515 B.R. 820
Bankr. D.N.M.2014Background
- Picacho Hills Utility Company is a New Mexico public utility subject to the NM Public Utility Act and Commission regulation.
- Bright View filed a $931,547.91 proof of claim for reimbursement and improvements related to Coronado Ridge extensions.
- The Water and Sewer Extension Agreement contemplated Bright View construct and Bright View be reimbursed 40 installments, no interest, with a rate-base condition tied to Commission determination.
- The Improvement Fees were charged to Bright View; Construction Cost reimbursement is owed by Debtor to Bright View.
- FRD in the Commission proceeding found violations by Debtor and Blanco, and the NM Supreme Court affirmed the order.
- Debtor filed bankruptcy; Bright View timely filed its Claim and seeks allowance of the unreimbursed Construction Cost portion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Construction Cost can be included in rate base | Bright View argues Construction Cost is owed; Debtor’s rate-base issue is unresolved | Debtor contends Commission never ruled on rate-base inclusion; not dispositive | Construction Cost not shown as includable; issue not resolved by FRD; overruled Objection on this basis |
| Whether the Agreement is a security requiring Commission approval | Bright View treats the Agreement as a security under NM law | Agreement is a bilateral construction contract, not a security | Not a security under NM Act; not void for lack of original approval |
| If security, whether void absent prior approval | Bright View could proceed if security status proven; approval not obtained | Even if security, voidability requires Commission consent | Even if security, Agreement remains in force absent Commission approval; not voided |
| Debtor’s failure to file with Commission affects enforceability | Bright View argues contractual rights not contingent on filings | Filings required only for rate-base actions; LEAs not automatically void | Failure to file does not render the Agreement unenforceable; Bright View’s claim stands |
| Proper amount of Bright View’s claim against Debtor | Claim reflects Construction Cost reimbursement; not limited by Improvement Fees | Improvements fees and Construction Cost not interchangeable; overpayments not applicable | Court presumes claim amount valid; no reduction based on Improvement Fees |
Key Cases Cited
- Allen v. Geneva Steel Co. (In re Geneva Steel Co.), 260 B.R. 517 (10th Cir. BAP 2001) (burden of proof on objecting party; ultimate burden on creditor)
- Agricredit Corp. v. Harrison (In re Harrison), 987 F.2d 677 (10th Cir.1993) (burden-shifting framework for proof of claim objections)
- Plains Elec. Generation and Transmission Co-op., Inc. v. New Mexico Public Utility Commission, 126 N.M. 152, 967 P.2d 827 (1998) (not all contracts or obligations are securities; policy considerations)
- State v. Soutar, 272 P.3d 154 (N.M. Ct. App.2012) (definition of security; investment contract concepts applied in NM context)
- S.E.C. v. W.J. Howey Co., 328 U.S. 293 (1946) (leading test for what constitutes a security)