FILED

U.S. Bankruptcy Appellate Panel

of the Tenth Circuit

April 3, 2018

Blaine F. Bates

Clerk

PUBLISH

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE TENTH CIRCUIT

IN RE FRED DALE VAN WINKLE,

Debtor.

BAP No. NM-17-031

BAP No. NM-17-032

BAP No. NM-17-033

TAMMY SPRAGUE, personal

representative of the estate of Fred Dale

Van Winkle,

Plaintiff – Appellee,

Bankr. No. 13-11743

Chapter 7

v. OPINION

JOHN WILLIAMS, ELLEN B.

WILLIAMS, and BELLEVIEW

VALLEY LAND CO., INC.,

Defendant – Appellants.

Appeal from the United States Bankruptcy Court

for the District of New Mexico

W.T. Martin, Jr. (Jennie D. Behles, Albuquerque, New Mexico with him on the

brief) of Martin, Dugan & Martin, Carlsbad, New Mexico, Attorneys for

Defendant – Appellants.

R. “Trey” Arvizu, III Las Cruces, New Mexico, Attorney for Plaintiff – Appellee.

Before KARLIN, Chief Judge, NUGENT, and MOSIER, Bankruptcy Judges.

KARLIN, Chief Judge.

John Williams, Ellen Williams, and Belleview Valley Land Co., Inc. (the

“Appellants”) appeal three bankruptcy court rulings: (1) the Order Denying
Motion to Dismiss for Lack of Jurisdiction;

1

(2) the Order Granting Partial

Summary Judgment and Denying Other Relief;

2

and (3) the Final Judgment,

3

which ordered Appellants to pay $50,000 in actual and punitive damages.

Appellants contend the bankruptcy court erred in denying their motion to dismiss

for lack of jurisdiction, failing to certify issues to the New Mexico Supreme

Court, finding Appellants violated the discharge injunction and a court order, and

awarding compensatory and punitive damages. Because we interpret New Mexico

law to allow a judgment lien to reattach upon redemption by the owner of

foreclosed property, we reverse the bankruptcy court’s finding that Appellants

violated the discharge injunction, affirm the finding that Appellants violated a

court order, and remand for further findings regarding damages.

I. Facts

In 2008, Fred Van Winkle (the “Debtor”) brought an action against the

Appellants to quiet title in Otero County, New Mexico. Appellants

counterclaimed and in 2010 ultimately obtained a money judgment against the

Debtor for $261,656 (the “Judgment Lien”). Appellants filed transcripts of that

judgment in Otero, Roosevelt, and Lincoln Counties, New Mexico because the

Debtor owned two tracts in Otero County (one seven acre tract and one thirty acre

tract—the “Otero Land”), his residence, a condominium, in Lincoln County (the

“Condo”), and a one-half interest in 311 acres in Roosevelt County.

The Debtor filed this Chapter 7 proceeding in May 2013. The Debtor

claimed as exempt $60,000 in equity in the Condo under New Mexico’s

homestead exemption. In Schedule D (Creditors Holding Secured Claims), the

1 Appellants’ App. at 358.

2 Appellants’ App. at 950.

3 Appellants’ App. at 1051. Although the Appellants appealed the three

orders separately, the Bankruptcy Appellate Panel entered an Order Joining

Appeals on July 7, 2017. BAP ECF No. 4.

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Debtor listed both the first mortgage on the Condo in the amount of $12,000 in

favor of First National Bank of Ruidoso (the “First Mortgage”) as well as the

Judgment Lien.

In September 2013, soon after receiving his discharge, the Debtor filed a

motion to avoid the Judgment Lien on the Condo, seeking to avoid the lien to the

extent it impaired the $60,000 homestead exemption allowed by New Mexico law.

Appellants objected (as the record reveals they did at almost every turn), stating

the obvious—that the Debtor could only exempt the $60,000 sought, and no more.

Before the matter could be decided, the Debtor passed away (in April 2014).

The Debtor’s daughter, Tammy Sprague, became the personal

representative of his probate estate.

4 Sprague and the Appellants entered into a

stipulated order resolving the Motion to Avoid Judicial Lien (the “Stipulated

Order”). It valued the Condo at $100,000 and avoided the Judgment Lien to the

extent it impaired the Debtor’s $60,000 exemption—capping the Judgment Lien

against the Condo to the remainder after payment of the First Mortgage and the

$60,000 exemption.

1. Foreclosure of the Otero Land

In August 2013, Appellants obtained stay relief to allow them to complete

the 2010 action to foreclose the Judgment Lien against the Otero Land. In May

2014, the New Mexico court entered a final judgment of foreclosure; that

judgment expressly provided that no in personam deficiency could be entered

against the Debtor.

The appointed special master conducted a sale of the Otero Land in July

2014. Appellants Ellen and John Williams were the high bidders, credit bidding

$67,000 of the Judgment Lien. The special master recorded a deed conveying the

Otero Land to the Williamses. Appellants requested the New Mexico court amend

4 Even though the Debtor died in April 2014, we will continue to refer to him

as “the Debtor,” or as “Sprague,” as appropriate for clarity.

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the foreclosure judgment to specify that the deficiency judgment was then

$271,905 plus interest, after crediting the bid against the balance due (the

“Deficiency Judgment”). The Deficiency Judgment provided

[t]he deficiency is a lien on the debtor’s . . . real estate. While no

deficiency judgment is granted on an in personam basis against the

Estate of Fred Van Winkle, deceased, the lien created by the

deficiency is collectable as provided . . . [by New Mexico law]. The

deficiency also remains collectable by the [p]laintiffs through legal

action, or actions, to enforce judgment liens as they may exist in

other New Mexico counties.

