Georgina Alfonseca-Baez v. Doral Financial Corp., et als

CourtUnited States Bankruptcy Court, D. Puerto Rico
DecidedOctober 11, 2007
Docket04-00006
StatusUnknown

This text of Georgina Alfonseca-Baez v. Doral Financial Corp., et als (Georgina Alfonseca-Baez v. Doral Financial Corp., et als) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Georgina Alfonseca-Baez v. Doral Financial Corp., et als, (prb 2007).

Opinion

Case 3:04-cv-01325-SEC Document18 Filed 09/28/2007 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO GEORGINA ALFONSECA-BAEZ Debtor/Plaintiff : Civil No. 04-1325(SEC) DORAL FINANCIAL CORP., et als : Defendants * □□□ ICICI IOI ICI a Ik kak OPINION AND ORDER Pending before the Court is Doral Financial Corp.’s (hereinafter Doral) Motion for Withdrawal of Reference (Docket # 1), Plaintiff's Opposition thereto (Docket # 5), and Doral’s reply to Plaintiff's opposition (Docket # 12). After carefully considering the parties’ filings and the applicable law, for the reasons set forth below, Doral’s Motion will be DENIED, and this matter will be REFERRED back to the Bankruptcy Court for final disposition. Factual and Procedural Background Plaintiff in this case is a debtor in a pending bankruptcy case under Chapter 13 of Title 11 of the U.S. Code. See, Docket # 5, at p. 3; see also, Bankr. Case No. 03-08570(GAC). Doral, the Defendant in this case, was listed as a secured creditor in Schedule D to Plaintiff’ □ bankruptcy petition. Docket # 5, at p. 4. The Chapter 13 Plan initially confirmed by the Bankruptcy Court, estimated Doral’s secured claim in the amount of $140,000, and pre- petition arrears to Doral in the amount of $5,200. Id. Shortly thereafter, Doral filed a sworn proof of claim with the Bankruptcy Court which included a pre-petition mortgage liability of $77,561.36 and pre-petition arrearage on the mortgage in the amount of $11,170.14, which were twice what Plaintiff had estimated. Id., at p. 6. Doral’s claim rendered Plaintiffs reorganization plan insufficient to satisfy the claims as proposed in the confirmed plan. Id., at p. 7. As such, the Trustee filed a motion to dismiss Plaintiffs bankruptcy petition. Id. Because of this, Plaintiff attempted to obtain, informally, from Doral the documents supporting its proof of claim. Id. However, Doral

Case 3:04-cv-01325-SEC Document 18 Filed 09/28/2007 Page 2 of 7

Civil Case No. 04-1325(SEC) refused to provide this information to Plaintiff. As such, Plaintiff addressed to Doral a “qualified written request”, pursuant to the “Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2601, et seg., whereby she requested from Doral some information pertaining to Plaintiff's mortgage loan with Doral. Docket #5, at p. 7. Said communication requested from Doral information regarding the mortgage payoff balance, Plaintiff’ s payment history, the total unpaid principal, interest and escrow balances due and owing as of the filing of the bankruptcy petition, among others. Id., at p. 5. Doral failed to respond to this request as well. Id. In an attempt to solve this matter, Plaintiff filed an adversary proceeding within the Bankruptcy Court challenging Doral’s proof of claim and requesting additional relief pursuant to the RESPA, 12 U.S.C. § 2601, et seg.; see also, Adv. Proc. No. 04-006(GAC). This motion ensued from the aforementioned adversary proceeding. Defendants argue that mandatory withdrawal of reference is required in this case pursuant to 28 U.S.C.A. § 157(d). It argues, in the alternative, that the circumstances surrounding this case qualify it for the exercise of permissive withdrawal. Applicable Law and Analysis Mandatory Withdrawal ___According to 28 U.S.C.A. § 157(b)(1) “Bankruptcy judges may hear and determine all cases under title 11 and all core proceedings arising under title 11, or arising in a case under title 11, referred under subsection (a) of this section and may enter appropriate orders and judgments, subject to review under section 158 of this title.” However, subsection 157(d) contemplates that some matters properly before a bankruptcy judge be withdrawn to a district court for resolution. Specifically, this section states that “[t]he district court may withdraw, in whole or in part, any case or proceeding referred under this section (to the bankruptcy court) on its own motion or on timely motion of any party, for cause shown. The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceedings requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting

Case 3:04-cv-01325-SEC Document 18 Filed 09/28/2007 Page 3 of 7

Civil Case No. 04-1325(SEC) interstate commerce.” 28 U.S.C.A. § 157(d). The first part of the cited section refers to permissive withdrawal, while the second part relates to the mandatory withdrawal of reference. The purpose of mandatory withdrawal of reference “is to assure that only Article III Judges determine issues requiring more than a routine application of federal statutes outside the Bankruptcy code.” In re Ponce Marine Farm, Inc. V. Browner, E.P.A., 172 B.R. 722, 724 (D. P.R. 1994)(hereafter Ponce); see also, In re Corporacién de Servicios Médico Hospitalarios de Fajardo, 227 B. R. 763, 765 (D. P.R. 1998)(hereafter Fajardo). Notwithstanding the mandatory nature of mandatory withdrawal, “[c]lourts have overwhelmingly construed this statute narrowly, because to do otherwise would eviscerate much of the work of the bankruptcy courts” and would also “create an escape hatch by which bankruptcy matters could easily be removed to the district court.” Fajardo, 227 B. R. at 765, citing, In the Matter of Vicars Insurance Agency, Inc., 96 F. 3d 949, 952 (7" Cir. 1996)(internal citations omitted)(hereafter Vicars). As such, “mandatory withdrawal is proper only where resolution of the adversary proceeding involves substantial and material consideration of non-bankruptcy federal statutes.” Ponce, 172 B.R. at 724.(citations omitted)(our emphasis). “Thus, the consideration of non-code law must entail more than routine application of federal non-code law to the facts.” Id. That is, the mere presence of a non-title 11 issue, even if it is outcome- determinative, does not require mandatory withdrawal. Vicars, 96 F. 3d at 953. For mandatory withdrawal to be required “non-code issues [must] dominate the bankruptcy issues.” Ponce, 172 B.R. at 724. In Ponce the district court held that mandatory withdrawal was not required because the bankruptcy court’s consideration of the non-code law, in that case the Clear Water Act, 33 U.S.C.A. § 1251, et seg., would only be tangential. Id. The district court concluded that “the tangential nature of the bankruptcy court’s inquiry is evidenced by the fact that the court need only address whether the [Defendant, the Environmental Protection Agency] followed

Case 3:04-cv-01325-SEC Document lo Filed Us/Zo/2zUUl Fage4+ orf

Civil Case No. 04-1325(SEC) the requisite procedures of the Clear Water Act.” Id. On the other hand, it determined that the main issues before the bankruptcy court were whether the EPA’s order was a claim under the bankruptcy code and what kind of treatment said claim was entitled to under the code. Id. We believe that the adversary proceeding filed by Plaintiff against Doral also involves a clear bankruptcy issue: whether the amounts claimed by Doral in its proof of claim are to be disallowed because they are “excessive, unreasonable, have [not been] allowed by the Court, are contrary to law, are fictitious and/or non existent.” See, Docket #1, Adv. Proc. 04- 006(GAC), at p. 7. Plaintiff’s inclusion of a claim under RESPA only responded to Doral’s alleged failure to provide the mortgage-related information requested by Plaintiff through informal means, and to Plaintiff’s need for said information in assessing the accuracy of Doral’s secured claim against the bankruptcy estate. Plaintiff's request on the adversary proceeding is for the bankruptcy court to reduce the amount claimed by Doral as it deems proper.

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Georgina Alfonseca-Baez v. Doral Financial Corp., et als, Counsel Stack Legal Research, https://law.counselstack.com/opinion/georgina-alfonseca-baez-v-doral-financial-corp-et-als-prb-2007.