{ "attribution": { "source": "legal.exploreworldai.com", "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca6-24-5862-2025-08-05", "cite_as": "NovaCopilot, legal.exploreworldai.com (https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca6-24-5862-2025-08-05)", "license": "https://legal.exploreworldai.com/revision", "version": "legal-2026-10-10", "fingerprint": "ewai:us:e7268f", "proof": "sha256:0ff65ee545d415f5f02dfefaa30e5abe38dce92482273bd99cb5c4d61abbe54f", "jurisdiction": "us", "lang": "en", "publisher": "NovaCopilot by ExploreWorld Legal", "terms": "https://legal.exploreworldai.com/om" }, "brand_source": "Source: NovaCopilot", "item": { "schema_version": "1.0.0", "id": "us:ca6-24-5862-2025-08-05", "jurisdiction": "us", "lang": "en", "brand_source": "Source: NovaCopilot", "brand": { "product": "NovaCopilot", "platform": "ExploreWorldAI", "infrastructure": "ExploreWorld Legal", "infrastructure_url": "legal.exploreworldai.com", "legal_entity": "Valkiv Ventures AB", "permanent_url": "https://legal.exploreworldai.com/novacopilot", "source": "Source: NovaCopilot", "powered_by": "Powered by NovaCopilot", "license": "https://legal.exploreworldai.com/licensvillkor" }, "sections": [ { "title": "RECOMMENDED FOR PUBLICATION", "paragraphs": [] }, { "title": "Pursuant to Sixth Circuit I.O.P. 32.1(b)", "paragraphs": [] }, { "title": "File Name: 25a0206p.06", "paragraphs": [] }, { "title": "UNITED STATES COURT OF APPEALS", "paragraphs": [] }, { "title": "FOR THE SIXTH CIRCUIT", "paragraphs": [ "para_6", "para_7", "para_8", "para_9", "para_10", "para_11", "para_12", "para_13", "para_14", "para_15", "para_16", "para_17", "para_18", "para_19" ] }, { "title": "No. 24-5862", "paragraphs": [ "para_21", "para_22" ] }, { "title": "Argued: April 30, 2025", "paragraphs": [] }, { "title": "Decided and Filed: August 5, 2025", "paragraphs": [] }, { "title": "Before: MOORE and NALBANDIAN, Circuit Judges.*", "paragraphs": [ "para_26" ] }, { "title": "COUNSEL", "paragraphs": [] }, { "title": "ARGUED: Rachele T. Yohe, BULLOCK & ASSOCIATES, LLC, Lexington, Kentucky, for", "paragraphs": [] }, { "title": "Appellants. Carte P. Goodwin, FROST BROWN TODD LLP, Charleston, West Virginia, for", "paragraphs": [ "para_30" ] }, { "title": "LLC, Lexington, Kentucky, for Appellants. Carte P. Goodwin, Blake N. Humphrey, FROST", "paragraphs": [] }, { "title": "BROWN TODD LLP, Charleston, West Virginia, Greg E. Mitchell, David C. Olson, GLOBAL", "paragraphs": [ "para_33", "para_34", "para_35", "para_36" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 2", "paragraphs": [ "para_38" ] }, { "title": "OPINION", "paragraphs": [ "para_40" ] }, { "title": "NALBANDIAN, Circuit Judge. HBKY, LLC and Elk River Export, LLC, each claim", "paragraphs": [ "para_42", "para_43", "para_44", "para_45", "para_46" ] }, { "title": "LLC. Kingdom contracted with Elk River for Elk River to cut and remove timber from certain", "paragraphs": [ "para_48", "para_49", "para_50" ] }, { "title": "HBKY in June 2016. And Kingdom signed the operative contract with Elk River in March", "paragraphs": [] }, { "title": "2017.2", "paragraphs": [ "para_53" ] }, { "title": "Kingdom ousted Elk River from the properties, breaching the timber contract. Then, Kingdom", "paragraphs": [ "para_55", "para_56" ] }, { "title": "In 2018, HBKY secured a judgment in New York federal court declaring Kingdom in", "paragraphs": [ "para_58", "para_59", "para_60", "para_61", "para_62", "para_63", "para_64", "para_65", "para_66" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 3", "paragraphs": [ "para_68", "para_69" ] }, { "title": "The district court granted summary judgment to HBKY, rejecting all of Elk River’s", "paragraphs": [ "para_71", "para_72", "para_73" ] }, { "title": "District courts grant summary judgment when “there is no genuine dispute as to any", "paragraphs": [ "para_75", "para_76", "para_77" ] }, { "title": "The parties agree that Kentucky law, including its adoption of the Uniform Commercial", "paragraphs": [ "para_79", "para_80", "para_81", "para_82", "para_83", "para_84", "para_85" ] }, { "title": "Elk River has two main arguments. First, it argues that the loan documents carved out an", "paragraphs": [ "para_87", "para_88", "para_89" ] }, { "title": "We first consider the authorized-sale theory. When a debtor sells collateral, the security", "paragraphs": [ "para_91", "para_92", "para_93" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 4", "paragraphs": [ "para_95", "para_96", "para_97", "para_98", "para_99", "para_100", "para_101", "para_102", "para_103", "para_104", "para_105" ] }, { "title": "HBKY did not agree to release its security interest. When Kingdom mortgaged its", "paragraphs": [ "para_107", "para_108", "para_109", "para_110", "para_111" ] }, { "title": "The mortgage also discussed sales of the collateral. It provided: “The lien and security", "paragraphs": [ "para_113", "para_114", "para_115", "para_116" ] }, { "title": "In response, Elk River points to three provisions of other documents that were part of the", "paragraphs": [ "para_118", "para_119", "para_120", "para_121", "para_122" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 5", "paragraphs": [] }, { "title": "Second, Elk River cites the Note Purchase Agreement, which provided that HBKY would", "paragraphs": [ "para_125", "para_126", "para_127", "para_128", "para_129" ] }, { "title": "Third, Elk River points to the Royalty Assignment. In that document, Kingdom", "paragraphs": [ "para_131", "para_132", "para_133", "para_134", "para_135" ] }, { "title": "While these references may show that HBKY expected Kingdom to sell timber and knew", "paragraphs": [ "para_137", "para_138", "para_139" ] }, { "title": "S.W.3d 841, 845 (Ky. Ct. App. 2000). And while the Security Agreement, Note Purchase", "paragraphs": [ "para_141" ] }, { "title": "HBKY’s security interest will survive any sale—a “sale” shall not “impair[]” the security", "paragraphs": [ "para_143" ] }, { "title": "Can we still find some sort of implied release? Elk River thinks so. As support, it cites", "paragraphs": [ "para_145", "para_146", "para_147", "para_148", "para_149", "para_150", "para_151" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 6", "paragraphs": [] }, { "title": "Similarly, the Kentucky Supreme Court has found authorization free of a security interest", "paragraphs": [ "para_154", "para_155", "para_156", "para_157" ] }, { "title": "But neither Universal C.I.T. Credit Corp. nor Trimble govern here.3 In neither case did", "paragraphs": [ "para_159", "para_160", "para_161", "para_162", "para_163", "para_164", "para_165", "para_166", "para_167", "para_168", "para_169", "para_170", "para_171", "para_172", "para_173", "para_174", "para_175", "para_176", "para_177", "para_178", "para_179", "para_180", "para_181", "para_182", "para_183", "para_184", "para_185", "para_186", "para_187", "para_188" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 7", "paragraphs": [ "para_190" ] }, { "title": "Even when a secured party doesn’t agree to release his lien, a later buyer can still claim", "paragraphs": [ "para_192", "para_193", "para_194" ] }, { "title": "This defense has several elements. The party must “buy[] goods in good faith, without", "paragraphs": [ "para_196", "para_197", "para_198", "para_199", "para_200" ] }, { "title": "This defense protects good-faith buyers when the secured party leaves the collateral with", "paragraphs": [ "para_202", "para_203", "para_204", "para_205", "para_206" ] }, { "title": "We’re on summary judgment, so the burden generally rests on HBKY (as the moving", "paragraphs": [ "para_208", "para_209", "para_210", "para_211", "para_212", "para_213" ] }, { "title": "HBKY has met its burden. HBKY has shown that Elk River hasn’t provided evidentiary", "paragraphs": [ "para_215", "para_216" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 8", "paragraphs": [] }, { "title": "We acknowledge that Elk River did do enough on one or two elements—for example, on", "paragraphs": [ "para_219", "para_220", "para_221", "para_222", "para_223", "para_224", "para_225" ] }, { "title": "622, 623 (Ky. Ct. App. 1924) (internal quotation marks omitted). The term “immediate", "paragraphs": [ "para_227", "para_228", "para_229", "para_230", "para_231", "para_232", "para_233", "para_234", "para_235", "para_236", "para_237", "para_238", "para_239", "para_240", "para_241", "para_242", "para_243", "para_244", "para_245", "para_246" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 9", "paragraphs": [ "para_248", "para_249" ] }, { "title": "But all of this helps Elk River on only one part of its defense. Questions about title and", "paragraphs": [ "para_251", "para_252", "para_253" ] }, { "title": "The Plaintiff does not even attempt to claim that Elk River purchased the timber", "paragraphs": [ "para_255", "para_256", "para_257", "para_258", "para_259", "para_260", "para_261", "para_262", "para_263" ] }, { "title": "But Elk River never showed the district court that Kingdom was “in the business of", "paragraphs": [ "para_265", "para_266", "para_267", "para_268", "para_269", "para_270", "para_271", "para_272", "para_273", "para_274", "para_275", "para_276", "para_277", "para_278", "para_279", "para_280", "para_281" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 10", "paragraphs": [ "para_283", "para_284" ] }, { "title": "On appeal, Elk River directs us to HBKY’s complaint, which joined many defendants", "paragraphs": [ "para_286", "para_287", "para_288", "para_289" ] }, { "title": "The Columbia contract doesn’t do Elk River any good. First, Elk River didn’t cite it in", "paragraphs": [ "para_291", "para_292", "para_293", "para_294", "para_295", "para_296" ] }, { "title": "Second, even considering the Columbia contract, there’s still insufficient evidence to", "paragraphs": [ "para_298", "para_299", "para_300", "para_301", "para_302" ] }, { "title": "K-Z Motors & Leasing Co., 309 N.E.2d 567, 568–69 (Ill. 1974) (sufficient evidence that", "paragraphs": [ "para_304", "para_305", "para_306", "para_307", "para_308", "para_309" ] }, { "title": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 11", "paragraphs": [ "para_311", "para_312" ] }, { "title": "It’s true that Kingdom sold timber to Elk River. But one transaction alone does not", "paragraphs": [ "para_314", "para_315", "para_316" ] }, { "title": "Oliver, 571 S.W.2d 102, 108 (Ky. Ct. App. 1978) (car rental company not in the business of", "paragraphs": [ "para_318", "para_319", "para_320", "para_321" ] }, { "title": "In sum, this record doesn’t tell us very much about who Kingdom is or what it does. The", "paragraphs": [ "para_323", "para_324" ] }, { "title": "The loan didn’t carve out any exception to HBKY’s first-priority lien, and Elk River", "paragraphs": [ "para_326", "para_327", "para_328", "para_329" ] } ], "paragraphs": [ { "text": "RECOMMENDED FOR PUBLICATION", "paragraph_id": "para_1" }, { "text": "Pursuant to Sixth Circuit I.O.P. 32.1(b)", "paragraph_id": "para_2" }, { "text": "File Name: 25a0206p.06", "paragraph_id": "para_3" }, { "text": "UNITED STATES COURT OF APPEALS", "paragraph_id": "para_4" }, { "text": "FOR THE SIXTH CIRCUIT", "paragraph_id": "para_5" }, { "text": "HBKY, LLC,", "paragraph_id": "para_6" }, { "text": "Plaintiff-Appellee,", "paragraph_id": "para_7" }, { "text": "v.", "paragraph_id": "para_8" }, { "text": "ELK RIVER EXPORT, LLC; ROBIN T. WILSON,", "paragraph_id": "para_9" }, { "text": "Defendants-Appellants.", "paragraph_id": "para_10" }, { "text": "┐", "paragraph_id": "para_11" }, { "text": "│", "paragraph_id": "para_12" }, { "text": "│", "paragraph_id": "para_13" }, { "text": "│", "paragraph_id": "para_14" }, { "text": "│", "paragraph_id": "para_15" }, { "text": "│", "paragraph_id": "para_16" }, { "text": "│", "paragraph_id": "para_17" }, { "text": "│", "paragraph_id": "para_18" }, { "text": "┘", "paragraph_id": "para_19" }, { "text": "No. 24-5862", "paragraph_id": "para_20" }, { "text": "Appeal from the United States District Court for the Eastern District of Kentucky at London.", "paragraph_id": "para_21" }, { "text": "No. 6:21-cv-00101—Gregory F. VanTatenhove, District Judge.", "paragraph_id": "para_22" }, { "text": "Argued: April 30, 2025", "paragraph_id": "para_23" }, { "text": "Decided and Filed: August 5, 2025", "paragraph_id": "para_24" }, { "text": "Before: MOORE and NALBANDIAN, Circuit Judges.