Flight Test Associates v. NC Aerospace Corp.

Filed 1/6/09 Flight Test Associates v. NC Aerospace Corp. CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Kern County. Arthur E. Wallace, Judge.

James R. Modig, for Plaintiff and Appellant.

No appearance for Defendants and Respondents.

-ooOoo-

California's Aircraft Repair Lien Law (Bus. & Prof. Code, 9790 et seq.) regulates repairs and services provided to owners of noncommercial aircraft. Pertinent to this appeal are provisions of the law which create a lien in favor of a repairperson on the repaired aircraft. Section 9795 provides in part: "All work done by a repairperson, including all warranty work, shall be recorded on an invoice and shall describe all work done and parts supplied. [] ... [] One copy of the invoice shall be given to the customer and one copy shall be retained by the repairperson." (Bus. & Prof. Code, 9795.)^[1] Section 9798.1, subdivision (a) provides for the creation of the lien and states that the lien "shall be in an amount equal to the agreed upon value of the labor and material furnished, or in the absence of any agreement, for the reasonable value thereof." ( 9798.1, subd. (a).) Subdivision (h) of this same statute provides that "[t]he statutory lien created pursuant to subdivision (a) shall not exist unless the repairperson has complied with all provisions of Sections 9793, 9794, 9795, ... and 9798." ( 9798.1, subd. (h).) In the case before us, the trial court refused to issue an order allowing the repairperson to sell the repaired aircraft at auction to satisfy the repairperson's purported lien on the aircraft. The court ruled that because there was no "invoice" which "describe[d] all work done and parts supplied" ( 9795), the repairperson had not complied with the provisions of section 9795 requiring the providing of such an invoice, and thus under subdivision (h) of section 9798.1 the statutory lien did "not exist." ( 9798, subd. (h).)

APPELLANT'S CONTENTION

Appellant Flight Test Associates, Inc. ("Flight Test") is the repairperson. Appellant contends that various documents it provided to the customer, and primarily the agreement for repairs to the aircraft, complied or substantially complied with the section 9795 requirement that "[a]ll work done by a repairperson ... shall be recorded on an invoice and shall describe all work done and parts supplied." ( 9795.) The trial court disagreed. As we shall explain, so do we. Like the trial court, we find no "invoice" complying with the requirements of section 9795.

We will begin with a brief overview of the Aircraft Repair Lien Law, followed by a brief summary of the facts pertinent to this appeal. We will then explain why the documents provided by appellant did not constitute an "invoice" within the meaning of section 9795. We note here, however, that in the trial court and thus also on this appeal, there has been no factual dispute as to facts pertaining to whether there was compliance with section 9795. In other words, the trial court was not concerned with whether any work listed on an invoice as "work done" ( 9795) was or was not actually done. The trial court was concerned with what it found to be the absence of any invoice recording "all work" claimed to have been "done" by appellant, the repairperson. The issue before us is thus purely one of law - whether the documents relied on by appellant constitute an "invoice."

THE AIRCRAFT REPAIR LIEN LAW

The Aircraft Repair Lien Law (ARLL) "applies only to work done on a general aviation aircraft with either an estimated cost or an actual cost of one hundred dollars ($100) or more." ( 9791.) The term "general aviation" is defined as "all aviation with the exception of air carrier and military aviation." ( 9790, subd. (d).) The ARLL is intended to implement two public policies expressly stated in it: (1) "that parties to all business transactions, including those transactions which are the subject of this chapter, exhibit mutual financial responsibility with respect to one another"( 9792, subd. (a)); and (2) "that all persons engaged in the business of aviation be subject to the highest level of certification by the Federal Aviation Administration of the United States of America (hereafter 'the FAA') available to those persons, and further, that these certificated persons be subject to the highest level of FAA surveillance activities and enforcement proceedings. This certification and surveillance contributes substantially towards the protection of the public by attempting to assure continued and ongoing compliance with all applicable FAA standards and certification criteria." ( 9792, subd. (b).)

