Fifth Circuit Court Cases - Case Law and Opinions from the 5th Circuit Federal Court - Court of Appeals

	ROMINGER LEGAL
		Fifth Circuit Court of Appeals Opinions - 5th Circuit
					Need Legal Help?
					Need Legal Help?
LEGAL RESEARCH CENTER
LEGAL RESEARCH CENTER			LEGAL HEADLINES - CASE LAW - LEGAL FORMS	NOT FINDING WHAT YOU NEED? -CLICK HERE

This opinion or court case is from the Fifth Circuit Court or Appeals. Search our site for more cases - CLICK HERE

LEGAL RESEARCH

COURT REPORTERS

PRIVATE INVESTIGATORS

PROCESS SERVERS

DOCUMENT RETRIEVERS

EXPERT WITNESSES

Find a Private Investigator

Find an Expert Witness

Find a Process Server

Case Law - save on Lexis / WestLaw.

Legal News - Legal Headlines

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-10149
_____________________
ASTRAEA AVIATION SERVICES, INC., doing
business as Dalfort Aviation,
Plaintiff - Appellant-Cross-Appellee,
versus
NATIONS AIR INC., ET AL.,
Defendants,
9 LIVES HOLDING, INC.,
Defendant - Appellee-Cross-Appellant.
_________________________________________________________________
Appeals from the United States District Court for the
Northern District of Texas
_________________________________________________________________
April 27, 1999
Before KING, Chief Judge, REYNALDO G. GARZA and JOLLY, Circuit
Judges.
E. GRADY JOLLY, Circuit Judge:
The main issue presented by this appeal is whether § 70.301 of
the Texas Property Code requires a mechanic to obtain the consent
of an aircraft's owner to perform work before the mechanic can
secure a lien on the aircraft. Astraea Aviation Services, Inc.
d/b/a Dalfort Aviation ("Dalfort")--a company that provides
aircraft maintenance and repair services--asserted a lien on an

aircraft and brought a foreclosure suit against the owner of the
aircraft. Dalfort now appeals from a judgment denying the
existence of a lien. Dalfort also appeals the decision to assess
attorney's fees against, rather than in favor of, Dalfort under
Tex. Prop. Code Ann. § 70.306 (West 1995). The owner of an
aircraft serviced by Dalfort, 9 Lives Holding, Inc. ("9 Lives"),
cross-appeals the magistrate judge's denial of recovery on two of
9 Lives' counterclaims. We conclude that the magistrate judge
correctly interpreted § 70.301 to require an owner's consent, and
we also agree that the judge granted appropriate relief to 9 Lives
on its counterclaims. We therefore affirm the judgment in all
respects.
I
We review a trial court's findings of fact for clear error.
Fed. R. Civ. P. 52(a). After reviewing the record, we conclude
that the district court did not clearly err in any of its relevant
findings of fact. We will therefore state the facts (some of which
remain disputed) according to the findings of the district court.
9 Lives owns an aircraft described as a Boeing 737-200 bearing
tail number N308VA. 9 Lives leased this aircraft to Viscount Air
Services, Inc. ("Viscount"),1 who in turn entered a sublease
1Viscount filed for bankruptcy while this appeal was pending,
but Viscount is not a party in this appeal. The district court
dismissed all claims against Viscount without prejudice.
2

agreement with Nations Air, Inc. ("Nations Air"). The lease
agreement placed certain maintenance responsibilities on the lessee
(Viscount),
and
the
sublease
agreement
passed
those
responsibilities on to the sublessee (Nations Air).
In August 1995, during the term of the sublease, Nations Air
entered an agreement with Dalfort in which Dalfort agreed to
perform maintenance and inspection work on the aircraft. After
learning of this arrangement, but before Dalfort began any of its
work, 9 Lives expressed to both Nations Air and Dalfort its
disapproval of having Dalfort perform the work. 9 Lives told
Dalfort that it would not consent to having Dalfort perform any
work on the aircraft. After 9 Lives refused to give its consent
(as owner), Dalfort nevertheless performed maintenance and
inspection work. Upon completing the work, Dalfort sent Nations
Air an invoice for $191,903.82.2 Although Nations Air conceded
that it was liable for the full cost of the repairs, neither
Nations Air nor 9 Lives paid Dalfort for any of its services or
expenses.3
2Dalfort charged $166,804.17 for maintenance and inspection
services and charged $25,099.65 for fuel, telephone costs, and
other miscellaneous expenses.
3The district court entered judgment against Nations Air for
the full $191,903.82. Nations Air is not, however, a party in this
appeal.
3

