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In Re: Steven R. Johnson Debtor. Jasmine Z. Keller v. Steven R. Johnson
Citations: 375 F.3d 668; 2004 U.S. App. LEXIS 14232; 2004 WL 1541791Docket: 03-1576
Court: Court of Appeals for the Eighth Circuit; July 12, 2004; Federal Appellate Court
Steven R. Johnson, the debtor, and his ex-wife were involved in a property settlement during their 2001 divorce, wherein the ex-wife was awarded the homestead, subject to a lien in favor of Johnson. After filing for Chapter 13 bankruptcy relief in 2002, Johnson claimed that his lien on his ex-wife's homestead was exempt under 11 U.S.C. § 522(d)(1). The Chapter 13 Trustee, Jasmine Z. Keller, objected to this exemption, but the bankruptcy court ruled in favor of Johnson, a decision later affirmed by the bankruptcy appellate panel. Upon appeal, the Eighth Circuit Court reviewed the legal conclusions of the bankruptcy court de novo. The court examined whether Johnson's lien, arising from a divorce decree, constituted an aggregate interest in real or personal property used as a residence, as defined by the Bankruptcy Code. The definition of "lien" was clarified under 11 U.S.C. § 101(37), highlighting that liens are charges against property rather than ownership interests. The court turned to Minnesota law, which stipulates that a lien is a charge for debt payment and does not equate to an estate or interest in land. The court concluded that Johnson's lien was merely collateral for a debt and did not represent a continuation of ownership of the marital estate. Since the lien is categorized as personal property under Minnesota law and is not utilized as a residence by Johnson or his dependent, the court ruled that it does not qualify for exemption as an aggregate interest under 11 U.S.C. § 522(d)(1). The Eighth Circuit reversed the bankruptcy appellate panel's judgment, instructing the bankruptcy court to proceed in accordance with this opinion.