Michael Brown Richesin

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
PACER Cover Sheet
for Electronically Filed Documents
Any data shown here are current as of 	. Any element of information on this form,
except the received date, is subject to change as changes may be made to the Court's official docket.
Case Title:
Case Number:
Document Information
Description:
Date Filed:
Date Entered On
Docket:
Filer Information
Submitted By:
If this form is attached to the document identified above, it serves as an endorsed copy of the
document as it existed on the above date. To confirm that nothing has changed since then,
review the docket.
06/10/06
Michael Brown Richesin
04-10884
Order Denying [65-1] Amended Plan, [26-1] Amended Plan. See order for specific
details.
Received on: 2005-02-16 10:23:51.000
2005-02-16 00:00:00.000
2005-02-16 00:00:00.000
Patti Hennessy
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 1 of 9

1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: MICHAEL BROWN RICHESIN, No. 13-04-10884 MR
Debtor.
ORDER DETERMINING THAT DEBTOR IS
INELIGIBE FOR CHAPTER 13 RELIEF UNDER 11 U.S.C. § 109(e)
THIS MATTER is before the Court on confirmation of the Debtor’s First Amended Chapter
13 Plan, on the limited issue of the Debtor’s eligibility for relief under Chapter 13 under 11 U.S.C. §
109(e). The Court held a final hearing on February 1, 2005. Debtor Michael Richesin was
represented by William Davis. Creditor Robert Palmer, M.D., was represented by George Moore.
Dr. Palmer asserts that the Debtor is ineligible for relief under Chapter 13 of the Bankruptcy Code
because the Debtor’s total unsecured debt exceeds the debt limitations set forth under 11 U.S.C. §
109(e). Whether the Debtor is eligible for Chapter 13 relief depends on whether the debt to Dr.
Palmer is liquidated and non-contingent. If Dr. Palmer’s claim is included in the computation of
unsecured debts, the Debtor is ineligible for Chapter 13 relief under 11 U.S.C. § 109(e). After
considering the evidence, and being otherwise sufficiently informed, the Court finds that the debt to Dr.
Palmer is neither unliquidated, nor contingent. Consequently the debt must be included in the total
unsecured debt, rendering the Debtor ineligible for Chapter 13 relief under 11 U.S.C. § 109(e).
FACTS AND BACKGROUND
Debtor filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code on
February 10, 2004. Prior to the filing of the Debtor’s bankruptcy proceeding, Dr. Palmer instituted a
civil lawsuit against Michael Mickey Richesin, Janet Richesin, A & J Automotive, A & J Automotive,
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 2 of 9

2
Inc., MJR Enterprises, Ltd., Car Company, Inc., Property Investments, Ltd., and Larry Lanphere in
the Second Judicial District Court, as Case Number C-202-CV-9812303 (“State Court Action”). An
Order was entered in the State Court Action on Dr. Palmer’s motion for partial summary judgment on
December 9, 2003. The Order found that “the promissory note and addendum are liabilities of A&J
Automotive, a New Mexico partnership, and its partners Mickey Richesin and Janet Richesin,” and that
“Mickey Richesin and Janet Richesin, partners, are jointly and severally liable for payments pursuant to
the promissory note and addenda.” See Exhibit 2. Post-petition, a Judgment was entered in the State
Court Action which referenced the prior Order establishing that Mr. Richesin was jointly and severally
liable. See Exhibit 1, ¶ 1. The Judgment found that the amount of the liability was $251,109.33. Id.
The Judgment was not entered against Mr. Richesin due to the filing of his bankruptcy proceeding and
the imposition of the automatic stay pursuant to 11 U.S.C. § 362. Id., ¶ 2.
Dr. Palmer’s Proof of Claim identifies the claim as an unsecured claim in the total amount of
$266,597.53. (See Claim #7). A copy of the Judgment is attached to the Proof of Claim as evidence
of the claim. There is no copy of the underlying promissory note or addenda before the Court.
Debtor lists Dr. Palmer’s claim on his Schedule F as a contingent, disputed, unliquidated claim in the
amount of $100,000.00 based on a personal guaranty of business debt. Debtor has not filed an
objection to the claim of Dr. Palmer in this bankruptcy proceeding.
DISCUSSION
In 2004, when the Debtor filed his bankruptcy petition, “[o]nly an individual with regular
income that owes, on the date of the filing of the petition, noncontingent liquidated, unsecured debts of
less than $290,525 and noncontingent liquidated secured debts of less than $871,550" is eligible for
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 3 of 9

