Allred v. Buttke (In re Buttke), Bankr. No. 10-10263
| Decision Date | 17 February 2012 |
| Docket Number | Bankr. No. 10-10263,Adv. No. 11-1015 |
| Parties | In re: PATRICK WILLIAM BUTTKE fdba Royal Snow Blowers SSN/ITIN xxx-xx-4090 and SHANA RUTH BUTTKE fka Shana Ruth Homrighausen SSN/ITIN xxx-xx-8349 Debtors. FORREST C. ALLRED Plaintiff v. WILLIAM C. BUTTKE Defendant. |
| Court | U.S. Bankruptcy Court — District of South Dakota |
The matter before the Court is Trustee-Plaintiff Forrest C. Allred's Motion for Summary Judgment regarding a lien claimed by Defendant William C. Buttke. This is a core proceeding under 28 U.S.C. § 157(b)(2). The Court enters these findings and conclusions pursuant to Fed.R.Bankr.P. 7052. For the reasons discussed below, the Court will grant Trustee-Plaintiff Allred's motion.
Patrick William Buttke and Shana Ruth Buttke ("Debtors") filed a chapter 7 petition in bankruptcy on November 23, 2010. On the petition date, Debtors owned a 2004 GMC Envoy ("the vehicle"), which they had purchased the month before using funds supplied by Defendant William C. Buttke ("William"). Both the certificate of title transferring the vehicle from the auto dealer to Debtors ("purchase certificate of title")and Debtors' application for a new title ("title application") indicate William held a lien on the vehicle. However, Debtors and William did not execute a separate document creating or conveying a security interest in the vehicle to William.
After the petition date, William took possession of the vehicle, and the vehicle is now titled in his name. Trustee-Plaintiff Forrest C. Allred ("Trustee Allred") commenced an adversary proceeding against William. By his complaint (doc. 1), Trustee Allred sought, inter alia, a judgment determining William did not have a valid lien on the vehicle and compelling him to turn over the vehicle or its value to the bankruptcy estate. Trustee Allred also asked the Court to order William to pay damages of $250.00 for William's alleged violation of the automatic stay when he took possession of the vehicle after the bankruptcy case was commenced.
William timely answered (doc. 5). He argued he did not violate the automatic stay because the vehicle was not listed on Debtors' schedules and because he had not been given notice of the case. William also claimed he had a valid lien on the vehicle securing the $9,500.00 he had given Debtors to purchase the vehicle.
Trustee Allred moved for summary judgment (doc. 10), asking the Court to declare William did not have a valid lien on the vehicle and William had violated the automatic stay. In his supporting brief (doc. 10-2), Trustee Allred argued that for William to have a perfected security interest in the vehicle on the petition date, S.D.C.L. § 57A-9-203 required him to have either a signed security agreement describing the vehicle or possession of the vehicle. Trustee Allred argued because William had neither, William did not have an enforceable security interest. Trustee Allred further argued, citing several cases, the recent revisions to Article 9 of the Uniform Commercial Code did not alter the requirement of a written securityagreement separate from a notation of the lien on the purchase certificate of title or the title application.
In his response (doc. 12) to Trustee Allred's motion for summary judgment, William claimed two disputed material facts: whether Debtors acknowledged his lien and whether he had notice of the bankruptcy filing. In his Statement of Material Facts Not in Dispute and Identification of Facts in Dispute (doc. 12-1), William listed three material facts in dispute:
The second and third items, however, are clearly issues of law. The first item is also an issue of law, because William has not identified any document creating or providing for his claimed security interest; he is relying on the "certificate of title transfer documents required by the [state]"1 and the title application that were authenticated by Debtor Patrick Buttke's signature2 and that acknowledge a lien held by William, two facts with which Trustee Allred does not quibble. In his brief, William argued S.D.C.L. § 57A-9-203(b) requires the debtor to have "authenticated a security agreement that provides a description of the collateral," in addition to some elements not in dispute. William argued the lien notations on the purchase certificate of title and the titleapplication constitute the necessary authenticated security agreement. As to the relief from stay issue, William argued he cannot be found in violation of the stay because he was not listed on the schedules as a creditor, the vehicle was not listed on the schedules as an asset of the estate, and he "had no notice of the filing."
