1. List the fixtures and the court’s finding with each one and why.

2. What factors does the court use in reaching its conclusions on the removed items?

Denny Ryerson (Debtor) filed his Chapter 11 bankruptcy case on August 30, 2013, and Anaconda (mortgage creditor) asked for relief from the stay to sell the property securing the mortgage notes. The property securing the notes is located on the shore of Lake Coeur d’Alene. A residence and related structures sit on two contiguous lakefront lots, and there are two additional lots adjacent thereto. The two primary lots total 2.18 acres. The residence, a luxury custom home, is about 11,000 square feet in size. There is a separate 1,500 square foot caretaker residence and a separate 900 square foot garage with a dwelling unit over it. The court valued the lots and residences, excluding moveable personal property (i.e., extensive furniture and art), at $9,000,000.

Anaconda commenced foreclosure on the deeds of trust. There was a $7,000,000 bid that Anaconda obtained for the residence property. At a separate foreclosure sale on April 15, Anaconda obtained a $145,000 bid for the adjacent lots.

Ryerson was entitled to remove personal property such as furniture and art, but he also removed fixtures and Anaconda sought remedies for the loss of the improperly removed fixtures. Anaconda requested that the court order the Debtor, who had “stripped” over $550,000 worth of “fixtures” from the property, be required to return them. The Debtor maintained that the items are not fixtures and sought to sell the non-fixture personal property and devote the proceeds to payment of creditors under the Chapter 11 plan.

JUDICIAL OPINION

MYERS, Chief Judge … Whether an item is a fixture is a mixed question of law and fact. To determine whether an item is a fixture, the Court is to apply a three-part test evaluating (1) the annexation of the item to the realty, either actual or constructive, (2) the adaptation or application of the item to the use or purpose to that part of the realty to which it is connected is appropriated, and (3) the intention to make the article a permanent accession to the freehold. Of these elements, intention is the most significant, and the other two assist the fact finder in addressing intent. Intent is objectively evaluated by the circumstances surrounding the disputed item’s installation.

1. Lighting

Debtor conceded the impropriety of removing the recessed “can” lights. They are fixtures. Similarly, the installed incabinet lighting, the wall sconces, and installed indirect lighting are also fixtures. Further, the installed lights on the grounds (for example, the “carriage lights” along the driveway discussed by Martin in his testimony) also satisfy the test for fixtures. However, beyond these several types of lighting, the evidence as to how any other lights were “mounted” or “installed” is too scant to support a finding they were fixtures.

Therefore, the Court concludes the suspended or hanging lighting—including the large chandeliers—are not fixtures. These hanging lights were suspended by chains—albeit some by substantial chains—from the ceiling. Though so “installed,” there was inadequate proof to establish the required intention that they be permanent accessions. The specific hanging light in a room is often, and was here, a matter of personal taste, whether considering the smaller hanging or suspended lighting fixtures (e.g., over a dining, game or pool table) or the large chandeliers. Such lighting is generally removable and replaceable.

They could be and were removed professionally, and without damage to the realty, and are unlike the lighting that was placed into the ceilings (i.e., recessed can lights) or walls. On the weight of the evidence, the Court finds all hanging lighting to be removable personal property rather than fixtures, and the Request will be denied as to the same. ………………….