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In re Swintek

United States Bankruptcy Appellate Panel of the Ninth Circuit

December 18, 2015

In re: RICHARD JAMES SWINTEK, Debtor. KAREN M. GOOD, Appellant,
v.
CHARLES W. DAFF, Chapter 7 Trustee, Appellee

Argued and Submitted at Pasadena, California November 19, 2015

Appeal from the United States Bankruptcy Court for the Central District of California. Adv. No. 8:13-01106-TA, Bk. No. 8:10-22458-TA. Honorable Theodor C. Albert, Bankruptcy Judge, Presiding.

Roya Rohani argued for appellant Karen M. Good.

Arjun Sivakumar of Brown Rudnick LLP argued for appellee Charles W. Daff, Chapter 7 Trustee.

Before: KIRSCHER, TAYLOR and KURTZ, Bankruptcy Judges.

OPINION

Page 304

KIRSCHER, Bankruptcy Judge:

Appellant and judgment creditor Karen Good appeals an order wherein the bankruptcy court determined that § 108(c)[1] did not toll or extend the one-year expiration period for Good's lien under Cal. Code Civ. P. (" CCP" ) § 708.110(d).

Page 305

This precise question of law is a matter of first impression before the Panel. We hold that § 108(c) tolled the one-year expiration period imposed under CCP § 708.110. Therefore, we VACATE AND REMAND.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Prepetition events

In 2001, two law firms obtained money judgments totaling approximately $300,000 against Richard J. Swintek, a former certified public accountant, for unpaid legal fees. In 2009, Good acquired the money judgments by assignment. She renewed the judgments in 2010 and began collection efforts.

On June 30, 2010, the state court issued an Application and Order for Appearance and Examination (" ORAP" ) to Swintek pursuant to CCP § 708.110. Good claims she personally served Swintek with the ORAP on that same date. Swintek was ordered to appear for examination on August 19, 2010.

In July 2010, Good instructed the Orange County Sheriff to levy upon several deposit accounts and certificates of deposit held in the name of Swintek and/or his wife. The sheriff took custody of approximately $67,000.

Swintek failed to appear for the ordered examination, resulting in the state court continuing it until October 14 and issuing a bench warrant for his arrest. Good claims she served Swintek with the new notice.

B. Postpetition events

Swintek filed a chapter 7 bankruptcy case on September 2, 2010. He identified Good as a secured creditor with an execution lien valued at $2,900, and he identified her as an unsecured creditor holding a claim for $310,000 for " attorney's fees." Notably, Good is Swintek's only creditor. Trustee Charles W. Daff was appointed to Swintek's case.

Trustee eventually acquired the $67,000 in levied funds. Good claimed all rights to them in her filed proof of claim. Thereafter, upon Swintek's motion under § 522(f), the bankruptcy court avoided Good's execution lien to the extent it impaired Swintek's allowed exemption of $21,725. Trustee was to hold the balance of the levied funds, $45,274.79 plus any accrued interest.

1. Good's first adversary complaint

In 2013, Good filed an adversary complaint against Trustee seeking a determination on the priority of her lien and declaratory relief. Good alleged that upon serving Swintek with the ORAP, she obtained a lien (the " ORAP Lien" ) on all of his personal property assets for one year under CCP § 708.110. Good alleged that all funds held by Trustee were subject to her ORAP Lien, yet he was refusing to distribute them to her.

In his motion to dismiss, Trustee argued that Good's ORAP Lien, issued on June 30, 2010, expired one year after the date of the order; thus, any lien created by service of the ORAP expired on June 30, 2011. Trustee contended the one-year durational period in CCP § 708.110(d) was not extended or tolled by § 108(c), citing In re Gbadebo, 431 B.R. 222, 226 n.4 (Bankr. N.D. Cal. 2010).

Rejecting the " dictum" in Gbadebo that § 108(c) did not apply to ORAP liens and relying on Kipperman v. Proulx (In re Burns),291 B.R. 846, 849 n.4 (9th Cir. BAP 2003), the bankruptcy court ruled that ยง 108(c) applied to Good's ORAP Lien. Therefore, because Good had stated a ...


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