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Green Tree Servicing, LLC v. Coleman: BANKRUPTCY - no error allowing modification of secured claim on mobile home

United States Bankruptcy Appellate Panel
No. 08-6019
In re: *
Tony W. Coleman, doing business *
as Superior Investigation Solutions, *
LLC; Stephanie A. Coleman, *
* Appeal from the United States
Debtors. * Bankruptcy Court for the Western
* District of Missouri
Green Tree Servicing, LLC, *
Creditor-Appellant, *
v. *
Tony W. Coleman; Stephanie A. *
Coleman, *
Debtors-Appellees. *
Submitted: August 8, 2008
Filed: August 25, 2008
Before KRESSEL, Chief Judge, SCHERMER and MAHONEY, Bankruptcy Judges.
KRESSEL, Chief Judge.
1The Honorable Arthur B. Federman, United States Bankruptcy Judge for the
Western District of Missouri.
Green Tree Servicing, LLC appeals the bankruptcy courts1 order of April 22,
2008, confirming Tony W. and Stephanie A. Colemans chapter 13 plan. Because we
agree with the bankruptcy court that the debtor could cram down Green Trees secured
claim, we affirm.
Green Tree holds a secured claim in a 1996 Chandaleur 16 x 80 manufactured
home which is owned by Stephanie A. Coleman. She and Tony use the home as their
residence, located on 30- 36 acres in Jasper County, Missouri.
The Colemans original chapter 13 plan proposed to bifurcate the manufactured
home claim, limiting the secured claim to the value of the mobile home, which the
Colemans plan listed as ,000.00 and treating the remainder as unsecured. The
original plan proposed to pay 0.00 per month to Green Tree.
Green Tree objected to the Colemans plan, arguing primarily that its claim was
not subject to cramdown and secondarily that the debtors had undervalued its
collateral and thus were not paying the secured claim in full. The bankruptcy court
overruled Green Trees objection in part, finding that it was subject to cramdown, but
ruling that the debtors had undervalued its collateral. In re Coleman, 373 B.R. 907,
914 (Bankr. W.D. Mo. 2007). The bankruptcy court valued the home at ,972.58
and directed the Colemans to file a new plan treating the secured claim at ,972.58.
Id. Green Tree appealed.
We dismissed Green Trees appeal as interlocutory. The debtors then filed an
amended plan and the bankruptcy court confirmed it. The Colemans amended
chapter 13 plan values the manufactured home at ,972.58 but, like the original
plan, it bifurcates the claim, limiting the secured claim to the value of the mobile
home and treating the remainder as unsecured. Under the confirmed plan, the
Colemans will pay Green Tree 0.00 for 60 months. Green Tree appealed again.
The confirmation order is a final appealable order.
Standard of Review
We review the bankruptcy courts factual findings for clear error and its
conclusions of law de novo. DeBold v. Case, 452 F.3d 756, 761 (8th Cir. 2006); In
re Vondall, 364 B.R. 668, 670 (B.A.P. 8th Cir. 2007). We review issues committed
to the bankruptcys courts discretion for an abuse of that discretion. In re Neal, 461
F.3d 1048, 1055 (8th Cir. 2006). Statutory interpretation is a question of law that
[appellate courts] review de novo. Minn. Supply Co. v. Raymond Corp., 472 F.3d
524, 537 (8th Cir. 2006).
The sole issue is a legal one which we review de novo. May a chapter 13 plan
modify the rights of a creditor holding a security interest in a manufactured home?
Appellant Green Tree contends that the 2005 Bankruptcy Abuse Prevention and
Consumer Protection Act expanded the scope of the anti-modification provision in 11
U.S.C. 1322(b)(2) to include manufactured homes when it defined debtors
principal residence and specifically included manufactured homes. Green Tree
argues that because Congress defined debtors principal residence in 11 U.S.C.
101(13A)(A)(B) to include manufactured homes, all mobile and manufactured
2E.g., In re Davis, 386 B.R. 182 (B.A.P. 6th Cir. 2008); In re Shepherd, 381
B.R. 675 (E.D. Tenn. 2008); In re Lara, No. 07-60188, 2008 WL 961892 (Bankr.
