The opinion of the court was delivered by: J. Ronnie Greer United States District Judge
These matters are before the Court on the appeal of J. Michael Nidiffer, et al. (hereinafter collectively referred to as "Nidiffer") and David H. Jones, Trustee (hereinafter "Jones" or "Trustee") of the order of the United States Bankruptcy Court for the Eastern District of Tennessee granting the motion of First Community Bank (hereinafter the "bank") for relief from stay and abandonment of property. This Court has jurisdiction of these appeals pursuant to 28 U.S.C. § 158(a). For the reasons more fully set forth below, this Court affirms the order of the Bankruptcy Court.
Factual and Procedural Background
On July 10, 2006, Nidiffer filed an involuntary Chapter 7 Petition against Silver Dollar, LLC (hereinafter the "debtor") in the United States Bankruptcy Court. The petition listed Silver Dollar Stores, LLC as a trade name of the debtor. Jones was appointed Trustee by the Bankruptcy Court.
On November 1, 2006, the bank filed a motion for relief from the stay and abandonment of property. The bank claimed a first lien on a 3.15 acre tract of real property located in Sullivan County, Tennessee. The indebtedness of the debtor, according to the bank, exceeded the value of the property, entitling the bank to abandonment of the property. Both Nidiffer*fn1 and the trustee objected to the motion.
Silver Dollar, LLC filed articles of incorporation with the Tennessee Secretary of State on January 21, 2003, and filed an assumed name application on January 30, 2003, for the assumed name of Silver Dollar Stores, LLC. On December 17, 2003, the 3.15 acre tract of real property was conveyed by Kingsport Foundry and Manufacturing Company to Silver Dollar Stores, LLC.*fn2
The bank relied upon a deed of trust dated September 30, 2004, from Silver Dollar Stores, LLC which secured the payment of several promissory notes from Silver Dollar Stores, LLC to the bank. At the time of the filing of the involuntary petition, the notes were in default. Nidiffer argued in the Bankruptcy Court that the deed of trust securing the indebtedness owed to the bank was void because the underlying conveyance by the December 17 deed was to a grantee (Silver Dollar Stores, LLC) which did not legally exist at the time of the conveyance. Nidiffer argued that the December 17 conveyance was void because the Tennessee Limited Liability Act does not authorize a limited liability company to take title to real estate in an assumed name. Nidiffer also argued that the acknowledgment on the deed of trust was defective.*fn3 Jones adopted the position of Nidiffer, as he does in this Court.
The Bankruptcy Court held a hearing on the bank's motion on November 28, 2006. Relying on the motion, the objections and the documents submitted in support and opposition to the motion, the Bankruptcy Court upheld the validity of the deed of trust, overruled the objections and granted the bank's motion. This appeal followed. The issues have been fully briefed and the matter is now ripe for disposition.
The Bankruptcy Court is the trier of fact in bankruptcy cases and the district court is bound by these findings unless they are clearly erroneous. Investors Credit Corp. v. Batie (In re Batie), 995 F.2d 85, 88 (6th Cir. 1993). The Bankruptcy Court's conclusions of law are reviewed de novo. Wesbanco v. Raforth (In re Baker & Getty Fin. Servs., Inc.), 106 F.3d 1255, 1259 (6th Cir. 1997). Bankr. R. 8013. This appeal involves only a legal conclusion of the Bankruptcy Court and this Court's review, therefore, is de novo.*fn4
In the Bankruptcy Court, the Trustee and Nidiffer argued that the deed of trust was defective because it was executed in the debtor's assumed name as opposed to its correct legal name and was, therefore, subject to avoidance by the trustee under its 11 U.S.C. § 544(a) strong arm powers. Alternatively, they argued that the warranty deed to the debtor in its assumed name only conveyed equitable title to the debtor which resulted in only an equitable lien in favor of the bank which was avoidable by the trustee's strong arm powers.
Under § 544(a) of the Bankruptcy Code, the trustee has the right and power, as of the date of the commencement of the bankruptcy case, to avoid any transfer or obligation of the debtor which is avoidable by a judicial lien creditor, a creditor with an execution returned unsatisfied at the commencement of ...