ORDER AND OPINION
Bеfore the Court is a request for relief contained within the motion of Diana L. Armenakis (the “Debtor”) to reconsider (the “Motion to Reconsider”) the Court’s order of August 14, 2008, lifting the automatic stay (the “Lift Stay Order”), pursuant to Rule 9024 of the Federal Rules of Bankruptcy Procedure (“FRBP”) and Rule 60 of the Federal Rules of Civil Procedure. The Debtor’s request is to avoid the judicial lien (the “Lien”) of Smithbuilt Financial, LLC (“Smithbuilt”), successor-in-interest to creditor National Loan Investors, L.P. (“NLI”), pursuant to 11 U.S.C. § 522(f) and Rule 4003(d) FRBP (the “Request to Avoid”). Also before the Court is Smithbuilt’s motion for relief from the automatic stay (the “Lift Stay Motion”) pursuant to 11 U.S.C. § 362(d) and Rules 4001(a) and 9014 FRBP. Smithbuilt seeks relief from the automatic stay so that it may exercise its rights and remedies under the Lien against the cooperative apartment (the “Apartment”)
1
owned by Debtor and her non-debtor spouse (the “Non-Debtor Spouse”). For the reasons stated below, (i) the Lien against Debtor’s interest in the Apartment is reduced to not less than $8,923.07 (the “Reduced Lien”),
2
(ii) the balance of the Lien is avoided, and (iii)
BACKGROUND
1. Factual Background
On May 18, 2005 (the “Petition Date”), Debtor filed a voluntary petition (the “Petition”) for chapter 7 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. On May 19, 2005, Robert L. Geltzer was appointed as interim trustee, and on June 28, 2005, he held a § 341(a) meeting, after which he became the trustee (the “Trustee”) pursuant to § 702(d). 3 On August 8, 2005, NLI moved for relief from the automatic stay (ie., the Lift Stay Motion) in order to enforce its rights and remedies under the Lien granted pursuant to a judgment entered in the Supreme Court of the State of New York, County of New York (the “State Court”), in an action entitled “National Loan Investors, L.P. v. James J. Armenakis and Diana L. Armenakis,” bearing Index No. 109166/04 (the “Judgment”). A hearing was scheduled for August 31, 2005.
The Judgment against Debtor and Non-Debtor Spоuse was granted on April 15, 2005, in a special proceeding conducted pursuant to § 5206(e) of the New York Civil Practice Law and Rules (the “CPLR”) directing the sale of the Apartment to satisfy a money judgment entered against Debtor and the Non-Debtor Spouse on March 10, 2004, in the amount of $245,000.00 for their default on a promissory note to NLI’s predecessor-in-interest (the “Money Judgment”). The Judgment was filed on May 2, 2005, and it directed the Sheriff of New York County (the “Sheriff’) to sell the Apartment subject to and in compliance with Rivercross’s restrictions, rules, regulations, law, and requirements, and that (i) the proceeds of the “said sale” be paid to Debtor and Non-Debtor Spouse, jointly, in an amount not exceeding $10,000.00; (ii) the Money Judgment, plus interest from March 10, 2004, be adjudged to be a lien upon the “surplus” of the “said sale” (ie., the Lien); and (in) the “surplus” be applied to the Money Judgment and to any charges lawfully accruing to Rivercross for unpaid maintenance charges, fees, and expenses to Riv-ercross (ie., the “Maintenance,” as defined supra fn. 2). Debtor and Rivercross, in its own motion for relief from the stay, assert in substance that the Maintenance constitutes a consensual first lien on the Apartment. Smithbuilt does not concede this point and has reserved its rights to challenge it, see infra fn. 13.
The Petition stayed enforcement of the Judgment and prevented the sale of the Apartment. Rivercross’s amended secured proof of claim indicated that Debtor and Non-Debtor Spouse owed Rivercross $40,253.21
4
in Maintenance at the Petition Date. As of November 3, 2008, Debtor and Non-Debtor Spouse owed Rivercross $75,803.65 in Maintenance, but as of February 4, 2009, Debtor and Non-Debtor Spouse owed Rivercross $45,760.04 in Maintenance. At the Petition Date, the
Debtor amended Schedule C attached to the Petition and claimed the new homestead exemption of $50,000.00 on September 9, 2005. The time to object to the Debtor’s exemption was extended a number of times by stipulation with the Trustee to October 17, 2006. No timely objection to Debtor’s amended exemption claim was filed. Smithbuilt raised the issue of which exemption should apply in one of its pleadings and during at least one hearing related to the Lift Stay Motion, each of which occurred after the October 17, 2006 date. 5
Since its filing, the Lift Stay Motion was adjourned numerous times on request of the parties as they attempted to work out a resolution. On January 12, 2007, Debtor received her discharge. On May 1, 2008, the Trustee certified that Debtor’s estate (the “Estate”) had been fully administered. Eventually, the parties informed the Court that they were unable to resolve the Lift Stay Motion and a hearing was held on July 16, 2008. On August 14, 2008, the Court granted the Lift Stay Order to Smithbuilt.
2. Motion to Reconsider
On August 18, 2008, Debtor filed the Motion to Reconsider, with a hearing date set for September 24, 2008. In the Motion to Reconsider, Debtor argued that the Court should relieve Debtor from the Lift Stay Order because Debtor either had no equity
(i.e.,
an amount in excess of the Maintenance and her exemption, hereinafter the “Equity”) in the Apartment to which the Lien could attach, or to the extent the Lien attached, § 522(f) gave her the right to avoid the Lien because it impaired her claimed $50,000.00 homestead exemption for the Apartment. Debtor therefore requested that the Court avoid the Lien
(i.e.,
the Request to Avoid). At the September 24, 2008, hearing, Debt- or argued that the Apartmеnt had a fixed value, as of the Petition Date, of $78,099.35,
6
which was set in accordance with the New York Private Housing Finance Law. Smithbuilt argued that the Judgment allowed the Sheriff to auction the right to purchase the Apartment for this purported fixed value and that this “right to purchase” had a fair market value of approximately $500,000.00. Because this question depended solely on New York state law,
7
principally, the Private
The Court then determined that it would hold another hearing on the Motion to Reconsider because the value issue raised significant questions as to Smithbuilt’s interest in the Apartment and, therefore, whether it had “cause” for relief from the stay. The hearing was scheduled for November 6, 2008, and adjourned at the request of the parties to December 10, 2008. At the conclusion of the hearing on the Motion to Reconsider, the Court issued a minute order (the “Minute Order”) granting the Motion to Reconsider, vacating the Lift Stay Order, reimposing the automatic stay, 9 and instructing the parties to brief the issue of Smithbuilt’s interest in the Apartment. Further, the Court stated that because it would hear the value issue, Smithbuilt would not bе bound in considering the § 522(f) issue by its concession regarding whether it would raise the exemption issue in the State Court. The Court held another hearing on March 18, 2009, regarding the parties’ submissions on Smithbuilt’s interest in the Apartment.
