In re Cardwell, Bankruptcy No. 3-90-05307.

• Decision Date: 14 May 1991
• Docket Number: Bankruptcy No. 3-90-05307.
• Citation: 128 BR 427
• Parties: In re Janet E. CARDWELL, Debtor.
• Court: U.S. Bankruptcy Court — Southern District of Ohio

128 B.R. 427 (1991)

In re Janet E. CARDWELL, Debtor.

Bankruptcy No. 3-90-05307.

United States Bankruptcy Court, S.D. Ohio, W.D.

May 14, 1991.

Christopher M. Hawk, Dayton, Ohio, for debtor.

Charles M. Caldwell, Asst. U.S. Trustee, Columbus, Ohio.

Paul Gilbert, Trustee, Dayton, Ohio.

DECISION AND ORDER DENYING DEBTOR'S MOTION TO AVOID LIENS

WILLIAM A. CLARK, Bankruptcy Judge.

This matter is before the court upon the motions of the debtor to avoid the liens of Good Samaritan Hospital and Dr. David D. Goldberg and Associates. This court has jurisdiction over this matter under 28 U.S.C. § 1334(b) and the standing order of reference entered in this district. This matter is determined to be a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B) — allowance or disallowance of exemptions and (K) — determinations of the validity, extent, or priority of liens.

The debtor filed for chapter 7 bankruptcy relief on November 30, 1990. Shortly thereafter the debtor filed two motions to avoid the liens of creditors, Good Samaritan Hospital and Dr. David D. Goldberg and Associates. Neither of the creditors responded to the motions. However, because of the governing case law in this circuit stated in Ford Motor Credit Corp. v. Dixon, 885 F.2d 327 (6th Cir.1989), the court entered an order requiring the debtor to file a memorandum to establish the basis to grant the avoidance of such lien in light of the Dixon case which appears to prohibit avoidance of a judgment lien.

The debtor filed a memorandum in support of her contention that under the Dixon case avoidance of the lien is viable. The debtor states that the bankruptcy was filed in an attempt to stop a foreclosure action and to discharge debt burdens after a foreclosure action was filed in October of 1990. In February, 1991 this court granted R.F. Norman Corporation relief from the automatic stay to "proceed to foreclose its mortgage lien upon the real property known as 1926 Larkwood Drive, Dayton, Ohio." Debtor asserts that the property is subject to execution since the stay has been removed to permit execution of the mortgage lien. Debtor's counsel argues that the Dixon case appears to allow the avoidance of a lien after a foreclosure suit has been filed.

The argument of debtor's counsel is reasonable were it not for the strict interpretation by the Sixth Circuit in Dixon of the Ohio exemption statute, Section 2329.66(A)(1) Ohio Revised Code. The statute provides as follows:

Every person who is domiciled in this state may hold property exempt from execution, garnishment, attachment or sale to satisfy a judgment or order, as follows:

(1) The person\'s interest, not to exceed five thousand dollars, in one parcel or item of real or personal property that the person or a dependent of the person uses as a residence; (emphasis added)

The Sixth Circuit in the Dixon case held that Ohio law specifically mandates that the Ohio homestead exemption is effective only upon "an execution, garnishment, attachment or sale to satisfy a judgment order." 885 F.2d at 330. The Dixon court interpreted the statute beginning with its "plain language" citing United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 240-41, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). The Dixon court noted that Ohio, having opted out of the federal exemption, limited the circumstances in which its homestead exemption is impaired to the circumstances recited in the Ohio exemption statute. The exemption is impaired when the property affected by the exemption is subject to an "execution, garnishment, attachment, or sale to satisfy a judgment or order."

Unquestionably the debtor's exemption after the filing of a foreclosure case against residential property is nearing the time when a clear impairment will occur. In Matter of Brown, 123 B.R. 260 (Bankr. S.D.Ohio 1990), Judge J. Vincent Aug on similar facts found, after the court's...