NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 9, 2013
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. DJ-278710-09.
Brian R. Quentzel, attorney for appellant.
John W. Sywilok, attorney for respondent.
Before Judges Nugent and Haas.
Plaintiff Sandra Steudtner appeals from the denial of her motion for reconsideration of a Law Division judge's order that cancelled and discharged her judgment lien against defendant Patricia Pecoraro's residence under N.J.S.A. 2A:16-49.1. That statute authorizes the cancellation and discharge of a judgment lien that was discharged or dischargeable in bankruptcy proceedings. The Law Division judge had earlier determined that the parties' dispute about whether the judgment lien was dischargeable in defendant's bankruptcy proceedings should have been addressed by plaintiff during those proceedings. When the judge made that determination, he failed to appreciate the significance of plaintiff's evidence that the judgment lien had not been discharged, and was not dischargeable, during the bankruptcy proceedings. Consequently, plaintiff's motion for reconsideration should have been granted. We reverse the order denying that motion.
The parties do not dispute the facts. Plaintiff sued defendant in the Special Civil Part for breach of contract, and the parties settled the suit. Defendant breached the settlement agreement and in January 2007 plaintiff secured a judgment in the amount of $13, 132 against defendant. More than two years later, on November 17, 2009, plaintiff recorded the judgment.
On March 2, 2010, the court issued a writ of execution, which a sheriff's officer served on defendant on May 17, 2010. The next month, on June 24, 2010, defendant filed a bankruptcy petition under Chapter 7 of the United States Bankruptcy Code, listing plaintiff as a creditor in the petition's "Schedule F, Creditors Holding Unsecured Non-priority Claims."
Although defendant petitioned the Bankruptcy Court to discharge her debt to plaintiff, she did not petition the court to cancel the judgment lien on her residence. Rather, in the petition's "Schedule A - Real Property, " she represented that her home's value was $399, 900 and that she owed a mortgage balance of $344, 734.35, leaving $55, 165.65 in equity. Against that equity, defendant claimed an exemption of $21, 625 under 11 U.S.C.A. § 522(d)(1). Thus, based on the information provided by defendant in her bankruptcy petition, she had $33, 540.65 in equity in her home not subject to exemptions; more than double plaintiff's judgment lien of $13, 132.
In September 2010, the bankruptcy trustee filed a "Report of No Distribution, " in which he reported "that there is no property available for distribution from the estate over and above that exempted by law." On January 18, 2011, the bankruptcy judge entered an order discharging defendant.
A year later, in January 2012, plaintiff filed a motion in the Law Division to "maintain the status quo." She sought to have the court both extend indefinitely the writ of execution and direct the sheriff not to return the writ. Plaintiff supported her motion with her attorney's certification, which recounted the entry of the judgment, her attempts to collect the judgment from defendant's personalty, defendant's obstruction of that process, and the sheriff's levy on defendant's residence. The attorney averred that defendant's discharge in bankruptcy prevented plaintiff from pursuing personal liability against defendant, and that "the [p]laintiff is now limited to the real property, upon which was levied prior to the onset of the [d]efendant's Chapter 7 bankruptcy case." Explaining that the writ she had obtained before defendant declared bankruptcy was scheduled to be returned in March 2012, two years from the date it was issued, plaintiff sought to maintain the status quo "by extending the life of the subject writ of execution and continu[ing] its levy upon the subject property[.]"
In response to plaintiff's motion, defendant filed a cross-motion seeking to have the court discharge and cancel the judgment under N.J.S.A. ...