LEGISLATIVE UPDATE--REVISED ARTICLE 7
As reported last year, all fifty states and the District of Columbia have adopted the 2003 revisions of Article 7. (1)
As is often the case, there were few cases concerning Article 7 during the reporting period. The three that did arise all dealt with warehouse liens. An additional noteworthy case involves the scope of COGSA preemption. These four cases are reported here.
A warehouse lien was at issue in PODS Enterprises, LLC v. World Trade Distribution, Inc. (2) PODS stored a customer's moveable storage container at World Trade Distribution's warehouse and never retrieved it. World Trade notified PODS of its warehouse lien under section 7-209, as required under section 7-210. PODS sued, asserting claims for conversion, theft under the Texas Theft Liability Act, fraud by nondisclosure, and tortious interference with prospective business relations. Insofar as Article 7 is concerned, the court concluded that the theft and conversion claims failed because World Trade held a warehouse lien under section 7-209, which is possessory in nature. (3) And while no warehouse receipt or express contract existed between PODS and World Trade, the court concluded the bailment could be created by implication. Delivery of the pod was some evidence of the storage agreement. (4) PODS also made a claim that World Trade had not fulfilled the requirements of section 7-210(b) and, thus, was liable for any damages the failure caused. However, PODS did not present any evidence that World Trade sold the container. The lack of such evidence at the summary judgment stage of the litigation was fatal to PODS's claim. (5)
In Fabrique Innovations, Inc. v. Etiwanda Logistics, Inc., (6) the storer (FII) was able to get a preliminary injunction requiring the release of stored goods upon the payment of a bond amount that would protect the warehouse's asserted lien amount. The court...