Without having received any payment, Dalfort released the
aircraft to Nations Air on August 25, 1995. Viscount terminated
its contract with Nations Air in October, 1995, and took possession
of the aircraft. A little later in the same month, Dalfort
asserted its right to a lien on the aircraft by filing an affidavit
with the Federal Aviation Administration ("FAA"). Then, in
November 1995, Dalfort sued 9 Lives, seeking to force foreclosure
on Dalfort's claimed mechanic's lien for the amount owed due to
maintenance performed on the aircraft. 9 Lives asserted several
counterclaims based on theories of conversion and Dalfort's alleged
creation of a cloud on 9 Lives title to the aircraft.4
II
The district court asserted subject matter jurisdiction over
the case under 28 U.S.C. § 1332. In September 1996, the parties
tried their case before a magistrate judge. Dalfort argued that
Texas law created a mechanic's lien on the aircraft under the
following property code section:
A person who repairs or performs maintenance work
on an aircraft has a lien on the aircraft for:
(1) the amount due under a contract for
the repairs or maintenance work; or
(2) if no amount is specified by
contract, the reasonable and usual
4The parties brought various other claims and counterclaims in
the district court, but the parties have only appealed those
mentioned.
4

compensation for the repairs or
maintenance work.
Tex. Prop. Code Ann. § 70.301 (West 1995).5 9 Lives did not
challenge the application of Texas law to this case.
The magistrate judge concluded that § 70.301 does not create
a lien without proof of the aircraft owner's consent to the
services supporting the lien. Acknowledging that no Texas court
has ruled on this precise point of law, the magistrate judge
reasoned that Texas courts would require the owner's consent
because they have required such consent when interpreting similar
mechanic's lien statutes. Therefore, the magistrate judge
concluded that Dalfort had no lien. Furthermore, the magistrate
judge awarded to 9 Lives reasonable attorney's fees under § 70.306
because it was a prevailing party.6
With respect to 9 Lives's counterclaims for conversion and
creating a cloud on the aircraft's title, the magistrate judge
noted that 9 Lives only claimed as damages lost rentals (allegedly
caused by the cloud on the aircraft's title) and the attorney's
5The Texas legislature has since modified this statute and
made the modifications effective as of August 28, 1995. See Tex.
Prop. Code Ann. § 70.301 (West Supp. 1999). The modifications,
however, would not play any relevant role in the issues of this
case.
6Section 70.306 states the following:
The court in a suit brought under this subchapter
may award reasonable attorney's fees to the prevailing
party.
5

fees incurred by defending against Dalfort's lawsuit. After noting
that it would award 9 Lives its attorney's fees under § 70.306
(thus, making it unnecessary to award those fees as relief for 9
Lives's counterclaims), the district court refused to allow 9 Lives
any further monetary recovery. The court concluded that 9 Lives
did not make a sufficient showing that, but for the cloud on the
title, it would have earned rentals by leasing the aircraft.
Although it did not allow for recovery, the magistrate judge did
grant some relief to 9 Lives in the cloud of title claim: The
court's judgment declared "invalid the lien clam [sic] filed by
Dalfort with the records of the Federal Aviation Administration."
The judgment also provided that "9 Lives' title to the aircraft is
quieted and cleared of any such lien claim by Dalfort."
Dalfort appeals from the judgment and contends that the
magistrate judge erred in finding that Texas law did not create a
lien. Dalfort also appeals the award of attorney's fees to 9 Lives
because, if Dalfort prevails on this appeal as to the allowance of
a mechanic's lien, then Dalfort is the prevailing party under §
70.306. 9 Lives cross-appeals the judgment and contends that the
magistrate judge erred in failing to find that it sustained damages
other than attorney's fees.7
7While this appeal was pending, 9 Lives filed a petition for
bankruptcy under Chapter 11 of the Bankruptcy Code. The filing of
this petition had the effect of staying the appeal. See 11 U.S.C.
§ 362(a). The bankruptcy court has since modified the stay so that
6

