Royal v. Bank of America

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
In re
LAURIE LEE REEL,
Debtor.
RANDY L. ROYAL, Trustee of the
Bankruptcy Estate of Laurie L. Reel,
Plaintiff,
v.
BANK OF AMERICA,
Defendant.
)
)
) 	Case No. 03-21834
) 	CHAPTER 7
)
)
)
)
)
)
) 	Adv. No. 04-2065
)
)
)
)
DECISION ON MOTIONS FOR SUMMARY JUDGMENT
On April 7,2005, the Plaintiff/Trustee's Complaint to Determine Extent of Lien came
before the court for a hearing on the parties' cross motions for summary judgment. 	The
parties agree there is no disputed issue of material fact and summary judgment is appropriate
as a matter of law.
Jurisdiction
The court has jurisdiction over this adversaryproceedingpursuantto 28 U.S.C. §§ 157
and 1334. This is a core proceeding within the definition of28 U.S.c. § 157(b)(2)(K). The
motions are brought under Fed. R. Civ. P. 56, made applicable in adversary proceedings by
Fed. R. Bankr. P. 7056.
Case 04-02065 Doc 25 Filed 06/07/05 Entered 06/07/05 11:13:34 Desc Correct
Image Page 1 of 5

Findinl:s of Fact
The Debtor, Laurie Reel, filed her voluntary chapter 7 petition in this court on
September 15, 2003. 	At the time of filing, the Debtor lived in Powell, Wyoming. 	The
plaintiff, Randy Royal, is the trustee of the estate.
On May 13, 2003, the Debtor executed a Consumer Credit Sales Agreement, Security
Agreement and Disclosure Statement to finance the purchase of a used 1997 Sundowner 7-
horse trailer (Trailer) from Nichols RV World (Nichols), located in Tulsa, Oklahoma. The
contract was assigned by Nichols to the defendant, Bank of America (BofA). At the time,
the Debtor resided in Owasso, Oklahoma.
Nichols had previously acquired the Trailer from Cache Performance Horses LLC
(Cache) located in Colorado. 	The trailer was a titled vehicle in Colorado, and Cache was
listed as the owner on the Colorado title. 	In October 2002, Cache assigned the title to
Nichols. On May 15,2003, Nichols, as a dealer, reassigned the Colorado title to the Debtor.
No title listing the Debtor as the owner of the trailer exists, and Nichols did not provide the
Colorado title to the Debtor.
On June 10,2003, BofA filed a VCC financing statement with the county clerk of
Oklahoma County, Oklahoma. 	On January 5, 2004, BofA repossessed the trailer in
Louisiana. This action followed.
2
Case 04-02065 Doc 25 Filed 06/07/05 Entered 06/07/05 11:13:34 Desc Correct
Image Page 2 of 5

Conclusions of Law
The Plaintiff contends BofA does not have a perfected security interest in the trailer
because BofA's lien is not recorded on a Colorado or Oklahoma title. Presumably, he seeks
to avoid the lien through 11 U.S.C. § 544(a).
Both Colorado and Oklahoma have enacted Article 9 of the Uniform Commercial
Code (UCC). Colo. Rev. Stat. §§ 4-9-101 through 4-9-710 (2004); Okla. Stat. Ann. tit. 12A,
§§ 1-9-101 through 1-9-710 (West 2001). 	Article 9 applies to a transaction that creates a
security interest in personal property. Colo. Rev. Stat. § 4-9-1 09( 1) (2004); Okla. Stat. Ann.
tit. 12A, § 1-9-109(1) (West 2001).
Under § 9-301 (1) of the VCC, "while a debtor is located in a jurisdiction, the local law
of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the
priority of a security interest in collateral." An individual debtor's location is the individual's
principal residence. Colo. Rev. Stat. § 4-9-307(b)(I) (2004); Okla. Stat. Ann. tit. 12A, § 1-9-
307(b)(1) (West 2001). Because the Debtor purchased the trailer in Oklahoma and resided
in Oklahoma at the time, Oklahoma law is applicable to the transaction.
Under Oklahoma's Vehicle License and Registration Act, the owner of every vehicle
in the state must possess a certificate of title. Okla. Stat. Ann. tit. 47, § 1105B (Thompson
West 2005). To perfect a security interest, a lien must be recorded on the certificate oftitle
to the vehicle. Okla. Stat. Ann. tit. 47, § 1110A (Thompson West 2005). However, under
3
Case 04-02065 Doc 25 Filed 06/07/05 Entered 06/07/05 11:13:34 Desc Correct
Image Page 3 of 5

Oklahoma law, a vehicle does not include trailers, except travel trailers and rental trailers.
Consequently, the horse Trailer in this case is not a titled vehicle in Oklahoma.
To perfect the security interest in the Trailer, BofA was required to perfect in
accordance with the UCC, specifically Okla. Stat. Ann. tit. 12A, §§ 1-9-31O(a) & 	1-9-
501(a)(2) which require filing in the office of the county clerk of Oklahoma County. BofA
properly filed its financing statement on June 10,2003, and has a perfected security interest
in the trailer under Oklahoma law.
However, the Plaintiff argues that the provisions of Article 9 found in § 9-303 of both
states' statutes control. That section provides:
Law governing perfection and priority of security interests in goods
covered by a certificate of title.
(a) This section applies to goods covered by a certificate of title, even
if there is no other relationship between the jurisdiction under whose
certificate of title the goods are covered and the goods of the debtor.
(b) 	Goods become covered by a certificate of title when a valid
application for the certificate of title and the applicable fee are delivered to the
appropriate authority. Goods cease to be covered by a certificate of title at the
earlier of the time the certificate of title ceases to be effective under the law of
the issuing jurisdiction or the time the goods become covered subsequently by
a certificate of title issued by another jurisdiction.
(c) The local law of the jurisdiction under whose certificate of title the
goods 	are 	covered 	governs 	perfection, 	the 	effect 	of 	perfection 	or
nonperfection, and the priority of a security interest in goods covered by a
certificate of title from the time the goods become covered by the certificate
of title until the goods cease to be covered by the certificate of title.
4
Case 04-02065 Doc 25 Filed 06/07/05 Entered 06/07/05 11:13:34 Desc Correct
Image Page 4 of 5

The plaintiff contends the Trailer is goods covered by a certificate of title under § 9-
303(a) because a Colorado certificate of title was issued in Colorado; that under § 9-303( c),
Colorado law governs perfection of BofA's security interest; and therefore, BofA was
required to perfect its lien by notation on a Colorado or Oklahoma certificate of title.
The court believes the plaintiff misreads § 9-303. Under Oklahoma law, the Trailer
is not goods covered by a certificate of title. 	The Colorado title ceased to be effective
pursuant to § 9-303 (b) when the Trailer was sold to the Oklahoma dealer and was moved
to Oklahoma. 	Colorado does not require registration and a certificate of title for a motor
vehicle or owner not located in Colorado, and Colorado's certificate-of-title law does not
govern the transaction.
Conclusion
For the reasons stated, BofA has a valid, perfected security interest in the Trailer. The
court will issue a summary judgment in favor of BofA on the complaint.
DATED this £ 	day of June, 2005.
Service to:
Randy Royal
John Patton
By the Court
~MCNIFFUnited States Bankruptcy Judge
5
Case 04-02065 Doc 25 Filed 06/07/05 Entered 06/07/05 11:13:34 Desc Correct
Image Page 5 of 5