IN RE: Michael C. Culver (2025)

Chapter 7

ERRATA ORDER REGARDING MEMORANDUM OF DECISION DENYING DEBTOR'S MOTION TO AVOID JUDICIAL LIENS

The Memorandum of Decision Denying Debtor's Motion to Avoid Judicial Liens, dated October 17, 2025 [ECF No. 202], should be corrected pursuant to Federal Rule of Bankruptcy Procedure 9024, which incorporates Federal Rule of Civil Procedure 60, in connection with N.Y. C.P.L.R. § 5206(d), as follows. The following corrections do not change the outcome of the Memorandum of Decision. On page 2, the sentence entered as:

For the reasons set forth below, the Court denies the Motion and sustains the Objection because the Creditor's lien does not impair the Debtor's homestead exemption, based on the (i) maximum homestead exemption allowed for properties in Dutchess County, which is $125,000.00, (ii) fact that a tenant by the entirety's undivided interest should be valued at the full amount of equity in the homestead for lien avoidance purposes, and (iii) full fair market value of the Property as determined by the Creditor's Appraisal, which is $2,500,000.00.

should be corrected to read:

For the reasons set forth below, the Court denies the Motion and sustains the Objection because the Creditor's lien does not impair the Debtor's homestead exemption, based on the (i) fact that a tenant by the entirety's undivided interest should be valued at the full amount of equity in the homestead for lien avoidance purposes, and (ii) full fair market value of the Property as determined by the Creditor's Appraisal, which is $2,500,000.00.

On page 3, the sentence entered as:

The Debtor's claimed homestead exemption exceeds the maximum exemption provided for properties in Dutchess County under N.Y. C.P.L.R. § 5206(d). See N.Y. C.P.L.R. § 5206(d) (providing for a maximum $125,000.00 homestead exemption for properties located in Dutchess County).

should be corrected to read:

The Debtor's claimed homestead exemption exceeds the maximum statutory exemption provided for properties in Dutchess County under N.Y. C.P.L.R. § 5206(d). See N.Y. C.P.L.R. § 5206(d) (providing for a maximum $125,000.00 homestead exemption for properties located in Dutchess County). However, the Debtor's claimed exemption of $149,975.00 is the correct dollar amount of exemption for properties in Dutchess County as of 2023, when the instant case was filed. See Current Dollar Amount of Payments Statutorily Exempt from Enforcement of Judgments, N.Y.S. DEPT. OF FIN. SERVS., https://www.dfs.ny.gov/industry_guidance/exemption_from_judgments (last visited Oct. 27, 2025).

On page 9, the paragraph entered as:

Section 5206(d) of N.Y. C.P.L.R. provides that debtors may claim a maximum homestead exemption ¹ of $125,000.00 for properties in Dutchess County. See N.Y. C.P.L.R. § 5206(d).

should be corrected to read:

Section 5206(d) of N.Y. C.P.L.R. provides that debtors may claim a maximum homestead exemption ² of $125,000.00 for properties in Dutchess County. See N.Y. C.P.L.R. § 5206(d). This statutory amount is adjusted upwards every three years. See Current Dollar Amount of Payments Statutorily Exempt from Enforcement of Judgments, N.Y.S. DEPT. OF FIN. SERVS., https://www.dfs.ny.gov/industry_guidance/exemption_from_judgments (last visited Oct. 27, 2025) (providing $149,975.00 as the maximum exemption for properties in Dutchess County as of 2021, and $170,700.00 as the maximum exemption for properties in Dutchess County as of 2024).

On pages 13 through 15, the paragraphs entered as:

If the Debtor's Appraisal is accepted, the Creditor's lien impairs the Debtor's homestead exemption and would be avoided to the extent of $10,902.60:

1. The Salisbury Mortgage, which is not subject to avoidance, is $1,628,837.21.

2. The Debtor's claimed homestead exemption of $149,975.00 exceeds the maximum value allowed for properties in Dutchess County and must therefore be reduced to $125,000.00, which is the maximum homestead exemption that may be claimed for properties in Dutchess County pursuant to N.Y. C.P.L.R. § 5206(d).

3. Subtracting the Salisbury Mortgage and the homestead exemption 3 from the Debtor's claimed value of the Property as of the Petition Date leaves a balance of $171,162.79.

4. Judicial Liens beyond $171,162.79 would be avoided:

a. The most senior lien 4 held by Blank Rome LLP would be intact in its entirety, leaving a net equity remaining of $114,909.10 ($171,162.79 - $56,253.69).

b. The next most senior lien held by Creditor would be intact to the extent of $114,909.10 and avoidable to the extent of $10,902.77 ($125,811.87 - $114,909.1); and

c. The most junior lien held by M&T Bank would be avoided in its entirety given that there is no equity remaining.

If the Creditor's Appraisal is accepted, the Creditor's lien does not impair the Debtor's homestead exemption and would not be subject to avoidance:

1. Subtracting the Salisbury Mortgage and homestead exemption from the Creditor's claimed value of the Property as of the Petition Date leaves a balance of $746,162.79.

