Timberon Water and Sanitation District

1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	TIMBERON WATER AND SANITATION DISTRICT, 	No. 9-07-12142 ML
Debtor.
ORDER GRANTING MOTION TO REOPEN AND SETTING PRELIMINARY
HEARING ON OBJECTORS’ REQUEST
FOR AWARD OF ATTORNEY’S FEES & COSTS
THIS MATTER is before the Court on the Motion to Reopen and Award Attorney’s Fees
& Costs to General Objectors (“Motion”) filed by Arlin Gamble, Lyndal Wilcox, Dwayne
Beagles and Virgil Beagles (“General Objectors”), by and through their counsel, J. Robert
Beauvais, P.A. (J. Robert Beauvais). The Motion seeks to reopen this bankruptcy proceeding for
the purpose of considering General Objectors’ request for attorney’s fees and costs against
Timberon Water and Sanitation District (“TWSD”) as a sanction for filing a voluntary petition
that was dismissed based on the Court’s determination that TWSD lacked statutory authority to
file a petition for relief under Chapter 9 of the Bankruptcy Code. 	TWSD filed a response
(Docket No. 62), and the General Objectors filed a reply (Docket No. 63). See Docket No.
After consideration of the Motion, the response, and the reply, the Court finds that
because General Objectors included a request for attorneys’ fees costs in its Response to Debtor
TWSD’s Memorandum Regarding Eligibility to File for Bankruptcy Protection (Docket No. 53),
the Motion should be granted.
Motions to reopen are governed by 11 U.S.C. § 350(b), which provides that “[a] case
may be reopened in the court in which such case was closed to administer assets, to accord relief
to the debtor, or for other cause.” 11 U.S.C. § 350(b). 	The Bankruptcy Court has broad
discretion to determine whether to reopen a closed bankruptcy case under 11 U.S.C. § 350(b). In
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1 See also, In re Rainbow Magazine, Inc., 77 F.3d 278, 284 (9th Cir.1996) (“There can be
little doubt that bankruptcy courts have the inherent power to sanction vexatious conduct
presented before the court.”).
2
re Parker, 264 B.R. 685, 691 (10th Cir. BAP 2001), aff’d, 313 F.3d 1267 (10th Cir. 2002). In
accordance with Rule 5010, Fed.R.Bankr.P., which delineates the procedure for reopening a
case, only the debtor or a party in interest has standing to move for the reopening of a case. See
In re Alpex Computer Corp., 71 F.3d 353, 356 (10 th Cir. 1995). 	At the outset of this Chapter 9
proceeding, TWSD conceded that General Objectors had standing to object to the voluntary
petition, since they were involved in ongoing litigation with TWSD and had “claims” against
TWSD. 	This type of standing is consistent with the definition of “party in interest”, broadly
defined in 11 U.S.C. § 1109(b), and “‘generally understood to include all persons whose
pecuniary interests are, directly affected by the bankruptcy proceedings.’” Apex, 71 F.3d at 356
(quoting Yadkin Valley Bank & Trust Co. v. McGee (In re Hutchinson), 5 F.3d 750, 756 (4th Cir.
1993)). 	The Court, therefore, finds that General Objectors have standing to file a motion to
reopen under 11 U.S.C. § 350(b).
TWSD argues that there is no statutory authority for the bankruptcy court to award
attorneys’ fees for opposing a voluntary petition, and that the bankruptcy court lacks jurisdiction
to assess fees against TWSD in light of the bankruptcy court’s previous determination that
TWSD is ineligible to be a debtor under Chapter 9 of the Bankruptcy Code. A bankruptcy court
has inherent authority under 11 U.S.C. § 105 “to maintain order and confine improper behavior
in its own proceedings.” In re Courtesy Inns, Ltd., Inc. 40 F.3d 1084, 1089 (10 th Cir.
1994)(holding that the bankruptcy court had inherent authority to impose sanctions against
company president in connection with dismissal of petition based upon bad faith filing).1 Here,
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because the request for attorneys’ fees and costs remained pending when the bankruptcy case
was dismissed, it is appropriate to reopen this case for the purpose of resolving this issue.
WHEREFORE, IT IS HEREBY ORDERED that this case be reopened. The appointment
of a trustee is unnecessary since there are no assets in this case that need to be administered nor
are there other services to be rendered by the trustee.
ORDERED FURTHER, that a preliminary hearing on the Motion for Fees and Damages
Under § 303(I) will be held before the Honorable Mark B. McFeeley on Tuesday, February 10,
2009 at 9:30am in the judge's conference room, thirteenth floor, Dennis Chavez Federal
Building and United States Courthouse, 500 Gold Avenue SW, Room 13017, Albuquerque, New
Mexico.
Note: 	Counsel/parties may appear at the preliminary hearing via telephone if such request is
made of chambers of Judge McFeeley (505-348-2545), at least one business day prior to
the date set.
_________________________________________
MARK B. McFEELEY
United States Bankruptcy Judge
Date entered on docket: February 2, 2009
COPY TO:
J. Robert Beauvais 	Daniel J. Behles
Attorney for General Objectors 	Attorney for Debtor
PO Box 2408 	770 Jefferson NE, Suite 305
Ruidoso, NM 88345 	Albuquerque, NM 87109
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