## Facts

- Charter One Auto Finance (Charter) was assigned a retail installment contract under which Inkas Coffee Distributors Realty and Equipment L.L.C. (Inkas) purchased a motor vehicle and agreed to make 60 monthly payments.
- In September 2000, Charter obtained a security interest in the vehicle that was properly perfected by notation on the vehicle’s certificate of title.
- Connecticut International Parking, L.L.C. (International) operated a vehicle storage/parking facility.
- In May 2001, Inkas delivered the vehicle to International for storage.
- International maintained continuous, lawful possession of the vehicle from May 2001 through May 2004.
- During storage, International periodically started and moved the vehicle to keep it in operating condition and to prevent deterioration while it remained on the lot.
- In July 2001, Inkas stopped making payments under the installment contract and defaulted.
- By May 2004, International’s unpaid storage charges totaled $9,851.
- In April 2004, Charter demanded that International deliver the vehicle to Charter based on Charter’s lien rights.
- International indicated it would release the vehicle if Charter provided proof of its rights, but International also demanded payment of the accrued storage charges.
- Charter refused to pay the storage charges and instead sought and obtained an order of replevin for the vehicle; Charter also sought money damages and attorney’s fees.
- International filed counterclaims seeking a determination of the parties’ rights and relief based on wrongful replevin and unjust enrichment.
- Charter and International stipulated that Inkas was insolvent and unable to pay either of them, and the case was submitted on stipulated facts with no material factual dispute.

## Issues

1. Whether International had a valid common-law possessory lien on the vehicle for storage and preservation charges while it maintained lawful, continuous possession.
2. If a common-law possessory lien existed, whether that lien had priority over Charter’s earlier perfected Article 9 security interest noted on the certificate of title, under Connecticut’s enactment of UCC § 9-333 (priority of certain liens arising by operation of law).
3. Whether Charter was entitled to replevy the vehicle from International without paying the storage charges, and whether International was entitled to relief on its counterclaims (including wrongful replevin and unjust enrichment).

## Decision

- The court determined that International held a valid common-law possessory lien on the vehicle arising from its lawful possession and the storage/preservation services provided in the ordinary course of its business.
- The court held that International’s possessory lien had priority over Charter’s previously perfected security interest under the UCC rule giving priority to qualifying possessory liens unless displaced by a statute that expressly provides otherwise.
- As a result, Charter could not compel delivery of the vehicle free of International’s lien without satisfying the lien claim for the reasonable storage/preservation charges.
- The court’s resolution of the parties’ rights recognized International’s entitlement to be paid first from the vehicle’s value up to the amount secured by its possessory lien (based on the stipulated $9,851 in storage charges), before Charter could realize value on its security interest.

## Legal Principles

- Connecticut common law recognizes a possessory lien in personal property when a party, in the ordinary course of business, lawfully retains possession of another’s chattel and furnishes services that protect, preserve, or maintain it; the lien secures reasonable charges for those services and depends on continued possession.
- Under UCC § 9-333 (and its Connecticut analogue), a possessory lien that (i) arises by operation of law (including common law), (ii) secures payment for services or materials furnished with respect to goods, and (iii) is effective only while the lienholder retains possession, generally has priority over a security interest in the same goods.
- A prior perfected Article 9 security interest—though properly perfected by notation on a vehicle title—can be subordinated to a later-arising possessory lien when the lien qualifies under § 9-333 and no statute expressly subordinates the lien to the security interest.
- A secured party seeking possession from a possessory lienholder must account for the lienholder’s superior right to retain the collateral until the lien is paid; priority rules may control who gets paid first from the collateral’s value.

## Conclusion

The Connecticut Superior Court held that a vehicle storage operator that lawfully kept and preserved a debtor’s vehicle held a common-law possessory lien securing its storage-related charges, and that this possessory lien took priority over the lender’s earlier perfected, title-noted security interest under UCC § 9-333, so the lender could not obtain the vehicle free of the storage claim without satisfying the lien.


Charter One Auto Finance v. Inkas Coffee Distributors Realty and Equipment L.L.C., 57 UCC Rep. Serv. 2d 672, 39 Conn. L. Rptr. 110 (2005)