United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

 Nos. 01-2026/01-2028/01-2029

___________

In re: MBA Poultry, L.L.C., *

 *

Debtor. *

________________________ *

 *

Dapec, Inc., *

 *

Appellant, *

 * Appeals from the United States

v. * District Court for the

 * District of Nebraska.

Small Business Administration, U.S., *

 *

Defendant/Appellee, *

 *

City of Tecumseh, *

 *

Interested Party, *

 *

The Money Store; Bird Watchers, *

L.L.C., *

 *

Interested Parties/Appellees. *

___________

No. 01-2480

___________
1

The Honorable Charles B. Kornmann, United States District Judge for the

District of South Dakota, sitting by designation.

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In re: MBA Poultry, L.L.C., *

 *

Debtor. *

______________________ *

 *

Dapec, Inc., *

 *

Appellee, *

 *

v. *

 *

Small Business Administration, U.S., *

 *

Defendant, *

 *

City of Tecumseh, *

 *

Interested Party/Appellant, *

 *

The Money Store; Bird Watchers, *

L.L.C., *

 *

Interested Parties/Appellees. *

___________

Submitted: February 15, 2002

Filed: May 30, 2002 

___________

Before McMILLIAN and RILEY, Circuit Judges, and KORNMANN,1

 District Judge.

___________
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RILEY, Circuit Judge.

These appeals arise out of the Chapter 11 bankruptcy of MBA Poultry, Inc.

(MBA Poultry). At the time it declared bankruptcy, MBA Poultry owed debts to The

Money Store (Money Store), the United States Small Business Administration (SBA),

Dapec, Inc. (Dapec), and the City of Tecumseh, Nebraska (Tecumseh), as well as to

other creditors who are not parties to these appeals. The Money Store and the SBA

claim interests in advances made under two loan agreements, Dapec claims an interest

in construction materials it furnished to MBA Poultry, and Tecumseh is trying to

collect unpaid sewer and water bills. On appeal, we must determine whether the

bankruptcy court was correct in determining the relative priorities of the claims of

these parties. We affirm in part and reverse in part.

I. BACKGROUND

The debtor, MBA Poultry, is the former owner of a chicken processing plant

in Tecumseh, Nebraska. When MBA Poultry purchased the plant from the Campbell

Soup Company on June 16, 1998, it obtained financing from the Money Store. The

Money Store made two loans to MBA Poultry on the date of the purchase. The first

loan (the "A" loan) was a promissory note in the amount of $840,000, payable over

a period of thirty years. The second loan (the "B" loan) was a promissory note for

$973,000, payable over a period of one year.

The "A" loan and the "B" loan were each secured by a separate deed of trust

filed in Johnson County, Nebraska, on June 17, 1998. In addition, as authorized by

Nebraska's statutes on construction liens, a "notice of commencement" of renovations

to the plant was also filed in Johnson County on June 17, 1998. See Neb. Rev. Stat.

§ 52-145. The notice of commencement was filed a few minutes after the Money

Store recorded its trust deeds.
2

In September 1998, the Money Store entered into an agreement with Dapec,

subordinating its security interest to Dapec's interest in the goods and fixtures sold

by Dapec to MBA Poultry. Dapec did not file the subordination agreement until

February 5, 1999, after MBA Poultry had assigned its interest to the SBA. Dapec

does not rely on the subordination agreement in its dispute with the SBA.

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The Money Store began disbursing money under the two loans the day the

promissory notes were signed. On June 16, 1998, the Money Store disbursed

$382,556 of the "A" loan and $642,515 of the "B" loan. The balances of both loans

were dispensed in installments, beginning on July 1, 1998, and ending on December

11, 1998.

MBA Poultry obtained additional financing from Heller Financial, Inc.

(Heller). Heller's loan and security interest were executed on October 29, 1998, more

than two months after Heller filed a financing statement with the Johnson County

Clerk. Heller's financing statement covered, among other things, all of MBA

Poultry's personal property, "whether now owned or existing or hereafter acquired or

arising." From the appellate record, it is unclear how much Heller loaned MBA

Poultry. When the bankruptcy petition was filed, MBA Poultry owed Heller

$2,149,948.

