Friendly Finance Corp. v. Orbit Chrysler Plymouth Dodge Truck, Inc.

HARRELL, J. Respondent, Orbit Chrysler Plymouth Dodge Truck, Inc. (Orbit), is, for the purposes of this case, a garage in possession of a motor vehicle subject to a garageman’s lien. The vehicle’s owner failed to pay Orbit for the repair work and services that gave rise to the lien. Orbit intends to sell the vehicle, as authorized by Md.Code (1975, 2000 RepLVol.), § 16-207 of the Commercial Law Article, 1 in order to recover the value of the services rendered. Petitioner, Friendly Finance Corporation (Friendly), is a lender holding a purchase money security interest in the ³⁴¹ motor vehicle that was perfected before Orbit came into possession of the vehicle.

The vehicle’s owner defaulted on the purchase loan and Friendly, in this replevin action, seeks to forestall Orbit’s sale of the vehicle and to take possession of the vehicle without having to pay Orbit for its repair services. Because the General Assembly intended the holder of a garageman’s lien to have priority of possession over any holders of perfected security interests in a motor vehicle when the holder of the garageman’s lien intends to conduct a statutory sale of the vehicle under § 16-207, we shall affirm the judgments of the District Court of Maryland, sitting in Prince George’s County, and the Circuit Court for Prince George’s County, each holding that Friendly is not entitled to possession and that Orbit may complete its statutory sale of the vehicle. Undisputed Facts On 31 August 2000, Israel Atkins bought a red, previously owned, 1998 Plymouth Neon four-door sedan. He financed the purchase of the vehicle with a loan provided by Friendly and secured by the vehicle.

That loan, a Maryland Closed-End Credit and Security Agreement, was perfected in Washington, D.C. on the same day. Orbit performed significant repairs and maintenance on the vehicle at Atkins’s request in April 2001. Atkins did not pay Orbit for the repairs, and Orbit became the holder of a garageman’s lien 2 for charges that eventually added up to $2,137.21: $1,162.21 in unpaid repairs (after payments under a mechanical repair contract were deducted), $300 in storage charges, and $675 in lien expenses. Atkins defaulted on his purchase money loan from Friendly and, on 5 November 2001, he informed Friendly that Orbit had possession of the vehicle. 3 ³⁴² Friendly filed in the District Court, on 29 November 2001, a replevin action to gain possession of the vehicle from Orbit without paying the charges due to Orbit.

Orbit responded by asserting its garageman’s lien and seeking dismissal of Friendly’s action. The District Court interpreted Title 16 of the Commercial Law Article to provide that a garage’s right to possession pending sale is absolute unless or until either (1) the repair bill is paid or (2) the lien is discharged through some other statutory means. Finding that Orbit’s repair bill had not been paid and that none of the statutory provisions by which the lien could be discharged were applicable, the court held that Orbit’s right to possess the vehicle and its right to sell the vehicle were superior to Friendly’s right to possession. It dismissed Friendly’s replevin action.

On direct appeal, the Circuit Court affirmed. We granted Friendly’s petition for certiorari, Friendly Finance v. Orbit, 374 Md. 358 , 822 A.2d 1224 (2003), to consider the following questions (rephrased for clarity): 1. Is a garageman’s lien on a motor vehicle subordinate to a previously perfected purchase money security interest if the garage intends to conduct a statutory sale of the vehicle under § 16-207? 2. Is the holder of a previously perfected purchase money security interest an “owner” within the meaning of that term as used in § 16-208 (Replevy of property by owner)?

Standard of Review The Court of Appeals will set. aside the judgment of a court based on the factual findings of that court only when those findings are clearly erroneous. Maryland Rule 8-131(c). 4 The relevant facts in this case are not in dispute. The legal analysis of the District Court and of the Circuit ³⁴³ Court, however, enjoy no deferential standard of appellate review. Helinski v. Harford Memorial Hosp., Inc., 376 Md. 606, 614-15 , 831 A.2d 40, 45 (2003).

We review de novo their interpretations of the relevant statutes. 5 Principles of Legislative Interpretation In order properly to interpret a statute, a court must ascertain and effectuate the intent of the Legislature. MVA v. Lytle, 374 Md. 37, 50 , 821 A.2d 62, 70 (2003). A reasonable statutory construction is one that is consistent with the purpose, aim or policy of the Legislature reflected in the statute. Id.

Statutory analysis begins with the plain meaning of the words of the statute. When those words are clear and unambiguous, and the result is not absurd, no further inquiry into legislative intent is required. See Lytle, 374 Md. at 57 , 821 A.2d at 73 ; Medex v. McCabe, 372 Md. 28, 38 , 811 A.2d 297, 303 (2002). When there is some ambiguity in the meaning of statutory language or when the language conflicts with the ³⁴⁴ larger statutory scheme, the statutory language must be construed in light of and governed by its context within the overall statutory scheme.

