Case No. 00-10078, Chapter 11United States Bankruptcy Court, D. Wyoming
June 28, 2000
ORDER DENYING MOTION FOR RELIEF FROM STAY
PETER McNIFF, United States Bankruptcy Judge.
On June 21, 2000, the Amended Motion for Relief From Automatic Stay of Western Truck Repair came before the court for hearing. Western seeks relief to foreclose its liens against two vehicles in which the estate has an interest. The debtor objected. The court has considered the testimony and other evidence, and the applicable law, and is prepared to rule.
Findings of Fact
The evidence shows the following:
1. Markwardt Leasing Corp. is the record owner of a 1990 Marmon semi tractor, VIN 1JUREF1B4L1000320. The Certificate of Title shows a lease to Unified Transport by handwritten notation. Western Truck Repair has possession of the 1990 Marmon.
2. Markwardt Leasing Corp. is also the record owner of a Marmon 1991 semi tractor 1JUCEF182M10000002, leased to Unified Transport. However, the tractor was destroyed, insurance proceeds were paid to Markwardt, and the debtor repurchased the engine from the insurance company for salvage value. The engine belongs to the estate and is in possession of the debtor.
3. In August and September of 1999, the movant, Western Truck Repair, performed repairs on the engines of the 1991 and 1990 Marmons, respectively. On February 15, 2000, Western filed a lien statement with the county clerk of Carbon County which reflects the repairs performed on the 1990 Marmon for a total amount due to February 10, 2000 of $12,861.29. The lien statement mistakenly identified the vehicle subject to the lien as the 1991 Marmon. The lien claim was stated against Markwardt Leasing Corp.
4. In its schedules, the debtor listed the 1990 and 1991 Marmons as personal property of the estate and did not list the leases with Markwardt.
Conclusions of Law
Western Truck Repair seeks relief from the stay under § 362(d)(1) or (2) to foreclose its alleged recorded lien against the 1991 Marmon engine and possessory lien on the 1990 Marmon truck. Western contends the liens are valid, it has not been offered adequate protection, the debtor is not using the trucks and therefore, they are not necessary for an effective reorganization, and there is no equity in the property. The debtor contends the liens are either preferential transfers or invalid.
To establish a right to relief from the stay, a creditor must make a prima facie case that it has a valid, enforceable security interest in the property. In re McGuinness, 139 B.R. 3 (Bankr.D.N.J. 1992). In Wyoming, a statutory lien in personal property is created pursuant to Wyoming Statutes §§ 29-7-101 through 207 (Lexis 1999). A person entitled to a lien for work, services, or storage may claim a possessory lien for six months after the date the charges became due and payable unless foreclosure proceedings are begun sooner. Wyo. Stat. § 29-7-102(a).
In order to preserve a lien without possession or outside the six month period, the lien holder must file a lien statement pursuant to Wyoming Statute § 29-7-103(b). A lien on a titled motor vehicle must have the amount of the lien and the name of the lien claimant placed on the copy of the certificate of title on file in the office of the county clerk. If properly recorded, a lien statement is effective for 180 days after it is filed, unless foreclosure proceedings are commenced.
With regard to the 1990 Marmon, the evidence does not show a valid perfected lien for the repair work. Although Western Truck Repair has possession of the truck, the possessory lien expired around the end of March. To the extent the lien statement was filed to perfect a lien against the 1990 Marmon, the lien statement misidentifies the vehicle. Further, the evidence does not show that the lien was recorded on the county clerk’s copy of the certificate of title.
With regard to the 1991 Marmon engine, the evidence does not show a valid lien either. The debtor does not have possession of the engine, and the lien statement, if intended to apply to the 1991 Marmon, misstates the amount of the lien. Nor is there evidence that the lien was recorded on the clerk’s certificate of title.
The Bankruptcy Code protects the holder of a statutory lien from preferential avoidance challenges and authorizes the recording of statutory liens as an exception to the automatic stay. 11 U.S.C. § 362(b)(3), 546(b)(1) 547(c)(6). The operation of these statutes may protect a creditor to the extent a lien statement could be amended by Wyoming statute or must be filed after the bankruptcy case is commenced.
The debtor apparently has a leasehold interest in the 1990 Marmon which entitles it to use the property. The court is unwilling to categorically state at this time that the debtor is incapable of reorganizing, despite its present circumstances.
In this case, the creditor is not entitled to relief from the automatic stay because it has not shown it has a valid lien on the vehicles. However, in the event the debtor seeks to avoid the alleged liens, a proper adversary proceeding should be filed pursuant to Fed.R.Bankr.P. 7001. Further, the creditor may have rights against the lessor of the 1990 Marmon independent of the bankruptcy proceedings and may have the ability to perfect a storage lien.
IT IS, THEREFORE, ORDERED that on the basis of the evidence before the court, the motion of Western Truck Repair for relief from the automatic stay is denied.