3. Request to Avoid
As previously stated, Debtor made the Request to Avoid in the Motion to Reconsider. Debtor argued that the fixed value of the Apartment less the Maintenance, which constituted a consensual first lien on the Apartment, either left no Equity to which the Lien could attach, or to the extent the Lien attached, § 522(f) provided to Debtor the right to avoid the Lien be
Despite these possible procedural defects with respect to the Request to Avoid, as previously discussed, Debtor’s underlying argument challenges the basis of the Lift Stay Order, namely, that Smithbuilt had an interest in the Apartment entitled to protection, thus establishing “cause” for lifting the stay. Therefore, insofar as Debtor seeks avoidance of the Lien, the Court did not grant reconsideration on that basis but rather on the basis of whether Smithbuilt had met its burden of proving a factual and legal right to relief from the stay regarding its interest. 12
The Court has determined that the state law issues as to the value of the Apartment and the bankruptcy issues of Debtor’s exemption are too intertwined for the Court to adjudicate each party’s rights without considering all the related issues. To determine if Smithbuilt has an interest in the Apartment entitled to protection, thus providing the basis upon which “cause” for lifting the stay may be established, the Court must also determine to what extеnt the Lien may be avoided. If Debtor’s value of the Apartment were to prevail, the unavoidable part, if any, of the Lien would be Smithbuilt’s only interest in the property entitled to protection. Even if Debtor had not made the Request to Avoid within the Motion to Reconsider, Debtor still could have moved to avoid the Lien by a separate motion. For the sake of judicial economy, the Court deems the Request to Avoid a motion to avoid the Lien in compliance with Rule 4003(d) FRBP.
The Court accordingly finds that despite its possible procedural defects, the
DISCUSSION
1. Value of Apartment
Smithbuilt contends that it has an interest in the Apartment, in part by virtue of its interest in the “right to purchase.” To determine whether, and if so, to what extent, Smithbuilt has an interest in the Apartment, the Court must first determine the legal issues impacting the Apartment’s value as a threshold issue before addressing thе Lift Stay Motion or the Request to Avoid.
A. Whether the Sheriff May Auction the Right to Purchase the Apartment Is a Question of Law
Smithbuilt argues that the Court is capable of taking judicial notice of the fact that the Apartment would have a fair market value well in excess of $500,000.00 when placed for public auction. Without reaching the issue of whether the Court may take judicial notice of the purported fact that the right to purchase an apartment as described above would be worth far in excess of $78,099.35, the Court will address the fundamental issue of whether the Sheriff may auction the right to purchase the Apartment distinct from the purchase of the Apartment at its fixed price. Further, related to that determination would be whether the Lien attached to such right even if the right in fact existed.
In this case, whether the right to purchase the Apartment can be separately auctioned by the Sheriff, as an interest to which the Lien attached, is a question of law, not a question of fact. In the Lift
However, Smithbuilt later states that Debtor “unpersuasively argue[s]” (i) that the Mitchell-Lama Law allegedly controls and limits the resale value of cooperative apartments within the Mitchell-Lama system, and (ii) that the Court would be unable to order the sale of a cooperative apartment due to a purported cap in resale value allegedly imposed by New York law. The Court agrees with Debtor’s argument on point (i) based on both established case law and New York State statutes and regulations, but the Court disagrees with Debtor’s argument on point (ii) based on Smithbuilt’s defense to Debtor’s application of the increased exemption amount in its Request to Avoid because Smithbuilt’s defense leaves Equity to which the Lien remains attached notwithstanding the fixed resale price of the Apartment.
B. Sheriff May Not Auction the Right to Purchase the Apartment
Smithbuilt argues in substance that the Sheriff could auction the right to purchase the Apartment for the purported capped resale value. Smithbuilt’s theory is that because of the size and desirable location of the Apartment, a prospective purchaser would pay as much as $500,000.00 at auction to purchase the right to get off the waiting list and pay the fixed price under the applicable regulations. Smithbuilt’s theory fails as both a matter of law and a matter of public policy.
i. Mitchell-Lama Housing
In order to provide the proper context, it is useful to first examine the public policy behind Mitchell-Lama housing: “The Mitchell-Lama program was designed to encourage private financing of low and middle income housing where affordable housing was not otherwise provided by the private real estate market, by the creation of limited-profit housing companies.”
Real Estate Bd. of New York, Inc. v. City Council of City of New York,
As for the regulations themselves, “there is a maximum price which a shareholder may receive as a refund of consideration upon the resale of his shares in the
Additionally, “[t]he regulations governing Mitehell-Lama cooperatives provide that owners may resell their apartments only to prospective purchasers who are on a waiting list maintained by the housing company.”
Scruggs-Leftwich,
ii. Judgment Creditor Steps Into the Shoes of Judgment Debtor
Smithbuilt’s argument that, despite these restrictions on Debtor’s ability to sell, the Sheriff could auction the right to purchase to someone on the waiting list and then the successful bidder would pay the purported fixed price is contrary to the law in New York. Namely, Smithbuilt’s argument that the Sheriff could auction the right to purchase the Apartment implies that Smithbuilt, as judgment creditor, has greater rights than Debtor, as judgment debtor. This is not the law in New York. Rather, “[t]he judgment creditor stands in the shoes of the judgment debtor.”
Cohen v. First Nat’l City Bank,
Smithbuilt’s argument that the Sheriff could auction the right to purchase the Apartment fails because this “terrain” is not open to Debtor herself.
See id.
The laws and regulations governing the resale of Mitchell-Lama cooperatives do not permit the owner of a cooperative apartment to auction the right to purchase it. Therefore, Smithbuilt, as judgment creditor, in stepping into Debtor’s shoes, could not auction the right to purchase the Apartment. Moreover, the Judgment by its own terms
17
belies Smithbuilt’s claim that the
As previously stated, at the Petition Date, the fixed value or maximum resale price of the Apartment was $78,099.35. To the extent the Lien attaches, it can only attach to whatever interest Debtor may have in the Apartment, subject to the Judgment, see supra fn. 17 and accompanying text. The Judgment limited the attachment to any “surplus” of Debtor’s and Non-Debtor Spouse’s interest in the Apartment (ie., the stock certificate and concomitant and appurtenant proprietary lease), with the “surplus” being applied to the Money Judgment and the Maintenance. Additionally, subject to Smith-built’s reservation of rights, see supra fn. 13, Rivercross has a consensual first lien on the Apartment in the form of the Maintenance, thus leaving only the Equity, if any, to which the Lien can attach. Therefore, with respect to Debtor, the Lien attaches to the Equity, if any, in the Apartment and not, even if such right to purchase exists, to any right to purchase the Apartment.
