                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


8-9-2005

In Re: Schick
Precedential or Non-Precedential: Precedential

Docket No. 04-2611




Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2005

Recommended Citation
"In Re: Schick " (2005). 2005 Decisions. Paper 620.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/620


This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2005 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
                                             PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT


                        No. 04-2611


                IN RE: TRACEY L. SCHICK




       On Appeal from the United States District Court
                for the District of New Jersey
                    (D.C. No. 04-cv-00067)
         District Judge: Honorable Robert B. Kugler


                   Argued April 18, 2005

   Before: ROTH, FUENTES, and BECKER, Circuit Judges.

                   (Filed: August 9, 2005)

Eric J. Clayman (Argued)
John A. Gagliardi
Jenkins & Clayman
412 White Horse Pike
Audubon, New Jersey 08106

ATTORNEYS FOR APPELLANT

Peter C. Harvey
Attorney General of New Jersey
Patrick DeAlmeida
Assistant Attorney General
Tracy E. Richardson (Argued)
Deputy Attorney General

                             -1-
Margaret A. Holland
Deputy Attorney General
R.J. Hughes Justice Complex
25 Market Street
P.O. Box 106
Trenton, New Jersey 08625

ATTORNEYS FOR APPELLEE


                      OPINION OF THE COURT


FUENTES, Circuit Judge.

        This matter requires us to determine whether a lien held by
the New Jersey Motor Vehicles Commission (“MVC”) for unpaid
motor vehicle surcharges and interest constitutes a judicial lien or
a statutory lien as those terms are defined in the U.S. Bankruptcy
Code (the “Code”). If it is a judicial lien, it may be avoided by the
Debtor-Appellant, Tracey L. Schick, under 11 U.S.C. § 522(f) to
the extent that it impairs her entitlement to a homestead exemption
under 11 U.S.C. § 522(d)(1). However, if statutory, the lien may
not be avoided by the Debtor. At least three bankruptcy courts
within our jurisdiction have concluded that the MVC’s lien is
judicial, while two district courts have reached the opposite
conclusion. For the reasons discussed below, we find that the
MVC’s lien is statutory. Accordingly, we will affirm the decision
of the District Court.

                          I. Background

       The essential facts in this matter are not in dispute. In April
2001 and February 2002, the MVC issued certificates of debt to the
Clerk of the Superior Court of New Jersey against Tracey L. Schick
for unpaid motor vehicle surcharges and interest.1 Subsequently,


       1
      The New Jersey Division of Motor Vehicles (“DMV”)
became the MVC on January 28, 2003, following the passage of

                                 -2-
on October 1, 2002, Schick filed a voluntary petition for
bankruptcy under Chapter 13 of the Code. The Debtor’s residence
was listed with a value of $100,000, against which a secured proof
of claim in the amount of $91,660 was filed by the first mortgagee.
Schick also listed the MVC as an unsecured creditor.

       Schick’s Chapter 13 plan provided for the curing of arrears
on her mortgage and on a car loan but included no provision for
dividends to unsecured creditors. After the Bankruptcy Court
confirmed the plan on February 28, 2003, the MVC filed a secured
claim for $3,610, plus interest, based on motor vehicle surcharges
assessed against Schick. In response, Schick moved to reclassify
the MVC’s secured claim as a general unsecured claim and to
avoid its lien as impairing her homestead exemption. In particular,
Schick argued that the MVC’s claim was a judicial lien as that term
is defined in the Code and could be avoided under 11 U.S.C.
§ 522(f) to the extent it impaired her homestead exemption arising
in 11 U.S.C. § 522(d)(1).2 In opposition, the MVC argued that its
claim against Schick was a statutory lien, as that term is defined in
the Code, and thus could not be avoided by the Debtor.