5

Appellants recorded a transcript of the Deficiency Judgment in Otero County in

August 2014 (although the only land the Debtor had owned in Otero County was

the subject of the foreclosure).

In March 2015, approximately eight months after the sale, Sprague

amended the Debtor’s Schedule B (Personal Property) to add as an asset of the

bankruptcy estate the New Mexico statutory right of redemption in the Otero

Land. She then filed a motion seeking abandonment of the estate’s interest in that

right of redemption. Neither Appellants nor the trustee objected, and the

bankruptcy court granted the motion. Immediately thereafter, Sprague timely filed

a petition in state court to redeem the Otero Land and deposited in the court

registry the $73,200 required by statute. Appellants responded first by asserting

Sprague was required to pay the entire remaining Deficiency Judgment to

successfully redeem. They also filed a new petition to foreclose the Deficiency

Judgment along with a motion for summary judgment. The petition to redeem

remains pending in the state court, and Appellants still hold title to the Otero

Land.

2. Foreclosure of the Condo

Appellants were simultaneously trying to enforce the Judgment Lien

against the Condo. One of the Appellants, John Williams, purchased the First

5 Amended Order Approving Special Master’s Report & Granting Deficiency

Judgment at 3-4, in Appellants’ App. at 676-77.

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Mortgage from First National Bank of Ruidoso in August 2013. In May 2015,

Appellants filed a complaint in Lincoln County seeking to foreclose the First

Mortgage and the Judgment Lien encumbering the Condo. The prayer for relief in

the amended foreclosure complaint requested, among other things, that Williams

be granted judgment on the note he claimed to have purchased for $15,034, plus

“[i]nterest at the rate of 20% per annum . . . ; plus [] Late Charges . . . ; plus []

Rent in the amount of $13,650 through April 20, 2015.”

6 Ultimately, Appellants

prayed that the proceeds of any Special Master’s sale be applied to satisfy (1) the

First Mortgage to Williams; (2) the homestead exemption; and (3) “the balance of

[Appellants’] judgment lien—payable to [Appellants].”

7

3. The Adversary Proceeding

Soon after the Condo foreclosure was filed, Sprague filed an adversary

proceeding in the bankruptcy court alleging the Appellants violated the discharge

injunction and the terms of the Stipulated Order. The parties agreed to a stay of

both foreclosure actions. Appellants filed a motion to dismiss the adversary

proceeding for lack of jurisdiction (the “Motion to Dismiss”),

8 which the

bankruptcy court denied along with a motion to reconsider that dismissal.

9

Sprague filed a Motion for Partial Summary Judgment as to Liability for

violation of the discharge injunction and for failure to comply with the Stipulated

6 Complaint for Judgment for Debt and Money Due on Promissory Note, to

Foreclose Real Estate Mortgage and to Foreclose Judgment Lien at 7, in

Appellants’ App. at 1481.

7 Opinion at 6, in Appellants’ App. at 939.

8 Motion to Dismiss for Lack of Jurisdiction, in Appellants’ App. at 320.

Appellants argued (1) the adversary proceeding was not a core proceeding; (2) the

bankruptcy court lacked jurisdiction under Stern v. Marshall, 564 U.S. 462

(2011); and (3) continuing in the bankruptcy court impaired Appellants’ right to a

jury trial. Memorandum Opinion at 4, in Appellants’ App. at 349.

9 Order Denying Motion to Reconsider, in Appellants’ App. at 620;

Memorandum Opinion, in Appellants’ App. at 611. The Order Denying Motion to

Dismiss for Lack of Jurisdiction and the Memorandum Opinion are appealed in

BAP appeal NM-17-033.

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Order. Appellants responded, but also sought to rescind their agreement to stay

the foreclosure cases

10 and to certify legal issues to the New Mexico Supreme.

11

The bankruptcy court entered the Order Granting Partial Summary Judgment and

Denying Other Relief and the Opinion that: (1) denied certification of issues to

the New Mexico Supreme Court; (2) granted partial summary judgment against

Appellants for violation of the discharge injunction; (3) declined to enter

summary judgment on the issue of violation of the Stipulated Order without

additional factfinding; and (4) denied Appellants’ motion to set aside the stay of

the foreclosure actions.

12

The bankruptcy court conducted a trial on the issue of whether Appellants

violated the Stipulated Order and whether damages were warranted for violation

of the discharge injunction and the Stipulated Order. In its Final Judgment and

Opinion, the bankruptcy court held that Appellants had willfully violated the

discharge injunction by their actions in the Otero Land foreclosure and had

violated the Stipulated Order by their actions in the Condo foreclosure.

13 The

bankruptcy court awarded Sprague $33,161.70 in actual damages and attorneys’

fees, and $16,838.30 in punitive damages, for an even $50,000 in damages.

II. Appellate Jurisdiction & Standards of Review

“With the consent of the parties, this Court has jurisdiction to hear timelyfiled appeals from ‘final judgments, orders, and decrees’ of bankruptcy courts

10 Motion to Set Aside the Stipulated Order in Regard to Stay, in Appellants’

App. at 779.

11 Petition for Certification to the New Mexico Supreme Court, in Appellants’

App. at 861.

12 Order Granting Partial Summary Judgment and Denying Other Relief, in

Appellants’ App. at 950; Opinion, in Appellants’ App. at 934. These two orders

are appealed in BAP NM-17-031.

13 Final Judgment, in Appellants’ App. at 1051; Opinion, in Appellants’ App.

at 1037. These orders are appealed in BAP NM-17-032.

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within the Tenth Circuit.”

14 An order resolving all claims asserted in an adversary

proceeding is a final order for purposes of appeal.

15 Neither party elected for

these appeals to be heard by the United States District Court pursuant to 28

U.S.C. § 158(c). Accordingly, this Court has jurisdiction over these matters.