2. Requirements for Lien Avoidance
Having concluded that the fixed value of the Apartment of $78,099.35 is the value to be considered in determining the lien avoidance issue, the Court will proceed to determine whether, and if so, the extent to which, any Equity exists such that Smith-built would have an interest in the Apartment.
A. Apartment is Property of the Estate
“As a general matter, upon the filing of a petition for bankruptcy, ‘all legal or equitable interests of the debtor in property’ become the property of the bankruptcy estate and will be distributed to the debtor’s creditors.”
Rousey v. Jacoway,
An “estate in bankruptcy [also] consists of ... those interests recovered or recoverable through transfer and lien avoidance provisions.”
Owen v. Owen,
Under § 522(f)(1)(A), “a debtor may avoid the fixing of a lien if three requirements are met: (1) there was a fixing of a lien on an interest of the debtor in property; (2) the lien impairs an exemption to which the debtor would have been entitled; and (3) the lien is a judicial lien.”
In re Wilding, 475
F.3d 428, 431 (1st Cir.2007) (citing
In re Chiu,
B. Lien Is Fixed on an Interest of Debtor in Property and Is a Judicial Lien
As for the first
Wilding
requirement, the Supreme Court has explained that “unless the debtor had the property interest to which the lien attached at some point
before
the lien attached to that interest, he or she cannot avoid the fixing of the lien under the terms of § 522(f)(1).”
Farrey v. Sanderfoot,
As for the third Wilding requirement, the Lien is a judicial lien. Smithbuilt contends that “the May 2, 2005 Judgment to sell the apartment Shares and associated proprietary lease doe [sic] not qualify as a judicial lien. It permits movant to sell the stock and proprietary lease at public auction with the proceeds to be applied towards the March 10, 2004 money Judgment.” Smithbuilt’s contention conflicts with both the Judgment and the Bankruptcy Code. The Judgment provides as follows: “it is further ORDERED and ADJUDGED that the money judgment obtained by NLI in the sum of $245,000.00, together with interest from March 10, 2004, in that certain action in this Court entitled “NAB Asset Venture III, L.P. v. Diana L. Armenakis, James J. Armenakis and Armenakis & Armenakis ” bearing Index No. 603371/98, be and the same hereby is adjudged to be a lien upon the surplus of the said sale, and that the lien be enforced.... ” The “said sale” is the Sheriffs sale of the Apartment. Elsewhere, the Judgment refers to “payment/delivery of the asset(s) levied upon.” Accordingly, the Judgment falls squarely within the Bankruptcy Code’s definition of “judicial lien” as provided in § 101(36) (“[t]he term ‘judicial lien’ means lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding”), and Smithbuilt is a lien creditor against the Estate, thus meeting the third Wilding requirement.
C. Lien Impairs Debtor’s Homestead Exemption
As for the second
Wilding
requirement, the Supreme Court has explained that “[t]o determine the application of § 522(f) [bankruptcy courts] ask not whether the lien impairs an exemption to which the debtor is in fact entitled, but whether it impairs an exemption to which he
would have been
entitled but for the lien itself.”
Owen,
More specifically, as an “opt-out” state, “New York law governs the nature and scope of the exemption” “while federal law governs the date on which the exemption come into play”: “Debtors may exempt ‘any property that is exempt under ... State or local law that is applicable on the date of the filing of the petition....’”
CFCU,
Debtor provides two related grounds for demonstrating that she has met this bur
i. 2005 Amendment Only Applies Retroactively to Bankruptcy Cases Filed After the Enactment Date
Debtor also presents a seemingly alternative but related ground for demonstrating that she has met her burden with respect to the second
Wilding
requirement. Debtor argues that notwithstanding the plain language of § 522(b)(3)(A) (permitting debtors to exempt “any property that is exempt under ... State or local law that is applicable on the
date of the filing of the petition
” (emphasis added)), the 2005 Amendment applies retroactively in cases where the bankruptcy petition was filed before the Enactment Date, citing three recent decisions rendered by bankruptcy courts, one of which was ultimately affirmed by the Second Circuit, in New York for support. Each of the three cases Dеbtor cites is distinguishable from this case, and the Court finds that the 2005 Amendment only applies retroactively to
First, while the court in
In re Little,
Second, in
In re Hayward,
Third, although the court applied retro-activity in
In re Carpenter,
ii. Smithbuilt May Defend Against Debtor’s Claimed Exemption Under Rule 4003(d) FRBP
By citing Carpenter*s holding, Debtor thus returns to the first ground
However, as discussed below, Debtor seeks affirmative relief in the Request to Avoid, which falls under § 522(f) and Rule 4003(d) FRBP, but nonetheless contends that Smithbuilt is still limited by the Rule 4003(b) FRBP timeframe, which would preclude any challenge to Debtor’s claimed exemption at this time. On the other hand, Smithbuilt’s rights
24
were not threatened until Debtor made the Request to Avoid in the Motion to Reconsider, and in defense of those rights, Smithbuilt has challenged whether
on the Petition Date
Debtor
would have been entitled
to the increased exemption. The challenge is not whether Debtor
is
entitled to the claimed exemption, but rather whether she has met her burden with respect to the second
Wilding
requirement (as previously stated, “the question is whether the lien impairs an ‘exemption to which the debtor would have been entitled under subsection (b), and under subsection (b),’ exempt property is determined ‘on the date of the filing of the petition.’ ”
Owen,
While the Court will review the jurisprudence examining the tension between subparts (b) and (d) of Rule 4003 FRBP, the Court begins by noting that the “law is well settled that limitations do not normally run against a defense. This principle has often been expressed in the figure of speech that the statute is available only as a shield, and not as a sword.”
Luckenbach S.S. Co. v. United
States,
Applying this principle to the facts of this case, Debtor attempts to use the Rule 4003(b) FRBP timeframe to cut off any consideration of Smithbuilt’s defense to the Request to Avoid. In other words, even though Debtor is seeking affirmative relief, she seeks to use the Rule 4003(b) FRBP timeframe as a “sword” to prevent Smithbuilt from defending its rights. She does not seek to use Rule 4003(b) FRBP as a “shield” to protect her entitlement to the claimed exemption from a tardy challenge by Smithbuilt. Indeed, Debtor
is
entitled to the increased exemption, and Smithbuilt does not challenge that entitlement.
