Warfel, Jr. v. 21st Mortgage Corporation

UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF WISCONSIN

In re:

Case Number: 20-11651-13

DAVID LESTER WARFEL, JR.,

and JEANNE MARIE WARFEL,

Debtor.

DAVID LESTER WARFEL, JR.,

JEANNE MARIE WARFEL, and

MARK HARRING,

Plaintiffs,

v.

Adversary Number: 21-00002

21ST MORTGAGE CORPORATION,

Defendant.

DECISION ON TRUSTEE’S COMPLAINT TO AVOID

DEFENDANT 21ST MORTGAGE CORPORATION’S

LIEN PURSUANT TO 11 U.S.C. § 544

David and Jeanne Warfel (“Plaintiffs”) filed a voluntary petition for relief

under Chapter 13 of the Bankruptcy Code on June 25, 2020. Jeanne Warfel

previously borrowed $129,703 from 21st Mortgage Corporation (“Defendant”) to

fund her purchase of a 28’ x 53’ manufactured home. She signed a promissory

note and granted Defendant a security interest. The home was delivered and

set in place on land Plaintiffs had purchased in a prior year.1 Defendant filed a

Proof of Claim asserting it had a perfected security in the manufactured home.

1 The land was purchased from another person in 2017 who financed it.

On January 11, 2021, Plaintiffs began an adversary proceeding against

the Defendant to avoid the lien on the manufactured home pursuant to 11

U.S.C. § 544(b)(1). A motion to dismiss the adversary proceeding was filed by

the Defendant. The motion alleged the Plaintiffs did not have standing to bring

an avoidance action under section 544(b)(1). Further that Defendant has a

properly perfected security interest in the manufactured home.

This Court denied the motion, concluding that the Plaintiffs did have

standing. A trial was held on the matter, and the Court granted judgment to

the Plaintiffs, ordering that the Defendant’s lien be avoided under section

544(b)(1).

Defendant appealed the decision to the District Court. The District Court

reversed this Court's order agreeing with the contention that “the Warfels don’t

have the right to file an adversary proceeding under § 544.” (ECF No. 56 p. 1).

Thus it was unnecessary for the District Court to consider whether the lien was

properly perfected or whether section 544 authorizes avoidance of an

unperfected lien. Id. It found that the Bankruptcy Code reserved this right to

the trustee. It also remarked that “one leading treatise suggested that the

debtor may name the trustee as a plaintiff to comply with § 544.” (citing Robert

E. Ginsberg, Robert D. Martin & Catherine J. Furay, Ginsberg and Martin on

Bankruptcy § 15.03[D]).

The case was remanded for further proceedings consistent with the

opinion of the District Court. At an initial status hearing after remand, the

possibility of amending the complaint was raised by the Plaintiffs. They asked

for a brief adjournment to confer with the Trustee about his willingness to be

named as a plaintiff. Defendant noted it would object to any amendment but

did not object to a brief adjournment.

A second status hearing occurred. The parties agreed that derivative

standing had been waived. The Trustee stated he would be willing to be added

as a plaintiff. Defendant was asked for argument. Counsel for Defendant

reiterated her view that joinder of the Trustee had been waived under any

alternative. Further that any claim by the Trustee would be barred by the two-

year statute of limitations.

The Court on its own ordered that the Trustee be joined under Fed. R.

Bankr. P. 7021 (incorporating Fed. R. Civ. P. 21), further noting he is an

indispensable party.2 Counsel for the Plaintiffs stated an amended complaint

could be prepared and sent to counsel for the Trustee within two weeks. The

Court ordered that it be filed by February 20, 2023.

An amended complaint was filed. The Trustee was named as the plaintiff.

The amended complaint claimed that the Defendant's lien is unperfected and

avoidable under section 544. Other than the joinder of the Trustee, the claims

and relief sought in the amended complaint are identical to the original

complaint. Defendant filed an answer restating its position that its lien was

properly perfected. It also asserted the claim of the Trustee was barred by a

2 Defendant filed a notice of appeal of this interlocutory decision. The District Court

denied the appeal as premature, noting that Defendant could request reconsideration

in the bankruptcy court. (ECF No. 73).

statute of limitations, and that the ability of the Plaintiffs to add or substitute

the Trustee had been waived.

