Opinion
Civil Action No. 3:92-1099
September 2, 1994
AMENDED MEMORANDUM OPINION AND ORDER
This matter is before the court on cross motions for summary judgment submitted by the Sony Corporation of America and The First Huntington National Bank. All three parties have jointly submitted stipulated facts. The case presents several issues for resolution under the Uniform Commercial Code, particularly § 9-312, W. Va. Code § 46-9-312 (1993).
A. STATEMENT OF THE CASE
The Stereo Factory, Inc., ("Stereo Factory") is a West Virginia corporation, operating primarily in Huntington, West Virginia. Stereo Factory ran into some financial difficulties and was unable to satisfy its creditors. Two of those disappointed creditors now claim a priority in the proceeds resulting from the sale of part of Stereo Factory's inventory.
1. The Security Agreements
The First Huntington National Bank (the "Bank") entered into two separate security agreements with Stereo Factory which cover Stereo Factory's inventory, among other things. The first agreement is dated August 23, 1988, and secures a $200,000 note. The second is dated July 13, 1989, and secures a $550,000 note. Both security agreements were perfected prior to any filing by Sony Corporation of America.
The First Huntington National Bank is now Bank One, West Virginia, Huntington NA. It is referred to throughout the parties' briefs and stipulated facts as "First Huntington" so the court will continue with that terminology.
Sony Corporation of America ("Sony") entered into a purchase money security agreement with Stereo Factory on August 16, 1990. Sony agreed to extend credit to Stereo Factory for the purchase of Sony merchandise. In return Stereo Factory granted Sony a purchase money security interest in all goods, products, parts and accessories, equipment and inventory sold by Sony to Stereo Factory. The security agreement was subsequently perfected. Sony thereafter notified the Bank, and all other holders of conflicting security interests, of its purchase money security interest in Stereo Factory's inventory. Sony and Stereo Factory also entered into a consumer tape distributor agreement, dated February 24, 1992.
W. Va. Code § 46-9-107 provides:
A security interest is a "purchase money security interest" to the extent that it is
(a) taken or retained by the seller of the collateral to secure all or part of its price; or
(b) taken by a person who by making advances or incurring an obligation gives value to enable the debtor to acquire rights in or the use of collateral if such value is in fact so used.
2. The Bank Accounts
Stereo Factory maintained several accounts (collectively, the "Accounts") at the Bank, including Account No. 29-0631-7 (the "Checking Account"). On September 9, 1992, it established Account No. 1-125788 (the "Savings Account"). In addition, it maintained a sweep account, also known as a repurchase account, which enabled it to earn interest on the funds deposited into its Checking Account. Those funds were periodically "swept" into Account No. 90-00925 (the "Sweep Account") and used to purchase part of the Bank's investment portfolio. When the funds were needed in the Checking Account, they were "repurchased" by First Huntington and redeposited into the Checking Account, along with the interest earned. (See the "Accounts Summary" attached as "Exhibit A" for a brief review of the relevant activity in the Accounts.)
3. The Transactions
On August 19, 1992, Stereo Factory submitted a purchase order to Sony for 1,150,000 audio cassette tapes for an agreed price of $.55 per tape. Stereo Factory sent a down payment of $160,000 on the following day. On August 21, 1992, Sony shipped to Stereo Factory 227,860 tapes for a total invoice price of $125,323 (the "First Shipment"). Stereo Factory received them on August 25 and immediately sent them to one of its customers, H.K. Tronics, in Laredo, Texas, for $120,765.80. H.K. Tronics received the First Shipment on August 27, 1992, and on that day purchased a cashier's check for $120,765.80 payable to Stereo Factory. Stereo Factory deposited the check into its Checking Account on August 31.
On August 21, 1992, Sony also shipped an additional 422,140 audio cassette tapes to Stereo Factory via a separate carrier for the agreed price of $232,177 (the "Second Shipment"). Stereo Factory received them on August 22, 1992, and immediately sent them to its customer Delinda Camera Art Supply ("Delinda Camera") in Laredo, Texas. Delinda Camera received them on August 24, 1992, and issued a check that same day for $221,655, payable to Stereo Factory. Delinda Camera gave the check to the driver of the truck who delivered the Second Shipment. Stereo Factory deposited this check into its Checking Account on August 25, 1992.
The price difference results from the overshipment of 60 tapes.
