Opinion
Case No. 97-11901.
October 9, 1997
MEMORANDUM OPINION AND ORDER RE ADRIAN STATE BANK'S OBJECTION TO CONFIRMATION
The Court conducted a hearing on this matter on September 11, 1997. FED. R. BANKR. P. 9014. Pursuant to § 157(b)(2) of Title 28 of the U.S. Code, this is a core proceeding. After reviewing the testimony from the hearing and the record as a whole, the Court makes the following findings of facts and conclusions of law. FED. R. BANKR. P. 7052.
I. FINDINGS OF FACT
The facts in this case are essentially undisputed. On December 18, 1995, the debtor, Mary J. Moody ("Moody"), purchased a ten-acre tract of land in Reagan, TN. Five days later, on December 23, 1995, Moody entered into a retail installment contract with Mobile Homes, Inc., of Jackson ("Mobile") for the purchase of a mobile home to be placed on this land As collateral for this transaction, Moody granted Mobile a security interest in her mobile home. Such interest was noted on the trailer's certificate of title. Moody also issued Mobile a deed of trust on the ten-acre tract as security for the mobile home purchase. Mobile registered this deed of trust in Henderson County on December 28, 1995. Mobile assigned these security interests to Adrian State Bank ("Bank") on December 23, 1995.
For some time, Moody used this mobile home as her primary residence. At the time of delivering the trailer to Moody's land, the wheels were removed and the home was underpinned and tied down. Since Moody was using this trailer as her home, one can only assume that electricity and/or gas and water connections were also made at some point. In December of 1996, Moody ceased living in this trailer on a daily-basis and moved into another trailer on her ten-acres. This trailer was not permanently affixed to Moody's property in any way.
Moody filed a chapter 13 bankruptcy petition in this Court on May 30, 1997. In her chapter 13 plan filed the same day, Moody indicated that she intended to surrender the mobile home to the Bank, but retain the ten-acre tract of land in her possession. Moody's plan lists the Bank as having a secured claim of $3000.00 and proposes a monthly payment to the Bank of $65.00 in order to pay this claim. On July 3, 1997, the Bank filed an objection to confirmation of this plan, asserting that Moody is not entitled to modify their security interest by severing the mobile home from the real property.
II. CONCLUSIONS OF LAW
The issue for this Court to decide is whether or not Moody's mobile home should be classified as real or personal property. If it is the former, the debtor is not entitled to sever it from her ten-acre tract of land in Reagan, TN, and split the Bank's claim. See 11 U.S.C. § 1322(b)(2). If, on the other hand, the mobile home can be said to be the latter, Moody may sever the mobile home from her tract, surrender it to the Bank and retain her ten-acres, thereby modifying the Bank's claim. In making this determination, this Court must look to relevant state law to see how Tennessee courts would decide the issue.
In the case of Paskell v. Nobility Homes, Inc., 871 S.W.2d 481 (Tenn. 1994), the Tennessee Supreme Court held that a mobile home is personal property in instances such as the one in the case at bar. In so doing, the Court stated:
Although a mobile home in Tennessee is treated as real property for the purposes of tax assessment, a transaction involving the sale of a mobile home is considered the sale of personal property and is subject to the terms and conditions found in the Uniform Commercial Code. T.C.A. 47-2-101 et. seq.
Id. at 483.
As a result of this mandate handed down by the highest authority in Tennessee, this Court finds that the Bank's collateral is of the nature that it can be severed. Moody may, therefore, surrender the mobile home to the Bank and still retain possession of the ten-acre tract on which the mobile home now sits. Such continued possession, however, must necessarily be provided for in Moody's chapter 13 plan through monthly payments to the Bank. An order will be entered accordingly.
III. ORDER
It is therefore ORDERED that Adrian State Bank's Objection to Confirmation is OVERRULED.
It is FURTHER ORDERED that Mary J. Moody may sever her mobile home from the land and surrender it to Adrian State Bank while retaining possession of the ten-acre tract; however, in order to do so, she will have to present evidence to this Court regarding the feasibility of a chapter 13 plan which allows her to keep unimproved land Such evidence must necessarily include proof that, in so keeping the land, Moody will not cause a detriment to her unsecured creditors.
It is FURTHER ORDERED that the confirmation hearing on Moody's chapter 13 plan is reset to Thursday, November 6, 1997, at 10:00 a.m.
IT IS SO ORDERED.