Morris v. General Motors Acceptance Corp. (In re Ball)

281 B.R. 706, 48 U.C.C. Rep. Serv. 2d (West) 709, 2002 Bankr. LEXIS 851
CourtUnited States Bankruptcy Court, D. Kansas
DecidedAugust 7, 2002
DocketBankruptcy No. 01-12954; Adversary No. 01-5148
StatusPublished
Cited by2 cases

This text of 281 B.R. 706 (Morris v. General Motors Acceptance Corp. (In re Ball)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Morris v. General Motors Acceptance Corp. (In re Ball), 281 B.R. 706, 48 U.C.C. Rep. Serv. 2d (West) 709, 2002 Bankr. LEXIS 851 (Kan. 2002).

Opinion

MEMORANDUM OPINION

ROBERT E. NUGENT, Bankruptcy Judge.

This is an adversary proceeding pursuant to 11 U.S.C. § 5471 to avoid General Motors Acceptance Corporation’s (“GMAC”) lien in the debtors’ 2000 Chevrolet Tahoe. The Trustee contends that perfection of GMAC’s hen in the debtors’ vehicle constitutes a preference under § 547(b) and is avoidable. The debtors purchased the vehicle in Oklahoma but promptly brought the vehicle to Kansas where they reside. The issues presented are: (1) whether Oklahoma law or Kansas law governs the issue of perfection; and (2) when GMAC became perfected.

The trustee contends that under the multistate transaction provision of Kan. Stat. Ann. § 84-9-103(2)(b) (1996), Kansas law governs the issue of perfection because only Kansas issued a certificate of title for the vehicle. The trustee reasons that since GMAC perfected its lien under Kansas law, at the earliest, on the date of the [708]*708Kansas title application, its perfection was within ninety (90) days of the debtors’ bankruptcy filing. GMAC, applying Oklahoma law, contends that it perfected its lien within the twenty (20) day safe harbor provision of § 547(c)(3) and therefore, the trustee may not avoid its lien in the vehicle.

This case was submitted to the Court upon stipulated facts and exhibits and the briefs of the parties. The Court has reviewed the parties’ submissions and is now prepared to rule. The controlling facts are as follow.

The debtors reside in Goddard, Kansas. On May 13, 2000 the debtors entered into a purchase agreement, security agreement and retail installment contract for the purchase of a 2000 Chevrolet Tahoe from a dealership in Oklahoma. The note and security interest were assigned by the Oklahoma dealership to GMAC. The vehicle arrived in Kansas on May 19 or May 20.

On May 13, 2000, the Oklahoma dealership executed a lien entry form under Oklahoma law. The lien entry form reflected the lien in the debtors’ vehicle and that GMAC was the assignee of the secured party. The lien entry form also indicated the debtors’ Kansas address. On May 24, 2000, the lien entry form, together with an application for an Oklahoma certificate of title for a vehicle, a certificate of origin, and an odometer disclosure statement were delivered to a motor license agent with the Oklahoma division of motor vehicles. The application for an Oklahoma certificate of title was not signed by the debtors although they were shown as owners on the application.

On May 24, 2000, the Oklahoma Tax Commission (“OTC”) issued a lien receipt with respect to the debtors’ vehicle. The lien receipt shows a lien fee of $10.00 was paid, that GMAC is the lien holder, and a lien date of May 24, 2000. No certifícate of title was ever issued by the Oklahoma authorities.

On June 14, 2000, the debtors applied for a Kansas certificate of title on the vehicle. A Kansas certificate of title was issued on July 12, 2000. GMAC’s lien is noted on the Kansas certificate of title.

On August 2, 2000, the debtors filed for bankruptcy relief under Chapter 7. On July 6, 2001, the trustee filed his adversary complaint against the debtors and GMAC, seeking to avoid GMAC’s lien in the vehicle as an alleged preference under § 547(b). GMAC defends by claiming that it became perfected during the 20-day safe harbor provision of § 547(c)(3) and therefore, its lien may not be avoided and preserved by the trustee.

ANALYSIS

At the outset, this Court is confronted with determining whether the provisions of former or revised Article Nine apply to the choice of law issue. The trustee relies upon the old multi-state transaction provision, former KaN. Stat. Ann. § 84 — 9—103(2)(b) (1996), in concluding that Kansas law controls the issue of GMAC’s perfection. The trustee asserts that “[t]his case pre-dates ‘new’ Article 9.” The new code provisions dealing with multi-state transactions are found at Kan. Stat. ANN. §§ 84-9-303, 84-9-316 (Supp. 2001). The Court notes that this adversary action was filed July 6, 2001, subsequent to the effective date of Article 9, as revised by the Kansas Legislature.2

[709]*709Kan. Stat. Ann. § 84-9-702(c) (Supp. 2001) provides:

This act [Article 9 as revised] does not affect an action, case, or proceeding commenced before this act takes effect. [Emphasis supplied].

If the “action, case, or proceeding” is commenced after the July 1, 2001 effective date, Article 9, as revised, applies. The Court must therefore determine as a preliminary matter whether the bankruptcy case filing (August 2, 2000) or the adversary case filing (July 6, 2001) is the controlling date for purposes of deciding whether the old or revised version of the multi-state transaction provision of Article 9 governs this preference dispute.

In an analogous case involving the enactment of the Bankruptcy Reform Act of 1994 (“1994 Act”), a bankruptcy court concluded that the bankruptcy ease filing was the controlling date.3 As in this case, the bankruptcy case was filed prior to the effective date of the 1994 Act but the adversary proceeding was filed after the effective date. In holding that the bankruptcy case filing was controlling, the bankruptcy court reasoned that the bankruptcy case includes adversary proceedings arising within the case:

First American’s argument, while disingenuous, does not pass muster. Although First American is correct that the word “case” is not synonymous with the term “adversary proceeding,” neither are the words mutually exclusive. Generally, in the bankruptcy context, the word “case” is a term of art which refers to “that which is commenced by the filing of a petition; it is the ‘whole ball of wax,’ the chapter 7, 9,11,12 or 13 case.” 5 Collier on Bankruptcy ¶ 1109.02 (15th ed.1993). Adversary proceedings, on the other hand, are su-bactions which are raised within a “case” and are commenced by the filing of a complaint, [citations omitted] ...

185 B.R. at 253.

The court also rejected the argument that an adversary proceeding was separate and distinct from a bankruptcy case.
First American admits in its brief that the 94 Act may not be applicable to this chapter 11 bankruptcy case, but argues that the amendment still controls this adversary proceeding by limiting the word “case” narrowly to the bankruptcy case itself and treating this adversary proceeding as an entirely separate action, such that even though the 94 Act would not apply to this chapter 11 case, it would still be applicable to this adversary proceeding. However, as stated above, “case” as traditionally used in the bankruptcy context, refers not only to that which is commenced by the filing of a petition, but also to all proceedings arising therein, such as this preference adversary proceeding.
No other result makes sense. There would be no adversary proceeding but for the filing of the case....

185 B.R. at 254.4

This Court agrees with the Blevins

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Bluebook (online)
281 B.R. 706, 48 U.C.C. Rep. Serv. 2d (West) 709, 2002 Bankr. LEXIS 851, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morris-v-general-motors-acceptance-corp-in-re-ball-ksb-2002.