Opinion
21-31206
05-24-2022
In re: DANIEL JOSEPH ANTHONY, Debtor.
ORDER DENYING DEBTOR'S MOTION TO AVOID JUDGMENT LIEN (DOC. 50)
GUY R. HUMPHREY JUDGE.
On April 8, 2022 Debtor Daniel Joseph Anthony ("Anthony") filed a Motion to Avoid Judgment Lien of World's Foremost Bank (doc. 50) (the "Motion"), which seeks to avoid the judgment lien of World's Foremost Bank (the "Bank") on Anthony's real property located at 714 Meadow Lane, Troy, Ohio 45373 (the "Property") on the basis that it impairs his claimed exemptions. The court subsequently ordered (doc. 53) supplemental briefing to clarify the legal basis for avoiding the lien, including whether the debtor held an interest in the Property at the time the lien attached.
In accordance with the order, counsel filed a Supplemental Memorandum (doc. 56) in support of the Motion. The court reviewed the Motion, the Supplemental Memorandum, and the attached exhibits to determine the following facts: Anthony and Kristina Cappelli, two unmarried individuals, jointly purchased the Property as equal joint tenants with the right of survivorship in 2015. Doc. 56, Ex. A. Two years later, in September 2017, the Bank obtained a certificate of judgment against Cappelli alone and attached a lien to her one-half interest in the Property. Doc. 50, Ex. A. In November 2017 Cappelli signed a quit claim deed in Anthony's favor, transferring her interest in the property to him in exchange for $37,650. Doc. 50, Ex. B; Doc. 56 at 3. The deed was recorded with the Miami County Recorder on November 13, 2017. Doc. 50, Ex. B.
Section 522(f) permits a debtor to "avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled . . . if such lien is- (A) a judicial lien . . ." 11 U.S.C. § 522(f)(1)(A). However, this power to avoid a judicial lien is not without parameters. Importantly, a debtor cannot use § 522(f)(1) to avoid a lien that affixed to a property interest before he acquired it. Farrey v. Sanderfoot, 500 U.S. 291, 296 (1991) ("[U]nless the debtor had the property interest to which the lien attached at some point before the lien attached to that interest, he or she cannot avoid the fixing of the lien under the terms of section 522(f)(1)."). Thus, "the critical issue in determining whether a debtor may avoid a lien under § 522(f)(1) is whether the debtor ever possessed the interest to which the lien fixed, before it fixed. If not, the debtor may not avail himself or herself of § 522(f)(1) to avoid the lien." Catli v. Catli (In re Catli), 999 F.2d 1405, 1408 (9th Cir. 1993) (citing Sanderfoot, 500 U.S. at 299) (cleaned up).
Whether Anthony held an interest in the one-half property interest to which the lien fixed, before it fixed, must be determined under Ohio law. See Id. In Ohio, a joint survivorship tenant "is not deemed to own the entire estate; he owns only an undivided one-half interest in the Real Property." In re Kindall, 508 B.R. 43, 46 (Bankr. S.D. Ohio 2014). Anthony admits that "if the judgment lien creditor in this case had sought to enforce their lien through foreclosure, prior to his purchase of the judgment lien debtor's interest, . . . he, not being a lien debtor, would have been compensated at the sale for his fractional interest." Doc. 56 at 3. Thus, it is clear that Anthony owned only an undivided one-half interest in the property and did not own any portion of Cappelli's one-half interest until she transferred it to him two months after the lien had already attached to her portion. Thus, Anthony took the property interest subject to the lien and his exemption was not impaired at the time that the lien affixed to Cappelli's property interest.
Anthony argues that he was nevertheless impacted by the judgment lien because a foreclosure sale would have changed his joint survivorship interest to that of a tenant in common. Further, he argues that a foreclosure sale would have threatened his use of the property. However, "Farrey clearly requires . . . that the debtor have the same interest in the property to which the lien attached before the fixing of the lien. Under Farrey, it is not enough that the debtor have merely some interest in the property before the lien attaches." In re Sammut, 171 B.R. 411, 413 (Bankr. M.D. Fla. 1994). At the time that the lien attached to the property interest, Anthony owned only his own one-half interest in the property. And because Anthony acquired Cappelli's interest in the property subject to the lien, he cannot avoid it under § 522(f). See Sammut, 171 B.R. at 413 (finding that the debtor acquired her former husband's one-half interest subject to the lien because she held no legal interest in his portion of the property at the time the lien attached); Cadle Co. v. Banner (In re Banner), 394 B.R. 292, 307-08 (Bankr. D. Conn. 2008) (similar).
For all these reasons, Anthony's motion to avoid the Bank's judgment lien is denied.
IT IS SO ORDERED.