441 P.3d 407
Alaska2019Background
- Two debtor LLCs (Wingnuts Aviation and Knik Aircraft Leasing) and their member Brett Crowley entered loan/security agreements with creditor LLCs (Northern Aviation and NA Holdings, owned by Jeffrey Helmericks) secured by three airplanes (two Cessnas and one Mooney).
- Knik financed two Cessnas from Northern; Knik never obtained commercial insurance as required, payments were irregular but sometimes accepted by Northern; one Cessna was later sold by Northern.
- Wingnuts leased space and bought fuel from NA Holdings; Crowley (individually/DBA Wingnuts) later signed a loan and security agreement securing a Mooney; Wingnuts incurred additional unpaid "net 30" fuel charges.
- Crowley made a $19,000 cash deposit in October 2014; parties disputed how NA Holdings applied that payment (to net-30 vs. Mooney loan). Later, Helmericks removed avionics and the engine from the Mooney; NA Holdings retained them claiming security rights.
- Superior Court held (1) Knik breached by failing to insure the Cessnas but found Northern showed no damages from other alleged breaches; (2) Northern's failure to give notice prior to repossession was harmless as to prerepossession notice but the court found notice of disposition harmless too; (3) Wingnuts was in default on the Mooney loan and NA Holdings entitled to possession/title; the court entered judgment against Wingnuts and Crowley individually.
- On appeal the Alaska Supreme Court affirmed some findings (insurance breach; text-message allocation interpretation), reversed the harmlessness finding as to notice of disposition of the Cessnas, vacated judgments regarding the Mooney repossession and against Crowley individually, and remanded for further findings regarding disposition, breach of the peace, and basis for individual liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Knik was in default (insurance/payment) so Northern could repossess Cessnas | Crowley/Knik: Northern waived insurance requirement; Knik was current (overpaid) on loan | Northern: Knik lacked insurance, payments irregular; repossession justified | Court: Affirmed Knik breached by failing to insure; payments irregular but court found Knik current on payments at repossession; prerepossession notice failure harmless |
| Whether Northern's failure to give statutorily required notice of disposition of the Cessnas was harmless | Crowley/Knik: Northern disposed of at least one Cessna and likely owes surplus; lack of notice harmed ability to protect surplus/redeem | Northern: Did not meaningfully contest on appeal (argued Crowley lacks standing) | Court: Reversed superior court — lack of evidence about disposition prevents finding harmless; remanded for accounting/disposition proceedings |
| Whether Wingnuts defaulted on Mooney obligations and allocation of $19,000 payment | Wingnuts/Crowley: $19,000 was intended to prepay the Mooney loan; Mooney not abandoned; seizure improper | NA Holdings: Payment applied to net-30 first; Mooney unrepaired and in default; seizure justified | Court: Affirmed trial court's interpretation of texts and finding Wingnuts in default for failing to maintain Mooney; but vacated repossession judgment due to unresolved breach-of-peace and commercial-reasonableness issues |
| Whether removal/retention of engine/avionics from Mooney constituted unlawful repossession (breach of the peace) and whether judgment against Crowley individually was supported | Wingnuts/Crowley: Removal was repossession in breach of the peace; no basis to enter judgment against Crowley personally (loan was LLC obligation) | NA Holdings: Claimed right to seize parts under AS 45.29.609 and treated Crowley as guarantor/secondary obligor | Court: Trial court failed to make necessary factual findings on breach of the peace and did not explain basis for individual judgment; vacated Mooney-related judgment and judgment against Crowley individually and remanded for specific findings |
Key Cases Cited
- Stanton v. Fuchs, 660 P.2d 1197 (Alaska 1983) (standard for clearly erroneous review)
- Sullivan v. Subramanian, 2 P.3d 66 (Alaska 2000) (Rule 52(a) findings and remand when findings inadequate)
- Ilardi v. Parker, 914 P.2d 888 (Alaska 1996) (remanding for further findings)
- State v. Jeffery, 170 P.3d 226 (Alaska 2007) (independent review of statutory interpretation)
- Hoch v. Ellis, 627 P.2d 1060 (Alaska 1981) (UCC/secured transactions notice and consequences)
- Dischner v. United Bank Alaska, 631 P.2d 107 (Alaska 1981) (value presumption and burden when creditor fails notice requirements)
- Kobuk Eng'g & Contracting Servs., Inc. v. Superior Tank & Constr. Co., 568 P.2d 1007 (Alaska 1977) (commercial reasonableness in disposition of collateral)
- Alaska Statebank v. Fairco, 674 P.2d 288 (Alaska 1983) (waiver and prerepossession notice issues)