* District Judge of the Western District of Louisiana,

sitting by designation.

1 United States Court of Appeals,

Fifth Circuit.

No. 94-60127.

In the Matter of HEARD FAMILY TRUCKING, INC., Debtor.

ORIX CREDIT ALLIANCE, INC., Appellee,

v.

HEARD FAMILY TRUCKING, INC., and J.C. Bell, Jr., Appellants.

Jan. 10, 1995.

Appeal from the United States District Court for the Southern

District of Mississippi.

Before SMITH and EMILIO M. GARZA, Circuit Judges, and STAGG,

District Judge. *

JERRY E. SMITH, Circuit Judge:

Heard Fam ily Trucking, Inc. ("Heard Family"), a chapter 7

debtor located in Mississippi, appeals the district court's ruling

that a creditor's lien on a Heard Family truck was perfected by the

issuance of an Alabama certificate of title. Heard Family argues

that, under Mississippi law, the exclusive means of perfe cting a

security intere st in a Mississippi vehicle is through a title

issued under that state's Motor Vehicle Titles Law. Concluding

that Mississippi law creates an exception for vehicles engaged in

interstat e commerce that are titled properly in other states, we

affirm.

I.

In March 1990, Heard Family, a Mississippi corporation with1 The record does not provide an answer to how and why the

Freightliner was titled in Alabama. Because these facts are not

critical to our decision here, we do not address them.

2 its principal place of business in that state, purchased a tractor

trailer truck (the "Freightliner") from Columbus White Sales, Inc.

("Columbus"). The sale was made by a conditional sales contract

note between Heard Family and Columbus, and the note was assigned

to appellee Orix Credit Alliance, Inc. ("Orix"), on the day of the

sale. Pursuant to the contract, Orix was granted a security

interest in the Freightliner. Soon thereafter, the Alabama

Department of Revenue issued a certificate of title for the

Freightliner. 1 In accordance with Alabama law, Orix's lien was

noted on the certificate; the title incorrectly listed Heard

Family's address as Kennedy, Alabama.

Heard Family business dealings took a downturn. By September

1991, it filed a bankruptcy petit ion under chapter 11, which

subsequently was converted to chapter 7. Meanwhile, Orix filed a

motion in the bankruptcy proceedings, seeking a lifting of the

automatic stay as to the Freightliner. Heard Family's trustee,

however, believed that the estate's i nterest in the truck was

superior to Orix's under the "strong-arm clause" of the Bankruptcy

Code. S ee 11 U.S.C. § 544 (1993). While disputing who was

entitled to t he proceeds, the parties nonetheless agreed to the

sale of the Freightliner. Upon sale, Heard Family's trustee

deposited the proceeds, pending a determination of the validity of

Orix's lien.

The bankruptcy court held a hearing and co ncluded that Orix3

did not have a perfected security interest in the Freightliner.

The court read M ISS .C ODE A NN . § 63-21-43 (1989) to require a proper

Mississippi title in order to perfect a security interest in the

Freightliner. Because the Freightliner did not have a Mississippi

title, the bankruptcy court ruled that the trustee's judicial lien

was superior, and the trustee was entitled to the proceeds of the

sale.

On appeal, the district court rev ersed, holding that

Mississippi law does not require the Freightlin er, as a vehicle

engaged in interstate commerce, to have a Mississippi title. See

M ISS .C OD E A NN . § 63-21-11(d) (1989). As the court found that the

provisions of the Motor Vehicle Titles chapter did not apply, the

Mississippi perfection provisions of its Uniform Commercial Code,

M ISS .C ODE A NN

. § 75-9-101 et seq. (1981 & Supp.1994) ("UCC"),

controlled. Under § 75-9-103(2), an interest perfected in another

state by issuance of a title remains perfected until a Mississippi

title is issued or the out-of-state title is surrendered. Since

neither predicate event had occurred here, the court held that

Orix's security interest remains in effect, and its interest in the

proceeds of the sale of the Freightli ner is superior to those of

the trustee.

II.

A.

We first examine whe ther we have jurisdiction over this

appeal. Under 28 U.S.C. § 158(a) (1993), the district court has

jurisdiction to hear appeals from "final judgm ents, orders, and4

decrees" issued by the bankruptcy court. Under 28 U.S.C. § 158(d),

the court of appeals has juri sdiction over the "final decisions,

judgments, orders, and decrees" issued by the district court under

either § 158(a) or (b). The Supreme Court has defined a "final

judgment" as used in 28 U.S.C. § 1291 as a decision that "ends the

litigation on the merits and leaves nothing for the court to do but

execute the judgment." F irestone Tire & Rubber Co. v. Risjord, 449

U.S. 368, 373-74, 101 S.Ct. 669, 673, 66 L.Ed.2d 571 (1981)

(citations omitted).

