United States Bankruptcy Appellate Panel of the Tenth Circuit
In re PEDRO MENDOZA and SANDY M. ARMIJO, Debtors.
PHILIP J. MONTOYA, Chapter 7 Trustee, Appellee. PEDRO MENDOZA and SANDY M. ARMIJO, Appellants, In re STEVEN BRIAN DOLLMAN and DARLA SUE DOLLMAN, DEBTORS. STEVEN BRIAN DOLLMAN and DARLA SUE DOLLMAN, Appellants,
PHILIP J. MONTOYA, Chapter 7 Trustee, Appellee.
from the United States Bankruptcy Court for the District of
Michael E. Lash of Christopher L. Trammell, P.A.,
Albuquerque, New Mexico for Appellants Pedro Mendoza and
Sandy M. Armijo.
Deborah M. DeMack of the Law Offices of Deborah M. DeMack,
Albuquerque, New Mexico for Appellants Steven Brian Dollman
and Darla Sue Dollman.
Bassan of Askew & Mazel, LLC, Albuquerque, New Mexico for
Appellee Philip J. Montoya, Chapter 7 Trustee.
MICHAEL, ROMERO, and SOMERS, Bankruptcy Judges.
ROMERO, BANKRUPTCY JUDGE
address the appeals of Pedro Mendoza and Sandy Armijo and
Steven and Darla Sue Dollman together as both appeals raise
an identical legal issue: whether the New Mexico bankruptcy
courts properly sustained a Chapter 7 trustee's
objections to the amendment of the debtors' bankruptcy
cases, the bankruptcy courts concluded the general right to
amend schedules provided by Federal Rule of Bankruptcy
Procedure 1009(a) sets the date the case is closed as the
specified period in which the debtors must file amendments to
their schedules. As the debtors in these appeals had closed
and then reopened their bankruptcy cases, the bankruptcy
courts concluded the specified period for amendment as a
matter of course had expired and both courts required the
debtors to show excusable neglect existed to allow the
amendments pursuant to Rule 9006(b). Because we do not read
Rule 1009(a)'s language to create a specified period of
time as set forth in Rule 9006(b), we REVERSE and REMAND both
cases for consideration of whether the debtors properly
claimed exemptions through the amended schedules.
these appeals are taken from two separate bankruptcy cases,
the factual background of each is similar. In both cases, the
Chapter 7 debtors received a discharge and their cases were
closed. Both sets of debtors unknowingly failed to disclose
personal injury claims in their schedules and both sets of
debtors sought to reopen their cases in order to amend their
schedules. Following reopenings, the Chapter 7 trustee
objected to the debtors' amended schedules in both cases.
Both bankruptcy courts sustained the Chapter 7 trustee's
objections on the basis neither set of debtors could show
excusable neglect for failing to amend their schedules prior
to the closing of the cases.
In re Dollman
Sue Dollman suffered a personal injury in a Wal-Mart store
parking lot when she tripped over a mangled shopping cart
corral on December 18, 2012. Mrs. Dollman experienced
physical and cognitive injuries as a result of her fall. Mrs.
Dollman and her husband, Steven Dollman, filed a Chapter 7
bankruptcy petition on September 18, 2013. The Dollmans did
not disclose Mrs. Dollman's injury or any potential cause
of action against Wal-Mart in their bankruptcy schedules. The
Dollmans received a Chapter 7 discharge on December 30, 2013.
years later, Mrs. Dollman filed a complaint against Wal-Mart
in state court on account of her personal injury. In the
course of litigation, Wal-Mart's counsel became aware of
the bankruptcy case and sought dismissal on the basis Mrs.
Dollman was not the valid holder of the personal injury
claim. Upon conferring with bankruptcy counsel, the Dollmans
filed a motion to reopen their bankruptcy case to amend their
claimed exemptions to exempt the personal injury claim. The
bankruptcy court granted the motion to reopen on January 24,
2017. The Dollmans immediately amended Schedules A, B, and C
to disclose a "Personal injury legal
claim" and exempt the personal injury claim
pursuant to § 522(d)(11)(D) and (E).
Montoya was appointed as the Chapter 7 trustee (the
"Trustee") in the reopened case on January 25,
2017. The Trustee objected to the Dollmans' amendments to
Schedules A, B, and C. The parties waived an evidentiary
hearing on the issue and the bankruptcy court issued its
memorandum opinion on September 29, 2017. In the opinion,
the bankruptcy court concluded Rule 9006(b) required the
Dollmans to file a motion to extend the time to amend the
schedules and meet the excusable neglect standard before they
would be allowed to amend their claimed exemptions.
