Title: 3M DOZER SERVICE, INC. v. BAKER
Citation: 136 P.3d 1047, 2006 OK 28
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: May 2, 2006

3M DOZER SERVICE, INC. v. BAKER Annotate this Case 3M DOZER SERVICE, INC. v. BAKER 2006 OK 28 136 P.3d 1047 Case Number: 100262 Decided: 05/02/2006 THE SUPREME COURT OF THE STATE OF OKLAHOMA 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. 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, Oklahoma, for Plaintiff/Appellant. Julia C. Rieman, GUNGOLL, JACKSON, COLLINS, BOX & DEVOLL, P.C., Enid, Oklahoma, for Defendants/Appellees, Barbara Moore Baker and Karen Sue Moore. David C. Henneke, Enid, Oklahoma, 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. ¶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. ¶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. ¶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." 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., 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. 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., 596 N.E.2d 24 (Ill. App. Ct. 1992); W.D. Curran & Assocs. v. Cheng-Shum Enters., 667 A.2d 1013 (Md. Ct. Spec. App. 1995); Victoria Grain Co. of Minneapolis v. Janesville Elevator Constr., Inc. (In re Victoria Grain Co.), 45 B.R. 2 (Bankr. D. Minn. 1984) (filing of mechanics lien statement did not violate automatic stay, but foreclosure proceedings did); O'Lane v. Spinney, 874 P.2d 754 (Nev. 1994). ¶12 Only when a statute requires an act in the nature of enforcing or perfecting a lien or requires the exercise of judicial discretion is renewal likely to be barred by the stay. For example, the renewal of a judgment in California was not a simple ministerial act because the debtor could challenge service, move to quash, or otherwise challenge renewal in ways requiring the exercise of judicial discretion. Kertesz v. Ostrovsky, 8 Cal. Rptr. 3d 907, 913-14 (Cal. Ct. App. 2004) (did not address whether an alternative "application for renewal" was stayed). In Kansas, renewal of a judgment lien was stayed during bankruptcy because the statute provided that the dormancy period did not run during any period when enforcement was stayed. St. Joseph Dev. Corp. v. Sequenzia, 968 P.2d 682, 684-85 (Kan. Ct. App. 1998). Similarly, where preservation of a mechanic's lien required an enforcement action, renewal was stayed during bankruptcy. Miner Corp. v. Hunters Run Ltd. P'ship (In re Hunters Run Ltd. P'ship), 875 F.2d 1425 (9th Cir. 1989). Finally, where the renewal statute required the creditor to issue a writ of scire facias requiring a response from the debtor, renewal was stayed during bankruptcy. ¶13 Under ordinary circumstances, Creditor had four options to renew its judgment in 1998: (1) execution; (2) notice of renewal; (3) garnishment; or (4) income assignment. ALTHOUGH CREDITOR COULD HAVE RENEWED ITS JUDGMENT, THE BANKRUPTCY CODE GAVE CREDITOR AT LEAST 30 DAYS AFTER THE AUTOMATIC STAY WAS LIFTED TO FILE THIS ENFORCEMENT ACTION. ¶14 In addition to the automatic stay, the bankruptcy code extends limitations periods on some claims against the debtor. 11 U.S.C. § 108(c). Specifically: [I]f applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an agreement fixes a period for commencing or continuing a civil action in a court other than a bankruptcy court on a claim against the debtor . . . then such period does not expire until the later of- (1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or (2) 30 days after notice of the termination or expiration of the stay . . .. Clearly, if the automatic stay had prevented Creditor from extending its judgment and judgment lien, section 108(c) would have extended the period in which it could do so until at least 30 days after the stay was lifted. Town of Colchester v. Hinesburg Sand & Gravel, Inc. (In re APC Constr., Inc.), 112 B.R. 89 (Bankr. D. Vt. 1990); DeBaillon v. Wilson (In re Jack/Wade Drilling, Inc.), 213 B.R. 493, 498-99 (Bankr. W.D. La. 1997); Concrete Structures, Inc. v. Tidewater Crane & Rigging Co. (In re Concrete Structures, Inc.), 261 B.R. 627 , 642 (E.D. Va. 2001); see also Don Huddleston Constr. Co. v. United Bank & Trust Co. of Norman, Okla., ¶15 The more complicated issue, however, is whether section 108(c) extended the period for Creditor to enforce its judgment lien even though it was not prevented from renewing its judgment. Because Congress has "generally left the determination of property rights in the assets of a bankrupt's estate to state law, . . . state laws should be suspended only to the extent of actual conflict" with the bankruptcy