26
Smithbuilt merely seeks to raise a
The 2008 Advisory Committee Notes explaining the newly-added last sentence of Rule 4003(d) FRBP (“Notwithstanding the provisions of subdivision (b), a creditor may object to a motion filed under § 522(f) by challenging the validity of the exemption asserted to be impaired by the lien,” hereinafter the “Clarifying Sentence”) supports this reading of the rule:
Subdivision (d) is amended to clarify that a creditor with a lien on property that the debtor is attempting to avoid on the grounds that the lien impairs an exemption may raise in defense to the lien avoidance action any objection to the debtor’s claimed exemption. The right to object is limited to an objection to the exemption of the property subject to the lien and for purposes of the lien avoidance action only. The creditor may not object to other exemption claims made by the debtor. Those objections, if any, are governed by Rule 4003(b). 9 Collier on Bankruptcy ¶4003 App. 4003 [4] (15th ed. rev.2009) (emphasis added).
Although the Clarifying Sentence became effective on December 1, 2008, which is after Debtor made the Request to Avoid in the Motion to Reconsider on August 18, 2008, Smithbuilt had objected to Debtor’s entitlement to the exemption prior to the Request to Avoid. As stated above, the Court’s interpretation of Rule 4003(d) FRBP is the same notwithstanding the Clarifying Sentence, but the fact that the Clarifying Sentence became effective after Debtor sought relief in the Request to Avoid does not preclude the Clarifying Sentence from applying to the Request to Avoid. 27
Prior to Rule 4003(d) FRBP’s amendment, courts considering the tension between subparts (b) and (d) of Rule 4003 FRBP provided various rationales for reaching the conclusion that was ultimately embodied in the Clarifying Sentence. 28
The highest court to address this tension is the Seventh Circuit in
In re Schoonover,
Although general unsecured creditors must take the initiative by objecting, lienholders may wait for notice under § 522(f). Once they receive notice, lien-holders litigate on the schedule appropriate to a proceeding under § 522(f), not the schedule for general creditors .... [L]ienholders have more time [to object to claimed exemptions] than general unsecured creditors, a dispensation essential if lienholders are to enjoy any chance to watch the proceedings from afar and enforce their liens later. Just as § 522(0 and Rule 4003(b) put the onus of timely objection on general unsecured creditors, so § 522(f) and Rules 4003(d) and 9014 put the onus of contesting a lien on debtors; the clock for lienholders runs from the motion under § 522(f) and not from the meeting of unsecured creditors. Schoonover,331 F.3d at 578 . 29
Likewise, the court in the widely-cited
Maylin
case
30
concluded that “the Taylor [c]ourt, which considered only a trustee’s late-filed objection to the debtor’s exemption in light of § 522(l) and Rule 4003(b), did not overrule a fundamental pillar of bankruptcy law
sub silentio. Taylor
cannot mean that secured creditors lose important rights by doing exactly what the law has long said they do: Ignore the bankruptcy proceedings until hailed into court.”
Maylin,
Taylor extends as far as its holding, but not as far as its dictum. It confirms Rule 4003(b)’s deadline for exemption objections made by the bankruptcy trustee (and the unsecured creditors who look tо the estate for payment). Its rule does not foreclose a secured creditor from defending a § 522(f) ... action by denying that the property involved is exempt under applicable law. Notwithstanding Rule 4003(b) and Taylor, affected secured creditors may contest the bona fides of an exemption in defense of a § 522(f) lien avoidance motion. Maylin,155 B.R. at 613 .
Both the Schoonover and Maylin courts focused on secured creditors’ right to not participate in bankruptcy proceedings as justification for allowing them to defend lien avoidance motions after the Rule 4003(b) FRBP deadline. While this rationale does not apply to the instant case because Smithbuilt did not exercise its option not to participate in the proceedings, the Schoonover and Maylin courts also focused on the defensive nature of an objection to a claimed exemption in the § 522(f) context as opposed a late objection in the § 522(0 context. Other courts have drawn a similar distinction. 32
In holding that “a creditor may raise exemption issues in a lien avoidance motion under § 522(f)(1) to
litigate
whether the debtor would have been entitled to the exemption under § 522(b), even if the property at issue has been
deemed
exempt under § 522(0,” the court in
Streeper
focused on the “entirely different functions” served by §§ 522(l) and 522(f).
Streeper,
Exemption under § 522(Z) quickly determines which property is available for distribution by the trustee to unsecured creditors and which property is available for the “fresh start” of the debtor. In contrast, § 522(f) extinguishes the property rights of a creditor. Due process requires notice to the creditor of a debt- or’s intention to avoid the lien. It would be inconsistent with due process to prevent the creditor from raising lien avoidance issues solely because of failure to object to the claim of exemption. Streeper,158 B.R. at 787 (citing Indvik,118 B.R. at 1006-7 ; Montgomery, 80 B.R. at 389; In re Frazier,104 B.R. 255 , 259 (Bankr.N.D.Cal.1989); In re Smith,119 B.R. 757 , 760 (Bankr.E.D.Cal.1990)) (emphasis added).
Indeed, other courts have also approached the question at hand from a rights-based perspective, particularly in their rejection of the argument that a secured creditor’s failure to object to an exemption within the Rule 4003(b) FRBP timeframe estops
33
or
[Ejquity requires that the court consider the underlying basis for an exemption in the lien avoidance context. It is “entirely appropriate that a debtor about to eliminate another’s property rights be put to his or her proof, and not be permitted to rely on a technical estoppel which is at best only tangentially related to the lien avoidance issue in any event.” In fact, despite the claim of exemption, a lien avoidance action may never be commenced. Thus, requiring a secured creditor to object to an exemption when it is claimed, rather than when the debt- or seeks to avoid the lien, fosters unnecessary litigation and may hinder the debtor’s fresh start. Morgan,149 B.R. at 152 (quoting Montgomery,80 B.R. at 389-90 ) (footnote omitted, emphasis added). 34
Finally, one bankruptcy court has relied on current scholarship to reach this result while maintaining consistent treatment of lienholders and general unsecured creditors:
Morgan and Schoonover reach the right result but neither analysis is entirely satisfactory, and there is a more sound statutory basis on which to reach their results. The “would have been” language of § 522(f) imposes a time element on the types of exemptions that can be used tо avoid liens. On this analysis, the debtor is only able to avoid liens by an exemption to which he would have been entitled at the time of filing his petition. Thus the lien creditors in Morgan and Schoonover would be permitted to show that the debtor could not satisfy the “would have been exempt” language from § 522(f) at the time he filed his petition.... This analysis achieves the Morgan and Schoonover result without suggesting that lienhold-ers have greater due process right [sic] or different deadlines than do general creditors. [The lienholder] is therefore entitled to make a showing that [the debtor] is unable to satisfy § 522(f)’s requirement that the property “would have been exempt” at the time of the petition date, notwithstanding her failure to timely object to his exemption claim. Jarski,301 B.R. at 345-46 (citing Matthew Ellingson, Getting Around Taylor: A New Look at Judicial Lienholders and Exemptions by Default, Norton Bankr.L. Adviser, October 2003, at 7, 9-10).
