Opinion
NOT FOR PUBLICATION
ORDER ON MOTION TO AVOID JUDICIAL LIEN
PETER W. BOWIE, Chief Judge United States Bankruptcy Court
Debtor has moved to avoid the judgment lien of her former family law attorney pursuant to 11 U.S.C. § 522(f), on the ground that the lien impairs an exemption to which she is otherwise entitled. In Debtor's reply to the Opposition, Debtor acknowledges that the judgment lien is only partially avoidable.
The Court has subject matter jurisdiction over the proceedings pursuant to 28 U.S.C. § 1334 and General Order No. 312-D of the United States District Court for the Southern District of California. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A), (0).
The underlying facts are simple. A Judgment of Dissolution was filed March 13, 2008, providing in relevant part that the residence was to be sold and "[t]he net sale proceeds are to be deposited into Petitioner's attorney's trust account and divided equally between the parties after payment of community debts, equalization, reimbursements and attorney fees." Debtor's former attorney recorded his lien for attorney fees on or about June 25, 2008. Then, on or about March 31, 2009 Debtor filed this Chapter 7 proceeding. She listed the real property as an asset, with a value of $355,500, with consensual mortgage liens of $244,955.84.
Debtor's former attorney, Mr. Love, contends that the avoidability of his lien pursuant to the Bankruptcy Code has to be determined as of the date of filing of the petition, and utilizing the value of the property as of that date, which Debtor said was $355,500. Subtracting the outstanding mortgage liens of $244,955.84 (according to Schedule D) left equity of $110,544.16, one half of which would be hers. That amount would be $55,272.08. By Mr. Love's calculation, after subtracting Debtor's claimed exemption of $18,813.16, Debtor would still have a non-exempt equity interest of $36,458.92 from which to pay Mr. Love's judgment lien. Mr. Love's lien was originally for $23,801.14, but he now asserts it should be $26,801.14 as set by the Family Court on or about December 16, 2009 -- post-discharge -- because of accrued interest. Whatever the allowed amount of Mr. Love's claim, it could be paid in full without impairing the exemption amount to which Debtor is entitled. Accordingly, says Mr. Love, the Debtor's motion should be denied.
Complicating matters, at some point post-petition, the property was sold. There were further hearings in the Family-Court which, for present purposes, resulted in two findings. First, Mr. Love's lien amount had increased to $26,801.14 because of accrued interest; and, two, Debtor's actual net equity share of the actual sale proceeds of the property is $33,249. Both sides acknowledge that if Debtor may use the actual share of the net proceeds, $33,249, then Mr. Love's lien does impair the $18,813.16 exemption to which Debtor is entitled. Only $14,435.84 would remain subject to Mr. Love's lien after allowing Debtor's exemption in full.
The core problems with Debtor's motion is as the creditor points out. The date of value of the property for purposes of a motion to avoid under 11 U.S.C. § 522(f) is the date of filing of the bankruptcy petition, not five months after the Debtor has received her discharge. As Mr. Love has pointed out, if Debtor had brought her motion while the case was originally pending, she could not have prevailed because the only property value available was the one Debtor scheduled, under penalty of perjury. She did not bring a motion to avoid while the case was then pending, and she received her discharge on July 7, 2009. At some point the property sold, apparently for less than she had hoped. So, in effect, she wants to go back in time, substitute a different value for the property which now results in some impairment of her exemption, and now assert the power to avoid the portion of Mr. Love's lien that impairs her exemption. However, Debtor has provided no authority to support her doing so.
Debtor did not move to avoid Mr. Love's lien while the case was originally pending, and his lien "rode through" her Chapter 7 bankruptcy following her discharge. It was still a valid lien when the property was sold, and Debtor is precluded from, in effect, having a second bankruptcy proceeding with a new date of valuation against which to assess her claim of impairment of her exemption. 11 U.S.C. § 727(a)(8).
Conclusion
For the foregoing reasons, Debtor's Motion to Avoid Lien shall be, and hereby is denied.
IT IS SO ORDERED.