John Deere Co. v. Blevins

• Decision Date: 20 December 1996
• Parties: JOHN DEERE COMPANY d/b/a John Deere Leasing Company v. William W. BLEVINS, Billy Jean Blevins, R.D. Hicks, Jerry Don Houser, Sandra B. Houser, and Marion Trust and Banking Company of South Pittsburg, Tennessee. 2950117.
• Court: Alabama Court of Civil Appeals

Page 1080

696 So.2d 1080

JOHN DEERE COMPANY d/b/a John Deere Leasing Company v. William W. BLEVINS, Billy Jean Blevins, R.D. Hicks, Jerry Don Houser, Sandra B. Houser, and Marion Trust and Banking Company of South Pittsburg, Tennessee.

2950117.

Court of Civil Appeals of Alabama.

Dec. 20, 1996.

Von G. Memory, Montgomery, for appellant.

Tazewell T. Shepard of Wilmer & Shepard, P.A., Huntsville, for Jerry Don Houser and Sandra B. Houser.

THIGPEN, Judge.

This case involves the validity of a judgment lien after a bankruptcy.

In July 1994, William W. Blevins and Billie Jean Blevins filed a complaint for a declaratory judgment against R.D. Hicks and John Deere Company seeking, inter alia, a determination of the validity of John Deere's judgment lien against a parcel of their property. Thereafter, Hicks filed a third-party complaint against Jerry Don Houser and Sandra B. Houser (Housers) and Marion Trust and Banking Company of South Pittsburg, Tennessee (Marion Trust). Following motions for summary judgment by the Blevinses, the Housers, and Hicks, the trial court entered a summary judgment in favor of the Housers. John Deere appeals.

The record reveals the following pertinent facts: In December 1982, the Housers executed a mortgage in favor of First National Bank of Stevenson (First National) on real property (Parcel 1) in Jackson County, Alabama, and the mortgage was duly recorded. Three years later, in December 1985, John Deere obtained a judgment for $10,657.50 against Jerry Don Houser, and pursuant to Ala.Code 1975, § 6-9-210, the certificate of judgment was recorded. This judgment resulted from a claim by John Deere against Jerry Don for a deficiency owed following the repossession and sale of certain equipment Jerry Don had purchased from and financed with John Deere.

In March 1986, the Housers petitioned for an order of relief in the United States Bankruptcy Court for the Northern District of Alabama. Approximately five months later, First National foreclosed its mortgage on Parcel 1 and recorded the foreclosure deed. The Housers allege that they received a discharge of their debts in bankruptcy on September 10, 1987. Subsequently, First National deeded Parcel 1 to Paul and Linda Hutcherson. On December 10, 1987, the Hutchersons conveyed the property to E.J. Houser and Letha Kate Houser, the father and mother of Jerry Don. On the same date, E.J. and Letha conveyed a portion of this real property (Parcel 2) to the Housers, thereby placing the Housers again in possession of a portion of the property that had previously been foreclosed by First National. It is this portion of the property, Parcel 2, that is the subject of controversy and to which the Blevinses currently have title. In February 1991, the Housers conveyed Parcel 2 to Hicks, who, in August 1991, conveyed the property to the Blevinses. Thereafter, in July 1994, the Blevinses filed a complaint for a declaratory judgment against Hicks and John Deere. Hicks then filed a third-party complaint against the Housers and Marion Trust, requesting a determination of his interest in the subject property before he transferred the property to the Blevinses. All parties filed motions for summary judgment. Further, the trial court stated that its "finding dispose[d] of all issues pending before the court ... including all motions for summary judgment and declaratory judgment." It is noteworthy that while these motions were pending, the trial court had entered an order requiring Hicks to post a bond sufficient to satisfy the amount of the principal and interest of John Deere's lien. Further, the court stated that the purpose of the bond was to permit the sale of the Blevinses' property and to provide security to John Deere if the court determined a valid lien attached to the Blevinses' property.

John Deere raises two issues on appeal: 1) whether the trial court erred in entering the summary judgments, holding that the judgment lien did not attach to the subject property; and 2) whether John Deere's judgment lien survived the bankruptcy proceedings of the Housers and attached to the property.