Finally, on August 31, Sony shipped the remaining 500,000 audio cassette tapes to Stereo Factory for the invoice value of $275,000 (the "Third Shipment"). Stereo Factory received the Third Shipment on September 1, 1992. Again, Stereo Factory immediately shipped the tapes to Delinda Camera, which received them on September 3, 1992. The agreed price was $262,500, which was subject to a discount of $20,000 if payment in cash were made within three days of receipt. On September 4, 1992, Delinda Camera issued a check payable to Stereo Factory for $242,468.50 which Delinda Camera either gave to the truck driver or sent by overnight mail. The Stereo Factory invoice documenting this transaction indicated a delivery date of September 3 and a payment date of September 4. Stereo Factory deposited this check into its Checking Account on September 8, 1992. After deducting various credits the principal amount Stereo Factory owes to Sony for the First, Second and Third Shipments is $468,720.51.
The difference between the check and the agreed price results from subtracting the undershipment of 60 tapes and the $20,000 cash discount.
Stereo Factory's Parkersburg operation was sold to T.D.S., Inc. for $250,000. On September 9, 1992, that $250,000 was deposited into the Checking Account. Also on September 9, 1992, Stereo Factory set up its Savings Account with $78,266.64 from its Checking Account. The check was marked with the words "Loan Proceeds Receipt." The Savings Account was pledged to the Bank as collateral for outstanding loans. That same day Stereo Factory issued a check to the Bank for $154,153.93 for the purchase of cashier's checks to pay off other Stereo Factory creditors not appearing here. That check was marked "Disbursement of SBA Loan Proceeds for Video Warehouse of Parkersburg." On September 10, 1992, the Bank paid a check Stereo Factory had issued to T.D.S., Inc. in the amount of $16,106.73, marked "Final Payment WVOP Creditors from Loan Proceeds." On September 15, 1992, the Bank paid a $60,000 check Stereo Factory had issued to T.D.S. Inc. several weeks earlier. That same day the remaining balance of $221,419.80 was transferred to the Sweep Account.
On September 17, 1992, the Bank set off $123,912.94 from the Sweep Account and $78,266.64 from the Savings Account, a sum total of $202,179.58. The Bank did not give Stereo Factory prior notice of the set-off. The funds were applied toward the principal Stereo Factory owed to the Bank. The Bank also liquidated some additional collateral in order to further reduce Stereo Factory's indebtedness.
Sony seeks summary judgment against Stereo Factory for the balance remaining on its invoices for the First, Second and Third Shipments. Sony further seeks summary judgment against the Bank to recover the proceeds of the Third Shipment, while the Bank seeks to retain the proceeds.
B. ANALYSIS
1. Summary Judgment Standard
Summary judgment is governed by Rule 56 of the Federal Rules of Civil Procedure. Summary judgment is appropriate where the parties' submissions reveal that there is no material fact at issue and that the moving party is entitled to judgment as a matter of law. All facts and inferences will be construed in favor of the non-moving party. Cole v. Cole, 633 F.2d 1083, 1092 (4th Cir. 1980). An adverse party may not rely upon denials or allegations in its pleadings, but must respond by affidavit or otherwise and set forth specific facts to establish a genuine issue for trial. See generally Anderson v. Liberty Lobby, 477 U.S. 242 (1986).
2. Priorities Among Conflicting Security Interests
The transactions in this matter are governed by the Uniform Commercial Code (the "U.C.C."), found at W. Va. Code §§ 46-1-101 through 46-11-108 (1993). This case hinges primarily on the court's interpretation of W. Va. Code § 46-9-312. Section 46-9-312 provides, in pertinent part, as follows:
(3) A perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority in identifiable cash proceeds received on or before the delivery of the inventory to a buyer if:
(a) The purchase money security interest is perfected at the time the debtor receives possession of the inventory; and
(b) The purchase money secured party gives notification in writing to the holder of the conflicting security interest if the holder had filed a financing statement covering the same types of inventory (i) before the date of the filing made by the purchase money secured party, or (ii) before the beginning of the twenty-one day period where the purchase money security interest is temporarily perfected without filing or possession (subsection (5) of section 9-304 [§ 46-9-304(5)]); and
(c) The holder of the conflicting security interest receives the notification within five years before the debtor receives possession of the inventory; and
(d) The notification states that the person giving the notice has or expects to acquire a purchase money security interest in inventory of the debtor, describing such inventory by item or type. . . .
