Johnathan Eugene Moberg and Jessica Diane Moberg

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
JOHNATHAN EUGENE MOBERG and
JESSICA DIANE MOBERG
Debtors. 	Case No. 13-10-11572 SF
MEMORANDUM OPINION IN SUPPORT OF ORDER SETTING A TRIAL TO
DETERMINE BANK OF AMERICA, N.A.’S STANDING TO OBJECT TO DEBTORS’
PLAN OF REORGANIZATION
The Debtors filed a Chapter 13 Plan with this Court on March
30, 2010 (doc 1). 	Debtors filed their Notice of Deadline for
Filing Objections to Confirmation of Chapter 13 Plan on April 23,
2010 (doc 16). 	Creditors received the Notice and Plan on April
26, 2010. 	On May 14, 2010, Bank of America (“BoA”) timely filed
an objection to confirmation of the Plan (doc 27). 	Bank of
America, however, has not filed a proof of claim in this case.
At the time Bank of America filed their objection, the time to
file a proof of claim had already passed and would have been
disallowed (doc 27, p. 1). 	This is a core proceeding under 28
U.S.C. § 28 157(b)(2)(A) & (L).
Background
The parties do not contest that BoA has a financial
relationship with Debtors. 	BoA is the holder of a note (“Real
Property Note”) from the Debtors secured by real property owned
by Moberg Welding, Inc. (“Moberg Welding”), which is not a Debtor
in this bankruptcy (doc 84, p. 2; doc 85, p. 2). 	Debtors have
not pledged any property as collateral for, or otherwise
guaranteed the Real Property Note (doc 84; doc 85 p. 2). 	BoA
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 1 of 7

2
also holds a note (“Personal Property Note”) from Moberg Welding
Inc., secured by equipment owned by that corporation, among other
things, and guaranteed by the Debtors (doc 84, p. 2; doc 85 p.
2). 	BoA asserts that because it is the holder of these two
notes, it is a party in interest, and has standing to object to
the confirmation of Debtors’ Chapter 13 plan (doc 84).
“Party in Interest”
Bankruptcy Code § 1324(a) provides that “a party in interest
may object to confirmation of the plan”. 	11 U.S.C. § 1324(a).
Thus, in order to object to confirmation, BoA must be a “party in
interest”. 	See In re Luna, No. 13-99-13304-SS (Bankr. D. N.M.
1999)(doc 49). 	This Court decided in In re Luna that an
unsecured creditor which has not filed a timely proof of claim is
not a “party in interest” in the Bankruptcy case, and therefore
lacks standing to object to confirmation. 	Id. 	“Party in
interest” is not defined by the Bankruptcy Code, but “is
generally understood to include all persons whose pecuniary
interests are directly affected by the bankruptcy proceedings.”
In re Davis, 239 B.R. 573, 579 (10 th Cir. BAP 1999). 	Thus, if BoA
can show that this plan will directly affect its pecuniary
interest, it would then be a “party in interest” and therefore
have standing to object to confirmation of the plan.
Personal Property
Vehicles
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 2 of 7

1BoA asserts the existence of an additional title as exhibit
F22 (doc 84, p. 4). However, there was no exhibit F22 filed with
this Court.
3
BoA claims that it has an unperfected security interest in
certain vehicles and trailers Debtors propose to sell as a part
of their Chapter 13 plan (doc 84, p. 4; doc 82, ex. 1). 	Parties
further admit, and the law is clear that “A security interest in
a vehicle of a type required to be titled and registered in New
Mexico is not valid against attaching creditors, subsequent
transferees or lienholders unless perfected.” 	§ 66-3-201(A)
N.M.S.A. 1978. 	BoA admits that its interest in the vehicles and
trailers secured by the Personal Property note is unperfected
(doc 84, p. 4). 	Instead, it asserts that the above cited law
does not apply since Moberg Welding is a party to the Security
Agreement (doc 84, p. 4).
This argument falls apart, however, because Moberg Welding
is not a Debtor in this bankruptcy or the owner of the collateral
Debtor is proposing to sell. 	While BoA has submitted a series of
Certificates of Title, which show that Moberg Welding was the
owner of many, but not all, of the items Debtors propose to sell
according to their Amended Plan, Debtors have submitted more
recent Certificates of Title showing that Debtors themselves are
the owners, free and clear of any liens, on each and every piece
of collateral they propose to sell (doc 84, ex. F1-F21 1; doc 82,
ex. 1; doc 85, ex. 2). 	Thus, BoA is in fact attempting to assert
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 3 of 7