The Court agrees with this analysis. Smithbuilt is entitled to make a showing that Debtor is unable to satisfy § 522(f)’s requirement that the property “would have been exempt” at the time of the petition date, notwithstanding its failure to timely object to her exemption claim.
As to the Judgment’s provision that the homestead exemption be shared “jointly” between Debtor and Non-Debtor Spouse, that provision is not res judicata. The Judgment was granted in a special proceeding conducted pursuant to CPLR § 5206(e), with Debtor and Non-Debtor Spouse’s homestead exemрtion granted pursuant to CPLR § 5206(a). Section 5206(a) is only made applicable to debtors in bankruptcy by N.Y. Debt. & Cred. Law § 282, which was not at issue when the Judgment was rendered because at that time neither Debtor nor Non-Debtor Spouse had filed for bankruptcy. Therefore, the issue of the applicable homestead exemption for a debtor in bankruptcy was not litigated in the State Court and is not res judicata. That issue is addressed below.
As to the $10,000.00 exemption amount, the Second Circuit has conclusively stated that the 2005 Amendment is retroactive for bankruptcy cases filed after the Enactment Date.
See CFCU,
Nonetheless, even though the Court rejects Smithbuilt’s argument that the $10,000.00 exemption should be applied because the Judgment made it
res judicata,
the Court accepts Smithbuilt’s argument that the $10,000.00 exemption is the amount to which Debtor would have been entitled on the Petition Date. The 2005 Amendment does not apply to Debtor’s homestead exemption retroactively because the Petition Date came after the Enactment. Date. Therefore, Debtor has not met her burden as to the “time element”
(i.e.,
the “would have been entitled”
iii. Debtor is Entitled to Full Homestead Exemption
As a final matter relating to the proper amount of Debtor’s homestead exemption, the Court rejects Smithbuilt’s argument that Debtor is only entitled to claim half of whichever exemption amount is applicable because Debtor owns the Apartment with Non-Debtor Spouse as a joint tenant with the right of survivorship. 38
It is well established in New York that an individual debtor in bankruptcy is entitled to the full homestead exemption and not half merely because she is a joint tenant with her non-debtor spouse. The Second Circuit has spoken definitively on this issue in the context of whether joint debtors may aggregate homestead exemptions, finding that the “New York legislature intended to allow each of two joint debtors to claim the benefit of the $10,000 exemption.”
John T. Mather Memorial Hospital, Inc. v. Pearl,
With the $10,000.00 exemption amount in mind, the next step is calculating the degree to which the Lien impairs Debtor’s homestead exemption. “Section 522(f)(2) now sets out a mathematical formula for the courts to apply to determine whether a lien impairs the debtor’s exemption. Specifically, liens impair an exemption to the extent that the sum of all liens on the property, including the lien under consideration, together with the value that the debtor could claim as exempt in the absence of liens on the property, exceed the value of the debtor’s interest in the property if it were totally unencumbered.” 4 Collier on Bankruptcy ¶ 522.11[3] (15th ed. rev.2009). Like the date for determining the proper exemption amount, “the petition date is the operative date for determining the various § 522(f) calculations.”
Wilding,
Debtor makes the § 522(f)(2)(A) calculation by assuming “for argument’s sake” that Debtor and Non-Debtor Spouse each own a one-half interest in the Apartment, specifically by subtracting the total Maintenance from the total fixed value of the Apartment and then dividing the remainder between herself and Non-Debtor Spouse to obtain their respective Equity interests (of course, each of those values could be divided in half before subtracting them to obtain the same respective Equity interests, which is the approach the Court uses below). Despite using incorrect amounts (ie., Debtor uses current amounts for the fixed price of the Apartment and Maintenance rather than amounts as of the Petition Date as wеll as the $50,000.00 exemption amount), Debtor einploys the approach taken by a majority of courts for property co-owned by a debt- or and non-debtor.
See In re Miller,
The court in
Miller
found that while some courts have advocated a “literal application” of § 522(f)(2)(A)(ii) (“all other liens on the property”),
see In re Cozad,
Using the template from
Fox,
$ 78,099.35 Value of the Apartment
$ 39,049.68 Value of Debtor’s Interest in the Apartment (the “Debtor Value”) % of $78,099.35/2
$ 40,253.21 Total Pre-Petition Maintenance (“all other liens on the property”)
$ 20,126.61 Portion of Pre-Petition Maintenance Apportioned to Debtor’s Interest in the Apartment (the “Debtor Maintenance”)
$271,217.94 40 The Lien (Smithbuilt)
$ 10,000.00 41 Homestead Exemption
($262,294.87) Debtor Value - Debtor Maintenance - The Lien — Homestead Exemption ($39,049.68 - $20,126.61 - $271,217.94 - $10,000.00)
$ 8,923.07 Reduced Lien ($271,217.94 - $262,294.87)
Accordingly, because the result of the § 522(f)(2)(A) calculation is negative, the Lien impairs Debtor’s homestead exemption, thus meeting the second
Wilding
requirement, and is accordingly avoidable to that extent
(i.e.,
$262,294.87).
See Fox,
3. Relief Under § 362(d)
A. Smithbuilt is a Party in Interest
Only a party in interest may request relief from the automatic stay.
See
§ 362(d).
43
Smithbuilt’s predecessor-in-in
B. Grounds for Relief and Burden of Proof
Section 362(d) provides two grounds for stay relief: “Sections 362(d)(1) and (d)(2) are disjunctive. This means the Court must lift the stay if the movant prevails under
either
of the two grounds.”
In re Elmira Litho, Inc.,
Nevertheless, “one considering the burden of proof must distinguish between the ultimate burden of persuasion (or the risk of non-persuasion) and the initial burden of going forward.... [T]he two are distinct, and a party can bear the initial burden of going forward even if it does not bear the ultimate burden of persuasion. If it fails to carry its initial burden, the Court will dismiss its application without rеquiring the party that bears the ultimate burden of persuasion to offer any evidence.”
Elmira Litho,
Accordingly, Smithbuilt must demonstrate a factual and legal right to the relief it seeks as part of its
prima facie
case: “every party seeking relief from the automatic stay under § 362(d)(1) must carry the initial burden of showing that it is entitled to relief before the debtor is obligated to go forward with its proof.”
Elmira Litho,
A party is entitled to relief under § 362(d)(1) for “cause,” which includes lack of adequate protection.
See
§ 362(d)(1). Smithbuilt’s predecessor-in-interest, NLI, argued that it established a
prima facie
case supporting an order lifting the automatic stay because while NLI could show that the value of its purported collateral was declining
(ie.,
the Maintenance continued to accrue during the stay, thereby decreasing the unencumbered part of the Apartment, which, subject to Debtor’s homestead exemption, could have been used to satisfy NLI’s judgment), Debtor could not show that NLI was adequately protected. Accordingly, NLI argued that
However, “[sjection 362(g)(2) places squarely on the debtor’s shoulders the burden of proving the absence of cause, and cause includes lack of adequate protection .... If the basis of the stay relief is lack of adequate protection of an interest in property, the nature of the movant’s interest defines the need for adequate protection, and the scope of the
prima facie
case.”
