Gracy v. Ark Valley Credit Union
689 F. App'x 590
| 10th Cir. | 2017Background
- Debtor bought land in Caldwell, Kansas, and placed a manufactured (mobile) home on it; he lived there for ~20 years and made improvements (skirting, porch, garage).
- Debtor granted two mortgages to Ark Valley Credit Union (AVCU) on the real property; neither mortgage mentioned the manufactured home or noted its title status.
- Debtor filed Chapter 7 bankruptcy; Trustee sued under 11 U.S.C. § 544(a) to avoid AVCU’s asserted lien in the manufactured home as unperfected because the home’s certificate of title was not eliminated as required by Kansas law.
- Bankruptcy court initially held the mortgages did not attach to the home because they failed to describe it; district court reversed and remanded to consider whether the home was a fixture under Kansas common law, rejecting AVCU’s argument that Kansas Manufactured Home Act (KMHA) § 58-4214 is the exclusive means to convert a manufactured home into a fixture.
- On remand the bankruptcy court found the home was a fixture under Kansas common-law factors (annexation, adaptation, intent) and that AVCU’s security interest in the home was unperfected and avoidable; district court affirmed. The Tenth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Trustee) | Defendant's Argument (AVCU) | Held |
|---|---|---|---|
| Whether K.S.A. § 58-4214 is the exclusive statutory means to convert a manufactured home into a fixture | § 58-4214 does not preclude common-law fixture analysis; statute provides one guaranteed method but does not displace common law | § 58-4214 is the sole means to change status; without title elimination a manufactured home cannot be a fixture | The statute does not exclude common-law fixture rules; § 58-4214 provides a conclusive method but is not exclusive |
| Whether Debtor’s manufactured home was a fixture under Kansas common law (annexation, adaptation, intent) | The home met adaptation and intent factors, and annexation (though removable) was sufficiently established for fixture status | The home was not permanently affixed, so it was not a fixture | Court found no clear error: all three common-law factors supported that the home was a fixture |
Key Cases Cited
- Paul v. Iglehart, 534 F.3d 1303 (10th Cir.) (standard of review for bankruptcy appeals)
- Wachovia Bank, N.A. v. Morris (In re Thomas), 362 B.R. 478 (B.A.P. 10th Cir.) (held KMHA provides clear statutory process and suggested common law should not apply to manufactured-home fixture status)
- City of Wichita v. Eisenring, 7 P.3d 1248 (Kan.) (fixture is a question of fact under Kansas law)
- Stalcup v. Detrich, 10 P.3d 3 (Kan. App.) (articulates the three-factor test for fixtures in Kansas)