Lytle, 374 Md. at 57, 821 A.2d at 73 . The legislative history or other sources extraneous to the statute itself may shed light on the legislative intent. McCabe, 372 Md. at 38, 811 A.2d at 303 . Analysis The District Court’s bases for concluding that Orbit was entitled to retain possession of the vehicle were twofold, each interpreting different provisions of Title 16 of the Commercial Law Article of the Maryland Code.

The first was that a motor vehicle lien held by a garage under §§ 16-202(c) 6 and 16-203(a) 7 enjoys priority over a previously perfected purchase money security interest in the vehicle if the garage demonstrated an intention to sell the car under § 16-207. 8 The second was that only an “owner” could file a § 16-208 9 ³⁴⁵ replevin action in order to gain immediate possession of a motor vehicle held subject to a garageman’s hen, and that Friendly was not an “owner” within the meaning of that term as used in the statute. Friendly argues that these were each misinterpretations of the statute. I The Maryland General Assembly, when it enacted the provisions relating to garageman’s liens, envisioned the statute would operate according to the following sequence of events: (1) The owner in possession of the motor vehicle takes it (or has it towed) to the garage and requests that it be repaired. § 16-202(e)(l). (2) The garage performs the requested repairs, creating a lien in favor of garage for the repair bill, and bills the owner. § 16 — 202(c)(2)(i).

(3) The owner fails to pay the bill. (4) The garage stores the vehicle, creating a lien in favor of the garage for storage costs. § 16-202(c)(l)(ii). (5) The garage retains possession of the vehicle until either the charges are paid or the lien is otherwise discharged. § 16-203(a). (6) The garage, within 30 days of the creation of the lien, sends notice of the lien to all holders of perfected security interests. § 16 — 203(b)(l)(i). 10 (7) If the bill remains unpaid for 30 days, the garage, at its option, may initiate a public sale of the vehicle. § 16-207(a). ³⁴⁶ (8) The garage sends notice, at least 10 days prior to sale, to the owner, all holders of perfected security interests, and the Motor Vehicle Administration. 11 § 16 — 207(b)(2). 12 (9) The garage publishes notice once a week for the two weeks immediately preceding the sale in one or more newspapers of general circulation in the county where the sale is to be held. § 16-207(b)(l). 13 (10) The garage sells the vehicle. § 16-207.

(11) Proceeds of sale are applied as follows: § 16-207(e)(1). 14 ³⁴⁷ i. Expenses of the sale. § 16-207(e)(l)(i). ii. Third-party storage fees. § 16 — 207(e)(l)(ii). 15 iii. The lien claim for garage repair and storage bills. § 16-207(e)(l)(iii). iv.

Any purchase money security interest. § 16-107(e)(l)(iv). v. Any remaining secured parties of record. § 16-107(e)(l)(v). vi. Any remaining balance to the owner. § 16-107(e)(4). 16 By its own admission, Orbit did not follow one of these steps. Specifically, it failed to give the notice required by § 16 — 203(b) to Friendly, the holder of a perfected purchase money security interest in the vehicle. 17 The penalty for this omission, however, is laid out clearly in § 16-207(e)(3): if the notice required under § 16-203(b) is not sent, the garage may not recover any amount for storage charges incurred or imposed pursuant to § 16-202(e)(l)(ii). 18 The failure to give ³⁴⁸ notice does not affect the § 16-202(c)(2)(i) lien for the repair bill. Orbit would be entitled to sell the car and recover the expenses of the sale and the value of the repairs notwithstanding its failure to give the § 16-203(b) notice to Friendly. 19 Orbit otherwise followed the statutory requirements in establishing and maintaining its statutory garageman’s lien.

The holder of a garageman’s lien need not relinquish possession of the vehicle prior to sale unless either the charges that give rise to the hen are paid or the lien is “otherwise discharged in accordance with this subtitle.” § 16-203(a). In the present case, the charges have not been paid. The means by which a hen may be “otherwise discharged in accordance with this subtitle” are (1) surrender or delivery of the property by the garage under § 16-204 (Effect of surrender of possession); (2) the filing of a bond by the owner under § 16-206 (Proceedings if charge disputed); (3) sale by the garage under § 16-207 (Unpaid account settled by public sale; applicability of notice requirements); or (4) replevin by the owner under § 16-208 (Replevy of property by owner). Friendly cites § 16-205(b) as the basis for its right to possession of the vehicle. “A motor vehicle [garageman’s] hen is subordinate only to a security interest perfected as required by law, except in the case of a motor vehicle sold under § lb-207 of this subtitle.” 20 § 16-205(b).

