The opinion of the court was delivered by: David N. Hurd United States District Judge
DECISION, ORDER OF SEIZURE and PERMANENT INJUNCTION
On January 26, 2009, an Order and Temporary Restraining Order was entered directing defendant Caskinette Auto Sales, Inc. ("Caskinette") to appear and show cause why an Order should not be entered authorizing the issuance of an Order of Seizure pursuant to N.Y. C.P.L.R. 7102, made applicable herein pursuant to Fed. R. Civ. P. 64, directing the United States Marshal or Sheriff of any county within the State of New York where the property may be found, to seize from Caskinette and deliver to plaintiff GE Commercial Distribution Finance Corporation ("GE CDF"):
A. inventory, accounts, chattel paper, documents, furniture, equipment, fixtures, general intangibles, contract rights, deposit accounts, certificates of deposit, and books, records, disks and tapes;
B. all accessions, accessories and replacements to or of the foregoing; and
C. all proceeds and products of the foregoing; (hereinafter collectively referred to as the "Collateral").
Pursuant to N.Y. C.P.L.R. 7109 and Fed. R. Civ. P. 65(b), the Order further temporarily restrained and enjoined Caskinette and its respective servants, agents, employees, representatives, and all persons acting in concert with it from removing, transferring, dismantling, selling, pledging, encumbering, commingling, using, concealing, hiding or otherwise disposing of, or permitting to become subject to a security interest or lien, the Collateral, including all deposit accounts, described above in any manner inconsistent with plaintiff's interests therein. Effectiveness of the Temporary Restraining Order was conditioned upon GE CDF posting an undertaking in the amount of $1,845,090.24, pursuant to the provisions of N.Y. C.P.L.R. 7102(e), which had been posted on January 23, 2009.
The Order to Show Cause was heard on February 6, 2009, in Utica, New York, at which time an evidentiary hearing regarding GE CDF's motion for a preliminary injunction was scheduled for February 17, 2009. It was further ordered that the Temporary Restraining Order remain in full force and effect pending the hearing. Defendant filed an Answer to plaintiff's Complaint on February 13, 2009.
The parties appeared for the evidentiary hearing on February 17, 2009, in Utica, New York. Pursuant to Fed. R. Civ. P. 65(a)(2), the bench trial on the merits was advanced and consolidated with the hearing. Neither party objected and the case proceeded to trial.
Plaintiff called two witnesses to testify at trial: Daryl Douglas, GE CDF Account Manager, and Clare Woods, GE CDF Field Service Representative. Plaintiff's Exhibits 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10 were received into evidence. Defendant rested its case.
Decision was reserved. It was ordered that the Temporary Restraining Order remain in full force and effect pending a decision being rendered. The following constitutes findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52.
1. GE CDF (as successor in interest of Duetsche Financial Services Corporation) and Caskinette entered into an Agreement for Wholesale Financing ("Agreement") on January 29, 2001.
2. Pursuant to the Agreement Caskinette granted GE CDF a security interest in all of its "inventory, equipment, fixtures, accounts, contract rights, chattel paper, security agreements, insurance policies, and payments owed or made to [Caskinette] thereon; all whether now owned or hereafter acquired, all attachments, accessories, accessions, returns, repossessions, exchanges, substitutions and replacements thereto, and all proceeds thereof." These assets are collectively referenced as "Collateral." (Pl.'s Ex. 1 ¶ 3.)
3. Pursuant to the Agreement Caskinette was to pay GE CDF the principal indebtedness on each unit of Collateral immediately upon the events of, among others, when a unit was lost, stolen, damaged, sold, transferred, rented, leased, or otherwise disposed of. Id. ¶ 9.
4. Additionally, Caskinette was to hold the proceeds of any Collateral in trust for GE CDF and, as set forth in the previous paragraph, immediately remit such proceeds to GE CDF. Id.
5. When a dealer such as Caskinette sells a unit of Collateral and receives proceeds but fails to immediately remit the amount of indebtedness as to that unit to GE CDF, it has been sold-out-of-trust, or "SOT."
6. GE CDF conducts periodic audits of Caskinette's inventory, usually about once a month.
7. During an audit, when a field service representative cannot physically locate a unit of Collateral and no Manufacturer's Statement of Origin can be located, that unit of ...