Gonzales v. BANK OF AMERICA, N.A. et al

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: 	RALPH LEO BRUTSCHE, 	No. 11-13326-j7
Debtor.
YVETTE GONZALES, Chapter 7 Trustee,
Plaintiff,
v. 	Adversary No. 11-01189-j
MARC LOIS LIBERMAN, et al,
Defendants.
MEMORANDUM OPINION
THIS MATTER is before the Court on Defendants’ Motion for Summary Judgment (the
“Motion for Summary Judgment”) (Docket No. 6), filed by and through their attorneys of record,
Modrall Sperling, Roehl, Harris, & Sisk PA (Spencer Edelman and Paul Fish). Defendants
Grevey-Liberman 1 filed a brief with supporting papers (Docket No. 7). Plaintiff Ralph Leo
Brutsche2 filed a response with supporting papers, and Grevey-Liberman filed a reply with
supporting papers (Docket Nos. 11 and 14).
1 The complete list of Defendants in this adversary proceeding (together referred to as “Grevey-Liberman”) is as
follows: Marc Lois Liberman; Bank of America, N.A. as Trustee of the Marc Louis Liberman Trust established
under the Marguerite Liberman Revocable Trust; Bank of America, N.A. as Trustee of the Michele Louis Liberman
Revocable Trust; Helen A. Grevey; Marianne Fischer; Francis S. Liberman; Wells Fargo, N.A. Trustee of the Ira. L.
Liberman and Frances S. Liberman Revocable Trust; Eileen Grevey Hillson as Trustee under the Lisa Marie
Clifford Trust #1; Eileen Grevey Hillson as Trustee under the Sean David Clifford Trust #1; Eileen Grevey Hillson
as Trustee under the Jack and Joanne M. Grevey Trust for the Benefit of Lisa Marie Clifford; Eileen Grevey Hillson
as Trustee under the Jack and Joanne M. Grevey Trust for the Benefit of Sean David Clifford; and Eileen Grevey
Hillson.
2 Yvette J. Gonzales, Chapter 7 Trustee, was substituted as the Plaintiff in this adversary proceeding by order of the
Court on October 2, 2012. See Order Substituting Yvette J. Gonzales, Chapter 7 Trustee, as Plaintiff (Docket No.
29). Because Mr. Brutsche filed the response to the Motion for Summary Judgment and provided all of the exhibits
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 1 of 15

-2-
Mr. Brutsche commenced this adversary proceeding for breach of contract, unjust
enrichment, and to avoid and recover fraudulent transfers pursuant to 11 U.S.C. §§ 544, 550(a),
and 511 and under the New Mexico Fraudulent Transfer Act, N.M.S.A.1978 § 56–10–18(A)(2)
(1989). See Complaint for Breach of Contract, Unjust Enrichment, and to Avoid and Recover
Fraudulent Transfers Pursuant to 11 U.S.C. §§ 544, 550(a), 551, and the New Mexico Fraudulent
Transfer Act (“Complaint”) (Docket No. 1). Grevey-Liberman seek summary judgment in their
favor on Mr. Brutsche’s claim for breach of contract contained Count 1 of the Complaint on the
grounds that Mr. Brutsche failed to fulfill several necessary conditions entitling him to
performance under the contract. Mr. Brutsche counters that, among other things, Grevey-
Liberman waived the conditions by their prior course of dealing with him. See Response in
Opposition to Defendants’ Motion for Summary Judgment (Docket No. 11) (“Response”).
After consideration of the Motion for Summary Judgment, Grevey-Liberman’s Response,
Mr. Brutsche’s reply, and all the supporting affidavits and other documents, and being otherwise
sufficiently informed, the Court finds that the facts not subject to genuine dispute establish, as a
matter of law, that Grevey-Liberman did not breach their contract with Mr. Brutsche. The Court
will therefore grant the Motion for Summary Judgment and dismiss Count 1 of the Complaint.
SUMMARY JUDGMENT STANDARDS
Summary judgment, governed by Rule 56, Fed.R.Civ.P., will be granted when the
movant demonstrates that there is no genuine dispute as to a material fact and that the movant is
entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(a), made applicable to adversary
proceedings by Rule 7056, Fed.R.Bankr.P. “[A] party seeking summary judgment always bears
and the affidavit in support of the response, the Court will refer to Mr. Brutsche as the Plaintiff for purposes of this
Motion only.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 2 of 15

