¶1 Defendant/Appellant Intercontinental Jet Service Corp. ("IJS") seeks
review of an order granting summary judgment in favor of Third-Party
Defendant/Appellee Harley Davidson Credit Corp. ("Harley Davidson"). IJS also
appeals the trial court's order denying its motion for new
trial/reconsideration.
¶2 Plaintiff/Appellee Blue Sky Telluride, L.L.C. ("Blue Sky") brought a
replevin action alleging IJS wrongfully retained possession of a Mitsubishi MU-2
aircraft ("aircraft") owned by Blue Sky and delivered to IJS for the
limited purpose of inspection.1 Blue Sky asserted IJS exceeded the scope of the
inspection and performed unauthorized repairs on the aircraft. IJS filed its
answer and counterclaim admitting it retained possession of the aircraft but
that it did so to ensure payment by Blue Sky for the repairs it performed with
Blue Sky's consent. All parties agree the aircraft was delivered to IJS on or
around December 5, 2008. In its counterclaim, IJS claimed it holds a "mechanic's
lien" filed with the Federal Aviation Administration ("FAA") and sought to
foreclose the lien and sell the aircraft. IJS also included a third-party claim
against Harley Davidson Credit Corp. alleging its lien was superior to any
right, title, or interest held by Harley Davidson.
¶3 Harley Davidson is the successor in interest to Eaglemark Savings Bank,
which originally financed the purchase of the subject aircraft. Eaglemark, now
Harley Davidson, filed its purchase money security interest in the aircraft with
the FAA on June 21, 2006, and the document was recorded on July 27, 2006. IJS
filed its lien with the FAA covering the value of the services and repairs
rendered on March 23, 2009, and the document was recorded on April 6, 2009.
¶4 Blue Sky filed a motion for partial summary judgment against the
counterclaim of IJS, arguing the statute of limitations period had expired for
IJS to foreclose its lien pursuant to 42 O.S. §§95 and 100. Harley
Davidson also filed a summary judgment motion arguing IJS did not hold a common
law possessory lien as it claimed, and, even if it did, such lien was governed
by 42 O.S. §91 and subject to
Harley Davidson's senior lien. Harley Davidson also argued that pursuant to 42 O.S. §§95 and 100 the statute of
limitations had run barring IJS from enforcing its lien. In separately filed
responses, IJS asserted it retained possession of the aircraft and held a common
law possessory lien, the foreclosure of which was not time-barred because the
statute of limitations on the underlying debt had not yet lapsed.
¶5 On March 6, 2012, the trial court granted summary judgment in favor of
Harley Davidson. The journal entry referenced a previously entered and signed
minute order,2
which included findings and conclusions of law stating, prior to 2009, liens on
aircraft were covered by 42 O.S.
§91. Statutory changes in the definition of personal property moved
airplanes to 42 O.S. §91A and
subsection (B)(3) required such liens to be foreclosed within sixty (60) days of
filing. According to the undisputed facts of the parties, IJS filed its lien
with the FAA on March 23, 2009 but did not seek to foreclose its lien until the
filing of its answer and counterclaim to Blue Sky's original petition on May 6,
2010. The trial court held that "continued and uninterrupted possession [did]
not 'secure' a lien past the SOL."
¶6 IJS filed a motion for new trial/reconsideration on February 17, 2012
arguing 42 O.S. 2011 §91A(B)(3)
did not apply to the facts in this case and that the statute of limitations on
its common law possessory lien had not yet expired. IJS also argued its common
law possessory lien was superior to Harley Davidson's purchase money security
interest. IJS further asserted summary judgment was not appropriate because
Harley Davidson would be unjustly enriched by IJS's repairs and any statute of
limitations was "equitably tolled" due to settlement negotiations. The trial
court denied IJS's motion to reconsider from which this appeal was taken.
Consistent with 12 O.S. 2011
§951(b), IJS's amended petition in error presented the same issues as its
motion for new trial.
