3M Dozer Service, Inc. v. Baker

• Decision Date: 02 May 2006
• Docket Number: No. 100,262.,100,262.
• Citation: 136 P.3d 1047,2006 OK 28
• Parties: 3M DOZER SERVICE, INC., Plaintiff/Appellant, v. Barbara Moore BAKER a/k/a Barbara J. Moore a/k/a Barbara Jean Baker; Spouse, if any, of Barbara Moore Baker, real name unknown; Karen Sue Moore; Spouse, if any, of Karen Sue Moore, real name unknown; Mark D. Stewart, Sherry L. Stewart; and their unknown heirs or devisees, Defendants/Appellees, and Debra K. Foster; Spouse, if any, of Debra K. Foster, real name unknown; Hamm & Phillips Service Company; Terry L. Seay; Spouse of Terry L. Seay, if any, real name unknown; Dakota J. Gauley; Emily D. Gauley; Shane P. Gauley; Spouse, if any, of Shane P. Gauley, real name unknown; Carol S. Snow; and Darrel L. Snow; and their unknown heirs or devisees, Defendants.
• Court: Oklahoma Supreme Court

Page 1047

136 P.3d 1047

2006 OK 28

3M DOZER SERVICE, INC., Plaintiff/Appellant, v. Barbara Moore BAKER a/k/a Barbara J. Moore a/k/a Barbara Jean Baker; Spouse, if any, of Barbara Moore Baker, real name unknown; Karen Sue Moore; Spouse, if any, of Karen Sue Moore, real name unknown; Mark D. Stewart, Sherry L. Stewart; and their unknown heirs or devisees, Defendants/Appellees, and Debra K. Foster; Spouse, if any, of Debra K. Foster, real name unknown; Hamm & Phillips Service Company; Terry L. Seay; Spouse of Terry L. Seay, if any, real name unknown; Dakota J. Gauley; Emily D. Gauley; Shane P. Gauley; Spouse, if any, of Shane P. Gauley, real name unknown; Carol S. Snow; and Darrel L. Snow; and their unknown heirs or devisees, Defendants.

No. 100,262.

Supreme Court of Oklahoma.

May 2, 2006.

Certiorari to Court of Civil Appeals Division I.

¶ 0 A judgment creditor filed an action seeking: (1) a declaration that its judgment lien was superior to all other interests; and (2) an order foreclosing on the property subject to the lien. The District Court of Major County, Honorable Ray Dean Linder, held that the judgment lien was no longer effective and granted summary judgment against the creditor. The Court of Civil Appeals, Honorable Kenneth L. Buettner, reversed on rehearing and remanded for further proceedings. We have previously granted certiorari, having found one primary issue of first impression. We hold that federal bankruptcy law, triggered by the judgment debtor's intervening bankruptcy, tolled the period during which the creditor could enforce its judgment lien.

CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; DISTRICT COURT'S JUDGMENT REVERSED; AND MATTER REMANDED FOR FURTHER PROCEEDINGS.

Raymond D. Munkres, Midwest City, OK, for Plaintiff/Appellant.

Julia C. Rieman, Gungoll, Jackson, Collins, Box & Devoll, P.C., Enid, OK, for Defendants/Appellees, Barbara Moore Baker and Karen Sue Moore.

David C. Henneke, Enid, OK, for Defendants/Appellees, Mark D. Stewart and Sherry L. Stewart.

COLBERT, J.

¶ 1 On February 16, 1988, Creditor, 3M Dozer Service, Inc., obtained a judgment against Debtor, Barbara Moore Baker, in Major County.¹ Creditor filed a certified copy of its judgment in the county clerk's office, obtaining a lien of record on five pieces of real property in which Debtor held an interest. By 1991, Debtor had transferred all of her interests in the properties. At least some of the transfers were to individuals or entities with family or business ties to Debtor and at least one property was subsequently transferred back to Debtor. Creditor successfully renewed its judgment on February 11, 1993, and extended its judgment lien for five years by obtaining a writ of execution from the court clerk and filing a certified copy of the writ in the county clerk's office. On November 18, 1996, Debtor filed a petition in the United States Bankruptcy Court for the Western District of Oklahoma, Case No. 96-19165. None of the properties subject to Creditor's lien were included in Debtor's bankruptcy estate.

¶ 2 On January 26, 1998, Creditor attempted to renew its judgment and extend the judgment lien a second time by filing a "Notice of Renewal of Judgment" with the district court. The notice correctly referenced the case number and the previous renewal, but incorrectly stated the date of the original judgment. Creditor also failed to file a certified copy of the notice with the county clerk.

¶ 3 On April 30, 1998, Creditor obtained a writ of execution on Debtor's goods and chattels. The Sheriff proceeded with the sale of the interests unaffected by Debtor's bankruptcy, but the district court set aside the sale on May 26, 1999, for reasons unrelated to our analysis. In her motion to have the sale set aside and the lien declared dormant, Karen Sue Moore, who is Debtor's daughter and a Defendant/Appellee here, argued that the lien and underlying judgment were dormant. The district court held that the judgment remained a valid lien on the properties. That order was not appealed.

