           United States Bankruptcy Appellate Panel
                         FOR THE EIGHTH CIRCUIT

                                _______________

                                  No. 03-6096EA
                                ________________

In re:                                  *
Henry Earl Renaud and                   *
Opal Minnie Renaud                      *
                                        *
     Debtors.                           *
                                        *
                                        *
M. Randy Rice, Trustee                  *
                                        *     Appeal from the United States
     Plaintiff - Appellee,              *     Bankruptcy Court for the Eastern
                                        *     District of Arkansas
           v.                           *
                                        *
Simmons First Bank of Searcy,           *
                                        *
     Defendant - Appellant.             *

                                      _____

                             Submitted: April 21, 2004
                               Filed: April 30, 2004
                                       _____

Before SCHERMER, FEDERMAN, and VENTERS, Bankruptcy Judges.
                            _____

VENTERS, Bankruptcy Judge.
       This is an appeal from two rulings of the bankruptcy court1 holding that
Simmons First Bank of Searcy (“Simmons Bank”) holds unperfected liens on Henry
and Opal Renaud’s (“Debtors”) 2001 Polaris ATV and mobile home. The issues on
appeal are twofold: (1) whether a security interest in an ATV may be perfected under
Arkansas’ Uniform Commercial Code when that interest was not noted on the ATV’s
certificate of title, and (2) whether the Debtors’ mobile home was transformed from
personal to real property when the Debtors affixed it to their land, such that a security
interest in the mobile home could be perfected by a real estate mortgage. For the
reasons stated below, we affirm the rulings of the bankruptcy court.

                           I. STANDARD OF REVIEW

       “Findings of fact, whether based on oral or documentary evidence, shall not be
set aside unless clearly erroneous, and due regard shall be given to the opportunity
of the bankruptcy court to judge the credibility of the witnesses.” Fed. R. Bankr. P.
8013. Findings of fact are reviewed for clear error, and legal conclusions are
reviewed de novo. Blackwell v. Lurie (In re Popkin & Stern), 223 F.3d 764, 765 (8th
Cir. 2000); Official Committee of Unsecured Creditors v. Farmland Industries, Inc.,
296 B.R. 188, 192 (B.A.P. 8th Cir. 2003). Matters committed to the bankruptcy
court’s discretion will be reversed only if the court has abused its discretion. C.T.
Development Corp. v. Barnes (In re Oxford Development, Ltd.), 67 F.3d 683, 685 (8th
Cir. 1995); City of Sioux City, Iowa v. Midland Marina, Inc. (In re Midland Marina,
Inc.), 259 B.R. 683, 686 (B.A.P. 8th Cir. 2001).

                                 II. BACKGROUND

      In 2001, the Debtors borrowed money from Simmons Bank to purchase a
Polaris ATV. That same year, Opal Renaud signed a consolidation note with
Simmons Bank refinancing the ATV and a 1994 Ford truck. To secure its loan,

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         The Honorable Audrey R. Evans, United States Bankruptcy Judge for the
Eastern and Western Districts of Arkansas.
Simmons Bank noted its lien on the Ford truck’s certificate of title, and had Opal
execute a security agreement in favor of Simmons Bank that covered the ATV.
Simmons Bank filed a UCC-1 financing statement with the Arkansas Secretary of
State in an effort to perfect its interest in the ATV. It acknowledged that it never
noted its interest on the ATV’s certificate of title.

        Also in 2001, the Debtors refinanced their purchase of a Spirit mobile home,
along with the real property on which it is affixed, by borrowing $33,100.83 from
Simmons Bank. The previous lienholder on the mobile home released its lien noted
on the certificate of title for the mobile home, and Simmons Bank placed the clean
title in the Debtors’ loan file. At no time did Simmons Bank note its interest on the
certificate of title; rather, Simmons Bank recorded a mortgage on the real property
covering “all existing and future improvements, structures, fixtures, and replacements
that may now, or at any time in the future, be part of the real estate.” The Debtors
acknowledged their intent to mortgage both the real property and the mobile home to
secure the debt.

                                III. DISCUSSION

       Simmons Bank argues that the bankruptcy court committed an error of law
when it ruled that the only method of perfecting a security interest in an ATV and a
mobile home was to have that interest noted on the property’s certificate of title.
Simmons Bank acknowledges that a creditor may perfect its interest using the
certificate of title laws, but Simmons Bank also contends that it has the option to
perfect an interest in the ATV under the Uniform Commercial Code. Furthermore,
Simmons Bank argues that the Debtors’ mobile home lost its identity as personal
property when it became affixed to the Debtors’ real property and that Simmons
Bank’s mortgage on the real property therefore encompassed the mobile home.




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A. The ATV

       The bankruptcy court held that an ATV is a motor vehicle subject to Arkansas’
certificate of title laws. Simmons Bank argues that Arkansas law does not require
ATVs to be registered as motor vehicles for operation on the public highways; thus,
a notation on the ATV’s certificate of title is not the exclusive method to perfect a
lien. Ark. Code Ann. § 27-21-103.2

       The Bank confuses the certificate of title and perfection laws with the statutes
regulating the operation of ATVs on the public highways. In fact, under Arkansas
law, not all ATVs are required to be registered as a motor vehicle for operation on the
public highways, but “all owners of [ATVs] that are not otherwise required to be
registered by law shall register them with the Director of the Department of Finance
and Administration within thirty (30) calendar days of acquiring them.” § 27-20-
202(a). The Director of the Department of Finance then issues “a certificate of title
to the owner of [the ATV].” § 27-20-205. Accordingly, while an ATV does not have
to be registered as a “motor vehicle, motorcycle, or motor driven cycle for operation
on the public streets and highways,” § 27-21-103, nothing in the statutes exempts
ATVs from the certificate of title laws as stated by § 27-20-205. By not requiring
ATVs to be registered as motor vehicles for operation on the public highways, the


