Charles Daff v. Karen Good , 906 F.3d 1100 ( 2018 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
IN RE RICHARD JAMES SWINTEK, No. 16-60003
Debtor,
BAP No.
14-1569
CHARLES W. DAFF,
Appellant,
OPINION
v.
KAREN M. GOOD,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kirscher, Kurtz, and Taylor, Bankruptcy Judges, Presiding
Argued and Submitted September 1, 2017
Pasadena, California
Filed October 22, 2018
Before: Kim McLane Wardlaw and Jay S. Bybee, Circuit
Judges, and Harvey Bartle III,* District Judge.
Opinion by Judge Bybee;
Dissent by Judge Wardlaw
*
The Honorable Harvey Bartle III, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
2 IN RE SWINTEK
SUMMARY**
Bankruptcy
The panel affirmed the Bankruptcy Appellate Panel’s
decision reversing the bankruptcy court’s grant of summary
judgment in favor of the bankruptcy trustee in an adversary
proceeding brought by a judgment creditor who, before the
debtor filed for bankruptcy, obtained an Order for
Appearance and Examination (“ORAP”) lien encumbering
the debtor’s personal property under California law.
Due to the bankruptcy code’s automatic stay on actions to
recover on claims against a debtor, the judgment creditor was
unable to execute on her lien, and she failed to renew it under
state law.
The panel held that the period in which a creditor may
execute on an ORAP lien constitutes “commencing or
continuing a civil action . . . on a claim against a debtor”
under the bankruptcy code’s tolling provision, 11 U.S.C.
§ 108(c), and is thus tolled during the automatic stay. The
panel remanded for further proceedings.
Dissenting, Judge Wardlaw wrote that an ORAP lien is
merely a tool to enforcing a judgment, which by definition
has ended the civil action, and thus does not fit within the
scope of the plain language of § 108(c), which applies only to
“commencing or continuing a civil action.”
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
IN RE SWINTEK 3
COUNSEL
Arjun Sivakumar (argued), Cathrine M. Castaldi, and Ronald
Rus, Brown Rudnick LLP, Irvine, California, for Appellant.
Michael A. Wallin (argued), Slater Hersey & Lieberman
LLP, Irvine, California, for Appellee.
OPINION
BYBEE, Circuit Judge:
Appellant Charles W. Daff, the trustee for the bankruptcy
estate of Richard J. Swintek (“the debtor”), appeals from the
Bankruptcy Appellate Panel’s (“BAP”) decision reversing the
bankruptcy court’s grant of summary judgment in the
trustee’s favor. Appellee Karen M. Good is a judgment
creditor who, before the debtor filed for bankruptcy, obtained
an “ORAP” lien encumbering the debtor’s personal property
under California law. Due to the bankruptcy code’s
automatic stay on actions to recover on claims against a
debtor, Good was unable to execute on her lien, and she
failed to renew it under state law.
This appeal presents the question of whether an ORAP
lien falls within the scope of the code’s tolling provision,
which applies to “a period for commencing or continuing a
civil action . . . on a claim against the debtor” that arose
before the bankruptcy petition. 11 U.S.C. § 108(c). We hold
that the period in which a creditor may execute on a lien
constitutes the continuation of the original action that resulted
in the judgment and is thus tolled during the automatic stay.
4 IN RE SWINTEK
We therefore affirm the BAP’s decision and remand for
further proceedings.
I
This case originates from two money judgments awarded
in 2001 in favor of non-parties and against the debtor. Good
acquired these judgments by assignment in 2009 and renewed
them in 2010. In June 2010, a California superior court
issued an Order for Appearance and Examination (“ORAP”),
which required the debtor to appear for a judgment-debtor
examination. Good served the debtor with the order the same
day and thus created a one-year “ORAP lien” encumbering
the debtor’s personal property under California Code of Civil
Procedure § 708.110(d). See S. Cal. Bank v. Zimmerman (In
re Hilde), 120 F.3d 950, 956 (9th Cir. 1997) (“[A]n ORAP
lien is created simply by service on the debtor of an order to
appear for a debtor’s examination . . . .”).