¶7 During the course of litigation and with the trial court's approval, Blue
Sky sold the aircraft to an unrelated party in an arms length transaction for
$525,000. IJS and Harley Davidson agreed to release their liens on the aircraft
and attached them to the sale proceeds. $125,000 of the sale proceeds was
disbursed to Harley Davidson, and the remaining $400,000 remains in escrow. Blue
Sky did not assert any claims against Harley Davidson. Blue Sky's claims against
IJS remain outstanding. This appeal is properly before this Court as the trial
court invoked 12 O.S. 2011
§994(A) by declaring its grant of summary judgment in favor of Harley
Davidson was intended to be a final order terminating all claims between IJS and
Harley Davidson and there was no just reason for delay of any appeal.
STANDARD OF REVIEW
¶8 An appeal from the denial of a motion for a new trial is reviewed under
the abuse of discretion standard.3 Head v. McCracken, 2004 OK 84, ¶2, 102 P.3d 670, 674. However, because
the correctness of the trial court's denial of a new trial depends on the
propriety of the underlying grant of summary judgment, we must determine whether
that decision was proper. Id.
¶9 Whether the trial court's entry of summary judgment was proper is a
question of law we review de novo. Manley v. Brown, 1999 OK 79, ¶22, 989 P.2d 448, 455. In a de
novo review, we have plenary, independent, and non-deferential authority to
determine whether the trial court erred in its application of the law and
whether a dispute exists as to any genuine issue of material fact. Kluver v.
Weatherford Hosp. Auth., 1993 OK
85, ¶14, 859 P.2d 1081, 1084.
Like the trial court, we examine the pleadings and summary judgment evidentiary
materials submitted by the parties to determine if a genuine issue of material
fact is in dispute. Carmichael v. Beller, 1996 OK 48, ¶2, 914 P.2d 1051, 1053. In so doing, we
view the facts and all reasonable inferences arising therefrom in the light most
favorable to the nonmovant. Id.
ANALYSIS
AIRCRAFT LIENS
¶10 Security interests in most goods are governed entirely by state law.
However, given the interstate nature of aircraft, Congress passed the Federal
Aviation Act ("Act") of 1958, which directed the Secretary of Transportation to
establish and maintain a system for recording "[a]ny conveyance which affects
the title to, or any interest in, any civil aircraft of the United States." 49
U.S.C.A §44107(a) (previously 49 U.S.C.A. §1403). The purpose behind the Act was
to create "a central clearing house for recordation of titles so that a person,
wherever he may be, will know where he can find ready access to the claims
against, or liens, or other legal interests in an aircraft." Philko Aviation,
Inc. v. Shackett, 462 U.S. 406, 411 (1983) (internal citations omitted). The
Act requires recording with the FAA of every transfer of any interest in a civil
aircraft in this country. Id., 462 U.S. at 410; e.g. Bank of Okla.
N.A. v. Martin, 1987 OK CIV APP
42, ¶12, 744 P.2d 218, 220.
"Although state law determines priorities, all interests must be federally
recorded before they can obtain whatever priority to which they are entitled
under state law." Philko Aviation, 462 U.S. at 413. See also
Martin at ¶12, 744 P.2d at 220 (holding that a security interest was not
perfected until filed with the FAA and priority of competing security interests
in the same collateral was determined by reference to Oklahoma's UCC statutes).
Failure to record with the FAA "invalidates the conveyance as to innocent third
persons... [b]ut recordation itself merely validates; it does not grant
priority." Philko Aviation, 462 U.S. at 413.
¶11 In a case predating Philko but consistent with its reasoning, the
Oklahoma Supreme Court also held the Act supplanted inconsistent state recording
statutes, i.e. 42 O.S.
§98, requiring a lienholder to file a statement with the county clerk within
sixty (60) days after last performing service on the subject personal property
to perfect its claim of lien. McCormack v. Air Center, Inc., 1977 OK 192, ¶16, 571 P.2d 835, 838. After filing with
the FAA, no further recordation is required for a lienholder to perfect its
claim of lien on an aircraft. 49 U.S.C.A. §44108(b); McCormack, ¶16, 571
P.2d at 838 ("The Trial Court erred in holding [lien claimant] was required to
file at the office of the county clerk. . . within the statutory period in order
to perfect its claim of lien."). The lien is valid from the date of filing. 49
U.S.C.A. §44108(b).