MBA Poultry's business did not generate enough revenue to pay off the "B"

loan in the one-year repayment period. Instead, MBA Poultry paid off the "B" loan

by arranging a $1,000,000 loan from the Nebraska Economic Development

Corporation (NEDCO). The NEDCO loan was secured by a deed of trust filed in

Johnson County on December 16, 1998. MBA Poultry's president and CEO, Mark

Haskins, also gave a personal guarantee for the loan. In January 1998, NEDCO

provided the money to repay the "B" loan by issuing debentures guaranteed by the

SBA. As part of this transaction, the Money Store assigned the "B" loan and the trust

deed securing it to the SBA.2
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Shortly after purchasing the plant, MBA Poultry began renovations by

installing an "air-chill" system. MBA Poultry bought the air-chill system from Dapec

for $709,000. On August 31, 1998, MBA Poultry gave Dapec a security interest in

"all goods and fixtures" it purchased from Dapec, including "renewals, additions, or

replacements thereto." Dapec claims it later provided additional materials worth

$12,000. Dapec did not file financing statements reflecting its security interest until

November 1998. On November 9, Dapec recorded a financing statement with the

Nebraska Secretary of State. On November 13, Dapec recorded a financing statement

in Johnson County. Both financing statements referred to "all goods or fixtures"

which MBA Poultry purchased from Dapec. Dapec filed a construction lien for

$721,000 plus interest on January 22, 1999.

MBA Poultry filed for Chapter 11 bankruptcy on January 25, 2000. On

February 17, 2000, the bankruptcy court entered a final order giving Heller a superpriority interest in MBA Poultry's personal property and authorizing the sale of the

"DAPEC Air Chill Line." Heller assigned its claim in bankruptcy to Bird Watchers,

L.L.C., which then purchased all of MBA Poultry's real and personal property at

auction for $4,800,000. The sale was approved by the bankruptcy court on June 7,

2000.

After the sale was approved, the bankruptcy court had to determine priority

among MBA Poultry's creditors. With the exception of Dapec, the creditors agreed

on priority in the following order: (1) Johnson County, (2) City of Tecumseh, (3) the

Money Store, and (4) American National Bank. These creditors also agreed that

either Dapec or the SBA should occupy the fifth priority position. 

Dapec refused to join the agreement on priority. Instead, it claimed that its

construction lien has priority, to some extent, over the liens of the Money Store and

the SBA. Dapec raised two arguments in support of this claim. First, it argued that

its construction lien dates back to June 17, 1998, when the notice of commencement
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was filed, and that it trumps any advances made after that date. Second, Dapec

argued that the frame of the air-chill line – a stainless steel "superstructure" – is a

fixture, and that its perfected security interest in the superstructure trumps the security

interest held by the SBA.

The bankruptcy court rejected both of these arguments, finding that Dapec's

construction lien did not attach before the Money Store made its cash advances and

that the superstructure is not a fixture. The bankruptcy court then entered an order

allowing the bankruptcy proceeds to be distributed in accordance with its rulings on

these two issues. The district court affirmed all three of these decisions, but did not

reach the merits of the fixture issue. Instead, the district court held that Dapec waived

its fixture claim by failing to object to the bankruptcy court's February 17, 2000 final

order.

The bankruptcy court also had to settle an issue of priority between Dapec and

the City of Tecumseh. On January 19, 2000, Tecumseh certified MBA Poultry's

delinquent sewer and water bills to the Johnson County Clerk. On January 25, 2000,

when it declared bankruptcy, MBA Poultry owed Tecumseh $32,796.06 for sewer

service and $31,028.57 for water service. The bankruptcy court held these unpaid

bills were special assessments which automatically took priority over Dapec's

construction lien.

The district court reversed the bankruptcy court's decision on this issue,

holding that Tecumseh was not entitled to treat its sewer and water liens like special

assessments with automatic priority over Dapec's construction lien. The district court

remanded the case to bankruptcy court for a determination of whether Tecumseh's

liens have priority if they are not treated like special assessments.

Dapec and Tecumseh now appeal the decisions of the district court. In its

appeals, Dapec asserts that its construction lien and its security interest in the
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superstructure have priority over the deeds of trust held by the Money Store and the

SBA. Tecumseh, in its appeal, asserts that MBA Poultry's sewer and water bills are

special assessments with automatic priority over Dapec's claims.

II. DISCUSSION

In a bankruptcy appeal, this court sits as a second court of review and applies

the same standards of review as the district court. In re Cedar Shore Resort, Inc., 235

F.3d 375, 379 (8th Cir. 2000). Like the district court, we review the bankruptcy

court's findings of fact for clear error and its conclusions of law de novo. Id.