III
A
The issue presented is whether the district court erred in its
interpretation of § 70.301 that a lien does not arise from § 70.301
unless the owner has given its consent to the work performed. We
will review this question of law de novo. See Branson v. Greyhound
Lines, Inc., 126 F.3d 747, 753 (5th Cir. 1997).
B
Dalfort first argues that the plain language of the statute
does not indicate that the owner must give its consent before a
lien will be established. Section 70.301 states that "[a] person
who . . . performs maintenance work on an aircraft has a lien on
the aircraft . . . ." We should not, Dalfort argues, read
additional terms into this plain language.
Dalfort acknowledges that other Texas cases have found a
consent requirement in other mechanic's lien statutes. Dalfort
points out, however, that the law governing mechanic's liens on
aircraft has its own subchapter in Texas' Property Code.
Accordingly, Dalfort contends that unique policy considerations
support a decision to interpret § 70.301 differently from other
mechanic's lien statutes. Dalfort's most prominent policy argument
for a unique interpretation of § 70.301 is based upon the federal
our court can rule in the instant appeal.
7

government's extensive regulation of aviation maintenance. Dalfort
argues that this heavy federal regulation is important because the
states could frustrate the goals of federal regulation by
engrafting owner-consent as a condition to enforcement of their
mechanic's lien statutes. The owner-consent requirement would,
according to Dalfort, discourage required maintenance work by
lessees. Dalfort further contends that the owner-consent would
limit "the [aircraft] operator's ability to choose which shop to
use for what work." In sum, Dalfort argues that to adopt an
interpretation of § 70.301 that incorporates an owner-consent
requirement would effectively permit Texas statutes to preempt FAA
regulations (although no particular FAA regulation actually
conflicts with a owner-consent requirement).
Finally, Dalfort presents an argument that owner consent was
given, based on the lease and sublease contracts. According to
this argument, 9 Lives gave consent--through the two agreements--to
Nations Air to have maintenance performed.8 Dalfort maintains that
8Under some situations, the sublease required Nations Air to
obtain the owner's approval before allowing a particular mechanic
to perform work on the aircraft. The specifics of these contract
provisions, as well as the parties' disagreement over how we should
interpret them, are ultimately irrelevant to our disposition of
this appeal.
8

after giving this consent to Nations Air, 9 Lives could not
withdraw its consent as to Dalfort.9
C
(1)
We begin our analysis of § 70.301 by noting that Texas courts
have long interpreted Texas law to require an owner's consent
before a mechanic can establish a lien against his property. See,
e.g., Hydra-Rig, Inc. v. ETF Corp., 707 S.W.2d 288, 290 (Tex. Civ.
App. 1986, writ refused n.r.e.) (interpreting Tex. Rev. Civ. Stat.
Ann. art. 5503 (since repealed) and stating that "[r]epairs or
improvements must have been authorized by the owners of a piece of
property in order to give validity to a lien"); Southwestern
Investment Co. v. Gilbreath, 380 S.W.2d 196, 197 (Tex. Civ. App.
1964, no writ) (an artisan must obtain an owner's consent to work
before the artisan can establish a valid lien on an automobile);
Drake Ins. Co. v. King, 606 S.W.2d 812, 818 (Tex. 1980) (citing
Southwestern Investment Co. with approval).
This requirement applies not only to statutory liens, but to
liens created by the Texas Constitution. The Texas Constitution
provides the following:
9The parties also disagree over whether the sublease remained
in effect. (9 Lives maintains that Nations Air had defaulted on
the sublease.) This fact is also irrelevant to our disposition of
this appeal.
9

Mechanics, artisans and material men, of every class,
shall have a lien upon the buildings and articles made or
repaired by them for the value of their labor done
thereon, or material furnished therefor; and the
Legislature shall provide by law for the speedy and
efficient enforcement of said liens.
Tex. Const. art. XVI, § 37.10 Like § 70.301, this provision in the
Texas Constitution does not expressly provide that an owner's
consent is required for the establishment of the lien. Compare
Tex. Const. art. XVI, § 37 ("Mechanics . . . shall have a
lien . . . ."); with § 70.301 ("A person . . . has a
lien . . . ."). Even so, Texas courts have interpreted the
constitutional provision to require an owner's consent. See, e.g.,
Sumrall v. Russell, 255 S.W. 239, 240 (Tex. Civ. App. 1923, writ
dism'd w.o.j.).
10For a general discussion of the distinction between liens
created by statute and liens created by the Texas constitutional
provision, see A&M Operating Co. v. South Coast Supply Co., Inc.,
182 B.R. 997, 1000-02 (E.D. Tex. 1995), aff'd, 84 F.3d 433 (5th
Cir. 1996). The A&M Operating Co. court summarized a century of
Texas law surrounding the requirements to establishing a
constitutional lien and notes that the constitutional lien exists
independently and apart from any legislative act. Id. at 1000; see
also First Nat'l Bank in Dallas v. Whirlpool Corp., 517 S.W.2d 262,
267 (Tex. 1974). Although the constitutional provision is self-
executing (and the liens it creates are automatic), the
constitutional lien "is ineffective against a subsequent bona fide
good faith purchaser for value without notice." A&M Operating Co.,
182 B.R. at 1001. The statutory lien provisions, in contrast,
create a recordation system that shores up the lienholder's
interest against all others. Dalfort has not directed us to any
legislative intent to drop the owner-consent requirement from the
constitutional lien when the legislature enacted § 70.301.
10

