United States Bankruptcy Appellate Panel

FOR THE EIGHTH CIRCUIT

_______________

No. 03-6096EA

________________

In re: *

Henry Earl Renaud and *

Opal Minnie Renaud *

*

Debtors. *

*

*

M. Randy Rice, Trustee *

* Appeal from the United States

Plaintiff - Appellee, * Bankruptcy Court for the Eastern

* District of Arkansas

v. *

*

Simmons First Bank of Searcy, *

*

Defendant - Appellant. *

_____

Submitted: April 21, 2004

Filed: April 30, 2004 

_____

Before SCHERMER, FEDERMAN, and VENTERS, Bankruptcy Judges.

_____

VENTERS, Bankruptcy Judge.
1

 The Honorable Audrey R. Evans, United States Bankruptcy Judge for the

Eastern and Western Districts of Arkansas.

This is an appeal from two rulings of the bankruptcy court1

 holding that

Simmons First Bank of Searcy (“Simmons Bank”) holds unperfected liens on Henry

and Opal Renaud’s (“Debtors”) 2001 Polaris ATV and mobile home. The issues on

appeal are twofold: (1) whether a security interest in an ATV may be perfected under

Arkansas’ Uniform Commercial Code when that interest was not noted on the ATV’s

certificate of title, and (2) whether the Debtors’ mobile home was transformed from

personal to real property when the Debtors affixed it to their land, such that a security

interest in the mobile home could be perfected by a real estate mortgage. For the

reasons stated below, we affirm the rulings of the bankruptcy court.

I. STANDARD OF REVIEW

“Findings of fact, whether based on oral or documentary evidence, shall not be

set aside unless clearly erroneous, and due regard shall be given to the opportunity

of the bankruptcy court to judge the credibility of the witnesses.” Fed. R. Bankr. P.

8013. Findings of fact are reviewed for clear error, and legal conclusions are

reviewed de novo. Blackwell v. Lurie (In re Popkin & Stern), 223 F.3d 764, 765 (8th

Cir. 2000); Official Committee of Unsecured Creditors v. Farmland Industries, Inc.,

296 B.R. 188, 192 (B.A.P. 8th Cir. 2003). Matters committed to the bankruptcy

court’s discretion will be reversed only if the court has abused its discretion. C.T.

Development Corp. v. Barnes (In re Oxford Development, Ltd.), 67 F.3d 683, 685 (8th

Cir. 1995); City of Sioux City, Iowa v. Midland Marina, Inc. (In re Midland Marina,

Inc.), 259 B.R. 683, 686 (B.A.P. 8th Cir. 2001).

II. BACKGROUND

In 2001, the Debtors borrowed money from Simmons Bank to purchase a

Polaris ATV. That same year, Opal Renaud signed a consolidation note with

Simmons Bank refinancing the ATV and a 1994 Ford truck. To secure its loan,
3

Simmons Bank noted its lien on the Ford truck’s certificate of title, and had Opal

execute a security agreement in favor of Simmons Bank that covered the ATV.

Simmons Bank filed a UCC-1 financing statement with the Arkansas Secretary of

State in an effort to perfect its interest in the ATV. It acknowledged that it never

noted its interest on the ATV’s certificate of title.

Also in 2001, the Debtors refinanced their purchase of a Spirit mobile home,

along with the real property on which it is affixed, by borrowing $33,100.83 from

Simmons Bank. The previous lienholder on the mobile home released its lien noted

on the certificate of title for the mobile home, and Simmons Bank placed the clean

title in the Debtors’ loan file. At no time did Simmons Bank note its interest on the

certificate of title; rather, Simmons Bank recorded a mortgage on the real property

covering “all existing and future improvements, structures, fixtures, and replacements

that may now, or at any time in the future, be part of the real estate.” The Debtors

acknowledged their intent to mortgage both the real property and the mobile home to

secure the debt.

III. DISCUSSION

Simmons Bank argues that the bankruptcy court committed an error of law

when it ruled that the only method of perfecting a security interest in an ATV and a

mobile home was to have that interest noted on the property’s certificate of title.

Simmons Bank acknowledges that a creditor may perfect its interest using the

certificate of title laws, but Simmons Bank also contends that it has the option to

perfect an interest in the ATV under the Uniform Commercial Code. Furthermore,

Simmons Bank argues that the Debtors’ mobile home lost its identity as personal

property when it became affixed to the Debtors’ real property and that Simmons

Bank’s mortgage on the real property therefore encompassed the mobile home. 
2

 That statute provides:

Nothing in this chapter shall be construed to require an all-terrain

vehicle to be registered as a motor vehicle, motorcycle, or

motor-driven cycle for operation on the public streets and highways.

Ark. Code Ann. § 27-21-103.

Chapter 21 of Title 27 of the Arkansas Code governs ATVs. The purpose

of the Chapter is “to regulate the use of recreational all-terrain vehicles by

restricting their use on the public streets and highways .... to ensure the safety and

general welfare of the citizens ... by limiting the situations where all-terrain

vehicles are permitted to be used in a dangerous and unsafe fashion.” § 27-21-

101.

