FI L ED U.S. COURT OF APPEAL S EL EVENTH CI RCUI T APRI L 2, 2010 J OHN L EY CL ERK [DO NOT PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 0 9- 13 65 2 Non -Arg um en t Ca le nd ar

__ __ __ __ __ __ __ __ __ __ __ __ D.C. Dock et Nos . 08 -0 21 34 -CV-AR- S, 02 -8 13 88 -J AC-7

IN RE: SCOTT A. MCDONALD,

DENISE L. MCDONALD,

Deb to rs

.

__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ _ SCOTT A. MCDONALD, DENISE L. MCDONALD,

Pl ai nt iff s- App el le es , Cro ss -Ap pe ll an ts ,

ve rs us

REDSTONE FEDERAL CREDIT UNION,

Defen da nt -Ap pe ll an t, Cro ss -Ap pe ll ee.

__ __ __ __ __ __ __ __ __ __ __ __ App eal s fr om

th e Uni te d S ta te s Di st ric t Co ur t fo r th e Nor th ern Dis tri ct of Al ab am a

__ __ __ __ __ __ __ __ __ __ __ __ (Ap ril 2, 2 01 0)Befo re TJ OFLAT, W ILSON an d C OX, Circ ui t J ud ge s.

PER CURI AM:

Thi s di sp ute ove r ap pr oxi m at el y $7, 000 be tw ee n th e cred it or , Red st on e Fed eral

Cred it Uni on , a nd de bt or s, Sco tt A. M cDo na ld an d Den i s e L. M cDo na ld , c om es to

th is co ur t afte r se ve n years o f on -an d- of f li ti ga ti on . The fo ll owi ng is a su m m ary of

th e nu m ero us jud ic ia l an d co ll at eral pr oc eed in gs in vo lv i n g t hi s co nt ro ve rs y , ta ke n

fro m bo th th e b an kr up tc y

an d d is tri ct co ur ts ’ op in io ns

. (1 ) On A u g u s t 2 4 , 20 01 , aft er th e Dis tri ct Co ur t of Mad is on Co un ty ha d

en te re d a d e fau lt jud gm en t ag ai ns t McDo na ld , Red st on e reco rd ed a jud gm en t of

$6 ,81 9.2 8 ag ai ns t McDo na ld in th e Pro ba te Offi ce of M a d i so n Co un ty, Alab am a,

pu rs ua nt to A LA

. C O D E § § 6 -9 -2 10 an d 6- 9- 21 1 (1 97 5)

. On th is da te , McDo na ld

own ed a on e- ha lf un di vi de d in te res t wit h hi s wife , Den is e Ly nn McDo na ld , in a

pr op ert y in whi ch th ey res id ed in Mad is on Co un ty th at is th e su bjec t of th is act io n.
(2 ) On Mar ch 25 , 20 02 , th e McDo na ld s fil ed a Ch ap te r 7 pe ti ti on in th e

Ban kr up tc y Co ur t fo r th e Nor th ern Dis tri ct of Alab am a. The McDo na ld s li st ed th ei r

ho m es te ad as ex em

pt pr op ert y , st at in g th at it s va lu e was $6 8,0 00 , wit h se cu red cl ai m s

a g a i n st th e pr op ert y to ta li ng $5 8,5 94 .59

. In Sch ed ul e F, th e McDo na ld s li st ed

Red st on e as an un se cu red cred it or an d no te d th at R e d st on e ha d a jud gm en t ag ai ns t

McDo na ld fo r $7 ,55 5.1 8. Red st on e di d no t ob ject to an y cl ai m of ex em pt io n un de r

2Ban kr

up tc y Ru le 40 03 , no r di d McDo na ld m ov e to av oi d Red st on e’s jud gm en t lie n

un de r 11 U.S.C. § 52 2( f). The ba nk ru pt cy co ur t gr an te d th e McDo na ld s Ch ap te r 7

di sc ha rg e o n J ul y

22 , 20 02 , and clo se d t he cas e.
(3 ) On Sep te m

be r 3, 20 03 , th e McDo na ld s m ov ed to reo pe n th ei r ba nk ru pt cy

cas e in or de r to fil e a m ot io n to av oi d Red st on e’s jud gm en t li en

. Red st on e ob jecte d,

arg ui ng th at it m ad e McDo na ld aware of th e jud gm en t whi le th e cas e was pe nd in g.

