In re: Armando Torres Ortiz and Milagros de la Torre Ramos

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: October 23, 2018
• Docket: 16-00042
• Status: Unknown

Opinion

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2 IN RE: CASE NO. 10-10228 (ESL) 3

4 ARMANDO TORRES ORTIZ CHAPTER 13 MILAGROS DE LA TORRE RAMOS 5 Debtors 6 7 WILFREDO SEGARRA MIRANDA 8 TRUSTEE

9 Plaintiff ADV. PROC. 16-00042

10 VS.

11 BANCO POPULAR DE PUERTO 12 RICO

13 Defendant 14

15 OPINION AND ORDER 16 This case is before the court upon the Motion to Set Aside Order and Judgment Granting 17 Plaintiff’s Motion for Summary Judgment (the “Motion to Set Aside Order”, Docket No. 28) filed 18 by creditor Banco Popular de Puerto Rico (“BPPR”); the Motion to Strike Document: BPPR’s 19 Motion to Set Aside Order and Judgment granting Plaintiff’s Motion for Summary Judgment filed 20 by Wilfredo Segarra Miranda, Trustee (the “Trustee”) (Docket No. 29); the Motion for 21 Reconsideration of Order and Judgment, and Notice filed by BPPR (Docket No. 30), and the 22 Opposition thereto (Docket No. 31). 23 Relevant Procedural History 24 The Debtors, Armando Torres Ortiz and Mildred La Torre Ramos, filed a chapter 13 25 bankruptcy petition on October 10, 2010. (Leading Case, Docket No. 1). Debtors’ plan dated 26 October 10, 2010 (Lead Case, Docket No. 4) was confirmed on December 30, 2010. (Lead case, 27 Docket No. 16). 1 On January 23, 2015, Banco Popular PR filed Motion for Relief of Stay under 362, alleging 2 that Debtors had accrued three (3) post petition arrears, and that the arrears where a material 3 default to the plan, which provided for post-petition direct payments. (Lead Case, Docket No. 4 37). Furthermore, on February 11, 2015, the Chapter 13 Trustee, José R. Carrión Morales, filed 5 Trustee’s motion to dismiss for failure to make payments with Declaration Under Servicemember 6 Civil Relief Act of 2003 (Lead Case, Docket No. 42). On February 12, 2015, the court granted the 7 Motion for Relief of Stay filed by Banco Popular P.R. as unopposed (Lead Case, Docket No. 43). 8 On March 19, 2015, the Debtors filed a Notice of Conversion of Case under Chapter 13 9 to Chapter 7 (Lead Case, Docket No. 53). On March 24, 2015, Wilfredo Segarra Miranda was 10 appointed Trustee (Lead Case, Docket No. 60). 11 On March 10, 2016, the Chapter 7 Trustee filed the present adversary proceeding in order 12 to “avoid, set aside, and rescind an unduly registered lien over Property #25105, property which 13 in turn will be recovered by the Trustee free and clear of all unrecorded conveyances, preserved 14 for the benefit of the bankruptcy estate and subsequently liquidated for the benefit of unsecured 15 creditors. Alternatively, the Trustee seeks an award for actual and punitive damages, and 16 reasonable attorney fees against BPPR upon a finding of willful violation of the automatic stay 17 for its postpetition actions to re[g]ister and create a lien over Property #25105, in clear violation 18 of the automatic stay”. (Adv. Proc., Docket No. 1). An Answer to Complaint was filed by BPPR 19 on May 5, 2016 (Adv. Proc., Docket No. 9). 20 On November 3, 2016, the parties filed a Join Pretrial Report (Docket No. 18). On 21 November 14, 2016, the Trustee filed the Motion for Summary Judgment requesting the court to 22 find that: 1) the Property Registrar acted incorrectly in making the recordation over Property 23 #25105; 2) the Trustee, both as a hypothetical lien creditor and a bona fide purchaser who 24 perfected his right as of the date of the filing, acquired preference to and, under Section 544(a) of 25 the Bankruptcy Code, is entitled to avoid the mortgage lien over the Property; and 3) that BPPR’s 26 post-petition actions to register the R&G Mortgage and create a lien over Property #25105 was 27 in violation of the automatic stay provisions. (Docket No. 23). On January 26, 2017, the 1 Unopposed Motion for Summary Judgment was granted by the court (Docket No. 24) and 2 Judgment was entered accordingly (Docket No. 25). On February 9, 2017, BPPR filed its Motion 3 for Reconsideration of Order and Judgment (Docket No. 28), which was amended through the 4 Motion for Reconsideration of Order and Judgment, And Notice (Docket No. 30). The Trustee 5 filed its Opposition to BPPR’s Amended Motion for Reconsideration of Order & Judgment 6 (Docket No. 31). 