Richard v. Fink v. Fidelity Financial ( 1996 )

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No. 96-1430
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In re: Denise Renee Beasley, *
*
Debtor, *
*
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* Appeal from the United States
Richard V. Fink, Trustee, * District Court for the
* Western District of Missouri.
Appellee, *
* [UNPUBLISHED]
v. *
*
Fidelity Financial Service, Inc.,*
*
Appellant. *
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Submitted: October 30, 1996
Filed: November 27, 1996
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Before BEAM, HANSEN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
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PER CURIAM.
Fidelity Financial Services, Inc. ("Fidelity") appeals the district
court's affirmance of the bankruptcy court's1 order setting aside
Fidelity's lien on the debtor's car as a voidable preference. The
bankruptcy court's ruling depended on its conclusion that state relation-
back statutes are inapplicable to preference-avoidance analysis under 11
U.S.C. § 547(c)(3)(B). This is an issue of first impression in this
circuit. In agreement with
1
The Honorable Ortrie D. Smith, United States District Judge
for the Western District of Missouri, affirming the decision of
the Honorable Frank W. Koger, Chief Judge, United States
Bankruptcy Court for the Western District of Missouri.
the position of the Ninth Circuit, we now hold that state relation-back
periods do not apply to section 547 analysis.
Section 547(b) of the Bankruptcy Code ("Code") allows a trustee in
bankruptcy to avoid certain prepetition payments and transfers of a
debtor's property as "preferential transfers." Not all preferential
transactions are voidable under section 547(b), however. As relevant here,
section 547(c)(3)(A) provides an exception for interests securing new
value. Section 547(c)(3)(B) allows a creditor a twenty-day grace period
in which to perfect an interest securing new value and thereby protect the
interest from the trustee's preference-avoidance powers.
Under section 547(e)(1)(B), "a transfer of a fixture or property
other than real property is perfected when a creditor on a simple contract
cannot acquire a judicial lien that is superior to the interest of the
transferee." Under Missouri law, if an interest in a vehicle is perfected
within thirty days of the purchase, the perfection will be considered
effective as of the date of purchase. Mo. Rev. Stat. § 301.600.2 (1994).
According to the parties' stipulation, Fidelity fulfilled state
requirements for perfecting its interest in the car twenty-one days after
debtor purchased it. The issue in this case is whether Missouri's thirty-
day relation-back statute applies in determining whether Fidelity perfected
its interest within the grace period provided by the Code.
The Ninth Circuit has concluded that state-law relation-back periods
are inapplicable to preference-avoidance analysis. In re Loken, 175 B.R.
56, 61 (B.A.P. 9th Cir. 1994), cited with approval in Fitzgerald v. First
Sec. Bank of Idaho (In re Walker), 77 F.3d 322, 322 (9th Cir. 1996). The
court reasoned that the Code's unambiguous definition of perfection
required it to determine at what point a judicial lienholder is barred from
obtaining rights superior to those of a transferee. 175 B.R. at 61-62.
It held
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that such a bar arises "when the transferee takes the last step required
by state law to perfect its security interest," and until then, "it is not
possible to say that other creditors `cannot' obtain superior rights." Id.
at 62. The court concluded that determining perfection without reference
to state grace periods is consistent with Congress's desire to have "a
uniform rule throughout the country." Id. at 62-63.
We find this reasoning persuasive. Accordingly, we affirm the
judgment of the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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