Unpublished Disposition, 909 F.2d 1488 (9th Cir. 1984)

MEMORANDUM^* 

Graves Logging Co. (Graves) appeals the district court's decision affirming the bankruptcy court's grant of partial summary judgment in favor of Brazier Forest Products of Oregon, Inc. (Brazier), and Rainier National Bank (Rainier). We reverse and remand to the district court.

FACTS AND PROCEDURAL HISTORY

Between July 24 and August 17, 1984, Graves provided logger services and delivered logs to, and for, Brazier under three logging contracts. These contracts were virtually identical and required Graves to deliver Douglas fir logs to Brazier at its Molalla, Oregon mill and off-species logs to third-party mills in various locations. On August 17, 1984, Brazier filed a petition in bankruptcy under Chapter 11. On August 20, Graves filed a logger lien for $128,185.21 on the logs it had delivered pursuant to its contracts with Brazier. With court and party approval, these logs, together with those of other loggers who had liens, were sold and the proceeds of that sale made subject to Graves' and the other loggers' liens.

Graves received $80,054 plus interest, which reflected the contract price for delivery of the logs to Brazier at its Molalla mill. Rainier, another secured creditor, and Brazier maintained that the $48,131.21 remaining on Graves' claim represented the contract price for delivery of the logs to the third-party mills, requiring a separate lien which they alleged Graves had failed to perfect under Or.Rev.Stat. Sec. 87.236(2). Therefore, according to Brazier and Rainier, Graves was not entitled to that amount from the sale of the Molalla logs.

Graves moved for summary judgment on its claim for the $48,131.21, based on three theories: 1) estoppel, 2) equitable lien, and 3) either that it had complied with Or.Rev.Stat. Sec. 87.236(2), or that it did not need to comply with that statute because the lien for the entire contract price could be satisfied from the proceeds of the sale of the Molalla logs. Brazier and Rainier filed cross-motions for summary judgment. The bankruptcy court granted Brazier's and Rainier's motion for partial summary judgment and denied Graves' motion, finding that the balance of Graves' lien was invalid.

Graves moved for reconsideration, asserting essentially the same arguments it had made previously. On the day before the motion for reconsideration was to be heard, Graves filed a Supplemental Memorandum in Support of the Motion to Reconsider in which it asserted that the value of the raw logs delivered to Brazier's mill exceeded the total amount of its claimed lien. Brazier and Rainier objected that this was a new theory which could not be considered in a motion for reconsideration. After ordering briefing on the issue, the bankruptcy court agreed and refused to consider this argument. The court also adhered to its previous decision on Graves' other arguments and denied the motion. On appeal, the district court affirmed the bankruptcy court's decision. Graves appeals both the denial of its motion for reconsideration and the grant of partial summary judgment in favor of Brazier and Rainier.

DISCUSSION

We review a grant of summary judgment de novo to determine whether the bankruptcy and district courts properly applied the relevant substantive law and whether a genuine issue of material fact exists. T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 629-32 (9th Cir. 1987); see In re Daniels-Head & Assocs., 819 F.2d 914, 917-19 (9th Cir. 1987). We review a trial court's denial of a motion for reconsideration for abuse of discretion. Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 1985).

Under Oregon law,

[a] person who performs labor on or assists in obtaining, handling, manufacturing or transporting timbers or wood products at the request of the owner of the timbers or wood products has a lien upon those timbers and those wood products for the reasonable or agreed value for this labor or services.

Or.Rev.Stat. Sec. 87.222 (1989). Liens created by this statute

shall also attach to the proceeds of the sale of the chattels subject to those liens if:

(a) Prior to the filing of the notice of claim of lien, the chattels or any part thereof are sold or delivered to an agent, broker, cooperative agency or other person to be sold or otherwise disposed of; and

(b) At the time the purchaser, agent, broker, cooperative agency or other person is notified of the filing of the claim of lien by delivery of a true copy thereof, the proceeds that were received or will be received from the sale or other disposal of the chattels have not been delivered to the owner of the chattels.

Id. Sec. 87.236(2).

