Opinion ID: 2977277
Heading Depth: 2
Heading Rank: 1

Heading: Stuart C. Brinley

Text: On February 15, 2001, Brinley filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in the United States Bankruptcy Court for the Western District of Kentucky. On February 27, 2001, Brinley filed with the bankruptcy court, pursuant to 11 U.S.C. § 521(1), a list of creditors, a schedule of assets and liabilities, a schedule of current income and current expenditures, and a statement of his financial affairs. In the schedule of assets and liabilities, Brinley listed a one-half interest in a house and lot located at 1007 Johnson Farm Road, Louisville, Kentucky (the “Property”). On April 9, 2001, pursuant to § 522(f) of the Bankruptcy Code, Brinley filed a motion to avoid the judgment lien that PNC Bank, Kentucky, Inc., held on the Property. LPP Mortgage, Ltd. (“LPP”), the successor by assignment of the judgment lien, timely filed an objection to Brinley’s motion. On July 24, 2001, while the motion to avoid the lien was pending, the Trustee filed a motion to close the bankruptcy case. The Trustee’s Final Report was accepted by the bankruptcy court on November 28, 2001. On May 24, 2002, the bankruptcy court decided Brinley’s motion to avoid the lien, holding that LPP’s lien was avoided in the amount of $18,418.00, leaving LPP with a judgment lien of $94,000.00 on the Property. On May 31, 2002, Brinley appealed to the United States District Court for the Western District of Kentucky. During the pendency of the appeal, on October 21, 2002, the bankruptcy court entered a final decree, the Trustee was discharged, and Brinley’s bankruptcy case was closed. On April 2, 2003, the district court issued an opinion reversing the bankruptcy court’s decision and completely eliminating LPP’s lien on the property. LPP and Brinley cross-appealed to this Court. On March 22, 2005, this Court issued an opinion reversing in part and affirming in part the decision of the district court. Using the statutory framework of 11 U.S.C. § 522(f)(1), this Court concluded that LPP’s judgment lien survived in the amount of $13,654.91 and was avoided to the extent of $98,763.44. Stuart C. Brinley v. LPP Mortgage, Ltd. (In re Brinley), 403 F.3d 415 (6th Cir. 2005). On April 25, 2005, the bankruptcy court set aside the final decree and reopened the bankruptcy case. On June 22, 2005, pursuant to this Court’s direction, the bankruptcy court ordered that LPP was to retain a judgment lien in the amount of $13,654.91 and that the remainder of the lien was avoided. On August 2, 2005, the bankruptcy court entered a final decree and closed the bankruptcy case. On October 20, 2005, LPP filed a motion to reopen the bankruptcy case and a motion pursuant to 11 U.S.C. § 551 to preserve for the benefit of the bankruptcy estate the unencumbered equity in Brinley’s Property that was created by virtue of the partial avoidance of LPP’s lien.1 On October 21, 2005, the bankruptcy court ordered that the case be reopened. On June 20, 2006, Brinley filed an objection to LPP’s motion to preserve unencumbered equity arguing, inter alia, that the Trustee had abandoned his interest in the Property, thus making § 551 inapplicable. A hearing was held on July 25, 2006, at which time the Trustee orally joined in LPP’s motion to preserve the unencumbered equity for the bankruptcy estate. On August 17, 2006, the bankruptcy court granted LPP’s motion to have the unencumbered equity preserved for the benefit of the bankruptcy estate. In its memorandum, the bankruptcy court found that the Trustee’s technical abandonment of the property was revocable under Federal Rule of Civil Procedure 60(b) and that 1 11 U.S.C. § 551 states: “Any transfer avoided under Section 522, 544, 547, 548, 549, or 724(a) of this title, or any lien void under section 506(d) of this title, is preserved for the benefit of the estate but only with respect to property of the estate.” 11 U.S.C. § 551. No. 07-6211 LPP Mortgage, Ltd., et al. v. Brinley, et al. Page 3 equity dictated that the abandonment be revoked. On August 25, 2006, Brinley filed a Notice of Appeal to the United States District Court for the Western District of Kentucky. The district court affirmed the decision of the bankruptcy court. Brinley appealed.