The bankruptcy court's decision on the validity of Orix's

security interest was but a small part of the ongoing bankruptcy

proceedings. This context, however, does not automatically divest

us of jurisdiction. The rule for appeals in bankruptcy cases is

necessarily more flexible than is the tradi tional rule under 28

U.S.C. § 1291. Accordingly, we have stated that "an order which

ends a discrete judicial unit in the larger case concludes a

bankruptcy proceeding and is a final judgment for the purposes of

section 158(d)." England v. FDIC (In re England), 975 F.2d 1168,

1171-72 (5th Cir.1992). We have tended to define such discrete

units as coterminous with adversary proceedings. Louisiana World

Exposition, Inc. v. Federal Ins. Co. (In re Louisiana World

Exposition, Inc.), 832 F.2d 1391, 1396 (5th Cir.1987).

Furthermore, we have held that a bankruptcy court's recognition of

a creditor's security interest was such a final order. S ee ITT

Diversified Credit Corp. v. Lift & Equip. Serv., Inc. (In re Lift

& Equipment Service, Inc.), 816 F.2d 1013, 1016 (5th Cir.), reh'g2 Orix also had security interests in two other trucks

purchased by Heard Family. Apparently the validity of these

interests was not contested, so any further involvement of Orix

would be limited to receipt of its property.

5 on other grounds, 819 F.2d 546 (5th Cir.1987).

Here, the review of the district court's decision is proper,

as it disposes of a discrete unit within a larger cas e. The

bankruptcy and district courts determ ined the narrow question of

entitlement to the proceeds from the sale of the Freightliner. The

rulings at issue settle all questions concerning that sale and

eliminate Orix fr om the proceedings. 2 A ruling by this court in

favor of either party leaves no thing for the lower court to do

except the ministerial task of directing payment of the proceeds.

Accordingly, the order in question is final, and we have appellate

jurisdiction.

B.

The district court held that a Mis sissippi certificate of

title was not necessary to perfect Orix's security interest in the

Freightliner, because Mississippi law provides an exception from

the state's title requirements for vehicles engaged in interstate

commerce. In reviewing the district court's affirmance of the

bankruptcy court's findings o f fact, we strictly apply a clearly

erroneous standard to the bankruptcy co urt's findings. P erkins

Coie v. Sadkin (In re Sadkin), 36 F.3d 473, 475 (5th Cir.1994) (per

curiam). We review conclusions of law de novo. Id.

The Mississippi Motor Vehicle Titles Law, M ISS .C ODE A NN

. § 63-

21-1 et seq. (1989 & Supp.1994), controls issuance of Mississippi6

certificates of title for automobiles and t he perfection of

security interests in those vehicles. Most security interests for

Mississippi vehicles are perfected under M ISS .C ODE A NN

. § 63-21-43.

This section provides that:

(1) Unless excepted by section 63-21-41, a security interest

in a vehicle of a type which a certificate of title is

required is not va lid against creditors of the owner or

subsequent transferees or lienholde rs of the vehicle unless

perfected as provided in this chapter.

(2) A security interest is perfected by the delivery to the

comptroller of the existing certificate of title, if any, an

application for a certificate of title containing the name and

address of the lienholder and the date of his security

agreement, and the required fee.

(3) If a vehicle is subject to a security interest when

brought into this state, the validity of the security interest

is determined by the law of the jurisdiction where the vehicle

was when the security interest attached, subject to the

following:

(a) If the parties understood at the time t he security

interest attached that the vehicle would be kept in this state

and it was brought into this state within thirty (30) days

thereafter for purposes other than transportation through this

state, the validity of the security interest in this state is

determined by the law of this state.

Moreover, § 63-21-55 state s that "the method provided in this

chapter of perfecting and giving notice of security interests

subject to this chapter is exclusive."

Not every vehicle physically within the state of Mississippi,

however, need be titled in the state. Mississippi law recognizes

numerous exceptions. The relevant exception here, provided by §

63-21-11(d), states that "[n]o certificate of title need be

obtained for: ... a vehicle regularly engaged in the interstate

transportation of persons or property for which a currently

effective certificate of title has been issued in another state."7

Here, the district court found that the Freightliner engaged

in interstate traffic, and the Alabama certificate was valid. It

relied upon the testimony of Sam Heard, Jr., the president and sole

stockholder of Heard Family, who testified to the bankruptcy court

that the Freightliner made deliveries to Alabama, California, and

Florida. Moreover, there existed a certificate of title issued by

the State of Alabama, and the court found that there was no

evidence that it was invalid. This finding is not clearly

erroneous.

Heard Family's main l egal argument is that Mississippi

precedent mandates that the exclusive me ans of perfecting a

security interest in a motor veh icle is through the Mississippi

Motor Vehicle Titles Law. It argues, therefore, that the district

court erred in applying the UCC's perfection provisions.

As it forthrightly admitted at oral argument, Heard Family's

assertion hinges pred ominately on one case, M emphis Bank & Trust

Co. v. Pate, 362 So.2d 1245 (Miss.1978), which involved a truck

pu rchased in Tennessee, where a lienholder perfected a security

interest. The truck, however, was sold at a sheriff's sale in

Tennessee to a Mississippi resident, who re-sold the truck to a

third party in his state. The lienholder later attempted to

enforce its security interest, relying upon the conflicts of laws

provision of Mississippi's version of the UCC. The Mississippi

Supreme Court, however, held that t he Mississippi Motor Vehicle

Titles Law was the exclusive means for protecting the security

interest. I d. at 1248. Since no Mississippi title existed, the8

security interest was not perfected under state law. I d. at 1248-

49.

