In re Roser

Robert James Roser (debtor) obtained a secured loan to purchase a car on May 19, 2007 and took possession of the vehicle the same day. On June 7, 2007, 19 days later, Sovereign Bank (creditor) filed its lien as required by Colorado law. The Colorado Uniform Commercial Code (UCC) gave priority over other security interests to a purchase-money security interest that is filed within 20 days of the debtor taking possession of the collateral. However, on May 31, 2007, Roser filed for Chapter 7 bankruptcy. The Bankruptcy Court for the District of Colorado held that the bankruptcy trustee could avoid Sovereign Bank’s lien because that lien had not been perfected before the filing of Roser’s bankruptcy petition, giving the trustee priority. The court believed that Colorado’s auto-titling statute superseded the UCC and made the question solely whether the lien or the bankruptcy petition was filed first. That court also held that Sovereign Bank’s filing of its lien violated the automatic stay of bankruptcy. Sovereign Bank appealed, arguing that the Colorado UCC gave its claim priority over the trustee’s interest because its claim was a purchase-money security interest (PMSI) and had been filed within 20 days of the debtor taking possession of the collateral. The trustee argued that because the filing postdated Roser’s bankruptcy petition, the filing violated the automatic stay and was ineffective.