In re Mance, Case No. 19 B 33057

611 B.R. 857

IN RE: Marcella Marie MANCE, Debtor.

Case No. 19 B 33057

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

Signed February 6, 2020

Appearance of Counsel: Attorney for City of Chicago, Charles A. King, Assistant Corporation Counsel - City of Chicago

Pro Se Debtor, Marcella Marie Mance

Order on Motion to Avoid Lien (Docket 22)

Jacqueline P. Cox, United States Bankruptcy Judge

The Debtor Marcella Marie Mance sought Chapter 7 bankruptcy relief on November 20, 2019. (The City of Chicago's Response pleading incorrectly references Chapter 13). The matter in issue is her motion seeking avoidance of the City of Chicago's lien on her motor vehicle. The City contends that its lien is a statutory lien, not capable of being avoided under 11 U.S.C. § 522(f). Section 522(f) provides that judicial liens on otherwise exempt property may be avoided under certain circumstances. Section 101(36) of the Bankruptcy Code ("Code") defines a judicial lien as a "lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding." 11 U.S.C. § 101(36).

Jurisdiction

Federal district courts have "original and exclusive jurisdiction" of all cases under the Bankruptcy Code. 28 U.S.C. § 1334(a). District courts may refer their bankruptcy cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). The District Court for the Northern District of Illinois has referred its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).

This matter involves a core proceeding for which this court has authority to enter a final order or judgment. 28 U.S.C. § 157(b)(2)(B) - allowance or disallowance of claims against the estate or exemptions from property of the estate.

Background

To obtain an order avoiding a lien a debtor has to satisfy four requirements: (1) properly assert the exemption; (2) there has to be a lien on the debtor's property; (3) the lien has to impair the debtor's exemption and (4) the lien must be a judicial lien. In re Wigfall , 606 B.R. 784, 786 (Bankr. N.D. Ill. 2019) (citing In re Rosol , 114 B.R. 560, 562 (Bankr. N.D. Ill. 1989) ).

The parties do not dispute that the Debtor's vehicle is worth $3000 as asserted in her Schedule A/B - Property, (Docket 16), or that she owes the City of Chicago approximately $12,000 for moving and parking violations. The Debtor's Schedule C claims a $2400 exemption in that vehicle pursuant to 735 ILCS 5/12-1001(c) which excepts from attachment, judgment and execution a debtor's interest, not to exceed $2400, in any one motor vehicle.

The only issue in dispute is the City of Chicago's contention that it holds a statutory lien which arises solely by statute and cannot be avoided by § 522(f) of the Code which allows debtors to avoid judicial liens.

Analysis

Based on the ruling in Wigfall, which allowed a debtor to avoid a lien under similar circumstances, this court will grant the Debtor's Motion to Avoid Lien. The lien the City has on the Debtor's motor vehicle, that it impounded for various infractions, was provided for in a statute, but arose only after the city complied with a defined administrative process, making it a quasi-judicial lien, avoidable under 11 U.S.C. § 522(f). The Illinois statute that authorizes the City's administrative adjudications system requires the City to obtain quasi-judicial determinations before it can seize or boot a vehicle to enforce its traffic regulations.

The bankruptcy court in In re Peake¹ discussed the City of Chicago's ordinances that provide a mechanism for its traffic violations enforcement program, citing the Illinois Vehicle Code:

Any municipality or county may provide by ordinance for a system of administrative adjudication of vehicular standing and parking violations and vehicle compliance violations as described in this subsection, automated traffic law violations as defined in Section 11-208.6, 11-208.9, or 11-1201.1, and automated speed enforcement system violations as defined in Section 11-208.8. 625 ILCS § 5/11-208.3(a).

Illinois law also provides that vehicles may be restrained:

Any municipality or county establishing vehicular standing, parking, compliance automated speed enforcement system, or automated traffic law regulations under this Section may also provide by ordinance for a program of vehicle immobilization for the purpose of facilitating enforcement of those regulations. The program of vehicle immobilization shall provide for immobilizing any eligible vehicle upon the public way by presence of a restraint in a manner to prevent operation of the vehicle. 625 ILCS § 5/11-208.3(c).

An additional Illinois statute provides criteria for immobilization:

Criteria for designation of vehicles eligible for immobilization. A vehicle shall be eligible for immobilization when the registered owner of the vehicle has accumulated the number of incomplete traffic education programs or unpaid final determinations of parking, standing, compliance, automated speed enforcement system, or automated traffic law violation liability, or both, as determined by ordinance. 625 ILCS 5/11-208.3(c)(1).

Once the City obtains a certain number of determinations of liability it may take the owner's vehicle in satisfaction of its judgment debt by way of supplementary proceedings or the regular execution process. See 735 ILCS §§ 5/2-1402(c)(1), (e) and 735 ILCS §§ 5/12-111, 5/12-112, 5/12-158 and 5/12-166. A court could order the judgment debtor to deliver the vehicle to the sheriff to be sold to satisfy the City's judgment. 735 ILCS § 5/2-1402(c)(1), (e). In addition, the sheriff could forcibly seize the judgment debtor's vehicle to sell it to satisfy the City's judgment.

Peake , 588 B.R. at 819 (citing In re Marriage of Logston , 103 Ill.2d 266, 82 Ill.Dec. 633, 469 N.E.2d 167, 172 (1984) (That court noted that if a judgment goes unpaid, it could be enforced through the remedy of execution, whereby as much of the debtor's property may be taken and sold as is necessary to satisfy the obligation)). A certified copy of a judgment serves the function of a writ of execution. See 735 ILCS § 5/2-1501.²

As the Peake court noted, "the legislature has authorized municipalities to take a short-cut on the path to the effective enforcement of their final determinations of liability where those final determinations are for violations of ordinances concerned with standing, parking and automated traffic law violations." Id.

In In re Fulton, in affirming the Peake ruling, the Seventh Circuit described the relevant municipal ordinances, M.C.C. § 9-100-120(b) and § 9-80-240(a):

The Chicago Municipal Code permits creditor-appellant the City of Chicago to immobilize and then impound a vehicle if its owner has three or more ‘final determinations of liability,’ or two final determinations that are over a year old, ‘for parking, standing, compliance, automated traffic law enforcement system, or automated speed enforcement system violation[s].’ Fulton , 926 F.3d at 920.

If the city did not have to pursue judicial or quasi-judicial process and obtain final determinations to receive the benefit of its lien, it would be a statutory lien, not avoidable under Section 522(f). The ordinance, however, pursuant to Illinois statute, allows the City to confiscate an owner's vehicle only after a specific number of determinations of liability have been entered.

The City's Response to the Debtor's Motion to Avoid Lien contends that its lien springs into existence pursuant to M.C.C. § 9-92-080(f)³ which gives it a possessory lien when it impounds a vehicle and that the...