Graves, Brazier, and Rainier agree that Graves filed a logging lien on the Molalla logs which attached to the proceeds of their sale and covered the $80,054 contract price of their delivery. Graves has received this amount plus interest. The remaining $48,131.21 owed Graves by Brazier under the contracts represents the value of the contract services of delivering logs to the third-party mills. Brazier and Rainier maintain that Graves was required to file a separate lien on the proceeds from these logs. The bankruptcy court implicitly agreed, finding

that in order to obtain a lien on proceeds under Oregon law, that is from the proceeds of the logs that were delivered to the third party mills, ORS 87.236(2) has to be complied with and that requires timely notice to the third party mills. Timely notice was not given in this case, hence, I conclude that portion of the lien is void as to the debtor.

Oral Decision, Graves App. I at 309-10.

Graves argues that Sec. 87.236(2) is irrelevant. It claims that its contracts with Brazier were not severable into separate contracts for delivery of logs directly to Brazier at its Molalla mill and contracts for delivery of logs to third-party mills. Therefore, according to Graves, the lien on the Molalla logs should be used to satisfy Brazier's entire contractual obligation, and recourse to the proceeds of the logs delivered to third-party mills is unnecessary. The bankruptcy court did not address this argument in its decision, but Graves did not clearly articulate the argument until its written response to Brazier and Rainier's cross-motions for summary judgment. That response was filed the morning of the hearing and was argued at the hearing. See Graves App. I at 248-309. We do not find this untimely, however, because Brazier and Rainier did not file their cross-motions for summary judgment and opposition to Graves' motion for summary judgment until three days before the hearing. See Brazier Supp. App. at 689.

We find that Graves' argument was properly raised and is correct. Under the common law governing specific possessory liens, "when several items of goods are delivered on a single contract the lien for the amount due on such contract extends in its entirety to each and every article delivered under that contract." R. Brown, The Law of Personal Property Sec. 13.2 at 400 (3d ed. 1975). Similarly, in the context of timber law, statutory timber liens may "be satisfied out of any part of the material on which the labor or service was expended." J. Kinney, The Essentials of American Timber Law Sec. 126 at 171 (1953) (citing cases detailed in Graves' brief at 30-32). To the extent Oregon has addressed the issue, its law is consistent with this position. See Minter-Wilson Drilling Co. v. Richins, 60 Or.App. 702, 715, 655 P.2d 1060, 1068 (1982) (holding, in the context of liens on real property used to secure payment of irrigation well-drilling services, " [t]he fact that some of the work was paid for as required by the contract does not mean that the property immediately benefitted by the completed well is not lienable for work done on other portions of the property covered by the contract"). Here, Graves expended labor and service on Brazier's behalf pursuant to a single contractual obligation: Brazier was to pay Graves to cut timber from federal lands and deliver that timber to the Molalla and third-party mills.

Graves also contends that the value of the logs delivered to the Molalla mill was sufficient to cover the lien for Brazier's entire contractual obligation. Brazier and Rainier maintain that Graves did not timely raise this argument. The bankruptcy and district courts agreed, finding that Graves failed to raise its argument concerning the value of the Molalla logs until the day of the hearing on its motion for reconsideration of the grant of summary judgment in favor of Brazier and Rainier. Therefore, both courts refused to consider this issue. Graves vigorously disagrees and maintains that it raised the issue in its argument before the bankruptcy court on the motions for summary judgment. We agree with Graves.

As we have indicated supra, in its response to the cross-motions for summary judgment, filed on the morning of the hearing, Graves explained its theory that Or.Rev.Stat. Sec. 87.236(2) did not apply because the entire lien could be asserted against the Molalla logs without resorting to the logs delivered to the third-party mills. Graves App. I at 248-56, 284-85. This argument predominated the hearing on the motions for summary judgment. See id. at 270-309. A necessary corollary to this argument is that the value of the Molalla logs delivered by Graves was sufficient to satisfy the entire lien. It would be pointless to argue that the entire lien could be asserted against the Molalla logs unless their value could cover such a lien. Without using specific figures, Graves consistently maintained in the hearing that the value of the logs it delivered to the Molalla mill was sufficient to cover its entire lien. E.g., id. at 309 ("If they got $150,000 for our logs and our cutting value is $128,000, we're entitled to be paid out of that fund if the proceeds are still there."). Graves also explained that $80,000 reflected the contract price for delivery of the logs, not their value. Id. at 280-81.

