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Ask Our Lawyer - May 2003

Q: At the recent state meetings, one of our ABATE members approached me about a problem he was having. Since it looks like something that all of you should be aware of, I decided to devote this month's column to it. Here's the story:
Our member placed his custom bike for sale on consignment with a bike shop that specialized in selling custom bikes. The owner promised to sell the bike, but the sale never materialized. After many failed deals and several months, he tried to remove the motorcycle in July 2001, but the owner insisted that he was going to take it to a show. The motorcycle was sold, but the our member never received the $20,000.00 to which he was entitled. After learning that the owner might file for bankruptcy protection, our member tried to collect his money.
In the meantime, the owner did file a bankruptcy, and the local prosecutors began to look into the owner's transactions. The bankruptcy court ordered the business assets sold to pay the debts, and our member received nothing from the court after the secured creditors and bankruptcy lawyers were paid. To add insult to injury, a finance company was asking the court to order all of the consignment sellers (including our member) to turn over the titles to the bikes so that they could be delivered to the buyers. While the prosecutors have reviewed the case with a grand jury, no indictments have yet been issued. Our member asked me what he should do.

A. I have few suggestions, and fewer good ideas on how he can get his money back. The best advice is to NEVER engage in a consignment sale without having a lawyer review and help draft the sales documents. There are contract terms and provisions that can enhance your ability to make sure you can receive payment for you bike, but no-one can offer an iron-clad guarantee. The best way to avoid getting screwed like our member was is to not put yourself in the position to start with. Consignment sales are fraught with danger and are best avoided altogether.
What else is available for our member? For starters, the bankruptcy should be challenged due to the fraud of the owner. However, proving fraud is always difficult, and collecting the restitution can be problematic. If our member still has the title to the bike, he can try to have the court order the bike returned to him. Again, while the arguments for doing so are legally sound, they require that the court be convinced and enter the proper orders. If our member doesn't have the title, the outlook is pretty bleak and is basically left up to the tender mercies of the bankruptcy court and the prosecutor's office.

Notes and thoughts

In a previous column, I engaged in one of my favorite past times, making fun of the French. I told French jokes, and many wrote me to say that I was too easy on them. When I learned that 23,241 Americans were buried in France from World War I, and 34,365 Americans are buried in France from World War II, I changed my mind. How many French are buried in America who died fighting for us - three? I think we should bring them home and bury them in hallowed ground - and that is certainly not France.

If you have any questions you would like to ask the lawyer, please submit them to: ASK OUR LAWYER, P.O. Box 2850, Indianapolis, Indiana 46206-2850, or email rodtaylor@abatelegal.com.