A. Priority Under Nebraska’s Construction Lien Statutes

The first issue on appeal pits Dapec's construction lien against the deeds of

trust the Money Store took to secure the "A" loan and the "B" loan. The deed of trust

for the "A" loan is still held by the Money Store, while the deed of trust for the "B"

loan has been assigned to the SBA.

Under Nebraska law, as a general rule, "a construction lien has priority over

subsequent advances made under a prior recorded security interest if the subsequent

advances are made with knowledge that the lien has attached." Neb. Rev. Stat. § 52-

139(2). In order to obtain priority under this statute, Dapec must show that the

Money Store made its cash advances with knowledge that Dapec's construction lien

had attached. The bankruptcy court found that the Money Store did not know about

Dapec's construction lien until after December 11, 1998, when it finished making

future advances under the "A" and "B" loans.

In an attempt to overcome this finding, Dapec relies on the "notice of

commencement" filed on June 17, 1998. Under Nebraska law, "[i]f a lien is recorded

while a notice of commencement is effective as to the improvement in connection

with which the lien arises, the lien attaches as of the time the notice is recorded."

Neb. Rev. Stat. § 52-137(2). Dapec argues that since section 52-137(2) relates its lien
3

Dapec also claims its liens might have priority under a Nebraska statute on

mortgages. See Neb. Rev. Stat. § 76-238.01. However, Dapec waived this argument

by failing to raise it in the bankruptcy court. We therefore decline to address it.

4

In 1999, the Nebraska Legislature adopted a revised version of Article 9 of the

Uniform Commercial Code, with an operative date of July 1, 2001. 1999 Neb. Laws

ch. 550. The relevant events in this case all took place before that date.

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back to June 17, 1998, when the notice of commencement was recorded, it also

imputes knowledge of the lien to the Money Store as of that date.

Dapec's argument fails because the relevant statute – section 52-139(2) –

requires actual knowledge of a competing lien. "In the absence of anything to the

contrary, statutory language is to be given its plain and ordinary meaning."

Rodriguez v. Monfort, Inc., 635 N.W.2d 439, 445 (Neb. 2001). Under section 52-

139(2), the priority of a construction lien does not turn on imputed knowledge that

a lien has attached or the knowledge that a lien might attach. It turns, rather, on the

lender's "knowledge that the lien has attached." See Neb. Rev. Stat. § 52-139(2). In

its ordinary use, the term "knowledge" means being "cognizant, conscious, or aware

of something," Webster's Third New International Dictionary 1252 (1993), and we

see no reason why the Nebraska Legislature would have intended a different meaning

here. As explained above, the Money Store did not actually know about Dapec's

construction lien when it was making advances. Accordingly, under the construction

lien statutes, Dapec's construction lien is subordinate to the deeds of trust filed by the

Money Store.3

B. The Fixture Issue

Under certain circumstances, Nebraska law gives a perfected security interest

in a fixture priority over the conflicting interest of an encumbrancer of the related real

estate. See Neb. U.C.C. § 9-313(4) [Operative until July 1, 2001].4

 A fixture is a

chattel which is capable of existing separate and apart from a parcel of real property,
5

The Money Store has not taken a position on this issue, presumably because

of the subordination agreement it entered into with Dapec. See supra note 2.

6

Since this case is a "core" bankruptcy proceeding, see 11 U.S.C.

§ 157(b)(2)(K), we do not use the standard of review provided by state law.

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but which has become a more or less permanent part of the real estate. See Pick v.

Fordyce Coop. Credit Ass'n, 408 N.W.2d 248, 255 (Neb. 1987) (citation omitted).

Dapec argues that its security interest in the stainless steel superstructure has priority

over the trust deed held by the SBA because the superstructure is a fixture.5

The district court did not reach the merits of this argument, finding instead that

Dapec waived the argument by failing to object to the bankruptcy court's February 17,

2000 final order. Interpretation of the bankruptcy court's order presents a question

of law which we review de novo. See Brady v. McAllister, 101 F.3d 1165, 1168 (6th

Cir. 1996). The final order of February 17, 2000, created a super-priority interest in

certain personal property, including MBA Poultry's "overhead conveyor." However,

it is not obvious to us that the bankruptcy court meant the term "overhead conveyor"

to include the superstructure. In the purchase orders for the air-chill system, MBA

Poultry and Dapec distinguished the components of the conveyor from the

superstructure. Perhaps more important, the bankruptcy court apparently did not

believe that Dapec had waived the issue, because it ruled on the merits of Dapec's

motion. Under these circumstances, we find that the fixture issue was not waived,

and we review the bankruptcy court's decision on its merits.

