In Re Thomas

362 B.R. 478, 2007 Bankr. LEXIS 328
CourtBankruptcy Appellate Panel of the Tenth Circuit
DecidedFebruary 12, 2007
DocketBAP No. 06-068, Bankruptcy No. 03-11882-7, Adversary Nos. 04-5228, 04-5232
StatusPublished
Cited by8 cases

This text of 362 B.R. 478 (In Re Thomas) is published on Counsel Stack Legal Research, covering Bankruptcy Appellate Panel of the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Thomas, 362 B.R. 478, 2007 Bankr. LEXIS 328 (bap10 2007).

Opinion

362 B.R. 478 (2007)

In re Matthew W. THOMAS, Pamela J. Thomas, also known as Pamela J. Carroll, Debtors.
Wachovia Bank, N.A., formerly known as First Union National Bank, Trustee for Long Beach Mortgage Loan Trust 2001-4, Plaintiff — Defendant — Appellee,
v.
J. Michael Morris, Trustee, Defendant — Plaintiff — Appellant.

BAP No. 06-068, Bankruptcy No. 03-11882-7, Adversary Nos. 04-5228, 04-5232.

United States Bankruptcy Appellate Panel of the Tenth Circuit.

February 12, 2007.

*479 J. Michael Morris, pro se.

Michael D. Doering, Kansas City, Missouri, for Plaintiff — Defendant — Appellee.

Before CLARK, CORNISH, and TALLMAN[1], Bankruptcy Judges.

TALLMAN, Bankruptcy Judge.

This matter involves a dispute between the Debtors' Chapter 7 trustee ("Trustee") and Wachovia Bank, N.A. ("Wachovia"), with respect to rights in the Debtors' manufactured home.[2] Wachovia is the foreclosing *480 creditor who purchased Debtors' real property in a foreclosure sale. The Trustee appeals from the bankruptcy court's judgment denying his Complaint to Avoid and Preserve Unperfected Security Interest and granting Wachovia's Petition to Quiet Title. The bankruptcy court based its judgment on the doctrine of claim preclusion. Because claim preclusion does not bar the Trustee from asserting his rights to the Debtors' manufactured home, we reverse.

I. BACKGROUND

On November 29, 2001, the Debtors executed a note and real estate mortgage in favor of Long Beach Mortgage Company ("Long Beach"), Wachovia's predecessor in interest. The Debtors' real property consisted of a parcel located in Arkansas City, Kansas (the "Real Estate"), with their 1997 Schultz manufactured home (the "Manufactured Home") situated on it. In an affidavit attached to the mortgage, the Debtors stated: 1() there is a Manufactured Home on the Real Estate which is permanently affixed to it; 2() the wheels have been removed and the Manufactured Home is permanently attached to utilities; 3() the Manufactured Home is titled to the same persons who hold title to the Real Estate; and 4() it is the Debtors' intent that the Manufactured Home be considered as part of the Real Estate.[3] It is undisputed that neither party took steps to have Long Beach's "security interest noted on the Debtors' certificate of title for the Manufactured Home.[4] Long Beach's note and mortgage were subsequently assigned to Wachovia.

The Debtors filed their bankruptcy case on April 16, 2003. Wachovia sought relief from the automatic stay and, on July 18, 2003, the bankruptcy court entered an order granting relief to Wachovia with respect to the Real. Estate.[5] Wachovia did not request, and the bankruptcy court did not grant, stay relief with respect to any personal property. The bankruptcy court's stay relief order provides that a judicial foreclosure may proceed in state court naming the Trustee as an in rem party only. It also provides that the estate will be entitled to full redemption rights and that the Trustee must receive notice of any sheriff's sale conducted with respect to the Real Estate.[6] On January 22, 2004, the Real Estate was sold at a sheriffs sale. The Certificate of Purchase shows that Wachovia purchased the Real Estate for $118,839.31.[7]

The Trustee was named as an interested party in the Kansas judicial foreclosure proceedings but he, took no action in the case. Neither the Trustee nor Wachovia's counsel were aware of the fact that a manufactured home was located on the Real Estate. However, before Wachovia *481 could insure its title to the Real Estate, the title insurance company required it to undertake a quiet title action to make sure that its title to the Real Estate included the Manufactured Home.

On August 6, 2004, Wachovia commenced its quiet title action in the District Court of Cowley County, Kansas (the "State Court"). At that time, the Trustee learned that the Real Estate contained the Manufactured Home. On August 30, 2004, the Trustee filed his Notice of Removal to remove the quiet title action from the State Court to the bankruptcy court. At the same time, the Trustee filed a separate adversary action in the bankruptcy court alleging that Wachovia did not have a perfected lien on the Manufactured Home and seeking to avoid Wachovia's lien under 11 U.S.C. § 544(a) for the benefit of the bankruptcy estate. The quiet title action and the lien avoidance action were consolidated and submitted to the bankruptcy court on stipulated facts.[8] The bankruptcy judge concluded that, because the Trustee was a party to the prior State Court foreclosure action, claim preclusion barred him from asserting any rights to the Manufactured Home.[9]

II. APPELLATE JURISDICTION

This Court has jurisdiction to hear timely-filed appeals from "final judgments, orders, and decrees" of bankruptcy courts within the Tenth Circuit, unless one of the parties elects to have the district court hear the appeal.[10] Neither party elected to have this appeal heard by the United States District Court for the District of Kansas, thus consenting to review by this Court.

III. STANDARD OF REVIEW

"For purposes of standard of review, decisions by judges are traditionally divided into three categories, denominated questions of law (reviewable de novo), questions of fact (reviewable for clear error), and matters of discretion (reviewable for `abuse of discretion')."[11]De novo review requires an independent determination of the issues, giving no special weight to the bankruptcy court's decision.[12]

This appeal presents issues requiring interpretation of Kansas law and a determination of the applicability of the doctrine of claim preclusion. These are exclusively legal issues that we will review de novo.[13]

IV. DISCUSSION

A. Statutory Background

Prior to 1991, the titling of manufactured homes and the perfection of security interests in manufactured homes was controlled by Kansas's motor vehicle titling statutes.[14] In the 1987 case of Beneficial *482 Finance Co. of Kansas, Inc. v. Schroeder, the Kansas Court of Appeals held that notation of a security interest on a manufactured home certificate of title was the exclusive method of perfecting a security interest in a manufactured home notwithstanding the fact that the manufactured home had been permanently affixed to the real estate upon which it stood.[15]

In 1991, the Kansas Manufactured Housing Act[16] (the "KMHA") was enacted into law. The KMHA is comprehensive legislation covering the licensing and regulation of manufacturers, distributors, dealers, and installers of manufactured housing; regulating sales transactions involving manufactured housing; setting uniform installation standards; and regulating the titling of manufactured homes as well as perfection of security interests.

Under the KMHA, manufactured homes are no longer treated as motor vehicles.[17] Nonetheless, the procedure for recording an ownership interest and for perfecting a security interest is similar, to the procedure used for motor vehicles.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
362 B.R. 478, 2007 Bankr. LEXIS 328, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-thomas-bap10-2007.