*", "paragraph_id": "para_25" }, { "text": "_________________", "paragraph_id": "para_26" }, { "text": "COUNSEL", "paragraph_id": "para_27" }, { "text": "ARGUED: Rachele T. Yohe, BULLOCK & ASSOCIATES, LLC, Lexington, Kentucky, for", "paragraph_id": "para_28" }, { "text": "Appellants. Carte P. Goodwin, FROST BROWN TODD LLP, Charleston, West Virginia, for", "paragraph_id": "para_29" }, { "text": "Appellee. ON BRIEF: Rachele T. Yohe, Thomas D. Bullock, BULLOCK & ASSOCIATES,", "paragraph_id": "para_30" }, { "text": "LLC, Lexington, Kentucky, for Appellants. Carte P. Goodwin, Blake N. Humphrey, FROST", "paragraph_id": "para_31" }, { "text": "BROWN TODD LLP, Charleston, West Virginia, Greg E. Mitchell, David C. Olson, GLOBAL", "paragraph_id": "para_32" }, { "text": "REGULATORY RISK & COMPLIANCE PLLC, Frankfort, Kentucky, for Appellee.", "paragraph_id": "para_33" }, { "text": "*During the pendency of this appeal, the Hon. Richard F. Suhrheinrich, a member of the original panel,", "paragraph_id": "para_34" }, { "text": "retired. Judge Moore and Judge Nalbandian act as a quorum pursuant to 28 U.S.C. § 46(d).", "paragraph_id": "para_35" }, { "text": ">", "paragraph_id": "para_36" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 2", "paragraph_id": "para_37" }, { "text": "_________________", "paragraph_id": "para_38" }, { "text": "OPINION", "paragraph_id": "para_39" }, { "text": "_________________", "paragraph_id": "para_40" }, { "text": "NALBANDIAN, Circuit Judge. HBKY, LLC and Elk River Export, LLC, each claim", "paragraph_id": "para_41" }, { "text": "thousands of acres of timber in Kentucky. They interpret a series of timber sales contracts,", "paragraph_id": "para_42" }, { "text": "security agreements, and mortgages differently. Finding that HBKY had the better reading of the", "paragraph_id": "para_43" }, { "text": "relevant documents, the district court granted summary judgment. We agree, and so we affirm.", "paragraph_id": "para_44" }, { "text": "I.", "paragraph_id": "para_45" }, { "text": "HBKY and Elk River both had deals with a third company, Kingdom Energy Resources,", "paragraph_id": "para_46" }, { "text": "LLC. Kingdom contracted with Elk River for Elk River to cut and remove timber from certain", "paragraph_id": "para_47" }, { "text": "land. But Kingdom also took out a $22 million loan from a group of lenders, who set up HBKY", "paragraph_id": "para_48" }, { "text": "to handle the loan.1 In return, Kingdom mortgaged several properties—including those on which", "paragraph_id": "para_49" }, { "text": "the timber stood—and gave HBKY a security interest in them. Kingdom executed the loan with", "paragraph_id": "para_50" }, { "text": "HBKY in June 2016. And Kingdom signed the operative contract with Elk River in March", "paragraph_id": "para_51" }, { "text": "2017.2", "paragraph_id": "para_52" }, { "text": "Kingdom didn’t follow through on its obligations with either Elk River or HBKY. First,", "paragraph_id": "para_53" }, { "text": "Kingdom ousted Elk River from the properties, breaching the timber contract. Then, Kingdom", "paragraph_id": "para_54" }, { "text": "didn’t pay back the loan, leaving HBKY in the lurch. That left Elk River and HBKY both with", "paragraph_id": "para_55" }, { "text": "valid legal claims against Kingdom, but also competing for the same prize—the timber.", "paragraph_id": "para_56" }, { "text": "In 2018, HBKY secured a judgment in New York federal court declaring Kingdom in", "paragraph_id": "para_57" }, { "text": "default on the loan. HBKY then registered that judgment in the Eastern District of Kentucky and", "paragraph_id": "para_58" }, { "text": "began foreclosing on the collateral, including the timber, located there. The foreclosure suit", "paragraph_id": "para_59" }, { "text": "1From now on, we refer to the lenders (and their interests) as HBKY (and HBKY’s interests). HBKY is", "paragraph_id": "para_60" }, { "text": "technically the lenders’ agent and assignee.", "paragraph_id": "para_61" }, { "text": "2Elk River and Kingdom first signed a timber contract on May 5, 2016, before the secured loan’s", "paragraph_id": "para_62" }, { "text": "execution. But they renegotiated several times and kept settling on different terms. They replaced the original", "paragraph_id": "para_63" }, { "text": "contract with a new one on May 11, 2016, also before Kingdom mortgaged the timber to HBKY. After the loan and", "paragraph_id": "para_64" }, { "text": "mortgage, Elk River and Kingdom renegotiated again with a third timber contract on July 7, 2016. They did so for", "paragraph_id": "para_65" }, { "text": "the final time on March 1, 2017.", "paragraph_id": "para_66" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 3", "paragraph_id": "para_67" }, { "text": "joined Elk River and its president, Robin Wilson, as defendants who claimed an interest in the", "paragraph_id": "para_68" }, { "text": "collateral.", "paragraph_id": "para_69" }, { "text": "The district court granted summary judgment to HBKY, rejecting all of Elk River’s", "paragraph_id": "para_70" }, { "text": "arguments—Elk River didn’t take title to the timber under the contracts, didn’t have a superior", "paragraph_id": "para_71" }, { "text": "interest, and wasn’t a buyer in the ordinary course of business. Elk River appealed.", "paragraph_id": "para_72" }, { "text": "II.", "paragraph_id": "para_73" }, { "text": "District courts grant summary judgment when “there is no genuine dispute as to any", "paragraph_id": "para_74" }, { "text": "material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).", "paragraph_id": "para_75" }, { "text": "We review summary-judgment grants de novo. Walden v. Gen. Elec. Int’l, Inc., 119 F.4th 1049,", "paragraph_id": "para_76" }, { "text": "1056 (6th Cir. 2024).", "paragraph_id": "para_77" }, { "text": "The parties agree that Kentucky law, including its adoption of the Uniform Commercial", "paragraph_id": "para_78" }, { "text": "Code (UCC), governs the contracts and loan documents. In a secured transaction under Article 9", "paragraph_id": "para_79" }, { "text": "of the UCC, a borrower who takes a loan gives the lender a security interest in some property—", "paragraph_id": "para_80" }, { "text": "the collateral—to ensure repayment of the debt. The secured lender can foreclose on the", "paragraph_id": "para_81" }, { "text": "collateral if the debtor defaults. See Ky. Rev. Stat. Ann. § 355.9-201, 203, 601.", "paragraph_id": "para_82" }, { "text": "When Kingdom took out the loan, HBKY took a security interest in the timber.", "paragraph_id": "para_83" }, { "text": "Generally, a valid, perfected security interest prevails over other interests. Ky. Rev. Stat. Ann.", "paragraph_id": "para_84" }, { "text": "§ 355.9-201. So the question is whether Elk River can trump HBKY’s security interest.", "paragraph_id": "para_85" }, { "text": "Elk River has two main arguments. First, it argues that the loan documents carved out an", "paragraph_id": "para_86" }, { "text": "exception for the timber, authorizing the sale to Elk River free of the security interest. Second,", "paragraph_id": "para_87" }, { "text": "Elk River claims that it bought the timber in the ordinary course of business.", "paragraph_id": "para_88" }, { "text": "A.", "paragraph_id": "para_89" }, { "text": "We first consider the authorized-sale theory. When a debtor sells collateral, the security", "paragraph_id": "para_90" }, { "text": "interest follows the collateral through the