U.S. Bank National Association v. Barbee (In re Barbee)
- Summarized by Dean Langdon , DelCotto Law Group PLLC
- 14 years 2 months ago
- Citation:
- 2011 FED App. 0016P (6th Cir.)
- Tag(s):
-
- Ruling:
- The Bankruptcy Appellate Panel affirmed the rulings of the Bankruptcy Court for the Eastern District of Kentucky which a) granted the chapter 13 debtor standing to pursue an avoidance action against his mortgage holder under 11 U.S.C. Sec. 544; and b) avoided the mortgage against the debtor's manufactured home since no lien was noted on the home's title and the home was never converted to real property under applicable state law.
- Procedural context:
- U.S. Bank, N.A. appealed from a summary judgment in favor of the chapter 13 debtor, Gary Barbee, avoiding the mortgage against the debtor's manufactured home. The debtor sought and obtained derivative standing to seek avoidance of the mortgage via motion, then promptly filed an adversary action to avoid the mortgage and prevailed on cross-motions for summary judgment.
- Facts:
- The debtor and his partner obtained a loan from Countrywide Home Loans in November, 1999 to purchase a tract of land in Millersburg, Kentucky which had a manufactured home in place. The mortgage covered real property, improvements and fixtures and was timely recorded in the proper county clerk's office. The loan file included a letter from the loan officer to the effect that the double wide mobile home was gutted and rebuilt in 1997. The debtor and his partner did not acquire a title to the manufactured home. The BAP first addressed whether the debtor was properly granted derivative standing under its prior decision of In re Dickson, 427 B.R. 399 (B.A.P. 6th Cir. 2010). The appeal was held in abeyance while the Sixth Circuit dealt with the appeal of the BAP's Dickson ruling, which was affirmed on the ground that the debtor had standing to avoid an involuntary transfer under 11 U.S.C. Sec. 522(h). In re Dickson, 655 F3d 585 (6th Cir. 2011). Although the transfer at issue here was voluntary, the BAP found no reason to depart from its ruling in Dickson and affirmed the bankruptcy court ruling granting derivative standing. Turning to the lien avoidance issue, the BAP rebuffed arguments that a) the debtor's failure to acquire a title for the manufactured home excluded it from property of the estate (relying on the definition of Sec. 541); b) the manufactured home was an "improvement" subject to the mortgage (relying on Kentucky law, KRS 186A.070.1); c) distinguishing an unpublished Kentucky Court of Appeals opinion finding that a manufactured home without a title may be conveyed by deed (Whisman v. Whisman); and d) refusing to consider an argument raised for the first time on appeal (that section 9-334(5)(d) of Article 9 of the Uniform Commercial Code granted priority to a mortgage which perfects a lien against a manufactured home which is a fixture). Ultimately, the BAP held that the failure of the mortgage holder to perfect its lien by notation on the title to the manufactured home was fatal, and the mortgage was avoided.
- Judge(s):
- Boswell, Harris and McIvor on panel, authored by Harris, J.
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