In re Ruby Jeane Sawyers

Case Type:
Case Status:
No. 20-1130 (8th Circuit, Jul 02,2021) Published
8th Circuit affirmed ruling of BAP that affirmed bankruptcy court (ED Mo.) order avoiding creditor's judicial lien as impairing debtor's homestead exemption. Debtor's home was destroyed in fire prior to bankruptcy petition. Creditor's lien attached after fire and before debtor attempted repairs. Notwithstanding insurance proceeds, house remained valued at less than homestead amount on petition date, rendering lien avoidable under 11 USC 522.
Procedural context:
Bankruptcy court granted debtor's motion to avoid creditor's judicial lien as impairing homestead exemption over creditor's objection. Creditor appealed to BAP, which affirmed. Creditor appealed to 8th Circuit.
David G. Waltrip, LLC (“Waltrip”) sued Sawyers in October 2016 for breach of contract in Missouri state court. During that litigation, a fire damaged Sawyers’s home. The fire damage was covered under a homeowner’s insurance policy, and Sawyers received $132,392.99 from her insurance provider for the sole purpose of restoring and repairing her home. After the fire occurred, Waltrip obtained a consent judgment that gave Waltrip a judicial lien against Sawyers’s homestead property in the principal amount of $234,123.31 and a total amount (including interest and costs) as of January 12, 2017, of $256,739.31..On February 15, 2017 (the “petition date”), Sawyers filed a petition for Chapter 7 bankruptcy protection. As of the petition date, Sawyers had not repaired her home, and its value was approximately $3,000 to $6,000. Waltrip filed a proof of claim for the judicial lien and was an active participant in Sawyers’s bankruptcy case. As of the petition date, Sawyers’s home was also subject to another consensual mortgage lien to First Community in the amount of $29,376.96. Without objection, Sawyers claimed a homestead exemption under Missouri law for $15,000. But, she failed to take the steps to avoid Waltrip’s lien under 11 U.S.C. § 522 of the bankruptcy code. Sawyers’s bankruptcy case closed in July 2017. After Sawyers’s bankruptcy case closed, Waltrip tried to enforce his lien by arranging a sheriff’s execution sale of Sawyers’s home. In April 2018, Sawyers filed to reopen her bankruptcy case to avoid Waltrip’s lien. The bankruptcy court approved Sawyers’s request to reopen her bankruptcy case and granted Sawyers’s motion to avoid Waltrip’s lien.
Loken, Grasz, Kobes

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