-3-
the initial responsibility of informing the ... court of the basis for its motion, and ... [must]
demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party seeking summary judgment must
set forth by number all material facts the movant contends are not subject to genuine dispute, and
refer with particularity to the portions in the record upon which the movant relies. NM LBR
7056-1(b). In considering a motion for summary judgment, the Court must “examine the factual
record and reasonable inferences therefrom in the light most favorable to the party opposing
summary judgment.” Wolf v. Prudential Ins. Co. of America, 50 F.3d 793, 796 (10 th Cir. 1995)
(quoting Applied Genetics Int’l, Inc. v. First Affiliated Sec., Inc., 912 F2d 1238, 1241 (10 th Cir.
1990)).
“[A] party opposing a properly supported motion for summary judgment may not rest on
mere allegation or denials of his pleading, but must set forth specific facts showing that there is a
genuine issue for trial” through affidavits or other supporting evidence. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed .2d 202 (1986). Furthermore, New
Mexico Local Bankruptcy Rule 7056–1(c) provides that the party opposing summary judgment
must: 1) list the material facts as to which the party contends a genuine fact exists; 2) “refer with
particularity to those portions of the record upon which the opposing party relies;” and 3) “state
the number of the movant’s fact that is disputed.” NM LBR 7056-1(c). Properly supported
material facts set forth in the movant’s motion are “deemed admitted unless specifically
controverted” by the party opposing summary judgment. NM LBR 7056-1(c).
FACTS NOT SUBJECT TO DISPUTE
The following facts are not subject to genuine dispute:
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 3 of 15

-4-
1. 	In 2005, Mr. Brutsche purchased undeveloped real property in Santa Fe County,
New Mexico (the “Property”) from Grevey-Liberman or Grevey-Liberman’s predecessors. See
Complaint, ¶¶ 10 and 11; Grevey-Liberman’s Answer to Complaint, ¶ 11 (“Answer”) (Docket
No. 1).
2. 	On or about June 24, 2005, Mr. Brutsche executed a Secured Promissory Note
(the “Note”) in favor of Grevey-Liberman or their predecessors in the amount of $5,182,000.00.
See Motion for Summary Judgment, ¶ 2; Response, ¶ 12. The Note called for annual payments
of $460,304.00 plus accrued interest. See Secured Promissory Note attached to the Complaint as
Exhibit A (Docket No. 1-1).3 The Note provides that payments are to be applied first to any
accrued interest and then to principal. Id. The full amount of the debt due under the Note was
due on June 24, 2010. Id.
3. 	On June 24, 2005, Mr. Brutsche executed and delivered a mortgage (the
“Mortgage”) in favor of Grevey-Liberman or their predecessors pledging the Property and
improvements thereon, rents, and profits as security for payment of the Note. See Mortgage
attached to the Complaint as Exhibit B (Docket No. 1-2). 4 The Mortgage was duly recorded with
the Clerk of Santa Fe County, New Mexico. See Complaint, ¶ 13; Motion for Summary
Judgment, ¶ 3.
4. 	Paragraph 5.15.5 of the Mortgage provides:
Partial releases from the lien of the Mortgage shall be given for the subdivided residential
lots as generally shown on Exhibit B (Phase 1) and future residential lots for which there
are future approved subdivision plats for future phases (total of 107 lots) (provided that
the appropriate infrastructure security has posted with the County of Santa Fe for the
3 Grevey-Liberman failed to proffer a true and complete copy of the Note in support of the Motion for Summary
Judgment. The Court will consider the Note as evidence because Grevey-Liberman admitted that the copy of the
Note attached to the Complaint was true and complete. See Complaint, ¶ 12; Answer, ¶ 12.
4 Grevey-Liberman proffered a partial copy of the Mortgage in support of the Motion for Summary Judgment. The
Court will consider the entire Mortgage as evidence because Grevey-Liberman admitted that the copy of the
Mortgage attached to the Complaint was true and complete. See Complaint, ¶ 13; Answer, ¶ 13.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 4 of 15