7 Reconsideration Standard 8 “Motions to reconsider are not recognized by the Federal Rules of Civil Procedure or the 9 Federal Rules of Bankruptcy Procedure in haec verba.” In re Lozada Rivera, 470 B.R. 109, 112 10 (Bankr. D.P.R. 2012), citing Jimenez v. Rodriguez (In re Rodriguez), 233 B.R. 212, 218-219 11 (Bankr. D.P.R. 1999), conf’d 17 Fed. Appx. 5 (1st Cir. 2001). Also see Van Skiver v. United 12 States, 952 F.2d 1241, 1243 (10th Cir. 1991); Lavespere v. Niagara Mach. & Tool Works Inc., 13 910 F.2d 167, 173 (5th Cir. 1990), cert. denied 510 U.S. 859, abrogated on other grounds by Little 14 v. Liquid Air Corp., 37 F.3d 1069, 1075-1076 (5th Cir. 1994). Rather, federal courts have 15 considered motions so denominated as either a motion to “alter or amend” under Fed. R. Civ. P. 16 59(e) or a motion for relief from judgment under Fed. R. Civ. P. 60(b). See Fisher v. Kadant, 17 Inc., 589 F.3d 505, 512 (1st Cir. 2009) (noting a motion for reconsideration implicated either Fed. 18 R. Civ. P. 59(e) or 60(b)); Equity Security Holders’ Committee v. Wedgestone Financial (In re 19 Wedgestone Financial), 152 B.R. 786, 788 (D. Mass. 1993). “These two rules are distinct; they 20 serve different purposes and produce different consequences. Which rule applies depends 21 essentially on the time a motion is served. If a motion is served within fourteen (14) days of the 22 rendition of judgment, the motion ordinarily will fall under Rule 59(e). If the motion is served 23 after that time, it falls under Rule 60(b).” In re Lozada Rivera, 470 B.R. at 113, quoting Van 24 Skiver, 952 F.2d at 1243. Also see Universal Ins. Co. v. DOJ, 866 F. Supp. 2d 49, 73 (D.P.R. 25 2012) (“A motion is characterized pursuant to [Fed. R. Civ. P.] 59(e) or [Fed. R. Civ. P.] 60(b) 26 based upon its filing date.”) “The substance of the motion, not the nomenclature used or labels 27 placed on motions, is controlling.” In re Lozada Rivera, 470 B.R. at 113. Under either rule, “the 1 granting of a motion for reconsideration is ‘an extraordinary remedy which should be used 2 sparingly.’” Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st Cir. 2006) (citations omitted). 3 Fed. R. Civ. P. 59(e) itself does not state the grounds on which relief under the rule may 4 be granted. Therefore, trial courts have considerable discretion in deciding whether to grant or 5 deny a motion to alter or amend under Fed. R. Civ. P. 59(e). See ACA Fin. Guar. Corp. v. Advest, 6 Inc., 512 F.3d 46, 55 (1st Cir. 2008) (“[Trial] courts enjoy considerable discretion in deciding 7 [Fed. R. Civ. P.] 59(e) motions, subject to circumstances developed in the case law.”); Venegas- 8 Hernández v. Sonolux Records, 370 F.3d 183, 190 (1st Cir. 2004), citing Edward H. Bohlin Co. 9 v. Banning Co., 6 F.3d 350, 355 (5th Cir. 1993); Robinson v. Watts Detective Agency, 685 F.2d 10 729, 743 (1st Cir. 1982). 11 Generally, in order for a motion for reconsideration to proceed under Fed. R. Civ. P. 59(e), 12 the movant must clearly establish a manifest error of law or present newly discovered evidence 13 that could not have been diligently found during the case. See Schwartz v. Schwartz (In re 14 Schwartz), 409 B.R. 240, 250 (B.A.P. 1st Cir. 2008), citing In re Rodriguez, 233 B.R. at 219. The 15 Court of Appeals for the “First Circuit has explained that a motion for reconsideration brought 16 under Fed. R. Civ. P. 59(e) must be based upon newly discovered evidence or a manifest error of 17 law or fact.” BBVA v. Vazquez (In re Vasquez), 471 B.R. 752, 760 (B.A.P. 1st Cir. 2012), citing 18 Aybar v. Crispin-Reyes, 118 F.3d 10, 16 (1st Cir. 1997). “To meet the threshold requirements of 19 a successful [Fed. R. Civ. P.] 59(e) motion, the motion must demonstrate the reason why the court 20 should reconsider its prior decision and must set forth facts or law of a strongly convincing nature 21 to induce the court to reverse its earlier decision.” In re Schwartz, 409 B.R. at 250 (citations 22 omitted). 