Anastacio Alanis

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
ANASTACIO ALANIS,
Debtor. No. 7-03-16513 SL
MEMORANDUM OPINION IN SUPPORT OF
ORDER VOIDING JUDICIAL LIEN
Anastacio Alanis-Rincon (“Debtor”) has moved to avoid the
transcript of judgment lien of Shelley Nichols-Shaw (“Creditor”)1
as impairing his homestead exemption. Doc 29. For the reasons
set forth below, the Court finds that the lien should be avoided
in its entirety on Debtor’s interest in the homestead property.2
Background
In 1999 Antonio Alanis, one of Debtor’s sons, caused an
automobile accident which severely injured and permanently
disabled Creditor. Following Antonio’s criminal conviction,
Creditor brought a civil action against Antonio and Debtor based
on various causes of action. Debtor did not appear on the trial
date and a judgment was entered against Debtor and his son in the
amount of $427,846.29 (which figure included $110,923.12 in pre-
Debtor was represented by counsel Trey Arvizu; Creditor	1
represented herself. Creditor did a quite creditable job of
representing herself, and the Court is confident that even if
Creditor had been able to afford an attorney, the outcome would
not have been more favorable to her.
The Court has subject matter and personal jurisdiction	2
pursuant to 28 U.S.C. §§1334 and 157(b); this is a core
proceeding pursuant to 28 U.S.C. §157(b)(2)(B),(K)and (O); and
these are findings of fact and conclusions of law as may be
required by Rule 7052 F.R.B.P.
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judgment interest) together with accruing interest at the rate of
8.75% per year. Exhibit 7. The transcript of judgment was filed
in Dona Ana County on May 7, 2003. Exhibit 5. On August 18,	3
2003, Debtor filed his chapter 7 petition. Ultimately, Debtor
received his discharge and the case was closed on June 16, 2006.
On September 30, 2009, employing another attorney, Debtor got the
case reopened and then filed the lien avoidance action at issue.
Following extended pretrial proceedings, the matter was tried to
this Court in Las Cruces over the course of two separate days.
Analysis
Since at the time of the acquisition of the property in
question Debtor was (and still is) married to his spouse, the
property in question is presumed to be community property under
New Mexico law. N.M.S.A. (1978) §40-3-12(A) (“Property acquired
during marriage by either husband or wife, or both, is presumed
to be community property.”) (2006 Repl. Pamph.). The evidence
also made abundantly clear, nor has Debtor disputed, that he has
at least joint control over the property and that the property is
liable for his debts.
Debtor numbered the pages of her exhibits consecutively	3
(page 1 through page 91)so that, for example, the New Mexico
State Police report of the accident, comprising three pages, is
numbered 1-3. The next document is a one-page letter from the
Third Judicial District Court Clerk’s office, and consequently is
identified as Exhibit 4. The transcript of judgment is comprised
of pages 5 and 6, and is identified as Exhibit 5. The Court has
adopted this numbering convention for all of Creditor’s exhibits.
(Note: Exhibits 1 and 4 were not admitted into evidence.)
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11 U.S.C. §541(a)(2) provides as follows:
The commencement of a case under section 301, 302, or
303 of this title creates an estate. Such estate is
comprised of all the following property, wherever
located and by whomever held:
. . .
(2) All interests of the debtor and the debtor's
spouse in community property as of the commencement of
the case that is--
(A) under the sole, equal, or joint management and
control of the debtor; or
(B) liable for an allowable claim against the
debtor, or for both an allowable claim
against the debtor and an allowable claim
against the debtor's spouse, to the extent
that such interest is so liable.
In consequence, even though Debtor listed only his “½ interest in
Residence [homestead]” on Schedule A (doc 1, admitted into
evidence as Debtor’s exhibit A), the entire property became part
of the bankruptcy estate upon the filing of Debtor’s petition.
And this was so even though in Schedule C, Debtor claimed as
exempt only “½ interest in Residence”. See, for example, In re
Victor, 341 B.R. 775, 781 (Bankr. D.N.M. 2006) (“Thus the debtor
may exempt her one-half interest in the community property, while
the whole of the property is included in the bankruptcy
estate.”), citing In re Page, 171 B.R. 349, 352 (Bankr. W.D.Wis.
