## Facts

- Aircraft owners granted Rainier National Bank a security interest in a Cessna 421A aircraft; the bank perfected the interest by FAA recording.
- The owners delivered the aircraft to Tacoma Aviation Center, Inc. for repairs and installation of new propeller blades; the work was completed by December 18, 1981.
- The owners did not pay for the work, and Tacoma retained possession of the aircraft.
- Tacoma asserted (1) a statutory mechanic’s/possessory lien for services and (2) retained title to the propeller blades on the theory that title did not pass until “delivery” under UCC § 2-401.
- Tacoma indicated it intended to remove and sell the newly installed propeller blades to satisfy its claim.
- After Tacoma filed bankruptcy, Rainier sought (1) injunctive relief to prevent removal of the blades and (2) relief from the automatic stay to protect its collateral.
- The dispute concerned whether Tacoma’s claimed lien/ownership in the blades could defeat Rainier’s earlier perfected security interest in the aircraft after the blades were installed.

## Issues

1. Whether newly installed propeller blades became “accessions” to the aircraft such that a prior perfected security interest in the aircraft attached to them under Article 9.
2. Whether a repairer’s statutory mechanic’s lien had priority over a previously perfected security interest when the lien statute did not expressly grant priority.
3. Whether a seller/installer’s retained-title theory under UCC § 2-401 could defeat a prior perfected Article 9 security interest once the goods were installed into the collateral.
4. Whether the court should enjoin removal of the blades and grant limited relief from the automatic stay to permit pursuit of lien and related claims.

## Decision

- The court held Tacoma’s asserted interests in the propeller blades (mechanic’s lien and retained-title claim) were subordinate to Rainier’s prior perfected security interest in the aircraft.
- The court treated the installed propeller blades as accessions, bringing them within Article 9 and the bank’s existing collateral coverage.
- The court rejected the use of UCC § 2-401 retained-title concepts to override Article 9 priority rules once the goods were installed as part of encumbered collateral.
- The court granted a preliminary injunction prohibiting Tacoma from removing the propeller blades from the aircraft.
- The court granted limited relief from the automatic stay to allow Tacoma to pursue a mechanic’s lien and related counterclaim in an appropriate nonbankruptcy forum.

## Legal Principles

- Goods installed into existing collateral may become accessions; a perfected security interest in the whole generally extends to the accessions under Article 9.
- Article 2 title-passage provisions do not control priority against third parties where Article 9 governs attachment and priority in collateral and accessions.
- A statutory lien for services has priority over a perfected security interest only if the lien statute expressly provides priority; absent explicit statutory priority, the earlier perfected security interest prevails.
- Bankruptcy courts may preserve state-law priority outcomes through equitable interim relief, including injunctions protecting collateral and targeted stay relief allowing pursuit of remaining state-law remedies.

## Conclusion

The court protected a secured creditor’s earlier perfected interest in an aircraft by treating newly installed propeller blades as accessions subject to Article 9 and by ruling that the repair facility’s mechanic’s lien and retained-title theory were subordinate, enjoining removal of the blades while allowing limited stay relief to pursue lien-related claims elsewhere.


In re Tacoma Aviation Ctr., Inc., 23 B.R. 326 (Bankr. W.D. Wash. 1982)