(5) In all cases not governed by other rules stated in this section (including cases of purchase money security interests which do not qualify for the special priorities set forth in subsections (3) and (4) of this section), priority between conflicting security interests in the same collateral shall be determined according to the following rules:
(a) Conflicting security interests rank according to priority in time of filing or perfection. Priority dates from the time a filing is first made covering the collateral or the time the security interest is first perfected, whichever is earlier, provided there is no period thereafter when there is neither filing nor perfection.
(b) So long as conflicting security interests are unperfected, the first to attach has priority.Id. (emphasis added).
The parties differ in their interpretation of the foregoing provision. The crux of their disagreement is the interpretation of the phrase "on or before the delivery" found in subsection (3). The parties agree on the operative facts: The goods were delivered on September 3, 1992. The check issued in payment for the Third Shipment was either given to the truck driver who delivered the goods or mailed by overnight mail. Sony claims that because payment was contemporaneous with delivery, it was in effect made "on delivery." The Bank argues that unless payment was made on the day of delivery it was not made "on delivery."
The proper interpretation of this phrase is crucial. If Sony has met the requirements set forth in subsection (3), then it has a priority interest in the inventory proceeds with its purchase money secured interest. If it has not met those requirements, then the priorities are ranked in accordance with subsection (5). Under subsection (5) the Bank has a priority interest because it was the first to file and perfect its secured interest. Upon careful consideration of the facts and the law, the court finds that Sony's interpretation of § 46-9-312 is correct.
This issue is apparently one of first impression. The court and the parties have been unable to unearth a single holding interpreting the phrase on" on or before the delivery." To guide its analysis the court first turns to the commentary accompanying W. Va. Code § 46-9-312.
When under these rules the purchase money secured party has priority over another secured party, the question arises whether this priority extends to the proceeds of the original collateral. . . . In the case of inventory collateral under subsection (3), where it was expected that the goods would be sold and where financing frequently is based on the resulting accounts, chattel paper, or other proceeds, the subsection gives an answer limited to the preservation of the purchase money priority only insofar as the proceeds are cash received on or before the delivery of the inventory to a buyer, that is, without the creation of an intervening account to which conflicting rights might attach.Id., Comment 3 (emphasis added). See also id., Comment 8:
Example 6. A files a financing statement covering a described type of inventory then owned or thereafter acquired. B subsequently takes a purchase money security interest in certain inventory described in A's financing statement and achieves priority over A under subsection (3) as to this inventory. This inventory is then sold, producing proceeds. . . . If the proceeds are cash, subsection (3) indicates that B's priority as to the inventory carries over to the cash. Proceeds which are accounts constitute different collateral and the priorities as to the original collateral do not control the priorities as to the accounts. . . . Many parties financing inventory are quite content to protect their first security interest in the inventory itself, realizing that when inventory is sold, someone else will be financing the accounts and the priority for inventory will not run forward to the accounts. Indeed, the cash supplied by the accounts financer will be used to pay the inventory financing.Id.
As the preceding commentary suggests, the drafters of the U.C.C. were concerned more with protecting accounts financers than inventory financers, and therefore preserved the proceeds for purchase money secured parties only insofar as the proceeds were cash, instead of accounts. Section 9-312 was affected somewhat by the 1972 Amendments. The Reasons for Change which accompanied the proposed 1972 amendments stated: "Accounts financing is more important in the economy than the financing of the kinds of inventory that produce accounts, and the desirable rule is one which makes accounts financing certain as to its legal position. James J. White Robert S. Summers, Handbook of the Law Under the Uniform Commercial Code 1041 n. 21 (Second Edition 1980) (quoting Reasons for Change). See also 1C Peter F. Coogan, Julian B. McDonnell, Paul J. Heald, Secured Transactions Under the Uniform Commercial Code § 19.04(3)(a)(iii) (Matthew Bender 1991). Thus, the phrase "on or before the delivery" was used to differentiate between transactions in which the buyer paid in cash and transactions in which the buyer set up a credit arrangement and ended up owing the seller for the cost of the goods.