The co ur t d en ie d M cDo na ld ’s m ot io n b as ed on th e d oc tri ne of l ach es

. (4 ) The reaf

te r, Red st on e fil ed fo r a writ of ex ecu ti on on th e pr op ert y , an d th e

Dis tri ct Co ur t of Mad is on Co un ty is su ed th is ne w writ

. McDo na ld th en fil ed a cl ai m

of ex em pt io n no t i c e. On Feb ru ary 1 0, 20 04 , t he Dis tri ct Co ur t of Mad is on Co un ty

gr an te d McDo na ld ’s ex em pt io n clai m an d di sm is se d Red st on e’s writ of ex ecu ti on

.
Red s t o n e fai le d to co nt es t McDo na ld ’s cl ai m of ex em pt io n, an d di d no t ap pe al th e

di sm is sa l o f th e wri t.
(5 ) Fo ur y ears la te r, on Mar ch 19 , 20 08 , th e McDo na ld s refi na nc ed th ei r

pr op ert y

. The y ob ta in ed a m or tg ag e fro m JP Mo rg an Ch a s e Ban k. Thi s m or tg ag e

in co rp or at ed a se co nd m or tg ag e to W or ld wid e Len di ng

. ( 6 ) Su bs eq ue nt ly, on Mar ch 28 , 20 08 , Red st on e fil ed a jud ic ia l fo recl o s u r e

co m pl ai nt in th e Mad is on Co un ty Ci rcu it Co ur t to en fo rc e it s li en . M cDo na ld fil ed

a m ot io n fo r su m

m ary jud gm en t, whi ch th e co ur t gr an te d. Red st on e th en m ov ed fo r

3a va cat io n of th e jud gm en t. On Sep te m be r 16 , 20 08 , th e Mad is o n C o u n t y C irc ui t

Co ur t gr an te d Red st on e’s m ot io n. The co ur t rei ns ta te d th e cas e. Howev er, th e co ur t

i s s u e d a st ay pe nd in g th e ou tc om e of th e act io n in th e ba nk ru pt cy co ur t whi c h w a s

reo pe ne d.
(7 ) On Au gu st 19 , 20 08 , McDo na ld fil ed a m ot io n with th e b an kr up tc y co ur t

to reo pe n th e Ch ap te r 7 cas e i n o rd er to fil e a co m pl ai nt ag ai ns t Red st on e fo r

in jun ct iv e rel ie f. McDo na ld so ug ht a co nt em pt ci ta ti on , al le gi ng th at Red st on e ha d

vi ol at ed th e ba nk ru pt cy di sc ha rg e. The co ur t gr an te d McDo na ld ’s m ot io n to reo pe n.
(8 ) On Octo be r 9, 20 08 , th e ba nk ru pt cy co ur t en te red an or de r refu si ng to

en joi n Red st on e fro m pr oc eed in g in th e Mad is on Co un ty C i rcu it Co ur t. The

ba nk ru pt cy co ur t ga ve two reas on s fo r it s or de r. Fi rs t, th e co ur t fo un d th at pr io r to th e

ba nk ru pt cy di sc ha rg e in 20 02 , McDo na ld di d no t m ov e pu rs ua nt to § 52 2( f) to av oi d

th e li en . As a res ul t, Red st on e ha d a li en on McDo na ld ’s p ro pe rty wh ic h R ed st on e

w a s e nt it le d to en fo rce. Seco nd , th e co ur t fo un d th at in 20 03 , McDo na ld d i d n o t

ap pe al it s or de r de nyin g th e m ot io n to reo p e n th e cas e. The co ur t fo un d th at re s
ju di ca ta r e s u l t e d. Acco rd in gl y , th e co ur t fo un d th at Red st on e di d no t vi ol at e th e

di sc ha rg e in

jun ct io n, an d t he refo re was no t i n c on te m pt

. (9 ) McDo na ld ap pe al ed to th e di st ric t co u r t

. O n Ju ne 26 , 20 09 , th e di st ric t

co ur t affi rm ed th e ba nk ru pt cy co ur t’s de ci si on in pa rt an d va cat ed in pa rt. The co ur t

4rev ers ed th e ba nk ru pt cy co ur t’s ho ld in g th at a jud gm en t li en ex is te d on McDo na ld ’s

ho m es te ad in Red st on e’s fav or , be cau se th e di st ric t co ur t fo un d th at no li en ex is te d.

