UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORP., et al.

, Debtors. ___________________________________/ REPLY TO DEBTORS RESPONSE IN OPPOSITION TO W.C. BLACK & SONS, INC.S MOTION FOR RELIEF FROM AUTOMATIC STAY I. STATEMENT OF FACTS In 1983, Collins and Aikman 1 (hereinafter C&A) contracted with W.C. Black and Sons, Inc. (hereinafter Black) to perform grading services at a landfill C&A owned in McDowell County, North Carolina. See Declaration of W.C. Black and Sons attached as Exhibit A hereto, at 4. CA would deliver carpet remnants to the landfill, and Black would bury and grade over those remnants. Black purchased a front-end loader and other equipment that it moved onto CAs property upon which the landfill was located. See Id at 5. Between 1983 and August of 2006, Blacks equipment remained on C&As property. Blacks staff used the equipment almost constantly during that time period pursuant to a series of contracts with C&A. See Id at 8. The most recent contract agreed to between the parties went into effect on January 1, 2004 (hereinafter the Contract). See Declaration of W.C. Black & Sons, Inc., ex. 1. One of the standard provisions included in the contract was guarantee of a monthly minimum payment.
1

Chapter 11 Jointly Administered Case No. 05-55927-SWR Hon. Steven W. Rhodes

It is believed by the Creditor in this matter that the original owner of the property was Collins and Aikman Corporation, but that it was transferred to Collins and Aikman Products Co. The owner of the property is jointly referred to Collins and Aikman for purposes of this brief, as the transfer took place before the start of the work subject to the lien that is at issue.

0W[;&,+

0555927061211000000000006

&,

This provided that in any month where there was not enough work for Black, C&A would pay Black $15,700 to cover the costs of keeping its equipment on the property. While this was never needed prior to December of 2005, C&A explained that it needed Black to keep its equipment on the property whether or not there was any grading work to be performed. This was because the landfill operated pursuant to permits and licenses issued by the State of North Carolina. See Id at 6. As previously stated, Blacks staff and equipment were continuously used between 1983 and December of 2005. While the Contract provided that it expired on December 31, 2004, Black and C&A continued to operate under the terms of the Contract through 2005 and into 2006. See Id at 11. In October of 2005, C&A decided to attempt to recycle its carpet remnants at a plant in South Carolina, instead of burying them at the landfill. See Id at 14. This was not the first time that C&A had attempted to recycle the remnants, and the previous attempts had not found much success. Therefore, C&A asked Black to keep its equipment on the property, both to be ready to work if recycling was not feasible, as well as to allow C&A to maintain its permits and licenses. See Id at s 15-17. In fact, C&A paid Black its monthly minimum for the pay period covering December 20 2005 to January 19, 2006, as Black kept its equipment on the property despite for the first time not having sufficient work to charge more than the monthly minimum under the Contract. See Id at 17. While the majority of C&As carpet remnants were sent to the recycling plant after November of 2005, there was additional work performed by Black at the landfill. Black was not paid for any work performed after the 12/20/05-1/19/06 pay period. See Id at 20. After conversations between the parties during January and February of 2006,

Black kept its equipment on the property so that C&A could keep its licenses and permits for the landfill while it determined what it would do with the property and remnants. See Id at s 19, 21. On August 17th, Black was notified by C&A that it was terminating its agreement and wanted Black to remove its equipment from the property. Black removed its equipment on August 24, 2006. See Id at 21. II. ARGUMENT OF LAW

A. Black furnished labor and materials for the improvement of C&As real property pursuant to a contract, and therefore is entitled to a lien pursuant to N.C.G.S. 44A-8. As set forth above, Black provided labor and materials for the improvement of C&As McDowell County landfill. In its brief, C&A does not dispute that Black provided labor and materials until March 20, 2006. It only argues that the provision of the front-end loader and other equipment between March 20 and August 24 does not qualify as actions for which a lien can filed. A review of the applicable statutes and case law demonstrates that the provision of the equipment is indeed covered by the lien laws of the State of North Carolina. N.C.G.S. 44A-8 provides that, [a]ny person who furnishes labor or materials or furnishes rental equipment pursuant to a contract, either express or implied, with the owner of real property for the making of an improvement thereon shall have a right to file a claim of lien on the real property to secure payment of all debts owing for labor done or materials furnished or equipment rented pursuant to the contract. The statute was expanded in 1996 to provide coverage for rental equipment after a North Carolina Court of Appeals decision held that rental equipment was not a direct means of improving real property, and therefore not covered by the lien statutes then in existence. See Southeastern Steel Erectors, Inc. v. Inco, Inc., 108 N.C.App. 429, 434, 424 S.E.2d

