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March 24, 2026 Get Citation Alerts Download PDF Add Note

In re: Fawn Leslie Batista

United States Bankruptcy Court, D. Colorado

• Citations: None known
• Docket Number: 25-12499

• Precedential Status: Unknown Status

• Opinion

• Authorities (11)

• Cited By (0)

• Summaries (0)

• Similar Cases (4.6K)

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Trial Court Document

THAIN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF COLORADO

The Honorable Michael E. Romero

In re:

Case No. 25-12499 MER

Fawn Leslie Batista,

Chapter 7

Debtor.

         ORDER GRANTING MOTIONS TO AVOID LIENS                       

THIS MATTER comes before the Court on three Motions to Avoid Fixing of 

Judicial Lien of CSI Factoring LLC and CSI Financial LLC To U.S.C. Section
522(f)(1)(A) (“Motions to Avoid”) filed by the Debtor, Fawn Batista, and the three
Objections filed by CSI Factoring LLC and CSI Financial LLC (collectively, “CSI”).1
BACKGROUND

The Debtor filed this Chapter 7 bankruptcy case on April 28, 2025. In her
schedules, she claimed a $350,000 homestead exemption for her home located at 108
Quartz Road, Florissant, Colorado. No party objected to her claimed exemptions. Prior
to the petition date, CSI obtained three state court judgments against the Debtor, her
late husband, Ricardo Batista, and a company they owned, Blackwing Enterprises, LLC.

The judgments were in the amounts of $419,288.09, $137,103.04, and $9,669.60, plus
accrued interest. These judgments relate to various factoring agreements between CSI
and Blackwing, which the Debtor and her late husband personally guaranteed. CSI
recorded transcripts of judgment in the Teller County, Colorado, real property records,
thereby encumbering Debtor’s home with three judgment liens.

In her Motions to Avoid, Debtor seeks to avoid CSI’s judgment liens pursuant to 11 U.S.C. § 522 (f). Section 522(f) states that “a lien shall be considered to impair an
exemption to the extent that the sum of-- (i) the lien; (ii) all other liens on the property;
and (iii) the amount of the exemption that the debtor could claim if there were no liens
on the property . . . exceeds the value that the debtor's interest in the property would
have in the absence of any liens.”2 Stated another way, a debtor may avoid a judicial
lien to the extent that the lien exceeds the debtor's net equity after deducting un-
avoidable liens and the debtor's homestead exemption.3 In her Motions to Avoid,
Debtor asserts the value of her home is $407,300 and that it is encumbered by a

1 ECF No. 19, 22, 25, 29, 30, 31.

2 11 U.S.C. § 522 (f)(2)(A).

3 Pearson v. Security Prop., Inc. (In re Pearson), 428 B.R. 533, 535-37 (Bankr. Colo. 2010).
consensual mortgage lien of $129,897. If you subtract the amount of the unavoidable
mortgage lien and the claimed homestead exemption from the asserted value of the
home [$407,300 - $129,897 - $350,000 = ($72,597)], the Debtor has no “net equity” in
her home to which CSI’s judgment liens could attach. This means, under Debtor’s
calculations, all of CSI’s liens are avoidable under § 522(f) as impairing her homestead
exemption.

CSI does not dispute the Debtor’s calculations. Instead, CSI’s objections are
based solely on an assertion that Debtor previously waived her homestead exemption
and thus cannot seek avoidance under § 522(f). CSI relies on personal guarantees that
the Debtor signed for CSI in which she agreed to waive her homestead exemption.4

CSI also points to state court probate proceedings for the Debtor’s late husband in
which the waiver issue was apparently considered. CSI asserts that the Debtor filed an
application for a homestead exemption in the probate proceeding, to which CSI
objected, citing the Debtor’s prior waiver in her personal guaranties.5 The Debtor did
not respond, and the state court entered an order denying the Debtor’s application,
noting that the Debtor “has not filed any responsive pleading and apparently does not
contest the validity of the Guaranty Agreements.6 CSI argues the probate court’s order
amounts to a final order determining Debtor waived her homestead exemption and that
the order should have a preclusive effect in this contested matter.

The Debtor does not dispute she signed the personal guaranties or that the
probate court entered its order denying her homestead exemption application.

However, she argues those facts do not prevent her from avoiding CSI’s lien under
§ 522(f). The Court agrees.