The bankruptcy court's determination that the superstructure is not a fixture

was a finding of fact. See Washington Metro. Area Transit Auth. v. Precision Small

Engines, 227 F.3d 224, 227 (4th Cir. 2000) (per curiam); First Wis. Nat'l Bank of

Milwaukee v. Fed. Land Bank of St. Paul, 849 F.2d 284, 287 (7th Cir. 1988). As

such, it may be reversed only if it was clearly erroneous. Fed. R. Bankr. P. 8013;

First Wis. Nat'l Bank, 849 F.2d at 287.6
Willemain v. Kivitz, 764 F.2d 1019, 1022 (4th Cir. 1985).

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Under Nebraska law, a court must look to three factors in determining whether

personal property has become a fixture. These factors are:

(1) whether the article or articles are annexed to the realty, or something

appurtenant thereto; (2) whether the article or articles have been

appropriated to the use or purpose of that part of the realty with which

it is or they are connected; and (3) whether the party making the

annexation intended to make the article or articles a permanent

accession to the freehold.

Fed. Land Bank of Omaha v. Swanson, 438 N.W.2d 765, 767-68 (Neb. 1989)

(citation omitted). The first two factors, annexation and appropriation to the use of

the realty, have value primarily as evidence of the owner's intent, which is generally

regarded as the most important factor. N. Natural Gas Co. v. State Bd. of

Equalization, 443 N.W.2d 249, 257 (Neb. 1989).

One piece of evidence before the bankruptcy court was the affidavit of Mark

Haskins (Haskins), the president and CEO of MBA Poultry. In his affidavit, Haskins

states that although the superstructure is "bolted to the floor or ceiling," the bolts can

be taken out, and the superstructure "can be removed from the premises with no

damage to the equipment or to the premises." Haskins also states that he "always

understood that the equipment could be removed at any time, without much difficulty

or any damage to either the machinery or building." According to Haskins, "it was

never [his] intention to have any of the equipment become a permanent part of or

accession to the . . . premises." 

The president of Dapec, Peter Goffe (Goffe), signed an affidavit that to some

extent conflicts with the affidavit of Haskins. In Goffe's affidavit, he states that it

took approximately seven weeks of work, averaging sixty-five hours a week, to
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complete the superstructure and the rest of the air-chill system. The entire system, he

says, "was custom designed and constructed in order to be integrated into the plant."

Goffe avers that the "ceiling of the air chill rooms is laid upon and is supported by the

support superstructure." According to Goffe, the components of the superstructure

are "welded together and affixed to the building," and "cannot be removed and reused

in any other location or otherwise broken down as reusable component parts."

The bankruptcy record also includes color photographs of the superstructure.

The photos support much of Goffe's affidavit. The photos show the superstructure

being constructed in a large room with walls of concrete block. The room appears to

be approximately sixteen feet high, twenty feet wide, and at least thirty-two feet long.

The superstructure, which is composed of stainless steel beams, fills the dimensions

of the room. At least five pairs of beams, spaced approximately eight feet apart, run

vertically from the floor almost to the ceiling. Each pair of vertical beams is

connected by four horizontal beams. The highest level of these horizontal beams

spans the tops of the vertical beams, and the other levels run successively lower in

intervals of about four feet. The horizontal beams are reinforced in the center of the

room by approximately four-foot long vertical beams. These shorter beams run

vertically between the horizontal beams, from the topmost beams straight down, from

one beam to the next, and from the lowest beams to the floor. Although it is clear that

most of the joints of the superstructure are welded together, it is not clear whether

they all are, or whether a few of them are bolted together instead.

The record is inconclusive as to whether, as Goffe claims, the ceiling of the

processing plant has been "laid upon" the superstructure. The photographs, which

were taken during construction of the superstructure, show a gap between the top of

the superstructure and the ceiling. According to Dapec, the ceiling was lowered after

the photographs were taken, and it now rests on the ceiling. The appellees have not

disputed this claim.
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In analyzing the affidavits and the photographs, the bankruptcy court made

three main points. First, it noted that the superstructure was only bolted down to the

floor of the plant and not permanently attached to the walls or ceiling. Second, while

the bankruptcy court noted that the superstructure was specifically designed for use

in MBA Poultry's chicken processing plant, it observed that the building itself could

be used for other purposes if the superstructure were removed. Third, the bankruptcy

court relied on Haskins's affidavit to show that the parties did not intend the

superstructure to be a fixture. In summary, the bankruptcy court found, "[i]t can be

reasonably inferred from the evidence of the use, purpose, and method of construction

of the superstructure that the parties intended it to be separate and distinct from the

real estate."

