Christina B. Ortiz

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
CHRISTINA B. ORTIZ,
aka Christina B. Sandoval,
Debtor. 	No. 13-08-10951 SS
MEMORANDUM OPINION ON MOTION FOR RELIEF
FROM AUTOMATIC STAY FILED BY INTERNATIONAL BANK
This matter is before the Court on a Motion for Summary
Judgment on International Bank’s Motion for Relief from Automatic
Stay (doc 26), the Response thereto filed by the Debtor (doc 27),
the Reply by International Bank (doc 28) and a second response by
the Debtor (doc 29). 	This is a core proceeding. 	28 U.S.C. §
157(b)(2)(G).
In New Mexico, summary judgment is governed by Local
Bankruptcy Rule 7056-1, which provides:
The moving party shall file with the motion a written
memorandum containing a short, concise statement In
support of the motion with a list of authorities relied
upon. A motion for summary judgment filed without the
required written memorandum may be summarily denied. 	A
party opposing the motion shall, within 20 days after
service of the motion, file a written memorandum
containing a short, concise statement in opposition to
the motion with authorities. 	If no such responsive
pleading is filed, the court may grant the motion for
summary judgment. 	The moving party may, within ten
days after the service of such memorandum, file a
written reply memorandum.
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
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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.
FACTS
Debtor’s response did not specifically controvert any of
International Bank’s twenty proposed undisputed facts, nor cite
to portions of the record that would controvert those facts.
Therefore, under NM LBR 7056-1 International Bank’s facts should
be deemed admitted. 	However,
[u]nder Fed.R.Civ.P. 56(e), only statements “made on
personal knowledge” will support a motion for summary
judgment; statements of mere belief must be
disregarded. 	Automatic Radio Mfg. Co. v. Hazeltine
Research, 339 U.S. 827, 831, 70 S.Ct. 894, 896, 94
L.Ed. 1312 (1950) (affidavit in support of motion for
summary judgment made on information and belief does
not comport with Rule 56(e)); see also Jameson v.
Jameson, 176 F.2d 58, 60 (D.C. Cir. 1949) (“Belief, no
matter how sincere, is not equivalent to knowledge.”);
Carey v. Beans, 500 F.Supp. 580, 583 (E.D. Pa. 1980)
(on summary judgment, “statements [in an affidavit]
prefaced by the phrases ‘I believe’ or ‘upon
information and belief’ or those made upon an
‘understanding’ ... are properly subject to a motion to
strike.”); 10A Wright, Miller and Kane, Federal
Practice and Procedure: Civil 2d § 2738, pp. 486-89
(1983).
Tavery v. United States, 32 F.3d 1423, 1427 n.4 (10 th Cir. 1994).
In other words, under Rule 56(e), the court may consider only
admissible evidence in ruling on a motion for summary judgment.
World of Sleep, Inc. v. La-Z-Boy Chair Co., 756 F.2d 1467, 1474
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1Additionally, Fact 20 does not cite to the record, nor is
it supported by the affidavit of Ronald L. Schmeits.
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(10 th Cir. 1985). 	And, the Court views the factual record in the
light most favorable to the nonmoving party. 	Concrete Works of
Colorado, Inc. v. City and County of Denver, 36 F.3d 1513, 1517
(10 th Cir. 1994).
Three of International Bank’s proposed facts are opinion
based or speculative and will not be considered: 15 (Bank’s
president does not believe the property is worth more than
$56,000), 18 (The property is not necessary to the effective
reorganization of the debtor), and 20 1 (The bankruptcy filing is
a scheme to hinder and delay the rights of International Bank.)
Therefore, the Court finds as follows:
1. 	Bonafacio Fernandez was Debtor’s, Christina Ortiz’s, father
who died on May 26, 2003. 	Bonafacio Fernandez executed a
Promissory Note to International Bank dated May 31, 2002 in
the principal amount of $48,000.
2. 	On June 28, 2007, the Estate of Bonafacio Fernandez executed
a Modification, Extension Agreement and Disclosure
Statement.
