A bankruptcy case that began in 2017 for a New Mexico dairy farm continues to drag on nearly eight years later, with the liquidating trustee now arguing that Doña Ana County should be barred from pursuing a $322,832 tax claim because it waited too long to assert it.
In a brief filed June 18, 2025, in the U.S. Bankruptcy Court for the District of New Mexico, Robert Marcus, the successor liquidating trustee for Las Uvas Valley Dairies, invoked the legal doctrine of laches to argue that the county's "unreasonable delay" in filing its administrative claim should disqualify it entirely. The case, numbered 17-12356-t11, has become a protracted legal battle that has prevented final distributions to creditors for years.
Las Uvas Valley Dairies, a New Mexico general partnership that operated a dairy farm and ranch in Doña Ana County, filed for Chapter 11 bankruptcy on September 15, 2017. The county received notice of the bankruptcy just two days later, on September 17, 2017, and quickly prepared a proof of claim that it filed on October 18, 2017. However, that initial claim covered only $234,816.03 in real property taxes and made no mention of personal property taxes on the farm's livestock.
The county's administrative claim centers on personal property taxes allegedly owed on livestock owned by the debtor in 2018. Despite having ample opportunity to assert such a claim during the bankruptcy proceedings—including specific deadlines for governmental claims and administrative expenses—the county remained silent on the matter for nearly two years after the bankruptcy plan was confirmed in June 2018.
Pattern of Neglect Emerges
Court documents reveal a troubling pattern of neglect by county officials. Terri Barraza, who has served as the county's Cash Operations Supervisor since 2009, admitted during testimony that she received every notice related to the bankruptcy case but placed them all in a file without reading them. This was her standard protocol for handling bankruptcy notices in all cases, according to the filing.
"Her protocol for handling such notices, both in this case and every other case, was to place them in a file without reading them," the brief states. Barraza further testified that even if she had read the notices, she would not have understood them. The bankruptcy court previously found this protocol constituted "inexcusable neglect."
The county received multiple opportunities to assert its personal property tax claim, including notices of the bankruptcy plan, confirmation hearing, and administrative claims deadlines. The governmental claims deadline was March 14, 2018, and the plan's administrative claims bar date was 90 days after the plan's effective date. The county missed both deadlines and filed no objections to the plan.
Late Claim Disrupts Liquidation
It wasn't until June 12, 2020—nearly two years after plan confirmation—that the county finally moved to amend its proof of claim to include the livestock taxes as an administrative expense. By that time, the trustee had already liquidated estate assets, made substantial distributions to secured creditors, and taken concrete steps to wind down the estate.
The timing of the county's late claim has had significant consequences. As the brief notes, the trustee had already sold the personal property, including all livestock, at public auction shortly after his appointment in July 2018. The proceeds were used to pay secured claims, and various settlements were negotiated based on the existing claims record.
"By the time the County finally moved to amend its proof of claim to add these taxes, the Trustee had already liquidated estate assets, made substantial distributions, and taken concrete steps to wind down the estate," the filing states.
Legal Doctrine of Laches Applied
The trustee's current argument centers on the equitable doctrine of laches, which bars untimely claims where there is both unreasonable delay by the claimant and material prejudice to the opposing party. Under Tenth Circuit precedent, courts apply this doctrine when a party with knowledge of relevant facts "acquiesces for an unreasonable length of time in the assertion of a right adverse to his own."
The brief argues both elements are clearly satisfied. First, the county's delay was unreasonable and inexcusable, given its actual knowledge of the bankruptcy case from the beginning and multiple opportunities to assert its claim. Second, the estate and creditors suffered material prejudice from the delay, as it forced the trustee to halt distributions, incur additional litigation costs, and prolong administration of the estate.
"The County's failure to assert its administrative claim in a timely and diligent manner, after full notice and opportunity, is more than enough to establish the first element of laches," the brief contends.
Creditors Bear the Cost
The prolonged litigation has had real consequences for creditors who have been waiting nearly eight years for final distributions. The bankruptcy court previously found that had the county timely filed its livestock tax claims, it would have changed how the trustee allocated estate assets and cut unsecured creditor distributions by at least half.
During a remand hearing, the trustee's counsel emphasized that "finality is critical" and that the ongoing litigation was occurring "to the prejudice of other creditors, to the prejudice of the estate." The case has required multiple appeals to the U.S. District Court and continues to consume estate resources that could otherwise be distributed to creditors.
Complex Procedural History
The case has a complex procedural history involving multiple appeals and remands. The bankruptcy court initially denied the county's motion to amend its claim on several grounds, including that new administrative claims could not be filed after plan confirmation. However, the District Court partially reversed that decision and remanded for further proceedings.
On remand, the bankruptcy court found there was no basis other than the administrative claims bar date to reject the county's claim, but it declined to consider the laches defense because the trustee had not explicitly used that term in his arguments. The trustee appealed again, and the District Court found that the laches defense had been adequately preserved, leading to the current remand specifically on the laches issue.
The case now returns to the bankruptcy court to determine whether the doctrine of laches bars the county's administrative claim, potentially bringing finality to a case that has stretched on for nearly eight years due to what the trustee characterizes as the county's "prolonged and unjustified delay."
The trustee is represented by Kevin H. Morse of Clark Hill PLC in Chicago. The bankruptcy court has not yet scheduled a hearing on the laches issue.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 25 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.