Opinion ID: 2575725
Heading Depth: 1
Heading Rank: 4

Heading: 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.

Text: ¶ 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., 1996 OK CIV APP 133, ¶ 9, 933 P.2d 944, 947 (quoting Johnson v. Johnson, 1938 OK 194, ¶ 0, 77 P.2d 745, 745 (syl. no. 2 by the Court)) (When a person is prevented from exercising his legal remedy by some paramount authority, the time during which he is thus prevented is not to be counted against him in determining whether the statute of limitations has barred his right.); Statewide Funding Corp. v. Reed, 1996 OK CIV APP 110, ¶¶ 7-8, 925 P.2d 578, 581. ¶ 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, 440 U.S. 48, 54 & n. 9, 99 S.Ct. 914, 59 L.Ed.2d 136 (1979). Nonetheless, the United States Supreme Court has recognized that the bankruptcy code's extension provision can help a lienholder whose right to take possession of property is frustrated by the bankruptcy and has left local judges to determine whether such frustration has actually occurred. Id. at 57, 99 S.Ct. 914. ¶ 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), 209 Ariz.343, 101 P.3d 637 (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), 288 B.R. 612, 615 (Bankr.S.D.Ga.2002) (holding that section 108(c) extended the time for renewing a judgment); see also Guertler, 230 Ill.App.3d 933, 172 Ill.Dec. 745, 596 N.E.2d 24; but see Durkan Patterned Carpet, Inc. v. Premier Hotel Dev. Group (In re Premier Hotel Dev. Group), 270 B.R. 234 (Bankr. E.D.Tenn.2001) (if automatic stay does not prevent filing or perfection of lien, section 108(c) does not extend time); In re Jack/Wade Drilling, 213 B.R. at 498-99 (where automatic stay did not prevent filing notice of lien, section 108(c) did not extend time). ¶ 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, 440 U.S. at 57, 99 S.Ct. 914. Although Defendants argue that Creditor could have foreclosed on the properties at any time because they were not part of the bankruptcy estate, Debtor and Defendant Moore successfully argued in both state and federal courts that Creditor could not do so while the bankruptcy was pending. But see Hans Nef v. Ag Servs. of Am., Inc., 79 Ark.App. 100, 86 S.W.3d 4, 9-10 (2002) (automatic stay and extension do not apply to property not in the bankruptcy estate). Although Creditor might have been able to bring an earlier independent action against Defendant Moore and Defendants Mark and Sherry Stewart and the other current property owners, Creditor tried unsuccessfully to obtain the bankruptcy court's permission to proceed against the properties. In addition, those property owners would have been entitled to use any defenses available to Debtor to discredit Creditor's lien since a judgment lien ceases to exist when the underlying judgment is no longer enforceable. U.S. Mortgage, 2003 OK 67, ¶ 18, 73 P.3d at 896-97. Moreover, we have previously held that, where judicial proceedings were initially prosecuted against the bankruptcy debtor, any subsequent collection or enforcement proceedings during the period of the automatic stay are ineffective. Bailey, 1991 OK 67, 862 P.2d 461 (post-bankruptcy-petition collection proceedings against insurer ineffective). Although the facts presented in Bailey differed markedly from those presented here, our analysis leads us to conclude that the fact that the properties here were not part of the bankruptcy estate is not determinative in this situation  particularly where at least some of the transfers were not arms-length sales to disinterested third parties. ¶ 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. [7] ¶ 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. [8]