-5-
required infrastructure for the phase in which the lots to be released are located) at a Lot
Release Price (principal payment per acre) of Seventy Three Thousand Dollars
($73,000.00) per lot plus all accrued interest due under the Note and subject to the
following requirements: (A) Each generally shown on Exhibit C; and (B) the “shared
lots” as shown on Exhibit C must be released first at a Lot Release Price of $25,000 per
lot to be applied against the One Million Dollar credit referenced above.
5. 	Paragraph 5.15.6 of the Mortgage provides:
Partial releases will be allowed only based on recorded subdivision plats and only for an
entire lot or tract as shown on an approved recorded subdivision plat. Prior to any release
of any Lots, an infrastructure guarantee (or equivalent bond, letter of credit, etc.) in favor
of the applicable government entity must be in place to cover all infrastructure
requirements applicable to such the subdivision plat (roads, sewer, utility lines, etc.).
Mortgagor shall deliver to Mortgagee written notice requesting such partial release,
identifying the lot(s) or tract(s) sought to be released (Request for Release). Mortgagor
shall not be entitled to any partial releases during any period of time when there exists an
event of default or an event with which the giving of notice or lapse of time, or both,
would constitute an event of default pursuant to the terms of the Mortgage. Buyer shall
pay all costs in preparing and recording each release and any necessary and reasonable
out-of-pocket expenses incurred by Mortgagee in connection with any partial release.
6. 	Between June 2007 and July 22, 2011, Mr. Brutsche paid Grevey-Liberman at
least $529,209.00 in principal under the Note. See Motion for Summary Judgment, ¶ 4;
Response, p. 2.
7. 	Grevey-Liberman executed three partial releases in favor of Mr. Brutsche
pursuant to the Mortgage. See Exhibit B to Affidavit of James P. Houghton, p. 6 (Docket No. 7-
2). The partial releases were recorded with the Santa Fe County Clerk on July 7, 2005, July 24,
2006, and August 17, 2006. Id. Each partial release included a description of the metes and
bounds of the tract(s) or individual lot numbers of land to be released from the lien of the
Mortgage. Id.
8. 	The Note and Mortgage were not in default at the time the three partial releases
were executed. See Exhibits 1 and 3 to Affidavit of Ralph L. Brutsche (“Brutsche Affidavit”)
(Docket Nos. 12-1 and 12-3); Motion for Summary Judgment, ¶ 5; Response, p. 2.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 5 of 15

-6-
9. 	On several occasions prior to June 2010, Mr. Brutsche did not immediately
designate the lots to be released after he became entitled to a partial release. See Response, p. 7;
Reply, p. 11. 	Mr. Brutsche delayed identifying the desired lots after making his payments
because he did not know which lots he would be selling or when he would be selling them. Id.
10. 	Mr. Brutsche did not pay the full amount due under the Note on or before June 24,
2010 as required by the terms of the Note. See Motion for Summary Judgment, ¶ 7, Response, p
2.
11. 	On July 2, 2010, Grevey-Liberman sent Mr. Brutsche a written notice of default
of his obligations under the Note. Id. at p. 7. Mr. Brutsche did not cure the default within 90
days after receiving the written notice of default. See Motion for Summary Judgment, ¶ 10;
Response, p. 3.
12. 	Mr. Brutsche filed a petition commencing a voluntary bankruptcy case under
Chapter 11 of the Bankruptcy Code on July 22, 2011.
13. 	On October 26, 2011, Mr. Brutsche, by and through his attorneys of record at that
time, Arland & Associates, LLC (Edward Mazel), made demand for release of lots 40, 45, 48,
49, 50, and 27 in High Summit III, Phase 2 (the “Phase 2 Lots”), which were secured by the
Mortgage. See Motion for Summary Judgment, ¶ 12, Response, p. 4.
14. 	The final subdivision plat for High Summit III Phase 1 (“Phase 1”) was recorded
with the Santa Fe County Clerk on June 24, 2005. See Exhibit B to Affidavit of James P.
Houghton, p. 32, 35 (Docket No. 7-2).
15. 	A subdivision plat for High Summit III Phase 2 (“Phase 2”) has not been
recorded. See Motion for Summary Judgment, ¶ 14; Response, p. 4.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 6 of 15

