United States District Court, N.D. Indiana
OPINION AND ORDER
HOLLY A. BRADY UNITED STATES DISTRICT COURT
Albert Davis and A. F. Davis Law, PLLC (the “Davis
Creditors”) appeal a decision of the Bankruptcy Court
in Jerrold B. Carrington's (“Debtor
Carrington”) Chapter 13 bankruptcy case. The Davis
Creditors assert that the Bankruptcy Court erred when it
concluded that their judgment lien on Debtor Carrington's
marital property is not a present property right and should
be treated as an unsecured claim. They maintain that Debtor
Carrington's contingent future interest in the marital
property has a present value, thereby entitling the Davis
Creditors to a secured claim.
Court has jurisdiction over the matters raised in this appeal
pursuant to 28 U.S.C. § 158(a)(1). No. issues of fact
are raised on appeal. This Court will perform a de novo
review of the challenged conclusions of law. See In re
Longardner & Assoc., Inc., 855 F.2d 455, 459 (7th
The Consent Judgment
August 2012, a final consent judgment in favor of Albert
Davis and against Debtor Carrington was entered in resolution
of litigation that Davis brought against Carrington in a
federal court located in California. It stated:
Judgment is hereby entered in favor of plaintiff Albert Davis
and against Jerrold B. Carrington in the amount set forth
Defendant Carrington shall pay to Mr. Davis in certified
funds the sum of seventy-eight thousand dollars ($78, 000)
plus interest, 60% of which shall be made payable to Mr.
Davis and 40% of which shall be made payable to A. F. DAVIS
LAW within five (5) days of the entry of this Judgment;
interest shall accrue at the rate of 10% from July 23, 2012
until the date Defendant Carrington fully pays Mr. Davis the
entire amount of this judgment.
Recording the Lien
2013, Davis recorded the judgment with the Lake County Clerk
and the Lake County Recorder of Deeds against Debtor
Carrington's interest in property located on Forest
Avenue in Gary, Indiana (the “Real Estate”).
Davis began proceedings supplemental to collect on the
judgment. Debtor Carrington did not make any payments toward
satisfaction of the judgment.
The Bankruptcy Proceedings
1, 2017, Debtor Carrington filed a petition under Chapter 13
of the United States Bankruptcy Code. Debtor Carrington's
wife was not included in the Chapter 13 petition. On August
8, 2017, the Davis Creditors timely filed their Proof of
Claim for $104, 700.28 (the “Davis Claim”). The
Davis Claim was listed as secured based on the California
federal court judgment lien, and the recording of the lien
with the Lake County Clerk's Office and the Lake County
Recorder of Deeds.
Carrington filed an objection to the treatment of the Davis
Claim as secured. Both sides submitted briefs and the
Bankruptcy Court issued an order regarding the parties'
stipulations and set a briefing schedule to address the issue
of whether the Davis Claim is secured considering
Indiana's treatment of tenancy by the entirety. Prior to
submitting his brief on this issue, Debtor Carrington filed a
Motion to Avoid Lien.
October 25, 2018, the Bankruptcy Court entered the
Memorandum, Opinion and Order holding that the contingent
future interest held by Debtor Carrington in the marital
property does not form the basis of a present lien and
therefore the Davis Claim is currently unsecured. The
Bankruptcy Court framed the issue before it as whether the
federal judgment against Debtor Carrington was a judicial
lien on the Real Estate that Debtor Carrington and his
non-debtor spouse jointly owned as tenants by the entirety.
The Bankruptcy Court found persuasive the analysis and
conclusions of law by the court in In Re Yotis, 518
B.R. 481 (Bankr. N.D.Ill. 2018), noting that Indiana and
Illinois law did not differ in any material respects
regarding tenancy by the entirety. The Yotis court
resolved a debtor's motion to avoid judicial liens where
the debtor and his non-debtor spouse held title to their real
estate as tenancy by the entirety. The court held that, ...