## Facts

- Billy Harold Stinnett purchased a Freightliner truck on credit from Texarkana Truck Center, Inc. in Texas, and the seller assigned the contract and security interest to Mercedes-Benz Credit Corporation (MBCC).
- The security agreement listed Stinnett’s home address in Arkansas.
- A third party registered and titled the truck in Oklahoma using an Oklahoma business address obtained for Stinnett, although Stinnett did not own a business in Oklahoma.
- Oklahoma issued a certificate of title showing a lien in favor of MBCC.
- Stinnett operated the truck from his Arkansas residence and used it for interstate hauling.
- After Stinnett filed bankruptcy in Arkansas, the bankruptcy trustee sold the truck and sought to avoid MBCC’s lien on the sale proceeds as unperfected under Arkansas law.

## Issues

1. Whether, under Ark. Code Ann. § 4-9-103(2), perfection of MBCC’s security interest was governed by Oklahoma certificate-of-title law rather than Arkansas law.
2. Whether MBCC’s lien notation on the Oklahoma certificate of title rendered the security interest perfected (and continuously perfected) so the trustee could not avoid it in bankruptcy.

## Decision

- The Eighth Circuit affirmed the judgment for MBCC.
- The court held that Ark. Code Ann. § 4-9-103(2)(b) made Oklahoma law govern perfection because the truck was covered by an Oklahoma certificate of title and Oklahoma required lien notation on the title as a condition of perfection.
- Because the Oklahoma certificate of title showed MBCC’s lien, MBCC’s security interest was perfected and remained perfected for purposes of Arkansas law.
- The trustee therefore could not avoid MBCC’s lien on the truck’s sale proceeds.

## Legal Principles

- In bankruptcy, the existence and status of property interests and security interests are generally determined by applicable state law.
- Under Ark. Code Ann. § 4-9-103(2), when goods are covered by a certificate of title issued by another jurisdiction whose law requires lien notation on the certificate to perfect, the issuing jurisdiction’s law governs perfection, and continues to govern until the goods are registered in another jurisdiction.
- Under Oklahoma law, notation of a lien on an Oklahoma certificate of title perfects the security interest and deems it continuously perfected.
- A bankruptcy trustee cannot avoid a creditor’s lien as unperfected when the security interest is perfected under the governing certificate-of-title law recognized by the forum state’s choice-of-law rule.

## Conclusion

The Eighth Circuit held that Arkansas’s UCC choice-of-law provision required application of Oklahoma certificate-of-title law, and because MBCC’s lien was noted on the Oklahoma title, MBCC’s security interest was perfected and not avoidable by the bankruptcy trustee.


Meeks v. Mercedes-Benz Credit Corp., 257 F.3d 843 (8th Cir. 2001)