In August 2010, the debtor filed a Chapter 7 bankruptcy
petition, and Daff became the bankruptcy estate’s trustee.
Good eventually filed proofs of claim in the bankruptcy case
in the amounts of her judgments. In March 2013, Good
commenced an adversarial proceeding seeking a declaration
that her ORAP lien had a priority superior to that of the
trustee. Both parties eventually moved for summary
judgment. The trustee argued that Good’s ORAP lien expired
in June 2011 because it is undisputed that she failed to renew
the lien under state law at the end of its one-year term. Good
countered that, because the debtor filed for bankruptcy after
the ORAP lien was created, the lien was tolled under § 108(c)
of the bankruptcy code.
IN RE SWINTEK 5
The bankruptcy court ruled in the trustee’s favor, holding
that the tolling provision is not applicable to ORAP liens and,
consequently, that Good’s lien expired in 2011. The BAP
reversed on appeal, concluding that this question is controlled
by our decision in Spirtos v. Moreno (In re Spirtos), 221 F.3d
1079 (9th Cir. 2000), where we held that § 108(c) tolls the
period for renewing a judgment. Good v. Daff (In re
Swintek), 543 B.R. 303, 309–11 (B.A.P. 9th Cir. 2015).
The trustee filed a timely appeal to this court. At oral
argument, however, it appeared that the parties disputed
whether Good had properly served the debtor with the ORAP
and thus whether a lien had ever encumbered his personal
property. This factual dispute raised a threshold question of
justiciability because, if the ORAP lien never existed, our
decision on § 108(c)’s applicability would be advisory. We
therefore remanded this case to the bankruptcy court, which
confirmed that service was proper.1 Accordingly, we now
turn to merits.2
1
Indeed, the parties conceded on remand that the ORAP was properly
served on the debtor. This appeal, however, initially involved a second
ORAP that Good claimed to have served on the debtor’s wife. The
bankruptcy court determined that this third-party ORAP was not properly
served and therefore did not encumber any of the debtor’s property that his
wife may have had in her possession or control. Accordingly, only the
ORAP served on the debtor in June 2010 remains at issue.
2
We have jurisdiction over this appeal under 28 U.S.C. § 158(d). We
review de novo the BAP’s decision, as well as “the bankruptcy court’s
grant of summary judgment.” Ghomeshi v. Sabban (In re Sabban),
600 F.3d 1219, 1221–22 (9th Cir. 2010).
6 IN RE SWINTEK
II
The question before us centers on the interplay between
two sections of the bankruptcy code: the automatic stay
under 11 U.S.C. § 362(a) and the tolling provision under
§ 108(c). Under § 362(a), the filing of a bankruptcy petition
automatically triggers a stay “of actions by all entities to
collect or recover on claims” against the debtor. Burton v.
Infinity Capital Mgmt., 862 F.3d 740, 746 (9th Cir. 2017).
The stay “is designed to provide breathing space to the
debtor, prevent harassment of the debtor, assure that all
claims against the debtor will be brought in the sole forum of
the bankruptcy court, and protect creditors as a class from the
possibility that one or more creditors will obtain payment to
the detriment of others.” Id. The stay’s scope is “quite
broad” and “applies to almost any type of formal or informal
action against the debtor or property of the estate.” Id. at
746–47 (internal quotation marks and citations omitted). The
statute enumerates several types of actions within the stay’s
scope that are relevant to this case:
(1) the commencement or continuation . . . of
a judicial, administrative, or other action or
proceeding against the debtor that was or
could have been commenced before the
commencement of the case under this title, or
to recover a claim against the debtor that
arose before the commencement of the case
under this title;
(2) the enforcement, against the debtor or
against property of the estate, of a judgment
obtained before the commencement of the
case under this title;
IN RE SWINTEK 7
....
