Opinion
Case No. 97-30410
October 28, 1999
Kenneth L. Anderson, Lewiston, Idaho, for Debtors.
Denise L. Rosen, Lewiston, Idaho, for Creditor Clarece Nicklas
MEMORANDUM OF DECISION
On October 1, 1999, a hearing was held upon the motion of Darrell and Gloria Dugger ("Debtors") to sell their residence free and clear of liens. Simultaneously, a hearing was held upon the Debtors' motion to avoid a $41,000.00 judgment lien of creditor Clarece Nicklas ("Nicklas") pursuant to § 522(f)(1)(A).
Upon conclusion of the hearing, the motion for approval of sale was granted and the sale approved. Insofar as the motion under § 522(f) was concerned, the Debtors established that the judgment lien of Nicklas was properly avoidable as impairing their homestead exemption. This motion was also granted, and an Order entered by the Court.
In argument at hearing, Nicklas raised a separate issue. Nicklas wished the Court to consider the possibility of a reattachment or "resurrection" of the judgment lien, as against the proceeds of sale of the homestead, in the event the Debtors did not use those proceeds to purchase another residence.
Nicklas has not, in any pleading or brief, specifically articulated the objection.
The Court allowed Nicklas a period of time following hearing to provide legal authorities and written argument in support of his contention. By virtue of that grant, the Court's Order granting the motion to avoid lien required the sales proceeds to be held by the Trustee pending further order. The issue described above was taken under advisement pending the creditor's submissions.
However, the time provided for briefing has expired and Nicklas has filed nothing to explain his objection or show that it well founded. The Court would be entitled, under these circumstances, to summarily overrule the objection and rescind the restriction upon the relief granted the Debtors.
The Court has also reviewed the matter, and discerns no basis upon which the objecting creditor's position can be sustained. First, the issue of avoidance of the lien is a matter separate and apart from the question of sale of the residence and the continued validity of the exemption in the proceeds. The § 522(f)(1)(A) motion was properly brought and heard, the impairment was established by the record, and the judgment lien of Nicklas was and is avoidable.
The objector has provided no authority which countenances or contemplates some sort of "conditional" ruling which would allow for the reattachment of a judicial lien previously avoided under § 522(f). The rights and interests of Nicklas, from and after entry of the order avoiding his lien, are those of a unsecured creditor.
The Debtors' other motion, which sought leave to sell the property, specifically provided:
Proceeds: Net proceeds after costs of sale and payment of liens by closing agent may be held by the trustee. Disbursement will be to the debtors upon their request to use the funds toward the purchase of a replacement residence, or to allowed claims pursuant to a confirmed plan if debtors fail to make such request within one year of date of sale.
See Motion for Sale of Free and Clear Liens and Notice of Hearing, Doc. No. 77/78, filed September 13, 1999, at page 1. This provision appears consistent with Idaho Code § 55-1008(1), which provides:
55-1008. Homestead exempt from execution — When presumed valid. — (1) Except as provided in section 55-1005, Idaho Code, the homestead is exempt from attachment and from execution or forced sale for the debts of the owner up to the amount specified in section 55-1003, Idaho Code. The proceeds of the voluntary sale of the homestead in good faith for the purpose of acquiring a new homestead, and proceeds from insurance covering destruction of homestead property held for use in restoring or replacing the homestead property, up to the amount specified in section 55-1003, Idaho Code, shall likewise be exempt for one (1) year from receipt, and also such new homestead acquired with such proceeds.
Idaho Code § 55-1008(1) (Emphasis added). Idaho law provides for protection of the proceeds of sale of the homestead for a period of one year. After one year, under § 55-1008(1) and under the Debtors' motion, creditors are entitled to look to these funds. Nicklas has no special right or interest, different from those of unsecured creditors generally, in the event that Debtors do not timely use the funds to obtain replacement real property as a residence.
In short, the Court has not been persuaded that any conditions, other than those set forth by the Debtors' in their own motion, should be imposed.
CONCLUSION
Based upon the foregoing, the motion approving the sale and the motion voiding the Nicklas' judgment lien shall not be subject to further or additional condition upon Nicklas' objection, and that objection shall be overruled. Counsel for Debtors shall prepare and submit a supplementary order which so provides. That supplementary order shall remove the conditions interlineated upon the October 1 Order, but it shall specifically reflect the conditions on use of the proceeds consistent with the language of Debtors' September 13, 1999 motion and consistent with Idaho Code § 55-1008(1).
Dated this 28th day of October, 1999.