2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-6-2002

Miller v. Sul

Precedential or Non-Precedential: Precedential

Docket No. 01-2799

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Recommended Citation

"Miller v. Sul" (2002). 2002 Decisions. Paper 479.

http://digitalcommons.law.villanova.edu/thirdcircuit_2002/479
PRECEDENTIAL 

 Filed August 6, 2002 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 01-2799 

IN RE: GARY M. MILLER, 

 Debtor 

GARY M. MILLER, 

 Appellant 

v. 

OKMI SUL 

a/k/a 

OKMI GARNER 

RONDA J. WINNECOUR, Esq., 

 Trustee 

On Appeal from the United States District Court 

for the Western District of Pennsylvania 

(D.C. Civ. No. 00-00334E) 

District Judge: Honorable Sean J. McLaughlin 

Submitted under Third Circuit LAR 34.1(a) 

July 12, 2002 

BEFORE: SCIRICA and GREENBERG, Circuit Judges , 

and FULLAM, District Judge* 

(Filed: August 6, 2002) 

_________________________________________________________________ 

* Honorable John P. Fullam, Senior Judge of the United States District 

Court for the Eastern District of Pennsylvania, sitting by designation. 

 

 Michael J. Graml 

 714 Sassafras Street 

 Erie, PA 16501 

 Attorney for Appellant 

 Craig A. Markham 

 Elderkin, Martin, Kelly & Messina 

 150 East 8th Street 

 Erie, PA 16501 

 Attorneys for Appellee 
OPINION OF THE COURT 

GREENBERG, Circuit Judge: 

This matter comes on before this court on appeal from an 

order entered by the district court on June 7, 2001, in 

accordance with its accompanying memorandum opinion 

affirming an order of the bankruptcy court entered 

September 14, 2000, in a bankruptcy proceeding involving 

the estate of Gary M. Miller, the debtor, who filed for 

protection under Chapter 13 of the Bankruptcy Code on 

November 4, 1999. Miller’s assets include his home at 311 

Crescent Drive, Erie, Pennsylvania, in which he owns an 

undivided, one-half interest as a joint tenant with Ms. Kum 

Pierce who is not a party to the bankruptcy and to whom 

he is not married. The undisputed estimated market value 

of the residence is $100,000.00, but there is an 

outstanding mortgage balance of $74,703.92 on the 

premises. Miller claims an exemption of $8,075.00 in the 

residence under 11 U.S.C. S 522(d)(1), a figure which is not 

in dispute. 

On June 24, 1999, appellee Okmi Sul obtained a 

judgment against Miller in the Court of Common Pleas of 

Erie County, Pennsylvania, for of $57,768.31.1 Following 

_________________________________________________________________ 

1. In this opinion we are using the numbers used by the bankruptcy and 

district courts. The actual amounts might be different now and Sul 

points out that her judgment had been increased by post-judgment 

interest and costs before Miller filed his Chapter 13 petition. We also 

note that there are slight discrepancies on which we will not dwell 

involving mere pennies. 

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the filing of his Chapter 13 petition, Miller filed a motion 

seeking to avoid this lien in its entirety under 11 U.S.C. 

S 522(f)(1)(A), which authorizes the avoidance of certain 

judicial liens "to the extent that such lien impairs an 

exemption to which the debtor would have been entitled." 

The bankruptcy court determined that the lien impaired the 

exemption only in part and that $4,573.00 of the lien was 

unavoidable. On Miller’s appeal the district court affirmed 

and he now has appealed to this court.2 

Miller asserts that the judgment lien impairs his 

exemption and is therefore avoidable in its entirety under 

11 U.S.C. S 522(f)(1)(A).3 However, according to Sul, 

additional equity remains to which her lien may attach even 

after Miller’s exemption is allowed in full. Thus, we must 

determine how to value Miller’s interest in a residence that 

he owns jointly with a non-debtor. 

Section 522(f)(2)(A) sets forth the following formula to 

determine the extent that an avoidable lien impairs an 

exemption: 

 For the purposes of this subsection, a lien shall be 
 considered to impair an exemption to the extent that 

 the sum of -- 

 (i) the lien; 

 (ii) all other liens on the property; and 

 (iii) the amount of the exemption that the debtor 

 could claim if there were no liens on the property; 

 exceeds the value that the debtor’s interest in the 

 property would have in the absence of any liens. 

Miller contends that, under the plain meaning of the 

statute, the proper calculation should be: 

_________________________________________________________________ 

2. The district court had jurisdiction pursuant to 28 U.S.C. S 158(a), and 

we have jurisdiction under 28 U.S.C. SS 158(d) and 1291. 

3. We are exercising plenary review as the issue on this appeal raises a 

question of law. See In re O’Brien Envtl. Energy, Inc., 188 F.3d 116, 122 

(3d Cir. 1999). 

