Opinion ID: 2632324
Heading Depth: 3
Heading Rank: 3

Heading: The Superior Court Applied the Wrong Standard in Its Decision.

Text: The superior court ruled from the bench at oral argument that, under common law doctrine, the discharge of the underlying debt in the Gabriels' bankruptcy effectively nullified the Guttchens' judgment lien: I have substantial doubt that the judgment and lien can have a separate existence. The case law that I'm familiar with from the common law is to the effect that in order for the judgment lien to exist, there has to be a valid underlying judgment. Once the valid underlying judgment is discharged in bankruptcy, it cuts the legs out from under the lien. The lien cannot have a separate existence. And I am prepared to hold to that effect at this time, but I will give counsel a chance to argue the point. Accordingly, the court denied the Guttchens' motion to execute without further considering its merits. But the superior court erred concerning the effect of the bankruptcy discharge. The United States Supreme Court has held that a bankruptcy discharge does not extinguish a valid lien on real property. [9] [A] bankruptcy discharge extinguishes only one mode of enforcing a claim  namely, an action against the debtor in personam  while leaving intact another  namely, an action against the debtor in rem. [10] While the Supreme Court's holding involved a mortgage lien, [11] numerous other courts have held that judgment liens similarly survive bankruptcy and are enforceable in rem. [12] The In re Hermansen court held, for example, that [g]enerally, valid, perfected judicial liens which precede bankruptcy survive and are enforceable after bankruptcy. . . . The bankruptcy discharge does not prevent post-petition enforcement of valid liens. The secured creditor may proceed to enforce the lien, as an in rem action, and is not barred . . . . [13] Accordingly, it was error to deny the Guttchens' motion for leave to execute on the ground that the Gabriels' bankruptcy extinguished both the underlying debt and the lien.