ELECTRONIC CITATION: 2005 FED App. 0004P (6th Cir.)

File Name: 05b0004p.06

BANKRUPTCY APPELLATE PANEL OF THE SIXTH CIRCUIT

In re: DANIEL W. CLUXTON, )

)

Debtor. )

_____________________________________ )

)

DANIEL W. CLUXTON, )

)

Debtor-Appellant, )

)

 v. ) No. 04-8028

)

FIFTH THIRD BANK, ET AL., )

)

Appellees. )

_____________________________________ )

Appeal from the United States Bankruptcy Court

for the Southern District of Ohio, Western Division, at Cincinnati.

No. 02-17602.

Argued: February 2, 2005

Decided and Filed: May 19, 2005

Before: COOPER, GREGG, and LATTA, Bankruptcy Appellate Panel Judges.

____________________

COUNSEL

ARGUED: David A. Kruer, DEARFIELD, KRUER & WARREN, Portsmouth, Ohio, for

Appellant. John L. Day, Jr., WELTMAN, WEINBERG & REIS, Cincinnati, Ohio, Francis J.

DiCesare, Cincinnati, Ohio, for Appellees. ON BRIEF: David A. Kruer, DEARFIELD,

KRUER & WARREN, Portsmouth, Ohio, for Appellant. John L. Day, Jr., WELTMAN,

WEINBERG & REIS, Cincinnati, Ohio, Francis J. DiCesare, Cincinnati, Ohio, for Appellees.
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 The Bankruptcy Code is contained in 11 U.S.C. §§ 101-1330. Unless stated to the

contrary, all future statutory references are to the Bankruptcy Code, e.g., “§ ____.”

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____________________

OPINION

____________________

JAMES D. GREGG, Bankruptcy Appellate Panel Judge. In this case, the bankruptcy

court denied confirmation of the Debtor’s chapter 13 plan. The bankruptcy court found that

the Debtor’s proposed “cramdown” of the debt on his mobile home violated the antimodification provisions of § 1322(b)(2) because the court found that the mobile home is

part of the real property. Daniel W. Cluxton, the “Debtor,” has appealed arguing that the

mobile home is personal property. For the reasons that follow, the Panel AFFIRMS the

bankruptcy court.

I. ISSUE ON APPEAL

The issue on appeal is whether the mobile home constitutes “real property that is

the Debtor’s principal residence” such that the chapter 13 plan being proposed by the

Debtor violates the anti-modification provisions of 11 U.S.C. § 1322(b)(2).1

II. JURISDICTION AND STANDARD OF REVIEW

The Panel has jurisdiction under 28 U.S.C. § 158(a)(1), which allows district courts,

and this Panel, under § 158(b), to review interlocutory orders of bankruptcy courts. On

October 26, 2004, the Trustee and Debtor filed a joint statement requesting leave to

appeal. The Panel granted permission to the Debtor to bring this appeal.

Conclusions of law are reviewed de novo. See Nicholson v. Isaacman (In re

Isaacman), 26 F.3d 629, 631 (6th Cir. 1994). “De novo review requires the Panel to review

questions of law independent of the bankruptcy court’s determination.” First Union

Mortgage Corp. v. Eubanks (In re Eubanks), 219 B.R. 468, 469 (B.A.P. 6th Cir. 1998)

(citation omitted). The determination whether a plan provision violates the Bankruptcy

Code is a legal conclusion reviewed de novo.

III. FACTS
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In May 1999, the original owners of the Debtor’s mobile home surrendered the

certificate of title of the mobile home to the Adams County auditor so that the mobile home

could be sold with real property to the Debtor. The Debtor financed his purchase through

a loan from Fifth Third Bank, granting a mortgage on the property and mobile home. From

the time that the Debtor purchased the mobile home and the real property, both have been

taxed as real estate.

The Debtor asserts that the mobile home is personal property because it is not

affixed to the real property. The mobile home sits on sixteen by sixteen inch block piers

with wood wedges between the piers and a steel frame. Each pier rests upon concrete

pads buried four inches below the soil rather than sixteen inches beneath the frost line as

required by state regulations. The vinyl skirting that came with the mobile home from the

manufacturer has been replaced by concrete blocks stacked around the base, some

without mortar. The block skirting does not support any weight and appears to have been

installed only for cosmetic purposes. Plumbing, electricity and a septic system have all

been connected to the mobile home. The record on appeal discloses no other

improvements. 

IV. DISCUSSION

Section 1322(b)(2) provides:

(b) Subject to subsections (a) and (c) of this section, the plan

may–

 (2) modify the rights of holders of secured claims, other

than a claim secured only by a security interest in real property

that is the debtor’s principal residence, or of holders of

unsecured claims, or leave unaffected the rights of holders of

any class of claims[.]

In Nobelman v. American Sav. Bank, 508 U.S. 324, 113 S. Ct. 2106 (1993), the Supreme

Court ruled that a Chapter 13 debtor may not use § 506(a) to strip down those types of

mortgages covered by § 1322(b)(2).

