A case about judgment liens and, in passing, memorandum opinions.

The plaintiffs took a default judgment for money and recorded it. Their debtors then acquired real property that they later sold to the DeBords. Under the statutes (33-961ff) and cases the rule has been that filing creates a lien against the debtor’s present or after-acquired property and that purchasers from the debtor take subject to the lien. In this action the plaintiffs sought to foreclose their judgment lien against it.

The problem was that in 1996 the statutes were amended to add a requirement that along with the judgment the creditor file an information sheet specifying some things about the debtor and the lawsuit. The plaintiffs didn’t file one until after they filed this action. The DeBords moved for summary judgment, arguing that this invalidated the lien. The plaintiffs argued that it merely affected the priority of their lien against other judgment creditors – of which there were none, so its lien was unharmed.

The trial court ruled for the DeBords. The Court of Appeals affirms, though its not clear whether for the same or different reasons.

After analyzing the history and structure of the statute the court agrees with the plaintiffs that failure to file the information sheet affects the priority, not the validity, of the lien.

But the court disagrees with the plaintiffs about its priority. The statute (33-967(D)) says that a judgment “has as its priority the date of [filing the information sheet].” “If the legislature wanted to limit the concept of priority . . . to the interests of competing lienholders . . . it could have said so.” “Priority” therefore includes not only competing lienholders but subsequent purchasers. Since the DeBords took the property before the information sheet was filed “[their] interest in the property has priority over the  . . . judgment lien.” So the DeBords win anyway.

We can’t quite get our head around this one. In what sense is a lien valid against property the owner of which has an interest that has “priority” over the lien? Since when does, or can, a lien statute use “priority” in the context of an ownership interest?

But what about memorandum decisions, you ask? The plaintiffs cited an opinion that mentioned that an earlier memorandum in that case had held that failure to file an information sheet didn’t invalidate a judgment lien. In one of several long footnotes the court points out that memoranda are not precedent and adds that courts “do not treat passing references to previous memorandum decisions in published opinions as precedent.” Since the court purports to agree that failure to file the sheet doesn’t invalidate the lien the purpose of this footnote is to discourage the memo-cited-in-a-later-opinion loophole. The courts want to limit the loopholes to the ones they are creating themselves by rule changes.

(link to opinion)