Hines v. Scottsboro Inv. Grp., LLC (In re Hines)

564 B.R. 736

IN the MATTER OF: James Leonard HINES SSN: XXX–XX–XXXX, Debtor(s)

James Leonard Hines, Plaintiff(s)

v.Scottsboro Investment Group, LLC, Defendant(s)

Case No. 13–83104–CRJ–7

AP No. 16–80041–CRJ–7

United States Bankruptcy Court, N.D. Alabama, Northern Division.

Signed January 10, 2017

James Leonard Hines, pro se.

Stuart M. Maples, Deanna S. Smith, Maples Law Firm, PC, Huntsville, AL, for Defendants.

MEMORANDUM OPINION

Clifton R. Jessup, Jr., United States Bankruptcy Judge

Before the Court is the Complaint filed by James Hines, (hereinafter the "Debtor" or "Hines") against Scottsboro Investment Group, LLC (hereinafter the "Defendant" or "SIG") seeking an Order prohibiting the Defendant from exercising a Writ of Execution against homestead property owned by the Debtor and his non-Debtor wife as joint tenants with right of survivorship.

Also, before the Court is the Debtor's Motion to Avoid Judicial Lien pursuant to 11 U.S.C. § 522(f)(1)(A) filed on September 14, 2016 (the "2016 Motion to Avoid Lien"), the Defendant's Response in Opposition to Debtor's Motion to Avoid Judicial Lien, and the Debtor's Response and Additional Response to the Defendant's Opposition to Debtor's Motion to Avoid Judicial Lien. The Debtor previously filed a Motion to Avoid the Defendant's judicial lien on March 11, 2014 with negative notice (the "2014 Motion to Avoid Judicial Lien"). No response having been filed by the Defendant, on April 11, 2014, the Court entered an Order Avoiding Lien (the "2014 Order Avoiding Lien"). As will be discussed in further detail below, the Court declines the request of both parties to revisit this issue finding instead that the 2014 Order Avoiding Lien is a final order which conclusively resolved the lien avoidance issue in this case.

The Adversary Proceeding and the 2016 Motion to Avoid Lien came before the Court for trial on October 11, 2016. Although the Court encouraged the Debtor to seek legal representation, the Debtor proceeded with the trial without the assistance of legal counsel. Following the trial, the Court entered an Order Requiring Post–Trial Briefs to address the following issues:

1. The proper application of the formula set out in 11 U.S.C. § 522(f)(2)(A) for determining the extent to which the Defendant's judicial lien impairs the Debtor's exemptions where the judgment lien attaches to the Debtor's interest in jointly owned property.

2. The appropriate method for calculating the fair market value of the Debtor's interest in his homestead property and the amount of all other liens against the homestead property for purposes of calculating the extent of impairment pursuant to 11 U.S.C. § 522(f), and more specifically whether the values must be taken from the Debtor's schedules.

3. Whether ALA. CODE § 6–10–3 applies to involuntary conveyances, and more specifically whether the Debtor's wife must sign a deed assenting to the Defendant's execution against the Debtor's one-half interest in the homestead property.

The parties having submitted their Post–Trial Briefs, and the Court having considered the evidence and arguments of both parties, and for the reasons set forth below, finds that ALA. CODE § 6–10–3 does not apply to involuntary conveyances and that the Defendant may proceed with its state court remedies against the Debtor's property.

The findings and conclusions set forth herein constitute the Court's findings of fact and conclusions of law pursuant to Fed. R. Bankr. P. 7052. To the extent any of the findings of fact constitute conclusions of law, they are adopted as such. Further, to the extent any of the conclusions of law constitute findings of fact, they are adopted as such.

STIPULATION OF FACTS

At the beginning of the trial, the parties stipulated to certain facts as they relate to the exemption and homestead issue in the Adversary Proceeding. The following Stipulated Facts are taken verbatim from the Defendant's Proposed Pretrial Order which was offered and admitted into evidence without objection by the Debtor:

A. Stipulated Facts.

1. On April 14, 2009, SIG filed a complaint in the Circuit Court of Jackson County, Alabama, Case No. 2009–000148 (the "Circuit Court"), against Hines for breach of contract.

2. On February 20, 2013, summary judgment was entered in favor of SIG and against Hines in the principal amount of $600,000, plus accrued interest, attorneys' fees and costs of the action.

3. On June 14, 2013, the Certificate of Judgment was recorded in Judgment Book 2013, Instrument No. 1048595, in the Probate Court of Jackson County, Alabama.

4. On October 7, 2013, (the "Petition Date"), Hines filed a voluntary petition under Chapter 7 of Title 11 of the United States Code, 11 U.S.C. § 101 et seq., (the "Bankruptcy Code") with this Court.

5. On January 28, 2016, Hines' [sic] moved this Honorable Court to abandon the Circuit Court Case No. CV–2013–000007, filed in Jackson County, Alabama [Doc. 105].