S.D. Tex. Apr. 8, 2008); Kinder v. Vanderbilt Mortg. and Fin., No. 1:07-cv-564,
2008 WL 2230694 (S.D. Ohio May 28, 2008); In re Williamson, 387 B.R. 914
(Bankr. M.D. Ga. 2008); In re Gearheart, No. 07-70232, 2007 WL 4463342 (E.D.
Ky. Dec. 14, 2007); In re Logan, No. 07-70212, 2007 WL 4414784 (Bankr. E.D.
Ky. Dec. 14, 2007); In re Fuller, No. 07-81703, 2007 WL 3244113 (Bankr. M.D.
N.C. Nov. 2, 2007); In re Oliveira, 378 B.R. 789 (Bankr. E.D. Tex. 2007); Herrin
v. Green Tree-AL, LLC, 376 B.R. 316 (S.D. Ala. 2007), aff'g In re Herrin, No. 06-
12249-WSS-13, 2007 WL 1975573 (Bankr. S.D. Ala. July 3, 2007); In re
Bartolome, No. 07-10731-DHW, 2007 WL 2774467 (Bankr. M.D. Ala. Sept. 21,
2007); In re McLain, 376 B.R. 492 (Bankr. D. S.C. 2007); In re Manning, No. BK
07-70190-CMS-13, 2007 WL 2220454 (Bankr. N.D. Ala. Aug. 2, 2007); In re
Cox, No. 07-60073, 2007 WL 1888186 (Bankr. S.D. Tex. June 29, 2007). But see
In re Shepherd, 354 B.R. 505 (Bankr. E.D. Tenn. 2006) (holding that the antimodification
provision of 11 U.S.C. 1322(b) is applicable to a mobile home
irrespective of whether the home is attached to the real property on which it sits),
revd, In re Shepherd, 381 B.R. 675 (E.D. Tenn. 2008) (holding that the definition
of debtors principal residence in 11 U.S.C. 101(13A)(A) does not operate to
extend the anti-modification provision of 11 U.S.C. 1322(b) to structures that are
not real property); In re Fells, No. 07-80559, 2007 WL 3120113 (Bankr. W.D. La.
Oct. 23, 2007) (holding that a lien on the debtors mobile home which was the
debtors principal residence as defined by 11 U.S.C. 101(13A)(A) was not
subject to modification under 11 U.S.C. 1322(b)); HSBC v. Lunger (In re
Lunger), 370 B.R. 649 (Bankr. M.D. Pa. 2007) (holding that because the definition
of debtors principal residence in 11 U.S.C. 101(13A) includes incidental
property, a secured interest in incidental property cannot be modified under 11
U.S.C. 1322(b)); In re Davis, 373 B.R. 46 (Bankr. S.D. Ohio 2007) (holding that
the definition of debtors principal residence in 11 U.S.C. 101(13A)(A)
homes, regardless of their state law classification as real or personal property, are
protected by the anti-modification provision of 1322(b)(2). Appellants Brief at
4. We join the majority2 of courts that have considered the issue, and hold that
protects holder of secured claim in a mobile home that is debtors principal
residence from modification under 11 U.S.C. 1322(b)), revd, In re Davis, 386
B.R. 182 (B.A.P. 6th Cir. 2008) (holding that the addition of a definition of
debtors principal residence in 11 U.S.C. 101(13A)(A) did not change the
scope of the 11 U.S.C. 1322(b) anti-modification provision and 1322(b)
remains applicable only to real property).
1322(b)(2) is unambiguous and does not prohibit modification of a manufactured
home security interest where that interest is not real property.
The plain language of 11 U.S.C. 1322(b)(2) clearly limits the antimodification
provision to a security interest in real property that is also the
debtors principal residence.
Statutory interpretation begins with the language of the statute itself. We
presume that [the] legislature says in a statute what it means and means in a statute
what it says there. Conn. Natl Bank v. Germain, 503 U.S. 249, 253-254, 112 S.Ct.
