Rodgers, Powers & Schwartz, LLP v. Minkina (In re Minkina)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 3 months 6 days ago
- Case Type:
- Consumer
- Case Status:
- Affirmed
- Citation:
- No. 22-1624 (1st Circuit, Aug 24,2023) Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the First Circuit held a bankruptcy court did not err in calculating a Massachusetts debtor's tenancy by the entirety interest in property for purposes of the formula in 11 U.S.C. § 522(f)(2)(A) used to avoid a judicial lien. It explained: "bankruptcy courts applying the § 522(f) formula should calculate 'the value that the debtor's interest in the property would have in the absence of any liens' as the 'fair market value [of the foregoing] as of the date of the filing of the petition,' just as Congress required[.]"
- Procedural context:
- The First Circuit accepted direct review of the bankruptcy court's order avoiding a creditor's lien based on the court's determination of how to perform the lien avoidance calculation under the formula in 11 U.S.C. § 522(f)(2)(A). The First Circuit reviewed de novo whether the bankruptcy court properly valued a debtor's tenancy-by-the-entirety interest in her residence at half of the property's value, notwithstanding that a prior First Circuit Bankruptcy Appellate Panel opinion, interpreting Massachusetts law, held such an interest should be assessed at 100% of the property's value for purposes of the formula.
- Facts:
- Debtor/Appellee Nataly Minkina filed a chapter 13 bankruptcy petition in the U.S. Bankruptcy Court for the District of Massachusetts. The debtor owned real property in Brookline, Massachusetts with her non-filing spouse as tenants by the entirety. The debtor and her husband were entitled to a homestead exemption in the property. The property was subject to two mortgages, and the debtor's interest in the property was encumbered by a judicial lien held by Creditor/Appellant Rodgers, Powers & Schwartz, LLP. The debtor moved the bankruptcy court to avoid the creditor's lien under 11 U.S.C. § 522(f), contending it impaired her homestead exemption. The creditor opposed the motion. The parties stipulated to the pertinent facts related to the lien calculation formula in § 522(f)(2)(A). They asked the bankruptcy court to decide the legal issue of "how to appraise the value of [the debtor's] interest in the property as a tenant by the entirety for purposes of the formula." The debtor argued the court should "adopt either an actuarial approach to determining her share or to simply 'treat [her share] as 50% of the value of the [p]roperty.'" Valuing the debtor's interest at 50% of the property's value would lead to full avoidance of the creditor's lien under the formula. Conversely, the creditor asked the court to follow Snyder v. Rockland Tr. Co. (In re Snyder), 249 B.R. 40 (1st Cir. B.A.P. 2000), decided under Massachusetts law, and value the debtor's interest at 100% of the property's value. This approach would prevent the debtor from avoiding any portion of the creditor's lien under the formula. The bankruptcy court opted to value the debtor's interest at 50% of the property's value, distinguishing between valuation of an interest in property and a delineation of a person's property rights based on that interest. Given the parties' stipulations to the other pertinent facts, the court entered an order avoiding the creditor's lien. The creditor appealed from that order.
- Judge(s):
- Barron, Howard, and Montecalvo
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