Court Opinion

ID: 4265328
Source: CourtListenerOpinion
Date Created: 2018-04-19 07:09:05.066294+00
Date Added: 2024-06-11T14:30:50.133369
License: Public Domain

STATE OF MICHIGAN

                            COURT OF APPEALS

BOB WOODWARD,                                                      UNPUBLISHED
                                                                   April 17, 2018
               Plaintiff/Counter-Defendant-
               Appellee,

v                                                                  No. 337984
                                                                   Wayne Circuit Court
CHRISTOPHER SCHWARTZ,                                              LC No. 13-012157-AV

               Defendant/Counter-Plaintiff,

and

MARK A. CHABAN,

               Appellant.

Before: SERVITTO, P.J., and MARKEY and O’CONNELL, JJ.

PER CURIAM.

       Appellant, Mark Chaban, appeals by right the circuit court’s order granting plaintiff’s
motion for a judicial sale of Chaban’s real property, specifically, his residence located at 15046
Hix Road in Livonia, Michigan. We affirm.

                    I. FACTUAL AND PROCEDURAL BACKGROUND

       This case has a lengthy history resulting in a 2014 judgment awarding plaintiff sanctions
for vexatious appeals in the amount of $24,125 against defendant and Chaban, who represented

                                               -1-
defendant, his brother-in-law, in an eviction dispute brought by plaintiff.1 Plaintiff’s judgment
for sanctions has remained, for the most part, uncollected and is the subject of this appeal.2

         This case began in 2010 when plaintiff initiated eviction proceedings against defendant in
district court to obtain possession of his rental property. Defendant filed a counterclaim seeking
delivery of title to the property, asserting that he and plaintiff entered into a verbal land contract
to sell the property to defendant. In May 2013, after a myriad of delays, plaintiff finally
prevailed on both his claim and the counterclaim; the court entered a judgment of possession in
favor of plaintiff and dismissed defendant’s counterclaim. Several months later, plaintiff took
possession of his property from defendant and sold it. On June 26, 2014, after defendant
appealed the district court’s order releasing funds to plaintiff of about $6,600, which had been
held in escrow during the proceedings, plaintiff filed a motion in the circuit court for vexatious
appeal sanctions against Chaban and defendant. See MCL 600.2445(3); MCR 7.216(C).
Plaintiff detailed in his motion that Chaban had filed numerous unsuccessful appeals throughout
the proceedings. Plaintiff sought actual and punitive damages totaling $24,125.

        On July 24, 2014, before the scheduled hearing on plaintiff’s motion for sanctions,
Chaban filed for voluntary bankruptcy under Chapter 7 of the Bankruptcy Code, 11 USC 701 et
seq. On the date Chaban filed his petition, he owned the real property that he used as his
personal residence at 15046 Hix Road in Livonia, Michigan, which he disclosed on his
bankruptcy Schedule A – Real Property. Chaban listed the value of his residence as $93,000,
subject to secured claims of $102,000. Chaban’s disclosures, thus, indicated that he had no
equity in his residence when he filed his petition. “When a debtor files a Chapter 7 bankruptcy
petition, all of the debtor’s assets [both legal and equitable interests] become property of the
bankruptcy estate, see 11 USC § 541, subject to the debtor’s right to reclaim certain property as
‘exempt,’ § 522(l).” Schwab v Reilly, 560 US 770, 774, 785; 130 S Ct 2652; 177 L Ed 2d 234
(2010); Owen v Owen, 500 US 305, 308; 111 S Ct 1833; 114 L Ed 2d 350 (1991). So Chaban’s
interest in his residence, to the extent he had any, became part of the bankruptcy estate when he
filed his petition. Owen, 500 US at 308-309.