(4) any act to create, perfect, or enforce any
lien against property of the estate;
11 U.S.C. § 362(a) (emphasis added).
The stay on such actions remains in place throughout the
bankruptcy’s pendency. Id. § 362(c). Given the fact that
proceedings can span months or (as demonstrated in this
case) years, claims that creditors might hold against a debtor
are liable to expire before the discharge is granted or denied.
The code therefore implements a tolling provision under
§ 108(c), which provides in relevant part: “[I]f applicable
nonbankruptcy law . . . fixes a period for commencing or
continuing a civil action in a court other than a bankruptcy
court on a claim against the debtor, . . . and such period has
not expired before the date of the filing of the petition, then
such period does not expire until . . . 30 days after notice of
the termination or expiration of the stay under section 362
. . . .” 11 U.S.C. § 108(c) (emphasis added).
Here, the applicable nonbankruptcy law is the California
ORAP statute. This statute allows a judgment creditor to
apply to a California court “for an order requiring the
judgment debtor to appear before the court . . . to furnish
information to aid in enforcement of the money judgment
[i.e., an ORAP].” CAL. CIV. PROC. CODE § 708.110(a). A
creditor’s service of the order upon the debtor “creates a lien
on the personal property of the judgment debtor for a period
of one year from the date of the order unless extended or
sooner terminated by the court.” Id. § 708.110(d).
8 IN RE SWINTEK
As noted above, the ORAP lien at issue was set to expire
during mid-2011, which was after the debtor filed his
bankruptcy petition and thus during the automatic stay.
Whether the lien has expired depends on whether § 108(c)
applies to it and thus tolled its one-year duration.3
Specifically, we must determine whether the period in which
a creditor may execute on an ORAP lien constitutes
“commencing or continuing a civil action” under the
bankruptcy code’s tolling provision. See 11 U.S.C. § 108(c).
The trustee contends that the code distinguishes between
the concepts of enforcing a judgment—e.g., by executing on
a lien—and continuing an action. In interpreting the phrase
“commencing or continuing a civil action” under § 108(c)’s
tolling provision, the trustee relies on the text of § 362(a)’s
stay provision. As seen in the excerpt above, § 362(a)(1) first
states that the stay applies to the “commencement or
continuation . . . of a[n] . . . action or proceeding against the
debtor,” thus using language nearly identical to § 108(c).
Compare 11 U.S.C. § 362(a)(1) with 11 U.S.C. § 108(c).
Section 362(a), however, separately addresses staying “the
enforcement . . . of a judgment” against the debtor in its
subsequent subsection. Id. § 362(a)(2). Thus, in the trustee’s
view, treating the enforcement of a judgment as the
continuation of a civil action would render the subsections of
the stay provision redundant. And because the tolling
provision is the counterpart to the automatic stay, the trustee
3
The BAP characterized the ORAP lien’s one-year period as a statute
of duration rather than a statute of limitation. In re Swintek, 543 B.R. at
307. Neither party challenges this determination on appeal, and as the
BAP correctly noted, § 108(c) makes no distinction between statutes of
limitation and duration. Id. at 308 (citing Miner Corp. v. Hunters Run Ltd.
P’ship (In re Hunters Run Ltd. P’ship), 875 F.2d 1425, 1427 (9th Cir.
1989)).
IN RE SWINTEK 9
contends that the phrase “commencing or continuing a civil
action” in the former should be read identically to the
“commencement or continuation . . . of a[n] . . . action or
proceeding” in the latter. See Mertens v. Hewitt Assocs.,
508 U.S. 248, 260 (1993) (“[L]anguage used in one portion
of a statute . . . should be deemed to have the same meaning
as the same language used elsewhere in the statute . . . .”).
The trustee therefore concludes that the tolling provision does
not apply to the enforcement of a judgment through means
such as the ORAP lien at issue.
This argument is premised on the assumption that each
subsection under § 362(a) enumerates a distinct, mutually-
exclusive form of creditor activity that falls within the stay’s
scope. There is clear overlap, however, throughout the stay
provision’s text. Subsection (2), for instance, encompasses
“the enforcement, against the debtor or against property of the
estate, of a judgment,” while subsections (4) and (5) also
collectively address “any act to create, perfect, or enforce any
lien against property of the estate” or “of the debtor.”
