Gaskill v. Citi Mortgage, Inc.

This appeal stemmed from plaintiffs' complaint to cancel and discharge a creditor's judgment lien held by defendant Citi Mortgage, Inc. (Citi). Following the conclusion of Chapter 7 bankruptcy proceedings the Superior Court entered a default judgment in favor of Citi against plaintiffs, and by virtue of its docketing of that judgment, Citi obtained a lien on all of plaintiffs real property in New Jersey. Four years later, plaintiffs instituted a Chapter 7 bankruptcy proceeding in the United States Bankruptcy Court. Because plaintiffs listed the law firm that had represented Citi, rather than Citi itself in their Chapter 7 petition, the bankruptcy court did not provide notice of the proceeding to Citi. After the bankruptcy trustee abandoned two of plaintiffs' New Jersey properties, the bankruptcy court discharged plaintiffs' debt and closed their Chapter 7 case. Citi did not attempt to levy on plaintiffs property at any time prior to the bankruptcy filing and did not seek to enforce its lien in the wake of plaintiffs bankruptcy discharge. More than three years after the bankruptcy discharge, plaintiffs filed this action under N.J.S.A. 2A:16-49.1, which permits a debtor whose debts have been discharged in bankruptcy, to apply to the state court that has entered a judgment against the debtor, or has docketed the judgment, for an order directing the judgment to be canceled and discharged. The trial court granted Citi's motion for summary judgment and dismissed plaintiffs' claim. The court acknowledged that a judgment creditor, such as Citi, who has not levied on the debtor's property prior to the debtor's filing of a bankruptcy petition, may enforce its valid lien following the bankruptcy discharge, but must do so within the year following the discharge. The Appellate Division affirmed the trial court. Finding no reversible error, the Supreme Court affirmed the Appellate Division for substantially the same reasons. View "Gaskill v. Citi Mortgage, Inc." on Justia Law