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New Mexico Lawyers Serving New Mexico's Legal Needs Since 1997

October 2014 Archives

Water Utility Cannot Avoid Large Unsecured Claim in Bankruptcy Case

A case involving the bankruptcy of a public utility in New Mexico providing water and sewer services to residential consumers demonstrates how a debtor cannot avoid certain legal requirements imposed on particular enterprises by the State and then use the lack of state action to avoid contractual obligations which reference the State’s involvement.  Debtor Picacho Hills Utility Company, Inc. is a small water and sewer utility in Las Cruces that provides water and sewer service to approximately 1000 houses in and around the Picacho Hills development near Las Cruces, New Mexico. The Debtor had entered into a Water and Sewer Extension Agreement with Bright View Land Company to  to construct and convey to Debtor certain water and sewer lines needed to extend utility service to Bright View's "Coronado Ridge" subdivision in Picacho Hills and agreed to reimburse Bright View, over time, for the cost of construction.

Determining When Debt Levels Are Too High for Chapter 13 Bankruptcy

Individuals considering whether to file a Chapter 13 bankruptcy case must not have too much debt or they will not be eligible to file for bankruptcy protection under that chapter. The rationale underlying this ceiling stems from the concern that a debtor with too much outstanding debt would never be able to pay back a sufficient amount of their claims. Specifically, with regard to unsecured debt, someone filing must have less than $383,175 of noncontingent, liquidated, unsecured debts at the time they file their petition commencing the bankruptcy action.

Solar Energy Company Files for Chapter 7 Bankruptcy

In late July, Ascendant Energy, a solar technology company based in Owls Head, Maine, filed for Chapter 7 bankruptcy. The company will not repay approximately $780,000 in debt, acquired mainly through loans and grants from the Maine Technology Institute and investment funds from Coastal Enterprises, Inc.

Teaming Up With Your Creditors in Bankruptcy

Generally speaking, in most Chapter 7 and Chapter 13 bankruptcy cases, individuals filing such actions view their creditors – at least for the pendency of the case –as legal adversaries whose interests diverge and whose goals clash. By contrast, in some Chapter 11 corporate reorganizations, the corporation seeking bankruptcy protection will negotiate deals whereby current creditors – particularly secured creditors – will finance ongoing operations of the company and/or enter in to a future joint venture with that debtor.

Neither a Lender Nor a Broker Be

A recent ongoing case pending in the United States Bankruptcy Court in Albuquerque reflects a recurring difficulty borrowers have in dealing with putative lenders. According to a decision in the case of In Re Clark,  Case No. 13-12132-j13, Adversary No. 13-1077 T. (U.S. Bankr. Ct. N.M. 2014), the underlying facts are significantly undisputed. The daughter of the debtor/plaintiff, Carmen A. Clark, passed away on May 23, 2012.  Plaintiff had previously granted Citicorp, her daughter’s lender, a mortgage on her house at 740 E. Lucero, Las Cruces, New Mexico to secure that loan for the daughter.  Plaintiff had been named in a foreclosure action brought by Citicorp but had failed to respond, and a default judgment had been entered against her two days after her daughter’s death. With the foreclosure sale scheduled for August 9, 2012, Plaintiff filed a Chapter 13 bankruptcy action in New Mexico as a means to stop the ordered foreclosure from proceeding.

Swerving School Bus Driver Fortunate Not to Be Facing Civil Claims

The arrest of a Utah school bus driver for Driving Under the Influence on an interstate highway in Draper potentially could have raised many questions beyond whether the State of Utah will successfully prosecute her for the criminal charges that have been levied. Lycia Martinez, 39, is suspected of having taken prescription anti-anxiety/muscle-relaxer pills, which were found in her purse, Utah Highway Patrol Sgt. Blaine Robbins said.  Other motorists on the highway at time called 911 about how the school bus, driven by Martinez failed to stay within its lane and almost collided with other vehicles.

Distinguishing Between Secured and Unsecured Claims in Bankruptcy

Secured and Unsecured Claims are treated slightly differently in Chapter 7 liquidations verses a Chapter 13 reorganization or a Chapter 11 corporate reorganization. In a Chapter 7, the Debtor generally discharges all unsecured debts and does not have to pay on any of these debts. The exception is if the debt is non-dischargeable (such as a tax debt, student loan, etc.) and in that case the debt remains. The Debtor also has the option in a Chapter 7 of keeping their secured collateral and paying on the same terms and conditions, surrendering the collateral back to the lender and discharging any deficiency, or redeeming the collateral by paying the entire note balance. On the other hand, in a Chapter 13 and Chapter 11, unsecured debts are generally not completely discharged and usually are paid a small portion or are paid in full—it all depends on how much funds there are going into the Plan of Reorganization toward unsecured debts. Secured debts can be surrendered (like a Chapter 7) and then any deficiency becomes an unsecured debt or the Debtor can retain the collateral and pay on the same terms or negotiate with the lender and pay on different terms, which are usually much more favorable to the Debtor..