11 U.S.C. § 362(a)(2, 4–5) (emphasis added). Subsection (6)
similarly encompasses “any act to collect, assess, or recover
a claim against the debtor.” Id. Indeed, this “language is
from time to time duplicative” in order to ensure that
“virtually all acts to collect [pre-bankruptcy] claims and all
actions that would affect property of the estate are stayed.”
3 COLLIER ON BANKRUPTCY ¶ 362.03 (Alan N. Resnick &
Henry J. Sommer, eds., 16th ed. 2017). Accordingly, the fact
that § 362(a) refers to both “the enforcement . . . of a
judgment” and “commencing or continuing a civil action”
does not demonstrate that these creditor activities are
mutually exclusive.
10 IN RE SWINTEK
Moreover, the trustee’s textual argument does not account
for our decisions in Spirtos and Miner Corp. v. Hunters Run
Ltd. P’ship (In re Hunters Run Ltd. P’ship), 875 F.2d 1425(9th Cir. 1989). In Spirtos, a creditor obtained a California
judgment several years before the debtor filed for bankruptcy
but failed to renew the judgment under state law. 221 F.3d at
1080. Because the judgment’s ten-year statute of duration
would have expired while the automatic stay was in effect,
the question on appeal was whether § 108(c) tolled this
period. Id. We held that it did. Id. (“[S]ection 108(c)
appears to cover our situation. The California statute of
duration is a nonbankruptcy law that applies to the
[creditor’s] judgment.”). The trustee attempts to distinguish
this holding by highlighting the fact that Spirtos addressed the
renewal of a judgment itself rather than the renewal of a lien.
He asserts that, without a valid, unexpired judgment, a
creditor would have no claim against the debtor or his estate,
and therefore, a judgment’s renewal is distinguishable from
its enforcement.
While this is a fair point, Spirtos relied in part on our
earlier decision in Hunters Run, where we held that § 108(c)
tolled “the period during which [a] creditor could enforce its
[mechanic’s] lien.” Spirtos, 221 F.3d at 1081 (citing Hunters
Run, 875 F.2d at 1428). One of the parties in Spirtos argued
that, under Hunters Run, § 108(c) applies only if § 362(a)
bars a creditor from renewing a judgment or lien while the
automatic stay is in place.4 Id. We rejected this narrow
4
The same party in Spirtos contended that the automatic stay
prevented the creditor only from enforcing her judgment—not from
renewing it under state law. Because we ultimately held that the tolling
provision’s applicability does not depend on whether a creditor is barred
from renewing a judgment, we declined to reach this issue. Spirtos,
IN RE SWINTEK 11
interpretation of our precedent, clarifying that Hunters Run
“stands for the proposition that section 108(c) extends the
limitations period so long as the creditor is barred by the
automatic stay from enforcing its judgment against the
property of the estate.” Id. (emphasis added). Therefore, in
Spirtos, it was “the creditor’s inability to enforce the
judgment for a portion of the ten-year period that [kept] the
period of duration open under section 108(c).” Id. (emphasis
added).
Here, the imposition of the automatic stay similarly
barred Good from executing on her ORAP lien and thus
enforcing her judgment. Indeed, the ORAP lien is the
modern iteration in California’s long history of providing
judgment creditors with a “supplemental proceeding[] for the
purpose of discovering assets of a judgment debtor and
applying them to satisfaction of the judgment.” 8 B.E.
WITKIN, CALIFORNIA PROCEDURE § 277 (5th ed. 2018)
(emphasis added) (stating that the ORAP statute “continues
the former authorization of examination proceedings”); see
also Smith v. Smith, 124 P.2d 117, 119 (Cal. Dist. Ct. App.