Appellate courts review the denial of a motion to dismiss for lack of

subject matter jurisdiction de novo.

16 Similarly, a grant of summary judgment is

reviewed de novo.

17 The denial of a motion for certification of a question of state

law is reviewed for abuse of discretion.

18 Whether a creditor violated the

discharge injunction is a question of law reviewed de novo.

19 Whether the

violation of the discharge injunction was willful is a factual finding reviewed for

clear error.

20 A determination that an action violated a court order is reviewed for

an abuse of discretion.

21 Finally, an award of damages and attorneys’ fees for

14 Straight v. Wyo. Dep’t of Trans. (In re Straight), 248 B.R. 403, 409 (10th

Cir. BAP 2000) (quoting 28 U.S.C. § 158(a)(1), (b)(1), and (c)(1)).

15 Adelman v. Fourth Nat’l Bank & Tr. Co, N.A., of Tulsa (In re Durability,

Inc.), 893 F.2d 264, 266 (10th Cir. 1990) (“the appropriate ‘judicial unit’ for

application of [] finality requirements in bankruptcy is not the overall case, but

rather the particular adversary proceeding . . . pursued within the broader

framework cast by the petition.”); see Montgomery v. City of Ardmore, 365 F.3d

926, 934 (10th Cir. 2004) (quoting McBride v. CITGO Petroleum Corp., 281 F.3d

1099, 1104 (10th Cir. 2002)) (“a notice of appeal which names the final judgment

is sufficient to support review of all earlier orders that merge in the final

judgment.”).

16 Merrill Lynch Bus. Fin. Servs., Inc. v. Nudell, 363 F.3d 1072, 1074 (10th

Cir. 2004); Smith v. Colo. Sup. Ct. (In re Smith), No. CO-07-028, 2007 WL

4227255, at *2 (10th Cir. BAP Dec. 3, 2007).

17 Dillon v. Fibreboard Corp., 919 F.2d 1488, 1490 (10th Cir. 1990).

18 Colony Ins. Co. v. Burke, 698 F.3d 1222, 1235 (10th Cir. 2012).

19 In re Houlik, 481 B.R. 661, 668 (10th Cir. BAP 2012) (citing Culley v.

Castleberry (In re Culley), No. NM-05-105, 2006 WL 2091199, at *2 (10th Cir.

BAP July 24, 2006)).

20 Id.

21 In re Lucre Mgmt. Grp., LLC, 365 F.3d 874, 875 (10th Cir. 2004) (citing

Fed. Trade Comm’n v. Kuykendall, 312 F.3d 1329, 1333 (10th Cir. 2002)); cf.

(continued...)

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violation of the discharge injunction or for violation of a court order is reviewed

for abuse of discretion.

22

III. Analysis

1. The Bankruptcy Court’s Jurisdiction

Appellants argue the bankruptcy court erred in determining it had

jurisdiction over the adversary proceeding in light of the Rooker-Feldman

doctrine. The Rooker-Feldman doctrine “precludes federal district courts from

exercising appellate jurisdiction over actually-decided claims in state courts” and

“adjudicating claims inextricably intertwined with previously-entered state court

judgments.”

23 This is because the Supreme Court is the only federal court

empowered to exercise appellate jurisdiction to reverse or modify a state court

judgment.

24 As very recently clarified by the Tenth Circuit Court of Appeals in

Mayotte v. U.S. Bank, N.A.,

25 a Rooker-Feldman issue only exists to the extent a

federal action “tries to modify or set aside a state-court judgment because the

(...continued)

Auto-Owners Ins. Co. v. Summit Park Townhome Assoc., ___ F.3d ___, Nos. 16-

1348, 16-1352, 2018 WL 1559980, at *7 (10th Cir. Mar. 30, 2018) (giving

deference to trial court’s interpretation of its own orders (citing Chi., Rock Island

& Pac. R.R. v. Diamond Shamrock Ref. & Mktg. Co., 865 F.2d 807, 811 (7th Cir.

1988))).

22 Peyrano v. Sotelo (In re Peyrano), No. EO-16-032, 2017 WL 2731299, at

*3 (10th Cir. BAP June 26, 2017) (citing Anchondo v. Anderson, Crenshaw &

Assoc., 616 F.3d 1098, 1101 (10th Cir. 2010)) (reviewing award of attorneys’ fees

for abuse of discretion). Courts review the constitutionality of punitive damages

de novo. Culley, No. NM-05-105, 2006 WL 2091199, at *2 (10th Cir. BAP July

24, 2006) (citing Cooper Indus. Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424,

436 (2001)).

23 Culley, 2006 WL 2091199, at *2 (citing Mo’s Express, LLC v. Sopkin, 441

F.3d 1229, 1233 (10th Cir. 2006)) (explaining that in Exxon Mobil Corp. v. Saudi

Basic Indus. Corp., 544 U.S. 280, 284 (2005), the Supreme Court has limited the

Rooker-Feldman doctrine to “cases brought by state-court losers complaining of

injuries caused by state-court judgments.”).

24 Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).

25 Mayotte v. U.S. Bank Nat’l Ass’n for Structured Asset Inv. Loan Tr. Mortg.

Pass-Through Certificates, Series 2006-4, 880 F.3d 1169, 1174 (10th Cir. 2018).

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state proceedings should not have led to that judgment.” In other words, there is a

Rooker-Feldman issue if the federal suit alleges that a defect in the state court

proceedings should invalidate the state judgment.

Applying this reasoning here, we must consider whether the success of the

claims Sprague raised in the adversary proceeding was contingent upon

demonstrating any prior state court judgment was reached in error. Sprague’s

adversary complaint sought damages for Appellants’ violation of the discharge

injunction under 11 U.S.C. § 542

26 and for violation of the Stipulated Order.