Before commencing work on an aircraft, the repairperson must give the customer either a written estimate of the price for parts and labor, or a "written estimate of the maximum cost for a specific job ... which shall not be exceeded by the actual cost of the job, including labor and parts." ( 9793, subd. (a).) A repairperson who gives an estimate in good faith, however, "shall not be obligated to complete a job within the quoted or estimated price if additional, unforeseen work is necessary to complete the job and the customer refuses to consent to payment for the cost of that additional work."
( 9794.)

As we have already mentioned, the repairperson must provide the customer with an invoice. "All work done by a repairperson, including all warranty work, shall be recorded on an invoice and shall describe all work done and parts supplied. Work and parts shall be listed separately on the invoice, which shall also state separately the subtotal prices for work and for parts, not including sales tax, and shall state separately the sales tax, if any, applicable to each. [] If any used, rebuilt, or reconditioned parts are supplied, the invoice shall clearly state that fact. If a part of a component system is composed of new and used, rebuilt, or reconditioned parts, the invoice shall clearly state that fact. [] One copy of the invoice shall be given to the customer and one copy shall be retained by the repairperson." ( 9795.) Also, "[t]he invoice shall show the repairperson's business name and address" and "[i]f the repairperson's telephone number is on the invoice, it shall be the telephone number that appears in any advertisement or on an advertising sign ...." ( 9796.)

The ARLL contains exceptions, not applicable here, to certain of its provisions when a repairperson provides services "to a general aviation aircraft in distress which is in need of immediate work critical to its preservation and safety, for which consent cannot be expeditiously obtained." ( 9798.)

The lien on the repaired aircraft is created pursuant to section 9798.1 of the ARLL. As we have already mentioned, the lien "shall be in an amount equal to the agreed upon value of the labor and materials furnished, or in the absence of any agreement, for the reasonable value thereof." ( 9798.1, subd. (a).) And as we have also already mentioned, subdivision (h) of the section 9798.1 provides that "[t]he statutory lien created pursuant to subdivision (a) shall not exist unless the repairperson has complied with all provisions of Sections 9794, 9795, 9796, 9797, and 9798." ( 9798.1, subd. (h).) Pertinent to this appeal is appellant's compliance, or lack thereof, with the invoice requirements of section 9795 mentioned above in the second preceding paragraph.

"The statutory lien created pursuant to subdivision (a) of Section 9798.1 is not valid unless and until it is recorded with the FAA Aircraft Registry" in the manner described in section 9798.2 of the ARLL. ( 9798.2, subd. (a).) After the lien is recorded, the repairperson "shall be entitled to the ex parte issuance of an order to show cause why the aircraft or other property should not be sold at auction." ( 9798.3, subd. (a).) "The order to show cause shall set a hearing date ... upon which the customer, the registered owner, or any other person having an interest therein may present evidence to the court, by way of declarations under penalty of perjury, or oral testimony as may be authorized by the court, as to any reason why the aircraft ... subject to the lien should not be sold at auction in accordance with the provisions pertaining to the enforcement of judgments generally within this state." (Ibid.) "At the hearing, the court shall have in rem jurisdiction with respect to the aircraft ... subject to the lien, and shall have personal jurisdiction over all persons or entities appearing at the hearing, and may make orders and enter judgments in accordance with applicable law." ( 9798.3, subd. (c).) The prevailing party "shall be entitled to recover from the nonprevailing party or parties such costs of suit and attorney fees as may be deemed by the court, in its discretion, to be just and reasonable." ( 9798.3, subd. (g).)

The ARLL also gives the registered owner of the aircraft "a right of redemption in the full amount of all amounts due to the repairperson, to be paid in cash, or in the equivalent, to the repairperson at any time up to, but not including, the entering of any judgment affecting the title to the aircraft or other property subject to the lien."
( 9798.3, subd. (d).) Regarding the ARLL generally, see also 4 Witkin, Summary of Cal. Law (10th ed. 2005) Sales,  335 at pp. 311-312, and 13 Witkin, Summary of Cal. Law (10th ed. 2005) Personal Property, 243 at pp. 265-266.)

