               United States Bankruptcy Appellate Panel
                               FOR THE EIGHTH CIRCUIT

                                         ______

                                     No. 03-6039EM
                                         ______

In re:                                      *
                                            *
Gaylord Grain L.L.C.,                       *
                                            *
         Debtor.                            *
                                            *
Union Planters Bank, N.A.,                  *
                                            *
         Creditor-Appellant,                *   Appeal from the United States
                                            *   Bankruptcy Court for the
               v.                           *   Eastern District of Missouri
                                            *
Rice P. Burns, Jr.,                         *
                                            *
         Trustee-Appellee.                  *
                                            *
                                            *
                                            *
                                            *
                                            *

                                         ______

                               Submitted: February 25, 2004
                                   Filed: March 9, 2004
                                         ______

Before KRESSEL, Chief Judge, DREHER and VENTERS, Bankruptcy Judges.
                                ______

KRESSEL, Chief Judge.
       Union Planters Bank, N.A. appeals from an order of the bankruptcy court1
granting the trustee’s motion to sell two vehicles free and clear of the bank's security
interest. Because we conclude that the bankruptcy court correctly granted the motion,
we affirm.

                                  BACKGROUND

       On August 12, 1999, the bank executed a Commercial Security Agreement with
the debtor, Gaylord Grain, LLP, in the amount of $250,000, listing as collateral all
equipment, farm products, livestock and farm equipment. On August 16, 1999, the
bank filed a UCC Form No. 1 with the Bloomfield, Missouri Recorder of Deeds and
listed all equipment, farm products, livestock and farm equipment as covered
property. On August 20, 1999, the bank filed a UCC Form No. 1 with the Missouri
Secretary of State and listed in part all equipment, farm products, livestock and farm
equipment as covered property.

       On August 21, 2002, the debtor filed for relief under Chapter 7 of the
Bankruptcy Code. On May 7, 2003, the trustee filed his motion seeking authority to
sell personal property free and clear of liens. The bank objected, asserting a lien in
the two items which the trustee sought to sell: a 1984 Mack Tractor and a 1986
Timpte Trailer. The bank believes it is entitled to the proceeds from the sale of these
two items. On June 24, 2003, the bankruptcy court granted the trustee’s motion. The
bank appeals.




      1
       The Honorable Barry S. Schermer, United States Bankruptcy Judge for the
Eastern District of Missouri.

                                           2
                             STANDARD OF REVIEW

       We review the bankruptcy court’s findings of fact, whether based upon oral or
documentary evidence, for clear error, and its legal conclusions are reviewed de novo.
Fed. R. Bankr. P. 8013; First Nat’l Bank of Olathe v. Pontow, 111 F.3d 604, 609 (8th
Cir. 1997).

                                    TIMELINESS

       The trustee has raised the issue of the timeliness of the appellant's notice of
appeal. The trustee concedes that the notice of appeal was timely filed, but argues
that the notice of appeal was not accompanied by the requisite filing fee which was
not paid until later, thereby rendering the notice of appeal untimely. However, the
record supports a determination that the fee was paid with the notice and we also note
that the clerk of bankruptcy court's docket, at entry number 51, specifically indicates
a notice of appeal filed on July 7, 2003, with a notation that the filing fee has been
paid. We conclude that the notice of appeal was timely.



                                     MOOTNESS

       The trustee filed a motion to dismiss this appeal, arguing that the sale of the
tractor and the trailer renders the appeal moot. We disagree. In Forbes v. Forbes (In
re Forbes), 215 B.R. 183, 192-194 (B.A.P. 8th Cir. 1997), we defined the mootness
doctrine as a statutorily and judicially created finality rule based upon “the occurrence
of events which prevent an appellate court from granting effective relief....” Id. at
193. In Blackwell v. Lurie (In re Popkin v. Stern), 234 B.R. 724, 727 (B.A.P. 8th Cir.
1999), rev’d on other grounds, 223 F.3d 764(8th Cir. 2000), we held that property
sold at an execution sale by the liquidating trustee did not moot the appeal, because
the proceeds from the sale could be paid to the appellant if it was found that the


                                           3
bankruptcy court erred.2 The Eighth Circuit agreed with us on the mootness issue.
223 F.3d 764, 766, n. 2. Similarly in this case, a finding that the bankruptcy court
erred on the issue of perfection would allow the proceeds from the sale of the trailer
and the tractor to be paid to the bank.

                                BONA FIDE DISPUTE

      11 U.S.C. § 363(f)(4) provides:

             The trustee may sell property under subsection (b) or (c) of
             this section free and clear of any interest in such property
             of an entity other than the estate, only if ...
             (4) such interest is in bona fide dispute.

In this case, the trustee did not file an adversary proceeding seeking to avoid the
creditor’s liens before he sought to sell the property free and clear of interests. Thus,
the issue becomes whether there is a “bona fide dispute” for purposes of 11 U.S.C.
§ 363(f)(4).

