ELECTRONI C CITATI ON: 2006 FED App. 0005P (6th Cir.) File Name: 06b0005p.06

BANKRU PTCY APPELLATE P ANEL OF THE SIXTH CIRC UIT

In re : LAQU

ITA CURRY , ) ) Debtor. )

_____________________________________ ) ) TIDEWATER FI

NANCE COMPANY , ) ) Appellant, ) ) ) v. ) No. 05-8083 ) LAQUI TA CURRY, ) ) ) Appellee. ) )
Appeal from the United States Bankruptcy Court for the Southern District of Ohio, Western Division at Dayton

Case No. 05-36056 Argued : May 3, 2006 Decided and Filed: August 10, 2006
Befor e: GRE GG, PA RS ONS , an d W HIPP LE , Bankr uptcy Appellat e Panel Judg es.

____________________ COUNSEL
ARGUED: James R. Sh eeran, Chesapeake, Virg inia, for Appellant. Jeffrey R. McQuiston, SKELTON, McQUI STON, GOURNARIS & HENRY, Dayton, Ohio, for A ppellee. ON BRI EF: James R. Sheeran, Chesapeake, Virginia, f or Appellant. Jeffrey

R. McQuiston, SKELTO N , McQUISTON, GOURNARI S & HENRY , Day ton, Ohio, Sc ott G. Stout, Dayton, Ohio, f or Appellee.-2- ____________________ OPINION

____________________ JAMES D. GREGG, Bankruptcy Appellate Panel Judge. Tidewater Finance Com pany (“Tidewa ter”) ap peals the

bankrup tcy

court’s order de nyi ng its moti on to termi

nate the automatic stay to sell a repossessed motor vehicle and overruling its objection to confirmation of the chapter 13 plan prop osed by

Laqu ita Curry (“Debto r”) bas ed on th e plan’s “cram d own” tre atment of

its claim secure d by

the vehic le. The b ankruptc y c ourt reje cted Tide

water’ s argum ent that it s prepetitionrep oss ession of the Debtor’s vehi cle cha nged th e partie s’ respe ctive pr operty rights, thereby pr

ohibiting modificationand “cram down” of Tidewater’s secured c laim. For the reasons that follow, the bankruptcy court’s order is AFFI

RMED.
I. ISSUE ON APPEAL
Must a chapte r 13 debtor whose v ehicle h as been r epossess e d p repetition pay a se cured creditor the full redemption value otherwise required by state law to adequately

protect the secured

cr edito r’ s in

te re st a nd r eg ai n po sse ssi on o f th e v eh ic le ?
II. JURISDIC TION AND STANDARD OF REVIEW
The Bankruptcy

Appellate Panel of the Sixth Circuit has jurisdiction to decide this appe al. The United Sta

tes Dist rict Cour t f or the Sout

hern Dist rict of O hio has au

thorized a ppeals to this Panel and a fin al order

of the ba nkruptcy court ma y be appeale d as of ri ght purs uant to 28 U .S.C. § 15 8(a)(1 ). For p

urposes o f appea

l, a fina l order “ ends the l itigation on the me rit s and leave s nothing for the court to do but execute the judgment.” Midland Asphalt Corp. v. United States , 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989 ) (citations omitted). The bankruptcy court’s order denying relief f rom the a utomatic s tay

is a final , appealable order. Nat’l City Bank

v. Elliott (

In re Elliott) , 214 B.R . 148 , 149 (B.A.P. 6th Cir. 1997). The order confirming the De btor’s chapter 13 planover Tidewater’s objection is also a final order for purposes of appea l. See Schory &Sons, Inc. v. Franc is (In r

e Francis) , 273 B.R. 87, 89 (B .A.P. 6th Cir . 2002); First Union Mortgage Corp. v. Eubanks (

In re Eub anks) , 219 B.R. 468, 469 (B.A.P. 6th Cir. 1998).1 “Cram down” is a bankruptcy term used when a plan is con firm ed over a claim holder’s obje ction

. Kenneth N. Klee, All You Ever Wanted to Know About Cram Down Under the New Bankruptcy

Code , 53 Am. Bank

r. L. J. 133 (1979 ); Till v. SCS Credit Corp. , 541 U.S. 465, 468-69, 124 S. Ct. 1951, 1954 (2004) ( recog nizing the

“cramd own” opti on in a cha

pter 13 c ase that

is exercised “by providing

the creditor both a lien

securing the claim and a promise of future property distributions (such as

deferr ed cash payments) whose total ‘ value, as of the effective date of the plan,

. . . is n ot less tha n the allowed amount of such claim’”). Often, in such situations, a secur ed creditor’s claim is bifurc ated such that it is treated as secured to the extent of the value of the collater al, with the balance of the claim treated as an unsecured claim, see Americredit Fin. Servs.,