3. 	The Promissory Note is secured by a Mortgage executed by
Bonafacio Fernandez dated May 31, 2002 and recorded in the
Real Estate Records of Colfax County, New Mexico, Book 13,
page 8415 on June 6, 2002. 	Bonafacio Fernandez owned title
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to the mortgaged real estate at the time the Mortgage was
executed and the mortgage lien is a first mortgage lien on
the property.
4. 	The Estate of Bonafacio S. Fernandez, deceased, defaulted on
the Promissory Note and Mortgage. 	The last payment under
the Note made pre-bankruptcy petition was in June 2007.
5. 	Christina Ortiz filed her Application for Informal
Appointment of Personal Representative before the Probate
Court of Colfax County cause no. 2007-4965 on May 25, 2007.
6. 	The Probate Court of Colfax County entered its Order of
Informal Appointment of Personal Representative, appointing
Christina Ortiz the Personal Representative of the Estate of
Bonafacio S. Fernandez, deceased, on June 26, 2007.
7. 	International Bank filed its Complaint for Money Judgment on
Promissory Note and for Foreclosure of Mortgage with the
District Court of Colfax County cause no. 07-264-CV, on
October 18, 2007. 	International Bank sought money judgment
only against the Estate of Bonafacio S. Fernandez, deceased,
and not against Christina Ortiz.
8. 	The Colfax County District Court entered its Judgment,
Decree of Foreclosure, Order of Sale and Appointment of
Special Master on February 13, 2008 which awarded
International Bank a money judgment against the Estate of
Bonafacio S. Fernandez, deceased, and ordered the mortgage
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lien foreclosed. 	On March 13, 2008, the District Court of
Colfax County entered its Judgment Awarding Attorneys Fees
and Costs.
9. 	International Bank has a secured claim by virtue of its
Mortgage and foreclosure Judgment against the Estate of
Bonafacio S. Fernandez, deceased, in the amount of
$49,304.72 plus interest at the [default] rate of 22.375%
per annum ($30.22 per day) from February 11, 2008. 	Debtor,
Christina Ortiz, has paid $510 since her bankruptcy petition
was filed. 	As of July 1, 2008, the amount due International
Bank was $53,505.30.
10. 	International Bank is entitled to collect additional
attorney’s fees and expenses under its Note and Mortgage
related to these proceedings. 	Such fees and expenses
currently exceed $3,500.
11. 	International Bank recorded its Lis Pendens related to the
foreclosure action against the Estate of Bonafacio
Fernandez, deceased, in the Real Estate Records of Colfax
County, New Mexico on August 18, 2007.
12. 	Debtor, Christina Ortiz, did not obtain any interest in the
mortgaged real estate until after the foreclosure judgment
when the Estate of Bonafacio S. Fernandez issued that
Warranty Deed (personal representative’s deed) from the
Estate of Bonafacio Fernandez, deceased, to Christina B.
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Ortiz dated March 7, 2008 and recorded in the Real Estate
Records of Colfax County on March 12, 2008. 	Debtor,
Christina B. Ortiz, is residing in the subject property as
her principal residence.
13. 	Debtor, Christina B. Ortiz, as Personal Representative of
the Estate of Bonafacio S. Fernandez, did nothing to
administer the probate estate or to pay the claim of
International Bank as required by the New Mexico Probate
Code, NMSA 1978, §45-3-801 et seq. 	See the Probate Court’s
Docket Sheet showing all filings through May 30, 2008.
14. 	International Bank holds an appraisal of the subject
property prepared by Elizabeth Moore dated December 27, 1995
which appraised the property to be worth $56,000.
15. 	None.
16. 	The Debtor’s proposed Chapter 13 Plan, paragraph 4.4 values
the subject property at $60,000.
17. 	Debtor lacks equity in the property.
18. 	None.
19. 	Debtor is not making adequate assurance payments. 	She has
only made one (1) payment of $510 since her bankruptcy
petition was filed.