        The term “bona fide dispute” is not defined in 11 U.S.C. § 363 (f)(4).
However, many courts, including the Seventh Circuit Court of Appeals, have stated
that courts must determine “whether there is an objective basis for either a factual or
legal dispute as to the validity of the debt.” In re Busick, 831 F.2d 745, 750 (7th Cir.
1987); In re Octagon Roofing, 123 B.R. 583, 590 (Bankr. N.D. Ill. 1991). Clearly this
standard does not require the court to resolve the underlying dispute, just to determine
its existence. Id. Courts utilizing this definition have held the parties to an evidentiary
standard and evidence must be provided to show factual grounds that there is an
“objective basis” for the dispute. Id.


      2
      In fact, that is exactly what happened. The appellants succeeded in having the
bankruptcy court's order reversed and the sale proceeds were paid to them.
                                            4
       Moreover, courts have recognized that to qualify as a “bona fide dispute” under
§ 363(f)(4), the propriety of the lien does not have to be the subject of an immediate
or concurrent adversary proceeding. See In re Collins, 180 B.R. 447, 452, n.8 (Bankr.
E.D. Vir. 1995) (citing In re Oneida Lake Dev., Inc., 114 B.R. 352, 358 (Bankr.
N.D.N.Y. 1990) (stating that § 363(f)(4) is satisfied even though the debtor has not
filed an adversary proceeding seeking to avoid the creditor’s lien)); In re Bedford
Square Assoc., L.P., 247 B.R. 140, 145 (Bankr. E.D. Penn. 2000) (stating that
although the debtor has not commenced a § 544(a)(3) action, the fact that in all
probability it could do so successfully is sufficient to establish that a “bona fide
dispute” for purposes of § 363(f)(4) exists) (citing In re Collins, 180 B.R. at 452, n.7;
In re Octagon Roofing, 123 B.R. at 590-592; In re Oneida Lake Dev., Inc., 114 B.R.
at 357-58; and In re Millerburg, 61 B.R 125, 127-128 (Bankr. E.D.N.C. 1986)).

       Thus, although the trustee did not file an adversary proceeding seeking to avoid
the liens in question, he may nevertheless sell free and clear of the bank’s liens if he
can show, pursuant to 11 U.S.C. § 544, an objective basis for avoiding the liens, and
thus establish a bona fide dispute for purposes of 11 U.S.C. § 363(f)(4).

                           PERFECTION OF THE LIENS

       Not only has the trustee established an objective basis for avoidance, we agree
with the bankruptcy court that the trustee can avoid the liens because the bank failed
to perfect its liens on the two motor vehicles. The liens on the motor vehicles should
have been perfected in accordance with the provisions of former Mo. Stat. Chapter
301. Pursuant to this statute, a lien on a motor vehicle is perfected, with certain
exceptions, when an application for a certificate of ownership is delivered to the
director of revenue. Mo. Stat. § 301.600(2) provides:

             A lien or encumbrance on a motor vehicle or trailer is
             perfected by the delivery to the director of revenue of the


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            existing certificate of ownership, if any, an application for
            a certificate of ownership containing the name and address
            of the lienholder and the date of his security agreement,
            and the required certificate of ownership fee. It is perfected
            as of the time of its creation if the delivery of the aforesaid
            to the director of revenue is completed within thirty days
            thereafter, otherwise as of the time of delivery.

Mo. Stat. § 301.600(2); In re Westfall, 227 B.R. 734, 738 (Bankr. W.D. Mo. 1998).
Uniform Commercial Code filing requirements are not applicable to the perfection
of liens on motor vehicles. Farmers & Merchants Bank v. Borg-Warner Acceptance
Corp., 665 S.W.2d 636 (Mo. App. 1983). Lest there be any doubt, the statute later
states:

            The method provided in sections 301.600 to 301.660 of
            perfecting and giving notice of liens and encumbrances
            subject to sections 301.600 to 301.660 is exclusive.

Mo. Stat. § 301.650(2) (emphasis added.)

       The bank's argument that, because the motor vehicles were also equipment,
it had the alternative of perfecting under UCC provisions is unavailing in the face
of the statute's use of the word “exclusive.” The bank did not follow the
procedure set forth in Mo. Stat. § 301.600(2). Instead, it filed financing
statements. However, the filing provisions of the Missouri Uniform Commercial
Code have no application to motor vehicles and perfection of liens therein. Mo.
Stat. § 301.650(2); In re Jackson, 268 F. Supp. 434, 437 (E.D. Mo. 1967).




                                          6
                        APPLICATION OF 11 U.S.C. § 544

     The bankruptcy trustee has, as of the commencement of the case, the rights and
powers of a hypothetical judicial lien creditor. Section 544(a)(1) provides:

             (a) The trustee shall have, as of the commencement of
             the case, and without regard to any knowledge of the
             trustee or of any creditor, the rights and powers of, or may
             avoid any transfer of property of the debtor or any
             obligation incurred by the debtor that is voidable by-
                           (1) a creditor that extends credit to
                    the debtor at the time of the commencement
                    of the case, and that obtains, at such time and
                    with respect to such credit, a judicial lien on
                    all property on which a creditor on a simple
                    contract could have obtained such a judicial
                    lien, whether or not such a creditor exists.