        Under § 522 of the Bankruptcy Code, Chaban was permitted to exempt certain types of
property from the estate, enabling him to retain the property exempted postbankruptcy. Law v
Siegel, 571 US ___, ___; 134 S Ct 1192, 1192; 188 L Ed 2d 146 (2014); Schwab, 560 US at 774-
776, 785; 11 USC 522(b)(1), (c), and (l). “An exemption is an interest withdrawn from the estate
(and hence from the creditors) for the benefit of the debtor.” Owen, 500 US at 308. “The
Bankruptcy Code specifies the types of property debtors may exempt, § 522(b), as well as the
maximum value of the exemptions a debtor may claim in certain assets, § 522(d).” Schwab, 560
US at 774. Absent objection by an interested party, “[p]roperty a debtor claims as exempt will
be excluded from the bankruptcy estate.” Schwab, 560 US at 774, citing 11 USC 522(l); See

1
  Defendant is deceased and is not a party to this appeal. Chaban was suspended from the
practice of law in Michigan for one year effective October 31, 2017 (pending appeal).
2
  Unless otherwise noted, the statutory references are to the Bankruptcy Code, 11 USC 101 et
seq.

                                                 -2-
also Taylor v Freeland & Kronz, 503 US 638, 643-644; 112 S Ct 1644; 118 L Ed 2d 280 (1992),
and Szyszlo v Akowitz, 296 Mich App 40, 48; 818 NW2d 424 (2012).

        Chaban elected to claim the federal exemptions under 11 USC 522(b)(2), which permits
the debtor to exempt property specified under § 522(d).3 11 USC 522(b)(1). On his Schedule C
– Property Claimed as Exempt, Chaban listed his residence as exempt under § 522(d)(1) (the
federal homestead exemption), which provides, in relevant part:

               (d) The following property may be exempted under subsection (b)(2) of
       this section:

               (1) The debtor’s aggregate interest, not to exceed [$22,975] in value, in
       real property . . . that the debtor . . . uses as a residence . . . .[4]

On his Schedule C, Chaban listed “$0.00” as the value of his residence and “$0.00” as the value
of the claimed exemption pursuant to § 522(d)(1), presumably reflecting his lack of any equity in
the property. The bankruptcy trustee did not object to the “$0.00” claimed exemption, and there
is no indication, nor is it alleged, that any other interested party objected.

       On August 5, 2014, during the pendency of the bankruptcy proceedings, the circuit court
entered an order awarding plaintiff $24,125 in vexatious appeal sanctions against Chaban (and
defendant). But due to Chaban’s bankruptcy, the circuit court stayed enforcement of the
judgment with regard to Chaban. On May 7, 2015, upon plaintiff’s action, the bankruptcy court
declared plaintiff’s judgment for sanctions against Chaban nondischargeable under § 523(6) (a
debt resulting from a willful and malicious injury is not dischargeable in bankruptcy).5

3
  “Under § 522(b), [the debtor] must select between a list of federal exemptions (set forth in
§ 522(d)) and the exemptions provided by his State, ‘unless the State law that is applicable to the
debtor . . . specifically does not so authorize,’ § 522(b)(1)—that is, unless the State ‘opts out’ of
the federal list.” Owen, 500 US at 308. “Michigan law permits debtors in bankruptcy to choose
their exemptions from those set forth in 11 USC § 522(d), from a set of general exemptions
available to all Michigan residents irrespective of their bankruptcy status, Mich Comp Laws
§ 600.6023, or from a list of exemptions available solely to debtors in bankruptcy, Mich Comp
Laws § 600.5451.” In re Schafer, 689 F3d 601, 604 (CA 6, 2012).
4
  On April 1, 2013, the amount of the federal homestead exemption in § 522(d)(1) was adjusted
to $22,975. See 11 USC 104(a); Revision of Certain Dollar Amounts in the Bankruptcy Code
Prescribed Under 104(a) of the Code, 78 Fed Reg 12089-01 (February 21, 2013). These dollar
amounts are revised in 3-year intervals ending on April 1. Chaban filed his bankruptcy petition
on July 24, 2014.
5
  Chaban challenged in bankruptcy court the circuit court’s order awarding plaintiff sanctions
against him as void in violation of the automatic stay of actions against a debtor in bankruptcy
under 11 USC 362. The bankruptcy court held that the court’s judgment for sanctions for
vexatious appeals did not violate the automatic stay because it fell under the police power
exception to the stay under 11 USC 362(b)(4). The bankruptcy court’s decision was upheld on

                                                -3-
Thereafter, on May 12, 2015, plaintiff recorded a notice of judgment lien against Chaban’s real
property. MCL 600.2801 et seq.