1994) (“The debtor, therefore, was able to exempt her one half
interest in the check but no more. It is irrelevant that because
there were no objections, the entire check was deemed exempt.”).
The trial focused on what exactly constituted the homestead
on the petition date and what was the value of the homestead.
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Precise evidence on the issue of value was difficult to come by
because of the passage of time and Creditor’s resources. The	4
Court’s findings are based on the testimony of Debtor, Creditor
and Creditor’s mother, the schedules and some of the exhibits,
including photographs of the property at various times.
The relevant portion of §522(f) reads as follows:
(1) Notwithstanding any waiver of exemptions but
subject to paragraph (3), the debtor may avoid the
fixing of a lien on an interest of the debtor in
property to the extent that such lien impairs an
exemption to which the debtor would have been entitled
under subsection (b) of this section, if such lien is--
(A) a judicial lien, other than a judicial lien that
secures a debt of a kind that is specified in section
523(a)(5);....
...
(2)(A) For the purposes of this subsection, a lien
shall be considered to impair an exemption to the
extent that the sum of--
(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor
could claim if there were no liens on the
property;
exceeds the value that the debtor's interest in the
property would have in the absence of any liens.
It appears that on the petition date, the parcel had on it
the home that Debtor had built and occupied together with his
spouse and their children (“green house”), the home under
construction by another of Debtor’s sons (“blue house”), and a
mobile home. The homestead parcel consists of Lots 2 and 4 of
At a previous hearing, Creditor explained that she could	4
not find anyone in Las Cruces to research the records and provide
her an estimate of the 2003 value of the property six years after
the petition date.
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the Ogaz Addition, Salem, Dona Ana County, New Mexico. Exhibit
13. While none of the exhibits admitted into evidence (including
the deed) state the size of the total parcel, it appears that it
is perhaps 4/10 of an acre or so.5
Debtor testified that he had purchased the two lots about
1986 for $6,000. He cleared them of weeds and “hills” and then	6
spent two years constructing the green house. Debtor got help
from his brother in laying the concrete foundation for the green
house. He then constructed the walls of cinder block with a
concrete coating, and the roof is concrete and rebar. He brought
running water into the house, and had electricity and gas
installed. The house however has no insulation, and no heating
or air conditioning. The photographs suggest that Hayes Street
was not paved. Exhibits 86 and 87.
Two months after completing the home, Debtor moved himself,
This is based on exhibit 86, a December 29, 2009 “address	5
certificate” from Dona Ana County based on a 2007 aerial photo
(exhibit 87). Exhibit 86 has a measurement legend on the bottom
showing 130-foot increments. The photo measurements would be
roughly consistent with Debtor’s testimony that the green house
was about 800 square feet. Although not admitted for this
purpose, exhibit 22 from the Dona Ana County assessor’s office
shows the square footage of the parcel as 19,600 square feet,
which would be approximately .45 acre, and the square footage of
the green house at 798.
Debtor purchased the lots from his brother Donato Alanis	6
and Donato’s spouse Petra. Exhibit 13. The one-page standard
form deed reflects that it was acknowledged by the transferors on
July 3, 1990 and recorded on July 5, 1990. Debtor explained,
with no evident irony, that it took a long time to get the
paperwork together.
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his spouse and his ten children into the home. Debtor estimated
that the house is about 800 square feet, and also testified that
the house was comprised of a 15' by 15' bedroom, 15' by 15'
living room, 14' by 14' kitchen and the bathroom. Debtor
testified in effect that there was not enough room in the house
for all the children; some of them suffered through having to
sleep in the uninsulated shell of the blue house as it was being
constructed.
After building and moving his family into the green house,
where he and his spouse have continuously resided ever since, he
or one of his sons began to construct the blue house. That house
was partially constructed – from the photographs it appears that
it had a floor, walls and roof but little else, including no
windows or doors – as of the date of the filing of the petition.
Exhibit 83. There was also apparently a trailer or mobile home
(“traila” or “casa movil”) on the property being used by the son
during the construction of the blue house. However, comparing	7
exhibit 83 with exhibit 84 (taken on March 17, 2004), it appears
that the mobile home was not there at the time the petition was
filed. In any event, there was insufficient evidence about
whether the trailer was affixed to the real estate, and it did
not belong to Debtor and was subsequently moved.
Photographic exhibits 84 and 85 suggest the trailer may	7
have been a small manufactured home.