Heard Family's reliance upon Pate is misplaced. The district

court in this case did apply the Mississippi Motor Vehicle Titles

Law when it looked to § 63-21- 11(d). Under that section, a

Mississippi title is not necess ary for vehicles engaged in

interstate commerce that have valid out-of-state titles.

No such exception applied in Pate. Here, this exception makes

the chapter and its perfection requirements inapplicable, as they

apply only to "vehicles of a type which a certificate of title is

required...." § 63-21-43(1). Moreover, the exclusivity provisions

of § 63-21-55 is itself limited to those security interests

"subject to this chapter."

Heard Family makes a corollary argument that § 63-21-11(d)

does not apply, because the Alabama title was not "cu rrently

effective," as required by that section, as the address on the

title certificate was incorrect. Heard Family cites two sections

of Alabama's Uniform Certificate of Title and Antithe ft Act,

A LA .C O DE § 32-8-1 et seq. (1994), to support this argument. The

first, § 32-8-35(a), requires that "[t]he application for the first

certificate of title

... shall contain: ... [t]he name, current

residence and mailing address of the owner...." The second, § 32-

8-39(a), requires that "[e]ach certificate of title issued by the

department shall contain (1) [t]he date issued; [and] (2) [t]he

name and current address of the owner...."

A certificate of title in Alabama does not become invalid3 This section, in relevant part, states:

(a) The Department shall suspend or revoke a

Certificate of Title, subject to the appeal provisions

of Chapter 2A of Title 40, when authorized by any other

provision of law, or if it finds:

1. The Certificate of Title was fraudulently

procured or erroneously issued; or

2. The vehicle has been scrapped, dismantled or

destroyed.

(b) suspension or revocation of a Certificate of Title

does not, in itself, affect the validity of a security

interest noted on it....

4 The purpose behind requiring the notation of a lien on the

face of a certificate of title is to provide notice to third

9 simply because the owner's address changes or is incorrect; no

section of Alabama's law mandates such a result. Alabama law does

require a title holder to notify the state within thirty days when

he changes address. § 32-8-2(1). No explicit penalty is provided,

however. B ut see § 32-8-13(2) (mandating that willful violation to

mail or deliver title within ten days after time set in chapter is

a misdemeanor). Moreover, Alabama law makes it a felony to use a

"false or fictitious name or address

... in an applic ation for a

certificate of title." § 32-8-12(4). It provides a means to

revoke erroneously or fraudulently issued titles. § 32-8-49. 3

By implicatio n, because the law creates a mechanism to

invalidate titles, the title must be valid until that process is

completed. Notably, Alabama's law also protects the validity of a

creditor's security interest even upon the suspension or revocation

of title. I d. This provision prevents debtors from defeating a

creditor's interests by means of the debtor's wrongdoing. 4parties. The invalidity of the debtor's address does not

diminish the value of notice of the security interest. See,

e.g., Yampolsky v. White Motor Credit Corp. (In re Angier), 684

F.2d 397, 399 (6th Cir.1982).

10 As the security interest provisions of the Motor Vehicle

Titles chapter did not apply to Freightliner because of M ISS .C ODE

A NN

. § 63-11(d), the district court properly looked to the

provisions of the UCC a s codified at M I SS .C ODE A NN

. § 75-9-101 et

seq. The UCC states in relevant part:

(2) Certificate of Title.

(a) This subsection applies to goods covered by a certificate

of title issued u nder a statute of this state or of another

jurisdiction under the law of which indication of a security

interest on the certificate is required as a condition of

perfection.

(b) Except as otherwise p rovided in this subsection,

perfection and the eff ect of perfection or nonperfection of

the security interest are governed by the law (including the

conflict of laws r ules) of the jurisdiction issuing the

certificate until four (4) months after the goods are removed

from that jurisdiction and thereafter until the good s are registered in another jurisdiction, but in any event not

beyond surrender of the certificate....

§ 75-9-103(2).

Here, Alabama law governs the perfection of the security

interest, because it is sued the certificate of title. Under

Alabama law, as Heard Family concedes, a security interest in an

automobile is perfected by having a valid certificate of title

reflecting the existence of the lien and the name of the

lienholder. S ee A LA .C ODE § 32-8-61. The certificate in question

did both. Further, the Freightliner had not yet been registered in

Mississippi, and the security interest therefore continued to be in

effect. In sum, we hold that the security interest was perfected11

and remained so.

III.

Orix has requested sa nctions under F E D .R.A PP .P. 38 and our

local rules. Because we find this appeal was not frivolous, that

request is DENIED. Based upon the findings and legal conclusions

discussed above, the judgment of the district court is AFFIRMED.