        On September 9, 2015, Chaban was granted a discharge from Chapter 7 bankruptcy
under § 727, the effect of which discharged Chaban from personal liability for all pre-petition
debts, unless the debt is not dischargeable under § 523(a). 11 USC 727(b) (“Except as provided
in section 523 of this title, a discharge under subsection (a) of this section discharges the debtor
from all debts that arose before the date of the order for relief . . . .”); 11 USC 524(a)(1)
(providing that a discharge extinguishes “the personal liability of the debtor”). Because
plaintiff’s judgment was deemed nondischargeable under § 523(a)(6) (debt resulting from a
willful and malicious injury), Chaban’s discharge from bankruptcy did not extinguish his
personal liability for the judgment debt owed to plaintiff. Thereafter, plaintiff obtained an order
to seize Chaban’s property to satisfy his judgment against Chaban. On October 28, 2015, the
levying officer recorded a levy against Chaban’s residence securing plaintiff’s judgment. See
MCL 600.6051.

        On March 24, 2016, upon the motion of another judgment creditor, the bankruptcy court
formally abandoned Chaban’s residence as an asset of the bankruptcy estate.6 Upon
abandonment of the residence, the trustee was “divested of control of the property,” and the
residence reverted to Chaban, whose “rights to the property are treated as if no bankruptcy
petition was filed.” Kane v Nat’l Union Fire Ins, 535 F3d 380, 385 (CA 5, 2008), quoting 5
Collier on Bankruptcy, § 554.02[3] (quotation marks omitted). In sum, the residence re-vested in
Chaban, subject to any secured liens against it, and the parties’ rights were governed by state
law. Nibbelink v Coopersville State Bank, 286 Mich 1, 11; 281 NW 415 (1938).

       Thereafter, the circuit court, pursuant to plaintiff’s motion, entered an order compelling
an inspection of Chaban’s residence to prepare for judicial sale under the levy.7 In October

appeal. In re Chaban, unpublished opinion and order of the United States District Court for the
Eastern District of Michigan, issued August 15, 2015 (Case No. 2:14-cv-14559). Chaban also
challenged the bankruptcy court’s determination that the judgment was a nondischargeable debt,
which was also upheld on appeal. In re Chaban, unpublished opinion and order of the United
States District Court for the Eastern District of Michigan, issued November 3, 2015 (Case No.
2:14-cv-14559).
6
  Under § 554, a trustee may abandon any property of the bankruptcy estate if the property is
“burdensome to the estate or that is of inconsequential value and benefit to the estate.” Szyszlo,
296 Mich App at 49 (citation and quotation marks omitted).
7
  Chaban removed the proceedings to the bankruptcy court, asserting that plaintiff’s actions
against exempted property constitute a proceeding concerning the debtor’s estate. The
bankruptcy court remanded the action to the circuit court, concluding that plaintiff’s efforts to
obtain satisfaction of his judgment have no bearing on whatever administration remains as to
Chaban’s bankruptcy, as the trustee no longer has any interest in the residence, did not challenge
the exemption, and formally abandoned the residence as an asset of the bankruptcy estate, and,
thus, whether the residence is exempt from creditor collection under state law is a matter of state

                                                -4-
2016, plaintiff moved in the circuit court for a judicial sale of Chaban’s residence under MCL
600.6018. Plaintiff asserted that the residence was appraised at approximately $175,000 to
$200,000, subject to mortgages of approximately $100,000, and, thus, there was sufficient equity
in Chaban’s residence that plaintiff, as a judgment creditor, was entitled to pursue to satisfy his
nondischargeable judgment for sanctions against Chaban. Chaban contested the motion and
moved for entry of an order declaring his residence exempt from further attempts at execution,
arguing, as he does on appeal, that his residence, which he claimed as exempt property in the
bankruptcy proceedings, without objection, is now immune from liability for pre-petition debts
under § 522(c), (f)(1), and cannot be executed against, levied, or sold to satisfy plaintiff’s
judgment. Chaban also argued that plaintiff failed to comply with various statutory procedural
requirements leading up to the sale. The circuit court disagreed and granted plaintiff’s motion
for judicial sale and allowed the sale to proceed. Chaban now appeals by right.

