United States Court of Appeals
For the First Circuit
Nos. 01-1747
01-1841
IN RE: PERRY HOLLOW MANAGEMENT COMPANY, INC., A/K/A
PERRY HOLLOW MGMT. CORP.; PERRY HOLLOW GOLF CLUB, INC.,
Debtors
YAMAHA MOTOR CORPORATION, USA,
Appellant,
YAMAHA MOTOR CO., LTD.,
Plaintiff,
v.
PERRY HOLLOW MANAGEMENT COMPANY, INC. A/K/A/
PERRY HOLLOW MGMT. CORP.; PERRY HOLLOW GOLF CLUB, INC.,
Debtors, Appellees,
JEFFREY A. SCHREIBER,
Chapter 11 Trustee, Appellee,
GERALDINE L. KARONIS,
Assistant U.S. Trustee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, U.S. District Judge]
Before
Torruella, Circuit Judge,
Coffin, Senior Circuit Judge,
and Lynch, Circuit Judge.
Diane M. Puckhaber, with whom Perkins & Puckhaber, P.A. was on
brief, for appellant.
Edward C. Dial, Jr., with whom Jeffrey A. Schreiber and
Schreiber & Associates, P.C. were on brief, for appellee.
Robert D. Kamenshine, Attorney, Appellate Staff Civil
Division, with whom Robert D. McCallum, Jr., Assistant Attorney
General and William Kanter, Attorney, Appellate Staff Civil
Division, were on brief for the United States Trustee.
July 23, 2002
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TORRUELLA, Circuit Judge. Yamaha Motor Corporation, USA
("Yamaha"), appeals from the judgment entered by the District Court
for the District of New Hampshire. The judgment affirmed the
bankruptcy court's decision to set aside Yamaha’s security interest
in and allow the sale of seventy-two golf carts, which were part of
the bankruptcy estate of Perry Hollow Golf Club, Inc. and Perry
Hollow Management Company, Inc. (collectively "Perry Hollow"). For
the reasons discussed below, we affirm the district court's
judgment.
I. Factual and Procedural Background
On or about March 24, 1996, Yamaha and Perry Hollow
entered into a conditional sales agreement for the purchase of
seventy-two golf carts. The agreement required Perry Hollow to
make eighteen equal payments between June of 1996 and August of
2001. The paperwork and correspondence generated during the
transaction listed Perry Hollow’s address as 250 Perry Hollow Road,
Wolfeboro, New Hampshire. Yamaha, through an agent, delivered the
golf carts to Perry Hollow Country Club, which was actually located
at 250 Perry Hollow Road, New Durham, New Hampshire. Pursuant to
a security interest in the golf carts accorded to Yamaha under the
agreement, Yamaha filed UCC-1 financing statements with the New
Hampshire Secretary of State and with the clerk of the town of
Wolfeboro, New Hampshire to protect its status as a secured
creditor.
In October of 1999, Perry Hollow filed a voluntary
petition for reorganization under Chapter 11 of the Bankruptcy
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Code. Perry Hollow continued to operate the golf club as a debtor-
in-possession until April of 2000, when Jeffrey A. Schreiber was
appointed as Chapter 11 Trustee ("Trustee") for Perry Hollow.
During the course of the bankruptcy proceedings, the
Trustee moved for summary judgment against Yamaha on the grounds
that the Trustee, pursuant to 11 U.S.C. § 544(b),1 may avoid
Yamaha’s security interest in the golf carts because it was
unperfected. The Trustee argued that Yamaha failed to perfect its
security interest inasmuch as the UCC-1 financing statement was
filed in the wrong town. Yamaha filed in Wolfeboro, but Perry
Hollow is located in New Durham. In response, Yamaha filed a
cross-motion for summary judgment seeking to establish the validity
of its security interest.
On October 17, 2000, the bankruptcy court granted the
Trustee’s motion for summary judgment and denied Yamaha’s cross-
motion. Yamaha appealed. On October 30, 2000, the Trustee filed
a motion for authorization to sell the golf carts free and clear of
any liens or encumbrances. Yamaha filed a motion in opposition.
After a hearing, in which Assistant U.S. Trustee Geraldine Karonis
("AUST Karonis") participated, the bankruptcy court granted the
Trustee's motion as well as his request to waive the ten-day
automatic stay, pursuant to Bankruptcy Rule 6004(g).2 On November
1
Section 544(b) provides: "The trustee may avoid any transfer of
an interest of the debtor in property or any obligation incurred by
the debtor that is voidable under applicable law by a creditor
holding an unsecured claim . . . ." 11 U.S.C. § 544(b).
