Former liquidating trustee asked the Court to order her former counsel to return $22,753 to the estate for redistribution.  The former trustee argued that the payment was contrary to counsel’s fee agreement.  Counsel countered that the agreement was changed through a settlement to allow him to collect the funds.  The Court found that the order approving the settlement was ambiguous, and applied tradition canons of contract construction, including the Restatement, to conclude that a proper interpretation required it to grant the former trustee’s motion. cont

Chapter 11 trustee of the Railyard Company sought to reject a lease between his estate and Railyard Brewing, a company owned by Debtor’s principals.  The lease was drafted by a principal while he controlled both companies, and it contained unusual terms that favored the lessee and burdened the lessor-estate.  The Court concluded that the trustee’s decision to reject the lease was within his sound business judgment.  However, because Railyard Brewing was potentially an appropriate tenant for the space, the Court directed the parties to attempt to negotiate a new, commercially reasonable lease through mediation.

Term in agreed order settling adversary proceeding which provided for payment of remaining settlement proceeds to “general unsecured creditors” was ambiguous and had to be construed against the drafter consistent with the priority distribution scheme contained in the Bankruptcy Code. The Code and Rules recognize priority unsecured claims and non-priority unsecured claims, but not general unsecured claims.  To be enforceable against all parties in interest with notice, a provision contrary to the requirements of the Bankruptcy Code must use explicit, clear language.   The Court denied the Chapter 7 Trustee’s motion to enforce the agreed order.

Defendant asked the Court to dismiss the adversary proceeding for lack of jurisdiction, to abstain, or to transfer venue.  Defendant argued that pursuant to 28 U.S.C. 1409(d), venue should be transferred to Texas because it lacked sufficient minimum contacts with New Mexico.  The Court concluded that Defendant purposefully availed itself of the privilege of conducting activities within New Mexico, as it solicited Plaintiff to bid on projects and entered into a construction contract with Plaintiff that included provisions invoking New Mexico law.  The Court also declined to enforce a forum selection clause requiring the case to be tried in Dallas, Texas because the proceeding was core and the public interest in centralizing bankruptcy proceedings outweighed the interests in enforcing a forum selection clause.  Finally, the Court declined to abstain under discretionary abstention provisions.