¶12 Here, both parties recorded their respective interests with the FAA.
Harley Davidson filed its purchase money security interest on June 21, 2006, and
IJS filed its lien with the FAA on March 23, 2009. Both liens being perfected by
filing with the FAA, we must look to Oklahoma law to determine the priority of
IJS's lien relative to Harley Davidson's purchase money security interest and
whether the statute of limitations had lapsed on such lien by the time IJS
sought to foreclose it.
POSSESSORY LIENS
¶13 IJS, citing Williamson v. Winningham, 1947 OK 231, 186 P.2d 644, maintains it has a
common law possessory lien and not a statutory lien under either 42 O.S. §91 or 42 O.S. §91A.4 All of the parties to this
appeal cite Williamson to support their respective positions. This case
from 1947 discusses the common law and Oklahoma's statutory lien scheme as it
existed at the time. Basically, 42
O.S. §91 "reiterates" an artisan's right to a possessory lien arising under
common law. Williamson at ¶25, 186 P.2d at 650. With such common law
liens, "[i]t is the right of a person to retain that which is in his possession,
belonging to another, until certain demands against such other person are
satisfied." Id. at ¶23, 186 P.2d at 650. "An artisan's lien for materials
and labor expended in betterment of personal property, existing under the common
law, where in the eyes of the law, ... the artisan has right of possession, may
constitute a lien, limited by statute." Id. at ¶28, 186 P.2d at
650 (emphasis added).
¶14 Williamson recognized statutory enactments may abrogate the common
law. This concept is also codified in our statutes. Section 2 of Title 12
provides in relevant part:
The common law, as modified by constitutional and statutory law,
judicial decisions and the condition and wants of the people, shall remain
in force in aid of the general statutes of Oklahoma.... 12 O.S. 2011
§2.
(Emphasis added.) At the time Williamson was decided, §91A had not
been enacted and §91 merely restated the right existing under the common law.
Section 91 applied to possessory liens for all types of personal property but
did not contain any of the current notice requirements or foreclosure sale
procedures. Compare R.L. 1910 §3852 and 42 O.S. 2011 §91.
¶15 As originally enacted and as it read at the time of the Williamson
decision, the text of R.L. 1910 §3852 read as follows:
Lien for services rendered on article. Every person who, while
lawfully in possession of an article of personal property, renders any
service to the owner thereof by labor or skill employed for the protection,
improvement, safe-keeping or carriage thereof, has a special lien thereon,
dependent on possession, for the compensation, if any, which is due to him
from the owner for such service.
This statute was first enacted in 1910 and remained substantially the same
until a major overhaul in 2005.5 2005 Okla. Sess. Laws, ch. 213, §4, ch. 477, §1
(codified at 42 O.S. Rev. Supp.
2005, §91) (effective Nov. 1, 2005). Prior to 2005, §91 covered possessory
liens for all types of personal property. The 2005 changes to Title 42 split off
vehicles titled by the Oklahoma Tax Commission ("OTC") or a federally recognized
Indian tribe in the State of Oklahoma. 2005 Okla. Sess. Laws, ch. 213, §4, ch.
477, §1 (codified at 42 O.S. Rev.
Supp. 2005, §91) (effective Nov. 1, 2005). Those certificate of title
vehicles were covered under §91 while all other types of personal property,
except for farm equipment as defined in §91.2, were covered under §91A.
