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ABC Bail Bonds, Inc. v. Munoz

April 21, 2009


On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-736-04.

Per curiam.


Submitted December 15, 2008

Before Judges R. B. Coleman and Simonelli.

Defendant Felix Blanco appeals from an order of the Law Division, denying his motion to void a judgment and related judgment lien against him and in favor of plaintiff ABC Bail Bonds, Inc. (ABC or plaintiff). We reverse.

We briefly summarize the facts from the record. ABC issued a bail bond on behalf of co-defendant, Raudo Munoz, who subsequently fled the country. ABC sought injunctive relief against Blanco and several co-defendants as guarantors of the breached bail bond on behalf of co-defendant Raudo Munoz, in the amount of $125,000. On June 11, 2004, plaintiff obtained a final judgment against Blanco in the amount of $159,435.43.

On October 8, 2005, Blanco filed a voluntary petition for bankruptcy, under Chapter 7 in the United States Bankruptcy Court for the District of New Jersey. Defendant listed plaintiff's judgment under Schedule F: creditors holding unsecured non-priority claims. Pending a final discharge, defendant filed in the Bankruptcy Court a motion to avoid plaintiff's lien. In response, plaintiff filed a proof of claim asserting that it held a secured claim against defendant for $162,710.15. However, plaintiff later admitted that the lien was not perfected by a levy. On January 26, 2006, the bankruptcy trustee filed a notice of abandonment of defendant's interest in his real property, to which plaintiff initially objected but later withdrew its objection.

On March 24, 2006, the Bankruptcy Court granted defendant "a discharge under section 727 of title 11, United States Code, (the Bankruptcy Code)." 11 U.S.C.A. § 727. However, plaintiff's lien on defendant's property remained. Subsequently, the court voided plaintiff's judgment lien, pursuant to Section 522(f) of the Bankruptcy Code, to the extent of $84,964.74 plus any post-judgment interest accrued. Thus, the court left "a remaining judgment lien attaching to [defendant]'s Real Property of $75,352.24, with statutory interest accruing on this amount from October 9, 2005."

Co-defendant Raudo Munoz was arrested in the Dominican Republic and extradited to the United States in January 2007. Accordingly, plaintiff applied for the return of its previously forfeited bail and obtained a remittitur of $101,800.

On July, 23, 2007, defendant filed a motion in the Law Division to void plaintiff's lien and to remove the judgment of record from his real property pursuant to N.J.S.A. 2A:16-49.1, or alternatively to offset the judgment lien by plaintiff's bail refund of $101,800. In opposing the motion, plaintiff presented a calculation of defendant's debt that started with the original amount of the judgment lien plus interest, for a total of $170,432.32, and added post-bankruptcy fees, including a fugitive fee and attorney's fees, for a grand total of approximately $200,000. According to plaintiff's calculation, the balance after subtracting plaintiff's bail bond refund was $99,931.32.

On September 10, 2007, the Law Division conducted oral arguments telephonically and denied defendant's motion on grounds that (1) the court lacked jurisdiction in the matter pursuant to the Bankruptcy Court concurrent jurisdiction; and (2) N.J.S.A. 2A:16-49.1 did not apply because this was not a discharged debt under the statute, but rather a partially discharged debt, since a lien of approximately $75,000 remained.

On appeal, defendant contends that the trial court erred in concluding that (1) it did not have independent jurisdiction to avoid a judgment that was not entirely voided by the Bankruptcy Court; and (2) N.J.S.A. 2A:16-49.1 did not apply because defendant's indebtedness to plaintiff was not entirely discharged. Defendant further contends that he meets the requirements for statutory relief under N.J.S.A. 2A:16-49.1 because (1) he meets the time requirement; and (2) "the lien could have been subject to discharge in the bankruptcy proceeding." The conditions for discharge under N.J.S.A. 2A:16-49.1 are (1) "that defendant was discharged from [the] debts pursuant to the federal bankruptcy law, . . . includ[ing] defendant's indebtedness to plaintiff," and (2) "that defendant waited more than one year before applying to the state court." Assocs. Commercial Corp. v. Langston, 236 N.J. Super. 236, 241 (App. Div.), certif. denied, 118 N.J. 225 (1989), and certif. denied, 118 N.J. 229 (1989).

A discharge in bankruptcy "voids any judgment 'to the extent that such judgment is a determination of the personal liability of the debtor.'" Party Parrot, Inc. v. Birthdays & Holidays, Inc., 289 N.J. Super. 167, 173-74 (App. Div. 1996) (citations omitted). However, it does not discharge pre-existing liens on a debtor's property. Id. at 173. Under New Jersey law, after one year following bankruptcy discharge, a defendant can apply in the New Jersey Superior Court for an order canceling the judgment against the defendant. N.J.S.A. 2A:16:49.1. The statute states in relevant part:

At any time after 1 year has elapsed, since a bankrupt was discharged from his debts, . . . he may apply, upon proof of his discharge, to the court in which a judgment was rendered against him, or to the court of which it has become a judgment by docketing it, or filing a transcript thereof, for an order directing the judgment to be canceled and discharged of record. . . . Where the judgment was a lien on real property owned by the bankrupt prior to the time he was adjudged a bankrupt, and not subject to be discharged or released under ...

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