4

A. The ATV

The bankruptcy court held that an ATV is a motor vehicle subject to Arkansas’

certificate of title laws. Simmons Bank argues that Arkansas law does not require

ATVs to be registered as motor vehicles for operation on the public highways; thus,

a notation on the ATV’s certificate of title is not the exclusive method to perfect a

lien. Ark. Code Ann. § 27-21-103.2

 

The Bank confuses the certificate of title and perfection laws with the statutes

regulating the operation of ATVs on the public highways. In fact, under Arkansas

law, not all ATVs are required to be registered as a motor vehicle for operation on the

public highways, but “all owners of [ATVs] that are not otherwise required to be

registered by law shall register them with the Director of the Department of Finance

and Administration within thirty (30) calendar days of acquiring them.” § 27-20-

202(a). The Director of the Department of Finance then issues “a certificate of title

to the owner of [the ATV].” § 27-20-205. Accordingly, while an ATV does not have

to be registered as a “motor vehicle, motorcycle, or motor driven cycle for operation

on the public streets and highways,” § 27-21-103, nothing in the statutes exempts

ATVs from the certificate of title laws as stated by § 27-20-205. By not requiring

ATVs to be registered as motor vehicles for operation on the public highways, the
5

statute exempts ATVs from, inter alia, certain equipment requirements. See e.g., §

27-20-104 (requiring motorcycles to have working horns, taillights, etc.).

Under Arkansas law, an ATV is subject to the certificate of title laws because

all owners are required to register an ATV with the Department of Finance and

Administration, which then issues a certificate of title. Because ATVs are covered

by certificate of title laws, the provisions of the Uniform Commercial Code do not

apply. See § 4-9-311(a)(2) (stating that “the filing of a financing statement is not

necessary or effective to perfect a security interest in property subject to: ... (2) any

other laws of this state which provide for central filing of security interests or which

require indication on a certificate of title to property of such interest....”). See also

Union Planters Bank, N.A. v. Burns (In re Gaylord Grain L.L.C.), 306 B.R. 624

(holding that “the filing provisions of the Missouri Uniform Commercial Code have

no application to motor vehicles and perfection of liens therein” and sanctioning the

appellant bank for filing a frivolous appeal). Therefore, the bankruptcy court did not

commit any error of law in concluding that Simmons Bank was an unperfected

creditor in the Debtors’ ATV and that the Chapter 7 Trustee was able to avoid

Simmons Bank’s lien pursuant to 11 U.S.C. § 544. 

B. The Mobile Home

With respect to the mobile home, Simmons Bank argues that the bankruptcy

court erred inasmuch as it held that the only way to perfect a security interest in a

mobile home is to note that interest on the certificate of title. Simmons Bank

contends that its mortgage on the real property encompassed the mobile home as soon

as the mobile home became permanently affixed to the real property. 

 The particular issue addressed by Simmons Bank is not new. Courts and

legislatures have struggled with the problems of classifying mobile homes that – in

their final stages – are every bit as much of the real property as a traditional brick and
3 The bankruptcy court found it unnecessary to decide the factual issue of

whether the Debtors’ mobile home had become a fixture that would be covered by

a real estate mortgage. However, for purposes of its analysis in resolving the legal

question before it, the court assumed that the mobile home in this case was

permanently affixed to the real property and was thus ostensibly covered as a

fixture under Simmons Bank’s mortgage.

6

mortar construction. The particular problem in this case, however, is not necessarily

a definition of when an item of personal property becomes annexed to the realty, but

rather one of perfecting a security interest in a mobile home and how to maintain that

perfection in light of the changing nature of the property from personal to real.3

There is no dispute that the Debtors’ mobile home is subject to registration

under Arkansas certificate of title laws. Ark. Code Ann. § 27-14-703 (“Every motor

vehicle ... and every mobile home shall be subject to the provisions of this chapter

....”). The fact that a mobile home is without wheels and designed as permanent

living quarters does not exempt owners of mobile homes from having to obtain a

certificate of title. See § 27-14-207(2) (defining a “mobile home” as “every house

trailer or other vehicle, with or without wheels, designed for use as living quarters,

either permanent or temporary, and, at the time of manufacture, capable of being

towed or otherwise transported or drawn upon a highway.”) (emphasis added). In an

apparent attempt to avoid the conundrum of when a mobile home is transmogrified

into a fixture or structure affixed to the realty, the Arkansas legislature has

established a bright-line rule – the time of manufacture – to determine whether a

mobile home is a mobile home or something else. Thus, it would appear that a house

trailer or other vehicle designed for use as living quarters and capable of being towed

or otherwise transported or drawn on a highway at the time of manufacture will

always be a mobile home subject to the certificate of title laws.

We can find no exception in Arkansas’s certificate of title laws that exempt

mobile homes if they are affixed to realty, and counsel for Simmons Bank has pointed
7

to no such exception. Cf. Ala. Code Ann. § 32-8-30(c) (providing a method for

cancelling the certificate of title on a mobile home when it is affixed to the realty

upon a showing that, inter alia, the secured party on the certificate of title has

released its lien). We should not provide an extra-statutory exception to Arkansas

law when the Arkansas legislature specifically made notation on the certificate of title

on a mobile home the exclusive method of perfecting an interest therein. Ark. Code

Ann. § 27-14-807(a) (“The methods provided in this subchapter of giving

constructive notice of a lien or encumbrance upon a registered vehicle shall be

exclusive except as to liens dependent upon possession.”). If Simmons Bank is

unhappy with the conclusion reached by the bankruptcy court, it should petition the

Arkansas legislature to change the certificate of title laws pertaining to mobile homes

affixed to realty. 

Accordingly, we affirm the rulings of the bankruptcy court.

______________