Appellants admit no state court has made findings or entered a decision

determining those issues. The only state court findings centered around whether

Appellants could foreclose the Judgment Lien and the amount of the Deficiency

Judgment; Sprague’s complaint challenged none of those findings.

Furthermore, bankruptcy courts clearly have jurisdiction to review alleged

violations of their own orders, including civil contempt matters arising out of core

matters.

27 Issuing an order to enforce its own orders—the discharge order and the

Stipulated Order—neither required the bankruptcy court to challenge the state

court proceedings nor to set aside or unwind any state court decision as explained

in Mayotte. Appellants argue that even if the state court had not yet issued a

decision, Rooker-Feldman was nonetheless implicated because the parties had

briefed some overlapping issues that the bankruptcy court might need to decide.

They are wrong. The state court did not have the opportunity to enter a decision

on those issues because the parties had agreed to stay the state court matters

pending resolution of the adversary proceeding in bankruptcy court.

26 All future references to “Code,” “Section,” and “§” are to the Bankruptcy

Code, Title 11 of the United States Code, unless otherwise indicated.

27 In re Skinner, 917 F.2d 444, 447-8 (10th Cir. 1990) (concluding bankruptcy

court had authority to issue sanctions for violation of automatic stay); see also In

re Unioil, 948 F.2d 678, 682 (10th Cir. 1991) (holding “bankruptcy court had the

inherent power to enforce its [own] order”).

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In light of Mayotte, which was issued after the parties briefed the issue, but

before oral argument (at which time Appellants still argued the doctrine

applicable), it is simply frivolous to argue the bankruptcy court lacked

jurisdiction.

28 Accordingly, the bankruptcy court committed no error in

determining it had jurisdiction over Sprague’s adversary complaint.

2. Certification of Issues to the New Mexico Supreme Court

“Whether to certify a question of state law to the state supreme court is

within the discretion of the federal court.”

29 Federal courts must “‘apply judgment

and restraint before certifying,’ and ‘will not trouble our sister state courts every

time an arguably unsettled question of state law” arises.

30 Federal courts are

bound to apply state law when necessary and “must determine what decision the

state court would make if faced with the same facts and issue.”

31

As a preliminary matter, it is unclear whether Appellants are challenging

the bankruptcy court’s decision declining to certify questions, or this Court’s own

motions panel decision, which also denied certification. They elected not to brief

the issue in their opening brief, instead incorporating by reference earlier briefing

28 Appellants argued this Court should apply Gogola v. Zingale, 141 F. App’x

839 (11th Cir. 2005), an unpublished decision from the Eleventh Circuit, instead

of Mayotte.

29 Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir. 1988) (first citing

Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974); and then citing Holler v.

United States, 724 F.2d 104, 105-06 (10th Cir. 1983)) (affirming denial of

certification of issue to New Mexico Supreme Court); Massengale v. Okla. Bd. of

Exam’rs in Optometry, 30 F.3d 1325, 1331 (10th Cir. 1994) (“Certification of

state law questions is not automatic . . . but discretionary.”).

30 Colony Ins. Co. v. Burke, 698 F.3d 1222, 1235-36 (10th Cir. 2012) (quoting

Pino v. United States, 507 F.3d 1233, 1236 (10th Cir. 2007)); Armijo, 843 F.2d at

407 (“Certification is not to be routinely invoked whenever a federal court is

presented with an unsettled question of state law.”) (citing L. Cohen & Co. v. Dun

& Bradstreet, 629 F.Supp. 1419, 1425 (D. Conn. 1986)).

31 Armijo, 843 F.2d at 407 (first citing Farmers All. Mut. Ins. Co. v. Bakke,

619 F.2d 885, 888 (10th Cir. 1980); and then citing Hartford v. Gibbons & Reed

Co., 617 F.2d 567, 569 (10th Cir. 1980)).

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on the motion made to this Court.

32 They also elected not to address the issue at

oral argument. Because Appellants have failed to sufficiently set forth the

bankruptcy court’s error in denying certification, and because “[a]n issue or

argument insufficiently raised in the opening brief is deemed waived,”

33 we

decline to consider the certification argument.

3. Violation of the Discharge Injunction

Appellants argue that their actions in recording the Deficiency Judgment,

after the foreclosure sale of the Otero Land, and then demanding payment in full

in response to the Debtor’s petition for redemption, do not constitute

postdischarge attempts to collect a prebankruptcy debt against the Debtor,

notwithstanding the original debt’s prebankruptcy origins. They base this

argument on New Mexico case law interpreting New Mexico’s redemption statute

(New Mexico Statute § 39-5-18), which they claim allows judgment lienholders to

re-foreclose, on an in rem basis, any remaining balance due on the already

foreclosed property even after redemption by the former property owner.

In New Mexico, the holder of a money judgment can create a judgment lien

against a debtor’s real property by filing a transcript of the judgment with the

clerk of the county where the real estate is located.

34 That lien can be foreclosed

“in the same manner as ordinary suits for the foreclosure of mortgages.”

35 After

foreclosure, a debtor may redeem the property within nine months by paying the

32 Appellants’ Br. 48 (“The issue was fully briefed and argued in the

Motion for Certification. For that reason, Issue III will not be further briefed.”).

33 Becker v. Kroll, 494 F.3d 904, 913 n.6 (10th Cir. 2007) (citing Headrick v.

Rockwell Int’l Corp, 24 F.3d 1272, 1277-78 (10th Cir. 1994)); Krumm v. Holder,

594 Fed. App’x 497, 501 (10th Cir. 2014) (stating party waives an inadequately

briefed issue); Mooring Capital Fund, LLC v. Knight, 388 F. App’x 814, 823 n.4

(10th Cir. 2010) (stating where brief does not develop issue beyond cursory

identification, issue is considered waived).