A motion to reconsider joinder was filed by Defendant. It contained

extensive argument. A hearing on that motion was held.

Defendant confirmed:

 There was a final hearing on the original complaint in February

2022;

 Defendant had the opportunity to present all evidence about

whether the manufactured home was a fixture or a moveable;

 Defendant could not identify any newly discovered evidence that

could not have been presented at the trial; and

 There are no issues of fact about whether the lien is avoidable.

The parties agreed that the only issues to be decided were legal issues.

Specifically whether (1) joinder of the Trustee was proper; (2) whether a claim

by the Trustee is time barred by a statute of limitations; and (3) whether the

lien was avoidable.

A briefing schedule was set. Defendant has submitted its brief. The Court

has considered Defendant’s arguments.

DISCUSSION

I. Jurisdiction

Defendant argues that this Court improperly used Fed. R. Bankr. P.

7021 to join the Trustee in the adversary proceeding. It claims the use of the

Rule was improper because parties cannot be joined post-judgment. And it

says joinder had been forfeited by the Plaintiffs. Finally, joinder results in

undue prejudice to both the Defendant and to unsecured creditors according to

Defendant.

If joinder was proper, Defendant argues that the amended complaint

should be considered new. Defendant posits that if treated as a new complaint

it would be, therefore, barred by the statute of limitations under 11 U.S.C.

§ 546.

This Court has jurisdiction under 28 U.S.C. §§ 1334 and 157(a). Venue

is proper in this Court as provided in 28 U.S.C. § 1409. This is a core

proceeding under 28 U.S.C. § 157(b)(2). The Court may enter final judgment.

28 U.S.C. § 157(b)(1).

II. Joinder of Trustee is Proper

A. This Court has the Authority to Join the Trustee Under Federal Rule of

Bankruptcy Procedure 7021.

The Defendant argues that the Plaintiffs cannot join the Trustee under

Fed. R. Bankr. P. 7021 (incorporating Fed. R. Civ. P. 21). Rule 21 provides that:

Misjoinder of parties is not a ground for dismissing an action. On

motion or on its own, the court may at any time, on just terms, add

or drop a party.

Fed R. Civ. P. 21 (emphasis added). The Defendant argues that because the

Plaintiffs lacked standing when they filed the original complaint, they cannot

use Rule 21 to gain standing post judgment.

This is a mischaracterization of how the joinder occurred. Plaintiffs did

not file a motion. This Court ordered joinder of the Trustee on its own under

Rule 7021. As provided, Rule 21 may be invoked by the Court on its own. The

Trustee could not have been joined without an order from this Court, even if

Plaintiffs had filed a motion. 3 Moore’s Federal Practice § 21.02[3] (Matthew

Bender 3d ed.). So the necessary determination is whether the joinder order by

this Court on its own was proper.

Rule 21 itself dictates that it might be used “at any time.” It has been

established that courts have discretion to make orders under Rule 21 even

after judgment has been rendered. See Newman-Green, Inc. v. Alfonzo-Larrain,

490 U.S. 826, 832 (1989). The Defendant fails to make an argument showing

that despite this clear language, joinder is impermissible because the Plaintiffs

did not have standing when they filed the original complaint.

Their argument relies largely on invoking Cole v. James B. Nutter & Co.

(In re Cole), 563 B.R. 526, 530-31 (Bankr. W.D.N.C. 2017). That case is not

binding on this Court. And it fails to show why application of Rule 21 is

inappropriate given the facts here. In Cole, plaintiffs filed a complaint and

listed claims under sections 544(b), 547(b), and 548 only to find that they did

not have standing. Id. at 530. The court refused to order joinder of the trustee

to facilitate the continuation of the actions. Id.

But Cole involved the involuntary joinder of a trustee under Fed. R. Civ.