       The Bankruptcy Court agreed with Schick, finding that the
MVC’s claim for unpaid surcharges and interest, which arose
pursuant to New Jersey’s surcharge statute, N.J. Stat. Ann.
§ 17:29A-35(b)(2), was a judicial lien, not a statutory lien. See In


the Motor Vehicle Security and Customer Service Act, N.J. Stat.
Ann. § 39:2A-1 et seq.
       2
           11 U.S.C. § 522(f) states in pertinent part:

                 Notwithstanding any waiver of exemptions but
                 subject to paragraph (3), the debtor may avoid the
                 fixing of a lien on an interest of the debtor in
                 property to the extent that such lien impairs an
                 exemption to which the debtor would have been
                 entitled under subsection (b) of this section, if such
                 lien is

                        (A) a judicial lien . . . .

                                    -3-
re Schick, 301 B.R. 170, 175 (Bankr. D.N.J. 2003). On appeal, the
District Court reversed, finding that the MVC had a statutory lien,
not a judicial lien, that could not be avoided by the Debtor. See In
re Schick, 308 B.R. 189, 194-95 (D.N.J. 2004).

       Schick now brings this timely appeal, contending that the
District Court’s decision was in error.

            II. Jurisdiction and Standard of Review

       This Court has jurisdiction over the final order of the
District Court, entered in a bankruptcy proceeding, pursuant to 28
U.S.C. §§ 158(d) and 1291. Our standard of review is the same as
that exercised by the District Court over the decision of the
Bankruptcy Court. See In re Zinchiak, 406 F.3d 214, 221-22 (3d
Cir. 2005) (citing In re Pillowtex, Inc., 349 F.3d 711, 716 (3d Cir.
2003)). Accordingly, we review findings of fact for clear error and
exercise plenary review over questions of law. Id. (citation
omitted).

                           III. Discussion

        As we noted in Graffen v. City of Philadelphia, the
Bankruptcy Code recognizes three types of liens: judicial, statutory,
and consensual. 984 F.2d 91, 96 (3d Cir. 1992) (citing H.R. Rep.
No. 95-595, 95th Cong., 312 (1977), reprinted in 1978
U.S.C.C.A.N. 6269). As the MVC’s lien for unpaid motor vehicle
surcharges was not created by consent, it must either be statutory
or judicial. We look to the Code for definitions of both terms. A
judicial lien is defined as a lien “obtained by judgment, levy,
sequestration, or other legal or equitable process or proceeding.”
11 U.S.C. § 101(36). By contrast, a statutory lien arises “solely by
force of a statute on specified circumstances or conditions . . . but
does not include . . . [a] judicial lien, whether or not such . . . lien
is made fully effective by statute.” 11 U.S.C. § 101(53). This
distinction is amplified in the legislative history, which indicates
that “[a] statutory lien is only one that arises automatically and is
not based on an agreement to give a lien or on judicial action.”
H.R. Rep. No. 595, 95th Cong., 314 (1977); S. Rep. No. 95-989,
95th Cong., 27 (1978); 1978 U.S.C.C.A.N. 6271, 5811; see also

                                  -4-
Gardner v. Pa., Dep’t of Public Welfare, 685 F.2d 106, 109 (3d Cir.
1982) (finding that statutory lien “must be a lien arising
automatically by operation of a statute, not one requiring
subsequent judicial action”).

        In many cases, the distinction between a statutory lien and
a judicial lien will be straightforward. For instance, the legislative
history indicates that mechanics’ liens, materialmen’s liens, and
warehousemen’s liens, as well as tax liens, are types of statutory
liens. See S. Rep. 95-989 at 27; H.R. Rep. No. 95-595 at 314
(1977), reprinted in 1978 U.S.C.C.A.N. 5787, 5813, 6271; see also
In re Sullivan, 254 B.R. 661, 664-65 (D.N.J. 2000) (finding that a
tax lien is a statutory lien); In re Concrete Structures, Inc., 261 B.R.
627, 633-34 (E.D. Va. 2001) (finding that a mechanics’ lien is a
statutory lien); APC Constr., Inc. v. Hinesburg Sand & Gravel,
Inc., 132 B.R. 690, 693-94 (D. Vt. 1991) (finding that a
contractor’s lien is a statutory lien). However, in other contexts,
the distinction between statutory and judicial liens has proven more
troublesome, and some courts have remarked that the Code
provides little assistance in resolving such disputes. See, e.g., In re
A&R Wholesale Distrib., Inc., 232 B.R. 616, 620 (Bankr. D.N.J.
1999) (noting that the Code provides “very little guidance for
distinguishing a judicial lien from a statutory lien”) (citation
omitted). The issue, raised here, of whether the MVC’s claim for
unpaid surcharges is a judicial lien or statutory lien is one example
where courts have reached conflicting results. Compare In re
James, 304 B.R. 131, 136 (Bankr. D.N.J. 2004) (finding the New
Jersey MVC surcharge lien to be judicial), with In re Fennelly, 212
B.R. 61, 66 (D.N.J. 1997) (finding the New Jersey MVC surcharge
lien to be statutory). The relevant inquiry is to determine the nature
of the MVC’s lien, i.e., whether it arises solely by force of statute,
or whether it results from some type of judicial process or
proceeding.