34 N.M. Stat. Ann. § 39-1-6 (1978).

35 N.M. Stat. Ann. § 39-4-13 (1978).

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purchaser the amounts set forth in New Mexico Statute § 39-5-18, or by filing a

petition for redemption that is accompanied by payment of the same amounts to

the county clerk.

36

In Construction Engineering & Manufacturing Co. v. Don Adams Mining

Co.,

37 the New Mexico Supreme Court held that, although a debtor need only pay

the amount paid at a foreclosure sale, plus taxes, interest, and penalties, in order

to redeem a foreclosed property, “[o]nce the mortgagor redeems foreclosed

property, it again becomes part of his real estate and thus subject to the [prior]

judgment lien and foreclosure. A foreclosure suit would then be the proper

remedy to effect payment of the amount of the deficiency.”

38

In Turner v. Les File Drywall,

39 the New Mexico Supreme Court effectively

reiterated its holding that redeemed property is again subject to a previously

foreclosed judgment lien. In Turner, the debtor/original owner of the foreclosed

property sold his right of redemption to a third party. The third party then

exercised the right of redemption. When the holder of the lien tried to reforeclose the property now owned by the third party, the state court denied the

requested relief. On appeal, the New Mexico Supreme Court rejected the

lienholder’s argument that a debtor can assign no greater rights than he possessed,

instead favoring application of the rule that the property of one is not subject to

the payment of debts held by another. As a result, it held that the judgment lien

would not follow the redeemed real estate if the debtor owner transferred the

property (in good faith) to a third party who then redeemed it. The clear

implication of this decision is that while a creditor cannot re-foreclose on

property redeemed by a third party, that same creditor can re-foreclose on

36 N.M. Stat. Ann. § 39-5-18 (1978).

37 572 P.2d 1246 (N.M. 1977).

38 Id. at 1248. See also N.M. Stat. Ann. § 39-4-13 (1978).

39 868 P.2d 652 (N.M. 1994).

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property redeemed by the original debtor.

To rebut these holdings, Sprague relies on § 524(a)(2), which “operates as

an injunction against the commencement or continuation of an action, the

employment of process, or an act, to collect, recover or offset any such

[discharged] debt as a personal liability of the debtor.”

40 Sprague argued, and the

bankruptcy court concluded, that when the Debtor received his discharge, that

discharge intervened to eliminate any part of the judgment that was not satisfied

by the first sale of the property. The bankruptcy court noted that it would not

make policy sense to allow the repeated foreclosure of property postredemption,

and it ultimately held that once the Debtor redeemed the property from the sale, it

became “after-acquired” property. As such, Appellants could not then seek to

attach the Judgment Lien to the redeemed property since it was not property

owned on the date of the bankruptcy petition. From that reasoning, the bankruptcy

court held that Appellants’ actions to pursue collection of its Deficiency

Judgment against that “after-acquired” property violated the discharge injunction.

These conclusions misapply the New Mexico Supreme Court’s holdings in

Construction Engineering and Les File Drywall that redeemed real property “once

again becomes part of the mortgagor’s real estate subject to prior judgment

liens.”

41 In New Mexico, judgment liens attach to real property acquired by a

judgment debtor after the date a transcript of judgment is filed, including property

lost at foreclosure but reacquired through redemption.

42 However, nothing in the

New Mexico Supreme Court’s interpretation of the law indicates property

redeemed is newly acquired property—rather, the property “again becomes part of

40 11 U.S.C. § 524(a)(2).

41 Turner, 868 P.2d at 653 (citing Constr. Eng’g, 572 P.2d at 1248) (emphasis

added).

42 Opinion at 10, in Appellants’ App. at 943. See also Const. Eng’g, 572 P.2d

at 1248.

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[a debtor’s] real estate.”

43 While this statutory scheme, which allows repeated

foreclosures, appears to conflict with New Mexico’s stated public policy behind

redemptions,

44 it is nonetheless the law of New Mexico.

The Special Master’s Deed indicates title to the Otero Land passed to

Appellants on July 8, 2014.

45 Sprague timely filed a petition to redeem on April

20, 2015.

46 Appellants objected to Sprague’s redemption in the state court and

simultaneously filed another action to foreclose the Deficiency Judgment. While

Appellants were admittedly procedurally premature in seeking to re-foreclose

their Deficiency Judgment, as they still held title to the Otero Land because the

state court redemption proceeding was stayed pending resolution of the

bankruptcy issues, their complaint did not seek collection of the discharged debt

in personam.

47 As a result, the filing of the postredemption foreclosure action was

not in violation of § 524(a)(2) because, under New Mexico law, a deficiency

judgment may become a postredemption lien on the real property once properly

transcribed. So long as Appellants were not seeking to hold the Debtor personally

liable for the deficiency judgment, and were instead merely pursuing any

remaining value in the non-exempt real estate, their actions did not constitute a

43 Const. Eng’g, 572 P.2d at 1248.

44 See Chase Manhattan Bank v. Candelaria, 90 P.3d 985, 987 (N.M. 2004)

(“One of the purposes of the redemption statute is to give the property owner . . .

a reasonable opportunity to redeem the property.”) (citing W. Bank. of Las Cruces

v. Malooly, 895 P.2d 265, 271 (N.M. Ct. App. 1995); see also Mortg. Elec.

Registration Sys., Inc. v. Montoya, 186 P.3d 256, 258 (N.M. Ct. App. 2008)

(quoting HSBC Bank USA v. Fenton, 125 P.3d 644, 646 (N.M. Ct. App. 2005)

superseded by statute, N.M. Stat. Ann. § 39-5-18 (2007)) (“[T]he commonly

stated purposes of statutory redemption are to encourage full value bidding at

foreclosure sales and to protect mortgagors.”).