A.

Pursuant to Ohio law, a mobile home may become part of real property. Ohio law

requires the owners of mobile homes to pay real estate taxes rather than personal property
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taxes when, among other things, “[t]he home is affixed to a permanent foundation.” Ohio

Rev. Code § 4503.06(B). More specifically,

[A]n owner of a manufactured or mobile home that will be taxed as real

property pursuant to division (B) of section 4503.06 of the Revised Code

shall surrender the certificate of title to the auditor of the county containing

the taxing district in which the home is located.

Ohio Rev. Code § 4505.11(H)(1).

The Debtor does not dispute that his mobile home was treated as part of the real

property according to these statutes. Nor does he dispute that when he obtained the loan

to buy the property and mobile home, it was treated as such by the bank and that he

granted a mortgage which encumbered the mobile home and the real property. Rather, the

Debtor asserts that the county auditor erred by allowing the mobile home to be treated as

part of the real property because it was not affixed to the real property in the manner

required by the statute.

The bankruptcy court determined that based upon the Ohio statute, the Debtor’s

mobile home is part of the real estate. In In re Kroskie, 315 F.3d 644 (6th Cir. 2003), the

Sixth Circuit Court of Appeals conducted a similar analysis under Michigan law. The Sixth

Circuit noted “the general rule that a security interest in a fixture can be perfected through

a properly recorded mortgage on real estate does not govern where, as here, there is a

specific statute dealing with mobile home security interests.” Id. at 647. The Sixth Circuit

also quoted In re Bencker, 122 B.R. 506, 511 (Bankr. W.D. Mich. 1990) “[T]he specific

provisions of [the] Mobile Home Commission Act dictate how legal ownership is transferred,

and it governs over the more general provisions of the Uniform Commercial Code.”

Kroskie, 315 F.3d at 647.

In the present case, the mobile home lost its status as personal property when the

original owners surrendered the certificate of title to the county auditor and the mobile

home began to be treated as real property. The Ohio statute provides that once the

certificate of title is surrendered and the mobile home becomes part of the real property,

the only way the mobile home can regain its status as personal property is with the consent

of any secured parties. See Ohio Rev. Code § 4505.11(H)(4). Moreover, Ohio courts have

held that a failure to precisely follow the statute by a county auditor does not negate the
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mobile home becoming part of the real property by operation of law. See Synder v.

Hawkins, 2004 WL 4882 (Ohio Ct. App. Jan. 9, 2004).

In the present case, the original owners represented that the mobile home was

affixed to a permanent foundation and surrendered the certificate of title to the county

auditor. The Debtor sought and received a mortgage because the mobile home was part

of the real property. Accordingly, the Panel holds that the mobile home became part of the

real property by operation of the statute. This rationale, standing alone, justifies affirmance

of the bankruptcy court’s ruling. 

B.

Additionally, the bankruptcy court carefully considered the traditional fixture analysis,

set forth in Teaff v. Hewitt, 1 Ohio St. 511 (1853), and also determined that the mobile

home was affixed to the real property. Teaff discusses the common law standard

governing the determination of when personal property becomes a fixture: 

1st. Actual annexation to the realty, or something appurtenant thereto.

2d. Appropriation to the use or purpose of that part of the realty with which

it is connected.

3d. The intention of the party making the annexation, to make the article a

permanent accession to the freehold–this intention being inferred from the

nature of the article affixed, the relation and situation of the party making the

annexation, the structure and mode of annexation, and the purpose or use

for which the annexation has been made.

Id. at 530 (emphasis in original). Ohio courts have recognized a relaxation of the fixture

test in other contexts. See Cleveland Elec. Illum. Co. v. Cont’l Express, 733 N.E.2d 328

(Ohio Ct. of Common Pleas 1999) (utility pole and attached equipment); Masheter v.

Boehm, 295 N.E.2d 917 (Ohio App. 1973), rev’d on other grounds, 307 N.E.2d 533 (Ohio

1974) (machinery used to manufacture steel parts). 

The bankruptcy court analyzed the three prongs of the common law test. First,

although it might be slight, the mobile home is attached to the property, via the electrical

and plumbing. Second, there was a clear adaptation of the mobile home to the use and

enjoyment of the realty. The court noted that the realty would be of little or no use to the
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Debtor in the absence of the mobile home, and the Debtor would need to replace it with

another or similar structure if it were removed. Third, the original owners evidenced an

intention to annex the mobile home to the real property when they submitted the certificate

of title to the county auditor, thereby causing it to be taxed as real property. Further, the

Debtor also evidenced an intention for the mobile home to be treated as part of the real

property when he applied for and obtained a mortgage on the mobile home and the real

property. The bankruptcy court found that the mobile home took on such a character as

to inform other persons that the Debtor intended to make it a permanent part of the real

property.

The three prongs of the Teaff analysis are met. The bankruptcy court also correctly

determined that the mobile home is real property under Ohio common law.

V. CONCLUSION

The decision of the bankruptcy court is AFFIRMED.