       We will first briefly consider the statutory scheme in New
Jersey which gives rise to the MVC’s claim for unpaid motor
vehicle surcharges and interest. We then consider our decision in
Graffen to determine whether the lien in favor of the MVC is
judicial or statutory. Finally, we explain why we are unpersuaded
by the arguments as well as the theories advanced by Schick, and

                                  -5-
relied upon by the In re Schick and In re James bankruptcy courts,
that the MVC’s lien is judicial.

                                 A.

        One of the collateral consequences for the violation of
motor vehicle laws in New Jersey is the imposition of surcharges
against the driver. In particular, N.J. Stat. Ann. § 17:29A-35(b)
(the “surcharge statute”) establishes a rating plan under which the
MVC levies surcharges on drivers in one of several different
situations. See generally 25 Robert Ramsey, New Jersey Practice
Series § 13.1-.6 (3d ed. 2001). For instance, surcharges may be
levied against a driver who is assessed too many violation points,
or who has been convicted of drunk driving or refusing to take a
breathalyzer test. See N.J. Stat. Ann. § 17:29A-35(b)(1)(a), (b)(2).
The amount of the surcharges is set forth in the statute and
administrative regulations. See id.; N.J. Admin. Code tit. 13, § 19-
13.1(a).

        The MVC has several collection methods available to ensure
payment of surcharges in the event of non-payment. At issue in
this case is the ability of the MVC to file a certificate of debt with
the Clerk of the Superior Court in the amount of the past due
surcharge. See N.J. Stat. Ann. § 17:29A-35(b)(2); see also N.J.
Admin. Code tit. 13, § 19-12.12(a). The surcharge statute states in
pertinent part:

              As an additional remedy, the director may issue a
              certificate to the Clerk of the Superior Court stating
              that the person identified in the certificate is indebted
              under this surcharge law in such amount as shall be
              stated in the certificate. The certificate shall
              reference the statute under which the indebtedness
              arises. Thereupon the clerk . . . shall immediately
              enter upon the record of docketed judgments the
              name of such person as debtor; the State as creditor;
              the address of such person, if shown in the
              certificate; the amount of the debt so certified; . . .
              and the date of making such entries. The docketing
              of the entries shall have the same force and effect as

                                 -6-
                 a civil judgment docketed in the Superior Court, and
                 the director shall have all the remedies and may take
                 all of the proceedings for collection thereof which
                 may be had or taken upon the recovery of a judgment
                 in an action, but without prejudice to any right of
                 appeal.

N.J. Stat. Ann. § 17:29A-35(b)(2). Accordingly, the surcharge
statute directs the MVC to file certificates of debt with the Clerk of
the Superior Court, whose sole responsibility is to docket the debts
in the amount as delivered. In New Jersey, when a judgment is
docketed in the records of the Clerk of the Superior Court, it
becomes a lien on the debtor’s real estate. See N.J. Stat. Ann.
§ 2A:16-1.3 Thus, the effect of the surcharge statute is to allow the
MVC to obtain a lien on the driver’s real property in the amount of
the unpaid motor vehicle surcharges and interest.

                                    B.

