In Re Robert James Roser, 09-1341.

CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)
Writing for the CourtHARTZ, Circuit Judge.
Citation613 F.3d 1240
PartiesIn re Robert James ROSER, Debtor. Sovereign Bank, Appellant, v. Daniel A. Hepner, Chapter 7 Trustee, Appellee.
Docket NumberNo. 09-1341.,09-1341.
Decision Date20 July 2010

613 F.3d 1240

In re Robert James ROSER, Debtor.
Sovereign Bank, Appellant,
Daniel A. Hepner, Chapter 7 Trustee, Appellee.

No. 09-1341.

United States Court of Appeals,Tenth Circuit.

July 20, 2010.

613 F.3d 1241


613 F.3d 1242

Matthew J. McGowan, Salter McGowan Sylvia & Leonard, Inc., Providence, RI, for Appellant.

Joli A. Lofstedt, Connolly, Rosania & Lofstedt, P.C., Louisville, CO, for Appellee.

Before TACHA, HOLLOWAY, and HARTZ, Circuit Judges.

HARTZ, Circuit Judge.

On May 19, 2007, Sovereign Bank gave Robert James Roser a secured loan to purchase a motor vehicle, and he took possession of the vehicle that day. Nineteen days later, on June 7, the Bank filed its lien in compliance with the Colorado Certificate of Title Act (CCTA), Colo.Rev.Stat. § 42-6-121 (2007). Because the Colorado Uniform Commercial Code (Colorado UCC), which closely tracks the Uniform Commercial Code (UCC), gives priority over other security interests to a purchase-money security interest that is filed within 20 days of the purchaser's taking delivery of the collateral, see Colo.Rev.Stat. § 4-9-317(e) (2007), the Bank felt secure.

But there was a complication. On May 31 Roser filed a voluntary petition under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Colorado. Relying on the prior opinion of the Bankruptcy Appellate Panel for the Tenth Circuit (BAP) in In re O'Neill, 370 B.R. 332 (10th Cir. BAP 2007), the bankruptcy court held that the trustee in bankruptcy (the Trustee) could avoid the Bank's lien, see 11 U.S.C. § 544(a) (authorizing trustee to avoid certain liens). It noted that the CCTA supersedes the Colorado UCC with respect to perfection of motor-vehicle liens and held that Colorado UCC § 4-9-317(e) does not apply to the Bank's lien in this case. Because the Bank's lien was not perfected before the filing of Roser's bankruptcy petition, the court held that the Trustee's interest is

613 F.3d 1243

superior to the Bank's lien. The court added that the Bank's postpetition perfection of its lien violated the automatic stay under 11 U.S.C. § 362(a). The district court affirmed.

The Bank appeals. See 28 U.S.C. § 158(d) (jurisdiction over bankruptcy appeals from the district courts). Rejecting O'Neill, we reverse. O'Neill misconstrued Colorado law. The CCTA does not supersede Colorado UCC § 4-9-317(e) because the provision does not govern the manner or timing of the perfection of liens. It governs only the priority of a lien and is not inconsistent with the CCTA. As a generally applicable law, § 4-9-317(e) gave the lien of the Bank priority over the Trustee's interest in Roser's vehicle. And the automatic stay did not prohibit the Bank from its postpetition perfection of its lien under the CCTA because such perfection is excepted from the stay by 11 U.S.C. § 362(b)(3).


“Our review of the bankruptcy court's decision is governed by the same standards of review that govern the district court's review of the bankruptcy court.” In re Charles, 323 F.3d 841, 842 (10th Cir.2003) (internal quotation marks omitted). Because this case presents no disputed factual issues but only matters of law, our review is de novo. See id.

A. Priority of Interests

The Bankruptcy Code gives the bankruptcy trustee the rights and powers of a hypothetical person who acquired a judicial lien on the debtor's property at the time that the bankruptcy petition was filed. See 11 U.S.C. § 544(a). 1 He can avoid any lien inferior to his interest in an asset of the bankruptcy estate. See In re Haberman, 516 F.3d 1207, 1210 (10th Cir.2008) (trustee has “the power to avoid any transfer or obligation that a hypothetical creditor with an unsatisfied judicial lien on the debtor's property could avoid under relevant state nonbankruptcy law.”). In general, the trustee can avoid liens that are unperfected when the petition for bankruptcy is filed. See In re Charles, 323 F.3d at 842. But in some circumstances a lien that is perfected after the bankruptcy filing may nevertheless have priority. Under § 546(b) of the Bankruptcy Code a trustee's avoidance rights “are subject to any generally applicable law that ... permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection.” 11 U.S.C. § 546(b)(1)(A). The term generally applicable law “relates to those provisions of applicable law that apply both in bankruptcy cases and outside of bankruptcy cases.” S.Rep. No. 95-989, at 86 (1978), as reprinted in 1978 U.S.C.C.A.N. 5787; see Makoroff v. City of Lockport, 916 F.2d 890, 892 (3d Cir.1990); 5 Collier on Bankruptcy ¶ 546.03[2][a], at 546-23 (Lawrence P. King ed., 15th ed. rev.2006). The applicable law in this case is the law of Colorado. See In re Charles, 323 F.3d at 842-43.

