Submitted: September 26, 2018
from the United States Bankruptcy Appellate Panel for the
SMITH, Chief Judge, MELLOY and STRAS, Circuit Judges.
Holdings, A-1, LLC (CRP) appeals the Bankruptcy Appellate
Panel's (BAP) decision affirming the bankruptcy
court's order holding that CRP has an unenforceable
judicial lien against the real property of the debtor, Casey
Drew O'Sullivan, and avoiding that lien pursuant to 11
U.S.C. § 522(f)(1). We affirm.
and his wife acquired a residence as tenants by the entirety
in November 1995. The residence is located in Barton County,
Missouri ("property"). On January 5, 2015, CRP
obtained a $765, 151.18 default judgment in the Circuit Court
of Platte County, Missouri, against O'Sullivan. The
judgment did not include Sullivan's wife. CRP then filed
a notice of foreign judgment, registering the judgment on
January 26, 2015, in the Circuit Court of Barton County,
Missouri, in an attempt to obtain a judicial lien on the
property owned by the O'Sullivans as tenants by the
entirety. See Mo. Rev. Stat. § 511.440.
April 3, 2015, O'Sullivan filed a voluntary Chapter 7
bankruptcy petition, which his wife did not join.
O'Sullivan listed the property in his schedules and
claimed a $15, 000 homestead exemption under both Mo. Rev.
Stat. § 513.475 and 11 U.S.C. § 522(b)(3)(B). CRP
did not object to O'Sullivan's claimed exemptions.
O'Sullivan simultaneously moved to avoid CRP's
purported judicial lien under 11 U.S.C. § 522(f)(1),
asserting that the lien impaired his claimed homestead
exemption. CRP objected to the motion. While acknowledging
that it had a judgment lien, CRP argued that its judgment
lien did not attach to the property. Consequently, CRP
asserted that its lien did not affix upon the property nor
impair O'Sullivan's exemption for lien-avoidance
bankruptcy court granted O'Sullivan's motion to avoid
CRP's lien on the property. It concluded that
"'CRP's judgment lien-although perhaps not
enforceable-certainly affixed upon [O'Sullivan's]
home upon CRP's recording of its judgment in Barton
County' and therefore impaired O'Sullivan's
claimed exemption." CRP Holdings, A-1, LLC v.
O'Sullivan (In re O'Sullivan), 841 F.3d 786, 788
(8th Cir. 2016) (alteration in original).
appealed to the BAP, which affirmed the bankruptcy
court's order. The BAP likewise concluded that "an
unenforceable judgment lien arose" on the property held
by the entireties. CRP Holdings, A-1, LLC v.
O'Sullivan (In re O'Sullivan), 544 B.R. 407, 413
(B.A.P. 8th Cir.), vacated, 841 F.3d 786 (8th Cir.
2016). Therefore, the BAP reasoned, it was "possible for
[O'Sullivan] to avoid it under § 522(f)."
Id. CRP appealed the BAP's affirmance of the
bankruptcy court's order avoiding its purported judicial
appeal to this court, "CRP challenge[d] the BAP's
conclusion that O'Sullivan could avoid its purported
judicial lien on the property." In re
O'Sullivan, 841 F.3d at 788. "The only
contested issues on appeal [were] whether a judicial lien
existed and, if so, whether that lien affixed on
O'Sullivan's interest in the property."
identified a threshold question that neither party had
addressed-"whether CRP had a judicial lien properly
subject to avoidance under § 522(f)(1)(A)."
Id. at 788-89. Ultimately, we "decline[d] to
undertake the question of whether there is a cognizable lien
under § 522(f)(1) in the first instance."
Id. at 790. We opted to vacate the BAP's
decision and remand "to the bankruptcy court for it to
determine whether CRP has a judicial lien on the property
(either enforceable or unenforceable)." Id.
remand, the bankruptcy court held that CRP possessed an
unenforceable judicial lien against O'Sullivan's
property and granted O'Sullivan's motion to avoid the
lien. In reaching its conclusion, the bankruptcy court noted
that this court "direct[ed] the parties to only one of
two possible results on remand." In re
O'Sullivan, 569 B.R. 163, 165 (Bankr. W.D. Mo.
2017), aff'd, No. 17-6012, 2017 WL 4844244
(B.A.P. 8th Cir. Sept. 22, 2017). The bankruptcy court could
find (1) the debt was dischargeable through the bankruptcy
proceedings because CRP's notice of foreign judgment
failed to give rise to a lien on O'Sullivan's exempt
homestead property, or (2) the lien is avoidable under §
522(f)(1) because CRP's notice of foreign judgment
secured an either enforceable or unenforceable lien on the
exempt property. The bankruptcy court opted for door number
two. First, it found that "CRP's judgment was not an
enforceable lien against the Debtor's [tenancy by the
entirety] property under Missouri law when the Debtor filed
it explained its assumption that "CRP had a cognizable
and avoidable lien under § 522(f)(1)" based on
"CRP's actions . . . in recording the judgment lien
as a foreign judgment in the county where the Debtor owned
his exempt home and in challenging ...