In re Sawyers

          Submitted: November 5, 2019

          Appeal from United States Bankruptcy Court for the Eastern District of Missouri - St. Louis

          Before SALADINO, Chief Judge, NAIL and DOW, Bankruptcy Judges.

          DOW, Bankruptcy Judge.

         David Waltrip ("Waltrip") appeals the order of the Bankruptcy Court^[1]granting a motion by Ruby Sawyers ("Debtor") to avoid a judicial lien. We have jurisdiction over this appeal. See 28 U.S.C. §158(b). For the reasons that follow, we affirm.

         This is a dispute between the Debtor and Waltrip, who held a judicial lien ("Judicial Lien") against the Debtor's primary place of residence (the "Property"). The Property suffered significant fire damage prior to the bankruptcy filing, and the insurance proceeds were paid to the Debtor. The Property was not restored during the bankruptcy proceeding. The Trustee made no distributions and abandoned all assets, and the case was closed. After receiving notice of a sheriff's sale of the Property, the Debtor reopened the case and instituted a lien avoidance action. The bankruptcy court granted the Debtor's motion for summary judgment and avoided the Judicial Lien, valuing the Property as of the date of the filing of the petition and rejecting Waltrip's position that the value of the Property should be enhanced by the amount of the insurance proceeds. Waltrip appealed.

         STANDARD OF REVIEW

         We review a bankruptcy court's grant of summary judgment de novo. Mwesigwa v. DAP, Inc., 637 F.3d 884, 887 (8^th Cir. 2011)(citing Anderson v. Durham D & M, L.L.C., 606 F.3d 513, 518 (8^th Cir. 2010). We will affirm if "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "We may affirm on any basis supported by the record." Seaver v. New Buffalo Auto Sales, LLC (In re Hecker), 459 B.R. 6, 10-11 (8^th Cir. BAP 2011). Here we review de novo whether the bankruptcy court's conclusions interpreting the relevant statutes and applying them to the undisputed facts are correct. Fisette v. Keller (In re Fisette), 455 B.R. 177, 180 (8^th Cir. BAP 2011).

         We review a bankruptcy court's findings of fact for clear error. In re Potts, 421 B.R. 518, 521 (8^th Cir. BAP 2010). "A finding is 'clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).

         FACTUAL BACKGROUND

         The Debtor filed her Chapter 7 petition in February, 2017. Waltrip was a creditor by virtue of a prepetition consent judgment in the amount of $256, 739.31 entered in a civil action. The judgment constituted a judicial lien. The Debtor claimed her homestead exemption of $15, 000 pursuant to RSMo §513.475. There were no objections to the exemption.

         Prior to the bankruptcy filing, a fire caused significant damage to the Property. The Debtor was the named insured under a homeowner's policy and was paid $132, 392.99 for the purpose of repairing and restoring the Property. Waltrip was not a loss payee under the policy, and his Judicial Lien did not extend to the insurance proceeds.

         The Trustee filed a Report of No Distribution abandoning all assets; no objection was filed. The Debtor received her discharge, and the case was closed. The Property was later repaired and restored using the insurance proceeds. An appraisal valued it between $95, 000 and $103, 640 in fully-restored condition, as opposed to between $3, 000 and $6, 000 on the petition date.

         Waltrip later instituted a sheriff's execution sale on the Property. On the day before the sale, the Debtor filed an emergency motion to reopen her case and a motion to avoid Waltrip's judicial lien pursuant to §522(f). The case was reopened, and the parties filed competing motions for summary judgment.^[2] The parties stipulated that the Judicial Lien ...