Elmira Litho,
C. Smithbuilt Lacks Adequate Protection
Smithbuilt has met part of its initial burden of going forward with the evidence by demonstrating that it has an interest in the Apartment entitled to protection (i.e., the Reduced Lien).
See Elmira Litho,
Smithbuilt meets its burden of proving a decline or threat of decline in the value of the unavoidable part of the Lien. Smith-built argued that the Maintenance continued to accrue during the stay, thereby decreasing the unencumbered part of the Apartment, which, because of Debtor’s homestead exemption, potentially left nothing for Smithbuilt to recover. Smith-built’s argument is not based on mere speculation. Indeed, while much of the evidence for this decline or threat of decline comes from Debtor’s own pleadings and other filings,
46
the most persuasive
The burden now shifts to Debtor to prove absence of “cause” pursuant to § 362(g)(2), such as by proving “that the collateral is not declining in value, or that the secured party is adequately protected through periodic payments, an equity cushion, additional or replacement liens or good prospects for a successful reorganization.”
48
Elmira Litho,
CONCLUSION
For the foregoing reasons, (i) the Lien against Debtor’s interest in the Apartment is reduced to not less than $8,923.07 (ie., the Reduced Lien), (ii) the balance of the Lien is avoided, and (iii) the Lift Stay Motion is granted so that Smithbuilt may exercise its rights and remedies against Debtor with respect to the Reduced Lien. If Smithbuilt successfully challenges the Maintenance as a valid hen on the Apartment, the Reduced Lien may be increased. If Smithbuilt’s challenge is unsuccessful or Smithbuilt does not challenge the Maintenance as a valid lien on the Apartment in the time set forth below, the Court shall enter an order consistent with this opinion.
Accordingly, for the foregoing reasons, it is hereby
ORDERED, Smithbuilt has until July 10, 2009 to commence an adversary proceeding pursuant to Rule 7001(2) FBRP challenging the validity, priority, or extent of the Maintenance as a consensual first lien as of the Petition Date. If a complaint is filed, a pre-trial hearing date will be set. If no complaint is filed, a final order consistent with this opinion will be entered regarding the amount of the Reduced Lien; and it is hereby further
ORDERED, to the extent Smithbuilt limits its challenge to the value of River-cross’s claim for pre-petition Maintenance pursuant to Rule 3012 FRBP, Smithbuilt has until July 10, 2009 to file such a motion pursuant to Rule 9014 FRBP. If a motion is filed, a hearing date will be set. If no motion is filed, a final order consistent with this opinion will be entered regarding the amount of the Reduced Lien.
Notes
. The Apartment is part of the cooperative apartment corporation known as "Rivercross Tenants’ Corp.” ("Rivercross”), wherein ownership of Debtor and Non-Debtor Spouse’s particular unit consists of a stock certificate representing a certain number of shares in the corporation together with the concomitant and appurtenant interest in a proprietary lease.
. As will be explained, this amount represents the amount of the Reduced Lien, assuming Rivercross’s lien
(i.e.,
unpaid maintenance and related charges, hereinafter the "Maintenance”) is valued in the amount of $40,253.21,
see infra
fn.4. To the extent the Maintenance is invalid, reduced, or of a lower priority than the Lien, the Reduced Lien
. Section 702(d): If a trustee is not elected under this section, then the interim trustee shall serve as trustee in the case.
. Although Debtor’s opposition to the Lift Stay Motion states that she and Non-Debtor Spouse owed $32,751.66 in Maintenance at the Petition Date and Smithbuilt’s reply to that opposition states the same amount, no objection was filed to Rivercross’s amended secured proof of claim in the amount of $40,253.21. See infra fn.13.
.There is cоnsiderable disagreement between the parties as to which exemption amount is applicable here (as well as whether an individual debtor in bankruptcy who owns a property with her non-debtor spouse as a joint tenant with the right of survivorship is entitled to claim a full exemption or only half because of the joint tenancy). The question regarding the applicable exemption amount takes on particular importance because Smithbuilt does not have an interest in the Apartment if the $50,000.00 amount is applicable, but Smithbuilt does have an interest in the Apartment if the $10,000.00 amount is applicable. See infra fn. 41 and Discussion § 3.C.iv.
. This fixed value was provided by Rivercross in response to an informational subpoena by NLI. The question asked for the "current market value of the unit.”
. “Property interests are created and defined by state law. Unless some federal interest requires a different result, there is no reason why such interests should be analyzed differ
. Although Debtor argues that Smithbuilt should be bound by its concession, that concession must be examined in the context of the exchange between the Court and Smith-built when it was made. The issue that concerned the Court was Smithbuilt seeking to have the State Court adjudicate the Debtor's exemption. The Court indicated that it would not lift the stay if Smithbuilt were to seek the State Court's adjudication of the exemption issue because that would likely result in Debt- or moving before this Court to resolve that issue. The Court concluded that if the stay were to be reimposed and Debtor were to seek avoidance of the Lien, Smithbuilt should not be bound by its concession made contingent upon the granting of certain relief that was vacated at the request of Debtor.
. The Court notes that despite the use of the term “reimpose” in the Minute Order, the specific action taken by the Court vacated the Lift Stay Order and reinstated the stay, restoring the parties to the status quo before the Lift Stay Order was granted. In distinguishing such action from the reimposition of the stay under § 105(a), which would be a “proceeding to obtain an injunction or other equitable relief” under Rule 7001(7) and require the filing of an adversary proceeding, the Tenth Circuit has held that "a party may seek relief from a bankruptcy court order lifting the automatic stay by filing a motion pursuant to Rules 9024 and 60(b) without filing an adversary proceeding.”
In re Gledhill,
. Rule 4003(d) FRBP: A proceeding by the debtor to avoid a lien or other transfer of property exempt under § 522(f) of the Code shall be by motion in accordance with Rule 9014. Notwithstanding the provisions of subdivision (b), a creditor may object to a motion filed under § 522(f) by challenging the validity of the exemption asserted to be impaired by the lien. (As discussed infra fn. 27 and accompanying text, the last sentence of this rule was added in 2008 and made effective on December 1, 2008.).
. Upon review the Court concludes that although the Request to Avoid, which was not part of Debtor's opposition to the Lift Stay Motion, could not provide the basis for the Motion to Reconsider, it could be considered as a separate request for relief.
. The Second Circuit has held that "reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked — matters, in other words, that might reasonably be expected to alter the conclusion reached by the court.”