4
an unperfected lien against a subsequent transferee which owns
the property free and clear of any liens, as it itself admits is
invalid by law. 	Thus, Bank of America cannot claim standing to
object to Debtors’ Chapter 13 Plan based on the sale of the
vehicles listed in Debtor’s Exhibit A, since they cannot enforce
their unperfected lien against Debtors, the owners of said
vehicles (doc 82, ex. 1).
Welding Machines
Debtors also propose to sell “3 of 5 Lincoln Welding
Machines” as part of their Chapter 13 Plan (doc 82, ex. 1). 	Bank
of America asserts that it holds a perfected security interest in
all three of these machines, owing to a perfected lien against
Moberg Welding’s “machinery, furniture, fixtures and other
equipment of every type” (doc 84, p. 3; doc 84, ex. C-E).
Debtors, for their part, assert ownership of the welding machines
(doc 85, pp. 2-3). 	Bank of America’s status as a secured party
hinges on a factual issue: Did Moberg Welding ever own the
welding machines in question? 	If the machines are (or were)
owned by Moberg Welding, then Bank of America has a security
interest. 	If they were always owned by the Debtors individually,
then BoA does not have a security interest in them. 	Bank of
America, however, offers no evidence showing that the welding
machines were in fact owned by Moberg Welding, Inc. 	It is true
that the machines are listed on Debtors’ Schedule B as
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 4 of 7

5
“(Business)”, much like the real property that Moberg Welding in
fact owns, discussed below (doc 13, p. 8). 	However, this is not
dispositive, as the other vehicles in question, also marked
“(Business)” on the Schedule B, in fact belong to the Debtors
individually (doc 18, p.7). 	No other evidence relating to the
ownership of the Lincoln Welding Machines has been offered. 	As
there is a significant question of fact relating to the existence
of a perfected security interest in the welding machines, which
may be held by Bank of America, this issue must be resolved at
trial before Bank of America’s standing to object to Debtors’
Chapter 13 Plan can be determined.
Real Property
BoA also claims standing based on the fact that “[t]he
Debtors’ proposed plan allows them to keep the real property
pledged to BOA,” (doc 84, p .2). 	There is one major flaw in this
assertion. 	Even though Debtors scheduled the real property, as
BoA itself states, “the real property is actually owned by Moberg
Welding, Inc.” (doc 13, p. 4; doc 84 p. 3). 	Thus, Debtors are
not keeping the property. 	Moberg Welding, Inc., which is not a
Debtor in this bankruptcy, is keeping the property, subject to
BoA’s asserted mortgage. 	As Debtors are not the owner of the
real property, and are not proposing to sell the real property,
this Bankruptcy will not affect BoA’s pecuniary interest in that
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 5 of 7

6
property. 	Thus, BoA’s claim of standing based on the real
property is not valid.
Conclusion
For the foregoing reasons, this Court finds that Bank of
America lacks standing to object to confirmation of Debtors’
Chapter 13 plan based on Debtors’ proposed sale of vehicles, and
the real property at 5837 U.S. Hwy. 64, Farmington, NM 87401.
Bank of America lacks a pecuniary interest in the vehicles
Debtors’ Plan proposes to sell, and Debtors bankruptcy does not
affect Bank of America’s pecuniary interest in real estate not
owned by Debtors which the Plan does not propose to sell.
However, there is a significant factual issue as to whether Bank
of America has a perfected security interest in the three Lincoln
Welding Machines that Debtors propose to sell. 	This issue must
be resolved at trial before Debtors’ Chapter 13 Plan may be
confirmed.
The Court will enter an interim order regarding the above
and set a status conference to determine a convenient trial date.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: 	August 25, 2011
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 6 of 7

7
Copies to:
Gerald R Velarde
Attorney for Debtors
2531 Wyoming Blvd NE
Albuquerque, NM 87112-1027
Spencer Lewis Edelman
Modrall Sperling Roehl, Harris & Sisk PA
Attorney for Bank of America, N.A.
PO Box 2168
Albuquerque, NM 87103-2168
William R Keleher
Attorney for Bank of America, N.A.
PO Box 2168
Albuquerque, NM 87103-2168
Kelley L. Skehen
Trustee
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
Case 10-11572-j13 Doc 107 Filed 08/25/11 Entered 08/25/11 13:38:58 Page 7 of 7