code. Butner v. United States, ¶16 The Second Circuit has held that section 108(c) renders the "automatic stay" discussion unnecessary because it "tolls the expiration of periods governing the life of statutory liens," regardless of whether enforcement or extension is stayed. In re Morton, 866 F.2d at 566. Similarly, the Ninth Circuit has concluded that section 108(c) applies regardless of whether the automatic stay would have prevented the lien renewal. Spirtos v. Moreno (In re Spirtos), 221 F.3d 1079, 1081 (9th Cir. 2000) ("It is the creditor's inability to enforce the judgment for a portion of the [dormancy] period that keeps the period of duration open under section 108(c).") enforced by, among others, Moreno v. Spirtos, No. B169547, 2004 WL 1682358 (Cal. Ct. App. July 28, 2004); see also Smith v. Lachter (In re Smith), 293 B.R. 220, 223 (B.A.P. 9th Cir. 2003); Lachter v. Smith (In re Smith), 101 P.3d 637 (Ariz. 2004). ¶17 In applying a Georgia statute similar to Oklahoma's, one bankruptcy court observed: [E]xistence of a valid judgment lien creates a right to enforce that judgment, whereas the lapse of that lien deprives the creditor of the right to enforce the judgment. Any act taken to renew the judgment, a pre-requisite to enforcement, constitutes a continuation of the civil action against the debtor or the debtor's property to which a nonbankruptcy statutory time limitation applies. Wessinger v. Raab (In re Greenberg), ¶18 Here, Creditor's enforcement of its lien was certainly "frustrated" by Debtor's bankruptcy. In re Smith, 101 P.3d at 639-640; Butner, ¶19 The legal result we reach today coincides with the equitable result. See O'Lane, 874 P.2d at 757. At a minimum, the status of the law governing this area was unsettled throughout the time when Defendants argue that Creditor should have been enforcing the lien. While some of Creditor's actions could have been more artful, it never stopped trying to assert its lien, at least some of the current property owners were always on notice of the lien, and Creditor's efforts were stymied at every turn by Debtor's assertion of the bankruptcy stay. Defendants' opposite assertion now-that the bankruptcy stay did not preclude Creditor's enforcement efforts-cannot be permitted to destroy the rights Creditor consistently asserted. Further, while Defendants Mark and Sherry Stewart have argued that they would have had no knowledge of the possible extension of the lien based on a title examination when they received their property in 1989, they failed to support that argument with any evidentiary material and Creditor presented evidentiary materials tending to support its argument that most, if not all, of the transfers of the properties have been among related parties and made specifically for the purpose of avoiding the lien. ¶20 We need not decide whether the period during which Creditor could enforce its lien was extended by only 30 days or whether it was tolled during the entire time Debtor was in bankruptcy. Creditor's execution was timely under either interpretation as it clearly had filed this action before the expiration of 30 days after it received "notice of the termination or expiration of the stay." CONCLUSION ¶21 Under ordinary circumstances, Creditor's judicial lien would have lapsed on February 11, 1998, because Creditor failed to file a certified copy of the notice of renewal of judgment with the county clerk. ¶22 On remand, the district court will have to resolve numerous issues of fact. While the parties have agreed that none of the properties subject to the lien were legally owned by Debtor at the time she filed bankruptcy and were never part of the bankruptcy estate, there is at least one deed purporting to transfer property back to Debtor and Creditor has introduced evidentiary material tending to support its argument that some or all of the transfers were not arms-length or for value. We take no position on whether bona-fide subsequent purchasers should still be able to avoid the lien or whether Creditor's assertions, if established, would change the result. Those determinations must first be made by the district court after the parties have had an opportunity to present their proof and make legal arguments. All we hold today is that Creditor was not barred as a matter of law from attempting to enforce its lien until at least 30 days after it received notice that the bankruptcy stay had been lifted. CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; DISTRICT COURT'S JUDGMENT REVERSED; AND MATTER REMANDED FOR FURTHER PROCEEDINGS. ALL JUSTICES CONCUR. FOOT