P. 19 (incorporated by Fed. R. of Bankr. P. 7019), not Rule 21. Id. at 531. The

court in Cole distinguished the circumstances in Cole from Wood v. Mize (In re

Wood), 301 B.R. 558, 562 (Bankr. W.D. Mo. 2003). The court in Wood allowed a

Chapter 13 trustee to be joined as an indispensable party plaintiff after finding

that the debtors did not have independent standing to pursue a claim under

§ 547. See id., 301 B.R. at 562–63. It remarked that:

In this Court's view, the trustee is an indispensable party within the

context of this proceeding because he is the only person with

standing to bring the action and full relief cannot be accorded the

creditors of the estate without his joinder.

Wood, 301 B.R. at 562.

The court in Cole distinguished between the cases because there was no

indication in Wood that the trustee resisted joinder, while the plaintiffs in Cole

were requesting that the court join the trustee under protest. Id.; Cole, 563

B.R. at 531. The Defendant is therefore incorrect when it interprets Cole to

mean that voluntary parties cannot be joined to a complaint if the original filer

lacked standing. See id.

The Defendant fails to draw a parallel between Cole and the present case.

Cole involved a motion by debtor under Rule 19, but this case involves use of

Rule 21 by the Court. The trustee in Cole was resisting joinder, while the

Trustee in this case willingly participates in the action. This case is more like

Wood: the Trustee is an indispensable party, without whom the action cannot

continue, and the Trustee was joined willingly. Wood, 301 B.R. at 562.

Therefore, application of these cases would suggest that joinder of the Trustee

was proper here. Given these considerations, the Defendant’s use of Cole

cannot overcome the plain meaning of Rule 21, which allows joinder “at any

time.”

The Defendant also contends that the District Court was wrong to rely on

Ginsberg and Martin in suggesting that the debtor may name the trustee as a

plaintiff to comply with section 544. Ginsberg and Martin states that “[i]n the

appropriate case, naming the trustee as a party plaintiff may solve the standing

issue.” Ginsberg and Martin on Bankruptcy § 15.03[D]. The Defendant bases its

assertion on the fact that Ginsberg and Martin relies on Montgomery v. Dennis

Joslin Co. II, LLC (In re Montgomery), 262 B.R. 772, 776 (B.A.P. 8th Cir. 2001).

It is true that Montgomery does not directly apply here. It decided that

the avoidability of a lien should not be considered when determining whether

the court should grant relief from stay under section 362. Montgomery, 262

B.R. at 775-76. The correct process to argue avoidance would have been an

adversary proceeding, and the plaintiff would either need to invoke derivative

standing or join the Chapter 13 trustee as a plaintiff. See id. There was no

adversary.

This does not mean that Ginsberg and Martin is wrong. Other courts

have allowed a Chapter 13 trustee to be named as a party plaintiff in an

amended complaint to pursue a Chapter 5 recovery. In Gardner v. Tyson (In re

Gardner), 218 B.R. 338, 342–44 (Bankr. E.D. Pa. 1998), the court permitted a

Chapter 13 debtor to maintain a fraudulent transfer action by adding the

Chapter 13 trustee as a party plaintiff. That same court later distinguished

voluntary and involuntary joinder, ruling that a trustee could not be joined

involuntarily to an action under section 544 given the requirements of Rule 19.

See Funches v. Household Fin. Consumer Discount Co. (In re Funches), 381 B.R.

471, 487 (Bankr. E.D. Pa. 2008). Courts in multiple other jurisdictions have

ruled similarly. See, e.g., Portuesi v. Bank of New York Mellon Trust Co. (In re

Portuesi), No. 19-11275, Adv. No. 20-2018, 2021 WL 2189014, at *4 (Bankr.

M.D.N.C. May 28, 2021) (allowing debtors to file an amended complaint naming

Chapter 13 trustee as plaintiff to use section 544 avoiding power); Bank of New

York v. Sheeley (In re Sheeley), No. 08-32316, Adv. No. 11-3028, 2012 Bankr.

LEXIS 1374 (Bankr. S.D. Ohio Apr. 2, 2012) (adding Chapter 13 trustee as an

indispensable party in amended complaint under Rule 19).

Thus, this Court finds that joinder of the Trustee was a proper

application of Rule 21, as a lack of standing when the original complaint was

filed does not render joinder improper.

B. Joinder is Not Precluded by “Undue Prejudice” to the Defendant or

Unsecured Creditors.