-3- Becaus e t he parties to this appeal have stipulated to the facts underly ing this dispute, the appeal present s only lega

l questions. A bankruptcy cour t’s conclusions of law are reviewed de novo. Adell v. John Richards Homes Bldg. Co. (In re John Richards Home Bldg. Co.) , 439 F.3d 248, 254 (6th Cir. 2 006); In re Downs , 103 F.3d 472, 476-77 (6th Cir. 1996). “De novo review means that the appellate court de termine s the law independently of the trial court’s determination.” Treinish v. Norwest

Bank Minn ., N.A. (

In re Per iandri) , 266 B.R. 651, 653 (B.A.P. 6th Cir. 2001).
III. FACTS
The underlying

facts are undisputed. On January 6, 2004, the Debtor purcha sed a 2000 Saturn SL from Jeff Wy ler Chevrolet , Inc . in Bata via, Ohio pursuant to the ter

ms of a Ret

ail Installment

Contract and Security A

greement (“Contra ct”) tha t obliga ted her t o pay $10,888.2 0 with annual in terest of 21.95% in 60 monthly installments. The vehicle was the collateral that secured the Debtor’s obligation under the Contra

ct. The Contract w as subseq uently assigne d to Tidewater and its security intere st was duly perfe cted.
After the Debtor defaulted on her required monthly payments, Tidewa

t e r lawful ly repossessed

the vehicle on May

25, 2005. The Debtor then filed her chapter 13 petition and plan and demanded

that Tidewater return the vehicle to her possession. As of the petition date, June 17, 2005, Tidewater

had not obtained

a Ce rtificate of Title to the vehicle or disposed of the vehicle. The accelerat ed balance owed pursuant to the Contract as of the filing of the chapter 13 petition was $10,718.83, which inc luded $10 ,008.88 in principa l, $300.95 inaccrue d intere st, $9.00 in late fee s, and $400.00 in repossession fees.
The Debtor d

id not rein state the Contract or redeem the vehicle under Ohio law in her plan. Rather, the Debtor proposed a “cram down.” 1 The plan valued the vehicle and Tidewater’s secure dInc. v. Nichols (In re Nichol s) , 440 F.3d 850 (6th Cir. 2006), notwithstanding that this would be impermissible under state law.

2 A commer

cial publ icati on co mmonly used to value vehicles. F ed. R. Evid. 802(17) and 902.

-4- claim at $6,700 and proposed to pay that amount with interest at 7.3%. The remainder of the balance owed under the Contract was treated as an unsec ured claim to be paid a9% distribution without interest

. As of the petition date, the NADA 2 retail value of the vehicle was $7,875 an d the tra de in value was $6,200.
Tidewater

filed a Motion to Te

rminate t he Automa

tic Stay (“Motion”) and ob

jected to confirmation

of the Debtor’s chapter 13 plan (“Objection”) . Both the Motion and the Objection were based on Tidewater’s argument that its prepetition repossession of the Debtor’s vehicle chang ed the parties’ property rig

hts in the vehicle. Tidewater asserted that its secured claim was not subject to modifica tion a nd “cram down.” The bankruptcy court rejected Tidewater’s ar guments, overruled its Objection, and denied its Motion. This timely appeal followed.
IV. DISCU SSION
Pursuant to Article 9 of the Uniform Commercial Code (“UCC”) as en ac ted by Ohio, Tidewater

lawfully reposse ssed the Debtor’s vehicle when she defaulted on her o bligations under the Contract. See Ohio Rev. Code Ann. § 1309.609. The Debtor then had the option of redeeming the vehicle by te

ndering fulfillment of

all obligations owed

under the Contract, including fees and repossession

costs. See Ohio Rev. C ode Ann. § 1309.623. While Tidewater concedes that under Ohio law the Debtor retained an interest in the vehicle a fter repos s ession, it argues that the competing interests of the Debtor and Tidewater in the vehicle were f ixed by Ohio law a

t the time of repossession. Tidewater further arg ues that the U

nited State s Supreme

Court’s ho lding in Butner

v. United States , 440 U.S. 48, 99 S. Ct. 914 (1979), requires that its rights be treated in bankruptc y uniformly with the tr

eatment t hat its rig hts would receiv e under Ohio UCC law. Tidewater frames its appeal as follows: “[T]his case is not an owner ship di spute - it is a uniform treatment and adequa te protection controversy .” (Appellant Br. at 8.) According to Tidewa ter, its possessory interest in the veh

icle is equal to the state law redemption value of $10,718.83, the full amount owed to it. Tidewater contends, therefore, that to ade quately protect its interest and regain possession of3 This sect ion of th e Ba nkruptcy Code, along with numerous others, was amended by the Bankruptcy

Abuse Pre vention and Consumer Protection Act of 2005 (“BAPCPA” or “the Act”) , effective October 17, 2005. Because the Debtor’s bankruptc y case w as filed

before the eff ective d ate of the Act, all references to the Ba nkruptcy Code in this opinion are to the pre -BAP CPA version

. See Bank ruptcy Abuse Pre

vention and Consumer Protection Act of 2005, Pub. L. No. 109-8, § 150 1(b)(1 ), 119 Stat. 23, 216 (stating that, unless otherwise provided, the amendments do not apply to cases c ommenced under title 11 before the effec tive date of the Act).

