625 B.R. 384
N.D. Ill.2021Background
- Two debtors (Cupree Howard and Marcella Mance) filed Chapter 7 petitions and claimed automobile exemptions while owing substantial unpaid parking/traffic fines to the City of Chicago.
- The City had immobilized (and later impounded) each debtor’s vehicle under Chicago Municipal Code § 9-100-120 after debtors accumulated multiple final determinations of liability in administrative adjudications.
- The City’s immobilization creates a possessory lien “in the amount required to obtain release of the vehicle.”
- Each debtor moved in bankruptcy to avoid the City’s possessory lien under 11 U.S.C. § 522(f)(1)(A); the Bankruptcy Courts granted the motions, treating the liens as judicial liens.
- The City appealed, arguing the liens are statutory (arising automatically by statute upon satisfaction of conditions) and therefore not avoidable; the district court affirmed the Bankruptcy Courts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the City’s lien from vehicle immobilization is a "judicial lien" (avoidable under § 522(f)) or a "statutory lien" (not avoidable) | City: lien arises automatically upon meeting statutory conditions and immobilization, so it is a statutory lien | Debtors (Howard/Mance): lien is obtained by prior quasi-judicial administrative determinations (money judgments) and the post-determination immobilization process, so it is a judicial lien | Court: lien is a judicial lien because it is obtained by and traceable to prior final administrative determinations (money judgments) and attendant adjudicative procedures; avoidable under § 522(f)(1)(A) |
Key Cases Cited
- Field v. Mans, 516 U.S. 59 (Supreme Court 1995) ("obtained by" contains an element of causation)
- Husky Int'l Elecs., Inc. v. Ritz, 136 S. Ct. 1581 (Supreme Court 2016) ("obtained by" covers debts traceable to wrongful acts)
- In re Schick, 418 F.3d 321 (3d Cir. 2005) (distinguishes judicial liens from statutory liens; ministerial acts creating liens may be statutory)
- In re Fulton, 926 F.3d 916 (7th Cir. 2019) (administrative final determinations of parking liability are money judgments)
- In re Wigfall, 606 B.R. 784 (N.D. Ill. 2019) (municipal immobilization liens analyzed as judicial liens tied to underlying judgments)
- In re Cunningham, 478 B.R. 346 (N.D. Ind. 2012) (nature of a lien depends on how it originally arises)
- Stamat v. Neary, 635 F.3d 974 (7th Cir. 2011) (standard of review on bankruptcy appeals: factual findings for clear error; legal conclusions de novo)