Opinion
In Bankruptcy, Case No. 01-70247
June 26, 2001
OPINION
This matter came before the Court on Debtor's Motion to Avoid Mechanic's Lien on her 1987 Cutlass Ciera.
On January 24, 2001, Debtor filed her voluntary Chapter 7 petition in bankruptcy. Debtor scheduled Spring Street Automotive as a secured creditor with a claim of $251 secured by a 1987 Cutlass Ciera automobile. On May 18, 2001, Debtor filed a Motion to Avoid Mechanic's Lien on said vehicle. A hearing was held on June 5, 2001, at which both Debtor and Mark Holtmeyer, owner of Spring Street Automotive, were present. The undisputed facts indicate that sometime before filing her bankruptcy petition (probably November, 2000), Debtor's vehicle was towed to Spring Street Automotive for diagnostic services and possible repairs. The diagnosis was made, and Spring Street Automotive tried to contact Debtor for her decision regarding repairs. Debtor never contacted Spring Street Automotive or returned their calls. Accordingly, Spring Street Automotive retained the vehicle and refused to return it until the bill of $100 for the diagnostic services and towing was paid. After Debtor filed bankruptcy, and after receiving notice of Debtor's bankruptcy filing, Spring Street Automotive obtained title to the vehicle through the Illinois Secretary of State and made significant repairs and improvements to the vehicle, including replacing the engine. Debtor now wishes to pay the original bill and have her vehicle returned to her. Spring Street Automotive is unwilling to return Debtor's vehicle to her unless she pays the initial bill, storage and interest charges charges, and for the repairs and improvements it has made. At issue is whether and to what extent Spring Street Automotive's actions violated the automatic stay provisions of the Bankruptcy Code and what, if anything, is the appropriate remedy.
Skilled workers who repair automobiles and other machinery are not included in the Mechanic's Lien Act. They have liens on such chattels for labor and storage under the Labor and Storage Lien Act, 770 ILCS 45/0.01 et seq. 770 ILCS 50/1 provides as follows:
§ 1. Every person expending labor, services, skill or material upon or furnishing storage for any chattel at the request of or with the consent of its owner, authorized agent of the owner, or lawful possessor thereof, in the amount of $2,000 or less, shall have a lien upon such chattel beginning upon the date of commencement of such expenditure of labor, services, skill, or material, until the possession of such chattel is voluntarily relinquished to such owner or authorized agent, or to one entitled to the possession thereof.
Liens pass through bankruptcy unaffected. Long v. Bullard, 117 U.S. 617, 620-21, 6 S.Ct. 917, 918 (1886); Dewsnup v. Timm, 502 U.S. 410, 112 S.Ct. 773 (1992); In re James Wilson Associates, 965 F.2d 160, 167 (7th Cir. 1992). Contrary to Debtor's contention, Spring Street Automotive did nothing wrong by refusing to return the vehicle to Debtor unless or until she paid the initial bill and for accrued storage and interest charges. Spring Street Automotive had a valid lien on Debtor's vehicle, and Debtor's bankruptcy filing did not affect, void, or diminish the lien.
However, certain post-petition actions are prohibited by the automatic stay, including any act to obtain possession of property of the estate. See 11 U.S.C. § 362(a)(3). Spring Street Automotive obtained title to Debtor's vehicle from the Illinois Secretary of State post-petition, and this act clearly violated the automatic stay provisions of the Bankruptcy Code, in spite of the fact that the actions were lawful and appropriate under state law, outside of the context of bankruptcy.
The Court does not find that Spring Street Automotive's actions were willful or intentional. Accordingly, no sanctions or punitive damages are appropriate. However, Debtor is clearly entitled to the return of her property upon satisfaction of the lien.
Mr. Holtmeyer indicated in Court that, after obtaining title to the vehicle, he had replaced the engine and made other repairs and improvements to the vehicle. Debtor is not necessarily entitled to the benefit of these repairs and improvements unless she chooses to pay for them; however, Spring Street Automotive is not entitled to demand payment for those repairs and improvements as a condition of returning the vehicle to her. Spring Street acted at its own peril in obtaining title to the vehicle after it had notice of Debtor's bankruptcy filing. Thus, upon satisfaction of the lien (in other words, upon payment of the initial bill plus any applicable storage charges and interest accruing up to, but not beyond, the date the petition in bankruptcy was filed), Debtor is entitled to the return of her vehicle in the same condition it was presented to Spring Street Automotive. Before returning the vehicle to the Debtor, Spring Street Automotive is certainly free to remove any improvements, including the new engine, and replace these items with the original components or with components of at least the same quality as those on the vehicle when it was originally presented to Spring Street Automotive.
This Opinion is to serve as Findings of Fact and Conclusions of Law pursuant to Rule 7052 of the Rules of Bankruptcy Procedure.
See written Order.
ORDER
For the reasons set forth in an Opinion entered this day,
IT IS HEREBY ORDERED that Debtor's Motion to Avoid Mechanic's Lien be and is hereby granted in part and denied in part.
IT IS FURTHER ORDERED that Spring Street Automotive return to Debtor her 1987 Cutlass Ciera automobile within 7 days of the date on which Debtor pays the initial bill of $100 plus any applicable pre-petition storage and interest charges.
IT IS FURTHER ORDERED that Spring Street Automotive be and is hereby entitled to restore said vehicle to its original condition and remove any improvements or enhancements and replace them, if applicable, with the original components or components of a quality at least equal to those in the vehicle when originally presented to Spring Street Automotive.