-7-
16. 	Grevey-Liberman has not released any lots or other land from the lien of the
Mortgage since August 2007. See Exhibit B to Affidavit of James P. Houghton, p. 6 (Docket
No. 7-2).
17. 	Mr. Brutsche has never paid the full amount of all principal and interest owing
under the Note. See Motion for Summary Judgment, ¶ 10; Response, p. 3.
18. 	Failure to duly and timely pay all principal and interest under the Note is an event
of default under the Mortgage. See Mortgage, Sections 1.02 and 4.01.
DISCUSSION
Mr. Brutsche asserts that Grevey-Liberman breached the Mortgage by refusing to release
the Phase 2 Lots from the lien of the Mortgage in October 2011. Grevey-Liberman counters that
Mr. Brutsche failed to fulfill necessary conditions precedent to Grevey-Liberman’s obligation to
release the Phase 2 Lots from the lien of the Mortgage. It is undisputed that Mr. Brutsche had
not paid the full amount of principal and interest due under the Note when he made written
demand for the partial release of the desired lots. As discussed below, the facts not in genuine
dispute as applied to the controlling law demonstrate that Grevey-Liberman did not breach their
obligations under the Mortgage by failing to release the Phase 2 Lots from the lien of the
Mortgage. Consequently, the Motion for Summary Judgment must be granted.
1. 	Mr. Brutsche Did Not Satisfy the Conditions of the Mortgage and Is Not Entitled to
Any Partial Releases.
The Mortgage contains several conditions Mr. Brutsche must satisfy to entitle him to
partial releases from lien of the Mortgage. Mr. Brutsche asserts that the conditions were either
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 7 of 15

-8-
satisfied or waived and that Grevey-Liberman therefore breached the Mortgage by refusing to
grant the requested releases. The Court disagrees.5
Pursuant to the terms of the Mortgage, which creates a lien against real property located
in New Mexico, the Court will apply New Mexico contract law. See Section 5.11 (The
Mortgage provides that it shall be “governed by and construed under and in accordance with the
laws of the State of New Mexico.”) The goal of contract interpretation is “to ascertain the
intentions of the contracting parties.” Gallegos v. Pueblo of Tesuque, 132 N.M. 207, 218, 46
P.3d 668, 679 (2002) (quoting Ponder v. State Farm Mut. Auto. Ins. Co., 129 N.M. 698, 702, 12
P.3d 960, 964 (2000)). When discerning the purpose and meaning of a contract, the Court’s duty
“is confined to interpreting the contract that the parties made for themselves, and absent any
ambiguity, the court may not alter or fabricate a new agreement for the parties.” WXI/Z
Southwest Malls v. Mueller, 137 N.M. 343, 347, 110 P.3d 1080 (N.M.App.2005) (quoting CC
Hous. Corp. v. Ryder Truck Rental, Inc., 106 N.M. 577, 579, 746 P.2d 1109, 1111 (1987)). As
such, the Court “may not rewrite obligations that the parties have freely bargained for themselves
... [i]n the absence of fraud, unconscionability, or other grossly inequitable conduct.” United
Props. Ltd. v. Walgreen Props., Inc., 134 N.M. 725, 729, 82 P.3d 535, 539 (N.M.App. 2003)
(internal citations omitted).
The Mortgage provides that Mr. Brutsche is entitled to a partial release of a lot from the
lien of the Mortgage only if the lot is within a recorded subdivision plat. Pursuant to Section
5.15.15:
Partial releases from the lien of this Mortgage will be given for the subdivided
residential lots as generally shown on Exihit B (Phase 1) and future residential
lots for which there are future approved subdivision plats for future phases….
5 Because the Court has determined that the recorded subdivision plat condition is dispositive it need not address the
whether any other conditions were satisfied or waived. The Court makes no determination regarding the other
conditions.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 8 of 15