sale “unless the secured party authorized the", "paragraph_id": "para_91" }, { "text": "disposition free of the security interest.” Ky. Rev. Stat. Ann. § 355.9-315(1)(a). Thus, without", "paragraph_id": "para_92" }, { "text": "the secured party’s consent, “a debtor cannot avoid or nullify a security interest in property by", "paragraph_id": "para_93" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 4", "paragraph_id": "para_94" }, { "text": "sale or transfer.” In re Bluegrass Ford-Mercury, Inc., 942 F.2d 381, 386 (6th Cir. 1991)", "paragraph_id": "para_95" }, { "text": "(Kentucky UCC).", "paragraph_id": "para_96" }, { "text": "The secured party must authorize a sale free of the security interest to release the security", "paragraph_id": "para_97" }, { "text": "interest. In other words, the secured party must give consent for both the sale and the dissolution", "paragraph_id": "para_98" }, { "text": "of the lien. See id. So consent to “the sale of secured property” isn’t necessarily the same as", "paragraph_id": "para_99" }, { "text": "consent to “a transfer free of a security interest.” Wegner v. Grunewaldt, 821 F.2d 1317, 1321", "paragraph_id": "para_100" }, { "text": "(8th Cir. 1987) (South Dakota UCC); see also In re S. Props., Inc., 44 B.R. 838, 842 (Bankr.", "paragraph_id": "para_101" }, { "text": "E.D. Va. 1984) (same under Virginia UCC); In re Hanson Restaurants, Inc., 155 B.R. 758, 761–", "paragraph_id": "para_102" }, { "text": "62 (Bankr. D. Minn. 1993) (same under Minnesota UCC). If the secured party authorizes a sale", "paragraph_id": "para_103" }, { "text": "but doesn’t lift the lien, the transferee can still lawfully take the collateral. But he takes it", "paragraph_id": "para_104" }, { "text": "encumbered.", "paragraph_id": "para_105" }, { "text": "HBKY did not agree to release its security interest. When Kingdom mortgaged its", "paragraph_id": "para_106" }, { "text": "property as collateral for the loan, Kingdom and HBKY agreed that HBKY would take “a", "paragraph_id": "para_107" }, { "text": "continuing security interest in . . . [a]ll . . . timber.” R. 316-7, Mortgage, p.2–3, PageID 6296–", "paragraph_id": "para_108" }, { "text": "97. The mortgage provided that this security interest was a “valid, perfected first priority lien.”", "paragraph_id": "para_109" }, { "text": "Id. at p.7, PageID 6301. And it stated that “the lien of this Security Document shall be absolute", "paragraph_id": "para_110" }, { "text": "and unconditional.” Id. at p.23, PageID 6317.", "paragraph_id": "para_111" }, { "text": "The mortgage also discussed sales of the collateral. It provided: “The lien and security", "paragraph_id": "para_112" }, { "text": "interest hereof shall not in any manner be impaired or affected by . . . sale . . . or disposition of", "paragraph_id": "para_113" }, { "text": "any of the Secured Obligations, or of any of the collateral or security therefor . . . .” Id. Put", "paragraph_id": "para_114" }, { "text": "simply, any “sale” of the collateral would not “impair[]” the security interest. So the parties did", "paragraph_id": "para_115" }, { "text": "not agree to lift the security interest upon the timber’s sale.", "paragraph_id": "para_116" }, { "text": "In response, Elk River points to three provisions of other documents that were part of the", "paragraph_id": "para_117" }, { "text": "larger loan package. First, Elk River notes that the Security Agreement stated: “Except for the", "paragraph_id": "para_118" }, { "text": "sale or lease of Inventory in the ordinary course of business and other sales of assets expressly", "paragraph_id": "para_119" }, { "text": "permitted by the term of the Note Purchase Agreement, each Debtor will keep the Collateral at", "paragraph_id": "para_120" }, { "text": "the locations specified.” R. 1-7, Security Agreement, p.11, PageID 859. Elk River argues that", "paragraph_id": "para_121" }, { "text": "this clause assumed that timber sales would go forward.", "paragraph_id": "para_122" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 5", "paragraph_id": "para_123" }, { "text": "Second, Elk River cites the Note Purchase Agreement, which provided that HBKY would", "paragraph_id": "para_124" }, { "text": "“establish . . . procedures acceptable to [HBKY], in [HBKY’s] sole discretion, for the collection", "paragraph_id": "para_125" }, { "text": "of checks, wire transfers, revenues, sales proceeds (including, without limitation from the sale of", "paragraph_id": "para_126" }, { "text": "timber . . .).” R. 317-6, Note Purchase Agreement, p.4, PageID 8075. Elk River again insists", "paragraph_id": "para_127" }, { "text": "that this clause assumed that Elk River would sell timber—how else would it give HBKY “sales", "paragraph_id": "para_128" }, { "text": "proceeds” from a “sale of timber”?", "paragraph_id": "para_129" }, { "text": "Third, Elk River points to the Royalty Assignment. In that document, Kingdom", "paragraph_id": "para_130" }, { "text": "warranted to HBKY “that the Royalty Interests conveyed to . . . [HBKY] are each free and clear", "paragraph_id": "para_131" }, { "text": "of any and all . . . encumbrances or burdens other than . . . [the] Timber Sale Contract between", "paragraph_id": "para_132" }, { "text": "Grantor and Elk River Export, LLC.” R. 50-3, Royalty Assignment, pp.1–2, PageID 1886–87.", "paragraph_id": "para_133" }, { "text": "The Royalty Assignment also stated that Kingdom was supposed to market and sell the timber.", "paragraph_id": "para_134" }, { "text": "Id. at p.3, PageID 1888.", "paragraph_id": "para_135" }, { "text": "While these references may show that HBKY expected Kingdom to sell timber and knew", "paragraph_id": "para_136" }, { "text": "of Kingdom’s dealings with Elk River, they don’t show that HBKY agreed to extinguish its", "paragraph_id": "para_137" }, { "text": "security interest. The various legal instruments, executed together as part of one larger", "paragraph_id": "para_138" }, { "text": "transaction, must be interpreted together. See ABCO-BRAMER, Inc. v. Markel Ins. Co., 55", "paragraph_id": "para_139" }, { "text": "S.W.3d 841, 845 (Ky. Ct. App. 2000). And while the Security Agreement, Note Purchase", "paragraph_id": "para_140" }, { "text": "Agreement, and Royalty Assignment may authorize timber sales, the mortgage makes clear that", "paragraph_id": "para_141" }, { "text": "HBKY’s security interest will survive any sale—a “sale” shall not “impair[]” the security", "paragraph_id": "para_142" }, { "text": "interest. R. 316-7, Mortgage, p.23, PageID 6317.", "paragraph_id": "para_143" }, { "text": "Can we still find some sort