Id. at ch. 213, §§1-2, ch. 477, §§1-2 (codified at 42 O.S. Rev. Supp. 2005, §§91, 91A,
and 91.2) (effective Nov. 1, 2005). The 2005 changes also included procedures
for foreclosing §91A property. Id. at ch. 477, §2 (codified at 42 O.S. Rev. Supp. 2005, §91A)
(effective Nov. 1, 2005). Additional changes in 2006 rectified some internal
inconsistencies in Title 42 and further refined foreclosure procedures for §91A
personal property. 2006 Okla. Sess. Laws, ch. 247, §2 (codified at 42 O.S. Supp. 2006, §91A)
(effective Nov. 1, 2006).
¶16 Since Williamson was decided, the statutes covering possessory
liens on personal property have changed significantly.6 Currently, §91A covers possessory
liens for all types of personal property which do not have a certificate of
title issued by the OTC or a federally recognized Indian tribe in the State of
Oklahoma.7 42 O.S. 2011 §91A(A)(1)(a) - (b).
It is a catch-all provision intended to govern possessory liens on items of
personal property which do not fall under either §§91 or 91.2. As "vehicle[s]"
which "ha[ve] a certificate of title that is not issued by the Oklahoma Tax
Commission or by a federally recognized Indian tribe in the State of Oklahoma,"
titled aircraft fall under the purview of §91A. Thus, any lienholder, like IJS,
who claims a possessory lien on aircraft for "furnishing storage, rental space,
material, labor or skill for the protection, improvement, safekeeping, towing,
right to occupy space, storage or carriage thereof" does so pursuant to 42 O.S. 2011 §91A.8 Common law possessory liens
on aircraft have been subsumed into §91A along with the additional requirement
that such liens be filed with the FAA rather than with the county clerk. 49
U.S.C.A. §44108(b); McCormack, ¶16, 571 P.2d at 838.
¶17 Presently, for items of personal property covered by §91A, there is no
deadline for providing notice to the owner or secured creditor (if any) of the
existence of the possessory lien, 42
O.S. 2011 §91A,9 except for the requirement that a lien statement be
filed with the county clerk within sixty (60) days of the work being performed
pursuant to 42 O.S. 2011 §98.10 Notice need
only be given when the lienholder wishes to foreclose its lien by a sale as
provided in subsection (A)(3). Section 91A(A)(3) sets forth procedures for a
non-judicial foreclosure sale of the subject personal property.
¶18 Here, IJS maintained possession of the subject aircraft from the time it
accepted delivery from Blue Sky11 but did not seek to foreclose its lien by the
procedures set forth in §91A(A)(3). Rather, Blue Sky brought a replevin action
against IJS for the recovery of the aircraft. In its answer and counterclaim,
IJS asserted it was entitled to payment from Blue Sky for the cost of labor and
parts used in the repair of the aircraft, plus storage fees, interest, and
attorneys fees and sought the permission of the trial court to "foreclose its
lien and sell the aircraft as allowed by Oklahoma law."12 Before any sale with the
attendant notice requirements could be held, the trial court granted summary
judgment in favor of Harley Davidson finding the statute of limitations had
lapsed for IJS to foreclose its lien. Thus, we must examine whether IJS was
within the statutory time to foreclose its perfected §91A possessory lien on the
subject aircraft.
LIMITATION PERIOD FOR ENFORCING §91A LIENS
¶19 We disagree with the trial court's determination that IJS must have
enforced its lien within sixty days of filing with the FAA under 42 O.S. 2011 §91A(B)(3). Instead,
we find that provision applies only when the lienholder has lost possession as
described in subsections (B)(1) and (B)(2). Here, IJS maintained possession of
the aircraft until the court approved sale. Its lien retained the same
characteristics when attached to the sale proceeds. The only other time
limitations provided in §91A concern the notice of the sale, 42 O.S. §91A(A)(4)13 and mandate that
foreclosure proceedings "shall not be commenced until thirty (30) days after
said lien has accrued," 42 O.S.
§91A(A)(6). By the very terms of §91A, the lien continues so long as the
lienholder retains possession. Section 91A(A)(2) provides in pertinent part:
Any person who, while lawfully in possession of an article of
personal property to which this section applies, renders any service to the
owner thereof by furnishing storage, rental space, material, labor or skill
for the protection, improvement, safekeeping, towing, right to occupy space,
storage or carriage thereof, has a special lien thereon, dependent on
possession, for compensation, if any, which is due to such person from
owner for such service.
