## Facts

- Textron Financial Corp. (Textron) and Unique Marine, Inc. (Unique Marine) entered into a credit agreement under which Textron financed Unique Marine’s inventory of boats and boating equipment.
- Textron paid manufacturers and suppliers for inventory placed into Unique Marine’s stock, and Unique Marine was required to pay Textron as each financed item was sold to a customer.
- The credit agreement provided that, upon default or breach, Textron could accelerate and declare immediately due the entire unpaid balance of Unique Marine’s obligations.
- Unique Marine’s obligations were secured by a security interest in its inventory of boats and boating equipment, valued at approximately $3.1 million (the collateral).
- After an inspection, Textron determined that Unique Marine had sold six financed items totaling more than $270,000 without reporting the sales to Textron or remitting payment as required (out-of-trust sales).
- Textron declared a default and demanded payment of the accelerated unpaid balance, totaling more than $3.5 million.
- Textron filed suit in the U.S. District Court for the Southern District of Florida and sought emergency relief to recover the collateral, including ex parte prejudgment writs of replevin.
- Textron also requested related emergency “break” orders to allow entry onto premises to seize the identified collateral, and a temporary restraining order (TRO) to prevent further sale, transfer, concealment, or movement of collateral before a hearing.
- In support of ex parte relief, Textron filed a verified complaint, submitted an itemized listing describing the property claimed, and agreed to post a bond of approximately $6.3 million.
- The emergency requests were referred to a magistrate judge for a report and recommendation.

## Issues

1. Whether Textron satisfied Florida’s requirements (applied through Fed. R. Civ. P. 64) for issuance of ex parte prejudgment writs of replevin to seize Unique Marine’s boat-inventory collateral before notice and a hearing.
2. Whether Textron met the standards for a TRO under Fed. R. Civ. P. 65 to restrain Unique Marine from selling, moving, hiding, or otherwise interfering with the collateral pending further proceedings.
3. Whether emergency break orders were warranted as ancillary relief to effectuate the replevin writs and prevent obstruction of the seizure.

## Decision

- The magistrate judge recommended granting Textron’s request for ex parte prejudgment writs of replevin, together with related break orders and a TRO, subject to the required bond and statutory procedures.
- The magistrate judge found Textron made a sufficient showing that Unique Marine was in default based on out-of-trust sales, which triggered Textron’s contractual rights, including acceleration and the right to recover collateral securing the debt.
- The magistrate judge concluded Textron satisfied core procedural requirements for prejudgment replevin by filing a verified pleading, providing a specific itemized description of the property, and offering a substantial bond to protect against damages from any wrongful seizure.
- The magistrate judge determined that ex parte relief was justified because the collateral consisted of movable inventory and Unique Marine’s prior unreported sales supported a reasonable concern that remaining collateral could be sold, relocated, concealed, or otherwise placed beyond Textron’s reach before a hearing.
- The magistrate judge recommended issuing break orders to ensure the writs could be executed effectively and without delay.

## Legal Principles

- Under Fed. R. Civ. P. 64, a federal court may use state-law prejudgment remedies, including replevin, to secure property at issue in the litigation, using the procedures provided by state law.
- Florida’s prejudgment replevin procedures require a verified showing of the claimant’s right to immediate possession and a sufficiently specific description of the property to be seized; the claimant must post a bond as required by statute.
- Ex parte prejudgment seizure is an extraordinary remedy and is permitted only when the verified showing supports immediate action, including a demonstrated risk that the defendant may conceal, move, damage, or dispose of the property before notice and a hearing can occur.
- A TRO under Fed. R. Civ. P. 65 requires a showing including likelihood of success on the merits and a risk of immediate, irreparable harm absent injunctive relief; restraining orders may be used to preserve the status quo until the court can hold a prompt hearing.
- Orders permitting entry to seize specified collateral (break orders) may be issued to carry out replevin relief when necessary to prevent frustration of the court-authorized seizure, and may be conditioned on the statutory bond and other safeguards.

## Conclusion

Textron’s verified filings showed that Unique Marine sold financed inventory out of trust and failed to remit proceeds, triggering default, acceleration, and Textron’s right to recover inventory collateral; because the remaining collateral was movable and at risk of further sale or concealment, the magistrate judge recommended ex parte prejudgment replevin, a TRO, and related break orders, conditioned on compliance with Florida replevin procedures and Textron’s bond.


Textron Financial Corp. v. Unique Marine, Inc., 2008 WL 4716965 (2008)