45 Appellants’ App. at 450.

46 Opinion at 5, in Appellants’ App. at 938.

47 Id. at 6, in Appellants’ App. at 939.

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discharge violation.

48

Nothing in the record suggests Appellants sought in personam relief, and in

fact, the Deficiency Judgment expressly indicated it was a lien on the Debtor's

real estate and “no deficiency judgment [was] granted on an in personam basis

against the Estate of Fred Van Winkle.”

49 We thus find that Appellants did not, in

trying to enforce the Deficiency Judgment against the Otero Land, commit any

“act, to collect, recover or offset any such [discharged] debt as a personal

liability of the debtor.” under § 524(a)(2). We therefore REVERSE the

bankruptcy court’s holding of a discharge violation.

4. Violation of the Stipulated Order

Although we hold that Appellants did not violate the discharge injunction,

we now review whether their actions taken in the Condo foreclosure violated the

terms of the Stipulated Order. This question is quickly answered by a careful

review of two documents: the Stipulated Order and the complaint Appellants filed

in state court to foreclose Williams’ first mortgage and Appellants’ Judgment

Lien on the Condo.

50

The parties agreed by the terms of the Stipulated Order that the Judgment

Lien was “partially avoided and attache[d] only to the extent of any value over

and above the stipulated value of the [Condo] ($100,000) less the payoff of the

First Mortgage less the Debtor’s allowed Homestead Exemption ($60,000).”

51 In

48 Turner, 868 P.2d at 653; Const. Eng’g, 572 P.2d at 1248; see also Dewsnup

v. Timm, 502 U.S. 410, 417-18 (1992) (explaining lien rights pass through

bankruptcy unaffected).

49 See Opinion at 5, in Appellants’ App. at 938 (quoting the Amended Order

Approving Special Master’s Report & Granting Deficiency Judgment at 3, in

Appellants’ App. at 448).

50 First Amended Complaint for Judgment for Debt and Money Due on

Promissory Note, to Foreclose on Real Estate Mortgage and to Foreclose

Judgment Lien, in Appellants’ App. at 1521.

51 Stipulated Order at 2, in Appellants’ App. at 121. The Order also provided

(continued...)

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their prayer for relief in the subsequent foreclosure complaint, however,

Appellants requested the proceeds of the foreclosure sale be distributed in the

following priority: “(1) satisfaction of the [First Mortgage]-payable to John

Williams;

52 (2) $60,000 for the homestead exemption-payable to the [Debtor’s]

Estate; and (3) the balance of [Appellants’] judgment lien-payable to

[Appellants].”

53

The bankruptcy court correctly determined that Appellants violated the

Stipulated Order by requesting payment of the entire remaining balance of the

Judgment Lien, instead of limiting the amount due on the First Mortgage and

Judgment Lien to a combined total of $40,000, as the Stipulated Order clearly

contemplated. This example illustrates the distribution contemplated by the

Stipulated Order. If the Condo sold for $110,000 on the date of the foreclosure

complaint (thus using the numbers in that complaint), Williams should have

received approximately $20,199 on the First Mortgage (assuming no advances,

etc.), the Debtor would have received the $60,000 representing the homestead

exemption, the Appellant Judgment Lienholders would have received $19,801

($100,000 stipulated value minus $20,199 then minus $60,000), and all sale

proceeds in excess of $100,000—or $10,000 in this example—would have

51 (...continued)

this: “when the amount of the payoff of the First Mortgage is known, the Court

will enter a further order establishing the exact amount of [Appellants'] judicial

lien that can be applied against the [Condo].” Id. It does not appear that

subsequent order has been entered.

52 The complaint indicated the note balance was $15,034 (purchase price),

plus $5,125 interest through April 20, 2015, plus daily accrual of $8.24, plus $40

in late charges. It also generally referenced amounts advanced and attorney fees.

At oral argument, Appellants counsel indicated the balance on the note now

“exceeds $50,000.” As an aside, Appellants also incorrectly sought a finding that

on top of the principal and interest due on the note, accrued rents in the amount of

$13,650 through April 20, 2015 should be added to its judgment. However,

Appellants’ interest in any rents is limited to security for repayment of the

promissory note, not an additional obligation to be added to principal, as

Appellants’ counsel admitted during oral argument.

53 Opinion at 5, in Appellants’ App. at 1041.

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belonged to the Debtor.

Because Appellants’ demand for payment of the entire remaining balance

of the Judgment Lien disregarded the limitations in the Stipulated Order, the

bankruptcy court correctly found Appellants in contempt of that order.

5. Damages

The bankruptcy court awarded $33,161.70 in actual damages and attorneys’

fees and $16,838.30 in punitive damages, for a total judgment of $50,000. The

actual damages were derived from the attorneys’ fees and costs itemized at trial;

the bankruptcy court did not explain how it arrived at the punitive damage award.

The bankruptcy court based the actual damage award on its determination that

Appellants willfully violated the discharge injunction. It elected not to also assess

damages for the contempt of the Stipulated Order, effectively finding that the

time spent by the Debtor’s counsel in prosecuting the discharge injunction

essentially overlapped the time spent on the contempt of the Stipulated Order.

Appellants first argue the bankruptcy court erred in assessing any damages

because no violation of the discharge or the Stipulated Order occurred. While we

reverse the bankruptcy court’s finding of a violation of the discharge injunction,

we affirm the bankruptcy court’s determination that Appellants violated the

Stipulated Order, so some damage award is undoubtedly appropriate. Bankruptcy

courts clearly have the power to enter monetary sanctions against a party for civil

contempt,

54 and the amount of sanctions awarded for civil contempt is reviewed

for abuse of discretion.