It has been established that if joinder would create “prejudice, expense or

delay,” the court may deny joinder under Rule 21. Chavez v. Illinois State

Police, 251 F.3d 612, 632 (7th Cir. 2001). But the Defendant fails to show how

issuing the joinder order prejudices them so “unduly” that a reversal of the

joinder order is warranted.

The Defendant argues it has experienced prejudice because this Court

failed to join the Trustee earlier. It claims that the Court should be looking at

“whether joinder will force a defendant to change a litigation strategy in pursuit

of which resources have already been expended.” Aigeltinger v. Target Corp.,

No. 5:21-CV-745, 2022 U.S. Dist. LEXIS 206679, at *8 (N.D.N.Y. Nov. 15,

2022) (internal quotation omitted). It alleges that this is how they have been

prejudiced, pointing to their added efforts to litigate this matter since the

joinder order. But the merits of the claim were fully litigated before the joinder

order. None of the litigation efforts following joinder have dealt with the merits

of the dispute. Instead, Defendant has simply been focused on avoiding the

merits.

Plaintiffs are correct that in exercising its discretion courts must

consider “principles of fundamental fairness” and judicial efficiency. Intercon

Research Assocs., Ltd. v. Dresser Indus., Inc., 696 F.2d 53, 58 (7th Cir. 1982). If

a party is forced to investigate new facts or allegations because of a joinder

order, and this would be laborious enough to become prejudicial, a court could

decline to make an order under Rule 21. See id.; Moore’s at 21.02[4].

But the Defendant does not state how the joinder order has forced it to

change its litigation strategy. It admits it has not been forced to investigate new

facts or claims. The substantive issues have already been tried. There are no

new facts or arguments about whether the manufactured home is a fixture or

whether there was proper perfection. No further investigation was required.

Other than the identity of the Plaintiff, there are no new allegations to be

investigated. Even if the Trustee had been joined earlier, the arguments and

facts presented at trial would have been the same.

Essentially, the Defendant is arguing that joinder prejudices them

because this litigation has been allowed to continue to decision on the merits

rather than being dismissed on a technicality. As the case they cite says,

prejudice factors in when a party is forced to expend resources to change their

litigation strategy after claims or parties are added. See Aigeltinger, No. 5:21-

CV-745, 2022 U.S. Dist. LEXIS 206679, at *8.

Not only do courts have wide discretion to act under Rule 21, but the

rule itself dictates that “misjoinder of parties is not a ground for dismissing an

action.” Chavez, 251 F.3d at 632. For this reason, it is erroneous to suggest

that this Court’s use of Rule 21 to correct misjoinder is improper because it

prevented dismissal of this action. Correction of misjoinder was precisely what

occurred here: the Trustee was joined because the Court found he was the

appropriate plaintiff and so was an indispensable party. Without the Trustee,

the action could not continue.

Use of Rule 21 to prevent statute of limitations consequences is a valid

and sometimes obligatory use of the rule. See Lee v. Cook Cnty., 635 F.3d 969,

971–72 (7th Cir. 2011) (“[The judge’s] order dismissing the original suit and

directing [plaintiffs] to file new actions violated Rule 21 . . . . [t]here’s a reason

why Rule 21 reads as it does: When a federal civil action is dismissed without

prejudice, the statute of limitations runs continuously.”); see also Elmore v.

Henderson, 227 F.3d 1009, 1012 (7th Cir. 2000) (it is improper for the district

court to dismiss misjoined claims when there is a risk of “statute of limitations

consequences”).

As a result, this Court finds that use of Rule 21 to correct misjoinder is

proper, and the continuance of this action does not “unduly prejudice” the

Defendant.

a. There is No Prejudice to Unsecured Creditors.

The Defendant also argues that the joinder of the Trustee and the

avoidance of its lien prejudices the unsecured creditors. They contend that

because of the Plaintiffs’ failure to provide for payment of what it considers to

be the value of its lien into the plan, “all unsecured creditors will be prejudiced

by not receiving what they are entitled to under the Plan.”

This argument is flawed for two reasons. First, consideration of prejudice

under Rule 21 focuses on the parties in the litigation, not on nonparties.