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 the judgment lien $57,768.31 

 the entire mortgage balance 74,703.92 

 Debtor’s exemption 8,075.00 

 $140,547.23 

Inasmuch as this total exceeds what would be the value of 

Miller’s interest in the property absent any liens, $50,000, 

by $90,547.23, he argues that the judgment lien must be 

avoided entirely. 

Miller’s calculations, however, do not take into account 

with respect to the amount of "all other liens on the 

property" the circumstance that he owns the residence 

jointly with Pierce so that the mortgage encumbers both 

joint tenants’ interests in the property, not merely Miller’s. 

In fact, the value of the entire property, $100,000.00, less 

the amount of the mortgage debt, $74,703.92, leaves 

$25,296.08 in equity. Thus, as a co-owner, Miller’s share of 

the equity is $12,648.04. Subtracting Miller’s $8,075.00 

exemption from his share of the equity leaves a surplus of 

$4,573.04 to which the judgment lien may attach. 

The foregoing result would be reached if Miller’s 

calculations are modified by using in the formula the 

portion of the debt the mortgage secures attributable to 

Miller’s share of the property, $37,351.96, in place of the 

total debt secured by the mortgage, $74,703.92. 4 Then the 

total of (i) (ii) and (iii) under section 522(f)(2)(A) would be 

$103,195.27. That sum, $103,195.27, would exceed the 

value of Miller’s interest in the property in the absence of 

any liens, $50,000, by $53,195.27, so that the lien would 

_________________________________________________________________ 
4. As the bankruptcy court stated, under the statutory language: 

 (i) the ‘lien’ is the $57,768 judgment against the Debtor’s $50,000 

 one-half interest, and 

 (ii) ‘all other liens on the property’ is one-half of the $74,703 

 mortgage, because 

 (1) ‘property’ means the property of the Debtor (the $50,000 

 half interest), and 

 (2) ‘all other liens on the property’ means one half of the 

 $74,703 mortgage ($37,351) . . . . 

Mem. Op. at 6. 

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impair the exemption to that extent. Therefore the lien 

would not impair the exemption to the extent that the 

amount of the lien, $57,768.31 exceeds $53,195.27, i.e., 

$4,573.04. 

We have not yet addressed the issue this appeal raises 

and we note that there is a division of authority on the 

point. The Bankruptcy Appellate Panel of the Tenth Circuit 

has adopted Miller’s approach, focusing on the literal 

meaning of the statute, in In re Cozad, 208 B.R. 495 (B.A.P. 

10th Cir. 1997). See also In re Piersol, 244 B.R. 309 (Bankr. 

E.D. Pa. 2000). However, the Courts of Appeals for the First 

and Eleventh Circuits and the Bankruptcy Appellate Panel 

of the Ninth Circuit follow the approach Sul advances as 

they have concluded that a literal application of section 

522(f)(2)(A) would lead to an absurd result when a debtor 

owns property jointly with a non-debtor. See In re Lehman, 

205 F.3d 1255 (11th Cir. 2000); Nelson v. Scala , 192 F.3d 

32 (1st Cir. 1999); In re Nielson, 197 B.R. 665 (B.A.P. 9th 

Cir. 1996). See also In re Ware, 274 B.R. 206 (Bankr. 

D.S.C. 2001); In re Abrahimzadeh, 162 B.R. 676 (Bankr. 

D.N.J. 1994). 

We conclude, consistently with the majority of the courts 

addressing the issue, that what might be characterized as 

a literal application of section 522(f)(2)(A), in particular 

section 522(f)(2)(A)(ii), produces an illogical result where a 

debtor owns property jointly with a non-debtor. It is illogical 

to net the total outstanding secured debt balance 

attributable to both a debtor and his joint tenant against 

the debtor’s one-half interest in the property alone because 

Congress could not have intended that a debtor benefit 

under section 522(f)(2)(A) by the use of what realistically 

should be regarded as someone else’s debt even if the 

debtor may be liable personally to the creditor for the entire 

debt. Such a mechanical application of section 522(f)(2)(A) 

would provide a windfall to the debtor at the expense of a 

secured creditor. 

In our view, the correct approach is to view the debtor as 

owning one half of the property to which one half of the 
mortgage debt is thus attributable and therefore to regard 

"property" in subsection (ii) to mean the debtor’s interest in 

the property and then to allocate the lien among the 

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interests in the property proportionately. In this case, 

inasmuch as Miller has a one-half interest in the property, 

one half of the lien should be allocated to him. In reaching 

our result we are in agreement with the Court of Appeals 

for the Eleventh Circuit which in Lehman explained that the 

similar result that it was reaching there was correct 

because "a literal interpretation [of section 522(f)(2)(A)] 

would disserve the legislative intent behind the provision" 

and "would produce an absurd result and would violate the 

Congressional intent." Lehman, 205 F.3d at 1257-58. 

For the foregoing reasons we will affirm the order of June 

7, 2001. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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