PROTO-PLASTICS INC V AUTOLIGN MFG GROUP INCAnnotate this Case
STATE OF MICHIGAN
COURT OF APPEALS
DELTA ENGINEERED PLASTICS, LLC,
October 27, 2009
AUTOLIGN MANUFACTURING GROUP, INC.,
Monroe Circuit Court
LC No. 07-023466-CK
WAMCO 34, LTD.,
MOON ROOF CORPORATION OF AMERICA,
AUTOLIGN MANUFACTURING GROUP, INC.,
WAMCO 34, LTD.,
Monroe Circuit Court
LC No. 07-23603-CK
AUTOLIGN MANUFACTURING GROUP, INC.,
Monroe Circuit Court
LC No. 07-23408-CK
WAMCO 34, LTD.,
Before: Owens, P.J., and Servitto and Gleicher, JJ.
Plaintiffs appeal as of right the trial court’s order granting declaratory relief in favor of
intervening defendant, Wamco 34 Ltd (Wamco), and additionally granting Wamco possession of
and authorization to sell plastic injection molds based upon the trial court’s determination that
Wamco had a priority interest in the molds. We reverse and remand.
Plaintiffs are in the plastic injection molding business.
Manufacturing Group, Inc. (Autolign) is a plastic injection molder that produced parts for use in
the automotive industry. Apparently, there was a fire at Autolign’s business in late December
2006 or early January 2007, and Autolign was unable to continue producing parts. Autolign
subcontracted its work, requesting that plaintiffs produce parts using molds owned by Autolign,
and Autolign would pay plaintiffs for the parts produced. Autolign delivered the various molds
to plaintiffs and plaintiffs produced the parts. Autolign, however, failed to pay for all of the parts
produced. In April 2007, Autolign entirely ceased its operations.
Plaintiff, Proto-Plastics, Inc., brought an action against Autolign claiming an account
stated/open account, breach of the parties’ contracts, and that Autolign was unjustly enriched by
Proto-Plastics’ manufacture and delivery of parts without payment from Autolign. Proto-Plastics
also asserted a statutory lien on the molds in its possession, from which it produced the parts,
under the Molder’s Lien Act, MCL 445.611 et seq. Proto-Plastics sought both monetary
damages and injunctive relief. Delta Engineered Plastics, LLC, and Moon Roof Corporation of
America, shortly thereafter, filed similar complaints against Autolign. Although the three
lawsuits were never officially consolidated, the trial court effectively treated the matters as
Upon learning that Wamco was a lender to Autolign, and asserted a first priority lien and
security interest in substantially all of Autolign’s assets, all parties stipulated to the addition of
Wamco as an intervening defendant. Wamco filed counter-complaints in all three cases for
claim and delivery, contending that plaintiffs were in possession of molds that represented a
portion of Autolign’s assets used to secure repayment of its debt to Wamco, and that that the
molds were now Wamco’s property. Wamco also sought a declaration that its interest in the
molds, and its right to the proceeds from the sale of the same, was superior to the interests/rights
of the plaintiffs. Wamco asked the trial court’s permission to take possession of the molds, to
dispose of the molds and to apply the proceeds to Autolign’s indebtedness to Wamco.
Wamco moved, in all three cases, for a declaration that it was entitled to the abovedescribed relief. The trial court ruled that Wamco had established that it was a secured creditor
of Autolign, and that Wamco’s security interest had priority over the plaintiffs’ possessory
interest in the molds. The trial court ordered that Wamco was entitled to possess and to liquidate
Plaintiffs sought to appeal the above ruling in this Court, but the cases were dismissed for
lack of jurisdiction, as the trial court’s order granting Wamco’s motion was not a final order,
appealable by right (docket no.'s 279621, 279622, 279623). This Court also denied plaintiffs’
applications for leave to appeal (docket no.’s 279781, 279783, 279786). After the trial court
entered final consent judgments in favor of plaintiffs and against Autolign, these consolidated
appeals, as of right, followed.
Although it was not termed as such, Wamco’s motion before the trial court was
essentially a motion for summary disposition. Wamco requested that the trial court grant all of
the relief requested in its counter-complaints, and resolve all issues in favor of Wamco. After
reviewing the pleadings and other relevant evidence, the trial court granted Wamco all of its
requested relief. Accordingly, we will review this matter as a grant of summary disposition in
favor of Wamco, pursuant to MCR 2.116 (C)(10).
This Court reviews de novo a trial court's grant or denial of summary disposition under
MCR 2.116(C)(10). Spiek v Dep't of Transportation, 456 Mich 331, 337; 572 NW2d 201
(1998). A motion brought under MCR 2.116(C)(10) tests the factual support for a claim.
