Schilling v. Montalvo (In Re Montalvo)

329 B.R. 234, 2005 Bankr. LEXIS 1596, 2005 WL 2077124
CourtUnited States Bankruptcy Court, W.D. Kentucky
DecidedAugust 17, 2005
Docket19-30574
StatusPublished
Cited by1 cases

This text of 329 B.R. 234 (Schilling v. Montalvo (In Re Montalvo)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schilling v. Montalvo (In Re Montalvo), 329 B.R. 234, 2005 Bankr. LEXIS 1596, 2005 WL 2077124 (Ky. 2005).

Opinion

MEMORANDUM-OPINION

JOAN L. COOPER, Bankruptcy Judge.

This matter is before the Court on the Motion for New Trial, to Take Additional Testimony and/or to Amend Findings of Fact and Conclusions of Law of Trustee, J. Baxter Schilling (“Trustee”). The Court reviewed the Trustee’s Motion, the Response to Motion for New Trial, to Take Additional Testimony and/or to Amend Findings of Fact and Conclusions of Law of Debtor Jaime Enrique Montalvo (“Debt- or”) and the Reply to the Response of Debtor by the Trustee. The Court also conducted its own research and considered the arguments of counsel at the hearing held June 28, 2005. For those reasons set forth below, the Court DENIES the Trustee’s Motion. An Order accompanies this Memorandum-Opinion.

PROCEDURAL BACKGROUND

On April 28, 2004, Trustee instituted this adversary proceeding against Defendant Carlos Montalvo (“Defendant”), the father of the Debtor. The Trustee sought to avoid transfers of $14,229.99 by Debtor to Defendant pursuant to KRS 378.010, KRS 378.020, 11 U.S.C. § 544(b), 11 U.S.C. § 548(a)(1)(A), 11 U.S.C. § 548(a)(l)(B)(I)-(ii), and 11 U.S.C. § 550(a). The matter was tried to the Court on February 28, 2005. The Court entered its Memorandum-Opinion and Judgment in favor of the Defendant on May 12, 2005. See, docket entry, no. 32.

On May 23, 2005, Trustee filed his Motion for New Trial, to Take Additional *237 Testimony and/or to Amend Findings of Facts and Conclusions of Law. Trustee contends that within days of the entry of the Memorandum-Opinion and Judgment, he received documents in a companion adversary proceeding which demonstrate that Debtor’s testimony at trial regarding whether Debtor’s parents co-signed a loan in favor of Banco Popular was false. Trustee contends that these documents prove that Debtor’s mother, Maria Montalvo, cosigned a Note with Debtor. Trustee contends the Court should add Maria Montal-vo as a party defendant and that the Court should enter judgment against Carlos and Maria Montalvo for $19,685.98.

LEGAL ANALYSIS

Trustee’s Motion seeks to reopen this case to grant a new trial, take additional testimony and/or make additional findings of fact and conclusions of law and to add Maria Montalvo as a defendant. Trustee’s Motion is made pursuant to Rules 7052, 9006 and 9023 of the Federal Rules of Bankruptcy Procedure. The Trustee’s Motion was timely made under the aforementioned Rules because it was filed no later than ten days after entry of the Judgment. The Court, however, finds no merit to the Motion and must deny Trustee’s request to reopen the trial.

Trustee’s request to alter or amend the Judgment is made pursuant to Fed. R. Bankr.P. 9023. The Bankruptcy Court may, in its discretion, alter or amend its judgment if there is newly discovered evidence or if there is a manifest error of fact or law. In re DeLaughter, 295 B.R. 317, 319 (Bankr.N.D.Ind.2003). In this instance, Trustee contends his motion is warranted because of newly discovered evidence. That evidence consists of documents he received from Banco Popular in a companion adversary proceeding which establish that Debtor’s mother co-signed on the Note to Banco Popular. Debtor had represented in his Petition that his parents were co-debtors on the Banco Popular loan. He testified at trial that at the time the Petition was drafted, he believed this to be the case. He later, however, could not recall if they were co-obligors on the loan. He tried to determine from Banco Popular if this was correct, but could not discover any corroborating information or documentation from the Bank. Debtor presented all of the documents he received from the Bank at trial, but none of them established that his parents were co-obli-gors on the loan.

Trustee did not subpoena any documentation on this issue from Banco Popular. Trustee chose, instead, to rely on Debtor’s representations in his Petition, a fact that was rebutted by Debtor’s testimony at trial. The documents submitted by Trustee in support of the Motion at bar clearly establish that Debtor’s mother was a co-obligor on the $60,000 Note in favor of Banco Popular.

A three part analysis applies to motions for a new trial based on newly discovered evidence. First, the new evidence must have been discovered after judgment and movant must have been excusably ignorant of the facts at the time of trial despite due diligence. Second, the evidence discovered must be of a nature that would probably change the outcome of the case. Third, the evidence must not be merely cumulative or impeaching. In re Covino, 241 B.R. 673, 679 (Bankr.D.Idaho 1999). The evidence submitted by the Trustee does not withstand scrutiny under this three part analysis.

The Defendant’s counsel at trial examined the Trustee, over the Trustee’s objection, as to his discovery efforts undertaken prior to trial. Trustee testified that he did not subpoena records of the Debt- *238 or’s loan from Banco Popular. Trustee eventually obtained these documents from the Bank during discovery in a companion adversary proceeding against Banco Popular. This begs the question as to why Trustee did not get these documents through ordinary discovery tactics in this case prior to trial?

The Trustee cannot meet the first element of the test. The Court does not believe the Trustee exercised due diligence in preparing for this case. When the new evidence was available prior to trial and the parties own lack of diligence in conducting discovery caused the party’s failure to discover the evidence, the subsequent discovery of the evidence is insufficient grounds for a new trial. In re Gorman, 2001 WL 1640064 (D.Minn.2001). See also, Boryan v. United States, 884 F.2d 767, 771 (4th Cir.1989) (a movant will not prevail where the evidence was fully discoverable through the exercise of reasonable efforts) and Max’s Seafood Café v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999) (new evidence must be evidence that was not available when the court entered judgment). Rule 9023 does not allow a party to introduce new evidence or advance arguments that could and should have been presented to the trial court prior to judgment. LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir.1995).

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Bluebook (online)
329 B.R. 234, 2005 Bankr. LEXIS 1596, 2005 WL 2077124, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schilling-v-montalvo-in-re-montalvo-kywb-2005.