Second, the effect of avoidance on general unsecured creditors is a plan

confirmation issue under section 1325, not whether there is an avoidable lien.

Whether the Plan is in the best interests of creditors is something that

must be determined at a plan confirmation hearing. The parties agreed that a

decision on avoidance of the lien needed to be decided before any hearing on

objections to confirmation of a plan. So trial on the avoidability of the lien is

separate from the decision on the sufficiency of proposed plan payments even

though it may directly affect that decision. As a result, the value—if any—of the

asserted lien is irrelevant to whether the Trustee can be joined in the adversary

proceeding. Objections to the Plaintiffs’ plan do not belong in the adversary and

will be addressed in the main bankruptcy case.

The argument emphasizes a misunderstanding of the interest of general

unsecured creditors. If the lien is not avoided, then payment would be required

to Defendant. None of the value would be paid to unsecured creditors. And

payment to Defendant would limit any funds available for unsecured creditors.

The actual plan confirmation standard is whether the unsecured creditors

would be paid at least as much as they would receive in a Chapter 7.

It is undisputed that Debtors could bring a lien avoidance action in their

own name in a Chapter 7. If avoided, they would also have a right to claim any

equity exempt up to the allowable statutory limits. The amount that would then

be available for unsecured creditors—including Defendant—would be

calculated. That is the proper measure of whether unsecured creditors are

receiving what is required under 11 U.S.C. § 1325(a)(4). The measure is not

whether the purported full value of the lien is paid to unsecured creditors.

C. Joinder Was Not Forfeited Because the Plaintiffs Failed to Raise it

Before This Court’s Trial Decision.

The Defendant argues that the Plaintiffs forfeited any joinder argument

by failing to raise it before trial.3 The Plaintiffs did not move to join the Trustee,

nor do they have the power to independently join a party under Rule 21, which

“may be invoked only by court order.” Moore’s at 21.02 [3]. It has been

established that Rule 21 can be used “at any time,” even after judgment or on

appeal. Newman-Green, Inc., 490 U.S. at 832. Application of joinder should

reflect principles of “fundamental fairness,” but otherwise courts are given wide

discretion when it comes to permissive joinder. See Chavez, 251 F.3d at 632;

Intercon Research Associates, Ltd., 696 F.2d at 58.

The Defendant points to cases that refer to (1) forfeiture of an argument

by failing to develop it or cite any case law to support it and (2) an incarcerated

3 Defendant also argues that derivative standing has been forfeited, but this point is

irrelevant because this Court and Plaintiffs are in agreement.

appellant not being able raise unrelated issues on remand that could have

been raised in his first appeal. See NeuroGrafix v. Brainlab, Inc., No. 12 C 6075,

2020 U.S. Dist. LEXIS 172920, at *22-23; United States v. Parker, 101 F.3d

527, 527–28 (7th Cir. 1996). The question is not whether new claims and

arguments would be forfeited at this point. No new claims or arguments have

been raised.

The question is whether this Court properly issued a joinder order post

judgment. When all of the facts relevant to a decision on the merits remain

unchanged and were fully tried, fundamental fairness dictates joinder to

correct the misjoinder and permit a decision of the actual claim. The Defendant

has not provided a reason as to why failure to raise “any joinder/ substitution

[argument]” can result in joinder by the Court on its own being forfeited. For

these reasons, this Court concludes that joinder has not been forfeited.

III. The Complaint is Not Time Barred by the Statute of Limitation Under 11

U.S.C. § 546.

The Defendant also argues that the current action is time-barred by the

statute of limitations under 11 U.S.C. § 546. It is correct that commencing a

new action under section 544 at the time the amended complaint was filed

would be time-barred under section 546(a)(1)(B). Defendant claims that the

amended complaint should be considered new because the Trustee could not

be properly joined under Rule 21. But, use of Rule 21 is found to be proper, as

discussed above.

So we now turn to whether the claim was properly amended under Fed.

