Darla C. Arenivar

1The Court has subject matter and personal jurisdiction
pursuant to 28 U.S.C. §§ 1334 and 157(b); this is a core
proceeding pursuant to 28 U.S.C. § 157(b)(2)(A); and these are
findings of fact and conclusions of law as required by Rule 7052
F.R.B.P. 	This chapter 7 case was filed prior to the effective
date of most of the provisions of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 (“BAPCPA”), Pub. L. No. 109-
08, 119 Stat. 23, and therefore the changes enacted by that
legislation are not applicable to this case.
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
DARLA ARENIVAR,
Debtor. 	No. 7-05-10686 SL
MEMORANDUM OPINION ON JAMES P. ARENIVAR’S
PETITION FOR ALLOWANCE AND PAYMENT OF
ADMINISTRATIVE PRIORITY EXPENSE
This matter is before the Court on James P. Arenivar’s
Petition for Allowance and Payment of Administrative Priority
Expense (doc 26)(“Application”), and the objection of the Trustee
(also “Plaintiff” hereinafter) thereto (doc 29) 1 . 	The parties
stipulated to certain facts, which are set out below. 	The Court
has reviewed the stipulations and considered the briefs
submitted, and now issues this memorandum opinion that finds that
the Application should be granted.
STIPULATED FACTS
1. 	Debtor filed a voluntary petition under chapter 7 on
February 1, 2005.
2. 	Plaintiff filed a complaint in the adversary proceeding,
Montoya v. James P. Arenivar on November 10, 2005, and
Summons was served on Defendant on November 21, 2005.
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 1 of 10

2Upon review of the Findings and Conclusions, the Court
found typographical errors in findings 9 and 10; the year
referenced should be 2002, not 1992. 	These errors do not change
anything, however.
Page -2-
3. 	Plaintiff’s complaint sought to avoid transfer, a
determination of the validity of ownership interest, or
turnover, and to sell the estate’s interest in real property
located at 4900 Garnet, Las Cruces, New Mexico (“Subject
property”).
4. 	Defendant lived in the Subject Property continuously from
prior to February 1, 2005 until September 29, 2006, when he
moved out.
5. 	This Court held a trial on the complaint on May 11, 2006,
and count one seeking to avoid transfer was dismissed.
6. 	Judgment was entered for Plaintiff on August 30, 2006,
granting turnover.
7. 	Findings of Fact and Conclusions of Law were also entered on
August 30, 2006, in which the Court concluded that the
Debtor’s right to 100% of the full property became property
of the estate upon the filing of the petition 2.
8. 	Defendant signed a quitclaim deed on September 7, 2006 and
moved out of the Subject Property as of September 29, 2006.
9. 	On February 1, 2005, the date of the filing of Debtor’s
petition, the Debtor listed the balance due on the mortgage
on the Subject Property as $69,963.00.
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 2 of 10

Page -3-
10. 	On August 1, 2006, the last month that Defendant made a
mortgage payment, the balance due on the mortgage was
$68,325.86.
11. 	Upon sale of the Subject Property on November 1, 2006, the
pay-off to the mortgage company was $70,479.74.
12. 	After costs of sale, including commissions, the net to the
estate was $37,423.06.
13. 	The reduction in principal from February 1, 2005 to August
1, 2006 was $1,637.14.
14. 	Defendant filed an administrative claim (doc 26) in the
amount of $12,785.59, consisting of $10,869.22 for mortgage
payments, and property taxes and homeowner’s insurance
payments in the amount of $1,916.37.
15. 	Defendant also filed a general unsecured claim in the amount
of $12,348.25 for one-half of the pre-petition mortgage
payments, taxes and homeowner’s insurance plus attorney
fees.
16. 	Defendant did not pay any rent to the estate for the twenty
months that he lived in the Subject Property from the date
of the filing of the petition until September 29, 2006.
17. 	The Debtor valued the property at $97,000 on February 1,
2005. 	This value was not disputed in the Debtor’s
bankruptcy case.
18. 	The Trustee sold the property for $119,000.
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 3 of 10

Page -4-
19. 	The Trustee argued before the Court at the time of the trial
on the merits on May 11, 2006 that the Trustee should be
entitled to the fair rental value while the Defendant lived
in the Subject Property.
20. 	The Trustee filed a brief in the adversary proceeding
subsequent to the hearing on the merits on June 1, 2006 and
argued, “the Trustee asserts that the estate is entitled to
the fair rental value of the subject property.”
21. 	The Court made no finding in regard to the Trustee’s
arguments mentioned above.
22. 	The decision entered by the Court on August 30, 2006 was not
appealed.
ADDITIONAL FINDINGS
23. 	Finding of Fact 13 found that Defendant had made all
mortgage payments, insurance and taxes since a refinance in
2002.
24. 	Finding of Fact 17 found that there had been no evidence of
the total amounts paid by Defendant prepetition on the
mortgage, insurance and taxes.
25. 	Finding of Fact 18 found that there had been no evidence of
the total amounts paid by Defendant postpetition on the
mortgage, insurance and taxes.
26. 	No evidence was presented at the adversary trial on the fair
market rental value of the property.
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 4 of 10