2
This rule states that, "An order authorizing the use, sale, or
lease of property other than cash collateral is stayed until the
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26, 2000, Yamaha filed another notice of appeal from the bankruptcy
court’s rulings and moved for a stay of the sale pending appeal.
The bankruptcy court denied Yamaha’s motion for a stay. See In re
Perry Hollow Golf Club, Inc., Nos. 99-13372-MWV, 99-13373-MWV, 2000
WL 1854779 (Bankr. D.N.H. Nov. 28, 2000). Yamaha appealed that
decision as well. On January 8, 2001, the district court
consolidated the appeals "for all purposes."
On March 27, 2001, the district court entered judgment
against Yamaha, affirming the bankruptcy court’s decisions. See In
re Perry Hollow Mgmt. Co., 260 B.R. 58 (D.N.H. 2001). Yamaha moved
for a stay of the district court's judgment pending appeal to this
Court. On May 8, 2001, the district court denied Yamaha’s motion
on the ground that Yamaha was unlikely to succeed on appeal. On
May 14, 2001, Yamaha filed a notice of appeal, challenging both the
district court’s March 27 judgment and the May 8 order denying a
stay.
This Court issued an order directing Yamaha to show cause
why its appeal from the March 27 judgment should not be dismissed
as untimely pursuant to Federal Rule of Appellate Procedure
4(a)(1)(A).3 On January 9, 2002, upon review of the parties'
arguments, this Court issued an order stating that there was an
arguable basis for finding the appeal timely under Federal Rule of
Appellate Procedure 4(a)(1)(B) and permitting the appeal to
expiration of 10 days after entry of the order, unless the court
orders otherwise." Fed. R. Bankr. P. 6004(g).
3
Rule 4(a)(1)(A) requires a notice of appeal to be filed within
thirty days of the judgment in a civil case.
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proceed. However, the order instructed the parties to brief this
jurisdictional issue along with the merits of the case.4
II. Discussion
A. Standard of Review
In an appeal from the district court reviewing
proceedings before the bankruptcy court, we independently review
the bankruptcy court's decision, applying the "clearly erroneous"
standard to findings of fact and de novo review to conclusions of
law. In re SPM Mfg. Corp., 984 F.2d 1305, 1310-11 (1st Cir. 1993).
No special deference is owed to the district court's
determinations. See id. at 1311.
B. Jurisdictional Issue
Before we can reach the merits of appellant's claims, we
must first determine that we are vested with jurisdiction. Yamaha
filed the instant appeal forty-eight days after the district court
entered judgment. Federal Rule of Appellate Procedure 4(a)(1)(A)
provides a default thirty-day deadline for filing an appeal in a
civil case. However, "[w]hen the United States or its officer or
agency is a party" in the case, then the appellant has sixty days
after the judgment to file a notice of appeal. Fed. R. App. P.
4(a)(1)(B). Although the parties no longer contest the timeliness
of this appeal,5 the timely filing of an appeal is "mandatory and
4
Despite this Court's clear directive, Yamaha failed to brief
this issue.
5
Earlier in the proceedings the U.S. Trustee argued that the
thirty-day rule applied to this appeal because the U.S. Trustee,
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jurisdictional." Acevedo-Villalobos v. Hernández, 22 F.3d 384, 387
(1st Cir. 1994) (internal quotation marks omitted). Therefore,
unless the sixty-day rule applies, we must dismiss for lack of
jurisdiction. See id. (noting that court "lack[s] jurisdiction
over late appeals").
The United States, its officer, or agency is a "party" to
a case not only where it is a named party to the appeal, see In re
Lloyd, Carr, & Co., 617 F.2d 882, 884 n.1 (1st Cir. 1980), but also
where it has actively participated in the proceedings, see id.; cf.
In re Serrato, 117 F.3d 427, 429 (9th Cir. 1997) (holding that U.S.
Trustee did not become party merely by his involuntary appearance
to quash a summons).
This appeal encompasses challenges to two separate
bankruptcy court proceedings, which the district court consolidated
"for all purposes." The first is an adversary proceeding, see Fed.
R. Bankr. P. 7001, challenging the validity of Yamaha's security
interest in the golf carts. The second is a contested matter, see
Fed. R. Bankr. P. 9014, in which Yamaha opposed the Trustee's
motion for authorization to sell the golf carts.
In the adversary proceeding, the only participants were
Yamaha and the Trustee. Because the Trustee is a private
bankruptcy trustee, who is not employed by the United States
government, the Trustee is not an officer of the United States.
See In re Serrato, 117 F.3d at 428; 28 U.S.C. § 586(a)(1)
despite being an agency of the United States, was not a "party" to
the instant appeal. The U.S. Trustee has now changed its position.