(Emphasis added.) Thus, we must look to other portions of Title 42 for the
statute of limitation for §91A liens.
¶20 Both Harley Davidson and Blue Sky argue 42 O.S. 2011 §§95 and 100 apply.
Section 95 provides "proceedings under this act shall be commenced within eight
(8) months after the work is done." We note that the statute itself has a
footnote after the word "act" which notes "act" refers to Title 42, §92 et
seq. By the terms of §95, its limitation period only applies to the lien
described in §92. This is further supported by the legislative history of §92
et seq. Sections 92-96 of Title 42 were all part of House Bill No. 11714 passed by
the Second Legislature on March 20, 1911. 1910-11 Okla. Sess. Laws, ch. 114,
p.254, §§1-5 (now codified at 42 O.S. 2011 §§92-96). Thus, the eight (8) month
limitation contained in §95 applies to §92-96 and not §91A.
¶21 Section 100 provides as follows:
Said lien may be foreclosed by the sale of the property so covered any
time within twelve (12) months in the same manner provided by for law for
the foreclosure of chattel mortgages. 42 O.S. 2011
§100.
"Said lien" to which §100 refers is the lien provided for in §97. Like
§§92-96, §§97-102 were passed as a part of the same bill; specifically, House
Bill No. 65415 passed by the Sixth Legislature on March 27, 1917.
1917 Okla. Sess. Laws, ch. 187, p.350, §§1-8 (now codified at 42 O.S. 2011
§97-102). Each section within the bill became a different section of Title 42.16 Section 1
of House Bill No. 654, which describes the lien, became 42 O.S. 2011 §97, and §4, which
provides for the twelve month limitation on the foreclosure sale, became 42 O.S. 2011 §100.17 Because the limitations
period provided in §95 or §100 does not apply to the lien provided for in §91A,
we must look to other portions of Title 42 for the limitations period. The rest
of the sections in Chapter 2 of Title 42, specifically §§111 through 121 and
§§131 through 132, deal with specific subject matter. Sections 111 through 121
involve liens claimed by threshers and combiners, and §§131 through 132 deal
with blacksmiths, wheelwrights, and horseshoers. None of these sections apply to
§91A possessory liens. We instead turn to Chapter 1 of Title 42 - General
Provisions.
¶22 Chapter 1 of Title 42 provides that a lien is created "by contract of the
parties; or by operation of law." 42
O.S. 2011 §6. Here, IJS's possessory lien pursuant to 42 O.S. 2011 §91A arose by
operation of law as the record does not show any agreement, express or implied,
between the parties to create a lien on the aircraft. See Phoenix Mutual Life
Ins. Co. v. Harden, 1979 OK
93, ¶6, 596 P.2d 888, 890
("Intention to create a lien on property must clearly appear from the language
of some instrument and attendant circumstances."). Title 42 O.S. 2011 §7 further provides
"[n]o lien arises by mere operation of law until the time at which the act to be
secured thereby ought to be performed." Title 42 O.S. 2011 §23 provides in
pertinent part "[a] lien is extinguished by the mere lapse of the time within
which . . . an action can be brought on the principal obligation." When read
together with the continued possession requirements of §91A and in the context
of the present case, those statutes establish IJS's lien arose at the time Blue
Sky was obligated to pay for the repairs. IJS can enforce such lien so long as
it retains possession of the aircraft and the statute of limitations on the
underlying debt has not lapsed.
¶23 IJS retained possession of the aircraft to secure payment for the repairs
it performed with the alleged consent of Blue Sky. The parties agree the
aircraft was delivered to IJS on or about December 5, 2008. IJS maintains it
provided its final invoice to Blue Sky demanding payment on January 26, 2009,
and the record shows IJS filed its lien with the FAA on March 23, 2009. Oklahoma
law is clear that IJS's lien was not perfected until it filed the lien with the
FAA, see paragraphs 9-11, supra, but that is not when IJS's right
to payment arose. Rather, IJS's right to payment arose when it completed repairs
as consented to by Blue Sky, which appears to be sometime in January 2009.18 Even if IJS
became entitled to payment as early as December 5, 2008 when the aircraft was
first delivered to IJS, the statute of limitations had not run on Blue Sky's
underlying obligation to pay for repairs rendered.
¶24 The principal obligation underlying IJS's claim of lien is the repair
work IJS performed on the aircraft which was done, according to IJS, either by
verbal or written agreement. We agree with IJS that the statute of limitation
for breach of an agreement is either three years or five years depending on
whether the agreement is verbal or written. 12 O.S. 2011 §95(A)(1) and (2).
Because IJS's lien potentially arose, at the earliest, when it accepted delivery
on December 5, 2008, its lien lapsed, at the earliest, within three years of
that date, or December 5, 2011. All parties agree IJS first sought to foreclose
its lien by the filing of its counterclaim on May 10, 2010, well within the
earliest possible limitation period.
PRIORITY OF IJS's §91A LIEN
¶25 Unlike §91, §91A does not discuss the priority of such possessory
liens.19
Additionally, for the same reasons as discussed in paragraphs 20 and 21,
supra, neither §§96 nor 99 discussing the priority of each subject lien,
apply to §91A. Rather, the Uniform Commercial Code ("UCC"), 12A O.S. 2011 §1-101 et seq.
provides for priority of such possessory liens. Specifically, 12A O.S. 2011
§1-9-333 provides "[a] possessory lien on goods has priority over a security
interest in the goods unless the lien is created by a statute that expressly
provides otherwise." Here, the statute creating the lien, 42 O.S. 2011 §91A, does not provide
otherwise. Thus, UCC §1-9-333 governs, and IJS's §91A possessory lien, if valid,
is superior to Harley Davidson's security interest and the trial court's grant
of summary judgment must be reversed.
VALIDITY OF IJS's CLAIM OF LIEN
¶26 Because the claims between Blue Sky and IJS remain outstanding, we cannot
determine whether IJS had a valid lien such that the claims between IJS and
Harley Davidson can be resolved. Pursuant to the terms of 42 O.S. 2011 §23, "[n]o lien arises
by mere operation of law until the time at which the act to be secured thereby
ought to be performed." Additionally, §91A provides such possessory liens arise
"for the compensation, if any, which is due to such person from the
owner for such service." 42 O.S.
2011 §91A(2) (emphasis added). Here, not only is there a question about
when the obligation to pay arose (when IJS accepted delivery, when the
work on the aircraft was completed, or when the final invoice was delivered to
Blue Sky), but there also remains a question of fact as to whether Blue Sky was
ever obligated to pay IJS for the repairs. Blue Sky maintains it delivered the
aircraft to IJS for the limited purpose of inspection while IJS maintains it was
authorized to make repairs as consented to by Blue Sky and as mandated by FAA
maintenance requirements. If Blue Sky did not give permission to IJS for the
repairs, no obligation to pay ever arose, and thus no lien exists which can be
prior to Harley Davidson's security interest. On the other hand, if Blue Sky
consented to the repairs performed by IJS, Blue Sky became obligated to pay for
such repairs. Thus IJS's lien would be valid and superior to Harley Davidson's
lien and IJS was within the statutory time for foreclosing such lien.
Additionally, we note there appears to be some question as to whether the repair
work undertaken by IJS was rendered to the owner of the aircraft. The deposition
of Dennis Braner indicated uncertainty may exist as to whether IJS performed the
repairs for the owner of the aircraft or for someone else who may or may not
have been an authorized agent.
¶27 Because there remains a question of fact as to whether Blue Sky consented
to the repairs performed by IJS creating an obligation to pay giving rise to
IJS's lien, the decision of the trial court is REVERSED and REMANDED for further
proceedings consistent with this opinion.
BELL, P.J., and GOREE, J., concur.