221 F.3d at 1081; see also Morton v. Nat’l Bank of N.Y.C. (In re Morton),
866 F.2d 561 (2d Cir. 1989) (holding that § 362(a) does not bar a creditor
from renewing a lien but that § 108(c) makes such renewal “unnecessary
for continuation of the lien until after the automatic stay is lifted”). And
while the trustee here does not explicitly advance the same argument, he
does in part frame the question before us as whether the renewal of an
ORAP lien constitutes commencing or continuing a civil action. Indeed,
he emphasizes that Good could have avoided this litigation by renewing
her lien. As in Spirtos, we take no position on whether the automatic stay
would have barred such renewal because, as discussed below, the
determinative factor for tolling is whether the stay prevented Good from
enforcing her judgment by executing on her lien.
12 IN RE SWINTEK
1942) (discussing the history of supplemental proceedings in
California).
The trustee nonetheless contends that § 108(c) is
inapplicable. He asserts that the mechanic’s lien at issue in
Hunters Run is distinguishable from an ORAP lien because
the former was a statutory lien that did not result from a
judgment.5 See Hunters Run, 875 F.2d at 1425. Thus,
according to the trustee, if the mechanic’s lien had expired,
its holder—like the judgment creditor in Spirtos—would not
have had a claim against the debtor, with whom the
lienholder lacked contractual privity. Here, by contrast, the
expiration of Good’s ORAP lien would still leave her with a
valid judgment. The only effect on her claim against the
estate would be her loss of priority as a secured creditor in the
distribution of the estate’s assets because she would become
an unsecured judgment creditor.
But the distinction that the trustee attempts to draw
between claim preservation and claim priority finds no basis
in our analysis in Hunters Run. Nor has he persuaded us that
we should adopt such a distinction. He cites only to Hazen
First State Bank v. Speight, 888 F.2d 574 (8th Cir. 1989).
Hazen, however, is inapposite, as it addressed a contract
between two creditors that altered the priority of their secured
5
The trustee also cursorily cites the fact that, under Washington law,
the mechanic’s lien at issue would have expired within eight months of its
creation unless its holder initiated a foreclosure action against the
encumbered real property. Hunters Run, 875 F.2d at 1426 & n.2. But this
simply reflects the lien’s duration—i.e., the period in which the lienholder
could foreclose on the property and sell it in order to satisfy the amount
owed to him. Here, absent a renewal by the state court, Good had one
year in which to execute on her lien against the debtor’s personal property
in order to satisfy her judgment against him.
IN RE SWINTEK 13
interests, which the Eighth Circuit held was outside
§ 108(c)’s scope. 888 F.2d at 577 (“[S]ection 108(c) has no
application to an agreement fixing the time to maintain the
Bank’s lien priority pursuant to an agreement between the
Bank and the” other secured creditor. (internal quotation
marks omitted)).
Moreover, in both Hunters Run and Spirtos, we
approvingly cited to a Second Circuit decision addressing the
applicability of § 108(c) to a judgment lien. Spirtos, 221 F.3d
at 1081 (citing Morton v. Nat’l Bank of N.Y.C. (In re Morton),
866 F.2d 561 (2d Cir. 1989)); Hunters Run, 875 F.2d at 1429(“Finally, our approach here corresponds with that recently
announced by the Second Circuit addressing ‘the question
whether section 108(c) tolls the expiration of periods
governing the life of statutory liens.’” (quoting Morton,
866 F.2d at 566)). In Morton, there was a dispute as to
whether a bank failed to renew a New York judgment lien
that encumbered the debtors’ real property and had a ten-year
term set to expire during the automatic stay. 866 F.2d at561–62. The Second Circuit held that, regardless of this
dispute, the ten-year period was tolled. Id. at 566. The court
reasoned that “congress significantly broadened the scope of
[the bankruptcy code’s tolling] provision by enacting
§ 108(c), which deals not only with the commencement of
actions, but also with their continuation.” Id. at 565. And
because the judgment lien at issue fixed the period in which
the bank could enforce its judgment by executing on the lien,
the court concluded that “[s]uch an execution is supplemental
to the original action that gave rise to the judgment, and is
thus part of a ‘continuing’ action against the debtor.” Id. at
566 (emphasis added) (citations omitted).
