Anthony John Mendez and Dorothy Mae Mendez

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
ANTHONY JOHN MENDEZ and
DOROTHY MAE MENDEZ,
Debtors. 	No. 7-07-11092 SA
MEMORANDUM OPINION ON UNITED STATES TRUSTEE’S
MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on the United States
Trustee’s (“UST”) Motion for Summary Judgment on Debtors’ Request
for Attorney’s Fees Pursuant to the Equal Access to Justice Act
(“EAJA”)(the “Motion”) (doc 66), Debtors’ Response (doc 68),
Debtors’ Exhibits (doc 69) and the UST’s Reply (doc 70). 	The
court will grant the Motion. 	This is a core proceeding.
In an earlier Memorandum Opinion (doc 59), the Court
addressed the preliminary issue of whether the Debtors could be
considered “prevailing parties” such that the EAJA would be
available to them. 	In that Memorandum Opinion the Court
described the background facts, quoted the fee shifting statute
found in the EAJA, and set out the four part test that a
petitioner must satisfy to be awarded attorney fees. 	Familiarity
with the earlier opinion is assumed and the Court will not
reiterate. 	The Court then found that the Debtors could be
considered “prevailing parties,” which satisfied the first prong
of the test. 	The Motion now before the Court is the UST’s
attempt to demonstrate that Debtors have failed to establish the
other prongs of the test.
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 1 of 8

Page -2-
There are several relevant facts in addition to those set
out in the earlier Memorandum. 	Debtors filed their Chapter 7
case on May 8, 2007. 	On May 18, 2007, the UST sent a letter to
Debtors’ attorney requesting the following documentation: 1) six
months of pay advices for the debtors, 2) the most recent Federal
tax return, 3) supporting documentation for a claimed monthly
health care expense of $100.00 and a monthly charitable
contribution of $25.00. 	The letter requested the documents by
June 4, 2007. 	On June 4, 2007 the UST received the Debtors’ 2006
tax return and payment advices for 3/4/07 and 5/12/07 only.
Debtors’ first meeting of creditors was held and concluded on
June 14, 2007. 	On June 21, 2007 the UST filed a statement on the
docket as follows: “Having reviewed the documents, if any, filed
by the debtor and any additional documents provided to the United
States Trustee, the United States Trustee is currently unable to
determine whether the debtor’s case would be presumed to be an
abuse under Section 707(b) of the Bankruptcy Code.” 	On an
unknown date before July 18, 2007, Debtors transmitted additional
payment advices to the UST, allowing a calculation of Debtors’
income for the four months preceding the filing of the petition:
January through April, 2007. 	Based on the available information,
the UST recomputed the Form 22A, which now showed monthly
disposable income of $463.53 and 60-month disposable income of
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 2 of 8

1Under 11 U.S.C. § 707(b)(2)(B)(iv)(II), 60-month disposable
income over $10,950 indicates abuse.
Page -3-
$27,811.73. 1 	(Doc 25-2, Motion to Dismiss for Abuse, Exhibit B).
On July 18, 2007, the UST filed a statement on the docket as
follows: “The United States Trustee has reviewed all materials
filed by the debtor and has determined that the debtor’s case is
presumed to be an abuse under Section 707(b).” 	On July 23, 2007
the UST filed the Motion to Dismiss under § 707(b)(2) and (3).
(Doc 25). 	Mr. Mendez lost his job during October, 2007. 	The
UST withdrew its Motion to Dismiss for Abuse on November 7, 2007.
(Doc 38). 	On December 6, 2007, Debtors’ attorney filed this
Motion for fees under the EAJA.
Summary judgment is proper when there is no genuine issue
as to any material fact and the moving party is entitled to a
judgment as a matter of law. 	Bankruptcy Rule 7056(c). 	In
determining the facts for summary judgment purposes, the Court
may rely on affidavits made with personal knowledge that set
forth specific facts otherwise admissible in evidence and
sworn or certified copies of papers attached to the
affidavits. 	Fed.R.Civ.P. 56(e). 	When a motion for summary
judgment is made and supported by affidavits or other
evidence, an adverse party may not rest upon mere allegations
or denials. 	Id. 	The court does not try the case on competing
affidavits or depositions; the court's function is only to
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 3 of 8

Page -4-
determine if there is a genuine issue for trial. 	Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
New Mexico LBR 7056-1 governs summary judgment motions. 	It
provides, in part:
The memorandum in support of the motion shall set out
as its opening a concise statement of all of the
material facts as to which movant contends no genuine
issue exists. 	The facts shall be numbered and shall
refer with particularity to those portions of the
record upon which movant relies.
A memorandum in opposition to the motion shall contain
a concise statement of the material facts as to which
the party contends a genuine issue does exist. Each
fact in dispute shall be numbered, shall refer with
particularity to those portions of the record upon
which the opposing party relies, and shall state the
number of the movant's fact that is disputed. 	All
material facts set forth in the statement of the movant
shall be deemed admitted unless specifically
controverted.
The UST’s Memorandum has a Statement of Undisputed Material
Facts (which in future cases should be “numbered” per the LBR)
with citations to the record. 	The Memorandum attaches the
affidavit of Michele Lombard, an employee of the UST, which in
turn has three admissible exhibits attached to it.
Debtors’ Response does not track the UST’s Statement of
Undisputed Material Facts, specifically admitting or denying each
one. 	Therefore, all material facts set forth in the UST’s
statement are deemed admitted. 	Furthermore, Debtors’ exhibits
are not supported by an affidavit and are inadmissible hearsay.
The Court will not consider them in the defense to the Motion.
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 4 of 8