23 “A motion for reconsideration ‘does not provide a vehicle for a party to undo its own 24 procedural failures and it certainly does not allow a party to introduce new evidence or advance 25 arguments that could or should have been presented to the district court prior to the judgment.” 26 Marks 3-Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc., 455 F.3d 7, 15-16 (1st Cir. 2006) 27 (citations omitted). Thus, a motion for reconsideration cannot be used as a vehicle to re-litigate 1 matters already litigated and decided by the court. See Standard Química de Venezuela v. Central 2 Hispano International, Inc., 189 F.R.D. 202, 205 fn.4 (D.P.R. 1999). “A party cannot use a Rule 3 59(e) motion to rehash arguments previously rejected or to raise ones that ‘could, and should, 4 have been made before judgment issued.” See Soto-Padró v. Public Buildings Authority, 675 5 F.3d 1, 9 (1st Cir. 2012) (citations omitted). Conversely, the court should renew and reconsider 6 whether it “patently misunderstood a party … or has made an error not of reasoning by 7 apprehension.” Ruiz Rivera v. Pfizer Pharmaceuticals, LLC, 521 F.3d 76, 82 (1st Cir. 2008). Also 8 see Mulero-Abreu v. Puerto Rico Police Department, 675 F.3d 88, 94-95 (1st Cir. 2012) (granting 9 reconsideration in cases of “manifest error of law”). “The granting of a motion for reconsideration 10 is an extraordinary remedy which should be used sparingly.” United States ex rel. Ge v. Takeda 11 Pharm. Co., 737 F.3d 116, 127 (1st Cir. 2013). “In practice, because of the narrow purposes for 12 which they are intended, [Fed. R. Civ. P. 59(e)] motions typically are denied.” Wright & Miller 13 11 Federal Practice and Procedure § 2810.1 (2nd ed. 2012) at p. 171. “[M]otions for 14 reconsideration should not give parties a ‘second bite at the apple’ or ‘another roll of the dice’”. 15 Conway v. A.I. duPont Hosp. for Children, 2009 U.S. Dist. LEXIS 45198 at *13, 2009 WL 16 1492178 at *4 (E.D. Pa. 2009). Also see BBVA v. Santiago-Vazquez (In re Santiago-Vazquez), 17 471 B.R. 752, 761 (B.A.P. 1st Cir. 2012) (“in denying reconsideration, the bankruptcy court 18 correctly applied the [] First Circuit precedent against a second bite at the apple: litigants may not 19 use Fed. R. Civ. P. 59(e) to advance arguments they could have made earlier”) 20 BPPR’s Motion to Set Aside Order was filed under Fed. R. Bankr. P. 59(e), applicable in 21 bankruptcy adversary proceedings through Fed. R. Bankr. P. 9023, and is premised on the 22 following arguments: (1) the Motion for summary judgment was untimely, as it was filed fourteen 23 (14) days after the pretrial conference, although the parties had agreed to a sixty (60) day period 24 to conclude discovery and sixty (60) days thereafter to file dispositive motions; (2) the court made 25 an “unexplainable mistake” by “finding in the Order that it ordered Defendant to reply to the 26 untimely Motion for Summary Judgment” when it stated “as ordered by the court on November 27 4, 2016”, as there was no order entered by the court to reply to the premature motion for Summary 1 Judgment filed on November 14, 2016; (3) the Plaintiff’s Motion for Summary Judgment fails to 2 comply with the Local Rules of Civil Procedure 56(b) which requires that motions for summary 3 judgment “shall be supported by a separate, short and concise statement of material facts, set forth 4 in numbered paragraphs, as to which the moving party