55

54 In re Skinner, 917 F.2d 444, 448 (10th Cir. 1990) (holding bankruptcy

courts may impose sanctions for civil contempt to compel compliance with a

court order or compensate parties for losses caused by noncompliance pursuant to

§ 105); In re Scrivner, 535 F.3d 1258, 1265 n.3 (10th Cir. 2008) (same).

55 Auto-Owners Ins. Co. v. Summit Park Townhome Assoc., ___ F.3d ___,

Nos. 16-1348, 16-1352, 2018 WL 1559980, at 8 (10th Cir. Mar. 30, 2018)

(holding abuse of discretion standard requires appellate court to “consider

whether the [trial] court’s determination appears reasonable in light of the

(continued...)

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Appellants next argue the bankruptcy court erred in awarding any fees

without receiving expert testimony regarding the reasonableness of the attorneys’

hourly rates and hours billed. We reject this argument as Appellants neither

objected to the reasonableness of the itemized hours nor to the $200-225 hourly

rate sought. Instead, in their post-trial brief, they argued that the reasonableness

of fees must be shown through expert testimony, and because no such testimony

was received, no fees could be allowed.

The bankruptcy court is authorized “to independently determine reasonable

fees” under the Bankruptcy Code.

56 As a result, we see no reason why expert

testimony is necessary for the court to determine whether the attorneys’ fees were

reasonable in this case. This is especially the case when the objecting party fails

to object to either any specific time entries or to the hourly rate.

Appellants also argue the bankruptcy court did not have jurisdiction to

award actual damages for Sprague’s time, instead arguing her fees should be

determined by the probate court.

57 We disagree. First, because her time was

incurred in prosecuting the adversary filed in the bankruptcy court, the

bankruptcy court was in the best position to determine what fee should be

allowed. Second, awarding fees for that personal representative’s time in the

55 (...continued)

complexity of the case, the number of strategies pursued, and the responses

necessitated by the other parties maneuvering. But we do not require the [trial]

court to identify and justify every hour allowed or disallowed.”) (emphasis added)

(citations omitted) (first citing AeroTech, Inc. v. Estes, 110 F.3d 1523, 1528 (10th

Cir. 1997); and then citing Malloy v. Monahan, 73 F.3d 1012, 1018 (10th Cir.

1996))).

56 In re Market Ctr. E. Retail Prop., Inc., 730 F.3d 1239, 1246 (10th Cir.

2013) (citing In re Commercial Fin. Servs., Inc., 427 F.3d 804, 810 (10th Cir.

2005)) (holding § 330 authorizes bankruptcy court to determine reasonableness of

fees).

57 Appellants also claim a personal representative’s compensation is “limited

to the statutory rate of $35.00 a day and approximately $.50 per mile.”

Appellants’ Br. 71. They cite no authority for this proposition, and the Court

could find none.

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probate estate would result in those fees being paid by the Debtor’s beneficiaries

out of estate assets, not by Appellants—the parties responsible for so much

unnecessary time and labor their actions caused the probate estate’s

representative.

The bankruptcy court has discretion to enter monetary sanctions for

contempt of the Stipulated Order, and it is competent to determine whether the

damages originally awarded, including attorneys’ fees and the representative’s

costs and fees, remain reasonable, upon remand, in light of these holdings.

58 But

because we reverse the bankruptcy court’s finding that Appellants violated the

discharge injunction, and the bankruptcy court did not make specific findings for

damages related solely to the violation of the Stipulated Order, we remand for the

calculation of actual and punitive damages resulting only from Appellants’

contempt of the Stipulated Order.

Finally, specifically with regard to punitive damages, we do not

suggest—by noting the bankruptcy court did not indicate how the punitive

damage award was arrived at—that the bankruptcy court’s decision to award

punitive damages was in error. We agree that the record is replete with examples

where positions taken by the Appellants appeared to be an unnecessarily

relentless pursuit to collect the Judgment Lien, often without regard to the law or

the practicalities of litigation.

This Court identified, in a thorough review of the record on appeal,

numerous actions that support the bankruptcy court’s conclusion that Appellants

were “litigious” and “aggressive,” including: the premature filing of the second

foreclosure on the Otero Land prior to the state court declaring the redemption

58 In re Skinner, 917 F.2d 444, 448 (10th Cir. 1990); see Commercial Fin.

Servs.,, 427 F.3d at 810 (citing In re Miniscribe Corp., 309 F.3d 1240, 1244

(10th Cir. 2002)) (“bankruptcy courts have wide discretion in awarding

compensation to attorneys, trustees, and professionals so long as it is

reasonable.”).

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effective and while it still held title; improperly delaying the redemption process

by arguing Sprague must pay the entire amount due on the First Mortgage to

properly redeem, which was clearly unsupported by state law;

59 seeking rents in

addition to the balance of the First Mortgage on the Condo when not entitled to

do so under the loan documents; seeking a writ of mandamus from the United

States District Court for the District of New Mexico to obtain a ruling on the

Rooker-Feldman jurisdictional issues when it was clear that doctrine was not

applicable;

60 continuing to assert that the bankruptcy court lacked jurisdiction

when the disputes clearly involved violations of the discharge order and contempt

of the bankruptcy court’s own order, none of which had been decided by the state

court; originally arguing, against clear Tenth Circuit authority, that the Debtor’s

estate lost its homestead exemption upon the Debtor’s post-petition death;

61

agreeing to a stipulation as to the Condo and then attempting to set the agreement

aside; and agreeing to stay the state court foreclosures and then attempting to set

that agreement aside. Even in this Court, Appellants submitted a voluminous

(1,679 pages), internally redundant, and mostly unnecessary record on appeal.