FACTS

Appellant Flight Test and respondent NC Aerospace Corporation entered into an agreement dated May 6, 2005 pursuant to which Flight Test would perform certain "services," also described in the agreement as "FTA responsibilities," on a Boeing 737-200 aircraft with Identification Number N105SW. The details of the dispute which arose between the parties over Flight Test's work on the aircraft are not pertinent to the issues raised on this appeal. Flight Test obtained a section 9783.3 hearing on the issue of whether the aircraft should be sold at auction to satisfy NC Aeorspace's purported debt to Flight Test. Following the hearing, the court asked the parties to submit additional briefing as to whether Flight Test had complied with the invoice requirements of sections 9798.1, subd. (h), 9795 and 9796. The parties did so. The court then ruled that Flight Test had failed to comply with section 9795, and that pursuant to section 9798.1, subd. (h), the statutory lien did "not exist" (ibid.) and Flight Test was not entitled to an order allowing it to sell the aircraft at auction. The court rejected Flight Test's argument that the May 6, 2005 agreement itself complied with the requirements of section 9795.

Flight Test filed its motions to vacate the judgment, for a new trial, and for judgment notwithstanding the verdict. The court heard and denied the motions.

FLIGHT TEST FAILED TO COMPLY WITH BUSINESS

AND PROFESSIONS CODE SECTION 9795

The May 6, 2005 agreement between Flight Test and MC Aerospace describes services which Flight Test "will provide." Section 9795, however, requires the repairperson to describe in an invoice "all work done and parts supplied."^[2] ( 9795.) An agreement simply listing the work that the repairperson "will" do does not suffice because it does not, and cannot, describe "work done" when no such work has yet been done. Flight Test did present some invoices accounting for $52,250 of its claimed lien amount of $234,442.67, but the remaining $182,192.67 of the claimed lien amount remained unexplained and unrecorded on any invoice.

The trial court thoroughly and painstakingly considered the issue of Flight Test's compliance (or lack thereof) with section 9795. We do not think we could explain Flight Test's failure to comply with section 9795 any more clearly than the trial court did in its order denying Flight Test's three motions. We therefore repeat that ruling here:

"In its moving papers and at the hearing on the motions petitioner argued several things, including:

"1. That the use of the word 'shall' in 9795 is not necessarily mandatory; [] 2. That the invoices did not comply with 9795 by reference to the contract which sets forth the work to be done; [] 3. That even if the invoices did not comply, 9795 should not be read so as to strictly require that the invoice describe the work; [] 4. That under the circumstances in this case, requiring technical compliance would be impractical because an invoice describing the work would be voluminous; [] 5. That the work was not 'done' because it cannot be considered completed until approved by the FAA, a status not achieved in part due to lack of cooperation on the part of respondent; and [] 6. That if there is an issue concerning the work performed and its reasonable value, the court has the authority to appoint an expert to inspect the aircraft and determine what work has been performed and its value.

"Though the word 'shall' is, regardless of statutory language, treated as permissive where no purpose is served by treating it as mandatory, where the failure to follow the statutory command has a result of substantial consequence, the word is interpreted as mandatory. Apparently the [L]egislature has determined that in instances within the Business & Professions Code, failure to follow statutory commands always carries with it a result of substantial consequence, because 19 of the Bus. & Prof. Code states that '"Shall" is mandatory and "may" is permissive.' Since the [L]egislature has clearly spoken in this instance, 'shall' as used in 9795 is interpreted as mandatory.

"There is a substantial purpose to be served by requiring that the invoice contain certain information. It is state policy that parties exhibit mutual financial responsibility with respect to one another. The financial responsibility of respondent is fairly obvious: to pay for work performed and parts provided. The financial responsibility of petitioner is to do the work. Though petitioner argues, and indeed the contract provides that the progress of payment provided under the contract was entirely independent of the progress of the work, there is a logical objective to be served by including a description of the work done and parts provided. Though payment terms and performance of the work may be entirely independent of one another, the lien to be created by adherence to the statutory requirements is not. Section 9798.1 establishes the amount of the lien as either the agreed upon value of the labor and material furnished, or, in the absence of an agreement, the reasonable value. In the event the work contracted for is not completed, as argued here by respondent, or if the scope of the work contracted for is changed and the contract no longer represents the actual value of the work performed and material furnished, then an invoice that describes the work performed is critical to determining what the reasonable value is. Mere reference to the contract, therefore, does not serve that purpose.

