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AK Valley Federal Federal Credit Union v. Liti

February 23, 2007

IN RE: AK VALLEY FEDERAL FEDERAL CREDIT UNION, APPELLANT,
v.
MARK ANDREW LITI AND JENNIFER LITI, F/K/A JENNIFER ANN CORMAN, APPELLEES.



The opinion of the court was delivered by: Ambrose, Chief District Judge.

BKCY. No. 03-30578 MBM

OPINION and ORDER OF COURT

SYNOPSIS

Pending are two Appeals filed by Appellant, AK Valley Federal Credit Union ("AK Valley"), from the United States Bankruptcy Court for the Western District of Pennsylvania filed at Case Numbers 06-1485 and 06-1486. The cases will be dealt with jointly. AK Valley seeks an order reversing the Orders of the bankruptcy court dated September 19, 2006, that granted Appellees', Mark Andrew Liti's and Jennifer Ann Liti's, f/k/a/ Jennifer Ann Cornman's, Motion to Re-Open and Motion to Avoid Lien. (Case No. 6-1485, Doc. No. 9; Case No. 6-1486, Doc. No. 8). After a careful review of the appellate briefs filed by the parties and the record on appeal, I affirm the September 19, 2006, Orders of the bankruptcy court.

OPINION

I. Background*fn1

On May 22, 2003, Appellant, AK Valley Federal Credit Union ("AK Valley"), obtained a judicial lien against personal property owned by Appellees/Debtors, Mark Andrew Liti and Jennifer Ann Liti, f/k/a Jennifer Ann Cornman ("Debtors"). A judicial sale of the personal property was scheduled by the Office of the Sheriff of Armstrong County. Prior to the sale, Debtors, on August 25, 2003, filed a Chapter 7 Bankruptcy at Case No. 03-30578. On the Schedule C of their bankruptcy petition, Debtors exempted an interest, inter alia, in their home located at 115 Old Pike Road, Freeport, PA 16229. AK Valley was listed as a unsecured creditor having obtained a judgment against Debtors' personal property on May 22, 2003. AK Valley did not file a proof of claim in bankruptcy to dispute their classification. Debtors did not seek to avoid the lien prior to discharge. The case was discharged on January 12, 2004.

In 2006, Debtors sought to refinance their home, but the lien impaired the exemption on the property. On August 16, 2006, Debtors filed a Motion to Reopen the Chapter 7 Bankruptcy case and a Motion for Avoidance of Lien. On September 19, 2006, Bankruptcy Judge McCullough held oral argument regarding the Motions. (Case No. 6-1485, Doc. No. 11; Case No. 6-1486, Doc. No. 12). Thereafter, on September 19, 2006, Bankruptcy Judge McCullough entered the following orders:

ORDER OF COURT

AND NOW, at Pittsburgh, Pennsylvania, this 19 day of Sept., 2006, upon consideration of the Motion to Re-Open, for the purpose of avoidance of lien, it is hereby ORDERED ADJUDGED AND DECREED the interests of the creditor AK VALLEY FEDERAL CREDIT UNION, were discharged, and their lien on debtor's real property at 115 Old Pike Road, Freeport, PA shall be avoided.

ORDER OF COURT

AND NOW, to wit, at Pittsburgh, Pennsylvania, this 19 day of Sept., 2006, upon consideration of Debtors' Motion for Avoidance of Lien, it is hereby ORDERED ADJUDGED AND DECREED that the interest of the creditor AK VALLEY FEDERAL CREDIT UNION, was discharged, and their lien impaired Movants' aforesaid exemption within the meaning of 11 U.S.C. Section 522 and 522(d)(1) in that impaired Debtors' ability to transfer or refinance their home and that Respondents' (sic) aforesaid liens on Movants' real and personal property located at 115 Old Pike Road, Freeport, Pennsylvania 16229 is hereby cancelled and avoided.

Case No. 6-1485, Doc. No. 9; Case No. 6-1486, Doc. No. 8.

On October 16, 2006, AK Valley filed a Notice of Appeal of both orders. The appeals have been docketed at two separate case numbers. (Case Number 06-1485 and Case No. 06-1486). Case number 06-1485 pertains to the appeal of the order granting the reopening of the case. (Case No. 06-1485, Doc. No. 1). Case Number 06-1486 pertains to the appeal of the order granting avoidance of the lien. (Case No. 06-1486, Doc. No. 1). The parties have filed identical appellate briefs in the two cases. (Case No. 06-1486, doc. nos. 7 and 8; Case ...


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