Opinion
No. 00-CV-0342E(Sc), BK-98-15929K, AP-99-1210K, 00-CV-0343E (Sc) BK-98-15752K, AP-99-1209K.
February 12, 2001
ATTORNEYS FOR THE PLAINTIFF-APPELLANT: Morris L. Horwitz, Esq., c/o Horwitz, Frankel and Ilecki, Tonawanda, NY.
ATTORNEYS FOR THE DEFENDANT-APPELLEE: Kevin Laurilliard, Esq., c/o McNamee, Lochner, Titus Williams, Albany, NY.
MEMORANDUM and ORDER
Presently before the undersigned are appeals by the bankruptcy trustee from a February 2, 2000 Order of the Bankruptcy Court which granted summary judgment in favor of appellee Green Tree Financial Corporation ("Green Tree") with regard to certain items of property from separate Chapter 7 proceedings. The proceeding in Rainer was brought by the trustee to set aside the allegedly unperfected lien of Green Tree on a personal-water-craft ("PWC") purchased by Rainer. The proceeding in Hovland was brought by the trustee to set aside the allegedly unperfected lien of Green Tree on an all-terrain-vehicle ("ATV") purchased by the Hovlands. Jurisdiction is premised on 28 U.S.C. § 158 and 1334. The trustee's appeal will be denied and the Order affirmed.
"Such Order is now embodied in the Bankruptcy Reporter as In re Rainer, 246 B.R. 11 (Bankr. W.D.N.Y. 2000).
Preliminarily, this Court notes that no party argues that the Bankruptcy Court was inaccurate in his recitation of the facts and the undersigned's review of the same reveals no clear error. Fed.R.Bankr. 8013. Consequently, this Court's analysis in the instant appeal will be limited to whether the Bankruptcy Court's legal conclusions withstand de novo review. In re Arochem Corp., 176 F.3d 610, 620 (2d Cir. 1999).
According to the Order, the Bankruptcy Court found that, "because (1) a vessel under 14 feet is not required to be titled [and/or] (2) [New York Uniform Commercial Code ("U.C.C.")] § 9-302(1)(d) speaks of `motor vehicles,' as distinguished from `vessels' or `boats' in the early 1960's when it was adopted and revised," Green Tree did not need to file a financing statement to perfect its purchase money security interest in the PWC. In re Rainer, 246 B.R. 11, 17 (Bankr. W.D.N.Y. 2000). The Bankruptcy Court also found that, although an ATV "is a `motor vehicle' that is not exempt from filing" under its reading of U.C.C. § 9-302(1)(d), the purposes of the U.C.C. — viz., "to clarify, simply and modernize the law of commercial transactions" — are best served by adopting the New York Vehicle and Traffic Law definition of a "motor vehicle," which expressly excludes ATVs. Id. at 17-18; see also N.Y. U.C.C. § 1-102 (stating, inter alia, that the U.C.C. "shall be * * * applied to promote its underlying purposes and policies," which include the simplification, clarification and modernization of the law governing commercial transactions); N.Y. Veh. Traf. § 125 (defining a "motor vehicle" as a "[e]very vehicle operated or driven upon a public highway which is propelled by any power other than muscular power, except * * * all terrain vehicles * * *"); N.Y.Veh. Traf. § 2281.1(a) (defining an ATV to mean "any self-propelled vehicle which is manufactured for sale for operation primarily on off-highway trails * * *"). Consequently, the Bankruptcy Court found that Green Tree did not need to file a financing statement to perfect its purchase money security interest in the ATV. Rainer, at 18.
Pursuant to New York Uniform Commercial Code § 9-302, a financing statement must be filed to perfect all security interests except in certain enumerated circumstances, one of which is where there exists a purchase money security interest in a consumer good. See N.Y. U.C.C. § 9-302(1)(d). Where the consumer good is a "motor vehicle," however, a "filing is required to perfect such a security interest * * * [where it is] required to be licensed or registered in this state unless it is perfected in accordance with article forty-six of the [New York] vehicle and traffic law * * *" Id. Article forty-six of the Vehicle and Traffic Law is also known as the "Uniform Vehicle Certificate of Title Act." N.Y. Veh. Traf. § 2134.