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Debtor’s schedule A listed Debtor’s “½ interest in	8
Residence” valued at $20,000, meaning the homestead had a total
value of $40,000. Since Debtor’s spouse has not filed, the “½
interest in Residence” accurately characterized Debtor’s interest
in the property. Other than the transcript of judgment, there
were no liens on the property. Schedule C claimed exempt
Debtor’s $20,000 interest in the property. No objections were
filed to the claimed exemptions, including the homestead
exemption.
Debtor’s trial testimony about the value of the property was
consistent that entire property was worth about $20,000 in August
2003. But as noted that testimony was at odds with the
information in Debtor’s schedules, which implied that the
property was worth $40,000.
Debtor’s counsel argued that the listings in the schedules
were ambiguous, so that the listings could mean the entire
property constituting the homestead was valued at $20,000. That
argument would be consistent with Debtor’s repeated insistence at
trial that the property at issue had a total value of $20,000.
However, Schedule A not only lists the value as $20,000 under the
Schedule A instructions of “Current Market Value of Debtor’s
Interest in Property” (emphasis added); it also states under
The Court takes the schedules, signed by Debtor under	8
oath, as admissions of Debtor.
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“Nature of Debtor’s Interest in Property” that Debtor is “Co-
Owner”. Schedule C also lists Debtor’s “½ interest in Residence”
as exempt. But Schedule C also lists $20,000 as the “Current
Market Value of Property Without Deducting Exemptions” for
Debtor’s “½ interest in Residence”. It is true that in this
context “Property” is not clarified either in the heading of the
column or in the entries made by Debtor. And Debtor is therefore
correct in arguing that that specific entry is ambiguous taken
alone, since that listing could be interpreted as simply stating
that Debtor’s interest was worth $20,000, or that the entire
property was worth $20,000. But especially in light of the
listing in Schedule A, the former interpretation seems more
likely.
This interpretation of Debtor’s schedules is bolstered by
the fact that the maximum homestead exemption available to Debtor
at that time was $30,000, having been raised from $20,000 by an
amendment to the statute in 1993. N.M.S.A. (1978) §42-10-9 (2011
Cum. Supp.). Debtor’s exemption of $20,000 fits neatly with an
effort by Debtor to exempt the entire value of a one-half
interest in the property if the value of the entire property were
$40,000. The Court also takes judicial notice of the
adjudicative fact that Debtor’s previous counsel at that time was
(and she still is) an experienced chapter 7 debtor’s attorney who
spoke fluent Spanish. Thus the Court finds that the Schedule A
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listing is sufficiently unambiguous that the Court finds that
Debtor valued his “½ interest in Residence” at $20,000.
The Court would have expected Debtor to have explained the
discrepancy between his current valuation and the valuation
clearly implied in his schedules, including if necessary calling
as a witness Debtor’s former counsel to help with the
explanation. There could of course have been many reasons Debtor
did not call his former counsel as a witness, including that
Debtor’s resources were limited, that former counsel would not
have a sufficient recollection of the facts to be at all useful,
etc. Had former counsel been called and testified that the
schedules were erroneous and that she had meant to value the
entire property at $20,000 instead of attributing that value only
to Debtor’s half interest, the Court might have agreed with
Debtor’s valuation. However, the Court finds more persuasive
Debtor’s sworn statements in his schedules filed in 2003, and
will use that value for this decision.
There was a considerable dispute about details about the
house (and just about everything else), based in part on the
Debtor’s insistence that he cannot read or write, having had no
formal education whatever. Debtor also testified that the lack
of schooling meant he was not good at arithmetic. He stated that
all his life he had worked in agriculture, suggesting that he had
no need of reading, writing or arithmetic skills to make a
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living. Creditor vigorously challenged Debtor’s inability to
provide details about square footage, dollars spent, etc. For
example, she raised the question of how Debtor knew how many bags
of cement to purchase for the concrete floor of the green house.