20. 	None.
DISCUSSION
1. 	“Ordinarily, the obligations arising out of a
contract are due only to those with whom it was
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made; a contract cannot be enforced by a person
who is not a party to it or in privity with it
....” 17A Am.Jur.2d Contracts 	§ 425 (1991)
(footnotes omitted). 	Privity of contract is
“[t]hat connection or relationship which exists
between two or more contracting parties.” 	Black's
Law Dictionary 1199 (6th ed.1990). 	Privity of
contract has also been defined as “the name for a
legal relation arising from right and obligation,”
or the “legal relationship to the contract or its
parties.” 	La Mourea v. Rhude, 209 Minn. 53, 295
N.W. 304, 307 (1940).
Tarin’s, Inc. v. Tinley, 129 N.M. 185, 190, 3 P.3d 680, 685
(Ct. App. 1999). 	Debtor is not in privity with
International Bank.
2. 	There is a split among the courts on whether a
debtor can include a mortgage in his or her
Chapter 13 plan despite the absence of privity
between the borrower and the mortgagor. The split
centers on the courts' interpretation of the term
“claim” as it pertains to Chapter 13 proceedings.
One line of cases, anchored by the decision of the
Supreme Court of the United States in Johnson v.
Home State Bank, interprets the term “claim”
broadly and permits debtors to cure defaulted
mortgages within a Chapter 13 plan even when no
privity of contract exists between the debtor and
creditor. 	Johnson v. Home State Bank, 501 U.S.
78, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991); Bank of
America v. Garcia (In re Garcia), 276 B.R. 627
(Bankr. D. Ariz. 2002); In re Allston, 206 B.R.
297 (Bankr. E.D. N.Y. 1997); In re Hutcherson, 186
B.R. 546 (Bankr. N.D. Ga. 1995); In re Trapp, 260
B.R. 267 (Bankr. D. S.C. 2001); In re Rutledge,
208 B.R. 624 (Bankr. E.D. N.Y. 1997); Citicorp
Mortgage, Inc. v. Lumpkin (In re Lumpkin), 144
B.R. 240 (Bankr. D. Conn. 1992). 	A second line of
cases interprets the term “claim” narrowly,
distinguishing Johnson and holding that a “claim”
does not exist for matters where privity is absent
between the debtor and creditor. 	In re Parks, 227
B.R. 20 (Bankr. W.D. N.Y. 1998); Ulster Savings
Bank v. Kizelnik (In re Kizelnik), 190 B.R. 171
(Bankr. S.D. N.Y. 1995); In re Threats, 159 B.R.
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241 (Bankr. N.D. Ill. 1993). 	The essential
difference lies in how the courts define the term
“claim.”
In re Curinton, 300 B.R. 78, 80 (Bankr. M.D. Fla. 2003).
The Curinton court reviewed both sides of this split,
examined the Supreme Court’s reasoning in Johnson, id. at
81-82, and concluded that privity should not be required to
include a bank’s claim against the debtor’s property within
a Chapter 13 plan, id. at 85. 	This Court finds the
reasoning of Curinton persuasive, and adopts it in full.
Therefore, Debtor may include the International Bank
mortgage in her Chapter 13 plan.
3. 	"[A]n irrebuttable presumption is created in a Chapter 13
case as to the debtor's home as necessary to effective
reorganization where the debtor's primary purpose in filing
the Chapter 13 petition is to save his home." 	Grundy Nat’l
Bank v. Stiltner (In re Stiltner), 58 B.R. 593, 596 n.1
(W.D. Va. 1986). 	In this case, Debtor is attempting to save
her home, so there is a presumption that the home is
necessary to an effective reorganization.
4. 	Confirmation of Debtor’s plan is set for August 12, 2008.
The outcome of that hearing will necessarily determine
whether International Bank is adequately protected.
5. 	On August 12, 2008, the Court took confirmation of the
Debtor’s plan under advisement. 	The Court will also take
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the Motion for relief from automatic stay under advisement
pending the ruling on confirmation.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	August 14, 2008
copies to:
Steven E Sessions
122 10th St NW
Albuquerque, NM 87102-2901
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
Steven L McConnell
PO Box 1148
Raton, NM 87740-1148
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