3Lack of documentation was not addressed any further in the
briefs, so the Court will treat this objection as abandoned.
Page -5-
27. 	No evidence was presented at the adversary trial on the fair
market sale value of the property.
28. 	Conclusion of Law 9 stated “[f]rom the Petition Date to the
entry of this Opinion, all amounts paid by Defendant for
mortgage payments, insurance and taxes were actual,
necessary, reasonable costs and expenses of preserving the
estate. 	Defendant may file a request for payment of
administrative expense for that amount. 	See 11 U.S.C. §
503(b)(1)(A).”
DISCUSSION
Section 503(b)(1)(A) states, in relevant part: “After notice
and a hearing, there shall be allowed administrative expenses...
including--the actual, necessary costs and expenses of preserving
the estate.” 	Trustee does not object to Defendant’s treatment
under this subsection; rather, the Trustee objects because he
claims he has an offset to the administrative expense allowance
for the fair rental value that accrued during Defendant’s
tenancy, and also objects for lack of documentation 3 (doc 29).
Later Trustee also argues that instead of receiving credit for
the full mortgage payments, Mr. Arenivar should be reimbursed
only for principal reduction; alternatively, Trustee asks that
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 5 of 10

Page -6-
the Court find Mr. Arenivar liable for one-half of the mortgage
payments, interest and taxes. 	(Doc 37).
Defendant’s position is that the Trustee’s objection is
precluded by the Court’s Findings of Fact and Conclusions of Law
entered in the adversary proceeding. 	Defendant also seeks
sanctions. 	(Doc 39).
Trustee replies that the Memorandum Opinion could not have
precluded his objection to the Application because no amounts
were proved at trial or set forth in the briefs. 	He also argues
that the Court failed to make findings on the rent issue.
Finally, he argues that Defendant would be unjustly enriched if
he were allowed to live for almost two years rent free. 	(Doc
40).
Defendant replies that after reviewing the Findings and
Conclusions he decided not to appeal the decision because he was
to be awarded the mortgage payments, taxes and insurance for the
Subject Property from the Petition Date until he moved. 	He
suggests that if the Trustee were displeased with the result, he
should have appealed or filed a motion to amend. 	(Doc 41).
The Court finds that it should apply the “Law of the Case”
doctrine in this situation.
The law of the case doctrine posits that “[w]hen a
court decides upon a rule of law, that decision should
continue to govern the same issues in subsequent stages
in the same case.” 	Arizona v. California, 460 U.S.
605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983).
“The doctrine of law of the case comes into play only
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 6 of 10

4And, that decision was not dicta. 	Entitlement to amounts
paid or a lien was raised as an affirmative defense by defendant
in the answer. 	These issues were necessarily litigated and
decided. 	See generally 18B Wright, Miller and Cooper, Fed. Prac.
& Proc. Juris. 2d § 4478.
Page -7-
with respect to issues previously determined.” 	Quern
v. Jordan, 440 U.S. 332, 347, n. 18, 99 S.Ct. 1139,
1148 n. 18, 59 L.Ed.2d 358 (1979). 	Furthermore, the
law of the case doctrine is solely a rule of practice
and not a limit on the power of the court. 	Messinger
v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 740, 56
L.Ed. 1152 (1912). 	See also Major v. Benton, 647 F.2d
110, 112 (10th Cir. 1981) (law of the case doctrine is
not an “inexorable command” but a rule to be applied
with good sense).
“The rule of the law of the case is a rule of
practice, based upon sound policy that when an issue is
once litigated and decided, that should be the end of
the matter.” 	United States v. U.S. Smelting Ref. &
Mining Co., 339 U.S. 186, 198, 70 S.Ct. 537, 544, 94
L.Ed. 750 (1950). 	See also, Fox v. Mazda Corp. of
America, 868 F.2d 1190, 1194 (10th Cir. 1989); Gage v.
General Motors, 796 F.2d 345, 349 (10th Cir. 1986).
Mason v. Texaco, Inc., 948 F.2d 1546, 1553 (10 th Cir. 1991).
First, issues decided in adversary proceedings can become law of
the case in the main bankruptcy case. 	Artra Group, Inc. v.
Salomon Bros. Holding Co., Not Reported in F.Supp., 1996 WL
637595, at *5 (N.D. Ill. 1996). 	Therefore, the issue of whether
Defendant was entitled to an administrative expense has already
been decided in the adversary proceeding 4. 	The only issue open
for argument is the amount.
At the adversary trial and in his subsequent briefs, Trustee
argued for a fair rental value offset. 	The Court declined to
make this finding in its Findings of Fact and Conclusions of Law.
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 7 of 10