       To determine whether the MVC’s claim for unpaid motor
vehicle surcharges and interest is a judicial lien or a statutory lien,
we look to our decision in Graffen v. City of Philadelphia. In
Graffen, we considered whether a lien obtained by the City of
Philadelphia for unpaid water and sewer charges, pursuant to
Pennsylvania’s water lien statute, Pa. Stat. Ann. tit. 53, § 7106(b)
(1972), created a statutory lien or a judicial lien under the Code.4

       3
         “No judgment of the superior court shall affect or bind any
real estate, but from the time of the actual entry of such judgment
on the minutes or records of the court.” See N.J. Stat. Ann.
§ 2A:16-1.
       4
           The water lien statute stated in relevant part:

                 With the exception of those claims which have been
                 assigned, any municipal claim, including interest,
                 penalty and costs, imposed by a city of the first class,
                 shall be a lien only against the said property after the
                 lien has been docketed by the prothonotary [the chief
                 clerk]. The docketing of the lien shall be given the

                                   -7-
Under the statute, a municipal claim for unpaid water bills became
a lien against the debtor’s property, and had the effect of a
judgment, after it had been docketed by a prothonotary and entered
in the judgment index. The debtors had argued that the water lien
statute created a judicial lien, which could be avoided under 11
U.S.C. § 522(f).

       We disagreed, finding that the lien was statutory because it
was not obtained by any “legal process or proceeding” within the
meaning of the definition of a judicial lien, 11 U.S.C. § 101(36).
Graffen, 984 F.2d at 96. We explained that these terms “inherently
relate to court procedures or perhaps similar administrative
proceedings.” Id. Although we recognized that in some
circumstances a judicial proceeding may be ex parte,5 we
concluded that where the Water Department administratively
determined the amount of the lien, and the prothonotary’s sole
responsibility was to docket the lien as delivered, the lien fell
within the Code’s definition of a statutory lien as it arose “solely by
force of statute.” Id. (citing 11 U.S.C. § 101(53)). In addition, we
rejected the argument that the act of docketing the City’s lien in the
judgment index by the prothonotary rendered the lien a judicial
lien:

               [D]ocketing simply would be a specified condition
               for creation of the statutory lien as defined in 11
               U.S.C. § 101(53). The legislative history of the
               Bankruptcy Code, which demonstrates that
               mechanics’ liens can be statutory, supports this


               effect of a judgment against the said property only
               with respect to which the claim is filed as a lien. The
               prothonotary shall enter the claim in the judgment
               index.

Pa. Stat. Ann. tit. 53, § 7106(b).
       5
        For instance, in Gardner, we recognized that “a lien
obtained by confessed judgment is a judicial lien avoidable under
§ 522(f)(1) of the Code, and not a security interest or a statutory
lien.” 685 F.2d at 108.

                                 -8-
              conclusion. Inasmuch as at least in some states
              public filing is required to preserve mechanics’ liens,
              there is no reason why the requirement that a water
              lien be docketed means that it cannot be statutory.

984 F.2d at 97 (internal citations omitted).

        We find Graffen to be persuasive in this case based on the
similarities between the Pennsylvania water lien statute and the
New Jersey surcharge statute. For instance, as with the water lien
statute in Graffen, the amount of the debt here is determined either
as a matter of statute or administrative regulation, as noted above.
Moreover, like the prothonotary in Graffen, the only duty of the
Clerk of the Superior Court, with respect to the lien, is to docket
the certificates of debt as delivered in “the amount of the debt so
certified.” N.J. Stat. Ann. § 17:29A-35(b)(2). As we made clear
in Graffen, the mere act of docketing a debt by the Clerk of the
Superior Court as part of his ministerial duties is insufficient to
render the MVC’s lien a judicial lien. Graffen, 984 F.2d at 97; see
also In re Fennelly, 212 B.R. at 65 (“[T]he mere ministerial act of
recording the lien does not create the requisite legal process or
proceeding to be a judicial lien.”). Nor is there is any “legal
process or proceeding” here within the meaning of the definition
of a judicial lien, 11 U.S.C. § 101(36), nor any other type of “court
procedures or perhaps similar administrative proceedings.”
Graffen, 984 F.2d at 96. Rather, the requirement that the
certificates of debt be docketed is one of the specified conditions
for the creation of the statutory lien. In these circumstances, the
lien held by the MVC is one that arises “solely by force of statute”
within the definition of a statutory lien, in 11 U.S.C. § 101(53).

