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Dickson v. Countrywide Home Loans (In re Dickson)

Dickson v. Countrywide Home Loans (In re Dickson), Case No. 10-5580 (6th Cir. August 26, 2011)
Sixth Circuit affirmed Bankruptcy Appellate Panel and Bankruptcy Court's ruling that Chapter 13 debtor had proper standing and could avoid as a preferential transfer a lien on debtor's mobile home obtained by a real estate mortgage creditor through a state court judgment rendered within 90 days prior to the filing of the Chapter 13 bankruptcy case.
Procedural context:
After a Chapter 7 discharge of debtor, a real estate mortgage creditor filed a state court foreclosure in rem seeking a determination that the debtor had intended to pledge her mobile home as part of the mortgage granted to the creditor which mortgage by its terms only described the real estate. The state court granted the mortgage creditor a judgment that the mobile home was deemed to be pledged to the creditor thereby creating a lien on the mobile home in favor of the creditor. Within 90 days of the state court's determination the debtor filed a Chapter 13, the Chapter 13 Trustee declined to file an adversary to attack the imposition of the lien, the debtor then filed the adversary, and the lien was avoided after the Bankruptcy Court determined the debtor had standing to assert the preferential transfer claim in the adversary proceeding.
in 1998 debtor granted Countrywide a mortgage on her real estate in exchange for a loan of $79,000.00. With proceeds from the loan the debtor acquired a mobile home and placed it on the real estate. In 1999 the debtor filed a Chapter 7 and the Chapter 7 trustee abandoned any interest in the real estate or mobile home. The debtor was discharged and did not reaffirm the debt. Countrywide filed a state court foreclosure and asserted the debtor intended to grant Countrywide a lien on the mobile home. Under Kentucky law a mobile home is personal property and a lien must be noted on the certificate of title to be perfected. Alternatively, a mobile home can be converted to real property. The state court granted Countrywide the relief it sought thereby perfecting a lien upon the mobile home. The debtor filed the Chapter 13 within 90 days of the determination. The Chapter 13 trustee was granted time to bring an adversary and, if no filing was made by the trustee, the debtor was allowed to bring the adversary. The debtor brought the adversary. The Bankruptcy Court found the debtor had standing under Section 522(h) when the trustee failed to file suit and found the state court judgment was an avoidable preferential transfer.
Norris, Gibbons and Griffin (Sixth Circuit); Jospeh M. Scott, Bankruptcy Judge.

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