Page -8-
Generally, when a requested finding is refused, or is
inconsistent with the Court’s general findings, it is deemed to
have been rejected by the Court. 	See, e.g., Switzer Bros. Inc.
v. Locklin, 297 F.2d 39, 45 (7 th Cir. 1961), cert. denied, 369
U.S. 851 (1962)(“The trial court rejected the evidence now urged
upon us, and its failure to enter findings with respect thereto
is tantamount to findings adverse to appellants upon the
evidence. 	Furthermore, the findings entered by the court imply
its rejection of the argument now asserted.”)(Citation omitted.)
See also 9A Wright & Miller, Federal Practice & Procedure § 2579.
For this reason alone, the Court can state that it is the law of
the case that the rental offset was rejected.
However, this rental offset is also not consistent with the
laws of co-tenancy. 	From the petition date to the execution of
the quit claim deed in September, 2006, Defendant and Trustee
were co-tenants of the Subject Property. 	In Olivas v. Olivas,
108 N.M. 814, 780 P.2d 640 (Ct. App. 1989) the New Mexico Court
of Appeals discussed New Mexico’s common law of co-tenancy:
Husband and wife held the family home as community
property during the marriage and as tenants in common
after dissolution. See Phillips v. Wellborn, 89 N.M.
340, 552 P.2d 471 (1976); Hickson v. Herrmann, 77 N.M.
683, 427 P.2d 36 (1967). 	Although wife was the
exclusive occupant of the house after the separation,
ordinarily a cotenant incurs no obligation to fellow
cotenants by being the exclusive occupant of the
premises.
“[I]t is a well-settled principle of the common
law that the mere occupation by a tenant of the
entire estate does not render him liable to his
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 8 of 10

Page -9-
co-tenant for the use and occupation of any part
of the common property. 	The reason is easily
found. 	The right of each to occupy the premises
is one of the incidents of a tenancy in common.
Neither tenant can lawfully exclude the other.
The occupation of one, so long as he does not
exclude the other, is but the exercise of a legal
right. 	If, for any reason, one does not choose to
assert the right of common enjoyment, the other is
not obliged to stay out; and if the sole
occupation of one could render him liable therefor
to the other, his legal right to the occupation
would be dependent upon the caprice or indolence
of his co-tenant, and this the law would not
tolerate.”
Williams v. Sinclair Refining Co., 39 N.M. 388, 392, 47
P.2d 910, 912 (1935) (quoting Hamby v. Wall, 48 Ark.
135, 137, 2 S.W. 705, 706 (1887)).
See also Trujillo v. Lopez (Estate of Lopez), 106 N.M. 157, 160,
740 P.2d 707, 711 (Ct. App. 1987)(“Mere occupation does not
render a tenant liable to his co-tenant for use and occupation of
the property, as each has the right to occupy the premises, but
neither tenant can lawfully exclude the other.”) Therefore, as
long as Defendant was on the deed, he had an equal right with the
Trustee to occupy the premises rent free. 	This result also
addresses Trustee’s argument that Defendant is unjustly enriched
by living rent free; it is not unjust enrichment to use what one
is entitled to use.
Trustee’s only other significant argument is that Defendant
should be credited only with principal reductions, not the
interest component of the mortgage payments. 	First, the law of
the case established that Defendant was entitled to mortgage
payments, not just principal. 	Secondly, the interest component
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 9 of 10

Page -10-
benefitted the estate just as much as the principal payments did.
Had Defendant not made the interest payments, the mortgage would
have defaulted and the mortgage company would have foreclosed on
the property.
Finally, the Court does not believe that Trustee’s objection
to the Application is sanctionable. 	The resolution of the
objection required consideration of various legal theories and
was not obvious, and there was no evidence that the Trustee acted
in anything but good faith.
Honorable James S. Starzynski
United States Bankruptcy Judge
copies to:
Bonnie Bassan Gandarilla
Moore, Berkson & Gandarilla, P.C.
PO Box 216
Albuquerque, NM 87103-0216
R Trey Arvizu, III
PO Box 1479
Las Cruces, NM 88004-1479
Case 05-10686-s7 Doc 44 Filed 09/13/07 Entered 09/13/07 10:08:51 Page 10 of 10