        At oral argument, counsel for the Debtor raised the
possibility that there was sufficient judicial process or proceeding
in this matter to find a judicial lien. In particular, counsel noted
that, in certain instances, the MVC may not impose surcharges
without a driver first being convicted in state court for driving
violations. The Bankruptcy Court also suggested this approach in
its opinion. See Schick, 301 B.R. at 175 n.6 (“Convictions for
driving while intoxicated and for motor vehicle violations are
premised on the opportunity of the driver charged with the offense

                                -9-
to be provided with a full adjudicatory process, usually in
municipal court, which qualifies as a ‘legal proceeding.’”).
However, in our view, the underlying traffic proceeding charging
the driver with a motor vehicle offense is too remote to constitute
the required judicial process or proceeding necessary to find a
judicial lien. Any such proceeding bears no relation to the creation
of the lien in favor of the MVC, which instead arises as a result of
the filing of the certificate of debt and its docketing by the Clerk of
the Superior Court. Moreover, the amount of the surcharge is set
forth either in the statute or administrative regulation and is not
determined by the underlying proceeding against the driver. See
N.J. Stat. Ann. § 17:29A-35(b)(1)(a), (b)(2); N.J. Admin. Code tit.
13, § 19-13.1(a). Certainly, the Clerk of the Superior Court’s sole
responsibility under the surcharge statute is to docket the certificate
of debt as delivered in “the amount of the debt so certified,” N.J.
Stat. Ann. § 17:29A-35(b)(2), without any reference or reliance on
the underlying proceeding against the driver. Thus, in light of our
decision in Graffen, we are satisfied that the lien in favor of the
MVC is statutory.

         Our decision in Lugo v. Paulsen, 886 F.2d 602 (3d Cir.
1989), is not to the contrary. In Lugo, we found that New Jersey
MVC surcharges were not dischargeable in bankruptcy, relying on
11 U.S.C. § 523(a)(9), which excepts from discharge a debt “to the
extent that such debt arises from a judgment . . . entered against the
debtor wherein liability was incurred by such debtor as a result of
the debtor’s operation of a motor vehicle while legally intoxicated
. . . .” We found that “the surcharge does ‘arise from’ a judgment”
for the purposes of non-dischargeability. Lugo, 886 F.2d at 608.
But Lugo discussed a different section of the Code from that at
issue here, and our concern there was to determine the ultimate
source of the debt and to effectuate the congressional purpose of
deterring drunk driving. That purpose is not at issue here, and our
concern is not for the ultimate source of Schick’s debt but rather
the proper characterization of her lien. While her surcharge debt
may have arisen from a judicial proceeding, the lien to enforce that
debt was purely statutory.

                                  C.



                                 -10-
        Schick seeks to distinguish Graffen because, unlike the
water lien statute which explicitly created a lien in favor of the
municipal authorities and thereafter permitted the docketing of the
lien, here the surcharge statute itself does not create the lien.
Rather, the lien arises only because the surcharge statute permits
the MVC to file a certificate of debt, which becomes a lien on the
debtor’s property only because the docketing is to have the effect
of a civil judgment under New Jersey law. Similarly, the
Bankruptcy Court in this matter, relying essentially on this
distinction, found Graffen to be inapplicable. In particular, the
Bankruptcy Court concluded that the appropriate method to analyze
the surcharge statute is by focusing not on the language “obtained
. . . by other legal or equitable process or proceeding” in the
definition of judicial lien, but rather on the language “obtained by
judgment,” which is a separate component of the definition of a
judicial lien in 11 U.S.C. § 101(36). In re Schick, 301 B.R. at 174-
75. By focusing on the language “obtained by judgment,” the
Bankruptcy Court observed that the surcharge statute confers on
the MVC all the benefits of a civil judgment, which includes a lien
on the debtor’s real property. Id. Accordingly, because the
docketing grants the MVC the benefits of a civil judgment, which
thereby creates a lien against the debtor’s property, the Bankruptcy
Court concluded that the MVC’s lien is thus “obtained by
judgment” within the meaning of 11 U.S.C. § 101(36).