Downey v Charlevoix Co Rd Comm'rs, 227 Mich App 621, 625; 576 NW2d 712 (1998). The
pleadings, affidavits, depositions, admissions, and any other documentary evidence submitted by
the parties must be considered, in a light most favorable to the nonmoving party, when reviewing
a motion brought under MCR 2.116(C)(10). Id.
The instant matters also involve issues of statutory interpretation, which we review de
novo on appeal. Gladych v New Family Homes, Inc., 468 Mich 594, 597; 664 NW2d 705
(2003). In determining the meaning of a statute the following rule applies:
The primary goal of statutory interpretation is to ascertain and give effect to the
intent of the Legislature in enacting a provision. Statutory language should be
construed reasonably, keeping in mind the purpose of the statute. The first
criterion in determining intent is the specific language of the statute. If the
statutory language is clear and unambiguous, judicial construction is neither
required nor permitted, and courts must apply the statute as written. However, if
reasonable minds can differ regarding the meaning of a statute, judicial
construction is appropriate. [Gateplex Molded Products Inc v Collins & Aikman
Plastics, Inc, 260 Mich App 722, 726; 681 NW2d 1 (2004), quoting Rose Hill
Ctr, Inc v Holly Twp, 224 Mich App 28, 32; 568 NW2d 332 (1997)]
Ownership rights in dies, molds, and forms is addressed in MCL 445.611, et seq. This
act, created in 1982, provides at MCL 445.618:
A molder has a lien, dependent on possession, on any die, mold, or form in the
molder's possession belonging to a customer for the amount due the molder from
the customer for plastic fabrication work performed with the die, mold, or form. A
molder may retain possession of the die, mold, or form until the amount due is
There is no dispute that plaintiffs are molders, that they had possession of Autolign’s
molds, that they performed plastic fabrication work with the molds, and that Autolign failed to
pay plaintiffs for their completed work. According to the above statutory provision, plaintiffs
had a possessory lien on the molds until the amount due for their plastic fabrication work was
In addition, there is no apparent dispute that Wamco also had an interest in the molds by
virtue of a continuing collateral mortgage and a security agreement granting liens upon
Autolign’s real property and assets, and the assignment of all rights, title and interest to the same
to Wamco, executed in 2005. The essential issue in the instant cases concerns the interplay
between the Molder’s Lien Act and the UCC. This Court must determine whether the plaintiffs
held the superior interest in the molds and/or the proceeds from the sale of the molds under the
Molder’s Lien Act, or whether Wamco’s UCC security interest had priority. There is no existing
case law on the Molder’s Lien Act and this precise issue. The instant cases thus appear to
present an issue of first impression in Michigan.
The parties agree that the Legislature set forth the UCC’s lien priority scheme at MCL
440.9333, and that this statute is applicable to the instant cases. The statute provides:
(1) As used in this section, “possessory lien” means an interest, other than a
security interest or an agricultural lien, that meets all of the following:
(a) It secures payment or performance of an obligation for services or materials
furnished with respect to goods by a person in the ordinary course of the person's
(b) It is created by statute or rule of law in favor of the person.
(c) Its effectiveness depends on the person's possession of the goods.
(2) A possessory lien on goods has priority over a security interest in the goods unless the
lien is created by a statute that expressly provides otherwise (emphasis added).
The comment to this section states:
2. “Possessory Liens.” This section governs the relative priority of security
interests arising under this Article and “possessory liens,” i.e., common-law and
statutory liens whose effectiveness depends on the lienor's possession of goods
with respect to which the lienor provided services or furnished materials in the
ordinary course of its business. As under former Section 9-310, the possessory
lien has priority over a security interest unless the possessory lien is created by a
statute that expressly provides otherwise. If the statute creating the possessory lien
is silent as to its priority relative to a security interest, this section provides a rule
of interpretation that the possessory lien takes priority, even if the statute has been
construed judicially to make the possessory lien subordinate.
It was the purpose of the UCC to prefer a service lien, common law or statutory, where the
service provider retained possession of the goods, over a perfected security interest, except
where the lien is statutory and the statute expressly provides otherwise. See, e.g., Nickell v
Lambrecht, 29 Mich App 191; 185 NW2d 155 (1970).
Plaintiffs accurately state that pursuant to MCL 440.9333, their possessory liens provided
for under the Molder’s Lien Act, have priority unless the Molder’s Lien Act expressly provides
otherwise. According to plaintiffs, because the Molder’s Lien Act does not expressly grant
priority to any other interest, their liens are first in priority.
Wamco argues, however, that the Molder’s Lien Act specifically grants priority to prior
lien holders, such as itself. Wamco contends that the Legislature intended molder’s liens to be
inferior to the interests of a secured creditor. Wamco relies on the Molder’s Lien Act at MCL
If the sale is for a sum greater than the amount of the lien, the proceeds shall first
be paid to the prior lien holder who has a perfected lien in an amount sufficient to
extinguish that interest. Any excess shall next be paid to the molder who
possesses a lien under this act in an amount sufficient to extinguish that interest.