of implied release? Elk River thinks so. As support, it cites", "paragraph_id": "para_144" }, { "text": "one case, Universal C.I.T. Credit Corp. v. Middlesboro Motor Sales, Inc., which held that", "paragraph_id": "para_145" }, { "text": "authorization to sell goods in the ordinary course of business can be authorization free of the", "paragraph_id": "para_146" }, { "text": "lien. 424 S.W.2d 409, 412–13 (Ky. Ct. App. 1968). The agreement in that case provided that", "paragraph_id": "para_147" }, { "text": "the debtor had “liberty to exhibit and to sell each chattle [sic] in the ordinary course of trade and", "paragraph_id": "para_148" }, { "text": "for the respective Principal Obligations shown in the respective statements.” Id. at 412 (internal", "paragraph_id": "para_149" }, { "text": "quotation marks omitted). At face value, this looks a little like Kingdom’s situation; Elk River", "paragraph_id": "para_150" }, { "text": "argues that the loan documents let Kingdom sell trees in the ordinary course.", "paragraph_id": "para_151" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 6", "paragraph_id": "para_152" }, { "text": "Similarly, the Kentucky Supreme Court has found authorization free of a security interest", "paragraph_id": "para_153" }, { "text": "implied under some circumstances. In Trimble v. North Ridge Farms, Inc., the court held that a", "paragraph_id": "para_154" }, { "text": "security agreement allowing collateral to “be sold, exchanged or otherwise transferred or", "paragraph_id": "para_155" }, { "text": "assigned” permitted a transferee to take the property sans lien. 700 S.W.2d 396, 397–98 (Ky.", "paragraph_id": "para_156" }, { "text": "1985).", "paragraph_id": "para_157" }, { "text": "But neither Universal C.I.T. Credit Corp. nor Trimble govern here.3 In neither case did", "paragraph_id": "para_158" }, { "text": "the contracts explicitly say that the security interest would remain unaltered by any sale. The", "paragraph_id": "para_159" }, { "text": "mortgage in this case does. So Kingdom could dispose of the timber, but the mortgage made", "paragraph_id": "para_160" }, { "text": "clear that HBKY would keep its security interest, whatever happened to it.", "paragraph_id": "para_161" }, { "text": "3We also have questions about these cases’ applicability today because the relevant UCC language has", "paragraph_id": "para_162" }, { "text": "since changed.", "paragraph_id": "para_163" }, { "text": "Before 2001, the UCC and the Kentucky UCC required that “the disposition . . . was authorized,” without a", "paragraph_id": "para_164" }, { "text": "clear statement that the sale be authorized free of the security interest. The old language was more amenable to", "paragraph_id": "para_165" }, { "text": "finding implied releases, as Universal C.I.T. Credit Corp. and Trimble show. See Pre-Revision U.C.C. § 9-306(2),", "paragraph_id": "para_166" }, { "text": "in Appendix O, Uniform Commercial Code (Am. L. Inst. & Nat’l Conf. of Comm’rs on Unif. State L. 2023) (“[A]", "paragraph_id": "para_167" }, { "text": "security interest continues in collateral notwithstanding sale, exchange or other disposition thereof unless the", "paragraph_id": "para_168" }, { "text": "disposition was authorized by the secured party in the security agreement or otherwise.”) (emphasis added); 1958", "paragraph_id": "para_169" }, { "text": "Ky. Acts 396 (“[A] security interest continues in collateral notwithstanding sale, exchange or other disposition", "paragraph_id": "para_170" }, { "text": "thereof by the debtor unless his action was authorized by the secured party . . . .”) (emphasis added).", "paragraph_id": "para_171" }, { "text": "To be sure, the official commentary didn’t favor implied releases. It remarked that a “transferee will", "paragraph_id": "para_172" }, { "text": "acquire the collateral free and clear of a preexisting security interest only if the disposition of the collateral by the", "paragraph_id": "para_173" }, { "text": "debtor was authorized by the secured party free and clear of the secured party’s security interest.” Pre-Revision", "paragraph_id": "para_174" }, { "text": "U.C.C. § 9-306 cmt. 3, in Appendix O, Uniform Commercial Code (Am. L. Inst. & Nat’l Conf. of Comm’rs on", "paragraph_id": "para_175" }, { "text": "Unif. State L. 2023) (emphasis added). And other courts didn’t favor implied releases. See Wegner, 821 F.2d at", "paragraph_id": "para_176" }, { "text": "1321; N. Com. Co. v. Cobb, 778 P.2d 205, 208 (Alaska 1989). Neither did the dissent in Trimble. 700 S.W.2d at", "paragraph_id": "para_177" }, { "text": "398 (Stephenson, J., dissenting) (“We should afford more dignity to a recorded security interest . . . . Any", "paragraph_id": "para_178" }, { "text": "authorization in accordance with the statute should be specific and not by inference.”).", "paragraph_id": "para_179" }, { "text": "But in 2000, the text of the UCC and Kentucky UCC was amended (effective 2001). Now the text states", "paragraph_id": "para_180" }, { "text": "that a security interest continues “unless the secured party authorized the disposition free of the security interest.”", "paragraph_id": "para_181" }, { "text": "U.C.C. § 9-315(a)(1) (Am. L. Inst. & Nat’l Conf. of Comm’rs on Unif. State L. 2023); 2000 Ky. Acts 1321 (codified", "paragraph_id": "para_182" }, { "text": "at Ky. Rev. Stat. Ann. § 355.9-315(1)(a)). According to the commentary, this change “makes explicit that the", "paragraph_id": "para_183" }, { "text": "authorized disposition to which [the provision] refers is an authorized disposition ‘free of’ the security interest.”", "paragraph_id": "para_184" }, { "text": "U.C.C. § 9-315 cmt. 2 (Am. L. Inst. & Nat’l Conf. of Comm’rs on Unif. State L. 2023); Ky. Rev. Stat. Ann. § 355.9-", "paragraph_id": "para_185" }, { "text": "315 cmt. 2.", "paragraph_id": "para_186" }, { "text": "So whatever the correct reading of the pre-2001 UCC text, it’s possible that the Kentucky courts would", "paragraph_id": "para_187" }, { "text": "approach implied releases differently today.", "paragraph_id": "para_188" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 7", "paragraph_id": "para_189" }, { "text": "B.", "paragraph_id": "para_190" }, { "text": "Even when a secured party doesn’t agree to release his lien, a later buyer can still claim", "paragraph_id": "para_191" }, { "text": "the collateral lien-free as a “buyer in the ordinary course of business.” Such a buyer “takes free", "paragraph_id": "para_192" }, { "text": "of a security interest created by the buyer’s seller, even if the security interest is perfected