DISCUSSION

By its terms, § 522(f) makes clear a prepetition waiver of an exemption does not
preclude avoidance of a lien under that statute. The statute permits a debtor,
“[n]otwithstanding a waiver of exemptions,” to avoid the fixing of a lien on an interest of
the debtor in property to the extent the lien impairs an exemption to which the debtor
otherwise would have been entitled. As one court put it:

If a prepetition waiver of a homestead exemption under state law were to
mean that a debtor is not entitled to claim the exemption in a bankruptcy
case for purposes of avoiding a judicial lien, the debtor could never avoid a
judicial lien against the property under § 522(f) as impairing “an exemption
to which the debtor would have been entitled.” § 522(f)(1). That would

4 CSI Objections, Ex. 2.

5 CSI Objections, Exs. 20, 21.

6 CSI Objections, Ex. 22.

render the language “[n]otwithstanding any waiver of exemptions”
contained in § 522(f)(1) a nullity.7

This conclusion is reinforced by § 522(e), which in relevant part says: “[a] waiver
of an exemption executed in favor of a creditor that holds an unsecured claim against
the debtor is unenforceable in a case under this title with respect to such claim against
property that the debtor may exempt under subsection (b) of this section.”8 Section
522(e) was added to the Bankruptcy Code to “protect[] the debtor’s exemptions, either
Federal or State, by making unenforceable in a bankruptcy case a waiver of
exemptions.”9

Notably, the language of § 522(e) is limited to exemption waivers given to
“unsecured” creditors. Judicial lienholders, like CSI, might characterize themselves as
secured creditors to avoid the language of § 522(e). However, courts have interpreted
the language differently:

Reading 11 U.S.C. §§ 522 (e) and (f)(1) together, I conclude that a judicial
lienholder should be viewed as a “creditor that holds an unsecured claim”
for purposes of 11 U.S.C. § 522 (e). While this may seem initially
counterintuitive, 11 U.S.C. § 522 (f)(1)(A) operates “[n]otwithstanding any
waiver of exemptions,” meaning that if a judicial lien hypothetically impairs
the exemption, the lienholder’s exemption waiver is unenforceable. If the
judicial lien is not subject to avoidance under 11 U.S.C. § 522 (f)(1)(A)
because it does not impair an exemption, then the exemption waiver is
irrelevant. Therefore, as a practical matter, there is no circumstance in
which an exemption waiver in favor of a judicial lienholder would be
enforceable under 11 U.S.C. § 522 (e), but not 11 U.S.C. § 522 (f)(1)(A).10
This Court agrees. Interpreting § 522(f)(1) and § 522(e) together means that the
prepetition waiver of exemption Debtor signed is unenforceable in the § 522(f) context
and does not preclude the Debtor from avoiding CSI’s judgment liens under that
subsection.11

7 In re Romo, 668 B.R. 661, 670 (Bankr. D. N.M. 2025) (holding that debtor’s prior waiver of homestead
exemption in prepetition foreclosure action did not preclude debtor from seeking avoidance of judgment
lien under § 522(f)).

8 11 U.S.C. § 522 (e) (emphasis added).

9 In re D’Italia, 507 B.R. 769, 774 n.22 (Bankr. D. Mass. 2014) (citing H.R.Rep. No. 595, 95th Cong., 1st
Sess. p. 362 (1977), reprinted in U.S.Code Cong. & Admin.News 1978, pp. 5963, 6318).
10 Id. at 774-75 (citing Owen v. Owen, 500 U.S. 305, 313 (1991)).

11 Id. at 774-75; In re Smith, 119 B.R. 757 (Bankr. E.D. Calif. 1990) (“[t]he plain meaning of section 522(f)
demands the conclusion that a debtor may avoid a lien on exempted property despite the debtor’s waiver
CSI argues the state court’s order denying Debtor’s homestead exemption
application in the probate case should have a preclusive effect in this proceeding, either
through application of collateral estoppel or the Rooker-Feldman doctrine. There are
several problems with this argument. First, it wholly ignores the language of § 522(f)
and (e) discussed above.12 Further, CSI, as the party asserting issue preclusion must
satisfy four requirements: “(1) The issue precluded is identical to an issue actually
litigated and necessarily adjudicated in the prior proceeding; (2) The party against
whom estoppel was sought was a party to or was in privity with a party to the prior
proceeding; (3) There was a final judgment on the merits in the prior proceeding;
(4) The party against whom the doctrine is asserted had a full and fair opportunity to
litigate the issues in the prior proceeding.”13 In this case, the first element is not met.