-5- the vehicle, the Debtor’ s sole option is to exerc ise her state law rig ht of red emption. A ccordin

g to Tidewater, the Debtor has no ability to “cram down” its claim through chapter 13. Contrary to Tidewater’s assertions, Butner does not di ctatethe resu lt Tidewa ter see ks. The bankruptcy

estate that is cre ate d upo n the filin g of a p etition consists of a ll lega l and equi

table interest in proper ty held by the debtor a

t the time of filing, wherever that property is located and by whomever

it is held. 11 U.S.C. § 541(a). 3 When disput es over w hether property

is include d in

the estate arise, the bankr

uptcy court wil l determi

ne the sta tus and na

ture of the debtor ’s owner ship or interest in the disputed property under applicable non-bankruptcy law, often state law, as of the time the bankruptcy pe

tition was filed. Butner , 440 U.S. a t 54-55. If a d ebtor has an interest in the propert y under non-bankruptcy

law, the court must then determine whether the interest is included inthe estate utilizing federal bankruptcy law. Id. ; United States v. Whiting Pools, Inc. , 462 U.S. 198, 205, 103 S. Ct. 2309, 2313 (1983).

In Butner , the Supre

me Co urt consi d er ed wh et he r a se cu ri ty i nt er es t i n r ea l p ro pe rt y, inc luding rents and profits, should be governed by state or federal law. Although the Court recognized

th at Co ngress’ constitutional authority to establish “‘uniform Laws on the subject of Bankruptcies through

out the Un

ited State s’ would c learly encompa ss a feder

al statute defining the mortgagee’sinterest

in the re nts and pr ofits earned by

property in a ba

nkrupt estate,” it found

that Congre ss had not exercised its power to fashion such a rule. Butner , 440 U.S. at 54. The Court then

ex plain ed that, generally , “[p]roperty interests are created and defined by

state law” and that “[u] n less some fed

eral inte rest req uires a d iffere nt result, there is n

o reason why such inte rests sho uld be analyzed diffe

rently simply

because an interested

party is involved in a bankruptcy pr oceeding.” Id. at 55. The Court further explained

that “[u]nif

orm trea tment of pr

operty interest s by

both state and federa l courts w ithin a State se rves to r educe u ncerta inty , to discoura

ge for um shopping , and to-6-

prevent a party f rom receiving ‘a windfall mer ely by reason of the happenstance of bankruptcy .’” Id . (citation omitted).
Tidewater

argues that if the Debtor

bifurcates its claim and “crams down” its interest in the vehicle to anything less than the

full amount due under

the Contract, the Debtor will have obtained nonuniformtreatme

nt of her interest

. However, Butner require s that whe

n an actu al confl ict exists between state laws and bankruptcy laws enacted by

Congress, the state laws are suspended. Id. at 54 n.9 (citations omitted.) In thi s instanc e, the Oh io UCC rede

mption pro vision con flicts wit h the Bankruptcy

Code, and Tidewater’s argument that Ohio law governs fails.
The Bankruptcy

Code requires any

entity in “possession, custody, or control, during the case, of property that the truste e may use, sell, or lease under section 363” to deliver such proper ty to the trustee. 11 U.S.C. § 542(a). The Bankruptcy Code also permits a trustee to “use, sell, or lease . . . property of the

estate.” 11 U.S.C. § 363. Thus, if the vehicle is property of the estate, §§ 363 and 542(a) provide the Debtor with the right of possession. See 11 U.S.C. § 1303 (providing that “debtor shallhave, exclusive of the trustee, the rights and powers of a trustee under

sections 363(b), 363(d), 363(e), 363(f), and 363( l), of this title”); Whiting Pools, Inc. , 462 U.S. at 207 (“In effe ct, § 542(a) grants to the esta

te a posse ssory

interest in certa in proper ty o f the deb tor that w as not held by the debtor at the co mmenceme

nt o f re organ

ization pro ceeding s.”). F urther, a debtor is permitte d to modify the rights of holders of secured claims, other tha n those secured solely

by a secur ity i nterest inreal property

that is the debtor’s residence. See 11 U.S.C. § 1322(b)(2). Theref ore, the Ohio UCC law that requires the Debtor to rede em, by pay ing the f ull amount due under the accelerated Contra ct to regain possession of the vehicle, conflicts with the Ba nkruptcy Code.
The first analysis to be conduc ted under Butner, determination of o wnership rights u nde r non-bankruptcy

law, has been addressed by the Supreme Court in Whiting Pools. Inthat case, the IRS seized a chapter