-9-
Section 5.15.6 of the Mortgage similarly provides: “Partial releases will be allowed only on
recorded subdivision plats.” Thus, a recorded subdivision plat that includes the lot sought to be
released is a condition to Grevey-Lieberman’s obligation to release the lot from the lien of the
Mortgage.6
The Mortgage also provides that “[m]ortgagor shall not be entitled to any partial releases
during any period of time when there exists an event of default or an event with which the giving
of notice or lapse of time, or both, would constitute an event of default.” See Section 5.15.6.
The Mortgage defines an event of default to include the “[f]ailure to pay any payment or other
charge or expense due under the Note when due” if such failure remains uncured for a period of
ninety (90) days after receiving a written notice of default. See Section 4.01.
Mr. Brutsche admits that on the date he demanded the partial releases of the Phase 2 Lots
the subdivision plat for Phase 2 had not been recorded. He also admits that he has not paid the
Note in full. Mr. Brutche argues that he is nevertheless entitled to a partial release of the Phase 2
Lots from the lien of the Mortgage, contending that: (1) Grevey-Lieberman waived the
requirement that there be a recorded subdivision plat that included the Phase 2 Lots before a
partial release of those lots was granted; and (2) all other conditions to lot releases have been
satisfied or waived. Mr. Brutsche construes the Mortgage to mean that if he satisfies all
conditions to lot releases that have not been waived before an event of default occurs, he has
earned those lot releases and remains entitled to the earned releases after an event of default
occurs. Mr. Brutsche construes the requirement to request lot releases in writing and designate
which lot is to be released not as a condition to entitlement to a lot release but merely a
6 “[A] condition precedent is an event occurring subsequently to the formation of a valid contract, an event that
must occur before there is a right to an immediate performance, [and] before there is a breach of a contractual duty.”
K.L. Conwell Corp. v. City of Albuquerque, 111 N.M. 125, 129, 802 P.2d 634, 638 (1990).
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 9 of 15

-10-
requirement for delivery of the release. Under this theory, Grevey-Lieberman was required to
deliver partial releases of the Phase 2 Lots earned prior to default even though Mr. Brutsche’s
request for release and designation of lots occurred after an event of default.
Mr. Brutche argues waiver of the condition that a subdivision plat for Phase 2 be
recorded prior to the execution of any partial releases under two theories: waiver by prior course
of performance and express waiver. If a contract includes conditions to performance, such
events must occur unless the conditions are waived before performance under the contract
becomes due. Nearburg v. Yates Petroleum Corp., 123 N.M. 526, 533, 943 P.2d 560, 567
(N.M.App. 1997) (citing Restatement (Second) of Contracts § 356 (1981)). Under New Mexico
law, a contracting party may waive or modify contractual conditions through its prior course of
dealing. See Wal-Go Associates v. Leon, 95 N.M. 565, 568, 624 P.2d 507, 510 (1981). Waiver
is defined as “the intentional relinquishment or abandonment of a known right,” and it may be
express or implied. J.R. Hale Contracting Co., Inc. v. United New Mexico Bank at Albuquerque,
110 N.M. 712, 716, 799 P.2d 581, 585 (1990). “A waiver must be knowing and voluntary.”
State v. Zamarripa, 145 N.M. 402, 410, 199 P.3d 846, 854 (2008).
To show that Grevey-Liberman waived the recordation requirement by their prior course
of performance, Mr. Brutsche must come forward with some evidence that Grevey-Liberman
previously granted partial releases based on unrecorded subdivision plats.7 It is undisputed that
7 Since Mr. Brutsche bears the ultimate burden of proof at trial as to whether there was a waiver of the contractual
condition, he must present some evidence at the summary judgment phase to create a genuine issue of material fact
on that matter. See Lopez v. LeMaster, 172 F.3d 756, 759 (10 th Cir. 1999) (“Where the nonmovant will bear the
burden of proof at trial on a dispositive issue … that party must go beyond the pleadings and designate specific facts
so as to make a showing sufficient to establish the existence, as a triable issue, of an element essential to that party's
case in order to survive summary judgment.”) By contrast, since Grevey-Liberman does not bear the burden of
proof at trial as to whether they waived the recordation requirement, they can satisfy their burden by identifying a
lack of evidence that the condition was waived. See Bausman v. Interstate Brands Corp., 252 F.3d 1111, 1115
(10th Cir.2001) (internal quotations omitted) (When a movant “does not bear the ultimate burden of persuasion at
trial, it may satisfy its burden at the summary judgment stage by identifying a lack of evidence for the nonmovant on
an essential element of the nonmovant's claim.”).
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 10 of 15

