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In re Evelyn Watkins

03 B 21660

Secured creditor filed a motion requesting relief from the automatic stay in order to pursue its state law rights and remedies with respect to the debtor’s car that was stolen and totaled pre-petition. It additionally requested an order pursuant to Bankruptcy Rule 9013 directing the insurance company to pay it the full settlement amount in order to fulfill the pre-petition state-court judgment denying declaratory relief in favor of the debtor. The debtor argued that the attorneys’ fees incurred due to her attempt to collect the insurance proceeds should be paid out of the proceeds because her attorney is entitled to a superior equitable lien against the proceeds as a result of their contingency-fee agreement. The court held that full faith and credit must be afforded to the state court judgment in favor of the secured creditor on the issue. The court lacked subject-matter jurisdiction to consider the argument under the Rooker-Feldman doctrine. The court also held that the debtor could not claim a wild-card exemption in the insurance proceeds; nor could the debtor attempt to avoid the lien under 11 U.S.C. § 522(f)(1). The motion to modify the stay was granted.

Friday, August 22, 2003