11 debtor ’s perso nal prope rty pursuant to a tax levy

before the debtor filed hi s bankruptcy

petition. Although the IRS po s sessed th e proper ty, it had not b een sold. The I RS asserted that the b ankruptc

y e state wa s not entitled to possession of the property be cause the levy

was complete before the petition was filed. Therefor e, according to the I

RS, the debtor had n o interest in the property. Considering the interplay betwe en

the definition of the bankruptcy estate, 11 U.S.C. § 541 (a)(1) , and the t urnover provision s, 11 U.S.C. § 542(a) , the Cour t e xpla ined that4 We recog nize that th e Supreme

Court limite d applica

tion of its holding to

chapter 11 cases

. Whiting Pools , 462 U.S. at 208 n.1 7 . (“Section 542(a) also governs turnovers in liquidation and individual adjustment of debt proceedings under Chapters 7 a nd 13 of the Bankruptcy

Code . . . . Our analy sis in this case depends in part on the reorganization context in which the turnover is sought

. We express no view on the issue whether § 542 (a) ha s the same broad effect in . . . adjustment of debt proceedings.”). Howeve r, because the definition of the “estate” is broader in chapter 13 than inchapter 11, see 11 U.S.C. § 1 306, ther e is no mea

ningful distinctio n betwee n chapter 11 and chapter 13 cases insofar as the Whiti ng Pools holding is concerned. Numerous courts have applied the Whiti ng Pools analysis to chapter 13 cases. See, e.g. Tidewater F inance Co. v. Moffett (

In re Moffett) , 356 F.3d

518 (4 th Ci r. 200 4) (ci ting Whiti ng Pools in Chapter 13 context); Charles R. Hall Motors, Inc. v. Lewis (I

n re Lewis) , 137 F .3d 12 80, 12 85 (11 th Ci r. 199 8) (ci ting Whiti ng Pools in chapter 13 context); Nat’l City B ank v. El liott (I n re Elliott

) , 214 B.R. 148, 151-52 (B.A.P. 6th Cir. 1 997) (appl ying Whiti

ng Pools analysis to chapter

13 case); In re Robinson , 285 B.R. 732, 735 (Bankr. W.D. Okla. 2002) (concurring with other courts that have interpreted Whiting

Pools to apply ina chapte

r 13 conte xt); Sutton v. Ford Motor Credit Co. (In re Sutton) , 87 B.R. 46, 49 n.1 (Bankr. S.D. Ohio 1 988) (hol ding tha t Whiti ng Pools is equally applicable to c hapter 13 cases).

-7- “[a] ltho ugh these statutes could be read to li mit the est

ate to tho se ‘inter

ests of the

debtor in pr op er ty’ at the time

of the filing of the petition, we view them as a definition of what is included inthe estate, rather than as a limitation.” Wh i ting Pools , 462 U.S. at 203. Given the broad scope of the statute, the Court concluded that “§ 541(a )(1) is in tended to include i n the esta te any propert y made av ailable to the estate by other provisions of the Bankruptcy Code” and § 542(a) is such a provision. Id. at 205. While there are limitations on the reach o f § 54 2(a), the Court further explained that “none requires that the debtor hold a possessory interest in the property

at the commencement of the reorganization proce edings.” Id . at 206.
The Court then

examined the enfor

cement provisions

of the I nternal Revenue Code to determine whether ownership of the property was transferred t o the I RS upon seizur e. While it acknowledged

that § 542(a) may not apply if ownership

was transferred to the I

RS upon seizure, the Courtheld that the enforcement provisions of the I nternal Revenue Code do not provide for

transfer of ownership of the property until it is sold at a tax sale. Id

. at 210. Therefore, the seized propert y
was property of the

estate and subject to the turnover requirements of § 542(a). Id. at 211. 4 And in return, “[t]he [creditor], under § 363(e), remains entitled to adequate protection for its interests . . . . Section 542(a) simply require s the [creditor] to seek protec tion of its interest according to the congressionally

established bankruptcy

procedures . . . .” Id. at 211-12.-8-

The Supreme Court’s holding in Whi ting Pool s undercuts Tidewater’s argume nt. Once a debtor’s interest

