Randy Scott Pridgen and Marsha Corbett Pridgen

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILSON DIVISION
IN RE:
RANDY SCOTT PRIDGEN
MARSHA CORBETT PRIDGEN
DEBTORS
CASE NO.
07-04531-8-RDD
ORDER DENYING MOTION TO SET ASIDE
This matter is before the court on the motion of Cary Oil Co., Inc. (“Cary”) to set aside the
court’s order of February 20, 2008 denying Cary’s motion for administrative expenses. A hearing
was held in Wilson, North Carolina on April 17, 2008. For the reasons set forth, the motion of Cary
is denied.
The debtors filed a petition for relief pursuant to chapter 13 of the Bankruptcy Code on
December 1, 2007. In Schedule F of their petition, the debtors listed Cary as holding an unsecured
nonpriority claim in the amount of $158,429.26 for a gas account for Momeyer Grill & Grocery, a
business operated by the debtors. On January 7, 2008, Cary filed an application for administrative
expenses in the amount of $36,135.13 pursuant to 11 U.S.C. § 503(b)(9) for purchases of fuel made
by the debtors through an agreement with Warren Oil from November 11, 2007 through December
SO ORDERED.
SIGNED this 22 day of April, 2008.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 1 of 8

2
1, 2007. The debtors objected to Cary’s claim for an administrative expense, and a hearing was held
on February 12, 2008.
At that hearing, both parties were represented by counsel. Evidence was presented regarding
the relationship between the debtors and Warren Oil, Warren Oil and Cary, and Cary and the
debtors, including the “Petroleum Supply and Administration Agreement” between Cary and Warren
Oil, which was admitted into evidence. 	The testimony of Mr. Pridgen and Mr. Mark Warren,
president of Warren Oil, was received and the cross-examination of both witnesses occurred. The
court entered an order, holding that the claim of Cary was not administrative, as receipt of the
gasoline by the debtors had occurred on November 9, 2007, which was prior to the twenty days
preceding the filing of the debtors’ petition. The court further found that, after delivery of the gas
on November 9, 2007, there was only a two-day period during which gas was pumped at the store,
resulting in total sales of $9,992.45, with the remaining gasoline removed from the tanks on
November 28, 2007, upon the request of Mr. Pridgen. The court allowed Cary 30 days within which
to amend its proof of claim.
On February 28, 2008, Cary filed the pending motion to set aside pursuant to Federal Rule
of Bankruptcy Procedure Rule 9023, which incorporates Rule 59 of the Federal Rules of Civil
Procedure. In Paragraph 6 of its motion, Cary alleges that “[t]he findings of the court were based
upon incomplete and inaccurate testimony by the male Debtor, and as a result, those findings and
the conclusions reached are not consistent with the correct facts that would lead to different
conclusions.” In its motion and through the testimony presented at the hearing on the motion to set
aside, Cary questions the court’s previous order regarding the delivery and receipt date of the
gasoline by the debtor.
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 2 of 8

3
At the hearing, Mr. Paul Stephenson, director of dealer operations for Cary, testified that
Cary was hired as a contractor by Warren Oil to administer and maintain businesses they had
contracted with to sell gasoline and diesel on consignment through those businesses. 	Mr.
Stephenson explained that the typical consignment arrangement in the gasoline business is for
dealers to act on behalf of Cary to sell the product owned by Cary, which invoices the dealer after
the product has been dispensed through the metering system. The dealers are invoiced on a weekly
basis for the gallons and dollars of gasoline sold. Mr. Stephenson testified that the gas belongs to
Cary until it is sold to the consumer by the dealer. He indicated that the title to the gasoline does
not transfer to the dealer until a sale to the consumer occurs. 	Mr. Stephenson identified the
agreement between Cary and Warren Oil. Cary Exhibit A. In the agreement, Cary agreed to manage
Warren’s consignment business with dealers based upon the different agreements that Warren had
with the dealers. Mr. Stephenson agreed that the language on page 2 of the agreement, “Title to said
gasoline and diesel fuel shall remain with Cary until same is pumped from the tank and sold to retail
customers,” accurately represented the operation between Cary, Warren Oil, and the debtors. Mr.
Stephenson testified that the language on p. 3 of the agreement, “Cary shall maintain all said
petroleum marketing equipment at the retail gasoline facilities,” meant that any equipment owned
by Warren on the dealer’s premises would be maintained by Cary. On page 6 of the agreement, it
is stated, “Provided, that under no circumstances shall Warren be requested to pay for gasoline and
diesel fuel until it has been sold at retail.” Mr. Stephenson explained that this meant the fuel belongs
to Cary until it is sold to a final consumer. Finally, on page 7 of the agreement, it is stated
All sums collected by Consignment Dealers or Warren for gasoline and diesel
fuel sold hereunder, less the Consignment Dealers’ commissions and Warren’s
remaining Profit, shall immediately become and remain the sole and exclusive
property of Cary, and, until such sums are remitted to Cary by either Warren or the
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 3 of 8

