In Re Thompson
ORDER
This mаtter comes before the court on the motion to avoid lien filed by the debtors, Neal Ray Thompson and Ruby Jean Thompson (“Debtors”), to which secured creditor, The First State Bank of Keyes “(Bank”), filed its response in objection, Debtors filed their resрonse brief, and Bank filed its reply brief. After careful review of the parties’ submissions, the court finds that the motion to avoid lien should be granted.
Debtors seek to avoid Bank’s security interest in two vehicles, a 1992 Chevrolet 3500 Pickup (“1992 Pickup”) and a 1981 Chevrolet Fleetside Pickup (“1981 Fleet-side”) (collectively “vehicles”). Debtors contend that the subject security interest is a nonpossessory, nonpurchase-money security interest, and the vehicles are exempt under Okla. Stat. tit. 31, §§ 1(A)(5) & (6), as implements of husbandry and tools of the trade. 1 Bank failed to object to debtors’ claimed exemptions in accordance with Fed. R. Bankr. P. 4003(b). Debtors contend they are entitled to avoid Bank’s lien pursuant to 11 U.S.C. § 522(f). 2
In keeping with extant law, this court must first determine Debtors’ clаim of exemption of the vehicles under the Oklahoma exemption statute. In this regard, Debtors cite the ease of
Taylor v. Freeland & Kronz,
Several courts have agreed with this reasoning.
See, e.g., In re Chinosorn,
Still other courts reach the same result but on different grounds. For example, the court in
In re Moe,
In
In re Streeper,
In a well-reasoned opinion, the court in
In re Maylin,
Taylor extends as far as its holding, but not as far as its dictum. It confuses Rule 4003(b)’s deadline for exemption objections made by the bankruptcy trustee (and the unsecured creditors who look to the еstate 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 bonafides of an exemption in defense of a § 522(f) lien avоidance motion.
Id. See also In re Liston,
This court agrees with the reasoning of
Maylin
and holds that a secured creditor’s failure to object to a debtor’s claim of exemption does not preclude it from litigating the merits of the exemption in the
The next issue to be addressed is, in the context of a § 522(f) motion, which party bears the burden of proof on the issue of a disputed claim of exemption. Debtors bear the burden of рroof on all lien avoidance issues.
Premier Capital, Inc. v. DeCarolis (In re DeCarolis),
In the present case, in their bankruptcy schedules, Debtors claimed the 1992 Pickup as exempt as an “implement of husbandry” under Okla. Stat. tit. 31, § 1(a)(5), and as a “tool of the trade” under Okla. Stat. tit. 31, § 1(A)(6), and the 1981 Fleetside also as a “tool of the trade.” Debtors have thus met their burden on the exemption issue. The burden then shifts to Bank to prove that the exemption claim is improper. In this regard, the only evidence before the court is the affidavit of debtor Neal Ray Thompson, attached to Debtors’ response brief, in which he testifies that Debtors are farming on a sealed-back basis, and they use the vehiсles claimed as exempt in conducting their farming operations. See Affidavit at ¶¶ 4 & 8. This testimony is unrefuted by Bank. Therefore, Bank has failed to satisfy its burden of proving the impropriety of the claimed exemptions.
The second determination the court must make is whether the property is enumerated as an item avoidable under § 522(f).
6
A debtor’s lien avoidance powers under § 522 lie against only the categories of assets that are identified in the statute.
In re Smith,
Debtors argue that the Bank’s lien on both vehicles is avoidable undеr subsection (ii) of § 522(f)(1)(B) as “implements,” which Debtors essentially equate to “farm implements.” In response, Bank argues that the word “implements” is modified by the phrase “of the trade of the debtor;” thus, the property at issue that is exempt
As to the construction of a statute, this court is “obliged to construe the statute so as to give effect to all of its terms.”
Donaldson, Hoffman & Goldstein v. Ganudio (In re Forrest A. Heath Co., Inc.),
In the present case, a construction of § 522(f) as requested by Debtors would require the court to read out of the statute the comma that exists between the word “tools” and the phrase “of the trade of the debtor.” Indeed, in their response brief, Debtors excludе the comma in their citation to the statutory language. The more appropriate construction of the statute is that suggested by Bank in which the word “implements,” like the words “professional books” or “tools,” is modified by the phrase “of the trade” оf the debtor. Thus, the lien subject to avoidance under § 522(f) must be on property that constitutes “implements” or “tools” of the trade of the debtor.
The unrefuted affidavit of debtor Neal Ray Thompson establishes that Debtors use the vehicles in their farming oрeration. In Oklahoma, farming can be considered a “trade.”
See Central Nat’l Bank & Trust Co. v. Liming (In re Liming),
ACCORDINGLY, IT IS ORDERED that Debtors’ motion to avoid lien should be and hereby is GRANTED.
Notes
. Schedule C of the Debtors' bankruptcy petition indicates that Debtors claimed as exempt the 1992 Pickup as a "tool of the trade” and as an "implement of husbandry,” and the 1981 Fleetside as an "imрlement of husbandry.” In their filings, however, the parties focus their arguments on the exemption for “implements of husbandry” under Okla. Stat. tit. 31, § 1(A)(5), although Debtors cite to Okla. Stat. tit. 31, § 1(A)(6). Given the lack of clarity, the court will address the motion to avoid lien in the context of both apparently claimed exemptions.
. Unless otherwise specifically stated, all references to sections herein are to the United
. The federal exemptions are found in § 522(d).
. Section 522(Z) provides that:
The debtor shall file a list of property that the debtor claims as exempt under subsection (b) of this seсtion. 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 сlaimed as exempt on such list is exempt.
Id. (emphasis added).
. That Rule, as recently amended, states:
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 supрlemental 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. Copies of the objections shall be dеlivered or mailed to the trustee, the person filing the list, and the attorney for that person.
Fed. R. Bankr. P. 4003(b).
. Section 522(f)(1)(B) provides:
Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid the fixing of a lien on an interest of the debtor in property to the еxtent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, is such lien is—
(B) a nonpossessory, nonpurchase-money security interest in any—
(i) household furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments, or jewelry that are held primarily for the personal, daily, or household use of the debtor or a dependent of the debtor;
(ii) implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor; or
(iii) professionally prescribed health aids for the debtor or a dependent of the debt- or.
Id.