Accordingly, the bankruptcy court struck the amended
Schedules A, B, and C and set a deadline for the Dollmans to
file a motion to extend the deadline to amend the schedules.
Dollmans filed a timely request for an extension of time to
amend their schedules pursuant to Rule 9006(b)(1), asserting
they acted in good faith and any delay in amending the
schedules was excusable based on their attorney's failure
to act. The Trustee objected to the request for an extension,
arguing the Dollmans could not meet the excusable neglect
conducting an evidentiary hearing, the bankruptcy court
entered its Memorandum Opinion on March 5,
2018. The bankruptcy court concluded that while
neglect may have occurred, the Dollmans did not meet Rule
9006(b)'s excusable neglect standard to amend schedules
in a reopened bankruptcy case. The bankruptcy court evaluated
the factors provided by the Supreme Court decision
Pioneer Investment Services Company. v. Brunswick
Associates,  concluding that although the Trustee
suffered minimal prejudice, the court could not excuse the
Dollmans' more than three-year delay in disclosing the
personal injury claim. Accordingly, the bankruptcy court
denied the motion to extend time to amend Schedules A, B, and
C. The Dollmans filed a timely appeal of the order striking
their amended schedules and the order denying their request
for an extension of time to amend the schedules.
In re Mendoza
Armijo suffered a personal injury in an automobile accident
when she was rear-ended at a stoplight on August 13, 2014.
The at fault driver's automobile insurance company, State
Farm Mutual Automobile Insurance Company ("State
Farm"), reimbursed Armijo for the cost of repairing her
vehicle on October 30, 2014. Armijo sought chiropractic
treatment for the personal injuries caused by the accident.
Between September 17, 2014 and June 22, 2017, Armijo received
a total of ninety-five chiropractic treatments. Armijo paid
for forty-five of the treatments out of her own pocket. The
chiropractor billed State Farm for the rest.
April 20, 2016, Armijo and her then husband, Pedro Mendoza,
filed a Chapter 7 bankruptcy petition. Armijo and
Mendoza did not list the car accident, injuries, or any
potential claims against State Farm in their bankruptcy
schedules. The Chapter 7 trustee appointed in the case
conducted a § 341 meeting of creditors and filed a
report of no distribution to creditors.
received no payment from State Farm, Armijo's
chiropractor contacted her regarding its $6, 250.71 bill in
May or June 2016. The chiropractor also contacted State Farm
regarding the bill on June 1, 2016. After that, State Farm
wrote Armijo a letter asking her to contact the company about
settlement of her claims. Armijo and Mendoza received a Chapter 7
discharge on July 25, 2016, and the bankruptcy court closed
their case on the same day.
October 14, 2016, State Farm sent Armijo a settlement
agreement and check for $14, 250.71 in settlement of all her
claims resulting from the August 13, 2014 accident. Armijo
signed the settlement agreement on October 18, 2016. State
Farm paid Armijo $8, 000.00 on October 25, 2016, and paid her
chiropractor $6, 250.71 directly on October 26, 2016. State
Farm sent Armijo and Mendoza's bankruptcy counsel a copy
of the settlement agreement and other communications on
November 22, 2016.
conferring with their bankruptcy counsel, Armijo and Mendoza
moved to reopen their bankruptcy case to schedule and exempt
the personal injury award for the automobile accident on
April 3, 2017. The bankruptcy court granted the motion to
reopen and Armijo and Mendoza filed amended Schedules A, B,
and C on April 12, 2017. Schedule B lists "$14, 250.71
for accident 8/13/14 caused by Dawn Davis/ State Farm
Insurance; subject to chiropractor lien of $6250.71 Net to
Sandy Armijo $8000.00 on 10/14/16." Schedule C
exempts the $14, 250.71 pursuant to § 522(d)(11)(D).
Philip Montoya was also appointed as Chapter 7 trustee in the
reopened Mendoza bankruptcy case. The Trustee filed an
objection to the amended claim of exemption, arguing the
amendment was untimely pursuant to Rule 1009(a).
bankruptcy court held a hearing on November 16, 2017, and
issued its Opinion and Order Sustaining
Trustee's Objection to Debtors' Claim of
Exemption on January 31, 2018. The bankruptcy court
concluded Rule 9006(b)(1) required Armijo and Mendoza to show
excusable neglect in order to amend their schedules in the
reopened bankruptcy case. Applying Pioneer, the
bankruptcy court concluded Armijo and Mendoza could not show
excusable neglect because numerous events in the bankruptcy
case should have prompted them to disclose the personal
injury claims. As a result, the ...