Bankr. No.:
01-10052
Chapter:
7
Date of Decision:
September 24, 2001
Issue:
(1) Whether a law firm had a valid, pre-petition attorneys’ lien on a judgment awarded to the debtor pre-petition? (2) Whether the debtor had an unlimited homestead exemption where he was at least age 70 on the petition date? (3) Whether the debtor’s judgment debtor, a bank, could "recoup" its claim against the debtor against the judgment it owed the debtor? (4) Whether a pre-petition setoff of the debtor’s and bank’s claims occurred pre-petition?
Ruling:
(1) The law firm had a valid statutory lien on the subject funds, subject to any § 545(2) avoidance action by the trustee. The law firm had docketed its notice of lien and the notice sufficiently stated the amount claimed. [Court note: The parties later settled the § 542(2) issue.] (2) The debtor was entitled to a homestead of unlimited value since he was over age 70 on the petition date. (3) The bank was not entitled to recoupment because its claim against the debtor did not arise out of the same transaction as the debtor’s claim against the bank. (4) A setoff did not occur pre-petition because no action was taken pre-petition to accomplish the setoff after a state court authorized it.
Full Bankruptcy Court Decision:
