Yeadon Fabric Domes v. Sports Complex

• Decision Date: 13 July 2006
• Parties: YEADON FABRIC DOMES, INC. v. MAINE SPORTS COMPLEX, LLC.
• Court: Maine Supreme Court

901 A.2d 200

2006 ME 85

YEADON FABRIC DOMES, INC. v. MAINE SPORTS COMPLEX, LLC.

Supreme Judicial Court of Maine.

Argued: May 8, 2006.

Decided: July 13, 2006.

Jon A. Haddow, Esq. (orally), Farrell, Rosenblatt & Russell, Bangor, for plaintiff.

Peter D. Klein, Esq. (orally), Eaton Peabody, (for Steven Hoksch), Christopher R. Largay, Esq. (orally), Joseph M. Pickering, Esq., Largay Law Offices, P.A., (for Kiser & Kiser Co.), Charles E. Gilbert III, Esq. (orally), Gilbert & Greif, P.A., Bangor, (for Harriman Brothers, Inc.), for defendants.

Panel: SAUFLEY, C.J., and CLIFFORD, DANA, ALEXANDER, CALKINS, LEVY, and SILVER, JJ.

CALKINS, J.

[¶ 1] Yeadon Fabric Domes, Inc. appeals from a judgment entered in the District Court (Bangor, Gunther, J.) in favor of Yeadon, Harriman Brothers, Inc., and Kiser & Kiser Company, against Maine Sports Complex, LLC (MSC). The judgment set the order of priority among MSC's creditors. Yeadon contends that the court erred when it held that Harriman's and Kiser's mechanic's liens had priority over its perfected security interest in a fixture attached to MSC's land. In resolving this matter, we are called upon to determine whether two apparently conflicting statutes can be harmonized: 10 M.R.S. § 4012 (2005), which gives title 11 perfected security interests priority over title 10 liens, and 11 M.R.S. § 9-1334(3) (2005), which subordinates security interests in fixtures to conflicting interests of encumbrancers. We interpret 10 M.R.S. § 4012 to refer only to personal property and not to fixtures. With that interpretation, 10 M.R.S. § 4012 is inapplicable to this case, and, pursuant to 11 M.R.S. § 9-1334(3), Yeadon's security interest is subordinate to the mechanic's liens of Harriman and Kiser. Thus, we affirm the judgment.

I. BACKGROUND

[¶ 2] In 2001, MSC entered into a series of business transactions for the purpose of building a sports complex in Hampden. It purchased real estate and gave a mortgage to the seller, H.O. Bouchard, Inc. It engaged Kiser to provide engineering services for the construction of the complex. MSC entered into a contract to purchase an inflatable, fabric dome from Yeadon, along with the materials and equipment required to erect and operate the dome. MSC contracted with Harriman to provide groundwork for the sports complex. MSC also obtained a loan from Bangor Savings Bank, giving the bank a mortgage, which was later assigned to Steven Hoksch. MSC defaulted on its obligations to these various entities, and litigation resulted.

[¶ 3] Yeadon had filed a financing statement for the dome and equipment with the Secretary of State on July 22, 2002. It brought a forcible entry and detainer action for personalty pursuant to 14 M.R.S. § 6012 (2005) against MSC, seeking to recover the dome. The court (LaVerdiere, J.) dismissed the action after concluding that the dome was a fixture and not personal property. Subsequently, on February 27, 2004, Yeadon recorded a financing statement in the Penobscot County Registry of Deeds.

[¶ 4] Yeadon filed a collection action against MSC, which was consolidated with other collection actions that had been filed by Harriman and Kiser. Both Harriman and Kiser had filed mechanic's lien claims, pursuant to 10 M.R.S. § 3253 (2005), and brought court actions to enforce their lien claims, pursuant to 10 M.R.S. § 3255 (2005). After motions for summary judgment, motions for default, and hearings, the court issued a final judgment detailing the order of priority of MSC's creditors and the amounts owed by MSC. The court found that Kiser began its work for MSC on December 3, 2001, and that Harriman began its work on December 7, 2001. The court put Yeadon last in the order of priority.

[¶ 5] Yeadon appealed from the determination of its priority. Kiser and Harriman filed briefs and argued in opposition. Hoksch filed a brief and argued in support of Yeadon.

II. DISCUSSION

A. Statutes

[¶ 6] The issue in this case is whether the court erred in determining the order of priority afforded to Harriman's and Kiser's mechanic's liens and to Yeadon's security interest in the dome. There are several statutes that bear on the question of priority. There are the statutes in Maine's version of the Uniform Commercial Code dealing with secured transactions, and there is also a statute in title 10.

[¶ 7] Maine's version of the U.C.C. sets out requirements concerning security interests and how to perfect them. Generally speaking, a financing statement must be filed to perfect a security interest. 11 M.R.S. § 9-1310(1) (2005). A security interest is perfected by filing unless certain exceptions apply, none of which are applicable here. 11 M.R.S. § 9-1310(1). A security interest in fixtures may be perfected by filing the financing statement in either of two places: in the registry of deeds for the county where the related real property is located, or in the Secretary of State's office. 11 M.R.S. § 9-1501(1) (2005). The relevant portions of section 9-1501(1) provide:

[T]he office in which to file a financing statement to perfect the security interest . . . is:

(a) The registry of deeds for the county in which the related real property is located, if:

. . . .

(ii) The financing statement is recorded as a fixture filing and the collateral is goods that are or are to become fixtures; or

(b) The office of the Secretary of State, in all other cases, including a case in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing.

Thus, for goods that are, or are to become, fixtures, the secured party who wishes to perfect a security interest should file the financing statement in the county registry of deeds if the filing is to be a fixture filing, or with the Secretary of State.¹

[¶ 8] A fixture filing is defined as "the filing of a financing statement covering goods that are or are to become fixtures and satisfying section 9-1502, subsections (1) and (2)." 11 M.R.S. § 9-1102(40) (2005). Section 9-1502 lists the information that a financing statement must contain to qualify as a fixture filing. 11 M.R.S. § 9-1502(1), (2) (2005).

[¶ 9] The provision in Maine's version of the U.C.C. dealing with the priority of security interests in fixtures is 11 M.R.S. § 9-1334 (2005). The general rule is that "a security interest in fixtures is subordinate to a conflicting interest of an encumbrancer or owner of the related real property other than the debtor." 11 M.R.S. § 9-1334(3). An encumbrance is defined as "a right, other than an ownership interest, in real property." 11 M.R.S. § 9-1102(32) (2005). The term "includes mortgages and other liens on real property." 11 M.R.S. § 9-1102(32).

[¶ 10] There are exceptions to the general rule and several alternatives by which a security interest in fixtures has priority over conflicting interests. The alternatives that are most likely to fit the factual situation of this case are found in 11 M.R.S. § 9-1334(4) and (5). The first of these alternatives is in section 9-1334(4), which gives a perfected security interest in fixtures priority when the debtor has an interest of record in, or is in possession of, the real property; the security interest in fixtures is a purchase-money security interest; the encumbrancer's interest arose before the goods became fixtures; and the security interest was perfected by a fixture filing before or within twenty days of the time the goods became fixtures. Another alternative is section 9-1334(5)(a), which states that a perfected security interest in fixtures has priority if:

(a) The debtor has an interest of record in the real property or is in possession of the real property and the security interest:

(i) Is perfected by a fixture filing before the interest of the encumbrancer or owner is of record; and

(ii) Has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner . . . .

There is also the alternative in section 9-1334(5)(c), which states that a perfected security interest in fixtures has priority if "[t]he conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by this Article."

[¶ 11] The final statute that bears on this case is in title 10, which contains the statute authorizing the mechanic's liens filed by Harriman and Kiser. See 10 M.R.S. § 3251 (2005). Specifically, 10 M.R.S. § 4012 states: "A security interest perfected in accordance with Title 11 has priority over any lien created or referred to by this Title unless the person claiming the lien has possession of the goods subject to the lien."²

B. Application of the Statutes to the Facts

[¶ 12] Yeadon filed a financing statement covering the dome and equipment with the Secretary of State on July 22, 2002, and with the registry of deeds on February 27, 2004. The court determined that the dome with its equipment is a fixture.³ The claims of Kiser and Harriman are pursuant to the mechanic's lien statute. 10 M.R.S. § 3251. Kiser began work on December 3, 2001, filed its lien on November 18, 2002, and filed its enforcement action on February 10, 2003. Harriman began work on December 7, 2001, filed its lien on August 27, 2002, and filed the enforcement action on October 17, 2002.

[¶ 13] The issue is whether the District Court correctly placed Yeadon's priority after Harriman and Kiser. The determination of the correct priority requires an interpretation and application of the statutes. Statutory interpretation is a question of law that we review de novo. City of Bangor v. Penobscot County, 2005 ME 35, ¶ 9, 868 A.2d 177, 180. The primary goal of statutory interpretation is to give effect to the intention of the Legislature. Id. To meet that goal we examine the plain meaning of the statute. Id. Only if the statutory language is ambiguous do we go beyond the plain meaning and look at the legislative history. Temm v....