The Bank presents a straightforward argument why its lien would have

613 F.3d 1244

priority under Colorado law over a lien of a judgment creditor who obtained judgment at the time Roser filed for bankruptcy. Under the Colorado UCC:

[I]f a person [1] files a financing statement [2] with respect to a purchase-money security interest [3] before or within twenty days after the debtor receives delivery of the collateral, the security interest takes priority over the rights of a buyer, lessee, or lien creditor which arise between the time the security interest attaches and the time of filing.

Colo.Rev.Stat. § 4-9-317(e) (2007). (As discussed below, this section was amended after Roser filed his petition.) There is no doubt that the Bank satisfied the requirements of this section. The filing of a lien under the CCTA constitutes the filing of a financing statement. See Colo.Rev.Stat. § 4-9-311(b) (“Compliance with the requirements of a [certificate-of-title statute] is equivalent to the filing of a financing statement.”). 2 And there is no dispute that the Bank complied on June 7, 2007, with the requirements for filing a motor-vehicle lien under the CCTA. See id. § 42-6-121 (2007). Nor is there any dispute that the Bank held a purchase-money security interest in Roser's vehicle. See id. § 4-9-103(a) & (b) (defining purchase-money security interest ). Thus, because the Bank filed its lien within 20 days of Roser's obtaining the vehicle, it contends that Colorado UCC § 4-9-317(e) gives its lien a priority over any rights in the vehicle-including the Trustee's interest as a hypothetical judicial-lien creditor-that arose between the time that the Bank's security interest attached (May 19, 2007, when it closed the loan) and its CCTA filing on June 7.

The Trustee argues, however, that we should follow the holding of the BAP in O'Neill. Although there were complications in O'Neill not present in this case, the BAP ultimately held that the bankruptcy trustee could avoid a purchase-money security interest in an automobile that had been filed under the CCTA within 20 days of the purchase but after the purchaser had filed for bankruptcy. See O'Neill, 370 B.R. at 333-34. The BAP reasoned that Colorado UCC § 4-9-317(e) does not apply to liens perfected under the CCTA. See id. at 337-38. As did the BAP

613 F.3d 1245

in O'Neill, the Trustee relies on the following sentence in the CCTA: “Except as provided in this section, the provisions of the ‘Uniform Commercial Code,’ title 4, Colo.Rev.Stat., relating to the filing, recording, releasing, renewal, and extension of chattel mortgages, as the term is defined in section 42-6-102(9), shall not apply to motor vehicles.” Colo.Rev.Stat. § 42-6-120(1) (2007).

We do not read CCTA § 42-6-120(1) as broadly as O'Neill did. To be sure, the CCTA provides its own distinct methods for filing, recording, and perfecting motor-vehicle liens, see Colo.Rev.Stat. § 42-6-121, releasing such liens, see id. § 42-6-125, and extending them, see id. § 42-6-127. It thus clearly supersedes the Colorado UCC with respect to those procedural matters regarding motor-vehicle liens. But the subject matter of Colorado UCC § 4-9-317(e) is not encompassed within the procedural matters preempted by § 42-6-120(1): “filing, recording, releasing, renewal, and extension” of liens. Indeed, the Colorado UCC adopts the CCTA's own methods for filing, recording, releasing, renewing, or extending liens. See id. §§ 4-9-311(b) (compliance with requirements of a certificate-of-title statute constitutes filing of a financing statement for purposes of Colorado UCC), 4-9-311(c) (similarly incorporating rules for duration and renewal of perfection of security interest). Accordingly, in applying the Colorado UCC, the date of perfection for a properly filed motor-vehicle lien is established by the CCTA. What Colorado UCC § 4-9-317(e) does is then govern the priority of the rights of creditors in...

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