14 IN RE SWINTEK
Although we signaled agreement with this reasoning in
Spirtos and Hunters Run, we now expressly adopt it and hold
that the period in which a creditor may enforce a judgment by
executing on a lien constitutes the continuation of the original
action that resulted in the judgment. We note that this
understanding of the tolling provision comports with
California’s own perception of the ORAP examination as part
of the original civil action that gave rise to a judgment. See
Smith, 124 P.2d at 119. (“Supplementary proceedings . . . are
regarded as proceedings in an action, but auxiliary and
supplementary thereto.” (citation omitted)). Because
California law afforded Good one year in which she could
execute on her ORAP lien and a portion of that period
coincided with the automatic stay, we find that § 108(c) tolled
the period.
III
Accordingly, we AFFIRM the BAP’s decision reversing
the bankruptcy court’s grant of summary judgment in favor
of the trustee, and we REMAND for further proceedings
consistent with this opinion.
WARDLAW, Circuit Judge, dissenting:
I respectfully dissent. The plain language of 11 U.S.C.
§ 108(c), the Bankruptcy Code’s extension provision, applies
to fixed periods of time only “for commencing or continuing
a civil action . . . .” Karen Good’s secret ORAP lien on
personal property, requiring Swintek to appear for a
judgment-debtor examination, is simply a different animal.
An ORAP lien is merely a tool to enforcing a judgment,
IN RE SWINTEK 15
which by definition has ended the civil action. And Karen
Good had recourse when Swintek filed for bankruptcy. In the
precise sentence that allowed her to create the lien through
service on the debtor, the statutory language permits her to
seek an extension of the lien from the court.
California’s ORAP is a unique enforcement tool. After a
final judgment, California allows judgment creditors to obtain
“an order requiring the debtor to appear before the court . . .
to furnish information to aid in enforcement of the money
judgment.” Cal. Code Civ. Proc. § 708.110(a). Creditors
may create a lien on the debtor’s personal property by serving
the ORAP on the debtor. The ORAP lien begins on the day
of service and lasts for one year unless the court extends or
terminates it. Id. § 780.010(d). The statute for ORAP liens,
unlike most liens, “omits any requirement of a court order to
perfect the lien.” In re Hilde, 120 F.3d 950, 955 (1997).
Sometimes called a “secret lien,” ORAP liens can be nearly
impossible to locate, requiring creditors to “examine court
files for lawsuits in which the debtor has been sued to
determine whether a judgment remains unsatisfied.” Id. at
956.
These unique judgment enforcement liens do not fit
within the scope of the plain meaning of 11 U.S.C. § 108(c).
“The plain meaning of legislation should be conclusive,
except in the rare cases in which the literal application of a
statute will produce a result demonstrably at odds with the
intentions of its drafters.” United States v. Ron Pair
Enterprises, Inc., 489 U.S. 235, 242 (1989) (quotation and
alteration marks omitted). Section 108(c) provides that “a
period for commencing or continuing a civil action in a court
other than a bankruptcy court on a claim against the debtor”
lasts until the later of “the end of such period” or “30 days
16 IN RE SWINTEK
after notice of the termination or expiration of the stay under
section 362.” 11 U.S.C. § 108(c). The ORAP lien does not
involve a “commencement or continuation” of a civil action.
Created only after the termination of an action, it involves
enforcement, which section 108(c) explicitly does not
address. This omission in section 108(c) is particularly
persuasive compared to section 362(a) of the bankruptcy
statute, which provides an automatic stay on not only
“commencement or continuation” but also “enforcement,
against the debtor or against property of the estate, of a
judgment obtained before the commencement of the case
under this title.” 8 U.S.C. § 362(a). “When a statute omits a
specific matter from its coverage, the inclusion of such a
matter in another statute on a related subject demonstrates an
intent to omit the matter from the coverage of the statute in
which it is not mentioned.” In re Hilde, 120 F.3d at 955(citation and alteration marks omitted). The majority is
incorrect that we cannot interpret section 108(c) in the
context of section 362(a). Even if some actions can be
construed as both “commencement and continuation” and
“enforcement” under 362(a), this does not change the nature
of the ORAP lien, which is a means of “enforcement” only.