In the situation at hand, the buyer, Delinda Camera, clearly contemplated prompt payment. It did not purchase the tapes in the Third Shipment on credit. Delinda Camera's final payment in fact reflected a $20,000 discount for cash. The parties obviously viewed this as a payment-on-delivery sale. In fact, it was third in a whole series of similar transactions requiring prompt cash payment. Moreover, the small amount of time which elapsed between delivery and payment was demanded by the logistics of the situation, namely, transporting the check from Laredo, Texas to Huntington, West Virginia, either by truck or overnight mail. It is also important to note that there is no tension here between inventory and accounts financers — the Bank was not an accounts financer for Stereo Factory.
Given the court's holding, it is unnecessary to consider any agency argument.
This interpretation of § 46-9-312 also finds support in the general U.C.C. provisions, particularly W. Va. Code § 46-1-102, which states in pertinent part:
(1) This chapter shall be liberally construed and applied to promote its underlying purposes and policies.
(2) Underlying purposes and policies of this chapter are
(a) to simplify, clarify and modernize the law governing commercial transactions;
(b) to permit the continued expansion of commercial practices through custom, usage and agreement of the parties;
(c) to make uniform the law among various jurisdictions.Id. Comment 1 to § 46-1-102 is also instructive.
[T]he proper construction of the Act requires that its interpretation and application be limited to its reason. The Act should be construed in accordance with its underlying purposes and policies. The text of each section should be read in the light of the purpose and policy of the rule or principle in question, as also of the Act as a whole, and the application of the language should be construed narrowly or broadly, as the case may be, in conformity with the purposes and policies involved.Id. (emphasis added).
The interpretation urged upon the court by the Bank is impractical and unworkable for real life commercial transactions. As Sony explains, it yields some absurd results. For example, under the Bank's interpretation, if a delivery were made at 11:30 p.m. and the payment tendered at 12:30 a.m. the following day, that would not constitute payment received on or before the delivery. That single hour between delivery and payment would make a crucial distinction. In effect, the Bank's interpretation requires § 46-9-312 to be read as stating "on or before the date of the delivery." The statute is clearly not meant to be read so restrictively; to do so would violate the intent of the drafters.
An inquiry under this portion of § 46-9-312 requires careful consideration of the circumstances of the case. The court's reading of the section is not intended to provide a license for sloppy bookkeeping or tardy payments. Every moment of delay between the delivery and the payment should be accounted for and the greater the delay, the more likely the purchase money secured party will be unable to avail itself of the protections of subsection (3). Nevertheless, the court finds that under the circumstances presented here, payment was made on delivery.
Sony has met the four additional requirements set forth in subsection (3)(a) through (d). Sony's purchase money secured interest was perfected when Stereo Factory received possession of the inventory; Sony gave the proper notice to holders of conflicting security interests, specifically the Bank, which had filed prior to Sony the notice fell within the five-year limitation period; the notice stated that Sony had or expected to acquire a purchase money security interest in Stereo Factory's inventory, and the notice described the inventory appropriately by item or type. Sony therefore has a priority purchase money security interest in the proceeds of the Third Shipment.
An alternative reading of subsection (3)(b) would require the purchase money secured party to give notice to holders of conflicting security interests before the purchase money secured party had even filed. This alternative reading resulted from an awkwardly-worded 1972 amendment and has been effectively debunked as impractical and contrary to the intent of the drafters. In re Diaconx Corp., 79 B.R. 602 (Bankr. E.D. Pa. 1987); King's Appliance Electronics, Inc. v. Citizens Southern Bank of Dublin, 278 S.E.2d 733 (Ga.App. 1981).
3. Lowest Intermediate Balance Rule
Sony asserts that the Bank wrongfully converted the proceeds and desires to recover the funds set off by the Bank from the Stereo Factory accounts. Sony claims that the proceeds from the Third Shipment, totalling $242,468.50, are identifiable and traceable through Stereo Factory's Checking Account, Savings Account and Sweep Account.
Section 46-9-312 provides that "[a] perfected purchase money security interest in inventory has priority over a conflicting security interest in the same inventory and also has priority :Ln identifiable cash proceeds received on or before the delivery of the inventory to a buyer. "Cash proceeds" include money, checks, and deposit accounts, among other things. W. Va. Code § 46-9-306(1).