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(providing that U.S. Trustee is responsible for maintaining a panel
of "private trustees" for Chapter 7 cases). Therefore, the sixty-
day rule was not applicable to the adversary proceeding.
The contested matter, although primarily between Yamaha
and the Trustee, involved a third party as well. AUST Karonis,
exercising the U.S. Trustee's discretionary right to "raise,"
"appear," or "be heard on any issue" in a bankruptcy proceeding,
see 11 U.S.C. § 307, cross-examined the potential buyer of the golf
carts regarding his financial capacity. By so doing, AUST Karonis,
and, therefore, the U.S. Trustee, an agency of the United States,
see Joelson v. United States, 86 F.3d 1413, 1417 (6th Cir. 1996),
became a party to the contested matter. See In re Lloyd, Carr &
Co., 617 F.2d at 883 n.1 (explaining that "the government's
participation here was sufficiently active . . . to invoke the 60-
day limit"). As a result, the sixty-day period applied to the
appeals of the contested matter.
Because the contested matter and the adversary proceeding
were consolidated "for all purposes," the sixty-day limit governing
the contested matter extends to the entire consolidated case. See
In re Adams Apple, Inc., 829 F.2d 1484, 1487 (9th Cir. 1987)
(finding that where the United States was a party to one case, the
sixty-day rule applied to the other case if the cases were
consolidated); cf. Bay State HMO Mgmt., Inc. v. Tingley Sys., Inc.,
181 F.3d 174, 182 (1st Cir. 1999) (holding that consolidated cases
should be treated as single action for purposes of determining res
judicata). Therefore, because Yamaha filed its notice of appeal
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within sixty days of the district court's judgment, its appeal is
timely, and we can proceed to the merits of the case.
C. Perfection of the Security Interest
New Hampshire law provides that a creditor, to perfect a
security interest, must file a UCC-1 financing statement with the
Secretary of State and, if the debtor conducts business in only one
town within the state, also with the clerk of such town. See N.H.
Rev. Stat. Ann. § 382-A:9-401(1)(c) (1994).6 When a debtor
conducts business in more than one town within the state, then a
creditor need only file a UCC-1 financing statement with the
Secretary of State. See id. The bankruptcy court determined, and
the district court affirmed, that Yamaha’s security interest was
not perfected according to New Hampshire state law inasmuch as
Yamaha did not file a UCC-1 financing statement with the clerk of
the town of New Durham, the town where Perry Hollow conducted
business.
On appeal, Yamaha offers three theories to support its
claim that filing in Wolfeboro was sufficient to perfect its
security interest. First, Yamaha argues that it was not required
to file in New Durham because Perry Hollow conducted business in
more than one town within the state. Second, Yamaha contends that
even if it was required to file in New Durham, it "substantially
6
This statute has since been amended, taking effect on July 1,
2001, to eliminate the requirement of having to file the financing
statement with the clerk of the town. See N.H. Rev. Stat. Ann. §
382-A:9-501(a)(2) (Supp. 2001). This amendment, however, has no
bearing on this case.
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complied" with the filing requirements so as to perfect its
security interest. Third, Yamaha claims that it justifiably relied
on Perry Hollow’s representations that it was located in Wolfeboro,
thereby excusing Yamaha's failure to file in New Durham under Field
v. Mans, 516 U.S. 59 (1995).
Yamaha argues that because Perry Hollow had a mailing
address in Wolfeboro and a physical location in New Durham, Perry
Hollow was conducting business in more than one town in the state,
thereby relieving Yamaha of the duty to file a financing statement
with anyone other than the Secretary of State. The bankruptcy
court, however, found that Perry Hollow does business only in one
town within New Hampshire. Given that the Wolfeboro address was
only a mailing address, we cannot say that this finding was clearly
erroneous. Therefore, under New Hampshire law, Yamaha had to file
a financing statement with both the Secretary of State and the
clerk of the town of New Durham to perfect its security interest.
Relying on In re Circus Time, 641 F.2d 39 (1st Cir.
1981), Yamaha further argues that even if it was obligated to file
in New Durham, it "substantially complied" with this requirement.
In Circus Time, this Court held that minor errors, not seriously
misleading, in certificates of title were not sufficient to render
a security interest in those vehicles unperfected; "substantial
compliance" with the documentary requirements was sufficient. See
id. at 43; see also N.H. Rev. Stat. Ann. § 382-A:9-402(8) (1994)7
7
This statute was amended and reenacted in 2001 as N.H. Rev.