1The debt limitations were increased in 2005 to $307,675 for unsecured debt and $922,975
for secured debt. See 11 U.S.C. § 109(e).
2The secured debt limitation contained in 11 U.S.C. § 109(e) is not at issue. In closing
argument Debtor conceded that the claim of the Internal Revenue Service (“IRS”) must be included in
the unsecured debt calculation, though the Debtor lists the priority and unsecured claims of the IRS as
contingent, unliquidated, and disputed in Schedules E and F. Tax obligations are non-contingent claims
when the taxpayer’s duty to pay is imposed by statute and arises upon non-payment of the taxes. See
Mazzeo v. United States (In re Mazzeo), 131 F.3d 295, 303 (2nd Cir. 1997) (holding that statute
imposing personal liability on person responsible for failure to pay business’ withholding taxes makes
the tax debt non-contingent for purposes of determining eligibility under 11 U.S.C. § 109(e)).
3In computing the total unsecured claims, the Court should look primarily to the debtor’s
statements and schedules and the filed proofs of claim, but “neither place total reliance upon a debtor’s
characterization of a debt nor rely unquestionably on a creditor’s proof of claim . . . ” Barcal v.
Laughlin (In re Barcal), 213 B.R. 1008, 1015 (8th Cir. BAP 1997) (citation omitted). The Internal
Revenue Service filed an amended claim listing $81,612.87 as a priority unsecured claim and
$79,908.28 as a general unsecured claim. (See Claim # 12 and Claim # 16). Based on the figures
listed in Debtor’s Amended Schedule F, the total unsecured debt, including the IRS’s priority claim, as
amended, but excluding Dr. Palmer’s claim entirely, is $209,988.49.
3
Chapter 13 relief. 11 U.S.C. § 109(e).1 The parties agree that if the claim of Dr. Palmer is included in
the calculation of unsecured debts, the Debtor exceeds the debt limitation contained in 11 U.S.C. §
109(e) and is not eligible for Chapter 13 relief.2 This is true even if Dr. Palmer’s claim is valued at the
$100,000.00 figure listed in Debtor’s Schedule F.3
Debtor asserts that the debt to Dr. Palmer is unliquidated and contingent because no judgment
has yet been entered against the Debtor and because the promissory note and addenda that allegedly
form the basis of Dr. Palmer’s claim are not before the Court. Debtor argues further that until every act
is completed to make a debt collectible, it remains contingent. Here, because no judgment has been
entered against Debtor individually, Debtor contends liability has not yet attached and the debt,
therefore, remains contingent. This Court disagrees.
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 4 of 9

4
Only debts that are contingent or unliquidated as of the date of the filing of the bankruptcy
petition can be excluded from the debt calculation to determine eligibility under 11 U.S.C. § 109(e).
Whether a debt is “liquidated” depends on “the certainty or uncertainty of the amount due.” In re
McGovern, 122 B.R. 712, 716 (Bankr.N.D.Ind. 1989). If the amount of the debt is “readily
ascertainable,” it is liquidated. In re Hanson, 275 B.R. 593, 596 (Bankr.D.Colo. 2002)(citation
omitted). Whether a debt is “contingent” depends on whether the facts that give rise to liability are
based on a future event. Mazzeo, 131 F.3d at 303. A debt is “noncontingent when all of the events
giving rise to liability for the debt occurred prior to the debtor’s filing for bankruptcy.” Id. “‘Only if
liability relies on some future extrinsic event which may never occur will the debt be held to be
contingent.’” In re Reader, 274 B.R. 893, 896 (Bankr.D.Colo. 2002) (quoting In re Nesbit, 2000
WL 294834, at *2) (Bankr.W.D.Pa. 2000)).
A debt is not unliquidated or contingent merely because a debtor disputes the debt. Hanson,
275 B.R. at 596 (“‘merely because a debtor disputes a debt, or has potential defenses or counterclaims
that might reduce the creditors’ actual collection, the debt is not thereby rendered ‘contingent’ or
‘unliquidated’’”) (quoting In re Crescenzi, 69 B.R. 65 S.D.N.Y. 1986)). “[T]he vast majority of
courts have held that the existence of a dispute over either the underlying liability or the amount of a
debt, does not automatically render the debt either contingent or unliquidated.” In re Jordan, 166 B.R.
201, 202 (Bankr.D.Me. 1994).
Here, the debt at issue is both liquidated and non-contingent. It is liquidated because the
amount of the debt can be readily ascertained. Debtor describes the debt to Dr. Palmer in his Schedule
F, as a “personal guaranty on business debt,” and ascribes a value of $100,000.00, though the debt is
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 5 of 9

5
characterized as “contingent,” “unliquidated,” and “disputed.” Dr. Palmer’s proof of claim states that
the basis for the claim is “money loaned,” attaches a copy of the Judgment, and values the claim at
$266,597.53. Though the note and addenda upon which the liability is based are not before the Court,
promissory notes are the types of contractual obligations that are considered liquidated for purposes of
determining eligibility because the amount is readily calculable. See, e.g., In re Fostvedt, 823 F.2d
305, 306 (9th Cir. 1987) (rejecting debtor’s argument that liability on promissory note was unliquidated
and contingent because amount he ultimately would be required to pay depended upon what portion of
the note the co-obligors paid); In re Burgat, 68 B.R. 408, 411 (Bankr.D.Colo. 1986) (claim premised
in part on promissory note arising from underlying franchise agreement was liquidated notwithstanding
complexity in determining exact amount of debt, and notwithstanding debtor’s affirmative defenses to
the claim), In re Pulliam, 90 B.R. 241, 244 (Bankr.N.D.Tex. 1988) (claims against guarantor were
liquidated because the amount was ascertainable from unconditional guaranty contracts and promissory
notes, notwithstanding fact that creditor stated that its claims were undetermined in the proof of claim).
In contrast, “[t]ort claims such as fraud, piercing the corporate veil, or quantum meruit, which were
disputed and where proof as to liability and damages is still to be produced, were likened to and
deemed contingent in nature.” In re Clark, 91 B.R. 570, 574 (Bankr.D.Colo. 1988) (emphasis in
original). Given that the debt is based on a promissory note, and addenda, and given that the State
Court Action has already determined that the Debtor is jointly and severally liable for the debt, the
Court finds that the debt at issue is liquidated in the minimum amount of $100,000.00 as listed in the
Debtor’s Statements and Schedules.
Debtor points out that the Judgment was entered post-petition, and was not entered against him
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 6 of 9

