Davis Forestry Products, Inc. v. DownEast Power Co., LLC
12 A.3d 1180
| Me. | 2011Background
- Depository account at The First, N.A. is contested between DownEast Power and Davis Forestry as to priority under Maine’s Article 9-A.
- Prospect Capital (predecessor to DownEast) secured Worcester Energy’s debt with a Mortgage that included a security interest in deposit accounts, but Prospect did not obtain control of the account to perfect that interest.
- Worcester defaulted; Prospect purchased Worcester’s collateral at auction and later conveyed it to DownEast, without obtaining control of the deposit account.
- Davis obtained a $101,036 judgment against Worcester and served trustee process; The First disclosed Worcester funds in the deposit account, triggering competing claims.
- The District Court held Worcester owned the deposit account at time of Davis attachment, DownEast’s security interest was unperfected, and Davis, as a lien creditor, had priority; the First was ordered to pay Davis from the funds.
- The Maine Supreme Judicial Court affirmed, concluding Prospect could not divest Worcester of the deposit account absent control, and Davis’s lien creditor status outranked DownEast’s unperfected security interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Attachment proper for deposit account | Davis: Prospect’s security interest attached via Mortgage | DownEast: attachment satisfied through 9-1203(2)(c)(i) and control | Attachment achieved; Prospect’s secured interest attached |
| Effect of control on perfection | Davis: control required to perfect and access funds | DownEast: control not necessary due to mortgage | Control required for perfection; no control means no self-help remedies |
| Divestiture of ownership by Prospect/DownEast | Davis: sale under 9-1610 ineffective without control | DownEast: sale divested Worcester of deposit account | Prospect/DownEast failed to divest; Davis could attach as lien creditor |
| Priority between Davis and DownEast | Davis outranks unperfected security | DownEast argues lack of perfection forecloses priority against Prospect | Davis, as lien creditor, has priority over DownEast’s unperfected security interest |
| Remedial framework for deposit accounts in Maine law | Davis: 9-1607 remedies require control | DownEast: 9-1610 allows self-help disposition | Remedies without control are unavailable; Davis prevails |
Key Cases Cited
- Coastal Ventures v. Alsham Plaza, LLC, 2010 ME 63 (Me. 2010) (context for priority and statutory interpretation of Maine U.C.C.)
- City of Bangor v. Penobscot Cnty., 2005 ME 35 (Me. 2005) (statutory interpretation under Maine laws; plain meaning rule)
- Yeadon Fabric Domes, Inc. v. Me. Sports Complex, LLC, 2006 ME 85 (Me. 2006) (statutory interpretation de novo; focus on intent)