The Bankruptcy Court's decision in In re Miller Engineering, Inc., 398 B.R. 473 (Bkrtcy.S.D.Fla. 2008), involved a discussion of various issues, including that of the priority of a Florida landlord's lien over a security interest on personal property. The resolution of the issue involved a determination of whether the lease was a continuing over eight years or whether based on the circumstances a new lease agreement arose.

The Court noted that the "creation and perfection of liens are fundamentally questions of state law" and that "Florida Statute section 83.08 governs the creation of a landlord's lien for rent due and owing." Section 83.08 generally provides, inter alia, for a lien in favor of every person to whom rent is due upon the property found upon or off the premises rented and in the possession of any person that belongs to the lessee and that is usually kept on the premises. The lien is superior to any lien acquired subsequent to the bringing of the property onto the leased premises. This statutory lien of the landlord does not need to be filed or recorded to be perfected and it attaches at the commencement of the tenancy or as soon as the chattel is brought onto the premises.

Florida Statutory Landlord's Lien

But the Bankruptcy Court reviewed that a landlord's lien is not permanent and that "[n]owhere in the statute does it indicate that the superiority of a landlord's lien over a subsequent lienholder continues after the lease period has ended, the lease's terms and conditions fulfilled, and a new lease is entered into between the same landlord and the same tenant..." (citing, Flowers v. Centrust Savings Bank, 556 So.2d 1123, 1125 (Fla. 3d DCA 1989). The Bankruptcy Court stated that Florida case law provides guidance into the facts which would constitute a legal termination of a lease, whether a new lease was entered into, and whether continued occupancy legally constitutes "arising under the same transaction."

In this case, the Bankruptcy Court founds that whether the lessee debtor elected to use its option to continue occupancy or whether it continued under a "more informal month-to-month arrangement is irrelevant" and that therefore the landlord's lien that arose under the original lease continued unbroken.

Waiver

The Court also noted that under Florida law that a landlord's lien may be waived. A waiver is "generally characterized as the 'intentional relinquishment of a known right'". (citing, Dooley v. Weil (In re Garfinkel), 672 F.2d 1340, 1347 (11th Cir. 1982)). The waiver may be express or implied. In this case, the Court found that the landlord's lien had been waived.


Marshaling

The Court next reviewed the priority of the various competing lien claims and the elements of the doctrine of marshaling. The Court stated that the equitable doctrine of marshaling "rests upon the principle that a creditor having two funds to satisfy his debt, may not by his application of them to his demand, defeat another creditor, who may resort to only one of the funds." (citing, Meyer v. United States, 375 U.S. 233 1963)). The Court noted that "[b]ankruptcy courts have the equitable power to order the marshaling of assets in a bankruptcy case." The Court further reviewed that in the absence of a contrary court order or statute, that as a general principle, a party with inferior interests to a junior lienholder, cannot object to marshaling.