Summary Judgment.
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Bankr.P. 7056 and Fed.R.Civ.P. 56(a). An issue of material fact is genuine if it has a real basis in the record. Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (quotes therein). A genuine issue of fact is material if it might affect the outcome of the case. Id. (quotes therein). The matter must be viewed in the light most favorable to the party opposing the motion. F.D.I.C. v. Bell, 106 F.3d 258, 263 (8th Cir. 1997); Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483, 1490 (8th Cir. 1992) (). Where motive and intent are at issue, disposition of the matter by summary judgment may be more difficult. Cf. Amerinet, 972 F.2d at 1490.
The movant meets his burden if he shows the record does not contain a genuine issue of material fact and he points out the part of the record that bears out his assertion. Handeen v. Lemaire, 112 F.3d 1339, 1346 (8th Cir. 1997) (). No defense to an insufficient showing is required. Adickes v. S.H. Kress & Co., 398 U.S. 144, 161 (1970) (citation therein); Handeen, 112 F.3d at 1346. If the movant meets his burden, however, the nonmovant, to defeat themotion, "must advance specific facts to create a genuine issue of material fact for trial." Bell, 106 F.3d at 263 (quoting Rolscreen Co. v. Pella Products of St. Louis, Inc., 64 F.3d 1202, 1211 (8th Cir. 1995)). The nonmovant must do more than show there is some metaphysical doubt; he must show he will be able to put on admissible evidence at trial proving his allegations. Bell, 106 F.3d at 263 ().
Security Interest in a Motor Vehicle.
In this adversary proceeding, the parties' principal dispute is whether the purchase certificate of title or Debtors' title application, which both acknowledge a lien held by William, constitute a security agreement. We look to the law in South Dakota to determine William's interest in the vehicle. Moon v. Anderson (In re Hixon), 387 F.3d 695, 700 (8th Cir. 2004) (cited in Checkett v. Sutton (In re Sutton), 365 B.R. 900, 904 (B.A.P. 8th Cir. 2007)).3
An "agreement" is the "bargain of the parties in fact, as found in their language or inferred from other circumstances[.]" S.D.C.L. § 57A-1-201(b)(3). A "security agreement" is "an agreement that creates or provides for a security interest." S.D.C.L. § 57A-9-102(a)(73). A "security interest" is "an interest in personal property . . . which secures payment or performance of an obligation." S.D.C.L. § 57A-1-201(b)(35) (in pertinent part).
For a security agreement to attach to collateral, value must have been given, the debtor must have acquired rights in the collateral or the power to transfer rights in the collateral to the secured party, and the debtor must have "authenticated a security agreement that provides a description of the collateral[.]" S.D.C.L. § 57A-9-203(b)(1), (2), and (3)(A). A creditor holding a security interest in a motor vehicle titled in South Dakota must perfect that interest according to South Dakota law. S.D.C.L. § 57A-9-303(c). In South Dakota, a lien on a motor vehicle is perfected when the lien is noted on the motor vehicle's certificate of title. S.D.C.L. §§ 32-3-39 and 41 and 57A-9-311(a)(2).4
No provision of S.D.C.L. chs. 32-3, 57A-1, or 57A-9 unequivocally states a security agreement covering a motor vehicle must exist separate from a lien notation on a certificate of title or on a title application. However, when the provisions of these chapters are considered conjunctively, as William urged the Court to do, the Court concludes that is what the law requires. City of Rapid City v. Estes, 805 N.W.2d 714,718-19 (S.D. 2011) () (cites therein).
A security agreement is more than a document that identifies collateral. Instead, three statutory definitions converge to require a bargain of the parties in fact, as found from their language or inferred from other circumstances, that creates or provides for an interest in personal property that secures payment or performance of an obligation. S.D.C.L. §§ 57A-1-201(b)(3) and (35) and 57A-9-102(a)(73). Then, for a security interest to attach to the collateral, the security agreement must identify the collateral. S.D.C.L. § 57A-9-203(b)(3)(A).
Here, the lien notations on the purchase certificate of title and the title application did not create or provide for a security interest, as required by § 57A-9-102(a)(73) for a...
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