In 2007, James Cavazos purchased a new Mercedes vehicle from a dealer and gave JPMorgan Chase Bank (Chase) a purchase-money security interest

(PMSI) in the car. The state recorded Chase’s lien on the original certificate of title. Cavazos then forged a release of the lien against the title and received a certified copy of the original title. In reliance on that title, NXCESS Motor Cars, Inc., bought the car. It sold the car to Xavier Valeri, who granted a PMSI to U.S. Bank. NXCESS warranted that the title was free of all liens. When a new title was issued, Chase learned of Cavazos’s forgery. It sued Cavazos, Valeri, and U.S. Bank for conversion (see page 127 in Chapter 6). Chase demanded possession of the vehicle and that Cavazos repay the loan. Valeri and U.S. Bank contended that they were buyers in the ordinary course of business and had good title to the Mercedes because the state had provided a title free of liens and claims. Cavazos is liable on the loan, but who has the right to possess the car? Which PMSI dominates?

Explain your answers. [ NXCESS Motor Cars, Inc. v. JPMorgan Chase Bank, N.A., ___ S.W.3d ___ (Tex.App.— Houston 2010)]