The Peril of Not Keeping Your Insurance Agent Properly Updated

For both personal and business reasons, be careful to make sure you keep your insurance carrier or agent well apprised of any changes in status or circumstances that you think may affect the kind of insurance coverage you have or need. The failure to do so can have serious adverse consequences that can prevent recovery under coverage you believe you have. This is the message which the recent case of Christy v. Traveler’s Indemnity Company of America, No. 13CV281 WJ/CG. (U.S. Dist Ct. N.M. 2014) delivers.

Abandonment of Claim Permitted by Bankruptcy Court in New Mexico

The United States Bankruptcy Court in Albuquerque decided to permit abandonment of property upon an unopposed motion by the Debtor itself. In the case of In Re College of Christian Brothers, Case No. 12-11195 j7 (Bankr Ct. N.M. 2014), the Court entered a default order granting a motion to abandon a pending claim held by the Debtor. Neither the Trustee in the case nor any other party to the bankruptcy case objected to the abandonment of a claim for indemnification against an insurance company which the debtor college maintains in a separate legal action wherein it was sued. The decision by the bankruptcy court in this Chapter 7 action does not mean that the Debtor must abandon its indemnification claim it is pursuing in that other case. Rather it means that the Trustee cannot or would not be able to use the proceeds from that claim – were it eventually successful – to pay off any debts owed by the Debtor.

Navajo Indians Reach Historic Settlement with Federal Government

The United States government has agreed to pay the Navajo Nation a record $554 million to settle longstanding claims by America's largest Indian tribe that its funds and natural resources were mishandled for decades by the U.S. government. The Indian nation raised many claims including improper execution of land use and water rights by the federal government over the last several decades. Specifically, the settlement derives from litigation charging the government of mismanaging Navajo trust accounts and resources on more than 14 million acres of land held in trust for the Nation and leased for such purposes as farming, energy development, logging and mining.

An Acquittal in Criminal Trial May not Bar Civil Case

A jury in Albuquerque has been hearing evidence in a case where, according to a state investigator, a police officer hit his accelerator as a vehicle driven by 21-year-old Ashley Browder went through an intersection. Ashley was killed by the impact and her 19-year-old sister, Lindsay was injured by the powerful collision. The investigator who testified at the trial estimated the police officer, Sgt. Adam Casaus, accelerated about 2.5 seconds prior to impact.

Toll Roads Forced to File Bankruptcy Due to Low Traffic

Over the last several years we have heard stories of wage-earners filing Chapter 13 cases because their mortgage is under water after their adjustable-rate mortgage adjusted in the wrong direction. We have heard of small businessmen filing Chapter 7 liquidations because revenues are not keeping up with incurred debt. But until now few have heard of highways filing for Chapter 11 bankruptcy protection. No, that is not a typo.  Highways need to reorganize their debt as well.

DISTRICT COURT IN NEW MEXICO AFFIRMS NO LIABILITY FOR EMPLOYER

The law in New Mexico and many other states holds that when an employee of a company is performing his or her work-related duties, the employer can be held legally responsible for any injuries caused by that employee. In the case of William v. Curtis, No. 12-CV-716 MCA/LAM. (U.S Dist. Ct. N.M. 2014), the federal trial court faced the issue of whether liability for an accident caused by a driver for El Paso Natural Gas Co., Inc. could be imputed to the company even though the driver had finished his duties for the day. At the time the driver, who was still driving his company truck, caused the EPNG vehicle to collide with the plaintiff's vehicle, he was on his way to a motel to get some rest. 

Bankruptcy Court’s Contempt Powers Upheld

The United States Ninth Circuit Court of Appeals ratified the use of the federal bankruptcy court ’s contempt powers to enforce its orders to a party to cooperate in conveying property located in Mexico. Foreign individuals who purchase property in Mexico within a certain range of the border with America cannot buy property out right so as to hold it as a fee simple interest. Instead they can merely hold the beneficial interest in a fideicomiso trust - an arrangement wherein a Mexican bank holds title to property and a foreign national is granted the right to its use subject to approval by the Mexican Ministry of Foreign Affairs. 

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