Stat. Ann. § 382-A:9-506(a) (Supp. 2001) (stating that financing
statements "substantially satisfying" the requirements are
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(providing that a "financing statement substantially complying"
with requirements is effective). This case, however, is easily
distinguishable. Circus Time involved errors in the financing
documents (i.e., the certificates of title), as opposed to errors
in the filing process. The doctrine of substantial compliance has
not been extended to filing requirements. See In re Covey, 66 B.R.
459, 460 (Bankr. D.N.H. 1986) (holding that security interest was
not perfected since debtor conducted business only in one town in
the state and creditor did not file financing statement in that
town); In re Sports Enters., Inc., 38 B.R. 282, 282-83 (D.N.H.
1984) (holding that security interest was unperfected where
creditor, in addition to filing with the Secretary of State,
mistakenly filed with the clerk of the town adjacent to where
debtor conducted business); see also N.H. Rev. Stat. Ann. 382-A:9-
401, Offic. Comm. 5 (stating that "filing in only one of two
required places is not effective").
A misfiled UCC-1 financing statement fails to serve the
intended purpose of the filing requirement, which is to give proper
notice that a secured interest exists. If we were to adopt
Yamaha's argument, we would be placing an undue burden on all
creditors. In addition to checking for prior encumbrances with the
clerk of the town where the debtor is actually located, creditors
would be forced to undergo the task of checking for misfiled
security interests in adjacent towns, perhaps even statewide.
Moreover, Yamaha's proposed scheme would reward creditors who
effective).
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negligently misfile their UCC-1 financing statements. Such an
outcome would undermine the statute's purpose. Therefore, we hold
that Yamaha's actions in this case were insufficient to perfect its
security interest.
Yamaha's final justification for filing in Wolfeboro,
instead of New Durham, is that it "justifiably relied" on Perry
Hollow's representations that it was located in Wolfeboro. As a
result, Yamaha argues that under Field v. Mans, 516 U.S. 59 (1995),
its security interest should not be avoidable. In Field, the Court
held that a creditor, who, in extending credit, placed "justifiable
reliance" on fraudulent representations made by the debtor, could
except a debt from discharge under 11 U.S.C. § 523(a)(2)(A).
Field, 516 U.S. at 74.
Yamaha alleges that Perry Hollow made false
representations by not providing the true location of its business
and that, therefore, Yamaha could justifiably rely on the Wolfeboro
address provided by Perry Hollow when filing the financing
statement. This argument is flawed. First, Field applies to
actions under 11 U.S.C. § 523(a) to except a debt from discharge.
This is not the case here.
Second, Yamaha fails to proffer evidence that Perry
Hollow committed fraud in providing its Wolfeboro address.
Specifically, Yamaha must prove that Perry Hollow intended to
deceive it when providing the Wolfeboro address. We are not
convinced that providing a valid mailing address, instead of a
physical address, constitutes an intentionally false
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representation. Therefore, insofar as this action was not brought
under 11 U.S.C. § 523(a), and absent a showing of fraud, we decline
to extend Field’s justifiable reliance standard to this matter.
See In re Perry Hollow Mgmt. Co., 260 B.R. at 62 (stating that no
case has applied Field to a suit avoiding a security interest under
11 U.S.C. § 544).
D. Yamaha's Motion to Stay the Sale Pending Appeal
Yamaha argues that it was entitled to a stay of the golf
carts' sale pending appeal, pursuant to Bankruptcy Rule 6004(g).
Rule 6004(g) states that "[a]n order authorizing the use, sale, or
lease of property other than cash collateral is stayed until the
expiration of 10 days after entry of the order, unless the court
orders otherwise." Fed. R. Bankr. P. 6004(g) (Supp. 2001)
(emphasis supplied). Yamaha complains that the bankruptcy court
erred in waiving the ten-day period and ordering the immediate sale
of the golf carts.
Although Rule 6004(g) provides for a ten-day stay, it also
clearly states that the court can order otherwise. The Advisory
Committee notes on Rule 6004(g) expressly state that "[t]he court
may, in its discretion, order that Rule 6004(g) is not applicable
so that the property may be used, sold, or leased immediately . .
. ."
The court held an evidentiary hearing on the Trustee's motion
to sell the golf carts and waive the automatic stay. The Trustee
presented as factual bases for the waiver that the sale price was
reasonable, the buyer was ready to complete the sale the next day,
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and the present owner of the golf club intended to charge for the
carts' continued storage. Yamaha did not contest these facts. See
In re Perry Hollow Mgmt. Co., 260 B.R. at 65. Accordingly, because
we find that the bankruptcy court properly acted within its
discretion, we affirm its decision to waive the stay.
III. Conclusion
For the foregoing reasons, the district court’s judgment is
affirmed.
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