433, 434 (1993). This evidences the legislatures intent to give the protection provided by the lien laws to anyone who provides any type of labor or materials, including equipment, for the improvement to real property pursuant to a contract. The key issue in this matter is why Black kept its equipment on C&As property. Black had been told over the years by C&A that for C&A to keep its permits and licenses, Black needed to keep its grading equipment on the property at all times. This is why a monthly minimum was guaranteed to Black in the Contract. Were C&A to lose its permit, the land would clearly lose value. Therefore, keeping Blacks equipment on the property was an improvement. The provision of Blacks equipment on C&As property was essentially the same as providing rental equipment; Black provided equipment, and was paid a monthly fee for the same. North Carolinas lien statutes are to be construed broadly in support of the strong public policy of the state favoring the protection of laborers and materialmen. See Martin Architectural Products Inc. v. Meridian Construction, Inc., 155 N.C. App 176, 182, 574 S.E.2d 189, 193 (2002). In following with the legislatures intent, as well as the public policy set forth by the Courts, Blacks lien should be allowed to be filed and enforced. C&A relies on the Priddy case to claim that Black should not be able to assert its lien rights. Priddy is certainly good law, but completely inapplicable to the present case. Priddy involved an owner and a contractor who, through fraud, attempted to jointly extend the 120-day time period for filing liens now codified in N.C.G.S. 44A-12. See Priddy v. Kernersville Lumber Co., 258 N.C. 653, 658, 129 S.E.2d 256, 261 (1963). In the matter before the Court, Black did not attempt to provide small services for purposes of extending the deadline for filing a lien. Black merely kept its equipment on C&As

property pursuant to the terms of the Contract until C&A properly terminated the Contract in August of 2006. Black was asked to keep its equipment on the property by C&A. It was paid for doing nothing but keeping its equipment on the property in January of 2006. It then was not paid between January and August, when C&A terminated the Contract. Black then promptly removed its equipment. W.C. Black and Sons, Inc. has timely asked the Court to allow it to file its Claim of Lien and lis pendens as required to perfect the lien it rightfully possesses against the McDowell County property owned by C&A. Black is still within the 120 days required by N.C.G.S. 44A-12. Allowing Black to file the lien and lis pendens does nothing but preserve Blacks rights for a later date when the Court determines the amount and validity of the lien. Black therefore respectfully requests this Court to allow it relief from the stay to file its Claim of Lien and lis penens. ALLARD & FISH, P.C. /s/ Daniel M. Katlein Attorneys for W.C. Black & Sons, Inc. 535 Griswold 2600 Buhl Building Detroit, MI 48226 (313) 961-6141 dkatlein@allardfishpc.com P33474 Dated: December 11, 2006
U:\30\440\pld\REPLY.DbtrsRespns.MtnRlfStay.doc

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In re: COLLINS & AIKMAN CORP., et al., Debtors. ___________________________________/ Chapter 11 Jointly Administered Case No. 05-55927-SWR Hon. Steven W. Rhodes

DECLARATION OF W.C. BLACK AND SONS, INC. Jason Black, as Vice President of W.C. Black and Sons, Inc., after first being sworn states for this declaration as follows: 1. 2. 3. years. 4. In 1983, Black originally contracted with Collins and Aikman (hereinafter C&A) That I am a citizen and resident of Charlotte, Mecklenburg County, North Carolina. That I am the Vice President of W.C. Black and Sons, Inc (hereinafter Black). Black is a grading company that has been in business for over twenty-five (25)

to providing grading services at a landfill C&A owned in McDowell County, North Carolina. C&A would provide carpet remnants that needed to be buried and plowed over in the landfill, and Black agreed to provide that service. 5. When the original contract was signed, Black moved a front-end loader and other

equipment onto the property on which the landfill was located. That front-end loader (as well as the other related grading equipment) was not removed until August 24, 2006. 6. The front-end loader and other equipment was kept on the property so that C&A

could retain all licenses and permits required by the State of North Carolina to maintain and use the landfill. 7. I was told by representatives of C&A on several different occasions over the years EXHIBIT A

that if Blacks equipment was moved off of the property, C&A may not be able to continue to use the property as a landfill, as obtaining the licenses and permits necessary to re-certify the property for use as a landfill would be extremely difficult. It was significantly easier to maintain the permits and licensing than it was to re-qualify, according to the C&A employees. 8. Black performed grading services at the landfill continuously between 1983 and