Any remainder shall then be paid to the customer (emphasis added).
Wamco contends that because, according to the plain language of the above statute, the proceeds
from the sale of molds are first paid to satisfy a prior perfected lien holder’s claim, a secured
creditor such as itself has the priority interest.
However, the statutes preceding MCL 445.618d(1) must be considered in order to
provide context and to give meaning to all of the statutory provisions. MCL 445.618, as
previously quoted, sets forth the molder’s right to a lien on a mold. Before a molder can enforce
a lien afforded pursuant to MCL 445.618, MCL 445.618a requires written notice of the claim of
lien be provided to the customer. MCL 445.618b goes on to provide that if the molder has not
been paid the amount due within 90 days after the notice was received by the customer, the
molder may sell the mold at public auction, if the molder still possesses the mold, and if he has
complied with MCL 445.618c. MCL 445.618c provides:
(1) Before a molder may sell the die, mold, or form, the molder shall notify, by
registered mail, return receipt requested, the customer and any person whose
security interest is perfected by filing (emphasis added) . . .
It is only then that we look to MCL 445.618d, which refers to “the sale” by a molder in
possession of a mold, seeking to recover the amount due the molder from a customer for plastic
fabrication work performed using the mold. If read in context, MCL 445.618d provides that if
the sale of a mold by a molder with a possessory lien is for a sum greater than the amount due
the possessory lien holder, the proceeds from the mold’s sale shall first be paid to a prior
perfected lien holder in an amount sufficient to extinguish the perfected lien holder’s interest.
Once the perfected lien holder’s interest is extinguished, any remaining funds shall be paid to the
molder who possesses a lien pursuant to this act, in an amount sufficient to extinguish the lien.
We conclude that MCL 445.618d only applies if a molder sells the mold, and only if the
sale is for a sum greater than the amount due to the molder for the unpaid product. In the
situation before us, however, MCL 445.618d was not triggered. Instead, Wamco took possession
of the molds, pursuant to the trial court’s order, and apparently sold the molds. Accordingly,
MCL 445.618d is inapplicable to the present facts and can provide no basis for Wamco’s claim
Moreover, while Wamco urges this Court to interpret MCL 445.618d as providing that
Wamco’s security interest has priority over plaintiffs’ possessory liens, the Molder’s Lien Act
that created the possessory lien does not “expressly” provide the same. Once again, MCL
440.9333(2) clearly states, “A possessory lien on goods has priority over a security interest in the
goods unless the lien is created by a statute that expressly provides otherwise” (emphasis added).
In the instant matters, the possessory molders’ liens are created by statute, however, the
provision in the Molder’s Lien Act relied upon by Wamco simply sets forth the distribution of
any proceeds following the sale of a mold by a molder. As noted in Gateplex Molded Products
Inc v Collins & Aikman Plastics, Inc, supra, at 727, under the Molder’s Lien Act, “MCL
445.618d discusses the distribution of the sale proceeds upon the sale of the mold, including
giving the excess of the proceeds to the customer.” Because MCL 440.9333(2) is controlling,
and there is no express provision in the Molder’s Lien Act stating that an interest such as
Wamco’s has absolute, unequivocal priority over possessory liens such as plaintiffs’, plaintiffs’
possessory liens were entitled to priority over Wamco’s interest in the molds.
The parties spend a considerable amount of time debating whether there is a distinction
between a lien and a security interest for purposes of their statutory interpretations. Specifically,
plaintiffs assert that even if MCL 445.618d were to be interpreted as Wamco contends (i.e.
placing a prior perfected lien holder’s interest in a priority position over a possessory lien
holder’s interest), Wamco was still not entitled to its requested relief because Wamco was not a
lien holder, as specified in MCL 445.618d. According to plaintiffs, because Wamco’s interest
was created by a security agreement, its interest was a security interest—which is distinct from a
lien. Wamco responds that the distinction makes no difference in this case because, either way,
it was entitled to priority.
Because we decline to read MCL 445.618d as “expressly” stating that a prior perfected
lien holder’s interest is superior to that of a possessory lien holder, we need not determine
whether Wamco’s interest in the molds was a security interest or a lien, or whether there is a
distinction between the two under the relevant statutes. There is no need to address any
distinction because Wamco relies entirely upon MCL 445.618d as the basis for its claim to
Reversed and remanded to the trial court for a determination of plaintiffs’ damages and
appropriate remedies. Plaintiffs, being the prevailing parties, may tax costs pursuant to MCR
7.219. We do not retain jurisdiction.
/s/ Deborah A. Servitto
/s/ Donald S. Owens
/s/ Elizabeth L. Gleicher