Submitted: September 5, 2017
from United States Bankruptcy Court for the Western District
of Missouri - Joplin
SCHERMER, NAIL and SANBERG, Bankruptcy Judges.
SCHERMER, Bankruptcy Judge
Holdings, A-1, LLC (CRP) appeals the bankruptcy
court's order holding that CRP holds a judicial
lien against the real property of Casey Drew O'Sullivan
(Debtor) and avoiding that lien under Bankruptcy Code §
522(f)(1). We have jurisdiction over this appeal from the
final order of the bankruptcy court. See 28 U.S.C.
§ 158(b). For the reasons that follow, we affirm.
sole issue on appeal is whether CRP has a judicial lien on
the Debtor's real property (either enforceable or
unenforceable). We hold that CRP has an unenforceable lien on
the Debtor's property.
facts are not in dispute. Because they have already been set
forth in detail in previous opinions by the bankruptcy court,
by us, and by the Eighth Circuit, we summarize them here.
1995, the Debtor and his wife acquired real property in
Barton County, Missouri as their residence (Property). In
2015, CRP obtained a default judgment in the Circuit Court of
Platte County, Missouri, against the Debtor, but not his
wife. CRP promptly recorded the judgment in the Circuit Court
of Barton County, Missouri.
months later, the Debtor filed a petition for relief under
Chapter 7 of the Bankruptcy Code. The Debtor claimed an
exemption in his interest in his home under both Mo. Rev.
Stat. § 513.475 (homestead exemption) and Bankruptcy
Code §522(b)(3)(B) (tenancy by the entireties). The
Debtor filed a motion to avoid CRP's judgment lien under
Bankruptcy Code § 522(f)(1) to the extent it impaired
the Debtor's exemption. CRP objected to the Debtor's
§ 522(f)(1) motion, but it did not object to the
Debtor's claimed exemption or the discharge of the
Debtor's debt. The bankruptcy court entered a Chapter 7
bankruptcy court granted the Debtor's § 522(f)(1)
motion, concluding that "CRP's judgment lien -
although perhaps not enforceable - certainly affixed upon the
Debtor's home upon CRP's recording of its judgment in
Barton County." In re O'Sullivan, No.
15-30173-can7, 2015 WL 3526996, at *2 (Bankr. W.D. Mo. 2015).
CRP appealed the matter to us, and we affirmed.
Eighth Circuit Court of Appeals then reversed and remanded
the matter to the bankruptcy court. It stated that the lower
courts assumed that CRP had a judicial lien. The Eighth
Circuit expressed doubt whether CRP had a lien that affixed
to the Property,  but it recognized a distinction between
unenforceable liens and nonexistent liens, stating that an
unenforceable lien is avoidable under §522(f)(1). The
court provided a summary:
In sum, if under Missouri law CRP's notice of foreign
judgment failed to give rise to a lien on
O'Sullivan's exempt homestead property, the debt
would have been dischargeable through the bankruptcy
proceedings. O'Sullivan would then not need to resort to
§ 522(f) to avoid CRP's judgment. Alternatively,
O'Sullivan could move to avoid the lien under §
522(f)(1) if CRP's notice ...