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Teague-Strebeck Motors Inc. v. Chrysler Insurance Co.3/8/1999
stion was destroyed, so there was no property to revert, and certainly no authorized abandonment. It cites Scharmer v. Carrollton Manufacturing Co., 525 F.2d 95, 98 (6th Cir. 1975), for the proposition that a trustee can abandon assets only if the assets exist and the trustee knows that they exist.
{23} We need not address this argument, however, because we agree with Chrysler that this Court's recent decision in Edwards v. Franchini, 1998-NMCA-128, Vol. 37, No. 41, SBB 26, forecloses the contention that title reverted ab initio. The plaintiffs in Edwards filed their suit in 1994. See id. 2. They had filed a Chapter 11 bankruptcy petition in 1989, and in 1993 the bankruptcy court had entered a final decree stating that the bankruptcy estate had been fully administered. See id. 1. Although the plaintiffs' claims against the defendants were property of the bankruptcy estate, the claims had never been scheduled in the bankruptcy proceeding nor brought to the attention of the bankruptcy trustee. See id. 6. We held that the trustee was the real party in interest with capacity to sue on the claims and that the plaintiffs had no right to enforce the claims in their own names. See id. We therefore affirmed the district court's summary judgment in favor of the defendants. After the summary judgment, however, the plaintiffs had sought and obtained a reopening of their bankruptcy proceeding and the reappointment of the trustee so that the trustee could abandon the claims against the defendants, thereby permitting the plaintiffs to pursue their claims. See id. 12. On that basis the plaintiffs requested this Court to remand to the district court "for a new ruling absent the existence of any bankruptcy." Id. 13. We denied the request, disagreeing with the plaintiffs' contention that the bankruptcy court's order "restored to them all rights to pursue their claims against [the defendants] as if the bankruptcy proceedings had not occurred." Id. 15. We wrote, "Although we agree with Plaintiffs that the bankruptcy court's order returns the rights of action to Plaintiffs, we believe that it does so effective as of the date of the order, not retroactively." Id. Noting that the Bankruptcy Code provides that property "revests," 11 U.S.C. ยง 349(b)(3) (1994), we stated that " he import of the words which Congress chose is that there exists a period of time in which the property was not vested in the entity in which it `revests.'" Id. 16.
{24} Following Edwards, we hold that the abandonment of assets and dismissal of the bankruptcy could not validate the Purchase Agreement and the Management Agreement ab initio. Any abandonment of assets by the Trustee merely provided Tucumcari Chevrolet-Geo with title to the property, which it could then (after the abandonment) transfer to Mills- Strebeck or another entity. Thus, we must treat the two agreements as having been contingent at the time of the fire on approval by the bankruptcy court. We note that Plaintiffs have not disputed that the Bankruptcy Code requires such approval.
{25} The question remaining, then, is whether Mills-Strebeck could have had an insurable interest in the dealership property at the time of the fire even though its agreements with Tucumcari Chevrolet-Geo were dependent on bankruptcy court approval. On one hand, Mills-Strebeck emphasizes that title to property is not an absolute requirement for an insurable interest. It relies on Suggs v. State Farm Fire & Casualty Co., 833 F.2d 883 (10th Cir. 1987). Applying New Mexico law, the court in that case held that the Suggs had an insurable interest in a mobile home in which they had lived for six weeks prior to the loss. See id. at 887-88. They were co-obligors on a note secu
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