Accordingly, by remanding, we only suggest this Court is unable to

ascertain how the bankruptcy court arrived at the punitive damage award and

whether the amount remains appropriate in light of our reversal of the bankruptcy

59 Exhibit E, Plaintiffs’ Motion for Summary Judgment to Foreclose Judgment

Lien and Supporting Brief at 16, in Appellants’ App. at 278.

60 While Appellants’ argument to the bankruptcy court that it did not have

jurisdiction over clearly core matters–the discharge injunction and enforcement of

its own orders–was in itself a stretch, seeking a writ of mandamus in the district

court, and then continuing to assert at oral argument that this Court should follow

Eleventh Circuit precedent instead of binding Tenth Circuit precedent (Mayotte v.

U.S. Bank Nat’l Ass’n for Structured Asset Inv. Loan Tr. Mortg. Pass-Through

Certificates, Series 2006-4, 880 F.3d 1169, 1174 (10th Cir. 2018)), is even more

troubling.

61 Order Regarding to Motion to Avoid Judicial Lien and Setting Scheduling

Conference at 1-2, in Appellants’ App. at 110-11. See Mansell v. Carroll, 379

F.2d 682, 684 (10th Cir. 1967) (holding exemptions are fixed on date of filing

petition); Grattan v. Trego 225 F. 705 (8th Cir. 1915) (holding debtor’s estate

entitled to homestead exemption after death).

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court’s finding that Appellants also violated the discharge injunction with its

actions regarding the Otero Land.

62 Because we remand for a recalculation of

damages, we do not further review the award of punitive damages.

6. Abandonment

To the extent Appellants allege Sprague acted in bad faith by obtaining an

order abandoning the right of redemption for lack of value and then redeeming the

Otero Land, we dismiss these allegations outright. Appellants and the Chapter 7

Trustee had the opportunity to object to the abandonment if they believed the

property had value to the estate; neither elected to do so. And given the years of

litigation surrounding that property, Appellants are hard-pressed to argue they

were unaware of its value when faced with that motion to abandon.

It is also well settled that property may be burdensome to the bankruptcy

estate despite retaining some value—especially when the asset at issue is

embroiled in litigation, as it was here.

63 The Chapter 7 Trustee clearly did not

believe the right of redemption retained any value for the estate, as evidenced by

the filing of his final report,

64 noting that the Judgment Lien encumbered the

Otero Land—which lien, by then, Appellants claimed exceeded $271,905, and for

which land they only bid $67,000 at the foreclosure sale. It is this kind of

62 See e.g. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 575 (1996) (explaining

to meet due process requirements regarding notice of the severity of potential

penalty, an award of punitive damages must not be excessive). See also Diviney v.

Nationsbank of Texas, N.A. (In re Diviney), 225 B.R. 762 (10th Cir. BAP 1998)

(holding a court should both analyze, in determining whether punitive damages

are warranted, whether a party acted with actual knowledge (or reckless

disregard) that he was violating a federally protected right and the nature of the

defendant’s conduct, his ability to pay, his motives, and whether there was

provocation by the debtor).

63 In re Eurogas, Inc., 560 B.R. 574, 585-86 (Bankr. D. Utah 2016) (finding

Chapter 7 Trustee exercised reasonable business judgment in determining asset

involved in litigation was burdensome to the estate).

64 Chapter 7 Trustee’s Final Account and Distribution Report Certification

that the Estate has been Fully Administered and Application to be Discharged, in

Appellants’ App. at 141; Order Approving Trustee’s Final Report, Court Costs,

and Trustee’s Commission and Expenses, in Appellants’ App. at 139.

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allegation that furthers our finding that Appellants seem willing to make most any

argument, regardless of its merits, to impede the Debtor’s—and now his probate

estate’s—opportunity for the fresh start anticipated by the Bankruptcy Code.

7. Appeal-related attorney fees.

The last issue we address concerns Sprague’s prayer for appeal-related

attorney fees. The Tenth Circuit has held that a prevailing party on appeal is not

automatically entitled to an award of appeal-related attorney fees. Generally, the

Tenth Circuit looks to see if attorneys’ fees are allowed by a specific statute, and

in the absence of a statutory provision, a party must make a specific application

for appeal-related attorneys’ fees.

65 In either case, the decision to award appealrelated attorneys’ fees falls within the appellate court’s discretion. If the court

determines such fees are appropriate, it may then remand to the trial court the

determination of the appropriate amount of fees.

66

This Court denies Sprague’s general request for appeal-related attorneys’

fees for three reasons: (1) there is no explicit statutory provision entitling her to

appeal-related attorneys’ fees; (2) there was no separate application for fees as

required; and (3) she is not the prevailing party on a significant issue that requires

remand.

IV. Conclusion

Because we find that New Mexico redemption law mandates it, we

REVERSE the bankruptcy court’s determination that Appellants violated the

discharge injunction. And although we AFFIRM the bankruptcy court’s

65 Crumpacker v. Kan. Dept. of Human Res., 474 F.3d 747, 755 (10th Cir.

2007) (quoting Hoyt v. Robson Cos., 11 F.3d 983, 985 (10th Cir. 1993) (holding

the district court does not have jurisdiction to award appeal-related attorneys’ fees

without a remand to do so)); Fed. R. Bankr. P. 8020(a) (“If the . . . BAP

determines that an appeal is frivolous, it may, after a separately filed motion or

notice from the court and reasonable opportunity to respond, award just damages

and single or double costs to the appellee.”) (emphasis added).

66 Hoyt, 11 F.3d at 985.

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determination that Appellants violated the Stipulated Order, we REMAND the

award of actual and punitive damages to the bankruptcy court to determine what

damages are attributable to the violation of the Stipulated Order.

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