                                  II. STANDARD OF REVIEW

      This issue involves questions of law, which we review de novo. Young v Indep Bank,
294 Mich App 141, 143; 818 NW2d 406 (2011).

                          III. FEDERAL HOMESTEAD EXEMPTION

         Plaintiff sought a judicial sale of Chaban’s residence pursuant to MCL 600.6018, which
provides, “All the real estate [interests] of any judgment debtor . . . are subject to execution, levy
and sale except as otherwise provided by law.” MCL 600.6018 (emphasis added). Clearly,
Chaban is a “judgment debtor” given the circuit court’s entry of the judgment for sanctions in
favor of plaintiff against Chaban. At issue is whether plaintiff could pursue recovery of his
nondischargeable judgment against Chaban’s residence under MCL 600.6018. Chaban asserts
that his residence was not subject to execution, levy, and sale under MCL 600.6018 because he
exempted it from the bankruptcy estate without objection, and pursuant to § 522(c), his
residence, as “property exempted,” is immunized from liability for plaintiff’s judgment, despite
its nondischargeability; plaintiff’s lien against the residence is avoided under § 522(f)(1); and,
therefore, plaintiff is prohibited under federal bankruptcy law from pursuing his judgment via
levy and judicial sale of his residence.

                        A. SECTION 522(c) – PROPERTY EXEMPTED

        Chaban correctly asserts that, under § 522(c), which “establishes the postbankruptcy
relationship between ‘property exempted’ in the bankruptcy case and prepetition debts..” In re
Farr, 278 BR 171, 176 (Bankr CA 9, 2002). Property exempted by the debtor (with some
specifically enumerated exceptions) is immunized against liability during and after the case for

law. Regarding the levy, the bankruptcy court found Chaban’s argument that it violated the
automatic stay or the discharge injunction to lack any technical or substantive merit because the
dischargeability of the debt, exemption, and abandonment of the residence controlled, regardless
of when such might have occurred.

                                                 -5-
all prebankruptcy debts.8 11 USC 522(c); Owen, 500 US at 308. Specifically, § 522(c) provides,
in relevant part:
                Unless the case is dismissed, property exempted under this section is not
        liable during or after the case for any debt of the debtor that arose, or that is
        determined under section 502 of this title as if such debt had arisen, before the
        commencement of the case, except . . .

11 USC 522(c)(1) through (4) enumerates four exceptions in which “property exempted”
remains liable for a nondischargeable pre-petition debt, only one of which is potentially
applicable here, § 522(c)(2) (excepting debt secured by an unavoided lien).9 Section 522(c),
thus, immunizes “property exempted” from all pre-petition debts, with the exception of those
nondischargeable debts expressly enumerated (not applicable here) or debts secured by liens that
have not been avoided. See Owen, 500 US at 308.

         The phrase “property exempted” as used in § 522(c) is not statutorily defined; however, §
522(c) refers to the property not liable for pre-petition debts as “property exempted under this
section.” The phrase “this section” in § 522(c) refers to § 522, which “determines what property
a debtor may exempt.” Owen, 500 US at 308. Section 522(b), in turn, allows a debtor to exempt
from the estate property listed in either paragraph (2) or (3). Section 522(b)(2), applicable where
a debtor, such as here, elects the federal exemptions, permits the debtor to claim property as
exempt as defined in § 522(d), which “in turn lists 12 categories a debtor may claim as exempt.”
Schwab, 560 US at 782. As the United States Supreme Court has recognized, “most of these
categories . . . define the ‘property’ a debtor may ‘claim as exempt’ as the debtor’s ‘interest’—up
to a specified dollar amount—in the assets described in the category, not as the assets
themselves.” Id. (alteration and citations omitted). Section 522(l), in turn, provides that, to
exempt property under subsection (b), the debtor must file a list of the property he claims as
exempt, known as Schedule C. 11 USC 522(l); Schwab, 560 US at 779-780; Fed R Bankruptcy
Proc 4003(a). Section 522(l) further provides that, unless an interested party objects, the
“property claimed as exempt” is exempt.10 11 USC 522(l). Thus, “[i]f an interested party fails to
object within the time allowed, a claimed exemption will exclude the subject property from the
estate . . . .” Schwab, 560 US at 775-776, citing 11 USC 522(l); Taylor, 503 US at 642-643. In
this context, the phrase “property exempted” plainly means the property claimed as exempt by