While the probate proceeding may have addressed the applicability of Debtor’s
exemption regarding her late husband’s probate estate, it in no way decided Debtor’s
rights under § 522(f). Indeed, Debtor could not have asserted a claim to avoid CSI’s
judgment liens during the probate action because Debtor’s lien avoidance rights under
§ 522 did not exist until she filed bankruptcy.14 As such, these § 522(f) issues were not
previously adjudicated. Furthermore, to the extent the state court’s order was entered
due to Debtor’s default (i.e., failure to respond), the order is not entitled to preclusive
effect under Colorado law because the issue was not “actually litigated.”15

For the same reasons, the Rooker-Feldman doctrine is inapplicable. That
doctrine is designed to prevent federal courts from sitting as appellate courts over state-
court judgments. Here, this Court is not reviewing the merits of the state court order or
otherwise seeking to overturn it. The state court’s determination that the Debtor waived
her exemption in the context of the probate case remains standing. The issue for this
Court to decide is not whether the state court order is correct as to Debtor’s rights in the

of the exemption.”); In re Blair, 79 B.R. 1, 3 (Bankr. D. Ariz. 1987) (“Even if [creditor] had established a
waiver under state law, federal bankruptcy law prohibits waiver of an exemption in favor of an unsecured
creditor. 11 U.S.C. § 522 (e).”).

12 At a preliminary hearing on CSI’s Objections, the Court asked the parties about the applicability of
§ 522(e) to this matter and allowed the parties to file further briefs on that issue. The brief filed by CSI
failed to address § 522(e).

13 Bebo Constr. Co. v. Mattox & O’Brien, P.C., 990 P.2d 78, 84-85 (Colo. 1999) (citing Michaelson v.
Michaelson, 884 P.2d 695, 700-01 (Colo. 1994)).

14 In re Romo, 668 B.R. at 673-74 (holding state court order regarding exemption in foreclosure
proceeding did not have preclusive effect with respect to Debtor’s rights under § 522(f)); In re Quade, 482
B.R. 217, 234-35 (Bankr. N.D. Ill. 2012) (holding that debtor’s waiver of exemption in prepetition collection
action did not have preclusive effect in later § 522(f) proceeding); In re Kadoch, 528 B.R. 626, 638-39 (Bankr. D. Vt. 2015) (“[E]ven assuming arguendo the Debtor voluntarily waived his homestead rights in
the state court proceeding, that waiver would be unenforceable in this case, if the Debtor seeks to avoid
the [creditor’s] Judgment lien.”); In re Watkins, 298 B.R. 342, 351 (Bankr. N.D. Ill. 2003) (same).
15 In re Ries v. Sukut (In re Sukut), 357 B.R. 834, 840 (Bankr. D. Colo. 2006) (default judgment not
entitled to preclusive effect under Colorado law).

probate estate, but whether the CSl’s judicial liens can be avoided pursuant to federal
bankruptcy law.'®
As discussed above, Debtor’s prepetition exemption waiver does not preclude
her from seeking to void CSI’s judgment liens under § 522(f). Debtor has demonstrated
that those liens impair her homestead exemption. CSI does not dispute Debtor's
assertions of impairment. Accordingly, avoidance of CSl’s liens under § 522(f) is
appropriate.
CONCLUSION
For all these reasons, it is hereby ORDERED as follows:
1. The Objections filed by CSI are OVERRULED, and Debtor’s Motions to Avoid
are GRANTED.
2. The judicial liens of CS! Factoring LLC and CSI Financial LLC on the Debtor's
interest in the real property known as 108 Quartz Road, Florissant, CO 80816 are
avoided pursuant to 11 U.S.C. § 522 (f).
Dated: March 24, 2026 BY THE COURT:

                                                < 
                                   Michael E. Romero, 
                                   United State     nkruptcy Court 

18 In re Quade, 482 B.R. at 234-35 (Rooker-Feldman does not apply to § 522(f) issue not determined by
the state court); In re Watkins, 298 B.R. at 351 (same).