(Similar questions could be raised about estimating the number of
cinder blocks needed for the walls, the amount of rebar for the
roof, the size of the window and door openings, etc.) Debtor
responded that he simply estimated those things. The Court finds
that Debtor overall was credible on this issue. While the Court
believes that Debtor may have downplayed his abilities somewhat
(particularly his calculation skills), the Court also finds that
a building as described by Debtor could be built without the need
for the skills implied by Creditor’s questions. It is worth
noting that there is no evidence of a building permit for the
green house, so that technical requirements that might have been
imposed by the town or the county would not have hindered
Debtor’s efforts. Nor was there enough evidence about the
quality of the construction of the green house such that the
Court could extrapolate from the construction what Debtor’s
computational skills were at the time.
Creditor argued vigorously that the facts that the parcel
consists of two lots, has two or three different house numbers
(859 [green house], 865 [former location of the house trailer]
and 869 [blue house] Hayes Street), could be subdivided, and may
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have separate utilities running to the green house and the blue
house meant that Debtor was not entitled to treat the entire
property as exempt, or that it exceeded the exempt value. The
short answer is that the entire property was exempted by Debtor
and no one objected.9
Creditor also sought to introduce into evidence various
documents from the offices of Dona Ana County to show that
someone at the county put a higher value on the property.
Exhibits 10 (assessor’s office CY 2003 valuation of the land and
building at $45,400), 11 (same for CY 2004) , 12 (CY 2005	10
valuation at $50,546), 77 (county building permit issued March 3,
2004 in which someone has valued the blue house at $60,000), and
82 (January 21, 2004 red tag report that apparently led to
issuance of exhibit 77). See also exhibits 54-59, 63 (mortgages
to Coronado Finance, Inc. in varying amounts), 75 and 78 (letters
from Shan Nichols, Creditor’s mother, to trustee providing
information about values of property, conduct of Debtor, etc.).
And given the use of both lots as a single parcel, the	9
fact that the area is apparently less than half an acre, the
quite low value of the entire parcel, and the partial
construction and non-habitability of the blue house at the time
of the filing, it is quite unlikely any objection to the claim of
exemption would have been successful. Thus, Creditor need not be
concerned that the claim of exemption was a point in the
proceedings where she could have altered the course of events.
Even if exhibits 10 and 11 had been admitted to establish	10
values, the valuation of $45,400 stated therein is remarkably
close to the $40,000 total value asserted by Debtor in his
schedules.
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The problem with admitting into evidence the county
documents to establish value is that doing so would not permit
the parties or the Court to examine whoever it was that inserted
the values into the documents. That is, admitting the documents
for the truth of their contents would leave the parties and the
Court completely unable to ask the person or persons how those
numbers were arrived at. Did the numbers come from a county
employee, or someone else? Did that person actually inspect the
property and then assemble and analyze a list of comparable
properties, or did the person simply run a program that generated
a number based on historic or perhaps unreliable data? Did the
$60,000 figure in exhibit 77 come from a contractor who did not
know or care about what the property was actually worth?
The “information” in these sorts of documents is termed
“hearsay” precisely because neither the parties nor the Court
would be able to hear directly from and question the author(s) of
the numbers to determine what the basis was for the values stated
in the documents. Further, the documents are lacking in other
indicia of reliability, and so are not admissible. The essence
of the trial process is to examine the factual predicates for and
the reasoning that leads to the conclusions about value;
admitting those documents to prove value would be completely
contrary to the fact-sifting process that is supposed to
characterize trials. The rules of evidence that govern court
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proceedings are not arbitrary; they are intended to permit the
Court to arrive at a decision which is as correct as possible
given the available reliable information.
Similar reasoning applies to the mortgage documents and the
letters of Ms. Nichols. To begin with, taking a mortgage on a
piece of property to secure repayment of a debt does not say
anything about the value of the property. As the varying amounts
of the mortgage debts make clear, ranging from $17,026.80
(exhibit 59) down to $1,241.04 (exhibit 63), regardless of how
much Debtor was borrowing Coronado, Coronado obtained a mortgage.
Thus, the mortgages were irrelevant on the issue of value. And
Ms. Nichols, although acting in complete good faith to assist her
daughter and to help the trustee do his job, did not provide an
independent basis for valuing the property. She has no expertise
as such in valuing real estate, and certainly not any that would
qualify her to testify as a real estate expert pursuant to F.R.E.
702 (the federal rule of evidence that addresses expert
witnesses).
Creditor also sought to introduce a considerable amount of
information about the value of the Hoover Street property (also
located in Salem) and of the mobile home. The specific issue
being tried, however, was whether the transcript of judgment
should be voided as to Debtor’s homestead. Therefore the value
of other property was irrelevant.