8
 Although the judgment was entered after Chaban filed for bankruptcy protection, the parties do
not dispute that plaintiff’s judgment was a debt that arose before bankruptcy.
9
  Although plaintiff’s judgment against Chaban was deemed nondischargeable pursuant to §
523(a)(6) (debt from a willful and malicious injury), the debt does not fall within one of the
enumerated exceptions under § 522(c) where a nondischargeable debt permits creditors to reach
a debtor’s exempted property.
10
  Fed R Bankruptcy Proc 4003(b) requires an interested party to object to the claimed exemption
within 30 days after the first meeting of creditors. The United States Supreme Court has held
that after the 30-day period expires, an interested party is barred from challenging the claimed
exemption. Schwab, 560 US at 775; Taylor, 503 US at 643-644; Szyszlo, 296 Mich App at 48.

                                               -6-
the debtor under § 522 that has been exempted. In re Raffone, 381 BR 30, 36 (Bankr D Conn,
2008). Accordingly, to ascertain what “property” was exempted under § 522, we look to
§ 522(d), which defines the particular property a debtor who elects the federal exemptions, as
Chaban did, may claim as exempt. Schwab, 560 US at 782; Owen, 500 US at 308.

        On his Schedule C, Chaban listed his residence as exempt property pursuant to the
federal homestead exemption, § 522(d)(1), which permits a debtor to exempt his “aggregate
interest,” not to exceed $22,975 in value, in real property that he uses as his residence. 11 USC
522(d)(1); Owen, 500 US at 310. Chaban claimed “$0.00” as the value of his claimed
exemption, presumably reflecting his lack of equity in the property, as disclosed on his Schedule
A. Chaban, despite his claimed exemption of “$0.00” in the residence, seems to assert that by
virtue of listing his residence as exempt, the residence itself is exempted, and, thus, immunized
from future liability for pre-petition debts under § 522(c). We find this assertion incorrect.

        The Supreme Court in Schwab instructs that where § 522(d), as here, defines the property
that a debtor is entitled to exempt as the debtor’s interest in a particular type of asset, the value of
which may not exceed a certain dollar amount, the exemption pertains only to the debtor’s
interest in the asset, not to the asset itself. Schwab, 560 US at 774, 782-783.11 “Because the
exemption [under § 522(d)(1)] is limited to ‘the debtor’s aggregate interest,’ the value of the
exemption depends upon the equity (if any) in excess of unavoidable liens.” In re Bessette, 269
BR 644, 647 (Bankr ED Mich, 2001) (quotation marks, citation and emphasis omitted); see also
Owen, 500 US at 310. “Only if there is equity remaining in the property after [deducting the
amount of liens on the property that are unavoidable from the value of the property] can a debtor
exempt the residence from property of the estate up to the limit provided by § 522(d)(1).”
Bessette, 269 BR at 647. In effect, where the debtor’s residence, such as here, is subject to an
unavoidable mortgage for its full value, he held only “bare legal title” to the property and only
the legal interest passes to the estate and the equitable interest remains with the mortgage
holders, and, thus, there is no equitable or aggregate interest available for the debtor to reclaim