in the re poss essed vehicl e is determined by state law, the rights and remedies provided to secur ed cred itors and chapter 13 debto rs by the Ba

nk ruptcy Code govern. Under the Bankruptcy

Code, Tidewat

er’s pos sessory

interest inthe vehic le is repl aced by its right to adequa

te protection. See Whiting

Pools , 462 U.S. a

t 207; TranSouth Fin. Corp. v. Sharon (In re Sharon) , 234 B.R. 676, 683 (B.A.P. 6t

h Cir. 1999). Tidewater attempts to distinguish Whiti ng Pools by asserting that the holdin g is limited to cases in which the IRS is the secured cr editor and seizure occurred under the I nternal Revenue Code. How ever, th e Court did not so constrain its holding. The Court specifica lly

stated, “ [w]e see no

reason w hy a differe nt result should obta

in when th e IRS is th e creditor.” Whiti

ng Pools , 462 U.S. at 209. Tidewater offers no persuasive re ason why the Whiting Pools holding i s not generally applicable to all secured

credito rs. A veh

icle rep ossessed

under Oh io law before commencement of a bankruptcy c ase, which has not been sold or otherwise disposed of, is propert y of the bankruptcy

estate. See In re Sharon , 234 B.R. at 682 (determining that “possession of the Debtor’s car

was par t of the bu ndle of r ights that bec ame ‘pr

operty of the es tate’”) ; Nat’l City Bank v. Elliott (

In re Ellio tt) , 214 B.R 1 48, 152 (B .A.P. 6th Cir. 1997) (stating that the vehicle was propert y of the estate, notwithstanding the fact that secure d creditor obtained reposses sio n title, because under Ohio law ownership does not transfe r until vehicle is sold).

In Elliott , the creditor repossessed the vehicle and, pursua ntto Ohio’s ve

rsion of th e UCC, obtained a “repossession title” in its name. Because the vehic le had not yet been

sold, the O hio UCC provided the debto rs with a s tatutory rig ht of redemption. The creditor argued tha t the statutory privi lege of redemption di d not confer upon the debtors any interest in the vehicle; instead the prepetitionrepossession entitled the credito r to a tra nsfer of ownersh ip pursua nt to Ohio Rev. Code Ann. § 4505.10(A). As such, according to the cr editor, the vehicle was not property of the estate.
The Bankruptcy

Appellate Panel, however, recog nized that “[u]nder Ohio law, a change of vehicle ownersh ip is not co nsummated

until the c ertific ate o f title is issued in the name of the purchaser.” In re Ellio tt , 214 B.R. at 150 (citingRockwell v. Thom as , 116 Ohi o App. 544, 189 N.E.2d 168 (1962)). The Panel further noted “[n]either possession nor title are alone determinative of whether an

interest constitutes property of the estate under § 541 . . . . ” Id . at 151 (citing, inter alia, In re Gunder , 8 B.R. 39 0, 392-93 (Bankr. S.D. Ohio 1980) and Jackson v. GMAC (

In re Jackson) , 142 B.R. 172 (Bankr. N.D. Ohio 1992)). Relying on the foregoing

principles and citing-9-

Whiting Pools , the Panel concluded, “[i]t is only after the disposition that the debtor loses all inter est inthe prope

rty and full o wnership

vests in a third party.” Id . at 152. A ccordin gly , the Pane l held that the vehicle was property of the estate and subject to turnover. Id. Here, Tidewater did not sell or dispose of t he Debto r’s vehicle. Nevertheless, Tidewater argues that the Bankruptcy Appellate Panel decisions in Sharon and Elliott are erroneous in that “they overlook the critical fact that the debtor lost the right to possess the vehicle unless he or she exercises the right to redeem it” as provided under state la w. (App e llant Br . at 15.) H owever , in accordancewith Whiti

ng Pools , § 542(a) grants to the estate a possessory interest in the repossessed collateral and, as discussed previously, to the e xtent Ohio law conflicts with the Bankruptcy Code, the Ohio statutory provisions are suspende d. Thus, the Debtor’ s bankrup tc y r ight to r egain possession of the vehicle is a result of federal law under § 542(a), not the Ohio redemption statute. Accordingly , the Debtor’s vehicle is property of her bankruptcy

estate.
Becau se the vehicle is pr ope rty of the De btor’s bankruptcy

estate, the automatic stay provisions of 11 U.S.C. § 36 2(a) apply

. In re Sharon , 234 B.R. at 682. However, at Tidewater’s insistence as a

secured creditor, the Debtor must provide adequa te protection

of Tidew ater’s i

nterest inthe property. See 11 U.S.C. § 363(e); Whiti ng Pools , 462 U.S. a

t 204; Volvo Commercial Fin. LLC v. Gasel

Transp. Lines, Inc. (In re Gasel Transp. Lines, Inc.) , 326 B.R. 683, 691 (B.A .P. 6th Cir. 2005) (G