11 U.S.C § 544(a)(1). Thus, the trustee is deemed to have a lien on all property of the
debtor. The trustee’s hypothetical lien is superior to any unperfected lien. Rouse v.
Chase Manhattan Bank, U.S.A., N.A. (In re Brown), 226 B.R. 39, 45 (W.D. Mo.
1998). Under § 544, the trustee has the power to avoid any lien that is unperfected on
the date the petition is filed. Nelson v. Smith (In re Smith), 245 B.R. 625, 629 (Bankr.
W.D. Mo. 2000). Contrary to assertions by the bank, the statute makes the trustee's
knowledge of the existence of the lien irrelevant.


      Because the bank did not perfect its liens on the 1984 Mack Tractor and the
1986 Timpte Trailer, the trustee’s hypothetical lien becomes superior to the
unperfected liens of Union Planters Bank. Consequently, the trustee may avoid the
bank’s liens.




                                           7
             ADEQUATE PROTECTION UNDER 11 U.S.C. § 363(e)


       Ordinarily, when the trustee proposes to sell property free and clear of an
interest in property, the bankruptcy court grants a replacement lien in the proceeds of
the sale as a condition of the sale. That is because § 363(e) provides:


             Notwithstanding any other provision of this section, at any
             time, on request of an entity that has an interest in
             property used, sold, or leased, or proposed to be used, sold,
             or leased, by the trustee, the court, with or without hearing,
             shall prohibit or condition such use, sale, or lease as is
             necessary to provide adequate protection of such interest...



11 U.S.C. § 363(e) (emphasis added). However, the court becomes involved only if
an entity having an interest in the property requests that the use be conditioned on
sufficient adequate protection. Armstrong v. Norwest Bank Minnesota, N.A. (In re
Trout), 123 B.R. 333, 337 (Bankr. D. N.D. 1990). Thus, it is incumbent on a creditor
who claims a lien on property being sold to request a replacement lien or some other
form of adequate protection.


       In this case, the record does not indicate that the bank made a request for
adequate protection pursuant to §363(e), nor has it raised this issue on appeal. “A
party’s failure to raise or discuss an issue in his brief is to be deemed an abandonment
of that issue.” Coney v. Union Pacific R.R., 136 F.3d 1195, 1196 (8th Cir. 1998)
(quoting Jasperson v. Purolator Courier Corp., 765 F.2d 736, 740 (8th Cir. 1995)).




                                           8
                                     SANCTIONS


      The trustee has made a motion for sanctions pursuant to Rule 8020, which
provides:


                    If a district court or bankruptcy appellate panel
                    determines that an appeal from an order, judgment,
                    or decree of a bankruptcy judge is frivolous, it may,
                    after a separately filed motion or notice from the
                    district court or bankruptcy appellate panel and
                    reasonable opportunity to respond, award just
                    damages and single or double costs to the appellee.


Fed. R. Bankr. P. 8020.
       After a careful review of the record and consideration of all of the appellant's
arguments, we conclude that this appeal is frivolous and sanctions are warranted. We
think the result of the appeal is obvious and the arguments advanced are wholly
without merit. See, Newhouse v. McCormick & Co., Inc., 130 F.3d 302, 305 (8th Cir.
1997) (interpreting analogous Fed. R. App. P. 38). We consider the bank's argument
regarding perfection to be frivolous in face of the statute's specific mandate that one
particular method is exclusive. Similarly, the bank's argument that the trustee should
not be able to avoid its security interest because he had actual knowledge is frivolous
in light of § 544(a)(1)'s proviso that avoidability is “without regard to any knowledge
of the trustee.” The bank has pointed to no statute or statutory construction or case
whose application in the bank's favor is anything other than frivolous.


       As a result of this frivolous appeal, the trustee has incurred attorney's fees and
expenses for defending this appeal, which include preparing and filing a brief and
traveling from Cape Girardeau to St. Louis for oral argument. These are all expenses

                                           9
which will be treated as administrative expenses in the case and thus reduce the
distribution to creditors. We thus assess damages against the bank and in favor of the
trustee in the amount of $2,500.00.


                                   CONCLUSION


      Because the bank did not comply with Mo. Stat. § 301.600(2), its lien was
unperfected. Because the lien was unperfected, the trustee could avoid it under
§ 544(a)(1). Because the lien was avoidable, it was the subject of a bona fide dispute.
Because the lien was the subject of a bona fide dispute, the trustee was entitled to sell
the property free of the lien. We therefore affirm the bankruptcy court's order
granting the trustee's motion and award the appellee $2,500.00 in damages.




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