11
   In Schwab, the Supreme Court construed the meaning of the federal exemptions under §
522(d)(5) and (6), which, like the homestead exemption at issue here, “defines the property the
debtor is authorized to exempt as an interest, the value of which may not exceed a certain dollar
amount, in a particular type of asset.” Schwab, 560 US at 774, 782-783. The Court, in rejecting
the debtor’s argument that she fully exempted the asset itself when she claimed as exempt a
dollar amount equal to the entire value of the property, found that the exemption clearly allows
the debtor to exempt only an interest in the asset up to a certain dollar amount, concluding that
the exemptions “define the ‘property claimed as exempt’ as an ‘interest’ in [the debtor’s] [asset],
not as the [asset itself] per se.” Id. at 782-783. Schwab recognized that the Code clearly
distinguished between exemptions for an interest in certain assets up to a certain dollar amount
and exemptions for certain assets themselves because other exemptions that a debtor may claim
under § 522(d) permit in-kind or unlimited exemptions, in which case the asset itself, if claimed,
would be exempt. Id. at 782-784.

                                                  -7-
from the estate as exempt property under § 522(d)(1).12 Owen, 500 US at 308-309; 11 USC
541(a)(1). “ ‘Exempted property’ in § 522(c) means only the property that is subject to the
exemption.” Farr, 278 BR at 181. And the property subject to exemption from the estate under
§ 522(d)(1) was Chaban’s aggregate interest in his residence to the extent of $0.00, as he
claimed, without objection. Schwab, 560 US at 782-783; Owen, 500 US at 310. The property
exempted is not “the entire fee simple property interest in which he claimed that exemption.”
Raffone, 381 BR at 35. Exemptions of the type like § 522(d)(1) “are presumed to preserve a
debtor’s ‘interest’ in an asset rather than the asset itself . . . .” In re Orton, 687 F3d 612, 617-618
(CA 3, 2012). “[W]hat is removed from the estate is an ‘interest’ in the property equal to the
value of the exemption at filing[,]” In re Gebhart, 621 F3d 1206, 1210 (CA 9, 2010), and “the
fact that the listed exemption amount and scheduled value are identical does not result in so-
called ‘in kind’ exemption which removes the property from the estate.” In re O’Brien, 443 BR
117, 140 (Bankr WD Mich, 2011), citing In re Cormier, 382 BR 377 (Bankr WD Mich, 2008).
Instead, Schwab held that “exemptions claimed under statutes like these are limited to the dollar
value claimed in the exemption.” Gebhart, 621 F3d at 1210-1211.

        We conclude that the amount Chaban has preserved through his homestead exemption
under § 522(d)(1) is his zero dollar interest in his residence. Because § 522(d)(1) permitted
Chaban to exempt only the aggregate interest in his residence up to a value of $22,975, and
Chaban claimed an exemption of zero dollars, as he was entitled, the property he exempted is his
interest of zero dollars, not the residence itself. Schwab, 560 US at 782-783; Owen, 500 US at
310. Therefore, the protection from liability for pre-petition debts afforded under § 522(c) to
“property exempted” does not extend to the nonexempt equity that plaintiff is now attempting to
pursue to satisfy his judgment through execution, levy, and sale pursuant to MCL 600.6018.

                      B. APPLICABILITY OF § 522(C)(2)(A) AND (F)(1)

        Moreover, it appears from the record that Chaban’s residence remained liable under
§ 522(c)(2)(A) for plaintiff’s judgment for sanctions. Section 522(c)(2)(A) does not shield
exempted property from liability for a pre-petition debt secured by a lien that has not been
avoided. Plaintiff’s judgment lien against Chaban’s residence, although obtained after the
petition was filed, secures Chaban’s liability for plaintiff’s judgment, a pre-petition debt.
Accordingly, plaintiff’s judgment lien falls within the exception of § 522(c)(2). See Farr, 278
BR at 181. Thus, under § 522(c)(2), Chaban’s residence remains liable for plaintiff’s pre-
petition nondischargeable judgment debt that is secured by a lien, unless it has been avoided.

