctions were published in the Hendricks County Flyer, but the sales took place in Marion County.

According to the record, since 2015, the Indiana Bureau of Motor Vehicles issued 49 new certificates of title for vehicles sold at Sperro’s lien auctions. Of those, 43 were sold to AMI Asset Management, owned by Dennis Birkley, a 20-year repossession colleague of Sperro owner Brian Fenner.  Sperro bought three, Fenner himself bought two, and one was sold to a neighbor of Fenner.

Ford Motor Credit alerted the BMV, which “decided to apply a heightened degree of scrutiny based on the potential for fraud,” the record says. Afterward, the BMV rejected about 40 applications for title from AMI for vehicles it purchased from Sperro. FMCC sued Sperro and AMI for damages last December, asserting conversion, replevin, tortious interference with a contract and conspiracy to commit fraud. BMV was named as a declaratory defendant.

The trial court ruled in favor of FMCC. The trial court also enjoined the Sperro parties from taking possession of any vehicle of which FMCC is a lienholder.

The COA affirmed the trial court in all respects. It found the court didn’t err in awarding prejudgment possession of the vehicles to FMCC or in granting an injunction.

Further, “the trial court did not err in concluding that Sperro and Fenner intentionally induced the breach of the Installment Contracts between the Borrowers and FMCC or proceeded with reckless disregard of the contractual relationship between the Borrowers and FMCC," Judge Terry Crone wrote for the panel in Sperro LLC d/b/a Sperro Towing and Recovery, Fenner & Associates LLC, Brian Fenner, and AMI Asset Management, Inc. and Indiana Bureau of Motor Vehicles v. Ford Motor Credit Company LLC, 49A02-1601-PL-187.

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