Plaintiffs, co-representatives of Debtor’s probate estate, filed this adversary proceeding seeking to recover redemption funds obtained by Defendants from a state court registry, which had been deposited by the probate estate to redeem property the Defendants had foreclosed. Plaintiffs’ theory  was that Defendants violated the discharge injunction by taking the funds. Determining the rightful owner of the redemption funds raised an obscure legal issue on which there is no binding or persuasive precedent. An appeal and protracted litigation of this already years-long dispute was a certainty. With the Court’s encouragement, the parties pursued mediation. They reached a settlement agreement and filed a joint motion seeking its approval. One of the co-representatives then unilaterally objected to, and sought to rescind, the settlement agreement. Applying New Mexico contract and probate law, the Court denied the objection. Applying bankruptcy law, the Court approved the settlement agreement.

The Court granted, in part, attorney’s interim fee application in a chapter 13 case. Fees and associated costs and expenses for work performed in representing the debtors in their chapter 13 case and in related adversary proceeding objecting to dischargeability of debt were compensable under 11 U.S.C. § 330(a)(4)(B). The Court rejected the argument that Debtors filed and prosecuted their chapter 13 case in bad faith, rendering all fees unnecessary and unreasonable. The Court disallowed fees for filing a motion for Rule 2004 exam in an adversary proceeding; once an adversary proceeding is commenced, litigants must seek discovery through the applicable rules of civil procedure rather than Fed.R.Bankr.P. 2004. The Court also disallowed fees for preparing and filing a proof of claim on behalf of creditor prior to claims bar date, contrary to the requirements of Fed.R.Bankr.P. 3004 and 11 U.S.C. § 501(c).

Bankruptcy Rule 1007(a) and NM LBR 1009-1(c) require debtors, including chapter 7 debtors, to include all entities listed on Schedules A through J on the Mailing List, regardless of whether the debtor is in arrears on any obligations to such entities on the petition date. Landlords of unexpired leases under which the debtor is current on the petition date and co-debtors to whom the debtor owes no money as of the petition date must be listed on Schedule G and H and included on the mailing list as required by Bankruptcy Rule 1007(a) and NM LBR 1009-1(c). Such entities are entitled to notice of debtor’s bankruptcy case.  

Plaintiff (the United States Government) sought summary judgment on its Section 523(a)(2)(A) claim against Defendant. The debt at issue is a money judgment arising from Defendant’s violations of the False Claims Act, 31 U.S.C. Section 3729. The Court holds that the principle of issue preclusion bars relitigating three of the five requisite elements of a Section 523(a)(2)(A) claim (false representation, reliance, and damages).  The remaining elements (intent to deceive and justifiable reliance) were not at issue in the False Claims litigation and issue preclusion does not apply. If Plaintiff proves the remaining elements at trial, the entire judgment (including treble damages and punitive damages) will be nondischargeable. The summary judgment motion is granted in part and denied in part pursuant to Fed. R. Civ. P. 56(g).