On Appeal from the United States District Court for the District of New Jersey (D.C. No. 04-cv-00067). District Judge: Honorable Robert B. Kugler.
The opinion of the court was delivered by: Fuentes, Circuit Judge.
Before: ROTH, FUENTES, and BECKER, Circuit Judges.
This matter requires us to determine whether a lien held by the New Jersey Motor Vehicles Commission ("MVC") for unpaid motor vehicle surcharges and interest constitutes a judicial lien or a statutory lien as those terms are defined in the U.S. Bankruptcy Code (the "Code"). If it is a judicial lien, it may be avoided by the Debtor-Appellant, Tracey L. Schick, under 11 U.S.C. § 522(f) to the extent that it impairs her entitlement to a homestead exemption under 11 U.S.C. § 522(d)(1). However, if statutory, the lien may not be avoided by the Debtor. At least three bankruptcy courts within our jurisdiction have concluded that the MVC's lien is judicial, while two district courts have reached the opposite conclusion. For the reasons discussed below, we find that the MVC's lien is statutory. Accordingly, we will affirm the decision of the District Court.
The essential facts in this matter are not in dispute. In April 2001 and February 2002, the MVC issued certificates of debt to the Clerk of the Superior Court of New Jersey against Tracey L. Schick for unpaid motor vehicle surcharges and interest.*fn1 Subsequently, on October 1, 2002, Schick filed a voluntary petition for bankruptcy under Chapter 13 of the Code. The Debtor's residence was listed with a value of $100,000, against which a secured proof of claim in the amount of $91,660 was filed by the first mortgagee. Schick also listed the MVC as an unsecured creditor.
Schick's Chapter 13 plan provided for the curing of arrears on her mortgage and on a car loan but included no provision for dividends to unsecured creditors. After the Bankruptcy Court confirmed the plan on February 28, 2003, the MVC filed a secured claim for $3,610, plus interest, based on motor vehicle surcharges assessed against Schick. In response, Schick moved to reclassify the MVC's secured claim as a general unsecured claim and to avoid its lien as impairing her homestead exemption. In particular, Schick argued that the MVC's claim was a judicial lien as that term is defined in the Code and could be avoided under 11 U.S.C. § 522(f) to the extent it impaired her homestead exemption arising in 11 U.S.C. § 522(d)(1).*fn2 In opposition, the MVC argued that its claim against Schick was a statutory lien, as that term is defined in the Code, and thus could not be avoided by the Debtor.
The Bankruptcy Court agreed with Schick, finding that the MVC's claim for unpaid surcharges and interest, which arose pursuant to New Jersey's surcharge statute, N.J. Stat. Ann. § 17:29A-35(b)(2), was a judicial lien, not a statutory lien. See In re Schick, 301 B.R. 170, 175 (Bankr. D.N.J. 2003). On appeal, the District Court reversed, finding that the MVC had a statutory lien, not a judicial lien, that could not be avoided by the Debtor. See In re Schick, 308 B.R. 189, 194-95 (D.N.J. 2004).
Schick now brings this timely appeal, contending that the District Court's decision was in error.
II. Jurisdiction and Standard of Review
This Court has jurisdiction over the final order of the District Court, entered in a bankruptcy proceeding, pursuant to 28 U.S.C. §§ 158(d) and 1291. Our standard of review is the same as that exercised by the District Court over the decision of the Bankruptcy Court. See In re Zinchiak, 406 F.3d 214, 221-22 (3d Cir. 2005) (citing In re Pillowtex, Inc., 349 F.3d 711, 716 (3d Cir. 2003)). Accordingly, we review ...