The co ur t reas on ed , i n pa rt, th a t th e li en di d no t at ta ch be cau se McDo na ld ha d le ss

eq ui ty in th e pr op ert y th an th e am ou nt of th e Alab am a ho m es te ad ex em pt io n. W it h

res pe c t t o t h e b an kr up tc y co ur t’s ho ld in g th at Red st on e was no t in co nt em pt , th e

di st ric t co ur t af

fir m ed

.
Bo th pa rti es ap pe al to th is co ur t. Red st on e ap pe al s th e di st ric t co ur t’s ho ld in g

th at it do es no t po ss es s a jud gm en t li en on McDo na ld ’s pr op ert y

. McDo na ld cro ss
ap pe al s t he di st ric t co ur t’s h ol di ng th at Red st on e is no t i n c on te m pt an d s ho ul d n ot

be en joi ne d fr om

pro ceed in g i n t he Mad is on Co un ty Circu it Co ur t.

Red st on e arg ue s th at th e Alab am a ho m es te ad ex em pt io n la w do es no t di ct at e

th at th e en ti re pro pe rty be co m es ex em pt if th e de bt or ha s les s th an $5 ,00 0 of equ it y

in th e pr op ert y ; i n s t e a d , th e ho m es te ad is ex em pt on ly to th e ex te nt of $5 ,00 0.

The refo re, Red st on e cl ai m s it ha d a l i e n o n M c D on al d’s pr op ert y whe n he fil ed

b a nk ru pt cy pr oc eed in gs

. Red st on e cl ai m s th at it was no t req ui red to ob ject t o

McDo na ld ’s v al ua ti on of hi s pr op ert y , b ut th at M c D o n a ld was req ui red to m ov e to

av oi d R ed st on e’s li en , whi ch he di d n ot

.
McDo na ld co un te rs th at he was no t req ui red to fil e a § 52 2( f) li en be cau se hi s

cl ai m of ex em

pt io n was su ffi ci en t to ex em pt th e pr op ert y un de r Alab am a ba nk ru pt cy

5la w; in ot he r wor ds , M cDo na ld co nt en ds th at th e li en di d no t at ta ch to hi s pr op ert y

be cau se it was ex em

pt fro m ex ecu ti on

. Thu s, th e di st ric t co ur t co rrec tl y he ld th at no

l i e n ex is te d whe n McDo na ld fil ed fo r Ch ap te r 7 rel ie f, no r di d a li en ex is t a f t e r

di sc ha rg e. Add it io na ll y , McDo na ld arg ue s th at Red st on e waiv ed an y rig ht to ob ject

to it s ex em

pt io n c la im

.
Afte r rev ie w, we affi rm

. W e ne ed no t reac h th e qu es ti on of whe th er, un de r

Alab am a la w, no li en at ta ch es to real pr op ert y whe n th e de bt or ha s le ss eq ui ty in th e

pr op ert y th an th e am ou nt of th e ho m es te ad ex em pt io n, or in st ead , whe t h e r t h e real

pr op ert y is ex em

pt on ly to th e ex te nt of th e ho m es te ad ex em pt io n. Rat he r, we affi rm

be cau se McDo na ld ’s h om es te ad is e xe m pt fro m le vy an d sa le un de r ex ecu ti on as a

m at te r o f re s ju di ca ta

. As th e di st ric t co ur t wro te , as an al te rn at iv e gr ou nd fo r th e

res ul t it reac he d, “ th e fact th at th e ho m es te ad is ex em pt fr o m l e v y a n d sa le un de r

ex ecu ti on be cam e a m at te r of re s ju di ca ta whe n th e Dis tri ct Co ur t of Mad is on Co un ty

in 20 04 , ex pr es sl y fo un d th at McDo na ld ’s ho m es te ad was ex em pt fro m le vy an d sa le

un de r ex ecu ti on .” (Ele c. R.1 4 a t 1 9.) 1

The District Court of Ma dison County noted in its Februa

ry 10, 2004 Orde r Dismissing 1 Ex ecution that McD onald filed a claim of e x emption as to personal proper ty and that Redstone did not contest the claim. Ac cording ly , the District Court of Madison County discharg ed Redstone’s wr it of execution. Howeve r, McDona ld only claimed his re al prope rty as exempt, so the District Court simply

made a mistake in descr ibing the pr operty as per sonal proper

ty . We ag ree with the district court that the District Court of Ma dison County found that McDona ld’s homestead w as exempt from execution.

