New Court Decision Relating to Michigan's Molder's Lien Act

February 2011

Michigan’s Ownership Rights In Dies, Molds and Forms Act, commonly known at the Molder’s Lien Act (MCL 445.611 et seq) allows moldbuilders to assert liens on the molds and dies they fabricate to ensure that if the moldbuilder is not paid for the molds and dies the moldbuilder may retake possession and sell them.

In order to properly assert a lien under the Molder’s Lien Act, a moldbuilder must do two things: (1) file a UCC financing statement in accordance with Michigan uniform commercial code; and (2) “permanently record on every die, mold or form ... the moldbuilder’s name, street address, city, and state.” MCL 445.619(1) and 445.619(2). The purpose of these provisions of the Molder’s Lien Act is to provide notice of the moldbuilder’s assertion of a lien.

A recent opinion by the Michigan Court of Appeals, C.G. Automation & Fixture, Inc. v. Autoform, Inc., 2011 Mich.App.Lexis 89, clarified the provisions of the Molder’s Lien Act by holding that in order to have an enforceable lien on dies, the moldbuilder must affix “permanently recorded information” to each die - on the actual body of the die itself.

Chrysler, L.L.C. contracted with Autoliv A.S.P., Inc. (“Autoliv”) to manufacture spoke covers for the JS41 vehicle platform. The manufacture of the spoke covers required the use of specialized production molds and metal trim dies. Autoliv contracted with Key Plastics, L.L.C. (“Key Plastics”) to produce the spoke covers and fabricate, or cause to be fabricated, the necessary molds and dies. Key Plastics contracted with Autoform, Inc. (“Autoform”) to fabricate the molds and dies. Autoform, in turn, contracted with C.G. Automation & Fixture, Inc. (“C.G. Automation”) to produce the required molds and dies. The dispute before the Court involved only the dies.

In September, 2006, C.G. Automation shipped the dies to Autoform. C.G. Automation placed an identification tags on the risers mounted to the dies. (A riser is a metal bar that is machined or bolted to the bottom of the die to establish the height of the die in the shut or closed position.) C.G. Automation also filed the requisite UCC financing statement.

Autoform never paid C.G. Automation and entirely ceased operations in 2007. However, before Autoform ceased operations it sold the dies to Key Plastics. (Key Plastics and Autoform fought a separate legal battle resulting in Key Plastics agreeing to pay Autoform for the molds and dies.) At the time that Key Plastics received the dies from Autoform, the original risers mounted to the dies by C.G. Automation had been removed.

C.G. Automotive sued Autoform, Key Plastics, Autoliv and Chrysler to enforce its lien and take possession of the dies. The Michigan Court of Appeals held that C.G. Automation did not have an enforceable lien on the dies because it had failed to “permanently record” the required information on the dies when it affixed the information to the risers - “an object readily removable from the die.” The Michigan Court of Appeals reversed the trial court’s ruling that C.G. Automation was entitled to take possession of the dies.

FOR MORE INFORMATION, PLEASE CONTACT:
Dawn R. Copley is a senior attorney in Dickinson
Wright’s Detroit office and can be reached at
313.223.3108 or dcopley@dickinsonwright.com.

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