      2
           That statute provides:
       Nothing in this chapter shall be construed to require an all-terrain
       vehicle to be registered as a motor vehicle, motorcycle, or
       motor-driven cycle for operation on the public streets and highways.
Ark. Code Ann. § 27-21-103.
       Chapter 21 of Title 27 of the Arkansas Code governs ATVs. The purpose
of the Chapter is “to regulate the use of recreational all-terrain vehicles by
restricting their use on the public streets and highways .... to ensure the safety and
general welfare of the citizens ... by limiting the situations where all-terrain
vehicles are permitted to be used in a dangerous and unsafe fashion.” § 27-21-
101.
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statute exempts ATVs from, inter alia, certain equipment requirements. See e.g., §
27-20-104 (requiring motorcycles to have working horns, taillights, etc.).

       Under Arkansas law, an ATV is subject to the certificate of title laws because
all owners are required to register an ATV with the Department of Finance and
Administration, which then issues a certificate of title. Because ATVs are covered
by certificate of title laws, the provisions of the Uniform Commercial Code do not
apply. See § 4-9-311(a)(2) (stating that “the filing of a financing statement is not
necessary or effective to perfect a security interest in property subject to: ... (2) any
other laws of this state which provide for central filing of security interests or which
require indication on a certificate of title to property of such interest....”). See also
Union Planters Bank, N.A. v. Burns (In re Gaylord Grain L.L.C.), 306 B.R. 624
(holding that “the filing provisions of the Missouri Uniform Commercial Code have
no application to motor vehicles and perfection of liens therein” and sanctioning the
appellant bank for filing a frivolous appeal). Therefore, the bankruptcy court did not
commit any error of law in concluding that Simmons Bank was an unperfected
creditor in the Debtors’ ATV and that the Chapter 7 Trustee was able to avoid
Simmons Bank’s lien pursuant to 11 U.S.C. § 544.

B. The Mobile Home

       With respect to the mobile home, Simmons Bank argues that the bankruptcy
court erred inasmuch as it held that the only way to perfect a security interest in a
mobile home is to note that interest on the certificate of title. Simmons Bank
contends that its mortgage on the real property encompassed the mobile home as soon
as the mobile home became permanently affixed to the real property.

         The particular issue addressed by Simmons Bank is not new. Courts and
legislatures have struggled with the problems of classifying mobile homes that – in
their final stages – are every bit as much of the real property as a traditional brick and

                                            5
mortar construction. The particular problem in this case, however, is not necessarily
a definition of when an item of personal property becomes annexed to the realty, but
rather one of perfecting a security interest in a mobile home and how to maintain that
perfection in light of the changing nature of the property from personal to real.3

        There is no dispute that the Debtors’ mobile home is subject to registration
under Arkansas certificate of title laws. Ark. Code Ann. § 27-14-703 (“Every motor
vehicle ... and every mobile home shall be subject to the provisions of this chapter
....”). The fact that a mobile home is without wheels and designed as permanent
living quarters does not exempt owners of mobile homes from having to obtain a
certificate of title. See § 27-14-207(2) (defining a “mobile home” as “every house
trailer or other vehicle, with or without wheels, designed for use as living quarters,
either permanent or temporary, and, at the time of manufacture, capable of being
towed or otherwise transported or drawn upon a highway.”) (emphasis added). In an
apparent attempt to avoid the conundrum of when a mobile home is transmogrified
into a fixture or structure affixed to the realty, the Arkansas legislature has
established a bright-line rule – the time of manufacture – to determine whether a
mobile home is a mobile home or something else. Thus, it would appear that a house
trailer or other vehicle designed for use as living quarters and capable of being towed
or otherwise transported or drawn on a highway at the time of manufacture will
always be a mobile home subject to the certificate of title laws.

      We can find no exception in Arkansas’s certificate of title laws that exempt
mobile homes if they are affixed to realty, and counsel for Simmons Bank has pointed


      3
        The bankruptcy court found it unnecessary to decide the factual issue of
whether the Debtors’ mobile home had become a fixture that would be covered by
a real estate mortgage. However, for purposes of its analysis in resolving the legal
question before it, the court assumed that the mobile home in this case was
permanently affixed to the real property and was thus ostensibly covered as a
fixture under Simmons Bank’s mortgage.
                                          6
to no such exception. Cf. Ala. Code Ann. § 32-8-30(c) (providing a method for
cancelling the certificate of title on a mobile home when it is affixed to the realty
upon a showing that, inter alia, the secured party on the certificate of title has
released its lien). We should not provide an extra-statutory exception to Arkansas
law when the Arkansas legislature specifically made notation on the certificate of title
on a mobile home the exclusive method of perfecting an interest therein. Ark. Code
Ann. § 27-14-807(a) (“The methods provided in this subchapter of giving
constructive notice of a lien or encumbrance upon a registered vehicle shall be
exclusive except as to liens dependent upon possession.”). If Simmons Bank is
unhappy with the conclusion reached by the bankruptcy court, it should petition the
Arkansas legislature to change the certificate of title laws pertaining to mobile homes
affixed to realty.

      Accordingly, we affirm the rulings of the bankruptcy court.

                                  ______________




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