Court Opinion

ID: 9477380
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:22:15.570712+00
Date Added: 2024-06-11T17:45:51.315447
License: Public Domain

K.K. HALL, Circuit Judge,
dissenting:
I agree with the majority's conclusion that Green Hill did not satisfy Virginia *745state law requirements for the creation of a lien solely by the filing of a memorandum lis pendens. I cannot, however, agree with the majority’s view that this Court is powerless to grant Green Hill’s request for relief from the automatic stay.
While the automatic stay provision of § 362(a)(4) prohibits “any act to create, perfect, or enforce any lien against property of the estate ...,” § 362(b)(3) makes it clear that the filing of a bankruptcy petition does not operate as a stay “of any act to perfect an interest in property to the effect that the trustee’s rights and powers are subject to such perfection under § 546(b)....”
In addressing this very issue, this Court has recently remarked that the import of § 546(b) is simple:
[T]he intervention of a petition ... should not cut off an interest holder’s opportunity to perfect where the interest holder could have perfected against an entity subsequently acquiring rights in the property if bankruptcy had not intervened.
Md. National Bank v. Mayor & City Council of Baltimore, 723 F.2d 1138, 1141 (4th Cir.1983) (quoting 4 L. King, M. Cook, R. D’Agostino & K. Klee, Collier on Bankruptcy, § 546.03[2], at 546-8 (15th Ed. 1983)). Clearly, the plain language of § 546(b) speaks of an interest in property, and does not limit its scope merely to liens.
Congress in enacting § 546(b) perceived that the mere intervention of a petition in bankruptcy should not be permitted to defeat what would otherwise be a valid security interest in property. If that interest awaits perfection, and if the generally applicable state law permits that perfection to be good against an intervening purchaser, then the trustee should stand in no better shoes than such an intervening purchaser.
Id. at 1142.
Other courts dealing with this issue have reached similar conclusions. See In re Yobe Elec., Inc., 728 F.2d 207 (3rd Cir.1984) (filing of mechanic’s lien did not violate automatic stay provision of Bankruptcy Code); Matter of Marietta Baptist Tabernacle, Inc., 576 F.2d 1237 (5th Cir.1978) (architect’s lien, not filed until after Chapter 11 petition, related back to time work performed); In re Ridley, 50 B.R. 51 (Bkrtcy.M.D.Tenn.1985) (automobile lien, once perfected, related back to date of filing of notation).
In our case, the district court recognized that, but for the filing of the bankruptcy petition, Green Hill could have docketed its judgment, and that judgment would have related back to the date of filing of the lis pendens. In my view, the bankruptcy court had not only the power, but the duty, under § 546(b), to allow Green Hill to docket its judgment and perfect its lien against Kim, notwithstanding the automatic stay provisions of § 362(a)(4).
I also disagree with the majority’s view that the lis pendens was inapplicable in this instance because Green Hill’s suit was not an action concerning title to real property. Virginia Code § 8.01-268 provides, in part: “No lis pendens or attachment shall bind or affect a subsequent bona fide purchaser of real or personal estate_” (emphasis added), reflecting an intent by the legislature that the filing of a lis pendens not be restricted to suits directly involving title to real property. Moreover, even if one accepts the majority’s argument, § 8.01-458 states that “[ejvery judgment for money ... shall be a lien on all real estate....” Since Green Hill’s money judgment, if docketed, became a lien on Kim’s property, the action affects real property. See In re Hart, 24 B.R. 821 (Bkrtcy.E.D.Va.1982).
Accordingly, I would reverse the district court’s decision and remand for further proceedings. Therefore, I respectfully dissent.