The Court sustained the debtor’s objection to creditor’s claim and disallowed the claim in its entirety. Creditor did not meet its burden of demonstrating by clear and convincing evidence (or even by a preponderance of the evidence) that a scrivener’s error in a guaranty agreement identifying a non-debtor entity in the signature block was the result of the parties’ mutual mistake sufficient to warrant reformation of the agreement under New Mexico law.

Plaintiff Darrell Newton and Defendant Josephine Baglio agreed to the entry of a final decree dissolving their marriage. The decree, which apportioned their community property, included an equal division of Plaintiff’s pension plan. Plaintiff subsequently defaulted under the final decree in a number of material respects. After repeated attempts to get Plaintiff to pay as agreed, the divorce court entered a money judgment against Plaintiff and ordered that Plaintiff’s right to receive half the pension plan payments be assigned to Defendant, thereby increasing her interest in the plan to 100%. Plaintiff brought this adversary proceeding against Defendant, seeking to avoid the assignment as either a preferential transfer or a judicial lien impairing an exemption. Defendant moved for summary judgment, arguing the debt is a domestic support obligation that cannot be avoided as a preference or judicial lien. Alternatively, Defendant disputed whether the assignment of Plaintiff’s pension was actually a judicial lien. The Court denied Defendant’s motion, reasoning there were genuine issues of material fact regarding whether the debt was a DSO and whether the assignment was a judicial lien.

Based on Plaintiff’s pending motion for summary judgment, Plaintiff objected, and gave non-responsive responses, to Defendant’s requests for discovery.  After the Court denied the motion for summary judgment, Plaintiff should have provided adequate supplemental discovery responses. Plaintiff failed to do so. Defendant filed a motion to compel, seeking attorneys fees and sanctions. Thereafter, Plaintiff provided supplemental, but still inadequate, discovery responses. Plaintiff’s counsel shall be required to reimburse Defendant for his expenses incurred and filing the motion to compel and to correct the deficiencies of the current discovery responses. Defendant’s request for sanction is denied.

Bank asserted a secured claim against equipment Debtor acquired post-petition under the theory that 1) the equipment was proceeds of encumbered LLC membership interests initially pledged by Debtor’s individual members to secure payment to acquire their membership interests in the Debtor; 2) the pledged membership interests would be transferred to a new investor upon confirmation of debtor’s plan in exchange for the investor’s prior contribution to the purchase of the equipment; and 3) the after-acquired equipment became property of the debtor’s bankruptcy estate. Creditor who held the initial security interest in the pledged membership interests had assigned  his security interest to the Bank. The Court sustained Debtor’s objection to the Bank’s claim, in part, because the evidence before the Court did  not establish that pledged membership interests would be transferred to the new investor. Consequently, the Bank did not establish under the Uniform Commercial Code that the after-acquired equipment was proceeds of the security interest in the pledged membership interests. The Court sustained Debtor’s objection to Creditor’s claim because his secured claim was premised on the same theory as the Bank’s and because his unsecured claim was not a claim against the Debtor, but rather, a claim against the non-debtor individual members of the Debtor.