"The arguments concerning the degree of detail necessary and the impracticality of including all of the work are insufficient to overcome the mandatory language of the statute. If petitioner had described in any way whatsoever the work which had been done, other than the over and aboves, then a substantial compliance argument might have merit. Here, however, there is no description of the work done other than the over and aboves. Further, at some point in time the parties themselves must have determined that the work to be performed was sufficiently detailed in the contract itself, since it was executed by both parties. Presumably they must have believed at the time of its execution that it was adequate to describe the obligations of both parties, including the petitioner's obligations as to the work to be performed. The contract itself is not so voluminous as to be impractical; it consists of seven pages, only two of which are the statement of work.

"If, on the other hand, the contract itself is inadequate to sufficiently describe the work to be performed, and, in fact, a description would be unwieldy, then clearly simple reference in the invoices to the contract itself, as argued by petitioner, would not be sufficient to satisfy the purpose of the statute.

"Petitioner argues also that strict compliance with the statute is not required and not possible because the work was not and could not be 'done' in the sense that petitioner was prevented from securing FAA approval because of the failure of respondent to provide, among other things, an inspection plan. To interpret the statute in this fashion would be to give the words 'work done' a technical meaning that the language of the statute itself does not demand. Words of a statute are to be given their usual ordinary meaning, unless the statute itself gives them a different meaning. (Halbert's Lumber, Inc. v. Lucky Stores, Inc. (1992) 6 Cal.App.4th 1233, 1238-1239.) Had the [L]egislature intended that 'work done' mean completed to a stage sufficient to have achieved FAA approval, it could have done so. It did not.

"Lastly, petitioner argues that the court may appoint an expert to determine what work has been done, presumably in order to ascertain a fair value and support petitioner's claim of lien. Such an action, assuming that it is within the court's power, would simply accomplish what an invoice describing work performed would have accomplished: listing what was done.

"One issue unaddressed in the earlier ruling and in the arguments of the parties is whether the fact that one of the invoices, Invoice No. 25-1762, contains a description of work performed constitutes compliance with the statute. Such a conclusion was rejected for a couple of reasons.

"First, it is considered to be compliance, it is not substantial. Based on the invoice alone, the over and aboves totaled $52,250. The base contract price was $240,000, and the lien amount claimed is $234,442,67. The over and aboves equal only approximately 22% of either the original base contract price, or the lien amount claimed. Even if all that were required in order to comply with the statute was substantial compliance, 22% is not substantial.

"Second, it has to be concluded that the purpose of requiring invoices describing the work performed and materials supplied is to apprise the party contracting for the work of what work has been done and what parts or materials were used in the work. Having only one of several invoices describing less than one quarter of the total dollar value of the work contracted for and claimed by petitioner to have been done does not serve that objective."

DISPOSITION

DISPOSITION: The superior court's November 15, 2007 order denying relief and its February 7, 2008 order denying Flight Test's motion to vacate judgment, motion for new trial and judgment notwithstanding the verdict are affirmed. Costs to Respondent.

_____________________

Ardaiz, P.J.

WE CONCUR:

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Gomes, J.

_____________________

Kane, J.

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^[1] All further statutory references are to the Business and Professions Code unless otherwise stated.

^[2]Section 9795 states in its entirety:

"All work done by a repairperson, including all warrant work, shall be recorded on an invoice and shall describe all work done and parts supplied. [] Work and parts shall be listed separately on the invoice, which shall also state separately the subtotal prices for work and for parts, not including sales tax, and shall state separately the sales tax, if any, applicable to each. [] If any used, rebuilt, or reconditioned parts are supplied, the invoice shall clearly state that fact. If a part of a component system is composed of new and used, rebuilt, or reconditioned parts, the invoice shall clearly state that fact. [] One copy of the invoice shall be given to the customer and one copy shall be retained by the repairperson."