¶ 4 Creditor asked the bankruptcy court to modify the automatic stay to allow it to pursue foreclosure on the properties, but its request was denied on August 6, 1999. Nevertheless, on June 11, 2001, Creditor filed this foreclosure action against Debtor, Defendant Moore, and others claiming an interest in the property. Debtor responded with a notice of bankruptcy and motion to stay, asserting that the foreclosure violated the bankruptcy stay as to all of the defendants. Debtor also informed the district court that she was filing a motion with the bankruptcy court to hold Creditor in contempt and declare the lien and underlying judgment dormant.

¶ 5 The bankruptcy court issued an order staying this lawsuit, but declined to rule on the validity of the lien and judgment. In an order dated October 29, 2001, it held Creditor in contempt for willfully violating the bankruptcy stay by filing this lawsuit. The bankruptcy court concluded, however, that Creditor had not violated the stay by filing the execution on April 30, 1998.² Finally, on June 21, 2002, the bankruptcy court vacated its order staying this action and annulled the automatic stay retroactively to June 11, 2001, to allow Creditor to pursue this action. The bankruptcy court had already discharged Debtor from any personal liability to Creditor on July 10, 2002.

¶ 6 On July 3, 2003, Creditor filed a motion for summary judgment in this foreclosure action against Debtor, Defendant Moore, and Defendants Mark and Sherry Stewart. On July 11, 2003, Debtor and Defendant Moore responded jointly and filed a "cross-motion" for summary judgment, asserting that Creditor's 1988 judgment was dormant and the lien unenforceable. On July 21, 2003, Defendants Mark and Sherry Stewart, who were not served until May 15, 2003, filed their answer and included a counter-claim to quiet title. They also filed a response and "cross-motion" for summary judgment identical to that filed by Debtor and Defendant Moore.³ Creditor argued in response that Debtor's bankruptcy prevented its judgment from becoming dormant until some time after the stay was lifted. Creditor also asserted that the district court's May 26, 1999, order declaring Creditor's lien valid was binding on all Defendants.

¶ 7 The district court concluded that Creditor's judgment was dormant as a matter of law and that its lien was unenforceable for want of an underlying obligation. It entered summary judgment in Defendants' favor and quieted title "in favor of the current record owners."⁴ The Court of Civil Appeals initially affirmed, but determined on rehearing that the federal bankruptcy code gave Creditor 30 days after the bankruptcy stay was lifted to file an action to enforce the lien even if: (1) the lien had otherwise expired; and (2) Creditor was not prevented by the bankruptcy stay from extending the lien. Although we agree with Judge Buettner's well-reasoned opinion, we granted Defendants' joint petition for certiorari to clarify the effect of the legal conclusions reached on an issue of first impression.

STANDARD OF REVIEW

¶ 8 Although there are numerous disputed and unsubstantiated assertions of fact in the record, those few facts material to the dispositive issue are undisputed, as they should be in a summary judgment. We are, therefore, presented with a pure question of law and apply the de novo standard of review. Wathor v. Mut. Assurance Adm'rs, Inc., 2004 OK 2, ¶ 4, 87 P.3d 559, 561.

DISCUSSION

¶ 9 Creditor concedes its judgment lien would have lost its efficacy under normal circumstances on February 11, 1998, because it failed to file a certified copy of the notice of renewal of judgment with the county clerk.⁵ See U.S. Mortgage v. Laubach, 2003 OK 67, ¶ 17, 73 P.3d 887, 896. Creditor argues, however, that the circumstances were not normal because Debtor's bankruptcy extended the judgment's dormancy period and the efficacy of the lien. In the alternative, Creditor asserts that the 1999 district court order declaring that Creditor's judgment remained a valid lien precludes all Defendants from relitigating the lien's validity in this action. Although we conclude that Creditor could have renewed its judgment and extended the judgment lien despite Debtor's bankruptcy, we also conclude that the bankruptcy nevertheless extended the dormancy period. As a result, Creditor had at least 30 days after the bankruptcy stay was lifted to file its action to foreclose.

THE AUTOMATIC STAY CREATED BY DEBTOR'S BANKRUPTCY DID NOT PREVENT CREDITOR FROM RENEWING ITS JUDGMENT BY FILING A NOTICE OF RENEWAL OF JUDGMENT.

¶ 10 The United States Bankruptcy Code creates an automatic stay upon the filing of a bankruptcy petition of "any act to create, perfect, or enforce any lien against property of the estate" or "any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the [bankruptcy] case." 11 U.S.C. § 362(a). The Court of Civil Appeals concluded that the stay did not prevent Creditor from renewing its judgment and extending its judgment lien. We agree.

¶ 11 Cases addressing this issue differ widely, but the most relevant factor is the amount of judicial involvement required by the state's judgment renewal procedures. When there is little judicial involvement and the renewal simply maintains the status quo, a majority of courts have concluded the stay does not prevent renewal. See Larson v. Norwest Bank Fargo, N.A. (In re Larson), 979 F.2d 625 (8th Cir.1992); Morton v. Nat'l Bank of N.Y.C. (In re Morton), 866 F.2d 561, 563-65 (2d Cir.1989); Wussler v. Silva (In re Silva), 215 B.R. 73 (Bankr.D.Idaho 1997); Guertler v. Barlow Woods, Inc., 230 Ill. App.3d 933, 172 Ill.Dec. 745, 596 N.E.2d 24 (1992); W.D. Curran & Assocs. v. Cheng-Shum Enters., 107 Md.App. 373, 667 A.2d 1013 (1995); Victoria Grain Co. of Minneapolis v....