regg , J., concu

rring) . Without cit

ing any authorit y, Ti dewate

r argu es that its repossession

confer red on it a “heigh tened int erest” in the collateral, the value of which exceedsits allowed secured claim and equals the amount necessar y to redee m the vehicle. Therefore, acc ording to Tidewater, adequate protection of its interest can be provided only by tender of

the full redemption value pursuant to state law. However, because disposition of the vehicle “is the cut off point of a Chap ter 13 debtor’s power to modify a secured creditor’s claim under § 1322( b)(2) of th e Bankr uptcy Code,” and Tidewater has not y et disposed of the vehicle, § 1322(b)(2) remains availab l e to the Debtor. See In re Elliott, 214 B.R. at 152-53 (rejecting cre ditor’s argument that debtor’s plan must provide f

or pay me nt in lump sum, as required by Ohio law, ba sed upon power to modify secured creditor’s claim). Just as the Debtor lost the right of possession to her vehicle prior to her chapter 13 petition and outside of bankruptcy c ould not have regained possession without redeeming the vehicle

through pay ment in full, the debtor in Whiti

ng Pools lost the right of possession by virtue of the IRS seizure prior to filing its bankruptcy petition and outside of ban kruptcy could not have5 This sect ion of the Inte rnal Reve nue Code provides t

hat: Any person whose property has been levied upon shall have the right to pay the amount due, together with the ex pe ns es of th e p ro ce ed in g, if

an y, to the Secretary

at any time prior

to the sale thereof, and upon such payment the Sec

retary shall restore such propert

y to him, and

all furth er proc eeding s in connection with the levy on suc h property shall ce ase from the time of such pay ment. 26 U.S.C. § 6337(a).

-10- regained possession except by tendering payment in full, much like redeeming the collateral under the UCC. See 26 U.S.C. § 6337(a). 5 However, despite the Internal Revenue Code’ s requirement of full payment of all oblig ations owed to regain possession, the Supreme Court’s opinion in Whiting Pools is conspic

uously si lent on any requir

ement that a debtor must make full pay ment in a reorganization

plan. Rather, in Whiti

ng Pools the Court held that bankruptcy law gives the debtor

a right of possessio n enforc eable

by turnover unde

r § 542(a) and the Bankruptcy Code replaces the protection

afforded to secured

creditors by possession with other rights such as adequate protection. Whiting Pools , 462 U.S. at 207. The Ohio UCC permits repossession and eventual sale of a debtor’s vehicle as the procedural mechanism to foreclose a nd satisfy a sec

urity intere s t. Contrar

y to Tidewater’s assertions, this proc edural r emedy does not c

hange the part ies’ substantiv e right s. Only the diminution of the value of the collateral is entitled to protection. Whiting Pools, 462 U.S. at 210- 11; In re Balderas , 328 B.R. 707, 720 (Bankr. W.D. Tex. 2005).

Insupport of its tenuous argument that pay ment of the full redemption val ue is the sole method to adequa

tely protect its interest, Tidewater relies upon the distinguishable decisions of the Eleventh Circuit Cou

rt of Appe als in Bell-Tel Fed. Credit Union v. Kalter (In re Kalter) , 292 F.3d 1350 (11th Cir. 2002) and Charles R. Hall Mo tors, Inc . v. Lewis ( In re Lewis

) , 137 F.3d

1280 (11th Cir. 1998). In Kalter and Le wis , apply ing Flo rida and

Alabama law resp ectively

, the Elev enth Circuit determined th at ownership of the vehicles immediately transferred to the creditors upon repossession; therefore, the debtor’s only interest in the veh

icle was a bare right of rede mption. In

re Kalter , 292 F.3d

at 1360; In re Lewis , 137 F.3d at 1284. Re lyin

g on stat e law, the Ele vent h Circuit held that turnover was inappropriate because the debtors’ chapter 13 plans failed to redeem their vehicles. In re Kalter , 292 F.3d at 1356; In re Lewis , 137 F.3d at 1285.
Tidewater’s reliance upon Kalter i s misplaced. Ohio law, unlike Florida law, does not provide for immediate transfer of full ownership until disposition, usually repossession sale, of the-11-

vehicle. As the Eleventh Circuit later recognized in Motors Acceptance Corp. v. Roz ier (I n re R ozier) , 376 F.3 d 13 23, 132 4 (1 1t h C ir. 200 4), th e re sul t i s go ver ned by ap pl ica bl e st ate law . In Rozier , the Eleventh Circuit certified the question of ownership to theGeorgia Supreme Court which held that, under Georgia law, ownership doe s not pass to the creditor upon repossession alone. Id. at 1324; Motors Acceptance Corp. v. Rozier , 597 S.E.2d 367, 368 (Ga. 2004). Consistent with the

a nsw er to its certified question, the Eleventh Circuit held that because ownership did not transfer upon repossession under Georgia law, the debtor’s vehicle was property of the estate. In re Rozier , 376 F.3d at 1324.