6. On February 24, 2016, this Honorable Court granted Hines' Motion [Doc. 109].

7. On March 15, 2016, SIG served a Writ of Execution upon Hines in order to execute on Hines' homestead, which is owned by Hines and his wife as joint tenants with the right of survivorship. More specifically, SIG seeks a one-half (1/2) undivided interest in Hines' property located at 203 Willowchase Drive, Scottsboro, Alabama, 35769 (the "Property").

8. On March 28, 2016, Hines filed a Motion to Quash Writ of Execution (the "Motion") arguing that SIG cannot execute on his homestead without his wife's signature, assenting to the deed, mortgage or other conveyance.

9. On May 4, 2016, the Circuit Court heard the Motion, considered the evidence submitted by the parties, and entered an order (the "Order") denying Hines' Motion and granting SIG's request to proceed with execution.

10. On May 26, 2016, Hines filed a Motion to Alter, Amend or Vacate the May 4, 2016 Circuit Court Order.

11. On August 12, 2016, the Motion was denied.¹

Additionally, the parties stipulated to paragraphs one through nine set forth in the Defendant's Response in Opposition to Debtor's Motion to Avoid Judicial Lien:

1. This Court has jurisdiction in this matter pursuant to 28 U.S.C. § 1334(a). This matter is a core proceeding as provided by 28 U.S.C. § 157(b)(2)(K).

2. In March of 1993, Debtor and his wife acquired 203 Willowchase Dr., Scottsboro, Jackson County, Alabama (the "Property") as joint tenants with right of survivorship.

3. Debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code on October 3, 2013.² At the time of the filing, Debtor owned and claimed a homestead exemption of Property.

4. The Property is subject to the following mortgages or judicial liens, which do not secure a debt of the kind set forth in 11 U.S.C. § 523(a)(5) (domestic support obligations):

a. Mortgage obtained by Regions Bank on June 7, 2004.

b. Judicial Lien obtained by SIG on June 10, 2013.

5. Debtor is entitled to an exemption in the Property in the amount of $5,000 pursuant to Alabama Code § 6–10–2.

6. Based upon the Tax Assessor's valuation of the Property on the Petition date and today, the Property has a fair market value of $288,000.00.

7. The payoff on the Regions Bank mortgage is $70,994.86.

8. 11 U.S.C. § 522(f)(2)(A) of the Bankruptcy Code provided that "a lien shall be considered to impair an exemption to the extent that the sum of—(i) the lien; (ii) all other liens on the property; and (iii) the amount of the exemption that the debtor could claim if there were no liens on the property; exceeds the value that the debtor's interest in the property would have in the absence of any liens." 11 U.S.C. § 522(f)(2)(B) provides that "[i]n the case of a property subject to more than 1 lien, a lien that has been avoided shall not be considered in making the calculation under subparagraph (A) with respect to the other liens."

9. A formula set forth in 11 U.S.C. § 522(f)(2) is used for determining whether a lien impairs an exemption.³

Although the parties stipulated to paragraphs one through nine of the Defendant's Response in Opposition to Debtor's Motion to Avoid Judicial Lien, the Court finds that the Debtor, proceeding as a pro se litigant, did not clearly concede that his residence had a fair market value of $288,000 nor that the payoff on Regions Bank's mortgage was $70,994.86 for purposes of calculating lien avoidance pursuant to 11 U.S.C. § 522(f). Instead, at trial the Debtor testified that on the petition date the fair market value of his home was $200,000 and argued that the mortgage lien was $77,387.49, as set forth in his Schedules.

To support the Debtor's proposed valuation of his home and the amount of the mortgage lien against the property, the Debtor offered Exhibit B which contains the Debtor's method for calculating lien avoidance under 11 U.S.C. § 522(f)(2)(A) using the Debtor's proposed values. The Court took the admissibility of Exhibit B under advisement at the conclusion of the trial. "Courts have generally held that an owner is competent to give his opinion on the value of his property."⁴ Accordingly, the Court finds that Exhibit B is admissible to the limited extent the Debtor seeks to offer the exhibit as evidence of his opinion, as the owner of the property, of the fair market value of his home on the petition date.

At trial, the Debtor also offered and the Court admitted pages one and two of Debtor's Exhibit C which included a certified copy of the 2014 Order Avoiding Lien which reads in full as follows:

ORDER AVOIDING LIEN

The Debtor filed a Motion to Avoid a Lien pursuant to 11 U.S.C. § 522(f). Notice and opportunity for a hearing to object to said Motion was given and no objections were filed. It appears to the Court that said Motion is due to be GRANTED .

It is therefore ORDERED, ADJUDGED, and DECREED that the Lien of Scottsboro Investment Group LLC Book 2013 instrument # 1048595 Jackson County, AL is AVOIDED to the extent that said lien impairs the Debtor's exemptions.⁵

ARGUMENTS

The Debtor's Complaint contains the following claims: ...