Plaintiffs, co-representatives of Debtor’s probate estate, filed this adversary proceeding seeking to recover redemption funds obtained by Defendants from a state court registry, which had been deposited by the probate estate to redeem property the Defendants had foreclosed. Plaintiffs’ theory  was that Defendants violated the discharge injunction by taking the funds. Determining the rightful owner of the redemption funds raised an obscure legal issue on which there is no binding or persuasive precedent. An appeal and protracted litigation of this already years-long dispute was a certainty. With the Court’s encouragement, the parties pursued mediation. They reached a settlement agreement and filed a joint motion seeking its approval. One of the co-representatives then unilaterally objected to, and sought to rescind, the settlement agreement. Applying New Mexico contract and probate law, the Court denied the objection. Applying bankruptcy law, the Court approved the settlement agreement.

The Court granted plaintiffs’ motion to enforce settlement agreement after an alleged breach by the defendant despite defendant’s voluntary dismissal of her underlying bankruptcy case. The Court found the settlement agreement was binding and enforceable even though the parties had not executed a contemplated definitive agreement. The mediated binding settlement agreement provided that the debt at issue was non-dischargeable in any bankruptcy case defendant might file, and defendant did not assert any grounds that might excuse performance under the parties’ settlement agreement. Enforcement of the settlement agreement did not require referral to the mediator as arbitrator because the enforcement dispute did not require the Court to determine the meaning of the settlement agreement, the intent of the parties, or the form of any additional documents to be prepared and executed as a result of the settlement agreement. The Court entered a non-dischargeable judgment against the Debtor/Defendant per the settlement agreement.

The Court granted, in part, attorney’s interim fee application in a chapter 13 case. Fees and associated costs and expenses for work performed in representing the debtors in their chapter 13 case and in related adversary proceeding objecting to dischargeability of debt were compensable under 11 U.S.C. § 330(a)(4)(B). The Court rejected the argument that Debtors filed and prosecuted their chapter 13 case in bad faith, rendering all fees unnecessary and unreasonable. The Court disallowed fees for filing a motion for Rule 2004 exam in an adversary proceeding; once an adversary proceeding is commenced, litigants must seek discovery through the applicable rules of civil procedure rather than Fed.R.Bankr.P. 2004. The Court also disallowed fees for preparing and filing a proof of claim on behalf of creditor prior to claims bar date, contrary to the requirements of Fed.R.Bankr.P. 3004 and 11 U.S.C. § 501(c).

The chapter 11 debtor asked the Court to approve its counsel jointly representing debtor and debtor’s principals in an adversary proceeding. The Court found no actual conflict of interest in the joint representation but found potential conflicts. The Court approved the joint representation subject to satisfaction of four conditions, which included a waiver by the principals of indemnification claims against the estate. The Court also found that indemnification claims arising from a prepetition contract are prepetition claims subject to the claims bar date and construed the ultra vires defense to liability narrowly.