John Deere contends that summary judgment was inappropriate because, it says, the movants relied on mere general assertions to support their motion for a summary judgment. Specifically, John Deere contends that there are genuine issues of material fact regarding: 1) the validity of its lien against all other property, including the instant property, in which the Housers have an interest; 2) the determination of the case as a "no asset" case; 3) the statutory requirement to give notice of the bankruptcy to John Deere as a secured creditor; and 4) the contentions of the Housers that their alleged discharge and the foreclosure of their property, Parcel 1, is determinative of the existence or validity of John Deere's lien.

The law regarding a summary judgment is well established. A summary judgment is proper when the trial court determines that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56, A.R.Civ.P.; Melton v. Perry County Board of Education, 562 So.2d 1341 (Ala.Civ.App.1990). The burden of negating the existence of a material fact is on the party moving for summary judgment. Rule 56, A.R.Civ.P. On appeal, the record must be viewed in a light most favorable to the nonmoving party. Mann v. City of Tallassee, 510 So.2d 222 (Ala.1987). A nonmovant must present substantial evidence to overcome a motion for summary judgment that is made and supported as required. Substantial evidence is defined as "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). The nonmoving party may not rest upon the mere allegations or denials of his pleading, but must set forth specific facts showing by substantial evidence that there is a genuine issue for trial. Rule 56, A.R.Civ.P.; Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794 (Ala.1989).

The trial court entered the following order, in pertinent part:

"The land of the debtors was removed from any attachment or execution process upon the properly conducted foreclosure procedure by the bank and the subsequent failure of the mortgagor (Housers) to execute his right of redemption. This right had expired on 2 September, 1987 so that when the Housers' discharge was granted eight days later, there was no property in the Housers' estate. It is the opinion of this Court that John Deere's in rem rights in the subject matter property no longer existed after the expiration of the debtors' right to redeem his land so that John Deere's judgment, being only a personal debt like all the others in this no asset bankruptcy action case, was discharged under the [Matter of Baitcher, 781 F.2d 1529 (11th Cir.1986) ] Rule cited hereinabove.

"John Deere cites the case of In re: Wrenn, 40 F.3d 1162, 1164 (11th Cir.1994), which stands for the proposition that 'a debt discharged in bankruptcy secured by a valid judgment lien, merely serves to discharge the debtor's liability for that debt; but does not remove or vacate the lien from the debtor's property. The discharge does not subordinate or vacate the judgment lien unless the debtor takes action as prescribed by the United States Bankruptcy Code to avoid the lien.' This case presupposes that the debtor has 'property' following a bankruptcy discharge upon which a lien could attach. This Court is persuaded by the following argument of counsel for the debtor:

" 'The instant case is distinguishable from the Wrenn case in that the judgment lien of John Deere was not attached to any property when the John Deere debt was discharged by the Housers' bankruptcy because of the previous foreclosure of First National Bank. With no property to attach to at the time of the Housers' discharge, John Deere's judgment was unsecured, and its lien could not later attach to newly acquired property.'

"Accordingly, this Court finds that the claim of the John Deere Company based on its judgment against Jerry Don and Sandra Houser was discharged by action of the bankruptcy court effective 10 September, 1987 and could not, as a matter of law, constitute a subsequent cloud on property after acquired by the Housers. It is the ORDER of this court that the motion for summary judgment of Jerry Don Houser and Sandra B. Houser be, and hereby is, granted.

"It is further the ORDER of this court that Jerry Don Houser and Sandra B. Houser, and their predecessors in title, took title to the subject matter property herein free and clear of any claim of the John Deere Company.

"It is the opinion of this Court that this finding disposes of all issues pending before this Court in this matter including all motions for summary judgment and declaratory judgment."

The creation and attachment of a judgment lien is statutory in nature. Ala.Code 1975, § 6-9-211, provides that every certificate of judgment which has been properly recorded shall be a lien on all property of the defendant in the county where filed, and that the lien shall continue for 10 years after the date of the judgment. Our Supreme Court has stated that "the recording of a certificate of judgment creates a blanket lien on all of the property of the defendant that is located in the county of recordation and is subject to levy and sale." Smith v. Arrow Transportation Co., 571 So.2d 1003, 1006 (Ala.1990). Recording the judgment provides notice to all persons of the existence of the lien. Ala.Code 1975, § 6-9-211. " 'The judgment creditor's rights in the property attach upon the act of recording the certificate of judgment and have priority over all rights arising out of subsequently recorded instruments.' " Smith at 1006; see Garrett v. Garrett, 628 So.2d 659, 660 (Ala.Civ.App.1993). Moreover, the lien attaches...