McCoy v. Kuiken (In Re Kuiken)
484 B.R. 766
| 9th Cir. BAP | 2013Background
- McCoy obtained a state-court judgment and recorded a judicial lien on debtor Kuiken's San Diego property in 2009.
- Kuiken conveyed the property to Bayview Resources, LLC in 2011 for valuable consideration, then reacquired it from Bayview in 2011.
- Kuiken filed Chapter 7 in October 2011 and claimed an automatic homestead exemption on the property.
- McCoy moved to avoid the lien under § 522(f) in January 2012; the bankruptcy court initially favored avoidance based on Kuiken’s exemption.
- The court ultimately concluded that Kuiken could not avoid the lien because his interest at the time the lien attached had been extinguished and replaced before filing, reversing on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Kuiken possess the interest to which the lien fixed before attachment, given transfers and reacquisition? | McCoy: Kuiken's pre‑lien interest was extinguished; Farrey bars avoidance. | Kuiken: continuity of interest analysis allows avoidance per Chiu. | No; Kuiken did not possess the same interest before attachment; avoidance is barred. |
| Does a later reacquired interest subject to a preexisting lien permit avoidance under § 522(f)? | McCoy: lien attached to a fixed interest; reacquired interest is a different one. | Kuiken: distinguish Stoneking/Chiu; Farrey controls. | No; reacquired different interest cannot be avoided under § 522(f) when lien fixed on former interest. |
| Is McCoy's lien a judicial lien subject to § 522(f)(1) avoidance despite transfer history? | McCoy: yes, remains a judicial lien; impairment of exemption supports avoidance. | Kuiken: lien is judicial and unaffected by transfer; avoidance limited by continuity of interest. | Yes, but avoidance fails on the critical inquiry of possession before attachment. |
Key Cases Cited
- In re Stoneking, 225 B.R. 690 (9th Cir. BAP 1998) (holds that Farrey analysis may apply when lien attaches to property later transformed, not extinguished)
- In re Chiu, 304 F.3d 905 (9th Cir. 2002) (debtor must possess an interest to which the lien fixed before filing, but need not own it at avoidance)
- Farrey v. Sanderfoot, 500 U.S. 291 (1991) (hold that debtor must have possessed the interest before the lien fixed; cannot avoid otherwise)
- In re Stephens, 15 B.R. 485 (Bankr. W.D. N.C. 1981) (similar to Farrey; liens on interests acquired after attachment cannot be avoided)
- Weeks v. Pederson (In re Pederson), 230 B.R. 158 (9th Cir. BAP 1999) (distinguishes cases where debtor never held any interest before lien; not controlling here)