The Sumrall case is particularly informative because there, as
in the instant case, the party asserting the lien had not
contracted with the owner, but with the lessee of the property. In
Sumrall, a land lease agreement called for a twenty year lease
during which the lessee was required to have a building constructed
according to stated specifications. To fulfill the requirements of
the lease agreement, the lessee contracted with the plaintiff to
construct the building (as Nations Air similarly contracted with
Dalfort to fulfill maintenance requirements on leased property).
When the lessee failed to pay the plaintiff, the plaintiff brought
a foreclosure action against the lessor-owner. The court held,
however, that the Texas Constitution only provided for a lien on
the lessee's leasehold estate; the plaintiff had no lien against
the owner's property because the plaintiff did not contract with
the owner. Sumrall, 255 S.W. at 240.11
Given the similarity between the language in § 37 and
§ 70.301, and the manner in which Texas courts interpret the
former, we cannot accept Dalfort's "plain language" arguments.
Indeed, we have been unable to locate any case in which a Texas
court has found the existence of a lien without first concluding
11The court also found that nothing in the "lease contract
between [the lessor and the lessee] constituted the latter the
agent of the former." Sumrall, 255 S.W. at 240.
11

that the owner himself (or his agent12) gave consent to the
performance of the services. Thus, Dalfort's argument cannot
succeed by focusing on statutory text and other Texas authority
alone.
(2)
Next, we turn to Dalfort's preemption argument. To persuade
us that federal law13 would preempt Texas law governing the
establishment of aircraft liens (when that state law contains an
owner-consent requirement), Dalfort must overcome the presumption
against preemption. See, e.g., Exxon Corp. v. Governor of
Maryland, 437 U.S. 117, 132 (1978). With this presumption guiding
our approach, we recount our own recent summary of federal
preemption:
Pre-emption may be either express or implied, and is
compelled whether Congress' command is explicitly stated
in the statute's language or implicitly contained in its
structure and purpose. Without explicit pre-emptive
language in the relevant statute, congressional intent to
displace state law may be inferred because the scheme of
12In this case, Dalfort cannot argue that the lease and
sublease agreements created an apparent agency relationship between
9 Lives and Nations Air. 9 Lives explicitly told Dalfort--before
Dalfort began servicing the aircraft--that it did not consent to
Dalfort performing any work on the aircraft. This explicit denial
of consent by the owner would destroy any apparent agency
relationship that the leasing agreements might otherwise have
created.
13The source of preemption is not limited to federal statutory
law. Federal regulations can also preempt state law. See, e.g.,
In re Cajun Electric Power Coop., Inc., 109 F.3d 248, 254 (5th Cir.
1997).
12

federal regulation may be so pervasive as to make
reasonable the inference that Congress left no room for
the States to supplement it, because the Act of Congress
may touch a field in which the federal interest is so
dominant that the federal system will be assumed to
preclude enforcement of state laws on the same subject,
or because the object sought to be obtained by federal
law and the character of obligations imposed by it may
reveal the same purpose. Even where Congress has not
totally supplanted a state law, the state law is voided
to the extent that it directly conflicts with federal
law. This type of conflict arises when compliance with
both federal and state regulations is a physical
impossibility or when state law stands as an obstacle to
the accomplishment and execution of the full purposes and
objectives of Congress.
In re Cajun Electric Power Coop., Inc., 109 F.3d 248, 253-54 (5th
Cir. 1997) (citations and quotation marks omitted).
Dalfort has pointed to no statute or regulation that directly
conflicts with an owner-consent requirement in mechanic's lien
statutes. Nor has Dalfort found, in either statutes or legislative
history, any expressly stated congressional intent to preempt state
law. Instead, Dalfort bases its argument on the notion that an
owner-consent requirement will thwart the policy behind federal
regulation of aircraft maintenance.
Dalfort correctly points out that the law governing interests
in aircraft is undoubtedly an area of coincident federal and state
regulation. In fact, federal law specifically contemplates this
coincidence. For example, the U.S. Code section governing the
"validity of conveyances, leases, and security instruments"
involving aircraft contains the following choice of law provision:
13

