Home New Cases A Furniture and Mattress Retailer Seeks to Invalidate Logistic Company’s Alleged General Warehouseman’s Lien

A Furniture and Mattress Retailer Seeks to Invalidate Logistic Company’s Alleged General Warehouseman’s Lien

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March 9, 2021, Eastern District of Michigan – Debtor Loves Furniture, Inc. recently commenced an action under Rules 7001 and 7065 of the Federal Rules of Bankruptcy Procedure against a logistics company for breach of contract. The Debtor also seeks to invalidate the company's 'alleged' general warehouseman lien.

By way of background, Loves Furniture owned and operated retail furniture stores. Loves Furniture contracted with Defendant Penske Logistics LLC to lease warehouse space in Burton and executed a Logistics Services Agreement (“LSA”). The LSA included two addendums - governing Penske’s provision of dedicated contract cartage that included the transport of goods from store to store or warehouse to store, and the other governed the distribution center management. 

In its complaint, the Debtor alleges that Penske wrongfully and erroneously alleged a contractual warehouseman’s lien on the Debtor’s inventory, because Penske never acquired exclusive control of the warehouse or its inventory under the agreement. The parties never formed a bailor/bailee relationship and at all times Loves Furniture had a right and ability to access and take possession of the inventory at will. The Debtor always maintained ownership and control over the warehouses, the equipment, and the inventory within its warehouse. Thus, according to the Debtor, neither does Penske qualify as a bailor, nor has a right to any warehouseman’s lien under MCL 440.7209 or MCL 440.7102. The Debtor also argues that Penske breached the LSA by failing to inspect incoming goods and report damaged goods to the Debtor. Thus, Penske did not adhere to the proper standard of care for the goods in the Debtor’s warehouse, grossly mismanaged the inventory, and levied significant overcharges, thereby, causing damage to Debtor’s goods and furniture for over $500,000.00. The Debtor also argues that Penske caused Debtor to lose sales over $6.2M, apart from causing loss of reputation in the community and loss of future business. 

Thus, the Debtor urges the court to issue a declaratory judgment holding that Penske is not entitled to any warehouseman’s lien and is liable to the Debtor for its damages, including its costs, interest, and attorneys’ fees. 

The Debtor also seeks to recover contractual, common law, and statutory tort damages against Penske for damage to its property and disgorge preferential payments that were made within ninety (90) days of Debtor’s filing of a Chapter 11 petition.

Jones & Associates