and", "paragraph_id": "para_193" }, { "text": "the buyer knows of its existence.” Ky. Rev. Stat. Ann. § 355.9-320(1).", "paragraph_id": "para_194" }, { "text": "This defense has several elements. The party must “buy[] goods in good faith, without", "paragraph_id": "para_195" }, { "text": "knowledge that the sale violates the rights of another person in the goods, and in the ordinary", "paragraph_id": "para_196" }, { "text": "course from a person . . . in the business of selling goods of that kind.” Ky. Rev. Stat. Ann.", "paragraph_id": "para_197" }, { "text": "§ 355.1-201(2)(i). A sale in the “ordinary course” must comport “with the usual or customary", "paragraph_id": "para_198" }, { "text": "practices in the kind of business in which the seller is engaged or with the seller’s own usual or", "paragraph_id": "para_199" }, { "text": "customary practices.” Id.", "paragraph_id": "para_200" }, { "text": "This defense protects good-faith buyers when the secured party leaves the collateral with", "paragraph_id": "para_201" }, { "text": "a debtor who sells goods of that kind. By doing so, the secured party “confers apparent authority", "paragraph_id": "para_202" }, { "text": "on the debtor to sell the goods,” and the law protects the buyer over the secured party, who", "paragraph_id": "para_203" }, { "text": "assumes the risk of the debtor making an unauthorized transaction. Madison Cap. Co., LLC v. S", "paragraph_id": "para_204" }, { "text": "& S Salvage, LLC, 765 F. Supp. 2d 923, 931 (W.D. Ky. 2011) (Kentucky UCC), aff’d, 507 F.", "paragraph_id": "para_205" }, { "text": "App’x 528 (6th Cir. 2012).", "paragraph_id": "para_206" }, { "text": "We’re on summary judgment, so the burden generally rests on HBKY (as the moving", "paragraph_id": "para_207" }, { "text": "party) to make its case. But at trial, Elk River would bear the burden of proof on “buyer in the", "paragraph_id": "para_208" }, { "text": "ordinary course,” an affirmative defense. See United States v. Cont’l Ill. Nat’l Bank & Trust Co.", "paragraph_id": "para_209" }, { "text": "of Chi., 889 F.2d 1248, 1253–54 (2d Cir. 1989). And when the nonmovant will bear the burden,", "paragraph_id": "para_210" }, { "text": "the movant has to demonstrate “that the nonmoving party has failed to make a showing sufficient", "paragraph_id": "para_211" }, { "text": "to establish the existence of an essential element of that claim.” Pineda v. Hamilton County, 977", "paragraph_id": "para_212" }, { "text": "F.3d 483, 491 (6th Cir. 2020) (internal quotation marks omitted).", "paragraph_id": "para_213" }, { "text": "HBKY has met its burden. HBKY has shown that Elk River hasn’t provided evidentiary", "paragraph_id": "para_214" }, { "text": "support for each element of its defense. Elk River failed to do so below, and it can’t cure that", "paragraph_id": "para_215" }, { "text": "problem on appeal.", "paragraph_id": "para_216" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 8", "paragraph_id": "para_217" }, { "text": "We acknowledge that Elk River did do enough on one or two elements—for example, on", "paragraph_id": "para_218" }, { "text": "the “buyer of goods in good faith” prong. Elk River’s briefing (below and here) argues at length", "paragraph_id": "para_219" }, { "text": "that the contracts gave it title (not an “option”) to the trees as goods (not real property), and we", "paragraph_id": "para_220" }, { "text": "understand this argument to go, at least partially, to the “buyer in ordinary course” elements.", "paragraph_id": "para_221" }, { "text": "The district court rejected Elk River’s title argument by misapplying the law of property interests", "paragraph_id": "para_222" }, { "text": "in standing timber.", "paragraph_id": "para_223" }, { "text": "A “sale of standing trees, in contemplation of their immediate separation from the soil . . .", "paragraph_id": "para_224" }, { "text": "is a constructive severance of them, and they pass as chattels.” Cheatham v. Head, 262 S.W.", "paragraph_id": "para_225" }, { "text": "622, 623 (Ky. Ct. App. 1924) (internal quotation marks omitted). The term “immediate", "paragraph_id": "para_226" }, { "text": "separation” or “immediate severance” is a bit of misnomer. It “does not mean a severance ‘at", "paragraph_id": "para_227" }, { "text": "once.’” Id. at 624. It’s “a relative term and contemplates a severance as soon as can reasonably", "paragraph_id": "para_228" }, { "text": "be done under the circumstances, which include the amount of timber, its accessibility, labor", "paragraph_id": "para_229" }, { "text": "conditions, etc.” Id. It means that the timberer must begin working diligently and remove the", "paragraph_id": "para_230" }, { "text": "trees with reasonable speed, not that the trees must be removed by tomorrow.", "paragraph_id": "para_231" }, { "text": "A timber purchaser generally forfeits title to any trees not removed during the contractual", "paragraph_id": "para_232" }, { "text": "time window. But if the purchaser “was prevented . . . by act of the seller from removing” any", "paragraph_id": "para_233" }, { "text": "timber during that time, then he does not forfeit it. Ream v. Fugate, 97 S.W.2d 11, 14–15 (Ky.", "paragraph_id": "para_234" }, { "text": "Ct. App. 1936). So when a landowner improperly ousts a purchaser from the land, courts will", "paragraph_id": "para_235" }, { "text": "add a “reasonable time” on to the term. Wright v. Cline, 189 S.W. 425, 426 (Ky. Ct. App. 1916).", "paragraph_id": "para_236" }, { "text": "The district court ruled that the timber contracts weren’t for title, but the court did not", "paragraph_id": "para_237" }, { "text": "conduct the multi-factor “immediate severance” analysis that Kentucky caselaw calls for. See", "paragraph_id": "para_238" }, { "text": "Cheatham, 262 S.W. at 623–24. We aren’t sure that the contracts were for title—but we aren’t", "paragraph_id": "para_239" }, { "text": "sure that they weren’t, either. If the case turned solely on this point, summary judgment", "paragraph_id": "para_240" }, { "text": "would’ve been improper.4", "paragraph_id": "para_241" }, { "text": "The district court also erred in ruling that Elk River forfeited its right to whatever timber", "paragraph_id": "para_242" }, { "text": "it hadn’t yet cut down. Kingdom ousted Elk River in breach of the contract, meaning that the", "paragraph_id": "para_243" }, { "text": "4We don’t think the record holds enough evidence to say—as a matter of law—that the contracts were or", "paragraph_id": "para_244" }, { "text": "weren’t for “immediate severance.” Declining to give summary judgment to HBKY wouldn’t have