In tracing and identifying proceeds under Article 9 of the U.C.C., courts have often utilized the "lowest intermediate balance rule."Universal C.I.T. Credit Corp. v. Farmers Bank of Portageville, 358 F. Supp. 317 (E.D. Mo. 1973); General Motors Acceptance Corp. v. Norstar Bank, 532 N.Y.S.2d 685 (1988); Bank of Kansas v. Hutchinson Health Services, Inc., 735 P.2d 256 (Kan.App. 1987); Ex parte Alabama Mobile Homes, Inc., 468 So.2d 156 (Ala. 1985); Coachman Industries, Inc. v. Security Trust Savings Bank of Shenandoah, 329 N.W.2d 648 (Iowa 1983); C.O. Funk Sons, Inc. v. Sullivan Equipment, 431 N.E.2d 370 (Ill. 1982).
The lowest intermediate balance rule has been defined as follows:
The rule, which operates on a common-sense view that dollars are fungible and cannot practically be earmarked in an account, provides a presumption that proceeds remain in the account as long as the account balance is equal to or greater than the amount of the proceeds deposited. The proceeds are "identified" by presuming that they remain in the account even if other funds are paid out of the account. . . . Under the rule, however, if the balance of the account dips below the amount of deposited proceeds, [the prior] security interest in the identifiable proceeds abates accordingly. This lower balance is not increased if, later, other funds of the debtor are deposited in the account.C.O. Funk Sons, Inc. v. Sullivan Equipment, 431 N.E.2d 370, 372 (Ill. 1982). The effect of the rule is to preserve the proceeds to the greatest extent possible as the account is depleted. Id.
The proceeds of the collateral can be traced through several forms in order to find identifiable proceeds in the hands of the debtor.Barber-Greene Co. v. National Bank of Minneapolis, 816 F.2d 1267 (8th Cir. 1987) (proceeds moved between collateral account and checking account); Central Production Credit Ass'n v. Hans, 545 N.E.2d 1063 (Ill.App. 1989) (proceeds moved from checking account to corn contracts, back to checking account and then to party); First Interstate Bank of Denver, N.A. v. Arizona Agrochemical Co., 731 P.2d 746 (Colo.App. 1986). Moreover, proceeds remain identifiable and the security interest in them continues, even though the proceeds are commingled with other funds. Brown Williamson Tobacco Corp. v. First National Bank of Blue Island, 504 F.2d 998 (7th Cir. 1974); Bank of Kansas v. Hutchinson Health Services, Inc., 735 P.2d 256 (Kan.App. 1987). See also § 46-9-205 (allowing commingling of funds by debtor).
Sony concedes that the operation of the lowest intermediate balance rule deprives it of the opportunity to pursue the proceeds of the First or Second Shipments, because the balance in the relevant Account equaled zero or less prior to the deposit of the proceeds from the Third Shipment. However, it claims that the Third Shipment proceeds are identifiable and must be disgorged by the Bank.
A brief summary of the activity in the Stereo Factory Accounts is attached hereto as "Exhibit A." An understanding of the activity between the time the proceeds were deposited and the time they were set off is important for the proper application of the lowest intermediate balance rule. On September 9, 1992, the proceeds of the Third Shipment, $242,468.50, were deposited in the Checking Account. The following day additional funds were deposited, including $250,000 for the sale of the Parkersburg operation. Also on that day, $78,266.64 from the checking account was used to establish the Savings Account. No activity occurred in the Savings Account until September 17, 1992, when that same amount was set off by the Bank.
Over in the Checking Account several transactions occurred which affected the balance, although the balance never dropped below $242,468.50. On September 15, 1992, $281,823.41 remained. On that day, the Bank paid a $60,000 check to T.D.S., Inc. and then transferred the remaining $221,419.80 to the Sweep Account. Thereafter, two transfers were made from the Sweep Account to the Checking Account. (Those funds were primarily used to purchase cashier's checks for other Stereo Factory creditors.) On September 17, 1992, the Bank set off the funds remaining in the Sweep Account — $123,912.94.
The Bank claims that the funds in the Savings Account are not identifiable cash proceeds because the Savings Account was established with funds directly traceable to Stereo Factory's sale of its Parkersburg operation. Also, the Bank notes that the check was marked "Loan Proceeds Receipts." However, it is not clear who made the notation, or why.