Shrader v. CSX Transp., Inc.,
. "[W]hen a Rule [9014] motion is appropriate, the adverse party must be given reasonable notice and an opportunity for a hearing in order to insure compliance with the due process requirements of the Constitution.”
In re Schrimp,
. Notwithstanding any other provision of this article and subject to any regulation not inconsistent with this section which may be promulgated by the commissioner or supervising agency:
(a) The resale price of shares in a mutual company shall be fixed by the mutual company, subject to the approval of the commissioner or supervising agency and shall be equal to (1) the consideration the selling tenant-cooperator paid for such shares and (2) any capital assessments and voluntary capital contributions approved by the commissioner or supervising agency and paid by the selling tenant-cooperator to the mutual company, to the extent not already included in the consideration paid for such shares, and, if established by the mutual company, (3) a proportionate share of the actual aggregate amortization paid on all existing and prior mortgages on the project in reduction of total outstanding principal indebtedness during such period as shall be fixed by the board of directors of the mutual company, to the extent not already included in the consideration paid for such shares, and (4) reasonable administrative charges.
(b) The aggregate amount to be paid to the selling tenant-cooperator with respect to the sale of the selling tenant-cooperator’s shares shall be fixed by the board of directors of the mutual company, subject to the approval of the commissioner or supervising agency, and shall be equal to (1) the consideration the selling tenant-cooperator paid for such shares, (2) any capital assessments and voluntary capital contributions approved by the commissioner or supervising agency and paid by the selling tenant-cooperator to the mutual company, to the extent not already included in the consideration paid for such shares, and (3) a proportionate share of the actual aggregate amortization paid by the selling tenant-cooperator on all existing and prior mortgages on the project in reduction of total outstanding principal indebtedness during such period as shall be fixed by the board of directors pursuant to subdivision (a) of this section, to the extent not already included in the consideration paid for such shares. To the extent that a selling tenant-cooperator may be entitled to an amount less than the resale price of his shares, the difference shall be retained by the mutual company. N.Y. Priv. Hous. Fin. § 31-a (emphasis added).
. 9 NYCRR § 1727-1.3 provides, inter alia, that when an apartment in a limited-profit housing company becomes available, applicants with numbers of prospective tenants or cooperators sufficient to fill the vacancy are notified of such availability in the order of their applications, which are required to be time and date-stamped consecutively, with eligible applicants having one right of refusal on an apartment without prejudice to their standing on the waiting list. See 9 NYCRR § 1727-1.3.
.
The
Court of Appeals also found that "[t]he agreement between the shareholders and the housing company is a product of all the relevant documents, including the prospectus. Here, while the prospectus stated that owners could resell apartments on the open market, it also provided that to the extent there was any conflict between the terms of the offering plan and the statutes and regulations governing Mitchell-Lama housing, such conflicts were to be reconciled in favor of the Private Housing Finance Law and the regulations promulgated pursuant to that law. The proprietary leаses and the purchase agreements also contained this express proviso.”
Scruggs-Leftwich,
. "[I]t is ... ORDERED and ADJUDGED, that pursuant to CPLR 5206(a) the Sheriff of New York County be, and the same hereby is, directed to sell at public auction, in the manner prescribed by law, subject to and in compliance with all restrictions, rules, regulations, law and requirements of Rivercross Tenant's Corp. or associated therewith, the following described property: the interest of the Respondents, as joint tenants with the right of survivorship, in and to that certain: (a) Stock Certificate No. 1176, dated June 1, 1996, representing ownership interest of 414 shares of stock in the cooperative apartment corporation known as 'Rivercross Tenants’
. Section 522(f), in pertinent part:
(1) Notwithstanding any waiver of exemptions but subject to paragraph (3), the debt- or may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is—
(A) a judicial lien ...
(2) (A) For the purposes of this subsection, 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.
. Section 522(1): The debtor shall file a list of property that the debtor claims as exempt under subsection (b) of this section. If the debtor does not file such a list, a dependent of the debtor may file such a list, or may claim property as exempt from property of the estate on behalf of the debtor. Unless a party in interest objects, the property claimed as exempt on such list is exempt.
. Rule 4003(b)(1) FRBP: Except as provided in paragraphs (2) and (3), a party in interest may file an objection to the list of property claimed as exempt only within 30 days after the meeting of creditors held under § 341(a) is concluded or within 30 days after any amendment to the list or supplemental schedules is filed, whichever is later. The court may, for cause, extend the time for filing objections if, before the time to object expires, a party in interest files a request for an extension. The Court notes that any reference to Rule 4003(b) FRBP's “30 day" timetable includes extensions granted by the Court pursuant to the last sentence of Rule 4003(b)(1) FRBP. In this case, the Court so ordered several stipulations between the Trustee and Debtor extending the time to object to claimed exemptions and discharge from the Petition Date to the final deadline for objecting to claimed exemptions and discharge on October 17, 2006, so that is the relevant Rule 4003(b) FRBP timetаble here.
. The Court notes that
In re Trudell,
. "[B]y definition a lien creditor is always, at least nominally, a secured creditor.”
In re Bradley,
. Smithbuilt also filed a secured proof of claim, even though, as a secured creditor, it was not required to do so.
See
§ 501(a) ("A creditor or an indenture trustee may file a proof of claim. An equity security holder may file a proof of interest.”);
see also Maylin,
. “Lien creditors hold constitutionally cognizable property rights in assets against which their liens lie.”
Maylin,
. The court in Montgomery, as well as other courts, referred to an exemption claimed pursuant to § 522(1) as an "exemption by default.”
See Maylin,
. “A lien avoidance action ... does not place in issue the debtor’s
entitlement
to the exemption so claimed. It focuses instead on entitlement to lien avoidance. Section 522(f) by its terms restricts the availability of lien avoidance to property
otherwise exempt under [§ ] 522(b).
An exemption which the debtor acquires solely by default pursuant to [§ ] 522(2) is
not
necessarily 'an exemption to which the debtor would have been entitled under subsection (b) of this section [§ 522].’ Section 522(f) therefore does not satisfy the [§ ] 522(b) eligibility element of a lien avoidance action. By the same token, a determination under [§ ] 522(f) that property is ineligible for
lien avoidance
does not mean that the property is then ineligible for
exemption.
The debtor's entitlement to the exemption remains undisturbed regardless of the outcome of the lien avoidance action.”
Montgomery,
. While the Court does not decide whether the Clarifying Sentence governs these proceedings, the Court notes that the Supreme Court's order adopting the amended rules states that they "shall take effect on December 1, 2008, and shall govern all proceedings in bankruptcy cases thereafter commenced and, insofar as just and practicable, all proceedings then pending.” Communication from the Chief Justice, 2008 Order of the Supreme Court Adopting Amendments to the Federal Rules of Bankruptcy Procedure, Apr. 23, 2008. The Court nonetheless observes that it would be both just and practicable for the Clarifying Sentence to govern these proceedings because the Clarifying Sentence reflects the strong majority view of courts on this issue and is consistent with the Court’s interpretation of Rule 4003(d) FRBP notwithstanding the Clarifying Sentence.
