McCoy v. Kuiken (In re Kuiken)

BAP No. SC-12-1218-JuMkPa (B.A.P. 9th Cir. Jan. 4, 2012)
REVERSING the bankruptcy court, the Ninth Circuit Bankruptcy Appellate Panel held that the debtor was not entitled to avoid a judicial lien encumbering the debtor's real property under 11 U.S.C. § 522(f)(1) because the debtor had not maintained a continuous interest in the property from the time the lien attached through the date of the filing of his bankruptcy petition. "When the interest once held is entirely extinguished by transfer, voluntary or a as a matter of law, a judicial lien which attached when a debtor had that interest cannot be avoided when the debtor acquires a new interest."
Procedural context:
The debtor filed a motion to avoid creditor's lien as impairing an exemption to which he was entitled. The creditor objected and eventually appealed the bankruptcy court's order granting the avoidance motion.
On August 18, 2003, the debtor acquired fee title to real property. On October 9, 2009, the creditor recorded a judgment lien against the property. On July 5, 2011, the debtor executed a grant deed conveying fee title to the property to an entity called Bayview for valuable consideration; the deed was recorded on July 15, 2011. Subsequently, less than a month before the bankruptcy filing, Bayview executed a grant deed conveying fee title to the property back to the debtor as a gift; that deed was recorded on October 11, 2011. Thirteen days later, on October 24, 2011, the debtor filed his chapter 7 petition. On Schedule A, the debtor listed the property as owned by Bayview (in error), and on Schedule C, the debtor claimed the property as exempt under California law.

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