The validity of a conveyance, lease, or instrument that
may be recorded under section 44107 of this title [which
governs the recordation of security interests] is subject
to the laws of the State . . . at which the conveyance,
lease, or instrument is delivered . . . .
49 U.S.C.A. § 44108 (West 1997); see also Philko Aviation, Inc. v.
Shacket, 462 U.S. 406, (1983) (stating that although federal law
requires recordation of interests in aircraft before those
interests can affect innocent third parties, state law determines
the priority of those interests). Given the express recognition of
state law in this area, it is clear that congressional intent
cannot be inferred on grounds that the federal regulation is so
pervasive that Congress left no room for the States to supplement
it. Nor is the federal interest "so dominant that the federal
system will be assumed to preclude enforcement of state laws on the
same subject." Although the Supremacy Clause of the U.S.
Constitution requires us to make the preemption inquiry in cases
involving areas where federal and state regulation coincide, we
must also pay heed to the Supreme Court's admonishment that in
"areas of coincident federal and state regulation, the teaching of
[the Supreme Court's] decisions . . . enjoins seeking out conflicts
between state and federal regulation where none clearly exists."
Exxon Corp., 437 U.S. at 130 (citation and quotation marks omitted;
ellipses in original).
Although requiring an owner's consent may place some
additional burden upon a lessee seeking maintenance services for an
14

aircraft, the requirement does not (in and of itself) restrict the
lessee's choice of mechanics. If the owner refuses to consent to
having the work performed, the mechanic will simply be unable to
secure a lien on the aircraft. The mechanic may still agree to
perform the maintenance work, but he can only look to the lessee
for payment. Thus, because the risk of nonpayment is greater, the
owner-consent rule might effectively increase the cost of
maintenance for lessees, but such a possibility, even if it were
sure to occur, is too tenuous to support preemption. In sum, we
are confident that no clear conflict exists between FAA regulations
and an owner-consent requirement for the establishment of
mechanic's liens. In the absence of a clear conflict, we will not
strain to find one. See Exxon, 437 U.S. at 130.
Finally, we find no merit in Dalfort's argument that 9 Lives
could not withdraw its consent that Dalfort contends was exhibited
in the lease agreements. Any consent 9 Lives may or may not have
given to Nations Air through the lease and sublease agreements
cannot support the conclusion that Dalfort received consent from
the aircraft's owner to perform maintenance work. 9 Lives
expressly refused to give Dalfort consent. Although 9 Lives may
have committed a breach of its lease agreement when it refused to
give consent to Dalfort, that alleged breach injured Nations Air,
not Dalfort. Dalfort was not a party to any contract with 9 Lives.
IV
15

We now turn to 9 Lives' cross-appeal. The magistrate judge
found that 9 Lives did not sufficiently establish any damages
resulting from conversion or from any cloud placed on the
aircraft's title. After reviewing the testimony presented at
trial, we conclude that the magistrate judge did not clearly err in
finding that 9 Lives failed to establish damages (other than the
attorney's fees already awarded under § 70.306). In his testimony,
a director of 9 Lives stated that another party agreed to lease its
aircraft, but that Dalfort's recordation of the lien delayed this
agreement. According to this testimony, the delay caused 9 Lives
to lose $125,000 in foregone rental payments. On cross-
examination, however, Dalfort's attorney brought to the court's
attention the conspicuous absence of any contract evidencing the
new leasing agreement. Furthermore, 9 Lives did not present any
other witnesses to testify to the existence of this agreement. We
do not think the magistrate judge clearly erred in finding that 9
Lives failed to establish damages.
Finally, we will affirm the court's award of attorney's fees
because 9 Lives clearly remains the prevailing party under
§ 70.306.
V
In summary, we conclude that Texas law did not create a lien
on the aircraft under § 70.301. The magistrate judge did not
clearly err in failing to find any damages, other than attorney's
16

fees, caused by wrongful conversion or a cloud on the aircraft's
title. Furthermore, the magistrate judge did not err in awarding
attorney's fees to 9 Lives as the prevailing party. For the
foregoing reasons, the judgment is
A F F I R M E D.14
14We hereby GRANT the parties' joint motion to waive oral
argument and have a decision entered.
17