       Chaban appears to assert that by virtue of his exemption, plaintiff’s judgment lien against
his real property securing plaintiff’s judgment has been avoided under § 522(f)(1). Under
§ 522(f), “judicial liens encumbering exempt property can be eliminated.” Owen, 500 US at 306.
Specifically, § 522(f)(1) permits a debtor to avoid the fixing of a judicial lien on property that is
exempted from the bankruptcy estate to the extent that the lien impairs an exemption to which

12
   “It is hornbook bankruptcy law that a debtor’s exemptions are determined as of the time of the
filing of the petition[,]” In re Friedman, 38 BR 275, 276 (Bankr ED Pa, 1984), and the value of
exempted property is determined at the time of the petition. See 11 USC 522(a)(2).

                                                 -8-
the debtor would have been entitled, other than a lien securing a domestic-support obligation. 11
USC 522(f)(1)(A).13 See also Owen, 500 US at 309; Farr, 278 BR at 181. The effect of § 522(f)
“is to protect a debtor’s future interest in the property encumbered by the lien because once the
lien is avoided, it does not reattach to the property, and, thus, the property is forever free of the
lien.” In re Jerew, 415 BR 303, 306 (Bankr ND Ohio, 2009).

        While plaintiff’s lien against Chaban’s residence securing his judgment for sanctions may
have been potentially avoidable under § 522(f)(1)(A), there is nothing in the record indicating,
nor does Chaban assert, that he ever sought avoidance of plaintiff’s lien, or that it was otherwise
avoided, in the bankruptcy proceedings. Chaban seems to argue that plaintiff’s judgment lien
was automatically avoided under § 522(f)(1). But the avoidance of a lien under § 522(f)(1) by its
express terms is clearly permissive. 11 USC 522(f)(1) (stating that “the debtor may avoid the
fixing of a lien on an interest of the debtor in property to the extent that such liens impairs an
exemption to which the debtor would have been entitled” (emphasis added). See also In re
Trevino, 78 BR 29, 38 (Bankr MD Penn, 1987) (“The debtor’s right to avoid liens is permissive
rather than automatic.”); In re Estate of Humphrey, 141 Mich App 412, 422-423; 367 NW2d 873
(1985) (stating that the use of term “may” signifies permissive language). Because there is
nothing in the record indicating that plaintiff’s judgment lien was ever avoided under § 522(f)(1),
we cannot conclude that Chaban’s residence was immunized from execution against it.

                                          C. CONCLUSION

       We conclude that Chaban’s residence was subject to execution, levy, and sale under
MCL 600.6018 to satisfy plaintiff’s nondischargeable judgment from the nonexempt equity in
the property. The property exempted by Chaban, and, thus, immune from liability for pre-
bankruptcy debt under § 522(c) is his claimed exemption of “$0.00,” his aggregate interest in his
residence, not the residence itself. Schwab, 560 US at 782-783. Moreover, because there is
nothing indicating that plaintiff’s judgment lien was ever avoided under § 522(f), the residence
remained liable under § 522(c)(2)(A) for the judgment because the debt was secured by an

13
     Specifically, § 522(f)(1)(A) provides, in pertinent part:

                  (f)(1) Notwithstanding any waiver of exemptions but subject to paragraph
          (3), the debtor may avoid the fixing of a lien on an interest of the debtor in
          property to the extent that such lien impairs an exemption to which the debtor
          would have been entitled under subsection (b) of this section, if such lien is –

                   (A) a judicial lien, other than a judicial lien that secures a debt of a kind
          that is specified in section 523(a)(5); . . .

Under § 522(f)(1), for a debtor to avoid a lien “(1) the lien must be a judicial lien; (2) the lien
must be fixed against an interest of the debtor in property; and (3) the lien must impair an
exemption to which the debtor would otherwise be entitled.” In re Jerew, 415 BR 303, 306
(Bankr ND Ohio, 2009).

                                                   -9-
unavoided lien. Thus, § 522(c) does not preclude plaintiff from pursuing recovery of his
judgment against Chaban’s residence under MCL 600.6018 for the nonexempt equity.
                          IV. MICHIGAN HOMESTEAD EXEMPTION

        Chaban further claims that, even if his residence is not immune from liability under
federal bankruptcy law (which it is not), the property is exempt under Michigan law from levy
and sale under MCL 600.6023. First, MCL 600.6023(1)(g) plainly provides that the property of
a judgment debtor is exempt from levy and sale under an execution of a homestead not
exceeding a value of $3,500.14 Plaintiff does not dispute that this $3,500 homestead exemption
is available to Chaban, and we agree that Chaban is entitled to a $3,500 exemption under MCL
600.6023(1)(g) from a judicial sale of his residence.