contends there is no genuine issue of 5 material fact to be tried. Each fact asserted in the statement shall be supported by a record citation 6 as required by subsection (e) of this rule”. L. Civ. R. 56(b); (4) that some of the documents filed 7 by Plaintiff are not in English, as required by 48 U.S.C. §864 and Local Rule 5(g); (5) the record 8 is barren of any BPPR’s post-petition actions to register the R & G Mortgage and create a lien 9 over property #25105 and therefore no base for the Court’s conclusion that BPPR violated the 10 automatic stay; (6) the Registrar of Property recorded sua sponte the R&G Mortgage, without 11 Banco Popular’s intervention, as allowed by bankruptcy law and that said registration did not 12 violated bankruptcy law, since the Registrar of Property is not bound by the automatic stay of 11 13 U.S.C. §362.; and (7) that “at trial, Banco Popular will prove that the foregoing inscription related 14 to the pre-bankruptcy presentation, to which no third party could acquire a higher rank or be 15 bound by the effects of the R&G Mortgage”. 16 In its Opposition, the Plaintiff alleges that: (1) the Defendant’s Motion for 17 Reconsideration fails to meet the standard for reconsideration under Federal Rules of Civil 18 Procedure by failing to provide convincing reasons why the court’s Order should be revisited, as 19 it fails to provide compelling facts or law in support of reversing the court’s determination, and 20 by advancing new arguments that could and should have been presented to the court prior to the 21 Order and Judgment. The Plaintiff also alleges that the Defendant failed to timely respond to the 22 motion for summary judgment, and the allegations that said motion was “untimely” is meritless, 23 as a motion for summary judgment can be filed “at any time until 30 days after the close of all 24 discovery”, pursuant to Fed. R. Civ. P. 56(b). Additionally, the Plaintiff alleges that there are no 25 exhibits or documents in Spanish attached to the Trustee’s for Summary Judgment, as stated by 26 Defendant. Furthermore, the Plaintiff states that the only legal reference made by BPPR in the 27 present case is Soto Ríos v. Banco Popular, 662 F.3rd 112, 117 (1st Cir. 2011), yet the facts of the 1 case are different from the instant case, considering that the lien was presented in a different 2 || property. 3 Although the court is unpersuaded by the Defendant’s arguments for reconsideration, as 4 || most of the arguments could or should have been presented to the court prior to the judgment, and 5 || the Defendant may be using the reconsideration as an attempt to undo its own procedural failure, 6 || acareful review of the record reveals that the parties have omitted and left unaddressed a material 7 || fact in the present case, that is, that the stay was lifted in favor of BPPR (Lead Case, Docket No. 8 || 43) prior to the notice of conversion. 11 U.S.C. $549 states that “...the trustee may avoid a transfer 9 || of property of the estate (1) that occurs after the commencement of the case; and (2) (A) that is 10 || authorized only under section 303(f) or 542(c) of this title; or (B) that is not authorized under this 11 || title or by the court’. The post-petition registration of BPPR’s lien was authorized by the court 12 || pursuant to the order lifting the automatic stay. 13 Conclusion 14 In view of the foregoing, the Motion for Reconsideration filed by BPPR (Docket No. 28) 15 |}is hereby granted. The court vacates the Order at Docket No. 24 and the Judgment entered at 16 || Docket No. 25. It is further ordered that the parties meet and explore settlement. If no agreement 17 reached and filed within thirty (30) days, the court will schedule a status conference. 18 SO ORDERED. 19 In San Juan, Puerto Rico, this 23" day of October, 2018. 20 21

unitéd states Bankruptcy Judge 23 24 25 26 27

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