2006. Every so often, a new contract (designated as a purchase order) would be signed at the request of C&A. 9. C&A provided a new purchase order to be signed that would be effective April 2,

2004. A copy of this purchase order is attached as Exhibit 1 and incorporated herein by reference (hereinafter the Purchase Order). 10. As was standard in the contracts between Black and C&A, the Purchase Order

provided a monthly minimum amount of compensation to Black. In this Purchase Order, C&A agreed to provide at least Fifteen Thousand Seven Hundred Dollars ($15,700) worth of work to Black. If the work was not provided, Black would receive that amount as minimum compensation. This was provided to compensate Black for keeping and maintaining its equipment at the landfill. Again, the equipment had to be maintained so that C&A could keep its permits and licenses to run the landfill. 11. While the Purchase Agreement provided that it expired on December 31, 2004, we

continued to perform the same work and receive payment at the same rate as we proceeded forward in 2005. However, payments in the four months preceding C&As bankruptcy filing were not made. 12. C&A filed for bankruptcy protection during the spring of 2005. At that time, Black

was owed approximately One Hundred Thousand Dollars ($100,000) in back payments for work done at the landfill pursuant to the Purchase Order. After filing for bankruptcy protection, C&A

informed me that it wished for Black to continue working at the landfill under the terms of the Purchase Order. 13. Black actually received payment for work done after C&As bankruptcy filing (but

not for the outstanding balance owed from prior to the filing) until February of 2006. 14. In October/November of 2005, I spoke with Jack Davis, a representative of C&A

who was my contact with that company. He informed me that C&A was again going to attempt to use a recycling plant down in South Carolina to process these carpet remnants, instead of burying them at the landfill in McDowell County. 15. C&A had attempted to recycle the carpet remnants before, without much success. It

always ended up having more remnants that the recycling plant could handle, and so Black was always kept busy burying the products at the landfill. 16. During the conversations Jack Davis and I had about the landfill and C&As decision to recycle the remnants, he never stated that the relationship between Black and C&A was terminated. He just informed me on a weekly basis that there would not be additional work for the following week, but there may be additional work the week after. 17. From 1983 until the pay period covering December 20, 2005 to January 19, 2006, C&A had always enough work to surpass the minimum monthly payment required. Enough work was not provided for the December 20-January 19 pay period, so C&A paid the monthly minimum provided for under the terms of the Purchase Order. 18. Black continued to do some work for C&A at the landfill, and I had more

conversations with Jack Davis and Chip Moore, who I understand is Mr. Davis boss at C&A. These conversations took place in January and February of 2006. 19. During these conversations, I discussed with Mr. Davis and Mr. Moore the

description of the current work for Black. While working under their direction, no money was being paid and negotiations were on-going for more work. It was understood that this work was

being done to satisfy State Inspectors and needed to be done in a timely fashion. Therefore, our equipment was required on site. Jack Davis also mentioned that C&A did not want to officially close the landfill due to the uncertainty of the recycling process. 20. Black provided additional work between February and April, under the same terms

that had been provided in the Purchase Order. No further payment was made for this work. In fact, after the work was completed, Chip Moore attempted to renegotiate the price, which I refused to do. 21. I understood that C&A was not sure what it was going to do with the landfill, and

wanted to keep its options open, so upon C&As instruction, I did not remove my equipment from the property until I was asked to do so in August of 2006. This was a detriment to Black, as that equipment could have been used elsewhere.

This 8th day of December, 2006.

/s/ Jason Black

SWORN TO AND SUBSCRIBED BEFORE ME THIS 8th DAY OF DECEMBER, 2006. /s/ Brandi S. Ledbetter NOTARY PUBLIC MY COMMISSION EXPIRES: June 23, 2010 Mecklenburg County, North Carolina (NOTARIAL SEAL)

EXHIBIT 1