Amegy Bank National Ass'n v. Brazos M & E, Ltd. (In Re Bigler LP)
458 B.R. 345
Bankr. S.D. Tex.2011Background
- Debtors' Chapter 11 plan (confirmed Nov. 2010) contemplates resolving priority among Amegy Bank and two lienholders, Halgo Power and Shaw Maintenance, for removables claims; plan structure links Halgo/Shaw outcomes to cash payments by Amegy equal to value of collateral per the M&M Lien Priority Adversary.
- Amegy provided prepetition financing with first-priority liens on substantially all assets; Halgo and Shaw supplied boilers and piping for the HPIB Facility and filed prepetition liens (statutory and constitutional) asserting superior rights on removables.
- The main adversary concerns whether Halgo’s and Shaw’s liens on the HPIB Facility’s removables are superior to Amegy’s liens, and the extent of Halgo/Shaw recovery under the confirmed plan.
- Halgo asserts a valid statutory lien on Boiler #1 and Boiler #2 (and argues constitutional lien status on the Boiler System); Shaw asserts a constitutional lien on the process piping system (but its statutory lien was untimely).
- The court adjudicates (a) Halgo’s valid statutory lien on Boiler #1 and Boiler #2 only (not on related equipment) and its removability status; (b) Shaw’s lack of a valid statutory lien and existence of a constitutionally protected lien on removable piping; (c) Halgo’s entitlement to cash payment for removable collateral under the Plan (subject to limits) and Halgo’s attorney’s fees and post-judgment interest; (d) that Boiler #1 and #2 are removable, but the remaining equipment is not; (e) that the process piping system is not removable and its lien is subordinate to Amegy’s.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Halgo’s boilers legally a removable lien subject to priority over Amegy? | Halgo has a statutory lien on boilers and they are removable. | Amegy contends boilers are not removable or Halgo’s lien is improper. | Halgo’s Boilers #1 and #2 are removable; Halgo has priority on those boilers. |
| Does Shaw have a valid statutory lien on the piping system? | Shaw timely filed a mechanic’s lien. | Shaw filed untimely; no valid statutory lien. | Shaw does not have a valid statutory mechanic’s lien. |
| Does Halgo have a constitutional lien, and on what assets does it attach? | Halgo has a constitutional lien on the Boiler System. | Halgo did not make/repair the HPIB Facility; no constitutional lien on the system. | Halgo has a constitutionally valid lien on Boiler #1 and Boiler #2 only; Boiler System not subject to constitutional lien. |
| What is the removability test outcome and lien priority when applied to Halgo/Shaw assets? | Removables should trump Amegy if removable; Halgo/Shaw should be paid. | Removability limited by Whirlpool/Monocrete tests; Amegy liens prevail on non-removable assets. | Boilers removable; process piping system not removable; Halgo entitled to cash for its removable boilers; Shaw’s lien non-removable and subordinated. |
| What is the amount payable to Halgo under the Plan, and are attorneys’ fees recoverable? | Halgo should be paid the value of its collateral ($2,000,000) under Plan 3.3. | Amount must reflect actual debt plus reasonable fees; not windfall. | Halgo entitled to cash equal to its actual claim amount ($533,472.45) plus reasonable attorneys’ fees; plan structure limits windfall; post-judgment interest applies. |
Key Cases Cited
- Ball v. Davis, 18 S.W.2d 1067 (Tex. 1929) (definition of articles made under Texas Constitution)
- Kellogg Brown & Root, Inc. v. Ballistic, 166 S.W.3d 732 (Tex. 2005) (Texas constitutional lien scope; articles made; special order)
- Whirlpool Corp. v. Dominguez, 517 S.W.2d 262 (Tex. 1974) (public policy for removing material; material injury test)
- A & M Operating Co. v. Hydro-Action, Inc., 182 B.R. 997 (E.D. Tex. 1995) (definition of mechanic/artisan/materialman; constitutional lien framework)
- In re Nat'l Gypsum Co., 257 B.R. 184 (Bankr. N.D. Tex. 2000) (Texas lien framework; Plan as contract; public rights context)
- In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) (public-rights considerations under bankruptcy plan)
- Porras v. Palomita, Inc., 747 S.W.2d 575 (Tex. App. 1988) (statutory lien fees; attorney fees recoverability debate)
- Ball, Boots Builders, Inc. v. Hobson Air Conditioning, Inc., 11 B.R. 635 (Bankr. N.D. Tex. 1981) (whether installation constitutes making a removable article)
- Cornerstone Bank, N.A. v. J.N. Kent Constr. Co., 1992 WL 86591 (Tex. App.—Dallas 1992) (Monocrete Incorporation and separability tests for removables)