Page -5-
Rather, Debtors’ Response makes legal arguments: 1) that
discovery has been stayed in this case and Debtors were hampered
in their ability to respond to the UST’s Motion, and 2) that the
UST’s statement of presumed abuse was untimely and therefore
provided no basis for a 707(b) motion.
The Debtors’ first argument is not well taken. 	Fed.R.Civ.P.
56(f) provides:
If a party opposing the motion shows by affidavit that,
for specified reasons, it cannot present facts
essential to justify its opposition, the court may:
(1) deny the motion;
(2) order a continuance to enable affidavits to be
obtained, depositions to be taken, or other discovery
to be undertaken; or
(3) issue any other just order.
“The affidavit must include the nature of the uncompleted
discovery; how the facts sought are reasonably expected to create
a genuine issue of material fact; what efforts the affiant has
made to obtain those facts; and why those efforts were
unsuccessful.” 	Dubai Islamic Bank v. Citibank, N.A., 126
F.Supp.2d 659, 665 (S.D. N.Y. 2000)(quoting Paddington Partners
v. Bouchard, 34 F.3d 1132, 1138 (2 nd Cir. 1994)). 	And, filing of
the affidavit is an absolute prerequisite for making this
argument. 	Boling v. Romer, 101 F.3d 1336, 1339 n.3 (10 th Cir.
1996)(citing International Surplus Lines Ins. Co. v. Wyoming Coal
Ref. Sys., Inc., 52 F.3d 901, 905 (10 th Cir. 1995)). 	Debtors
filed no affidavit in this case that would meet the Rule 56(f)
requirements.
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 5 of 8

Page -6-
Debtors’ second argument is also not well taken. 	It focuses
on the timeliness of the Motion to Dismiss. 	Debtors argue that §
704(b)(1) establishes a 10-day deadline after the first meeting
of creditors for the UST to file a statement of presumed abuse;
unless the presumed abuse statement is filed the UST cannot file
a motion under § 707(b) that is based on the presumption. 	The
Court does not need to and may not address the merits of this
argument at this time. 	The motion has been withdrawn and the
Court may not issue an advisory opinion. 	However, the Court does
note that this issue has not been decided in the Tenth Circuit
and there is at least one case to the contrary. 	See In re
Cadwallder, 2007 WL 1864154 at *6 (Bankr. S.D. Tex. 2007) (“[T]he
Court believes that § 704(b) establishes a duty, but does not
establish the penalty for failure to perform that duty, and
therefore even if a U.S. Trustee failed to comply strictly with
his § 704(b) duties, his motion to dismiss would not (merely for
that reason) be time-barred.”) 	Furthermore, the “majority” of
bankruptcy courts that have addressed the issue have held that §
704(b)(2) does not impact motions brought under § 707(b)(1) or §
707(b)(3) which are not based on the presumption of abuse. 	In re
Perrotta, 390 B.R. 26, 28-29 (Bankr. D. N.H. 2008). 	And,
finally, the Court has seen no cases dealing with whether §
704(b)(1) is a jurisdictional requirement or whether it is more
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 6 of 8

Page -7-
in the nature of a statute of limitations which could be waived
if not timely raised by the Debtor.
The real issue is whether the government’s position in
pursuing the litigation was substantially justified. 	28 U.S.C. §
2412(d)(1)(B). 	The Court finds it was. 	The UST requested
documents from the Debtors early in the case; not all were
provided by the time of the creditors meeting. 	From what was
provided, the Bankruptcy Analyst calculated income higher than
reported and unallowable or unsubstantiated deductions on Form
22C.
The U.S. Trustee had the authority and the duty to
investigate to determine whether the debtor is abusing
the bankruptcy system and whether grounds exist for
opposing a discharge of her debts. 11 U.S.C. §§ 307,
343, 521(f), 521(h), 704(b)(2), 707(a), 707(b),
727(c)-(e), 1112(b)(4), 1112(e), 1116(1), 1116(7),
1224, 1307(c), & 1307(e); 28 U.S.C. § 586(a)(3);
Stewart v. U.S. Trustee (In re Stewart), 215 B.R. 456
(10th Cir. BAP 1997); In re Young, 205 B.R. 894 (Bankr.
W.D. Tenn. 1997); Neary v. Darby (In re Darby), 376
B.R. 534 (Bankr. E.D. Tex. 2007); Lightfoot v. Landry
(In re Landry), 350 B.R. 51 (Bankr. E.D. La.2006).
In re Russell, 392 B.R. 315, 364 (Bankr. E.D. Tenn. 2008). 	Based
on what the UST had, and based on the law as it existed (and
still exists in New Mexico) the Court finds that the UST was
substantially justified in bringing the § 707(b) motion, both
under § 707(b)(2) (presumption of abuse) and § 707(b)(3)
(totality of circumstances).
The Application for Attorney Fees pursuant to the EAJA (doc
41) should be denied. 	A separate Order will enter.
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 7 of 8

Page -8-
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	August 27, 2009
Copies to:
Dennis M Feld
PO Box 45116
Rio Rancho, NM 87174-5116
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
Case 07-11092-s7 Doc 72 Filed 08/27/09 Entered 08/27/09 09:34:01 Page 8 of 8