Smith v. H.D. Smith Wholesale Drug Co.

PRISCILLA R. OWEN, Circuit Judge:

Bankruptcy Trustee W. Steve Smith (Trustee or Smith) and nondebtor spouse Alicia Atkinson McCombs (Atkinson) appeal the bankruptcy court’s grant of summary judgment to H.D. Smith Wholesale Drug Company (H.D. Smith). The Trustee and Atkinson argue that the bankruptcy court erred in holding that H.D. Smith had an enforceable lien against the proceeds of the sale of the debtor’s homestead property in excess of the $125,000 homestead exemption. We reverse and remand.

I

In 2004, Michael Ray McCombs (McCombs or Debtor) and his wife, Atkinson, purchased a home and an…