4
Consignment Dealer, the possession and control thereof by the Consignment Dealer
or Warren shall be that of a trustee for the use and benefit of Cary, and not otherwise.
Mr. Stephenson testified that this language also meant that the gasoline belongs to Cary.
Mr. Stephenson testified that the only contract between Cary and the debtors was a credit
application between the two parties. 	The purpose of the agreement was to explain the credit
extended to the debtors and to explain the personal guarantees made by them. This was to ensure
that Cary received payment from the debtors.
Mr. Stephenson testified that, although the consignment contract does not identify when title
to the gasoline passes from one party to the other, it passes from Cary to the dealer and from the
dealer to the consumer when it passes through the retailer’s equipment.
Mr. Mark Warren, president of Warren Oil, testified that Mr. Stephenson’s testimony
regarding the agreement between Cary and Warren Oil was accurate. He testified that Mr. Pridgen’s
parents had been customers of Warren Oil since 1996, and he agreed to begin a relationship with Mr.
Pridgen as a favor to his parents. Although Mr. Warren testified that there was no written agreement
between Warren Oil and the debtors, he indicated that their business relationship was conducted the
same as that between Warren Oil and Mr. Pridgen’s parents, with whom a written agreement had
been entered. Cary Exhibit E. Mr. Warren agreed that, although there was no written agreement,
he had verbally consented to Mr. Pridgen closing his store on Sundays. 	Mr. Warren indicated,
however, that had the debtor chosen to close his store during other normal operating hours, he would
have removed his product from the store.
Mr. Warren testified that, as a consignment dealer, title to the gasoline passed from Cary to
the dealer based upon the gasoline flowing through the meter. From the time the gasoline flowed
from the meter until the consumer paid for it, title was held by the dealer. Therefore, Mr. Warren
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 4 of 8

5
explained, the gasoline was not received by the debtor until it was sold, which was within the 20
days prior to filing.
At the end of testimony, the parties stipulated that the amount of the claim which Cary seeks
to have classified as an administrative expense is $8,762.75, based upon the amounts of gas sold
during the 20 days prior to the filing of the debtors’ complaint.
Counsel for Cary argues that the relationship between Cary and the debtor should be
classified as a consignment pursuant to the factors set forth by the North Carolina Court of Appeals
in DKH Corporation v. Rankin-Patterson Oil Company, Inc., 131 N.C. App. 126 (1998). In that
case, eight factors for consideration were set forth in determining whether a gasoline transaction is
a consignment agreement or a sale agreement.
When making this determination, these courts have considered several factors
including: 	(1) whether there is an absolute obligation to pay for the goods, (2)
whether the purchaser takes title to the goods, (3) whether the purchaser immediately
pays for the goods, (4) whether the purchaser sets the resale price, (5) whether the
purchaser bears the risk of loss, (6) whether the purchaser insures the goods, (7)
whether the purchaser repairs and maintains the goods, and (8) whether the purchaser
pays taxes on the goods.
Id. at 130 (citations omitted). 	Counsel argues that all eight factors lean in favor of finding a
consignment arrangement in this case. Because the arrangement is a consignment, counsel argues
that title to the goods remained with the consignor until sale to the consumer, thereby delaying
receipt of the goods by the dealer until sale.
Counsel for the debtors argues that there are two issues related to Cary’s motion. The first
is whether Cary is entitled to a reconsideration of the court’s prior order. Counsel argues that Rule
59 requires misapplication of law or the presentation of new facts. Counsel argues that Cary is not
entitled to reconsideration because it was present and represented by counsel at the prior hearing,
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 5 of 8

