461 B.R. 711
6th Cir. BAP2011Background
- Debtor Gary Barbee, in chapter 13, pursued lien avoidance under 11 U.S.C. §544 against Bank as trustee for Truman FHA Trust 2008-1.
- Bank’s lien on Debtor’s manufactured home was not noted on the certificate of title and the home was not converted to real property.
- Real property mortgage originated with Countrywide in 1999; note/mortgage later assigned to Bank (Nov 11, 2009 petition filed).
- Debtor argued the manufactured home is estate property and Bank’s lien is unperfected under Kentucky law, making it avoidable.
- Bank argued Debtor lacked standing and the lien is not avoidable since it is a fixture or otherwise perfected; court granted Debtor summary judgment, Bank appealed.
- Banking Panel ultimately affirmed the bankruptcy court, addressing derivative standing and perfection of the lien under Kentucky law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Derivative standing to pursue lien avoidance | Barbee has derivative standing under Dickson | Bank argues Debtor lacks standing to pursue avoidance | Debtor has derivative standing to pursue §544 avoidance |
| Whether the home is property of the estate | Home is property of the estate under 11 U.S.C. §541 | Home may be treated as fixture; not necessarily estate property | Home is property of Debtor’s estate (at least equitable interest) under §541 |
| Perfection of the Bank’s lien on a personal property manufactured home | Lien not noted on title; cannot be perfected | Possibly perfected by conversion or other means | Lien not perfected; avoidable under §544 because not noted on title or converted |
| Waiver of Kentucky UCC perfection argument on appeal | Argued for first time on appeal | Argument waived (not considered) |
Key Cases Cited
- Countrywide Home Loans v. Dickson (In re Dickson), 655 F.3d 585 (6th Cir.2011) (Bankruptcy court’s derivative-standing discussion aligns with Dickson’s later direct-standing holding)
- In re Dickson, 427 B.R. 399 (6th Cir. BAP 2010) (Derivative standing to pursue lien avoidance recognized by BAP)
- In re Trailer Source, Inc., 555 F.3d 231 (6th Cir.2009) (Hyundai Translead relied on for derivative-standing principles)
- Hyundai Translead, Inc. v. Jackson Truck & Trailer Repair, Inc., 555 F.3d 231 (6th Cir.2009) (Supports trustee-derivative standing concepts in avoidance actions)
- Potts v. Draper, 864 S.W.2d 896 (Ky.1993) (Certicate-of-title regime; title controls ownership in KY vehicle context)