The trustee essentially argues that, because the "Bankruptcy Court in dicta agrees with the position of the trustee that both PWC's and ATV's are motor vehicles," UCC § 9-302(1)(d) expressly requires the filing of a financing statement with regard to each inasmuch as New York law does not otherwise provide for a method of perfection within the meaning of such section through the issuance of a certificate of title under Article 46 of the Vehicle and Traffic Law. Appellant's Brief at 8-9, 12-14. Moreover, the trustee asserts that it was clear error for the Bankruptcy Court to adopt unnecessarily a "rule of convenience" pursuant to U.C.C. § 1-102 which limited the definition of a motor vehicle" under U.C.C. § 9-302(1)(d) to that defined under the New York Veh. Traf. Law. Id. at 8, 10-11. The trustee argues as follows: "1) Both items of collateral are motor vehicles; 2) Registration of both types of vehicles are [sic] required; 3) No other means of perfection is provided for; 4) Therefore, a UCC-1 filing is required to perfect a security interest." Id. at 13. In response, Green Tree argues that the Bankruptcy Court never characterized the PWC as a motor vehicle and that such Court, while noting the ATV was probably a motor vehicle" within a broad reading of U.C.C. § 9-302(1)(d) stated that, the application of such definition to this collateral was not suitable. Appellee's Brief at 3-6.
Insofar as the PWC is the subject of the instant appeal, it is plain that the Order did not err when it determined that such collateral was not a "motor vehicle" within the meaning the U.C.C. and that, therefore, Green Tree did not need to file a financing statement to perfect its interest in the PWC. As was stated by the Bankruptcy Court, there is no evidence that U.C.C. § 9-302(1)(d) ever intended to subsume watercraft within its definition of "motor vehicle." Rainer, at 17. Indeed, where a watercraft was considered to be a consumer good under New York law, a purchase money security interest in this type of collateral has been deemed to be perfected without filing. See Howell State Bank v. Jericho Boats, Inc., 533 N.Y.S.2d 363, 364 (Suffolk C0. S.Ct. 1988) ("Since the boat was a consumer good it was unnecessary for the plaintiff *** to file a financing statement to perfect its purchase money security interest therein."); Marine Midland Bank, N.A. v. Smith Boys, Inc., 492 N.Y.S.2d 355, 358 (Erie Co. S.Ct. 1985) ("Under [U.C.C.] Section 9-302(1)(d), a purchase money security interest in a boat, used as consumer goods, is perfected without filing."); see also Chemical Bank v. Miller Yacht Sales, 413 A.2d 619, 623 (N.J.Super.Ct. A.D. 1980) (noting that New York U.C.C. section 9-302(1)(d), which mandates "filing of a financing statement to perfect a security interest in a motor vehicle required to be licensed or registered, does not apply to boats."). Consequently and because the PWC does not fall within the motor vehicle exception of U.C.C. § 9-302(1)(d), the Bankruptcy Court did not err when it ruled that Green Tree possessed a purchase money security interest in that consumer good which was perfected without filing a financing statement.
The trustee's appeal with regard to the ATV is similarly unavailing. The Bankruptcy Court did not err when it determined that he, in the interests of commercial law clarity, should not "speculate on what the Commission on [sic] the UCC would say about new types of vehicles" by stating that the UCC requires a holder of a purchase money security interest in a previously unimagined style of "motor vehicle" perfect that interest through the filing of a financing statement. Rainer, at 18. Although such collateral could be considered a "motor vehicle" within the meaning of U.C.C. § 9-302(1)(d), in the sense it was capable of self-propulsion over land, the undersigned agrees that the adoption of the N.Y. Veh. Traf. Law definition of "motor vehicle" is better suited to effectuate the purposes of the U.C.C. by providing a clear and workable definition of such type of property. Ibid. Absent such limitation, the undersigned is also in agreement with Green Tree that an appropriate demarcation can be said not to exist. Appellee's Brief at 7. Inasmuch as the undersigned finds no error in the Bankruptcy Court adopting such rule of convenience with regard to the definition of a "motor vehicle" under U.C.C. § 9-302(1)(d), he did not err in determining that Green Tree possessed a purchase money security interest in the ATV which was perfected without the need for filing a financing statement.
Accordingly and because the Bankruptcy Court committed no error in determining that neither the PWC nor the ATV is properly construed as a "motor vehicle" within the meaning of New York U.C.C. § 9-302(1)(d), it is hereby ORDERED that the trustee's appeal is denied and that Green Tree be deemed to possess a perfected purchase money security interest in the aforementioned contested property.
DATED: Buffalo, N.Y. February 9, 2001.