6The el em en ts o f r e s j u d i c at a in Alab am a are “ (1 ) a pr io r jud gm en t on th e

m eri ts , (2 ) ren de red by a co ur t of co m pe te nt juri sd ic ti on , (3 ) wit h su bs ta nt ia l id en ti ty

of th e pa rti es , an d (4 ) wit h th e sa m e cau s e of act io n pr es en te d in bo th su it s.”

Dai ry la nd In s. Co . v . J

ac ks on , 5 66 So . 2 d 72 3, 72 5 (Ala

. 1 9 9 0 ) (ci ta ti on om it te d)

.
The do ct rin e o f

res ju di ca ta

in vo lv es pr io r l i t i g a t i o n be twee n a pl ai nt iff an d a de fen da nt , wh ic h is de ci de d on th e m e r i t s b y a co ur t of co m pe te nt juri sd ic ti on , an d th en a
su bs eq ue nt at te m

pt by th e pr io r pl ai nt iff to rel it ig at e th e sa m e cau se of act io n ag ai ns t th e sa m e de fen da nt , or pe rh ap s to rel it ig at e a di ffer en t cl ai m no t pr ev io us ly li ti ga te d bu t whi ch ari se s ou t of th e sa m e ev id en ce. Alab am a la w is well se tt le d th at th is wil l no t be al lo wed

. A va li d, fin al jud gm en t on th e m eri ts of th e cl ai m ex ti ng ui sh es t h e c l a im

. If th e pl ai nt iff won , th e cl ai m is m erg ed in to th e jud gm en t; if th e de fen da nt

won , t h e p l ai nt iff is ba rred fro m rel it ig at in g an y m at te r whi ch co ul d ha ve be en li ti ga te d i n t he pri or act io n.

W hi sma n v . Ala ba ma Po wer Co

. , 51 2 S o. 2 d 7 8, 8 1 (Al a. 19 87 ) (ci ta ti on om it te d)

.
In th is cas e, th e fo ur ele m en ts ne ces sa ry to est ab li sh re s ju di ca ta are pre se nt

.
The re is a pr io r jud gm en t on th e m eri ts on McDo na ld ’s c l a i m t h a t hi s ho m es te ad

pr op ert y is ex em

pt fro m ex ecu ti on by Re ds to ne

. The 20 04 jud gm en t was ren de red
by th e Dis tri ct Co ur t of Mad is on Co un ty, a co ur t of co m pe te nt juri sd ic ti on

. The

su bs ta nt ia l id en ti ty of th e pa rti es el em en t is al s o m et –M cDo na ld an d Red st on e are

pa rti es in bo th th e cu rren t act io n as well as th e 20 04 act io n, whe n th e Dis tri ct Co ur t

of Mad is on Co un ty gran te d M cDo na ld ’s cla im of e xe m pt io n. Last , t he same caus e

7of act io n was pre se nt in bo th act io ns . Red st on e is no w see ki ng to est ab li sh it ha s a

li en on McDo na ld ’s p ro pe rty. Howev er, as th e d is tri ct co ur t co rrec tl y fo un d, if th e

20 04 fin di ng by the Dis tri ct Co ur t o f Mad is on Co un ty tha t M cDo na ld ’s pro pe rty is

ex em pt is co rrec t, the n a jud gm en t lie n cou ld no t hav e at ta ch ed

. (Ele c. R.1 4 at 19 .)

Fo r reas on s th at we do no t kn ow, Red s to ne di d no t ob ject to th e or de r ex em

pt in g

McDo na ld ’s real pr op ert y or a p pe al th e de ci si on

. Acco rd in gl y , McDo na ld ’s real

pr op ert y is ex em pt as a m at te r of re s j ud ic at a

.
McDo na ld ’s c r o s s
- a pp eal th at th e di st ric t co ur t’s affi rm an ce of th e

ba nk ru pt cy ’s co ur t’s de ci si on to no t sa nc ti on Red st on e or is su e an in jun ct io n ag ai ns t

it is wit ho ut m eri t. The ba nk ru pt cy co ur t’s or de r de nyin g th e M c D o n a l d ’s fir st

m ot io n to reo pe n th e cas e on Sep te m be r 3, 20 03 op in ed th at Red st on e di d ha ve a li en

on McDo na ld ’s pr op ert y

. The refo re, it can no t be sa id th at R e d s to ne di d no t act in

go od fai th in att em

pt in g t o e xe cu te it s ju dg m en t.

AFFIRMED.

8