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In re O'Sullivan

United States Bankruptcy Appellate Panel of the Eighth Circuit

January 19, 2016

In re: Casey Drew O'Sullivan, Debtor. CRP Holdings, A-1, LLC, Creditor - Appellant
v.
Casey Drew O'Sullivan, Debtor - Appellee

 Submitted November 23, 2015.

Page 408

Appeal from United States Bankruptcy Court for the Western District of Missouri - Joplin.

For CRP Holdings, A-1, LLC, Creditor - Appellant: Bradley David McCormack, Neil S. Sader, THE SADER LAW FIRM, LLC, Kansas City, MO.

For Casey Drew O'Sullivan, Debtor - Appellee: Norman E. Rouse, COLLINS & WEBSTER, Joplin, MO.

Before KRESSEL, SCHERMER and NAIL, Bankruptcy Judges.

OPINION

Page 409

KRESSEL, Bankruptcy Judge.

Judgment creditor CRP Holdings A-1, LLC appeals the June 4, 2015 order of the bankruptcy court[1] granting the debtor's motion to avoid its judgment lien. We have jurisdiction over this appeal under 28 U.S.C. § 158(c). We affirm.

BACKGROUND

The debtor, Casey Drew O'Sullivan, and his wife acquired a residence as tenants by the entirety in November 1995. The residence is located in Barton County, Missouri. CRP obtained a $765,151.18 judgment in the Circuit Court of Platte County, Missouri against the debtor and a related business on January 5, 2015.[2] The judgment was not against the debtor's wife. CRP then filed a Notice of Foreign Judgment,[3] registering the judgment on January 26, 2015, in the Circuit Court of Barton County, Missouri.

The debtor filed a chapter 7 petition on April 3, 2015 and listed his residence in his schedules. He valued the residence at $105,000.00, subject to a $95,134.04 mortgage of Heritage State Bank. He valued his apportioned interest in the residence at $52,500.00 and claimed a $15,000.00 exemption in that interest under both Mo. Rev. Stat. § 513.475 and 11 U.S.C. § 522(b)(3)(B). CRP did not object to the debtor's claimed exemptions. The debtor also filed a motion to avoid CRP's judgment lien against the residence. CRP objected to the motion, acknowledged that it had a judgment lien, but argued that its judgment lien did not attach to the residence. CRP further argued that because its judgment lien did not attach to the residence, then its lien did not fix upon the residence nor impair the debtor's exemption for lien avoidance purposes.

In deciding the motion, the bankruptcy court looked at § 522(f)(1)'s provision that a debtor " may avoid the fixing of a lien on an interest of the debtor in property . . . ." The court then referred to Farrey v. Sanderfoot, 500 U.S. 291, 111 S.Ct. 1825, 114 L.Ed.2d 337 (1991), to ascertain the meaning of " fixing" as used in § 522(f)(1). The court noted that Farrey defined " fixing" as a temporal event, the " fastening of a liability" onto an interest of the debtor. The court then noted that the Missouri judgment lien statute provides that judgments " shall be liens on the real estate of the person against whom they are entered, situate in the county for which or in which the court is held." Construing Farrey 's definition of " fixing" relative to the Missouri statute for judgment liens, the bankruptcy court concluded as a ...


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