. The Court notes that following the minority view of courts on this issue would render the Clarifying Sentence superfluous, thus violating a "cardinal principle” of construction.
See, e.g., Williams v. Taylor,
.“Taylor
did not get its 30-day limit from the Bankruptcy Code: all §
522(l)
says is that creditors who want dibs on assets claimed as exempt must object, which [the lienholder] eventually did. The deadline came from Rule 4003(b), which deals with objections by general creditors. Motions under § 522(f) to avoid liens fall under Rule 4003(d), not Rule 4003(b)-and Rule 4003(d) does
not
set a 30-day schedule but instead provides that '[a] proceeding by the debtor to avoid a lien or other transfer of property exempt under § 522(f) of the Code shall be by motion in accordance with Rule 9014.' In turn, Rule 9014 leaves deadline-setting to the bankruptcy judge.”
Schoonover,
.
See In re Corson,
. “A § 522(f) lien avoidance motion is one procedure by which a debtor hails a secured creditor into bankruptcy court and obtains a determination of rights. It can serve as the functional equivalent of an objection to claim.”
Maylin,
.
See, e.g., In re Canelos,
. The Ninth Circuit Bankruptcy Appellate Panel (the "BAP”) in
Morgan
contrasted the cases holding that "a judicial lien creditor who fails to object to a debtor’s claim of exemption in a timely fashion may not raise the alleged invalidity of the exemption as a defense to a lien avoidance action,” with those cases holding that "the lien creditor's failure to object to the debtor’s claim of exemption does not prevent the creditor from raising the issue whеn the debtor seeks to
. Some courts have expressed concern as to the basis of
Morgan's
holding.
See Maylin,
. The Court notes that "Rule 4003(d) sets no deadline for filing a motion to avoid a lien under [§ ] 522(f), and the [Bankruptcy] Code has no statute of limitations for these avoiding powers comparable to that for other avoiding powers.” 9 Collier on Bankruptcy ¶ 4003.05 (15th ed. rev.2009) (footnote omitted). Accordingly, courts have construed Rule 4003(d) FRBP in light of its purpose to protect exemptions and allowed lien avoidance motions to be filed and determined after the bankruptcy case is closed, with some courts not requiring the case to be reopened to consider such a motion. See 9 Collier on Bankruptcy ¶ 4003.05 (15th ed. rev.2009) (footnotes omitted). It would be inequitable to require lien-holders to adhere to the Rule 4003(b) FRBP timetable in order to defend their rights when debtors seeking relief under § 522(f) and Rule 4003(d) FRBP are subject to no such timetable.
.
See Hayward,
. "What the Legislature gave to holders of judgment liens, the Legislature may take away prior to sale or other satisfaction of the judgment lien. The Court thus concludes that the fact that the judgment lien that is the target of this ... § 522(f) motion was filed in the County Clerk's Office and became a lien on the Debtor's homestead before the enactment of the increase in homestead exemption from $10,000 to $50,000 does not affect the Debtor's right now to claim the $50,000 exemption in order to accomplish the avoidance of the judgment lien.”
Trudell,
. Smithbuilt specifically argues that the homestead exemption is property-specific rather than owner-specific. Without deciding that issue, this opinion addresses the narrower, and for this case determinative, issue of whether a an individual debtor in bankruptcy who owns a property with her non-debtor spouse as a joint tenant with the right of survivorship is entitled to claim a full exemption or only half because of the joint tenancy. Additionally, the Court notes that this opinion does not affect the ability of Smithbuilt to exercise its rights and remedies against Non-Debtor Spouse.
See Hager,
. Smithbuilt's selective citation of a New York Law Journal article is unpersuasive. Smithbuilt quotes the following passage: "It is unclear whether spouses can each claim the $50,000 exemption if both names are on the deed. Mr. Farley, counsel to Senator Leibell, said the intent was to link the exemption with the property, not the owners, and to limit the total exemption to $50,000, not $100,000.” John Caher, Legislature Quietly Boosts Homestead Exemption, New York Law Jоurnal, Sept. 8, 2005, at 1. Smithbuilt omits the paragraph immediately following that one: "However, practitioners note that under the prior statute, a husband and wife were each entitled to a $10,000 exemption, and observe that nothing in the new law changes that tradition. The amended version of the law is altered only to the extent that it deletes all references to $10,000 and replaces them with the new figure.” Id. Insofar as N.Y. Debt. & Cred. Law § 282 rather than CPLR § 5206 governs debtors in bankruptcy, this article is also irrelevant to this case.
. The calculation is the same whether or not interest is included in the Lien. When the amount of a lien exceeds the value of the subject property, any additional amount of that lien does not alter the reduced portion of the lien under the § 522(f)(A)(2) calculation.
. If the exemption amount were $50,000.00, the Lien would be avoided in its entirety. See 4 Collier on Bankruptcy ¶ 522.11[3] (15th ed. rev.2009) (footnote omitted) ("[C]ourts have ... avoided liens in their entirety if the total of the liens on the property and the debtor's exemption exceeds the fair market value of the property.”).
. See supra fn. 13.
.Section 362(d): On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay—
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest;
(2) with respect to a stay of an act against property under subsection (a) of this section, if—
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization.
. Section 362(g): In any hearing under subsection (d) or (e) of this section concerning relief from the stay of any act under subsection (a) of this section—
(1) the party requesting such relief has the burdеn of proof on the issue of the debtor's equity in property; and
(2) the party opposing such relief has the burden of proof on all other issues.
. “Such ‘threats' include the failure to maintain property insurance or the failure to keep the property in a good state of repair.”
Elmira Litho,
. Debtor stated in a pleading dated July 12, 2007, Rivercross was owed "$100,000 in rent arrears and other charges.” Debtor stated in the Motion to Reconsider, dated August 15, 2008, that Rivercross was owed “past due maintenance charges of $63,843.61.” In a letter to the Court dated November 3, 2008, Debtor's counsel stated that “as of October 21, 2008, the Debtor and her husband owe a total of $75,803.65.” Finally, in a letter from Rivercross to the Court dated November 18, 2008, Rivercross stated that the "outstanding amount owed ... at the present time is $45,760.04.” Rivercross also stated that
. The court in
Elmira Litho
observed that a secured creditor can prove its case qualitatively without quantifying the decline in value of the collateral "by demonstrating that the debtor has completely failed, or substantially failed, to make post-petition payments.”
Id.,
. The Court notes that these are among the means by which adequate protection may be provided under § 361.