If not for the reference to ³⁴⁹ § 16-207, it would appear that § 16-205(b) conflicts with § 16-203(a). On the one hand, § 16 — 205(b) is not one of the means by which the garageman’s lien may be discharged according to § 16-203(a). On the other hand, § 16-205(b) seems to make Orbit’s motor vehicle lien subordinate to Friendly’s perfected security interest. It is our view, however, that the reference to § 16-207 in § 16-205(b) gives a garageman with such a lien priority of possession over the holders of perfected security interests when the garage intends to sell the vehicle under § 16-207, but makes garage-man’s liens subordinate to perfected security interests in all other situations.

Friendly argues that the use of the past tense in § 16-205(b) (“sold”) indicates a legislative intent to give the garage-man’s lien priority over perfected security interests only if the § 16-207 statutory sale has been completed. On the contrary, the Legislature intended the garage to retain priority of possession throughout the process leading to a § 16-207 sale. The word “sold” in § 16-205(b) originally was meant to be read in the conditional present tense rather than in the past tense. The reference to § 16-207 was added to § 16-205(b) by amendment in 1982. 1982 Md. Laws, Chap. 890.

The original bill would have amended § 16-205(b) to read: “A boat lien or motor vehicle lien is subordinate only to a security interest perfected as required by law, except when sold pursuant to § 16-207 of this article.” The Legislature amended the bill before its enactment. The version that the Legislature enacted read: “A boat lien or motor vehicle lien is subordinate only to a security interest perfected as required by law, except in the case of a motor vehicle lien when a vehicle is sold pursuant to § 16-207 of this article.” Each version employed conditional language: “when sold” and “when a vehicle is sold.” The version that the Legislature enacted contained the word “is,” confirming that the statute was to be read in the present tense. The fact that the Legislature used the phrase “when a vehicle is sold,” rather than “when a vehicle has been sold,” is ³⁵⁰ persuasive evidence that it intended to extend the garage’s special priority over all other lienholders to embrace the entire process leading to a § 16-207 sale. Although the statute was amended in 1986 to remove the conditional language, 1986 Md. Laws, Chap. 418, the 1986 amendment seems to have been intended to remove the unnecessary redundancy of the word “vehicle” and generally to shorten the provision.

The resulting language could be read in either the conditional present tense or the past tense, but it does not appear that the Legislature intended in 1986 to change the tense. The statute’s tense has not been changed since. This conclusion is confirmed by our review of the rest of the statute. Section 16-207 quite clearly gives garageman’s liens priority over perfected security interests after the sale’s completion, so the reference to § 16-207 in § 16-205(b) would become surplusage if it only applied after a sale was completed.

We consistently have noted that statutory interpretations that result in surplusage or meaningless language should be avoided. See Eng’g Mgmt. Servs. v. Md. State Highway Admin., 375 Md. 211, 224 , 825 A.2d 966, 974 (2003). Section 16-207(d) gives the purchaser of a vehicle sold in a § 16-207 statutory sale the right to title “free and clear of any lien.” Sections 16-207(e)(l) and (e)(3) give the holder of a garage-man’s lien for repair work on a motor vehicle priority in the distribution of the sale’s proceeds over any perfected security interest holder.

There would be no need to make an exception for § 16-207 in § 16-205(b) if the Legislature had intended that exception to apply only after the sale was completed because the parties’ respective positions after a statutory sale already are clear in § 16-207. The reference to § 16-207 only has separate meaning if it applies throughout the course of carrying out a statutory sale. The Legislature’s choice to grant priority so that a garage may recover the value of repairs it performed on a vehicle is a sensible one objectively as well. The garage has added value to the vehicle.

A secured interest holder would receive a windfall if it were to obtain the right to possess and sell the ³⁵¹ vehicle without first paying the garage’s repair bill. For example, in this case Orbit replaced a leaking head gasket and a substantial portion of the front suspension, along with performing several other repairs. It also performed routine maintenance, such as changing the oil and aligning the front wheels. It is fair to say that the vehicle was worth more after the repairs than at the condition it was in at the time Atkins brought it to Orbit. 21 II Friendly sought a writ of replevin under § 16-208. 22 Issuance of such a writ would discharge the garageman’s lien and Friendly would be entitled to possession. 23 Section 16- ³⁵² 208, however, is only available to “the owner of the property.” Friendly is not the owner of the vehicle, but is rather the holder of a secured interest in the vehicle.

Accordingly, Friendly is not entitled to replevin under § 16-208. 24 Title 16 of the Commercial Law Article includes a broad and open-ended definition of the term “owner:” “ ‘[o]wner’ includes a person