2. Judicial Liens beyond $746,162.79 would be avoided:

a. The most senior lien held by Blank Rome LLP in the amount of $56,253.69 would be intact in its entirety, leaving a net remaining equity of $689,909.10 ($746,162,79 - $56,253.69);

b. The next most senior lien held by Creditor in the amount of $125,811.87 would also be intact in its entirety, leaving a net remaining equity of $564,097.23 ($689,909.10 - $125,811.87); and

c. The most junior lien held by M&T Bank in the amount of $919,061.57 would be intact to the extent of $564,097.23 and avoidable to the extent of $354,964.34 ($919,061.57 - $564,097.23).

should be corrected to read:

If the Debtor's Appraisal is accepted, the Creditor's lien impairs the Debtor's homestead exemption and would be avoided to the extent of $35,877.77:

1. The Salisbury Mortgage, which is not subject to avoidance, is $1,628,837.21.

2. The Debtor's claimed homestead exemption is $149,975.00.

3. Subtracting the Salisbury Mortgage and the homestead exemption 5 from the Debtor's claimed value of the Property as of the Petition Date leaves a balance of $146,187.79.

4. Judicial Liens beyond $146,187.79 would be avoided:

a. The most senior lien 6 held by Blank Rome LLP would be intact in its entirety, leaving a net equity remaining of $89,934.10 ($146,187.79 - $56,253.69).

b. The next most senior lien held by Creditor would be intact to the extent of $89,934.10 and avoidable to the extent of $35,877.77 ($125,811.87 - $89,934.10); and

c. The most junior lien held by M&T Bank would be avoided in its entirety given that there is no equity remaining.

If the Creditor's Appraisal is accepted, the Creditor's lien does not impair the Debtor's homestead exemption and would not be subject to avoidance:

1. Subtracting the Salisbury Mortgage and homestead exemption from the Creditor's claimed value of the Property as of the Petition Date leaves a balance of $721,187.79.

2. Judicial Liens beyond $721,187.79 would be avoided:

a. The most senior lien held by Blank Rome LLP in the amount of $56,253.69 would be intact in its entirety, leaving a net remaining equity of $664,934.10 ($721,187.79 - $56,253.69);

b. The next most senior lien held by Creditor in the amount of $125,811.87 would also be intact in its entirety, leaving a net remaining equity of $539,122.23 ($664,934.10 - $125,811.87); and

c. The most junior lien held by M&T Bank in the amount of $919,061.57 would be intact to the extent of $539,122.23 and avoidable to the extent of $379,939.34 ($919,061.57 - $539,122.23).

Dated: October 27, 2025 Poughkeepsie, New York

FOOTNOTES

1.   The Debtor's non-filing spouse's homestead exemption is not included in the calculation because her undivided half-interest in the Property is not property of the estate. See In re Raskin, 505 B.R. 684, 686 (Bankr. D. Md. 2014). This is consistent with caselaw discussing whether judicial liens impair a Debtor's homestead exemption when the debtor owns property as a tenant by the entirety with his non-filing spouse. See, e.g., In re Heaney, 453 B.R. 42, 49 (Bankr. E.D.N.Y. 2011) (discussing impairment of Debtor's exemption) (emphasis added); see also Levinson v. R&E Prop. Corp., 395 B.R. 554, 557 (E.D.N.Y. 2008) (same); In re Armenakis, 406 B.R. 589, 617 (Bankr. S.D.N.Y. 2009) (same).

2.   Footnote 13 in the Memorandum of Decision should not be corrected.

3.   $1,628,837.21 (Salisbury Mortgage) plus $125,000.00 (maximum homestead exemption) equals $1,753,837.21.

4.   Blank Rome LLP's lien was recorded on March 4, 2016, at 2:43 p.m. (prevailing Eastern Time); the Creditor's lien was recorded on December 28, 2018, at 11:53 a.m. (prevailing Eastern Time); and M&T Bank's lien was recorded on May 14, 2021, at 2:10 p.m. (prevailing Eastern Time). Therefore, Blank Rome LLP's lien is the most senior, followed by the Creditor's lien, with M&T Bank's lien being the most junior. See, e.g., United States v. McCombs, 30 F.3d 310, 321 (2d Cir. 1994) (explaining that New York follows the general principle of “first in time is first in right,” meaning that the first recorded lien typically holds the highest priority); see also Don King Prods. v. Thomas, 945 F.2d 529, 533 (2d Cir. 1991) (same); United States v. City of New Britain, 347 U.S. 81, 87 (1954) (holding that “the first in time is the first in right” when two statutory liens attach to the same real estate).

5.   $1,628,837.21 (Salisbury Mortgage) plus $149,975.00 (claimed homestead exemption) equals $1,778,812.21.

6.   Footnote 15 in the Memorandum of Decision should not be corrected.

Hon. Cecelia G. Morris United States Bankruptcy Court