In Kalter , the Elev enth

Circuit Court of Appeals examined Florida’s UCC and certificate of tit le statute to

determine whethe

r a Flor ida debtor whose c ar is rep ossessed prepeti tion reta in s ownersh ip of the vehicle. Because the court found no lang uage in the UCC addressing title, transfer of title, or ownership of repossessed collateral, thereby restricting case law interpreting the statute, it concluded that the Florida UCC provided no guidance as to who o wns the ve hicle upon repossession. In re Kalter , 292 F.3d at 1354-56. However, the Eleventh Circuit he ld

that the Florida certi ficate of title statute, Fla. Stat. § 319.28, expressly mandated that owne rship transfers upo n repos session. The court relied upon languag e stating that a repossessing creditor ma y submit an affidavit “announcing the repossession as ‘pr oof of ownership.’” Id . at 1357-58.

Incontras t to Florid

a law, as noted by the c ourt in Sutton v. F ord Motor Cr

edit Co. ( In re Sutton) , 87 B.R. 46, 48 (Bankr. S.D. Ohio 1988), Ohio’s certificate of title statute, Ohio Rev. Code Ann. § 4505.10, explicitly refers to the Article 9 pr ovisions of the governing Ohio law. “Ohio Rev. Code § 4505.10 contemplates a ‘completion’ of the repossession

procedu re under state law , where in

a debtor’s rights to redeem . . . may be cut of f, befor e owner ship of a motor vehi cle is transferred by operation of law.” Id. Unlike Ohio’s certificate of title statute, Florida’s statute makes no r eference to Florida’s version of the UCC. The Kalter court lacked case law interpreting the Florida UCC as guidance. In re Kalter , 292 F.3d at 1356. In contrast, the

Sixth Circuit Bankruptcy Appellate Panel relied upon prior Ohio case law to interpret the applicable provisionsof the Ohio UCC. See In re El liott , 214 B.R. at 151. In Smith v. Acceleration Life Ins. Co. , 446 N.E.2d 855, 859 (Ohio App
. 1982), an Ohio appeals

court he ld that a d

ebtor’s insurabl e intere st

in collateral “is extinguished, at the earliest, by the e

xpiration of his ri g ht to reta in possess ion of the

collater al under [the righ t to-12-

rede em]. Only

at this poin

t in time is th e secur

ed cred itor-beneficiar

y in a posi tion to a ssert ful l control over the collateral and subject the value of the collateral to the pay

ment of the debt.”

Inaddition, because the Eleventh Circuit in Kalter rejec ted the Florida UCC as determinative of the issue, it dismissed several of the debtor’ s arguments. One of the rejected arg uments was that

a provision of the Florida UCC, Fla. Stat . § 679.504 (now Fla. Stat . § 679.617), established that ownersh ip of the repossessed collateral remained with the d ebtor be cause it stated that when the secured party sells the c ollatera

l to a purc

haser, “ all of the

debto r ’s rights therein” pass to the purchaser. Based on

the then broad definition of “debtor” in the Florida statute, the court concluded that the term “debtor,” as used in the statute, could encompass either the debtor or the creditor i n possession of the collateral. In re Kalter , 292 F.3d at 1354-55. However, the definition of debtor inboth the Florida UCC and the Ohio UCC has been amended to read a “person having an inter est, other than a sec urity inte

rest . . . .” The Official Comments make it clear that “[s]ecured parties a nd other lien holders are excluded from the definition of ‘debtor’ . . . .” Ohio Rev. Code Ann. § 1309.102; Fla. Stat. § 679.1021 (emphasis added). Because the purchaser of the collateral obtains ownersh ip of the collateral, it follows that this was one of the debtor’ s rights

at the time

the creditor sold it, mandating the conclusion that ownership does not transfer upon repossession alone