-11-
the subdivision plat for Phase 1 was recorded in June 2005 before Grevey-Liberman granted any
releases in favor of Mr. Brutsche. The partial releases executed on July 24, 2006 and August 17,
2006 included lots within Phase 1. Although it is unclear from the evidence before the Court in
connection with the motion for partial summary judgment whether the partial release executed
on July 7, 2005 included lots within a recorded subdivision plat (namely, Phase 1), Mr. Brutsche
has provided no evidence to show that any releases were granted for property outside of Phase 1.
As such, Mr. Brutsche has failed to make a sufficient showing to withstand summary judgment
that Grevey-Liberman waived the recordation requirement by course of performance.
Mr. Brutsche also contends that Grevey-Liberman expressly waived their right to object
to granting the partial releases because they failed to raise the issue of there not being a recorded
subdivision plat that included the Phase 2 Lots in email correspondence from counsel for Greve-
Liberman to counsel for Mr. Brutsche. In particular, Mr. Brutsche claims that Grevey-Liberman
should have raised the issue in an email from counsel for Grevey-Liberman to counsel for Mr.
Brutsche dated June 30, 2010 or in a notice of default letter from counsel for Grevey-Liberman
to Mr. Brutche and his counsel dated July 2, 2010. In a letter from his counsel requesting an
extension of the maturity date of the Note, Mr. Brutsche asserted that he was entitled to lot
releases notwithstanding his failure to pay off the Note by its maturity date. In email
correspondence responding to the letter, counsel for Grevey-Liberman stated: “I will check the
terms of the Mortgage but after default I am not sure what release rights Mr. Brutche would have
at this time.” See Exhibit 2 to Brutsche Affidavit. Mr. Brutche asserts that because the email
correspondence raised only one reason why Mr. Brutsche may not be entitled to lot releases (i.e.
a default), Grevey-Liberman waived all other objections to granting lot releases.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 11 of 15

-12-
The email correspondence from counsel for Grevey-Liberman to counsel for Mr.
Brutsche does not establish a knowing, voluntary, and intentional relinquishment or
abandonment of Grevey-Liberman’s contractual right to withhold lots releases in the absence of
a recorded subdivision plat. The email correspondence was in response to a letter written after
the Note had matured requesting an extension of the maturity date. The email correspondence
made it clear that counsel needed to check the terms of the Mortgage to determine what release
rights, if any, Mr. Brutche still had. It does not evidence an intent on the part of Grevey-
Liberman to waive all requirements for lot releases beyond the requirement that Mr. Brutsche not
be in default.
Mr. Brutsche also asserts waiver because the notice of default letter gave notice of a
default solely for the reason that Mr. Brutsche failed to make the final payment due under the
Note. The failure to include in the letter a failure to record a subdivision plat for Phase 2 does
not support Mr. Brutche’s claim of waiver. Under the Mortgage, recording subdivision plats was
a condition for lot releases. It was not also a promise. Failure to record a subdivision plat for
Phase 2 did not, therefore, constitute a breach. There would be no reason to reference failure to
record a subdivision plat in a notice of default letter. The Court therefore concludes that because
recordation of a subdivision plat for Phase 2 is a condition to Mr. Brutsche’s entitlement to the
Phase 2 lot releases, and the condition did not occur, Grevey-Liberman is not obligated to grant
partial releases for the Phase 2 Lots.8
Alternatively, Mr. Brutche argues that he still has the right to satisfy the contractual
conditions to partial releases because an event of default has not occurred under the Mortgage.
8 In their Motion for Summary Judgment, Grevey-Liberman identifies several other conditions in the Mortgage that
Mr. Brutsche allegedly failed to satisfy. In particular, Grevey-Liberman alleges that Mr. Brutsche failed to: (1)
obtain an infrastructure guarantee (such as a letter of credit) in favor of the applicable government entity; and (2)
submit a written demand identifying the desired lots to be released. The Court need not address whether Mr.
Brutsche satisfied these additional conditions.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 12 of 15

