THE Estate of Manuel Villagomez and its administrator, Colleen V. Manglona, through attorney Robert T. Torres, have asked the Superior Court to approve the partial distribution of estate funds to pay City Trust Bank $28,307.50 for the decedent’s outstanding and delinquent loan.
But the NMI Settlement Fund and its trustee, Joyce Tang, represented by attorney Nicole Torres-Ripple, objected to the estate’s motion.
They said the NMISF’s claim has priority and paying City Trust Bank is giving “preferential treatment of one creditor over another in the same class and a claim due and payable over a claim not due.”
The NMISF also stated that the estate’s motion is premature because the NMISF’s emergency motion for temporary stay of proceedings is pending before the court.
But Torres said the NMISF’s reading of the applicable law or 1 CMC §2925 is incorrect. According to the plain meaning of the statute, Torres said the order or payment of claims is only triggered “if the applicable assets of the estate are insufficient to pay all claims in full.”
The NMISF cites 1 CMC §2925 for the proposition that the NMISF has priority over City Trust Bank’s claim or debt.
“The Trustee misreads the conditional clause to the order of preference of payment,” Torres said. “In this estate’s case, there are more than sufficient assets to pay all claims in full including the NMISF’s disputed and reduced claim of $12,717.73. The estate is receiving income from the leased property of the estate at over $1,000 per month. The estate has several pieces of real estate that, if necessary to be sold, would be more than sufficient to pay all claims in full. That really does end the inquiry.”
Torres said City Trust Bank is a secured creditor holding a mortgage on a leased property which is an estate asset.
“It has priority and it is secured,” he added. “If the estate defaults on the loan through non-payment, which is currently the case but for the consideration by City Trust Bank, then City Trust Bank can declare a default and declare the entire loan amount due and owing.”
Torres added, “The administrator is seeking the consent of the Court to pay City Trust Bank because it is a secured creditor that has not been paid…. On top of that and unlike the NMISF’s claim, defaulting on the City Trust Bank loan has consequences for the estate and the heirs: foreclosure on the mortgaged property which is the same property for which the estate is receiving the rental income from the existing lease.”
Torres said, “If the Trustee had exercised diligence in providing decedent his appeal rights during his lifetime we wouldn’t be in this situation. The other proper reason for paying City Trust Bank is to stop the fiscal drain on the estate with the accrual of interest. How is that not in the best interest of all concerned? The less interest and the absence of default ensures that any creditor (if properly a creditor) such as claimant NMISF would be paid. As she seeks disposition of estate assets and payment of an estate debt, the administrator is properly moving this court for such authorization.”
Torres noted that the Superior Court has not granted the NMISF’s motion to stay proceedings, he said.
Likewise, the District Court for the NMI did not grant and in fact declined to grant the trustee’s request to stay the Superior Court proceedings, Torres said.
“The Trustee also objects to payment to City Trust Bank as premature because she has a pending emergency motion for temporary stay of proceedings. Indeed, that is the case and we have a Status Conference on May 19, 2022 as to that motion,” Torres said.
“But the Trustee misses the point: this court did not grant that emergency motion for temporary stay but has instead directed the parties to attend a briefing schedule on the motion.
“The Trustee also confuses her motion for a stay with the administrator’s request to pay City Trust Bank. They are entirely separate issues. The motion for a stay by the Trustee is based on her desire that the adjudication of the decedent’s appeal or dispute of the NMISF claim be in its administrative proceedings and not before this court.
“What the Trustee does not inform the court is this: the NMI District Court has indicated that it will and has granted the Trustee’s request to compel the administrator to follow the administrative process in the Settlement Agreement in Johnson v. Inos. However, the Trustee also does not inform the court that the NMI District Court declined and refused to grant her motion for a stay of the Superior Court proceedings. In other words, the administrator must go through the administrative appeals process but she is not estopped from proceeding forward in Superior Court as to the rest of the probate proceedings.”
Torres said the Estate of Villagomez administrator has proceeded to file the inventory of the estate and has continued to work to address the debts of the estate.
“The Trustee asserts that the administrator’s motion to pay City Trust Bank is ‘premature,’ ” Torres said.
“How is that so? The estate is delinquent on the loan payments and interest is accruing. Does the Trustee want the administrator to invite a foreclosure action, accrue more interest and now impose more court costs or fees in dealing with a foreclosure action?
“The Trustee forgets that the administrator owes a fiduciary duty to other creditors and heirs too.
“What is the prejudice to the Trustee when since the inception of this proceeding she reduced her once over $56,000 claim down to over $19,000 and now further reduced to over $12,000?
“In the meantime, the City Trust Bank loan accrues and grows in liability and risk of default.
“That is the reason for which the administrator moves for approval by this court — to protect assets from risk of loss and reduce costs to the estate. The issue is not what the Trustee wants or that she gets it her way as she would have the court do but rather what is in the best interest of this estate probate proceeding.”
Torres said the NMISF would be amenable to stipulating to the use of the cash in the estate “to bring the City Trust Bank account current.”
“But bringing the account current, is but a temporary solution,” he added. “The interest would continue to accrue and then the administrator will need to continue to return to this court for monthly payments after becoming delinquent on payments. What kind of suggestion is that except to perhaps try and bully the administrator into yielding to the Trustee’s claim as a condition of agreeing to pay City Trust Bank?”
Torres said his client “will not be haggled into agreeing to a claim that she in good faith maintains is time-barred and of which the Trustee is informed.”
Paying City Trust Bank as soon as possible is in the best interest of the estate including the NMISF even if it cannot or will not see it, he added.
“The court has yet to hear from the heirs or City Trust Bank on this issue — suffice it to say they do not agree with the Trustee’s views or suggestions. The Court may hear from them on the issue in due course,” Torres said.
The NMI Settlement Fund has a claim against the Estate of Manuel Villagomez based on an overpayment in retirement benefits paid prior to his passing.
The decedent, Manuel B. Villagomez, passed away on May 10, 2021, and was a member of the Settlement Class at the time of his death.
The NMI Settlement Fund said it is a creditor of the estate, and it timely filed a notice of claim in the probate action in Superior Court on Nov. 1, 2021.
The NMISF is seeking, among other things, an order enjoining the estate administrator from asserting any claims or defenses, or seeking any relief related to the Settlement Agreement and the Settlement Fund’s claim against the decedent Manuel B. Villagomez in any court other than the NMI District Court.