Reviewing the bankruptcy court's decision, the first factor we address is the

manner in which the superstructure is affixed to the real estate. In analyzing this

factor, the bankruptcy court concentrated on the fact that the superstructure is only

bolted down. In their briefs, the parties argue about the significance of this fact.

Under Nebraska case law, it is possible for an item that is merely bolted down

to become a fixture. The SBA cites Swanson, 438 N.W.2d at 768, in which the

Nebraska Supreme Court held that two grain bins were not fixtures, where they were

merely bolted down to concrete slabs and were capable of being removed without any

significant difficulty. In other cases, however, the Nebraska Supreme Court has

found items to be fixtures even though they were only bolted down. For example, in

Tillotson v. Stephens, 237 N.W.2d 108, 109 (Neb. 1975), the court treated another

grain bin as a fixture, where the bin "was anchored to a concrete base and became an

integral part" of the grain elevator to which it was connected. Similarly, in Oliver v.

Lansing, 80 N.W. 829, 831 (Neb. 1899), the court upheld a trial court's finding that

opera chairs in a theater were fixtures, where the chairs had been "specially adapted"

to the theater and "affixed thereto by screws." These cases counsel us not to put too
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much weight on the fact that the superstructure was only bolted to the floor of the

processing plant.

In evaluating the superstructure's annexation to the real estate, we think it is

more useful to examine how difficult it would be to remove the superstructure from

the plant. An article is more likely to be a fixture when "removal of the article will

injure the realty or will injure the article itself." See N. Natural Gas, 443 N.W.2d at

257-58. The affidavits submitted to the bankruptcy court conflict on this issue. The

photographs in the record, however, resolve the issue decidedly in Dapec's favor.

Looking at the photos, we can see no way in which the superstructure can be removed

without causing substantial damage either to the plant, or to the superstructure itself,

or both. For all practical purposes, the superstructure is part of the processing plant,

and this fact weighs heavily in favor of finding that it is a fixture.

The second factor – appropriation to the use of the realty – also points strongly

towards the conclusion that the superstructure is a fixture. Like the opera chairs in

Oliver, the superstructure was specifically designed for use in MBA Poultry's

processing plant. And, like the grain bin in Tillotson, the superstructure was

integrated into the processing plant during several weeks of construction. The

bankruptcy court discounted these facts, because, in its view, the real estate could be

used for other purposes. The Nebraska Supreme Court, however, has not looked to

the full range of purposes to which real estate might be applied, but rather to "the use

to which [it] is applied." N. Natural Gas, 443 N.W.2d at 259 (emphasis added). The

real estate in this case was being used as a chicken processing plant, and Bird

Watchers, which purchased the plant in the bankruptcy sale, planned to continue that

use. Under these circumstances, the superstructure was clearly appropriated to the

use of the realty.

Finally, we believe MBA Poultry intended the superstructure to be a permanent

feature of its processing plant. As the bankruptcy court observed, the principal
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evidence against this conclusion is the affidavit of Haskins, MBA Poultry's president

and CEO, who claims he had no such intent. Haskins, however, was not a

disinterested party. He personally guaranteed the $1,000,000 NEDCO loan that was

financed by the SBA, and he has a strong financial interest in seeing the SBA repaid

from the bankruptcy estate.

The Nebraska Supreme Court has indicated that, to be trustworthy, evidence

of intent should come primarily from objective sources, such as "the nature of the

articles affixed, the relation and situation of the party making the annexation, the

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

annexation has been made." N. Natural Gas, 443 N.W.2d at 257; see also Pick, 408

N.W.2d at 255. For reasons stated above, we believe these factors point inescapably

toward an intention on the part of MBA Poultry to make the superstructure a

permanent part of its plant.

In short, the evidence plainly shows that the stainless steel superstructure is a

fixture. The bankruptcy court's finding to the contrary was clearly erroneous.

Accordingly, we remand the case for a determination of priority between Dapec's

security interest in the superstructure and the security interest held by the SBA.

C. Priority of Sewer and Water Bills

Tecumseh asserts that its liens for MBA Poultry's unpaid sewer and water bills

have priority over Dapec's construction lien. Under Nebraska law,

All special assessments, regularly assessed and levied as provided by

law, shall be a lien on the real estate on which assessed, and shall take

priority over all other encumbrances and liens thereon except the first

lien of general taxes under section 77-203.