1146, 1149, 117 L.Ed.2d 391 (1992). When a statutes plain meaning is
unambiguous, judicial inquiry is complete. Rubin v. United States, 449 U.S. 424,
430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981). [I]n the absence of a clearly
expressed legislative intent to the contrary, that language must ordinarily be regarded
as conclusive. Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 299, 78
L.Ed.2d 17 (1983), quoting from United States v. Turkette, 452 U.S. 576, 580, 101
S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981), quoting from Consumer Product Safety
Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d
766 (1980).
11 U.S.C. 1322(b)(2) states that a chapter 13 plan may modify the rights of
holders of secured claims, other than a claim secured only by a security interest in real
property that is the debtors principal residence. A plain reading requires that in
order for the anti-modification provision to apply, the claim must both be secured only
by an interest in real property and further, that the real property must be the
debtors principal residence. BAPCPA defines debtors principal residence as a
residential structure, including incidental property, without regard to whether that
structure is attached to real property. 11 U.S.C. 101(13A)(A). Further, it specifies
that debtors principal residence includes an individual condominium or
cooperative unit, a mobile or manufactured home, or a trailer. 11 U.S.C.
101(13A)(B). No one disputes that the manufactured home is the debtors principal
residence. Green Tree argues that the only logical reading of 1322(b)(2) is that all
manufactured and mobile homes are exempt from cramdown, regardless of their state
law classification as real or personal property. However, Green Trees reading is
contrary to the plain meaning of the statute.
In 1322(b)(2), the word that functions as a restrictive pronoun; it limits the
application of the anti-modification provision to types of secured interests in real
property that are used by the debtor as a principal residence. The result is that the
determination of whether a security interest in a debtors principal residence may be
subject to cramdown turns on whether that residence is real or personal property.
Green Tree argues that by adding a definition of debtors principal residence in
101(13A)(B), Congress eliminated the requirement under 1322(b) that in order to
be exempt from cramdown, the secured interest must be in real property. Congress
could have easily written the anti-modification provision as Greentree suggests but did
not. See Herrin v. Green TreeAL, LLC (In re Herrin), 376 B.R. 316 (S.D. Ala. 2007)
(had Congress truly wanted to remove the real property requirement, it could have
done so with exceptional ease by merely redacting the word real or adding the words
or personal in Section 1322(b)(2)). Therefore, we hold that 1322(b)(2) is
unambiguous and does not prohibit modification of a manufactured home security
interest where that interest is not real property.
Consideration of the legislative history would not change the interpretation of
Because we hold that Section 1322(b)(2) is unambiguous and does not prohibit
modification of a manufactured home security interest where that interest is not real
property, we do not find it necessary to consider the legislative history for evidence
of what Congress might have meant. However, the outcome would be the same even
if we consider the legislative history of BAPCPA. As Green Tree concedes in its
brief, the legislative history is minimal. The only support Green Tree offers is found
in the April 8, 2005, House of Representatives Judiciary Report:
Sec. 306. Giving Secured Creditors Fair Treatment in
Chapter 13. [] Section 306(c) (1) amends section 101 of
the Bankruptcy Code to define the term "debtor's principal
residence" as a residential structure (including incidental
property) without regard to whether or not such structure is
attached to real property. The term includes an individual
condominium or cooperative unit as well as a mobile or
manufactured home, or a trailer.
H.R. Rep. No. 109-31, at 72 (2005), reprinted in 2005 U.S.C.C.A.N. 88, 140. The
report simply reiterates that the term debtors principal residence has been defined
to include manufactured homes; it does not indicate, explicitly or implicitly, that the
anti-modification provision of 1322(b)(2) must be extended all security interests in
manufactured homes, whether or not state law treats them as realty or personalty.
With such a scant record, we see no reason to question the plain meaning of
State law controls the determination of whether a debtors principal residence
is real or personal property.
