Submitted: November 14, 2018
from the United States Bankruptcy Appellate Panel for the
BENTON, BEAM, and ERICKSON, Circuit Judges.
BENTON, CIRCUIT JUDGE.
Matthew Bennett and Teresia Robin Bennett filed for Chapter
13 bankruptcy. Their plan proposed that The Paddock's
secured claim in their manufactured home would be bifurcated
into secured and unsecured parts. The Paddock objected. The
bankruptcy court overruled the objection. It held that 11
U.S.C. § 1322(b)(2)'s anti-modification provision
did not apply to The Paddock's claim. In re
Bennett, 2017 WL 1417221 (Bankr. N.D. Iowa Apr. 20,
2017). The Paddock appealed. The Bankruptcy Appellate Panel
(BAP) affirmed. In re Bennett, 584 B.R. 15 (B.A.P.
8th Cir. 2018). The Paddock again appeals. Having
jurisdiction under 28 U.S.C. § 158(d)(1), this court
Paddock LLC installs, rents, and sells manufactured homes in
a planned neighborhood it owns. The Bennetts rented and later
purchased a manufactured home, financed by monthly payments
to The Paddock. At the time of purchase, they also agreed,
for the lot under the home, to a 990-year Ground Lease
(99-year terms with 9 renewal options). By the lease, the
Bennetts pay a monthly association fee. They pay
personal-property taxes for the home; The Paddock pays
real-property taxes for the lot.
Bennetts filed for Chapter 13 bankruptcy. Their plan proposed
that The Paddock's claim-secured by a security interest
only in their manufactured home-would be treated as partly
secured and partly unsecured under 11 U.S.C. §
506(a)(1). The Paddock objected, arguing that an
anti-modification provision bars bifurcation because the
manufactured home is real property. This provision prohibits
a plan from modifying the rights of creditors who have
"a claim secured only by a security interest in real
property that is the debtor's principal residence."
11 U.S.C. §
1322(b)(2). After an evidentiary hearing, the
bankruptcy court found that, under Iowa law, the home was
personal-not real-property. The court overruled The
Paddock's objection and confirmed the plan. The Paddock
appealed to the BAP, which reviewed for clear error and
Paddock appeals, arguing the bankruptcy court erred in
finding the manufactured home was personal property under
an appeal from the BAP, this court independently reviews the
bankruptcy court's decision, applying the same standard
of review as the BAP." In re Terry, 687 F.3d
961, 963 (8th Cir. 2012). Factual findings are reviewed for
clear error and conclusions of law de novo. Id. This
appeal presents a mixed question of law and fact: whether the
bankruptcy court's factual findings meet Iowa's legal
test for fixtures. Because this question entails primarily
factual work, its resolution is reviewed for clear error.
See U.S. Bank N.A. v. Village at Lakeridge, LLC, 138
S.Ct. 960, 967 (2018).
Paddock has the burden to prove that its claim is within
§ 1322(b)(2)'s anti-modification exception. See
Educ. Assistance Corp. v. Zellner, 827 F.2d 1222, 1226
(8th Cir. 1987) (creditor objecting to Chapter 13 plan bears
initial burden to produce satisfactory evidence supporting
its objection). See also In re Jordan, 403 B.R. 339,
351 (Bankr. W.D. Pa. 2009) (collecting cases).
Paddock's claim is secured by a security interest only in
the Bennetts' manufactured home, which is their principal
residence. The issue is whether the home is personal or real
property. The Bankruptcy Code does not resolve this issue.
"In the absence of a controlling federal rule, we
generally assume that Congress has 'left the
determination of property rights in the assets of a
bankrupt's estate to state law,' since such
'[p]roperty interests are created and defined by state
law.'" Nobelman v. Am. Sav. Bank, 508 U.S.
324, 329 (1993) (alteration in original), quoting Butner
v. United States, 440 U.S. 48, 54-55 (1979). See In
re WEB2B Payment Sols., Inc., 815 F.3d 400, 405 (8th
Cir. 2016) ("The nature and extent of the debtor's
interest in property are determined by state law.").
Here, the issue is determined by Iowa law. See In re
Reinhardt, 563 F.3d 558, 563-64 (6th Cir. 2009) (using
state law to determine whether mobile home was personal or
real property under § 1322(b)(2)); In re Ennis,
558 F.3d 343, 345-46 (4th Cir. 2009) (same).
Iowa common law, personal property is a fixture-thus real
property-when: "(1) it is actually annexed to the
realty, or to something appurtenant thereto; (2) it is put to
the same use as the realty with which it is connected; and
(3) the party making the annexation intends to make a
permanent accession to the freehold." Ford v.
Venard, 340 N.W.2d 270, 271 (Iowa 1983), citing
Cornell College v. Crain, 235 N.W. 731, 732 (Iowa 1931).
The first two are "mainly important in determining the
intention of the party making the annexation," which is
"the controlling consideration in determining the whole
question." Speer v. Donald, 207 N.W. 581, 582
(Iowa 1926), quoting Ottumwa Woolen Mill Co. v.
Hawley, 44 Iowa 57, 63 (1876). "[T]he intention is
paramount and really the determining factor."
Cornell College, 235 N.W. at 732. A party's
intention is a factual question. Speer, 207 N.W. at