Neb. Rev. Stat. § 77-209. According to Tecumseh, its sewer and water bills have

priority because its ordinances authorize a delinquent sewer or water bill "to be
7

Special assessments differ from taxes generally in that they are directed at

property which has received special benefits from public improvements.

See NEBCO, Inc. v. Bd. of Equalization of City of Lincoln, 547 N.W.2d 499, 503

(Neb. 1996). Tecumseh does not argue that it is permitted to treat sewer and water

bills like first liens for general taxes. See Neb. Rev. Stat. § 77-203 and § 77-208.

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collected as a special tax in the manner provided by law." Tecumseh City Code, §§ 3-

121, 3-212.

Under Nebraska law, "[s]ewer use charges are not special assessments."

Rutherford v. City of Omaha, 160 N.W.2d 223, 228 (Neb. 1968). Tecumseh concedes

this point, but argues Nebraska law allows a municipality to treat such charges as if

they were special assessments.7

Tecumseh's argument rests ultimately on two Nebraska statutes. First,

Nebraska allows a city of the second class, such as Tecumseh, to collect delinquent

sewer charges "in the same manner as other municipal taxes are certified, assessed,

collected and returned." Neb. Rev. Stat. § 18-503. Second, Nebraska also permits

cities of the second class to provide by ordinance for the collection of water charges

and taxes. Neb. Rev. Stat. § 17-538. Neither of these statutes specifically permits a

municipality to treat unpaid utility bills like special assessments.

Because they lack such provisions, the statutes cited by Tecumseh do not make

unpaid sewer and water bills the equivalents of special assessments. In Nebraska, any

statutory authorization to levy special assessments must be strictly construed against

the municipality. Foote Clinic, Inc. v. City of Hastings, 580 N.W.2d 81, 84 (Neb.

1998). Although section 18-503 allows a municipality to collect sewer bills in the

way it collects "other municipal taxes," it says nothing in particular about levying or

collecting special assessments. Section 17-538, which authorizes the collection of

water bills, says nothing at all about special assessment procedures. Construing these
8

MBA Poultry's plant was apparently not in an extension district where special

assessments might have been authorized by law. See Neb. Rev. Stat. §§ 19-2401 –

19-2407; Matzke v. City of Seward, 226 N.W.2d 340, 344-45 (Neb. 1975), overruled

on other grounds, First Assembly of God Church v. City of Scottsbluff, 279 N.W.2d

126, 129-30 (Neb. 1979).

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statutes strictly against Tecumseh, as we must, we hold that they do not give

automatic priority to Tecumseh's sewer and water bills.8

While Nebraska law does not give MBA Poultry's unpaid sewer and water bills

automatic priority, those bills may still be liens. See Neb. Rev. Stat. §§ 17-538, 17-

925.01. Dapec does not contest the district court's holding that the sewer and water

bills are liens. As liens, the unpaid sewer and water bills may or may not have

priority over Dapec's construction lien under Nebraska's general rules governing lien

priority. Thus, the district court correctly ordered the case remanded to the

bankruptcy court for a new determination of priority.

III. CONCLUSION

We agree with the bankruptcy court and the district court that Nebraska's

construction lien statutes do not give Dapec's construction lien priority over the

security interests held by the Money Store and the SBA. Unlike the district court, we

conclude the bankruptcy court clearly erred in finding that the stainless steel

superstructure of MBA Poultry's air-chill line is not a fixture. We agree with the

district court that the bankruptcy court committed a legal error when it gave

Tecumseh's unpaid sewer and water bills automatic priority over Dapec's security

interest. 

We affirm the judgment of the district court in Case No. 01-2026, in which the

district court approved the bankruptcy court's disposition of the construction lien

issue. However, we reverse the judgment of the district court in Case No. 01-2028.

Instead, we hold that the superstructure is a fixture, and we remand the case for a
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determination of priority between Dapec's security interest in the superstructure and

the security interest held by the SBA. In accordance with these two rulings, we

affirm in part, and reverse in part, the judgment of the district court in Case No. 01-

2029, which upheld the bankruptcy court's decision to allow disposition of proceeds

under its rulings on the construction lien and fixture issues. Finally, we affirm the

judgment of the district court in Case No. 01-2480, and, like the district court, we

remand that case for a new determination of priority between Dapec's construction

lien and the unpaid sewer and water bills owed to Tecumseh.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.