necessarily", "paragraph_id": "para_245" }, { "text": "meant granting it to Elk River.", "paragraph_id": "para_246" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 9", "paragraph_id": "para_247" }, { "text": "clock stopped running. See Ream, 97 S.W.2d at 14–15. How could Elk River have exercised its", "paragraph_id": "para_248" }, { "text": "rights while Kingdom blocked access to the land?5", "paragraph_id": "para_249" }, { "text": "But all of this helps Elk River on only one part of its defense. Questions about title and", "paragraph_id": "para_250" }, { "text": "buyer-of-goods status only get the company so far. In its district-court briefing, Elk River didn’t", "paragraph_id": "para_251" }, { "text": "apply the law to the facts on the defense’s remaining elements with argument and citation to", "paragraph_id": "para_252" }, { "text": "record evidence. Aside from the title discussion, Elk River’s analysis consists of two sentences:", "paragraph_id": "para_253" }, { "text": "The Plaintiff does not even attempt to claim that Elk River purchased the timber", "paragraph_id": "para_254" }, { "text": "“with knowledge that the sale violates the rights of another person in the goods[.]”", "paragraph_id": "para_255" }, { "text": "[DN 316, 317.] In fact, the opposite is true as the Royalty Collateral Agreements", "paragraph_id": "para_256" }, { "text": "explicitly authorize Kingdom to market and sell the timber, and these agreements", "paragraph_id": "para_257" }, { "text": "also specifically identify prospective timber contracts by and between Kingdom", "paragraph_id": "para_258" }, { "text": "and Elk River therein. [DN 50-3.]", "paragraph_id": "para_259" }, { "text": "R. 321, Elk River Resp./Reply, p.8, PageID 9865 (citations in original). That’s it. In other", "paragraph_id": "para_260" }, { "text": "words, there’s one sentence about what HBKY didn’t demonstrate, even though it’s Elk River’s", "paragraph_id": "para_261" }, { "text": "burden to provide affirmative support. And there’s another sentence arguably claiming that Elk", "paragraph_id": "para_262" }, { "text": "River had no malintent.", "paragraph_id": "para_263" }, { "text": "But Elk River never showed the district court that Kingdom was “in the business of", "paragraph_id": "para_264" }, { "text": "selling” timber, or that Elk River took title “in the ordinary course.” Ky. Rev. Stat. Ann.", "paragraph_id": "para_265" }, { "text": "§ 355.1-201(2)(i). The district court wasn’t told what Kingdom’s business was, how it operated,", "paragraph_id": "para_266" }, { "text": "how the contracts with Elk River came about—or much else about Kingdom. Elk River", "paragraph_id": "para_267" }, { "text": "5Elk River also argued below that if it had secured title to the timber before the loan, then HBKY never", "paragraph_id": "para_268" }, { "text": "took a valid security interest. It’s true that if the pre-loan contracts gave title to Elk River in May 2016, then", "paragraph_id": "para_269" }, { "text": "Kingdom wouldn’t have had any title to mortgage in June 2016 (save, perhaps, a reversionary interest). See supra", "paragraph_id": "para_270" }, { "text": "note 2 (pre-mortgage contracts); Ky. Rev. Stat. Ann. § 355.9-203(2) (debtor must have “rights in the collateral” to", "paragraph_id": "para_271" }, { "text": "give a valid security interest); Bach v. Little, 131 S.W. 172, 173 (Ky. Ct. App. 1910) (reversion in standing timber).", "paragraph_id": "para_272" }, { "text": "On appeal, though, Elk River hasn’t renewed its argument that HBKY never took a valid security interest. So we do", "paragraph_id": "para_273" }, { "text": "not reach the issue.", "paragraph_id": "para_274" }, { "text": "Elk River tacks on an issue-preclusion argument for good measure. Years after this case’s events, a state", "paragraph_id": "para_275" }, { "text": "court declared Kingdom in breach for ousting Elk River, and Elk River now suggests that the state-court judgment", "paragraph_id": "para_276" }, { "text": "precludes HBKY from disputing who has title to the timber.", "paragraph_id": "para_277" }, { "text": "It doesn’t. First, the state-court decision expressly noted that Elk River’s rights remained subject to", "paragraph_id": "para_278" }, { "text": "HBKY’s foreclosure action in federal court. Second, issue preclusion wouldn’t apply anyway. Title wasn’t actually", "paragraph_id": "para_279" }, { "text": "litigated or necessary to the state-court judgment, and HBKY wasn’t a party in that suit. See Weatherford U.S., L.P.", "paragraph_id": "para_280" }, { "text": "v. U.S. Dep’t of Lab., 68 F.4th 1030, 1039 (6th Cir. 2023).", "paragraph_id": "para_281" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 10", "paragraph_id": "para_282" }, { "text": "provided no declaration, interrogatories, or deposition testimony asserting that Kingdom was in", "paragraph_id": "para_283" }, { "text": "the timber business.6 Nor did it offer business records or other evidence to that end.", "paragraph_id": "para_284" }, { "text": "On appeal, Elk River directs us to HBKY’s complaint, which joined many defendants", "paragraph_id": "para_285" }, { "text": "claiming an interest in the collateral. One such defendant is Columbia Plywood Corporation,", "paragraph_id": "para_286" }, { "text": "who the complaint alleges also had a timber contract for some of the land (we aren’t given", "paragraph_id": "para_287" }, { "text": "further details). This contract, Elk River suggests, is evidence of Kingdom’s involvement in the", "paragraph_id": "para_288" }, { "text": "timber business.", "paragraph_id": "para_289" }, { "text": "The Columbia contract doesn’t do Elk River any good. First, Elk River didn’t cite it in", "paragraph_id": "para_290" }, { "text": "the district court, and at summary judgment, district courts “need consider only the cited", "paragraph_id": "para_291" }, { "text": "materials.” Fed R. Civ. P. 56(c)(3). While a district court can look around for other evidence in", "paragraph_id": "para_292" }, { "text": "the record, nothing requires it to. “Judges are not like pigs, hunting for truffles buried in the", "paragraph_id": "para_293" }, { "text": "record.” Murthy v. Missouri, 603 U.S. 43, 67 n.7 (2024) (cleaned up). And it’s “especially", "paragraph_id": "para_294" }, { "text": "important” to hold parties to their burdens in cases—like this one—where the record spans tens", "paragraph_id": "para_295" }, { "text": "of thousands of pages. Id.", "paragraph_id": "para_296" }, { "text": "Second, even considering the Columbia contract, there’s still insufficient evidence to", "paragraph_id": "para_297" }, { "text": "establish Kingdom