6
personally. But the fact that the Judgment was not entered against him personally does not render the
debt unliquidated, which only concerns the amount of the debt, not the existence of liability. See
McGovern, 122 B.R. at 715 (“Liquidation relates only to the amount of any liability. It does not
concern the existence of liability itself.”). Moreover, “[a] debtor’s dispute, defenses or counterclaims
do not affect the character and classification of a claim as being liquidated.” In re Clark, 91 B.R. at
574 (emphasis in original) (citations omitted).
That no judgment was entered against Debtor as of the date of the petition relates more to
whether the debt is contingent than whether the debt is liquidated. However, the entry of a judgment is
not a pre-requisite to liability for purposes of determining whether a debt is non-contingent. See, e.g.,
In re Knight, 55 F.3d 231, 236 (7th Cir. 2995) (rejecting debtor’s argument that fines and penalties
assessed against him were contingent because no judgment had been entered as of the petition date);
Reader, 274 B.R. at 897 (debt not contingent, though debt not reduced to judgment as of petition
date); Jordon, 166 B.R. at 201-202 (claim raised in civil lawsuit not contingent though debtor filed
bankruptcy before a judgment was entered). All of these cases focus on whether all acts that give rise
to liability occurred pre-petition. As explained by the Bankruptcy Court in In re McGovern,
The proper characterization of a claim as contingent or noncontingent depends upon
events that have already taken place, as opposed to events which have yet to occur.
So long as all of the allegations upon which the fact of liability is based related to events
that have already occurred the claim is noncontingent. We are not concerned with the
uncertainty that exists over whether or not the finder of fact will ultimately determine
that those events actually occurred and impose liability. Otherwise, every claim,
whether in contract or tort, would be contingent until judgment had been entered.
McGovern, 122 B.R. at 716.
When “‘all of the allegations upon which the fact of liability is based relate to events that have already
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 7 of 9

7
occurred’” the claim is noncontingent. Knight, 55 F.3d at 236 (quoting In re McGovern at 716).
Courts focus on the “triggering event” that causes liability to determine whether a debt is contingent.
See Mazzeo, 131 F.3d at 303 (“‘a claim is contingent as to liability if the debtor’s legal duty to pay
does not come into existence until triggered by the occurrence of a future event . . . . [A] creditor’s
claim is not contingent when the ‘triggering event’ occurred prior to the filing of the chapter 13
petition.’”) (quoting 2 Collier on Bankruptcy ¶ 109.06[2][b] (Lawrence P. King, ed., 15th ed. rev.
1997)).
In this case, there were two pre-petition triggering events that render the debt non-contingent.
The second event, the entry of the Order finding the Debtor jointly and severally liable for payments
due under the note and addenda, presupposes the first event: the failure to pay. Because all events that
give rise to the Debtor’s liability occurred pre-petition, the debt at issue is not contingent. The debt to
Dr. Palmer must be included in the total amount of unsecured debt as of the date of the petition.
Based on the foregoing, the Court concludes that the Debtor’s unsecured debts exceed the
limits set forth in 11 U.S.C. § 109(e). The Debtor is, therefore, ineligible for relief under Chapter 13 of
the Bankruptcy Code.
WHEREFORE, IT IS HEREBY ORDERED, that the Debtor’s First Amended Chapter 13
Plan is DENIED confirmation. Debtor may seek to convert his proceeding to Chapter 7 or Chapter 11
in accordance with 11 U.S.C. § 1307 within fifteen days of the entry of this Order, or the case will be
dismissed.
_________________________________________
MARK B. McFEELEY
United States Bankruptcy Judge
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 8 of 9

8
I certify that on the date shown on the attached
document verification, a true and correct copy of
the foregoing was either electronically transmitted,
faxed, delivered or mailed to the listed counsel
and/or parties.
William F. Davis
Attorney for Debtor
PO Box 6
Albuquerque, NM 87103 -6
George Moore
Attorney for Dr. Palmer
PO Box 216
Albuquerque, NM 87103
Annette DeBois
Attorney for Chapter 13 Trustee
625 Silver Ave. SW, Suite 350
Albuquerque, NM 81702
________________________________
Patti G. Hennessy
Law Clerk
(505) 348-2545
Case 04-10884-j7 Doc 71 Filed 02/16/05 Entered 02/16/05 11:16:00 Page 9 of 9