        However, we think the Bankruptcy Court placed too much
weight on the word “judgment” in 11 U.S.C. § 101(36) and read it
in isolation from the rest of the definition. See In re Zukowfsky,
1995 WL 695108, at *3 (E.D. Pa. Nov. 21, 1995) (noting that the
bankruptcy court erred in placing too much weight on the word
“judgment). It is a cardinal rule of statutory interpretation that the
“starting point of any statutory analysis is the language of the
statute.” Pa. Dep’t of Envtl. Res. v. Tri-State Clinical Labs. Inc.,
178 F.3d 685, 688 (3d Cir. 1999) (citations omitted). The Code
defines a judicial lien as “obtained by judgment, levy, sequestration
or other legal or equitable process or proceeding.” 11 U.S.C.
§ 101(36). The natural reading of the definition is that “judgment,”
“levy,” and “sequestration” are enumerated examples of types of
“legal or equitable process or proceeding[s].” Thus, for a lien to be
judicial, there must be some judicial or administrative process or

                                -11-
proceeding that ultimately results in the obtaining of the lien. We
implied that these terms are all related to such processes or
proceedings in Graffen, stating that these “terms inherently related
to court procedures or perhaps similar administrative proceedings.”
984 F.2d at 96.

        Here, this requirement is not fulfilled, as the lien obtained
lacked any judicial process or proceeding. The surcharge statute
grants the MVC a lien upon the docketing of the certificate of debt,
which is then treated as having the effect of a civil judgment. In
other words, the MVC obtains its lien not by any judgment, but
rather by the ministerial act of docketing, which is treated as
having the consequences of a judgment. In effect, the surcharge
statute grants the MVC an expeditious path to secure a lien against
the debtor’s property, without having to engage in a lengthy and
possibly costly judicial proceeding to obtain a judgment against the
debtor. In our view, this statutorily created short-cut, in the
absence of any meaningful judicial process or proceeding, renders
the MVC’s lien a lien that “arises solely by force of statute.” 11
U.S.C. § 101(53). To hold otherwise would be to elevate form
over substance and ignore the context in which “judgment” is used
in 11 U.S.C. § 101(36).6

        For this reason, we also reject Schick’s reliance on the New
Jersey tax lien statute, N.J. Stat. Ann. § 54:49-1, and construction
lien statute, N.J. Stat. Ann. § 2A:44A-3. Schick rightly notes that
the tax lien and construction lien statutes both contain language
expressly granting a lien, whereas the surcharge statute contains no
such language. For instance, the tax lien statute expressly grants a


       6
         We note, hypothetically, that if the surcharge statute were
to be repealed to divest the MVC of its expeditious remedy, then
the MVC would have to proceed in court in a civil action to seek
a judgment against Schick in order to secure a lien against the
Debtor’s property. In such a circumstance, there clearly would be
the required judicial process or proceeding to transform the MVC’s
lien into a judicial lien. The fact that the New Jersey legislature
chose to give the MVC a short-cut in obtaining its lien supports our
holding that the MVC’s lien is statutory, not judicial.

                                -12-
lien to the appropriate municipality or governmental entity: “Such
[tax] debt, whether sued upon or not, shall be a lien on all property
of the debtor . . . .” Accordingly, the tax lien statute confers to the
appropriate agency a valid and enforceable right to collect unpaid
taxes on the day of the assessment without any judicial action.
Similarly, under the construction lien statute, a contractor who
provides work, services, material or equipment pursuant to a
contract is entitled to a lien for the value of the work or services
performed, or materials or equipment furnished in accordance with
the parties’ contract. See N.J. Stat. Ann. § 2A:44A-3 (“Any
contractor, subcontractor or supplier who provides work, services,
material or equipment pursuant to a contract, shall be entitled to a
lien for the value of the work or services performed, or materials
or equipment furnished . . . . The lien shall attach to the interest of
the owner in the real property.”). As with the tax lien statute, the
construction lien statute grants the contractor a lien for the value of
the services rendered upon completion of the work without any
judicial process or proceeding.