as regularly engaged in the timber business. Evidence on what constitutes", "paragraph_id": "para_298" }, { "text": "ordinary-course business can take many forms, such as testimony from a person with knowledge", "paragraph_id": "para_299" }, { "text": "of the company and industry norms. See, e.g., Fordyce Bank & Tr. Co. v. Bean Timberland, Inc.,", "paragraph_id": "para_300" }, { "text": "251 S.W.3d 267, 272–73 (Ark. 2007) (sufficient evidence when several witnesses testified about", "paragraph_id": "para_301" }, { "text": "industry practices and how their companies operated); Am. Nat’l Bank & Tr. Co. of Chi. v. Mar-", "paragraph_id": "para_302" }, { "text": "K-Z Motors & Leasing Co., 309 N.E.2d 567, 568–69 (Ill. 1974) (sufficient evidence that", "paragraph_id": "para_303" }, { "text": "company was in the business of selling cars when the company’s witness testified that his", "paragraph_id": "para_304" }, { "text": "company ordinarily leased and sold cars). But we don’t have anything like that here. No", "paragraph_id": "para_305" }, { "text": "declarations, deposition testimony, or business records showing that Kingdom was engaged in", "paragraph_id": "para_306" }, { "text": "6Elk River’s fallback—that the district court should’ve denied judgment for HBKY in favor of more", "paragraph_id": "para_307" }, { "text": "discovery—falls flat. Elk River began the round of summary-judgment briefing in the district court. (Both parties", "paragraph_id": "para_308" }, { "text": "ultimately moved; recall that this appeal concerns HBKY’s motion.)", "paragraph_id": "para_309" }, { "text": "No. 24-5862 HBKY, LLC v. Elk River Export, LLC, et al. Page 11", "paragraph_id": "para_310" }, { "text": "the business of selling timber or that Elk River bought timber in the ordinary course of that", "paragraph_id": "para_311" }, { "text": "business.7", "paragraph_id": "para_312" }, { "text": "It’s true that Kingdom sold timber to Elk River. But one transaction alone does not", "paragraph_id": "para_313" }, { "text": "suffice. Companies make one-off or side deals all the time, disposing of assets outside their", "paragraph_id": "para_314" }, { "text": "primary business. And courts have routinely found that those transactions, by themselves, aren’t", "paragraph_id": "para_315" }, { "text": "enough to prove that a company is regularly engaged in certain business. See McKenzie v.", "paragraph_id": "para_316" }, { "text": "Oliver, 571 S.W.2d 102, 108 (Ky. Ct. App. 1978) (car rental company not in the business of", "paragraph_id": "para_317" }, { "text": "selling cars, even though it sold one car); Madison Capital, 765 F. Supp. 2d at 930 (mining", "paragraph_id": "para_318" }, { "text": "company in the business of mining, not selling mining equipment, even though it sold some", "paragraph_id": "para_319" }, { "text": "equipment); In re Keystone Gen., Inc., 135 B.R. 275, 281 (Bankr. S.D. Ohio 1991) (radio retailer", "paragraph_id": "para_320" }, { "text": "in the business of selling completed radios, not radio parts).", "paragraph_id": "para_321" }, { "text": "In sum, this record doesn’t tell us very much about who Kingdom is or what it does. The", "paragraph_id": "para_322" }, { "text": "record thus doesn’t support Elk River’s status as a “buyer in the ordinary course of business.”", "paragraph_id": "para_323" }, { "text": "IV.", "paragraph_id": "para_324" }, { "text": "The loan didn’t carve out any exception to HBKY’s first-priority lien, and Elk River", "paragraph_id": "para_325" }, { "text": "hasn’t shown that it purchased the timber in the ordinary course of business. We affirm.", "paragraph_id": "para_326" }, { "text": "7Which is all the more curious because in the state-court case, see supra note 5, Elk River president Robin", "paragraph_id": "para_327" }, { "text": "Wilson did offer testimony, drawing on his “personal knowledge of the parties’ agreement” and his expertise", "paragraph_id": "para_328" }, { "text": "“be[ing] in the timber businesses for over 30 years.” R. 313-1, Bell Circuit Court Judgment, p.2, PageID 5542.", "paragraph_id": "para_329" } ], "word_count": 4285, "cites": [ "603 U.S. 43", "119 F.4th 1049", "942 F.2d 381", "821 F.2d 1317", "889 F.2d 1248", "977\nF.3d 483", "68 F.4th 1030" ], "cited_by": [], "sha256": "5eed776db387727bb9dde677ddebe946d4198a9a2d5c7d49d62c5c323eabc596", "source_url": "http://www.opn.ca6.uscourts.gov/opinions.pdf/25a0206p-06.pdf", "fetched_at": "2026-10-01T23:07:12.968+00:00", "canonical": "https://legal.exploreworldai.com/ai/judgments/us/ca6-24-5862-2025-08-05", "risk_graph": "https://legal.exploreworldai.com/api/public/v1/risk?id=us:ca6-24-5862-2025-08-05", "relations_graph": "https://legal.exploreworldai.com/api/public/v1/relations?id=us:ca6-24-5862-2025-08-05", "changes": "https://legal.exploreworldai.com/api/public/v1/us-praxis/changes", "agent": "https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:ca6-24-5862-2025-08-05", "verification": { "stored_sha256": "5eed776db387727bb9dde677ddebe946d4198a9a2d5c7d49d62c5c323eabc596", "recomputed_sha256": "5eed776db387727bb9dde677ddebe946d4198a9a2d5c7d49d62c5c323eabc596", "intact": true, "checked_at": "2026-10-11T06:04:06.240Z" } }, "hash": "sha256:0ff65ee545d415f5f02dfefaa30e5abe38dce92482273bd99cb5c4d61abbe54f", "version": "legal-2026-10-10", "expires": "2026-10-12T00:00:00.000Z", "dependency": { "index_version": "legal-2026-10-10+legal-2026-10-10+2026-10-10T17:32:53", "content_hash": "sha256:0ff65ee545d415f5f02dfefaa30e5abe38dce92482273bd99cb5c4d61abbe54f", "revalidate_after": "2026-10-11T07:04:06.394Z", "max_copy_age_seconds": 3600, "policy": "revalidate-required; attribution-preferred", "changelog": "https://legal.exploreworldai.com/api/public/v1/dependency", "verify": "https://legal.exploreworldai.com/api/public/v1/verify", "stale_copy_invalid": true }, "canonical": "https://legal.exploreworldai.com/api/public/v1/judgment-text?id=us:ca6-24-5862-2025-08-05", "follow": [ { "rel": "risk", "href": "https://legal.exploreworldai.com/api/public/v1/risk?id=us:ca6-24-5862-2025-08-05" }, { "rel": "relations", "href": "https://legal.exploreworldai.com/api/public/v1/relations?id=us:ca6-24-5862-2025-08-05" }, { "rel": "agent", "href": "https://legal.exploreworldai.com/api/public/v1/us-praxis/agent?id=us:ca6-24-5862-2025-08-05" }, { "rel": "obligations", "href": "https://legal.exploreworldai.com/api/public/v1/obligation-chain" }, { "rel": "changes", "href": "https://legal.exploreworldai.com/api/public/v1/whats-new?jurisdiction=us" } ], "disclaimer": "Source reference with official identifier. 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