-13-
Mr. Brutsche asserts that he is not in default under the Note or Mortgage by failing to pay off the
Note at maturity. He reasons that because Grevey-Liberman wrongfully failed to grant releases
of Phase 2 Lots prior to the maturity date he was excused from his obligation to make the final
payment due under the Note. However, regardless of whether a wrongful failure to grant
releases would have excused a payment obligation, the Court has found that no such wrongful
failure occurred. Mr. Brutsche did not become entitled to any partial releases prior to the
maturity date because he had not satisfied the recordation requirement that was a condition to
Grevey-Liberman’s obligation to grant the partial releases. Grevey-Liberman did not wrongfully
fail to execute partial releases of Phase 2 Lots prior to the maturity date of the Note for an
additional reason. It would have been impossible for Grevey-Leberman to grant lot releases
before the Note maturity date because Mr. Brutsche did not designate which Phase 2 Lots he
wanted released until well over a year after the Note matured. Mr. Brutcshe’s delay did not
relieve him of his obligation to pay off the Note at maturity. By failing to pay the full amount
due under the Note on or before the June 24, 2010 maturity date and by failing to cure such
nonpayment within the 90-day cure period, Mr. Brutche defaulted under the Note and Mortgage.
As a result, under the terms of the Mortgage he is not entitled to any further partial releases from
the lien of the Mortgage.
Based on the foregoing, the Court concludes as a matter of law that at the time Mr.
Brutsche made written demand for the partial release of the Phase 2 Lots he was in default under
the Mortgage and at least one condition (i.e. recordation of the plat for Phase 2) to his
entitlement to the lots releases had not been satisfied or waived. Therefore, Grevey-Lieberman
did not breach the Mortgage by failing to grant the partial releases.
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 13 of 15

-14-
2. 	Grevey-Liberman Did Not Hold the Partial Releases in Trust
Finally, Mr. Brutsche asserts that Grevey-Liberman granted a partial release of the Phase
2 Lots upon receipt of his payments, held the releases in trust until he designated the specific lots
to be released, and must deliver the lot releases out of trust now that they have been designated.
To determine whether a trust relationship has been created, the Court must look to applicable
state law. Downriver Community Federal Credit Union v. Penn Square Bank Through Federal
Deposit, 879 F.2d 754, 760 (10th Cir. 1989). Under New Mexico law, the “elements of a valid
trust include a competent settlor and trustee, intent by the settlor to create a trust, ascertainable
trust res, a sufficiently ascertainable beneficiary or beneficiaries, a legal purpose, and a legal
term.” Matter of Estate of Boyer, 117 N.M. 74, 79, 868 P.2d 1299, 1303 (1994) (citing In re Will
of Coe, 113 N.M. 355, 360, 826 P.2d 576, 581 (Ct.App.1992)).9
The undisputed facts establish that no trust relationship existed between Grevey-
Liberman and Mr. Brutsche. Mr. Brutsche presented no evidence that Grevey-Liberman agreed
or otherwise intended to hold the partial releases in trust. Further, there was no ascertainable
trust res. Because Mr. Brutsche had not designated any specific lots to be released prior to
October 2011, Grevey-Liberman could not have executed a partial release of lots to be held in
trust. Moreover, Grevey-Liberman could not have granted a valid oral partial release of
unknown lots prior to June 2010 because any release of land must be in writing. See Gonzales v.
Gonzales, 116 N.M. 838, 845, 867 P.2d 1220, 1227 (1993) (“[T]he common law Statute of
9 Courts have also consistently held that the traditional debtor-creditor relationship is insufficient to give rise to a
trust or similar fiduciary duties. See Restatement (Third) of Trusts, § 5(i)-(k) (2003) (noting that a contract to
convey property does not give rise to a fiduciary relationship); Holdeman v. Devine, 474 F.3d 770, 778 (10 th Cir.
2007) (“[T]he relationship of debtor to creditor that results from contract is not fiduciary in nature.”).
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 14 of 15

-15-
Frauds requires that transfers of real property be in writing.”). The Court concludes that Grevey-
Liberman did hold any partial releases of lots in trust for Mr. Brutsche.
CONCLUSION
Based on the foregoing, Grevey-Liberman’s Motion for Summary Judge will be granted.
Mr. Brutsche’s claim for breach of contract contained in Count 1 of Complaint is dismissed. The
Court will enter a separate judgment and order consistent with this Memorandum Opinion.
______________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
Date entered on docket: November 7, 2012
COPY TO:
Spencer Lewis Edelman
Modrall Sperling Roehl, Harris & Sisk PA
PO Box 2168
Albuquerque, NM 87103-2168
Paul M Fish
Modrall Sperling Roehl, Harris & Sisk PA
PO Box 2168
Albuquerque, NM 87103-2168
George D. Giddens, Jr
10400 Academy Rd. NE, Suite 350
Albuquerque, NM 87111-1229
Ann H. Washburn
10400 Academy Rd. NE, Suite 350
Albuquerque, NM 87111-1229
Case 11-01189-j Doc 33 Filed 11/08/12 Entered 11/08/12 16:53:11 Page 15 of 15