        However, we do not believe that the fact that the surcharge
statute lacks explicit lien-creating language, in contrast to the tax
lien and construction lien statutes, is determinative in this matter.
Like the tax lien and construction lien statutes, the surcharge
statute contemplates that the MVC will have the right to recover
unpaid motor vehicle surcharges from the debtor without any
judicial action. The additional step required by the surcharge
statute – the filing of the certificate of debt with the Clerk of the
Superior Court – is merely a ministerial act intended to “perfect”
the lien in favor of the MVC. As noted in Graffen, this ministerial
act is only a “specified condition” for the creation of the statutory
lien. Graffen, 984 F.2d at 97. We do believe that a statute that
lacks express lien-creating language may confer a judicial lien
where there is accompanying judicial process or proceeding.
However, the surcharge statute, while lacking express lien-creating
language, requires no such judicial action.7


       7
        We also note that, although the surcharge statute does not
explicitly provide for a lien itself, that statute read in conjunction
with § 2A:16-1 does explicitly provide for the lien. We do not see

                                 -13-
       Finally, we consider the Bankruptcy Court’s reliance on our
prior decision in Gardner as an example of where a lien was ruled
judicial because it was “obtained by judgment.” See In re Schick,
301 B.R. at 174; see also In re James, 304 B.R. at 136 (analogizing
the MVC’s lien to the lien at issue in Gardner). In Gardner, the
Pennsylvania Department of Public Welfare required a debtor, as
a condition of receiving public assistance, to sign reimbursement
agreements. 658 F.2d at 108. These reimbursement agreements
contained standard confession of judgment provisions, authorizing
the entry of judgment against the recipient which would act as a
lien against the recipient’s real property. Id. Relying on the
authority of In re Ashe, 669 F.2d 105 (3d Cir. 1982), we found in
Gardner that a lien obtained by confessed judgment was a judicial
lien and thus could not be avoided by the DPW.8 Gardner, 685
F.2d at 108-09.

        However, we do not believe that Gardner is applicable in
this case or supports a conclusion that the surcharge statute creates
a judicial lien. In Graffen, we noted that, for purposes of finding
a judicial lien, in some instances a judicial proceeding may be ex
parte, and we cited Gardner as involving such an example.
Graffen, 984 F.2d at 96, n.7 (noting that “liens [in Gardner] were
judicial as they were obtained by judgments entered upon a
confession of judgment executed by the debtor”). However, in
Graffen, we further noted that Gardner did not “stand for the


any reason why a lien should lose its statutory character simply
because it is automatically created by the operation of two statutes,
rather than one. Although 11 U.S.C. § 101(53) states that a
statutory lien must arise “solely by force of a statute,” we think it
would be overly formalistic to interpret the use of the singular
statute to bar statutory liens from being created by operation of
more than one statute read in conjunction.
       8
         “[A] confession of judgment . . . gives by consent, and
without the service of process, a result which could otherwise be
obtained only by process through a formal proceeding; it
constitutes but one of the ways by which a person may be sued.”
In re Ashe, 712 F.2d at 872 (Becker, J., concurring and dissenting
in part) (internal citation omitted).

                                -14-
proposition that liens requiring some administrative action to be
perfected must be characterized as judicial liens.” Graffen, 984
F.2d at 97. As noted above, the ministerial docketing required to
“perfect” the MVC’s lien is insufficient to render the lien to be
judicial. In any event, the confession of judgment procedure bears
no similarity to the ministerial docketing procedure at issue in the
surcharge statute.

                         IV. Conclusion

        For the foregoing reasons, we determine that the MVC’s
lien is a statutory lien. Accordingly, the judgment of the District
Court will be affirmed.