Green Tree argues that the application of state law in the present case would
violate the Supremacy Clause and the Bankruptcy Clause of the Constitution, and
wreak havoc on the uniformity of bankruptcy proceedings by requiring bankruptcy
courts to look to the mobile home classification statutes from each state to determine
the rights of the parties in a mobile home lending situation, potentially leading to fifty
(50) different interpretations of the statutes involved. Appellants Brief at 16. Green
Trees analysis directly conflicts with a central tenet of bankruptcy law that state law
creates property rights and that those rights are to be respected in bankruptcy, even
though the results may vary among the states. Butner v. United States, 440 U.S. 48,
54-55 & n. 9, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979) (determining property
interests by reference to state law does not violate the Bankruptcy Clause); Stellwagen
v. Clum, 245 U.S. 605, 613, 38 S.Ct. 215, 217, 62 L.Ed. 507 (1918) (the Bankruptcy
Act recognizes and enforces the laws of the states []. Such recognition in the
application of state laws does not affect the constitutionality of the Bankruptcy Act,
although in these particulars the operation of the act is not alike in all the states);
Sturges v. Crowninshield, 17 U.S. 122, 128, 4 Wheat. 122, 4 L.Ed. 529 (1819) (state
laws are thus suspended only to the extent of actual conflict with the system provided
by the Bankruptcy Act of Congress).
Green Tree asserts that the plain meaning of the statute creates a conflict with
state law. In support, it cites a decision which has been reversed. In re Shepherd, 354
B.R. 505 (Bankr. E.D. Tenn. 2006), revd, 381 B.R. 675 (E.D. Tenn. 2008) (holding
that 101(13A)(A) does not alter the requirement that the property in question be
real property in order for the anti-modification provision to apply). We see no
conflict between the statute and state law. In the absence of a controlling federal
rule, we generally assume that Congress has left the determination of property rights
in assets of a bankrupt's estate to state law, since such property interests are created
and defined by state law. Nobelman v. Am. Sav. Bank, 508 U.S. 324, 329, 113 S.Ct.
2106, 2110 (1993) (quoting Butner v. U.S., 440 U.S. 48, 54-55, 99 S.Ct. 914, 918
(1979)). The definition of debtors principal residence in 11 U.S.C. 101(13A)(B)
includes manufactured and mobile homes, but is silent as to whether manufactured
and mobile homes are real or personal property. Therefore, we look to the applicable
state law to determine whether the debtors property is real or personal.
The debtors manufactured home is personal property under Missouri law.
Lastly, we consider whether the Colemans manufactured home is real
property under applicable state law. Under Missouri law, manufactured and mobile
homes are generally classified as personal property but may be converted to real
property by both (1) Attaching the manufactured home to a permanent foundation
situated on real estate owned by the manufactured home owner and (2) The removal
or modification of the transporting apparatus including but not limited to wheels, axles
and hitches rendering it impractical to reconvert the real property thus created to a
manufactured home. Mo. Rev. Stat 700.111; Housley v. Mericle, 57 S.W.3d 360,
364 (Mo. App. 2001) (A manufactured home is considered personal property until
converted to real property, pursuant to 700.111.); In the Estate of Parker, 25
S.W.3d 611, 615-16 (Mo. App. 2000) (A person converts his mobile home from
personal to real property by causing the mobile home to become a fixture.). See also
In re Thornton, 269 B.R. 682, 685 (Bankr. W.D. Mo. 2001) (finding that a
manufactured home had been converted to real property, where the manufactured
homes wheels and tires had been removed, skirting had been installed, the structure
had been placed on blocks, and the structure had been attached to its own well and
septic system).
Green Tree does not contend that the Colemans manufactured home has been
legally converted from personal to real property and presented no evidence at the
confirmation hearing on July 25, 2007. Green Tree states generally, The facts of this
case are simple and uncontested. Appellants Brief at 2.
The only evidence presented to the bankruptcy court was the testimony of Ms.
Coleman. Coleman at 911. Ms. Coleman testified that she and her husband own the
land on which the manufactured home sits. She testified that the wheels had been
taken off and bricks put underneath, but that there was no foundation and nothing to
secure the home to the land. She testified that the home is only secured to the land by
standard tie downs, which she said are basically poles that they hammer into the
ground. Tr. at 29. She testified that in order to move the home, one would only need
to get a truck, come out there, jack it up, put the wheels back on it and drive it off.
Id. The bankruptcy court found, based on Ms. Colemans testimony, that the home
had not been permanently attached to the land and therefore was not real estate under
Missouri law. Coleman at 911. Because the courts finding is supported by the
record, we do not disturb it.
For the foregoing reasons, the judgment of the bankruptcy court is affirmed.


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