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Similarly, evidence that harked back to Debtor not being
denied his discharge (see Nichols-Shaw et al. v. Alanis,
Adversary Proceeding No. 03-1378, in which this Court entered a
judgment denying the complaint to deny Debtor his discharge) is
also not relevant. Nor can the Court, in the name of equity or
for any other reason, ignore the specific provisions of the
Bankruptcy Code to impose additional requirements on Debtor to
claim his exemptions, or to otherwise punish Debtor. Thus the
Court has no authority to require Debtor to subdivide the Hayes
Street property (which, as Creditor makes clear, seems eminently
doable) and sell off half of it in order to partially satisfy the
transcript of judgment. And Debtor, having obtained his
discharge and thereby his “fresh start”, was entitled to	11
purchase new vehicles and otherwise get on with his life.
Creditor also vigorously pursued information about any
insurance policy that may have been in effect in 2003 against
which Creditor could have claimed. Why Creditor was never able
to obtain that information (despite having counsel for the civil
tort action against Antonio Alanis and Debtor) is not at all
Creditor also asserted non-dischargeability claims in the	11
adversary proceeding she filed against Debtor. It is difficult
to see how she would have been able to establish a §523(a)(6)
claim when the language of the statute, “willful and malicious
injury”, in effect requires that she prove that it was Mr. Alanis
(not his son) who intended to injure her. Thus, her decision not
to use her limited resources to pursue that claim was very
reasonable.
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clear to the Court, nor is it clear that there would be any basis
whatever for making a claim against any such policy now. But
more to the point, that entire issue is beside the point of
whether the transcript of judgment impairs Debtor’s exemption.
Conclusion
There is no question that Creditor has been terribly
injured, physically and emotionally. She has explained on
several occasions not only what the continuing disabilities are,
which have required numerous surgeries and will require even
more, but also how severely her injuries have impacted her
ability to support and care for members of her family. The
difficulty of her situation is apparent to the Court, and indeed
has never been contested by Debtor. And now it is also apparent
to Creditor that despite her years of effort, the state criminal
and civil courts and the federal bankruptcy court cannot provide
any significant help to her. This case illustrates the
unfortunate reality that sometimes the legal system simply cannot
provide resources where there are none, or which are not allowed
by the law. The Court has no authority to act outside the bounds
of the law even in terrible circumstances such as these.12
Adam Liptak, the legal affairs writer for The New York	12
Times, recently wrote about this issue.
In a 1958 lecture, Judge Learned Hand, a towering
presence on the federal appeals court in New York,
recalled saying goodbye to Justice Oliver Wendell
Holmes Jr. as the justice left for the Supreme Court.
“I wanted to provoke a response,” Judge Hand said,
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For the foregoing reasons, the Court will grant Debtor’s
motion to avoid the judicial lien created by the transcript of
judgment with respect to Debtor’s interest in the real
property.13
James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: November 10, 2011
COPY TO:
R Trey Arvizu, III
PO Box 1479
Las Cruces, NM 88004-1479
Shelly Nichols-Shaw
1004 Kimberly Cove
Round Rock, TX 78665
“so as he walked off, I said to him: ‘Well, sir,
goodbye. Do justice!’”
Justice Holmes gave a sharp retort: “That is not
my job. My job is to play the game according to the
rules.”
Adam Liptak, When Fairness and the Law Collide, One Jurist is
Troubled, N.Y. Times, October 18, 2011, at A16.
The Court of course is not making any ruling on whatever	13
criminal restitution obligations any member of the Alanis family
may still owe to Debtor. Nor is the Court making any ruling on
the effect of the transcript of judgment on any interest that
Lorensa Alanis, Debtor’s spouse, may retain in the property.
Compare, for example, In re Page, 171 B.R. at 352 (Bankr.
W.D.Wis. 1994) (“The debtor, therefore, was able to exempt her
one half interest in the check but no more. It is irrelevant that
because there were no objections, the entire check was deemed
exempt.”) with In re Schmiedel, 236 B.R. 393, 400 (Bankr.
E.D.Wis. 1999) (“Similarly, upon the bankruptcy of a spouse, both
spouses' interests in community property are protected, and this
includes avoidance of a judicial lien.”).
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