     We do disagree, however, with Chaban’s assertion that his residence is exempt under
MCL 600.6023(3) because he is a surviving spouse. MCL 600.6023(3) provides:
             If the owner of a homestead dies, leaving a surviving spouse but no
     children, the homestead is exempt, and the rents and profits of the homestead
     shall accrue to the benefit of the surviving spouse before his or her remarriage,
     unless the surviving spouse is the owner of a homestead in his or her own right.

Chaban asserts that he is entitled to this homestead exemption under MCL 600.6023(3) because
he is a surviving spouse that has not remarried. He asserts that he and his deceased wife held the
homestead in joint tenancy before her death in 2012. Under this exemption, if the owner of a
homestead dies, the surviving spouse is entitled to an exemption in the homestead for the benefit
of the surviving spouse before remarriage, “unless the surviving spouse is the owner of a
homestead in his or her own right.” MCL 600.6023(3) (emphasis added). In this case, both
Chaban and his wife, as joint owners in the residence, owned an undivided interest in the
residence before her death. Upon her death, her interest in the property was extinguished, and
Chaban became the sole owner of the entire homestead. “The principal characteristic of the joint
tenancy is the right of survivorship. Upon the death of one joint tenant, the surviving tenant or
tenants take the whole estate.” Albro v Allen, 434 Mich 271, 274-275; 454 NW2d 85 (1990);
Wengel v Wengel, 270 Mich App 86, 94; 714 NW2d 371 (2006). “A joint tenancy with full
rights of survivorship is composed of a joint life estate with dual contingent remainders.”

14
     Specifically, MCL 600.6023, provides, in relevant part:
                 (1) The following property of a judgment debtor and the judgment
          debtor’s dependents is exempt from levy and sale under an execution:

                                               * * *

                   (g) A homestead of not more than 40 acres of land and the dwelling house
          and appurtenances on that homestead . . . owned and occupied by any resident of
          this state, not exceeding in value $3,500.00.

                                                -10-
Wengel, 270 Mich App at 87. Thus, because Chaban is an owner of the residence in his own
right, the exemption under MCL 600.6023(3) does not apply to him.

        Finally, Chaban complains that plaintiff failed to comply with certain statutory
procedural requirements governing execution against the property, MCL 600.6001 et seq., before
proceeding to a judicial sale of his residence, e.g., plaintiff failed to obtain six appraisals of the
property as required under MCL 600.6025(2) and to notify Chaban that the homestead was worth
more than the $3,500 homestead exemption before sale under MCL 600.6059. Chaban did not
present this issue in his “Statement of Issues Presented” as MCR 7.212(C)(5) requires;
consequently, we need not address it. English v Blue Cross Blue Shield of Mich, 263 Mich App
449, 459; 688 NW2d 523 (2004) (“An issue not contained in the statement of questions
presented is waived on appeal.”). While these procedural requirements may not have been fully
complied with, it is apparent that Chaban was not prejudiced by any potential procedural
irregularities leading up to the judicial sale. See Cross v Fruehauf Trailer Co, 354 Mich 455,
467-468; 93 NW2d 233 (1958). The record reveals that although the judicial sale, in fact,
commenced, there were no bids on the property, and it was ultimately not sold. Thus, Chaban
could not have been deprived of his entitlement to his homestead or his exemption, of which he
complains, by the levying officer’s failure to fully comply with the procedural requirements
before the sale. Vanden Bogert v May, 334 Mich 606, 613; 55 NW2d 115 (1952) (concluding
that equitable relief was not warranted where the judgment debtor was not deprived of her right
to claim her exemption).

       We affirm.

                                                              /s/ Deborah A. Servitto
                                                              /s/ Jane E. Markey
                                                              /s/ Peter D. O'Connell

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