6
and had an opportunity to present the evidence presented at the second hearing during the first
hearing.
Counsel for the debtors argues that, if the court finds Cary is entitled to reconsideration, the
second issue is whether they are entitled to an administrative claim pursuant to 11 U.S.C. §
503(b)(9). Counsel argues that, although ownership may not have passed to the gasoline until the
time at which it was sold to a consumer, § 503(b)(9) does not require transfer of ownership to create
an administrative claim. § 503(b)(9) is dependent upon receipt of the goods by the debtor, which,
counsel argues, occurred more than 20 days prior to the filing of the petition because that is when
the debtor took possession and control of the gasoline.
The Fourth Circuit Court of Appeals held in Pacific Ins. Co. v. American Nat. Fire Ins. Co.,
148 F.3d 396, 403 (4th Cir. 1998):
Although Rule 59(e) does not itself provide a standard under which a district court
may grant a motion to alter or amend a judgment, we have previously recognized that
there are three grounds for amending an earlier judgment: (1) to accommodate an
intervening change in controlling law; (2) to account for new evidence not available
at trial; or (3) to correct a clear error of law or prevent manifest injustice. . . . . Rule
59(e) motions may not be used, however, to raise arguments which could have been
raised prior to the issuance of the judgment, nor may they be used to argue a case
under a novel legal theory that the party had the ability to address in the first
instance. Similarly, if a party relies on newly discovered evidence in its Rule 59(e)
motion, the party must produce a legitimate justification for not presenting the
evidence during the earlier proceeding. In general reconsideration of a judgment
after its entry is an extraordinary remedy which should be used sparingly.
(internal citations and quotations omitted). In this case, no evidence was presented at the second
hearing which was not available in the first hearing. At the second hearing, Cary was represented
by different counsel, who made new arguments. Motions under Federal Rules of Civil Procedure
Rule 59 serve to correct errors of law or fact, or to consider the impact of newly discovered
evidence; they are not to be used by a losing party who failed to raise available arguments or who
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 6 of 8

1No language exists in the documents supporting intervening title to the gasoline or receipt
of the gasoline by the debtor who was a consignment dealer, as the gasoline passes from the meter
to the end of the hose into the tank of the retail customer.
7
simply disagrees with the court’s decision. 	Cary’s motion for reconsideration stated that the
findings of the court in the order entered February 20, 2008, “were based upon incomplete and
inaccurate testimony by the male debtor, and as a result, those findings and the conclusion reached
are not consistent with the correct facts that would lead to a different conclusion.” The male debtor,
Mr. Pridgen, was in court for the hearing on the motion for reconsideration, but was not called as
a witness to explain his previous “incomplete and inaccurate testimony.” Based upon the standards
set forth in Pacific Ins. Co., no grounds for reconsideration are present.
Even if there were grounds to set aside the court’s prior ruling, the court’s finding that there
is no administrative claim under 11 U.S.C. § 503(b)(9) would be the same. Section 503(b)(9) allows
an administrative claim for
the value of any goods received by the debtor within 20 days before the date of
commencement of a case under this title in which the goods have been sold to the
debtor in the ordinary course of such debtor’s business.
(emphasis added). The Uniform Commercial Code defines “receipt” of goods as “taking physical
possession of them.” N.C. Gen. Stat. § 25-2-103(1)(c).
Cary argues that receipt is when the gas passes from the meter to the end of the hose, that
title to the gasoline passes to the debtor at that point, and therefore, he is in receipt for purposes of
§ 503(b)(9). However, there is no written agreement with the debtor setting out terms of delivery,
receipt or title terms for a consignment dealer. In fact, the agreement between Cary and Warren Oil
provides that Cary Oil retains title until “same is pumped from the tank and sold to retail customers.”
Cary Exhibit A, page 2.1 The court finds that the testimony supporting the argument that title
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 7 of 8

2Whether the debtor “received” the gasoline on November 9, 2007, as the court held in its
order of February 20, 2008, or did not “receive” the gasoline as the gasoline passed from the meter
to the end of the gas hose, no receipt occurred during the twenty days prior to the commencement
of the case.
8
passes to the dealer from the meter to the end of the hose for receipt purposes is not credible and is
not corroborated by the written agreements. Cary Exhibit A. Such facts do not support a finding
that the debtors took physical possession of the gas or “received” the gas sold within 20 days before
the commencement of the case.2 Therefore, Cary is not entitled to an administrative claim pursuant
to 11 U.S.C. § 503(b)(9). Cary shall have 10 days from the date of this order to properly amend the
proof of claim dated February 6, 2008 as previously ordered on February 20, 2008. Based on the
foregoing, the motion of Cary Oil Co., Inc. for reconsideration of the court’s order of February 20,
2008 is DENIED.
SO ORDERED.
END OF DOCUMENT
Case 07-04531-8-RDD Doc 58 Filed 04/22/08 Entered 04/22/08 15:29:12 Page 8 of 8