New Mexico Taxation and Revenue Department was not permitted to amend its timely filed proof of claim after 1) expiration of the claims bar date; 2) confirmation of debtor’s plan; and 3) entry of sale order authorizing the sale of a liquor license that provided for payment of NMTR’s then existing claim in full. The Court relied on equitable considerations, including another creditor’s detrimental reliance on the amount of NMTR’s timely filed claim, to disallow the untimely amended claim.

Plaintiff sought summary judgment on her claim that an Oregon state court default judgment against Debtor is nondischargeable. In support of her motion, plaintiff relied on the principles of claim and issue preclusion. Claim preclusion does not apply to Section 523(a) claims. Although issue preclusion may apply to such claims, the judgment in this case does not satisfy the requisite standards. Plaintiff’s nondischargeability claim is based on fraud, false pretenses, and false representation. The state court judgment was based on Plaintiff’s Oregon state law claim of “financial abuse of a vulnerable person.”  The judgment does not demonstrate an identity of issues between this and the former proceeding, nor it show that the issues underlying Plaintiff’s nondischargeability claim were actually litigated and essential to the state court judgment. Plaintiff’s motion for summary judgment is denied.  

The Court granted Plaintiff’s supplemental motion for summary judgment determining that a state court award of attorneys’ fees was entitled to preclusive effect and was appropriately included as part of the non-dischargeable judgment attributable to Defendants’ non-dischargeable conduct under § 523(a)(6). The state court entered a separate judgment for attorneys’ fees following entry of a damages judgment after trial. The Court determined that Defendants had a full and fair opportunity to litigate whether Plaintiff was entitled to attorneys’ fees at the trial in which Defendants failed to appear. The Court determined further that Defendants were not entitled to attorneys’ fees under § 523(d), which applies only to claims under § 523(a)(2). Plaintiff’s complaint included claims under both § 523(a)(2)(A) and (a)(6) based on the same conduct and the same state court judgment; the Court granted judgment under § 523(a)(6) only; and Defendants had to defend the claim under § 523(a)(6) regardless of Plaintiff’s additional claim asserted under § 523(a)(2).

The Court denied creditor’s request for relief from the automatic stay under § 362(d)(1) and § 362(d)(4). Debtor filed a prior chapter 7 case six years earlier, failed to disclose a second rental property on two loan modification applications submitted to creditor, made only one payment on the two loan modifications, and filed a second bankruptcy case under chapter 13 on the eve of a scheduled foreclosure trial. Creditor asserted that debtor intentionally undervalued the property subject to the creditor’s second lien in her bankruptcy schedules so that she could seek to strip off creditor’s mortgage through her chapter 13 plan. The Court could not determine the value of the property because creditor’s appraiser made an extraordinary assumption concerning the property’s condition. The Court determined that debtor’s conduct did not rise to the level of bad faith necessary to constitute “cause” for relief from the stay under § 362(d)(1) and did not evidence a scheme to hinder, delay, or defraud creditor sufficient to grant in rem stay relief under § 362(d)(4). Debtor’s schedules showed changed circumstances in her financial condition, and property valuation would be determined at confirmation.