Case Type:
Case Status:
No. 16-60003 (9th Circuit, Oct 22,2018) Published
11 U.S.C. § 108(c) tolled the period in which a judgment creditor could enforce a one-year “ORAP lien” encumbering the Debtor’s personal property under California Code of Civil Procedure ("CCP") § 708.110(d). Thus, three years into a Chapter 7 case, the Judgment Creditor held a valid lien superior to the rights of the Trustee.
Procedural context:
The bankruptcy court granted summary judgment in favor of the Chapter 7 Trustee, and the Judgment Creditor appealed. The Bankruptcy Appellate Panel reversed, ruling in favor of the Judgment Creditor. In a split decision, the Ninth Circuit Court of Appeals affirmed the BAP.
The Judgment Creditor served the Debtor with an "Order to Appear for Examination." A creditor’s service of the order upon the debtor “creates a lien on the personal property of the judgment debtor for a period of one year from the date of the order unless extended or sooner terminated by the court.” CCP § 708.110(d). Two months later, the Debtor filed a Chapter 7 case. Three years into the case, and without having sought to extend the lien, the Judgment Creditor filed an action seeking a declaration that it had a lien on the debtor's personal property. The Trustee obtained a summary judgment from the bankruptcy court that the lien had expired. The Ninth Circuit held that Section 108(c) tolled the effectiveness of the lien, and noting that the lien was the continuation of a judgment-related proceeding.
Kim McLane Wardlaw and Jay S. Bybee, Circuit Judges, and Harvey Bartle III, District Judge.

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