In re Spirtos, 221 F.3d 1079 (9th Cir. 2000) and In re
Hunters Run Ltd. P’ship, 875 F.2d 1425 (9th Cir. 1989) are
inapposite. Each of these two cases involve renewals of the
underlying claim—not priority. Spirtos involved not a lien at
all but the underlying judgment. 221 F.3d at 1080. The
creditor had obtained a medical malpractice judgment against
Spirtos, which became unenforceable after ten years if not
renewed. Id. Renewal of the judgment itself is a
continuation of the original civil action within the meaning of
section 108(c). The majority’s expansive reading of our
comment in Spirtos that “section 108(c) extends the
IN RE SWINTEK 17
limitations period so long as the creditor is barred by the
automatic stay from enforcing its judgment against the
property of the estate” is unavailing. 221 F.3d at 1081. We
stated this in the context of an underlying judgment, not an
ORAP lien, and the comment simply clarified Spirtos’s
holding that tolling applies whether or not section 362(a)
applied to stay renewal, in addition to enforcement, of the
judgment. Id.Hunters Run similarly examined a Washington
mechanic’s lien that would cease to exist unless the creditor
brought a foreclosure lawsuit within eight months. 875 F.2d
at 1426–27. With the existence of this mechanic’s lien
statutorily attached to the commencement of a foreclosure
lawsuit, the claim at issue in Hunters Run was plainly within
the scope of section 108(c)’s “commencing” a civil action.1
In both Spirtos and Hunters Run, the judgment and
mechanic’s lien foreclosure lawsuit were public, recorded
events. In both cases, the application of section 108(c) saved
the creditor’s claim. And in both cases, the judgment and
mechanic’s lien foreclosure lawsuit constituted “commencing
or continuing a civil action.” Here, by contrast, the ORAP
lien is a secret lien created by service, and the judgment
remains valid because the expiration of the ORAP lien only
deprives Good of priority. “The purpose of section 108(c) is
to prevent a debtor from taking advantage of the bankruptcy
scheme by filing for bankruptcy and then waiting for the
1
The majority further points to a Second Circuit case, Morton v. Nat’l
Bank of N.Y.C., 866 F.2d 561 (2d Cir. 1989), which involves a judgment
lien. The fact that Spirtos and Hunters Run cite to Morton, is of no
consequence. Neither Spirtos nor Hunters Run dealt with liens akin to an
ORAP lien.
18 IN RE SWINTEK
statute of limitations to run on the creditor’s claim,” and such
a “purpose is not forwarded by the application of section
108(c)” to a case about loss of priority status. Hazen First
State Bank v. Speight, 888 F.2d 574, 577 (8th Cir. 1989)
(finding that section 108(c) does not extend the expiration
date of a subordination agreement between two creditors).
The BAP, in finding for Good, expressed concern that failure
to toll Good’s ORAP lien would “give the debtor the power
to eliminate certain secured claims simply by filing for
bankruptcy at the appropriate time and then allowing the
limitation period to run while it remained under the protection
of the automatic stay.” In re Swintek, 543 B.R. 303, 311
(B.A.P. 9th Cir. 2015) (citing In re Morton, 866 F.2d 561,
567 (2d Cir. 1989)). These concerns present no problem here
because the record does not show, and Good does not claim,
that the debtor would benefit from Good’s loss of priority.
Allowing Good to maintain her priority despite her failure
to renew the ORAP lien, on the other hand, creates problems
of inequity. The majority’s decision to allow ORAP liens,
which are by nature temporary tools of judgment
enforcement, to become a secured claim in a bankruptcy
proceeding without time limitations, would lead to
inequitable results among other creditors. This could not
have been what Congress intended.