The premise underlying the lowest intermediate balance rule is that identifiable cash proceeds are paid out last. The secured interest is eroded only to the extent that the balance dips below the amount of the proceeds deposited. The debtor is assumed to spend its own funds first.Bank of Kansas v. Hutchinson Health Services, Inc., 735 P.2d 256 (Kan.App. 1987). Moreover, proceeds may be commingled and traced from one form to another without becoming unidentifiable and without destroying the security interest attached to them.
The Bank and Stereo Factory are both in positions to manipulate the transactions in the Accounts. They cannot, however, be permitted to earmark funds and deprive a secured creditor of its priority secured interest under the U.C.C. Allowing the parties to name" the funds in the Savings Account would serve to eviscerate the lowest intermediate balance rule and evade the priority rules of the U.C.C.
The proceeds from Delinda Camera totalled $242,468.50. The amount set off by the Bank totalled $202,179.58. In accordance with the lowest intermediate balance rule, Sony may recover the proceeds, but only the funds remaining, namely $202,179.58.
4. Set-off
Sony's purchase money security interest in the proceeds is superior to the Bank's right of set-off. National Acceptance Co. of America v. Virginia Capital Bank, 491 F. Supp. 1269 (E.D. Va. 1980); Firstar Eagan Bank, N.A. v. Marquette Bank Minneapolis, N.A., 466 N.W.2d 8 (Minn.App. 1991); C H Farm Service Co. of Iowa v. Farmers Savings Bank, 449 N.W.2d 866 (Ia. 1989); Coachman Industries, Inc. v. Securit Trust Savings Bank of Shenandoah, 329 N.W.2d 648 (Iowa 1983). Irrespective of good faith or bad faith, the Bank wrongfully converted the proceeds by exercising dominion and control over Sony's property.Rodgers v. Rodgers, 399 S.E.2d 664, 677 (W.Va. 1990). Sony is entitled to recover from the Bank the funds wrongfully converted, namely, $202,179.58. See also W. Va. Code § 46-9-507.
5. Stereo Factory
Stereo Factory was served with the complaint and answered it, admitting to the substance of Sony's claims: (1) Stereo Factory entered into a security agreement and a distributor agreement with Sony; (2) Stereo Factory purchased audio cassette tapes and failed to pay for them in full; (3) Stereo Factory breached the security agreement and the distributor agreement, and; (4) Stereo Factory owes Sony the principal balance of $468,720.51, plus interest thereon equal to one and one-half percent (1 1/2%) per month, plus the attorney's fees and expenses incurred in bringing this action.
In addition to the admissions contained in its answer, Stereo Factory stipulated to the facts underlying Sony's motion. See Stipulations of Fact filed September 21, 1993. Moreover, Stereo Factory did not file a brief in opposition to Sony's motion for summary judgment.
The parties have submitted ample evidence to support Sony's claims against Stereo Factory for its unpaid account, including the security agreement, the distributor agreement, the invoices documenting the transactions and the billing statements. Sony is therefore entitled to summary judgment.
However, Sony's motion requested summary judgment against Stereo Factory in the amount of $468,720.51, which is the total principal balance remaining unpaid for the First, Second and Third Shipment. The Bank shall be required to disgorge the remaining $202,179.58 in proceeds from the Third Shipment. Sony is not entitled to a windfall and is only entitled to the difference of $266,540.93.
Under Article 8, Section C of the distributor agreement, and Section 9.2(A) of its security agreement, Sony is entitled to interest on the remaining $266,540.93 at the rate of one and one-half percent (1 1/2%) for each month the payment remains outstanding. Under Section 9.4 of the security agreement, Sony is also entitled to reasonable attorney's fees and expenses incurred in enforcing Sony's rights under the security agreement.
Given the foregoing ruling, it is unnecessary for the court to address the other issues raised in the motions for summary judgment.
C. CONCLUSION
The Bank's motion for summary judgment shall be, and is hereby, DENIED. Sony's motion for summary judgment shall be, and is hereby, GRANTED in part and DENIED in part.
The Bank shall pay Sony $202,179.58, plus interest at the statutory rate from the date of judgment.
Stereo Factory shall pay Sony $266,540.93, plus interest at the rate of one and one-half percent (1 1/2%) for each month the balance has remained, and continues to remain, unpaid. Stereo Factory shall also pay Sony reasonable attorney's fees and expenses incurred in this action, plus interest on that sum from the date of judgment at the statutory rate until paid in full.
The clerk is directed to forward a copy of this order to all counsel of record.