The court granted plaintiffs’ motion for summary judgment on their non-dischargeability claim under § 523(a)(2)(A) based on the preclusive effect of a state court judgment. The findings and conclusions of the state court satisfied all non-dischargeability elements even though the claim was based on violations of the New Mexico Unfair Trade Practices Act (“NMUPA”), which does not require proof of fraudulent intent or justifiable reliance, elements necessary to sustain a non-dischargeability claim under § 523(a)(2)(A). the state court’s findings were necessary to conform the findings with the evidence. Further, the state court’s final judgment adjudicating plaintiffs’ claims under the NMUPA sufficiently established defendant’s fraudulent conduct under § 523(a)(2)(A). Consequently, the same issues to be decided in the non-dischargeability proceeding were actually litigated and necessarily determined in the state court action. Attorneys’ fees and costs awarded by the state court under the NMUPA and traceable to defendant’s fraudulent conduct were appropriately included in the non-dischargeable judgment. However, plaintiffs could not recover attorney’s fees incurred in prosecuting the adversary proceeding based on the same NMUPA fee-shifting statute because the adversary proceeding did not adjudicate plaintiffs’ claims under the NMUPA.

Chapter 13 debtor separately classified student loan debt and proposed to cure the default under an alleged payment plan, including interest. The chapter 13 trustee objected. The Court ruled that the plan unfairly discriminated against the general unsecured claims (sec. 1322(b)(1) and violated sec. 1322(b)(10), which forbids paying interest on any unsecured claim unless all claims are paid in full.

New Mexico attorney general moved for an order that the automatic stay did not apply to state court action brought prepetition against one of the debtors for violation of the Unfair Practices Act. The court ruled that certain counts were excepted from the stay under the “police power” exception, while other counts were not. For the counts that were stayed, the court found that cause had not been demonstrated to modify the stay. Finally, the court found that the attorney general lacked standing to bring certain common law counts, and seek certain remedies, on behalf of customers alleged harmed by the unfair trade practices.

Judgment lien creditor sought determination that the chapter 7 Debtors’ real estate contract—pursuant to which they are purchasing their residence—was deemed rejected pursuant to 11 U.S.C. § 365(d)(1), and that the real estate contract was therefore terminated and not property of the estate. The Court held that it need not decide whether the real estate contract was an executory contract governed by § 365, because either way, the real estate contract is still in effect and is property of the estate. If the real estate contract is subject to § 365, it was automatically rejected pursuant to § 365(d)(1). The effect of the automatic rejection was a material breach, which the real estate contract seller waived by continuing to accept payments post-rejection. The real estate contract was modified by course of performance such that payments made by the Debtors directly to the seller’s mortgage lender constituted payments under the real estate contract.