The bankruptcy court nevertheless focused on the logs delivered to the third-party mills and found that, under Sec. 87.236(2), Graves was required separately to perfect the part of the lien attributable to work done on these logs. Because it found that Graves had failed to do so, the court held that portion of the lien void. Graves App. II at 309-10.

In its motion for reconsideration, Graves expanded on its argument that the entire lien could be satisfied from the value of the Molalla logs. Id. at 317-330. In this motion, Graves also asserted, "The $80,000 which Brazier previously paid Graves, represents only a portion of the proceeds received by Brazier on the sale of Graves' logs from its Molalla mill." Id. at 320. Finally, in its response to Brazier's and Rainier's opposition to its motion, Graves stated that " [t]he essence of Graves' Motion for Reconsideration is that the value of the Graves' logs delivered to the Debtor's Molalla mill were of sufficient value to satisfy Graves' claim for all of its labor services provided at the request of the Debtor." Id. at 409 (emphasis in original).

This statement does not reflect a new theory but merely clarifies the argument Graves had been making in connection with its motion for summary judgment. That Brazier, Rainier, and the court did not fully understand the argument until that time may demonstrate that Graves could have presented the argument more clearly, but it does not demonstrate that Graves previously had not made that argument. An attempt to be better understood is the essence of a proper motion for reconsideration. The judge mistakenly believed this was a new argument. Under these circumstances, we believe the bankruptcy judge's refusal to consider the argument was an abuse of discretion.

On the merits, then, we must determine if there is a genuine issue of material fact whether the value of the Molalla logs was sufficient to satisfy Graves' entire claim against Brazier. Unfortunately, Brazier's Molalla log inventory was never segregated according to which logger delivered specific logs prior to the logs' court-approved sale. In support of its motion for summary judgment, however, Graves included Brazier's "letters and scale certificates identifying the quality, quantity and species of logs delivered by Graves" to the Molalla mill, Graves App. II at 599 & 601-64, and a letter written by Lyle Bare, Brazier's Senior Vice President-Finance, containing "a handwritten summary sheet written by Mr. Bare stating the value per thousand board feet of different grades of logs on-site at Molalla as of August 17, 1984." Id. at 600, 546, & 551. Based on this information, Russell Graves, Graves' president, determined that the approximate value of the logs his company delivered was $223,751.20. Id. at 600 & 665. As Graves correctly asserts, this amount is considerably more than sufficient to cover Graves' entire lien of $128,185.21.

Brazier and Rainier, on the other hand, did not offer any evidence of the value of the logs Graves delivered to Molalla. Rather, they baldly assert that the Molalla logs were worth only the price Brazier agreed to pay Graves to cut the logs and deliver them to the mill.

Regardless of the assumptions made by both parties and their mutual misunderstandings, Graves presented specific facts to support its position in its motion for summary judgment. Brazier and Rainier, by contrast, failed to present any facts in support of their cross-motions for summary judgment. Nor does it appear likely that such facts exist, given that the logs delivered to Brazier's Molalla mill were never segregated according to their deliverer and that Graves used figures supplied by Brazier to calculate the value of the logs Graves delivered. We therefore conclude that no genuine issue of material fact exists on the issue of whether the value of the logs Graves delivered to the Molalla mill was sufficient to cover its entire lien. Based on the undisputed evidence, the value of these logs was sufficient to cover that lien.

CONCLUSION

Graves' entire lien could be satisfied from the proceeds of the sale of logs it delivered to Brazier's Molalla mill. No genuine issue of material fact exists whether the value of the Molalla logs was sufficient to cover Graves' entire lien. That value was sufficient. We therefore reverse the grant of partial summary judgment in favor of Brazier and Rainier and remand to the district court for entry of summary judgment in favor of Graves.

Graves also requests attorneys' fees pursuant to its logging contracts with Brazier, which provide for reasonable attorneys' fees to the prevailing party in a cause of action to enforce the terms of the contracts or a claim for damages under the contracts. Graves App. II at 524, 529, and 535; ER at 50. Because we find that it prevails, we award Graves its reasonable attorneys' fees, including attorneys' fees on appeal, such fees to be determined by the district court on remand.

REVERSED and REMANDED.