. Moreover, effective July 1, 2001, Ohio enacte d a new pr

ovision wh

ich clar ifies tha t the Ohio Certific ate of Title statute, Ohio Rev. Code Ann. § 4505.10, does not alter the substantive rights of a debtor and

a secured creditor in Ohio and is not determinative of the issues here. See Ohio Rev. Code Ann. § 1309.619. Section 1309.619, entitled “Transfer of record of le gal title,” recognizes that the debtor’s ownership does not cease until the vehicle is disposed of by the creditor. In per

tinent part, it states that the tra

nsfer of legal t itle to collateral to a secured party “is not of itself a disposition of collateral under this chapter and does not of itse lf relie ve the se cured pa

rty of its dutie s under th

is chapter.” Id . Clarifying the issue, the official comment states, “A secured party who has obtained . . . leg al title re

tains its du

ties . . . a nd the deb tor reta

ins its rightsas well.” Ohio Rev. Code Ann. § 1309.6 19 Official cmts. 2 (2000). Section 1309.619 was effective prior to the date of the repossession at issue, and there is no question that the Debtor retained owne rship of the vehicle.
Tidewater’s reliance upon Lewis is also misp laced. I n that ca se, the El eventh Cir cuit determined, notwithstanding the Alabama UCC effective in 1965, that Alabama continue d to rely-13-

on t he common law of conversion without reconciling the import of the Ala bam a UCC. Th e common law of conversion requires that upon a debtor ’s defa

ult, title a nd right of posses sion pass to the creditor. In re Lewis , 137 F.3d at 1283-84. The common law of conversion was not addressed in Elliott, and Ohio’s state courts have relied upon the UCC rather than c ommon law conversion.
Tidewater

also adva nces a F ourth Circ

uit Court of

Appeals case, in which it was a pa rty , in support of its arg uments. Tidewater Finance Co. v. Mof fett (I n re Moffe tt) , 356 F.3d 518 (4th Cir. 2 004). The facts in Moffett are simil ar to this c ase. Tide water r epossess ed the de

btor’s v ehicl e before the filing of her chap ter 13 petition. When the debtor demanded the vehicle be returned, Tidewater

responded by r

equesting relief from stay . Tidewater argued that its repossession stripped the debtor and the bankruptcy estat e of any inter

e st in the vehicle except bare legal title and an intangi ble right of

redemption. The Fourth Circuit recognized that the issue conc erning who holds legal ownership of the repossessed vehicle under Virg inia law was “significan t, as it determines whether Moffett had

a lega l as well a s an equit

able inte rest in the reposse ssed vehi cle that bec ame part of her bankruptcy

estate.” Id. at 523. Citi ng Whiting Pools , the Fourth Circuit then explained that “if Moffett retained

ownersh ip of the r epossess ed vehic le under

Virgini a law, then the vehic le would automatically bec ome part of her estate. I n such a ca se, there wou ld be no ne ed for he r to exercise her right of redemption in order to bring the vehicle within the estate.” Id . at 524 (citation omitted). However, because the debtor’s c hapter 13 plan proposed to exercise her right to re deem the vehicle

as provided for by

Virginia state law, the Fourth Circuit did not address and determine the issue of ownership of

the vehicle and whether it was necessar y for the debtor to exercise her right of redemption to bring the vehicle into the estate. Theref ore, contrary

to Tidewater ’s arg

ument, Moffett is not persuasive authority in the instant ca se.
Summ arizi ng, pursuant

to Ohio law, the Debtor in this case retained ownersh ip of her vehicle

no twithstanding repossession by Tidewa ter. Therefore, the Debtor’s ve hicle is property of

he r bankruptcy

estate and subject to turnover to her. The D ebtor may provide adequate protection as requested by T idewate

r throug h a plan in

which Tid

ewater is paid the value of

its collateral. See In re Howard

, 212 B.R. 864, 876 (Bankr. E.D. Tenn. 1997) (explaining that the value of collater al is “the source and

limit of the

secure d credit

ors’ rig ht to adeq uate protection”). Any

plan must satisfy the chapter 13 confirmation standards. As the Debtor is not surrende ring the vehicle, any

plan must provide that Tidewater retain its lien and that t

he value paid under the plan is not less than the-14-

allowe d amo unt of Tidewater’s claim. See 11 U.S.C. § 1325(a)(5). The amount of Tidewater’s allowed secure d claim

is determ ined by 11 U.S.C. § 5 06(a), w

hich prov ides that a claim is secured “to the extent of the value of such creditor’s interest in the estate’s intere st in such property . . . and is an u nsecure d cla im to the extent that the value of such creditor’s interest . . . is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuationand of the proposed disposition or use of such property . . . .” 11 U.S.C. § 506(a). The plan proposed by the D ebtor, and conf irmed by the bankr uptcy court, satisfies the requirements of 11 U.S.C. § 1325 for treatment of Tidewater’s allowed secur ed claim. Tidewater’s requested relief from stay to sell the vehicle and objection to confirmation are unwarranted.

V. CONCLUSION
The bankruptcy c ourt’s order deny ing Tidewater’s motion to terminat e the autom atic stay and overruling its objection to confirmation of the chapter 13 plan is AF FIRMED.