IN RE:  STEWART MICHAEL DEBORDE CASE NO. 99-70212 MEMORANDUM OPINION valuation hearing 

 UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

PIKEVILLE

 

IN RE:

STEWART MICHAEL DEBORDE CASE NO. 99-70212

CONNIE LEE DEBORDE

DEBTORS

 

MEMORANDUM OPINION

 

This matter came before the Court on August 4, 1999 for a valuation hearing as to the following assets owned by Stewart Michael DeBorde and/or Connie Lee DeBorde (collectively the "debtors"):

1) 1997 Mac trailer (VIN No. 1M9DS363D096633);

2) 1997 Western Star tractor (light blue) (VIN No. 2WKEDDCJ8VK946571);

3) 1997 Western Star tractor (dark blue) (VIN No. 2WKEDCCJ4VK945086);

4) 1997 International tractor (VIN No. 2HSFBAERIVCO21514) (the "97 tractor);

5) 1996 USTS trailer (VIN No. 1U9DS3633T1051535) (the "96 trailer").

It was announced in open court that agreement had been reached between the debtors and Associates Commercial Corporation, which holds a perfected first lien on items 1, 2 and 3 above under the terms of which Associates agrees with the debtors’ valuation of its collateral for purposes of the debtors’ chapter 13 plan as follows: vehicle no. 1, $38,000; vehicle no. 2, $70,000; vehicle no. 3, $65,000.

Navistar Financial Corporation (hereinafter "Navistar") holds a perfected first lien on the 97 tractor and the 96 trailer. Navistar filed its objection to debtors’ March 14, 1999 chapter 13 plan on May 26, 1999 asserting that the actual value of its collateral is greater than that assigned by the debtors in their chapter 13 plan, as follows: a) the plan assigns value of $60,000 to the 97 tractor; b) the plan assigns value of $25,000 to the 96 trailer. The debtors and Navistar were present in Court, along with their respective counsel.

This court has jurisdiction of this matter pursuant to 28 U.S.C. 1334. The valuation hearing is a core proceeding, and the valuation hearing was set by Bankruptcy Court order of June 29, 1999 entered on the debtors’ motion seeking a valuation hearing for the debtors’ assets described above.

Pursuant to the Court’s order for valuation hearing, the debtors and Navistar duly filed the affidavits of their prospective expert witnesses, to which no objections were filed. The affidavits are the direct testimony of each such affiant offered as expert valuation testimony. In that regard, the debtors’ offered the affidavit with attached exhibits of Medford Gossett, who gave the opinion of fair market retail value of the 97 tractor at $58,000 and a fair market retail value of the 96 trailer at $25,900. Navistar presented the testimony of Thomas Sword who gave his opinion that the current retail market value of the 97 tractor is $69,950 and the current retail market value of the 96 trailer is $30,000. Since no objections to the affidavits were filed, the valuation testimony of both witnesses is found by the Court to be expert testimony.

FINDINGS OF FACT

The Court observed the demeanor of the expert witnesses, and the testimony of Stewart Michael DeBorde and Connie DeBorde, together with the exhibits offered into evidence, including the affidavits of the expert witnesses. The Court finds that the opinion of the debtors’ expert witness, Medford Gossett, is the more credible evidence of fair market value of the 97 tractor ($58,000) and the 96 trailer ($24,900).

This determination is made based upon the following factors:

1. Medford Gossett was the most credible expert witness who gave full and complete answers to questions asked of him, including those on cross-examination;

2. Thomas Sword is an employee of Yeary’s Truck Sales and Service, which has full recourse to Navistar for the 97 tractor and 96 trailer;

3. The opinion testimony of Thomas Sword contains errors, including a reference to an electric tarp system on the 96 trailer. The debtors’ testimony seriously contradicted Sword’s testimony of the original cash price of the 96 trailer, and the weight of the evidence leads the Court to conclude that the 96 trailer does not have the heavy duty components that would enhance its value;

4. Thomas Sword, during his redirect testimony, referred to the January/February 1999 NADA Official Commercial Truck Guide for values relating to individual components of the 97 tractor which enhanced its value. When asked by his counsel how those figures would be changed if brought up to date (August 1999), he testified that the values would decrease by 4% to 6% for that five to six-month period. This type of depreciation over a five to six-month period is inconsistent with Mr. Sword’s testimony of value for the 97 tractor which was bought by the debtors from Yeary Truck and Sales Service for $72,500 in November 1998, which he has valued at $69,950, approximately ten months later, which is only 4% less than its selling price.

For the reasons specified above, the Court finds the fair market retail value of the 97 tractor to be $58,000 and the fair market retail value of the 96 trailer to be $24,900.

Dated:

By the court –

_____________________________
JOSEPH M. SCOTT, JR.

U.S. BANKRUPTCY JUDGE

Copies to:

Marcia A. Smith, Esq.

Laura Kincheloe, Esq.

Thomas J. Hodge, Esq.

Beverly M. Burden, Esq.

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

PIKEVILLE

 

IN RE:

STEWART MICHAEL DEBORDE CASE NO. 99-70212

CONNIE LEE DEBORDE

DEBTORS

 

ORDER

 

In conformity with the memorandum opinion of the Court this day entered, IT IS HEREBY ORDERED that the fair market value of the 1997 International tractor (VIN No. 2HSFBAER1VCO21514) is set at $58,000 and the fair market value of the 1996 USTS trailer (VIN No. 1U9DS3633T1051535) is set at $24,900.

Dated:

By the court –

________________________________
JOSEPH M. SCOTT, JR.

U.S. BANKRUPTCY JUDGE

Copies to: Marcia A. Smith, Esq.

Laura Kincheloe, Esq.

Thomas J. Hodge, Esq.

Beverly M. Burden, Esq.