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Embraer Aircraft Maintenance Services, Inc. v. Aerocentury Corp.

United States District Court, M.D. Tennessee, Nashville Division

March 6, 2018

EMBRAER AIRCRAFT MAINTENANCE SERVICES, INC., Plaintiff,
v.
AEROCENTURY CORP., Defendant.

          MEMORANDUM

          ALETA A. TRAUGER UNITED STATES DISTRICT JUDGE

         Pending before the court is Plaintiff's Second Motion for Leave to File a Second Amended Complaint (Docket No. 79). Defendant has filed a Response (Docket No. 82), and Plaintiff has filed a Reply (Docket No. 83). For the reasons stated herein, Plaintiff's Motion is GRANTED.

         BACKGROUND

         This action arises from certain repairs and maintenance work performed by Plaintiff Embraer Aircraft Maintenance Services, Inc. on a SAAB-SANIA Model SAAB340B aircraft (“the plane”) owned (when this case arose) by Defendant Aerocentury Corp. At the time of Plaintiff's work on the plane, Defendant had leased the plane to Colgan Air, Inc. In late 2011, when Colgan's lease with Defendant was about to expire, Colgan contracted with Plaintiff to perform inspection, maintenance and any needed repair work for the plane, work required by Colgan's lease with Defendant. Plaintiff worked with representatives of both Colgan and Defendant to detail the service and repairs to be done.

         When Plaintiff completed its work, a repairman's lien secured by the plane automatically arose under Tennessee law. Tenn. Code Ann. §§ 66-19-101 and 66-19-102. Plaintiff issued an invoice for its work to Colgan for $351, 465.20. Colgan never paid the invoice and, in fact, filed for bankruptcy protection soon thereafter. Plaintiff perfected its lien by filing a notice in the Register of Deeds for Davidson County, Tennessee, and a separate notice with the Federal Aviation Administration. Plaintiff also notified Colgan and Defendant about its lien.

         On January 25, 2013, Plaintiff initiated this action to foreclose on the plane in satisfaction of its lien. In July of 2013, with no notice to Plaintiff, and after this foreclosure proceeding had been underway for six months, Defendant leased the plane, with a purchase option, to an aviation company known as URGA, located in the Ukraine. Pursuant to the lease with URGA, the plane was exported to Ukraine and removed from registration in the United States. On March 25, 2014, URGA exercised its purchase option and Defendant sold the plane to URGA, despite the pending foreclosure proceedings in this court.

         On November 24, 2015, Plaintiff filed a Motion for Summary Judgment in this action. In its Response to Plaintiff's Motion, Defendant disclosed, for the first time, that Defendant had sold the plane that is the subject of this action. Plaintiff then asked the court to order Defendant to deliver the proceeds from sale of the plane to Plaintiff, to be applied toward the debt owed to Plaintiff for work it performed on the plane.

         The court found that it could not decide Plaintiff's motion because it was unclear, under Tennessee law, whether Tenn. Code Ann. § 66-21-101 allows the enforcement of a statutory lien, such as Plaintiff's, by any method other than attachment of the lien-subject property.[1] Docket No. 69 at 5. Therefore, on March 25, 2016, the court certified two state law questions to the Tennessee Supreme Court as follows:

         1. May a repairman's lien arising under Tenn. Code Ann. § 66-19-101[2] be enforced by a method other than attachment of the lien-subject property itself?

         2. Under what circumstances, if any, may a court attach the proceeds of the sale of lien-subject property, or otherwise reach them with a judgment, where the owner has rendered attachment of the lien-subject property impracticable or impossible after the initiation of a foreclosure proceeding? Docket No. 69. The court then stated that it would hold this case in abeyance and ordered the Clerk to administratively close the case. Docket No. 70.

         On November 27, 2017, the Tennessee Supreme Court responded to this court's certified questions. It held that the only remedy provided for in Tenn. Code Ann. § 66-21-101 is attachment of lien-subject property. Docket No. 75 at 11 and 13. The court stated that the statutory lien follows the property and, therefore, there is no Section 66-19-101 statutory lien on the proceeds resulting from any sale of the plane. Therefore, as Plaintiff has no lien on the proceeds of the sale, Section 66-21-101 provides no remedy for Plaintiff to reach the proceeds. The court declined to answer the second question, finding that it did not state a defined question of unsettled Tennessee law. Id.

         After receiving the Tennessee Supreme Court's Order, this court reopened the file and held a telephone conference with counsel for the parties to discuss the status of the case. Docket No. 76. The Plaintiff requested leave to amend the complaint based upon new information and a new legal theory, which the court granted. The court issued an Order setting forth the briefing schedule for the Motion to Amend. Docket No. 77. That Motion to Amend is now before the court.

         MOTIONS TO AMEND

         Rule 15 of the Federal Rules of Civil Procedure provides that district courts should freely give leave to amend complaints when justice requires it. The Supreme Court has held that a motion to amend should be liberally granted unless the motion is brought in bad faith or the proposed amendments would cause undue delay, be futile, or unfairly prejudice the opposing party. Waddle v. Comm'r., Tenn. Dept. of Correction, 2017 WL 6442143 at * 2 (M.D. Tenn. Dec. 15, 2017) (citing Foman v. Davis, 371 U.S. 178, 182 (1963)). Amending a complaint would be futile if the proposed amendment would ...


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