Valuation of a Massachusetts’ spouse’s interest in a tenancy by the entirety

August 25, 2023

This appeal required the Court to assess the propriety of a valuation method espoused in the Bankruptcy Appellate Panel’s (“B.A.P.”) decision in Snyder v. Rockland Tr. Co. (In re Snyder), 249 B.R. 40 (1st Cir. B.A.P. 2000), for a debtor’s interest in property held as a Massachusetts tenant by the entirety for purposes of the lien avoidance formula of 11 U.S.C. § 522(f).  The bankruptcy court below departed from that approach, and appellant Rodgers, Powers & Schwartz, LLP (“RPS”) — a law firm that is the holder of the judicial lien that appellee Nataly Minkina seeks to avoid — asserts that doing so constituted legal error.  Finding no such error, we affirm the bankruptcy court’s order.  In doing so, we also clarify that the B.A.P.’s decision in Snyder both misapplied Massachusetts law and impermissibly derogated from the plain text of § 522.

The bankruptcy court ultimately granted Minkina’s motion to avoid.  It once again rejected the Snyder approach, reiterating that — contrary to RPS’s assertions and the B.A.P.’s reasoning — Massachusetts law, and particularly the Supreme Judicial Court’s (“SJC”) decision in Coraccio v. Lowell Five Cents Sav. Bank, 415 Mass. 145 (1993), did not compel the conclusion that a spouse’s share in a tenancy by the entirety had to equal the full value of the property.  In re Minkina, 631 B.R. at 551-55.  The court consequently accepted the parties’ stipulation that Minkina’s share in the property was worth no more than $525,000, and separately rejected RPS’s arguments that the other liens and homestead exemption needed to be allocated between the spouses.  Id. at 548, 556, 558-59.  Given these conclusions, Minkina could avoid the judicial lien in its entirety under the § 522(f) formula.  Id. at 559.  The court permitted a direct appeal of the bankruptcy court’s
interlocutory order under 28 U.S.C. § 158(d)(2), and this appeal followed.

Minkina has the better of the argument.  The fact that a Massachusetts tenancy by the entirety constitutes a “unitary title” plainly does not compel the conclusion that an individual spouse’s interest in the tenancy must be valued at the fair market value of the entire property in question.  Moreover, the Snyder approach impermissibly departed from Congress’s explicit instructions to value the debtor’s interest in the property absent any liens as the fair market value thereof for the purposes of the § 522(f) formula.  Read the full opinion, click the link below.

In re Minkina 1st Cir. BAP 522f lien avoidance

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