R. Civ. P. 15. “Rule 15 allows a party to amend despite the running of an

applicable state statute of limitations when parties are sufficiently on notice of

the facts and claims that gave rise to the proposed amendment.” Moore’s at

§ 15.19[1]. The purpose of this is to allow meritorious claims to continue

despite technical difficulties. See Woods v. Indiana Univ.-Purdue Univ., 996 F.2d

880, 883 (7th Cir. 1993). To protect parties from prejudice, Rule 15(c) requires

that a claim sufficiently “relate back.” By only allowing claims that “relate

back,” courts ensure that parties maintain all notice and protection that the

statute of limitations requires. See id.; Moore’s at § 15.19[1].

The pivotal consideration is whether “the amendment asserts a claim or

defense that arose out of the conduct, transaction, or occurrence set out—or

attempted to be set out—in the original pleading.” Fed. R. Civ. P. 15(c)(1)(B). In

determining whether an amended pleading meets this requirement, courts

should look to whether the defendant had notice of the claim the plaintiff is

now asserting, whether the same kind of evidence supports the new claim, and

if unfair surprise to the defendant could result if the court allowed the

amendment to relate back. Moore’s at § 15.19[2].

As has been noted already, the amended complaint contains no new

arguments. The evidence is identical. The Defendant has been on notice of all

these assertions of facts and law since the filing of the original complaint. The

only difference between the original and amended complaints is naming the

Trustee as Plaintiff. This level of consistency is more than enough to find that a

pleading relates back: new theories for relief can even be added as an

amendment, so long as they arise from the same factual basis as the original

count, giving the parties notice. Newman v. Kruszynski (In re Kruszynski), 150

B.R. 209, 211 (Bankr. N.D. Ill. 1993).

Here both the factual basis and theory are unchanged. Thus, this Court

finds that the amended complaint sufficiently “relates back” to the original. The

Defendant had notice, the evidence is identical, there is no new theory, and

there is no indication of prejudice.

IV. Defendant’s Lien is Avoidable Under 11 U.S.C. § 544.

The Defendant continues to allege that its lien is properly perfected, and

accordingly cannot be avoided under section 544(b)(1). It maintains that the

manufactured home is moveable, and thus its security interest is perfected

under Wis. Stat. Ch. 101 Subchapter V, “Manufactured and Mobile Homes.”

Plaintiffs purchased vacant land intending to build a home. When the

time to build would take longer than expected, they considered buying a trailer

to use while the house was being built. When looking at a used trailer, the

manager of Quality Homes introduced them to manufactured homes.

The manufactured home would be faster and “it didn’t do anything that a

. . . stick-built home would not have done . . . .” (ECF No. 46, p. 17, lines 4-6).

Plaintiffs understood either a basement or a concrete slab was required as a

permanent foundation for the home they picked. (Id., lines 4-8). Metal arms

drilled into the concrete were needed to affix the house to the concrete. (Id.,

lines 15-17).

Because they decided they did not need a basement, additional planning

and coordination was needed for the slab. Plaintiffs had to put in a well and

septic. Sleeves for both had to be inserted in the slab before it dried. (Id., p. 16,

lines 9-17).

Options for financing were given to Plaintiffs by Quality Homes. They

selected Defendant. To qualify, they were told they had to own the land, so

their land contract was converted to a note and mortgage. A copy of the deed

was sent to Defendant. Jeanne asked whether Defendant had a title report that

would show the deed but was told Defendant’s didn’t require those or title

insurance. She asked whether there would be a title company for closing. The

answer was no. Instead, Quality Homes would handle the closing.

Plaintiffs signed a purchase contract that said Quality Homes would

deliver and set the house. At the closing, various other documents were

presented—a note and security agreement and powers of attorney. While the

note and security agreement say under Other Terms and Conditions that the

manufactured home was and would remain personal property, there are also

contradictory terms in the documents. The documents also refer to a mortgage

or deed of trust. No one reviewed or explained the documents to Plaintiffs. They

were left to assume they understood the documents. After closing there was an

application for a certificate of title. It was signed by Quality Homes. Plaintiffs’

signature was inserted using the power of attorney.

Plaintiffs’ home cannot move under its own power. It had to be

transported from the manufacturing facility to Plaintiffs’ land. It complied with

the HUD Code—a national building code. It is built on a steel frame using an

automated building system. The floor is then attached and the home is

constructed on that frame. The frame stays with the HUD-coded manufactured

home. (ECF No. 46, pp. 78-79).

In order to transport the home on an interstate highway, it must be

delivered in halves. Axles, tires, and hitches are attached for the transport.

When it arrives at the building site, it is put in place and the axles, tires, and

hitch are removed. The halves are bolted together and a ridge plate is installed.

It is bolted to the concrete slab. Utilities—water, septic, electricity—are

connected. In sum, there is physical annexation to the land. It is adapted to the

purpose to which the land is devoted. And it met the intention of the Plaintiffs

to make a permanent accession to the land.

This Court found that the manufactured home is properly classified as a

“good that is to become a fixture” under Chapter 409 of the Wisconsin

Statutes. The Court concluded that the Plaintiffs intended to use the

manufactured home as their permanent residence. That intention was known

to the manufactured home dealer when the order was placed and the

arrangements for financing were made. It was also obvious to Defendant.

Factors which played a part in this determination included:

● The manufactured home was placed on real property.

● The real property address served as the Debtor’s residence.

● The temporary axles and wheels used to transport the manufactured

home were removed.

● The manufactured home sits on concrete blocks that are set on a full

concrete slab.

● It is anchored to the concrete slab, and bolted into a receiving plate

bolted into the concrete slab.

● Plaintiffs intended to make the manufactured home a permanent

home.

● The manufactured home provided everything a stick-built house

would provide.

● This manufactured home has never again operated on or over the

highways as a motor vehicle.

State law determines the standards for determining when personalty

becomes affixed to real property. The Wisconsin law applies a three-part test:

1) Actual annexation to the realty

2) Application or adaptation to the use or purpose to which the realty

is devoted

3) Intention of the person making annexation to make a permanent

accession to the freehold.

Premonstratensian Fathers v. Badger Mut. Ins. Co., 175 N.W.2d 237, 46 Wis. 2d

362, 367 (Wis. 1970). The application of these tests leads to a determination of

whether an item, otherwise considered personal property, constitutes a

common law fixture. The home is integral to the real property. It is clearly

adapted to and used for a residence. There is no dispute that the unerring

intention of the Debtors was for this to be their permanent home.

Simply because it would be physically possible to move this

manufactured home does not change the conclusion it became a fixture. The

fact the home could be removed from the slab, utilities disconnected, and once

separated in half that axles, wheels, and a hitch could be temporarily added for

transport doesn’t change it from a fixture to a moveable. It is bolted to a

required permanent slab. A well was drilled and septic installed. Connections

to utilities were made. It was intended and has been used as a permanent

alternative to a stick-built home. And the very size and difficulty in

transporting it further confirms the fact it was intended to be placed in one

position and used as a permanent home.

Defendant urges a restrictive interpretation of section 101.9218(1), Wis.

Stats., that says the method of perfecting security interests in a mobile or

manufactured home in that section is exclusive. That ignores section

101.9218(2). It provides that the method Defendant relies on does not apply to

a manufactured home that is a fixture to real estate or to a manufactured

home that when acquired the owner intends to permanently affix to the owner’s

land.

Because the manufactured home was intended and considered to be a

fixture, the Defendant had two options for perfecting its lien: (a) file a financing

statement, or (b) file a fixture filing. Wis. Stat. § 101.9213. It did neither and its

lien was found to be not properly perfected.

The Defendant offers no new evidence or legal argument for this Court to

consider. So it is the conclusion of the Court that the lien was not properly

perfected. The lien is avoidable under section 544.

CONCLUSION

For the above reasons, this Court finds that the Trustee was properly

joined under Fed. R. Bankr. P. 7021. And the complaint relates back to the

original and therefore this action does not violate the statute of limitations

under section 546 and is properly brought before this Court.

The Court finds that the Defendant’s lien is also avoidable under section

944. This matter has been fully tried on all the evidence contained in the

current action.

This decision shall constitute findings of fact and conclusions of law

pursuant to Bankruptcy Rule 7052 and Rule 52 of the Federal Rules of Civil

Procedure.

A separate order and judgment consistent with this decision will be

entered.

Dated: August 9, 2023

BY THE COURT:

U.S. Bankruptcy Judge

21