In Re: Denisse Rodriguez Martinez

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: November 10, 2015
• Docket: 14-04946
• Status: Unknown

Opinion

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1 IN THE UNITED STATES DISTRICT COURT 2 FOR THE DISTRICT OF PUERTO RICO 3 4 5 || In Re: 6 DENISSE RODRIGUEZ MARTINEZ, CIVIL NO. 15-2064 (GAG) 7 || Debtor. 8 Bankr. Case No. 14-4946 (EAG) 9 10 OPINION AND ORDER 11 Before the court today is a motion for leave to file an interlocutory appeal filed by Denisse 12 || Rodriguez Martinez, Debtor in Chapter 11 Bankruptcy Case No. 14-4946 (EAG) from the United 13 || States Bankruptcy Court for the District of Puerto Rico. On appeal, Debtor challenges the 14 || Bankruptcy Court’s denial of her application to employ her former attorney, Alexandra Bigas 15 || Valedon, as the notary public for the sale of Debtor’s property, (Docket No. 1-2.) Immediately 16 || after filing for appeal, the United States Trustee in this case filed an objection to Debtor’s motion 17 || for leave to appeal to this court. (Docket No. 5.) For the reasons described below, the court 18 |] DENIES Debtor’s motion for leave to appeal at Docket No. 1-2. 19 I. Jurisdiction 20 The Bankruptcy Court had jurisdiction over this matter pursuant to 28 U.S.C. § 1334, 21 || which confers jurisdiction on this District Court as to all matters arising under 11 U.S.C. §§ 101 ef 22 || seg., and pursuant to the District Court’s resolution dated July 19, 1984, which, in turn, refers all 23 || Title 11 matters to the United States Bankruptcy Court for the District of Puerto Rico. The District 24

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1 |{ Court has appellate jurisdiction pursuant to 28 U.S.C, § 158(a)@G). In re Watson, 309 B.R. 652, 2 {| 659 (B.ALP. Ist Cir. 2004) aff'd, 403 F.3d 1 (Ist Cir, 2005). 3 i. Standard of Review 4 Interlocutory orders issued by bankruptcy judges, such as the present one, may be appealed 5 where the district court grants leave to appeal, a decision wholly within said court’s 6 || discretion. See 28 U.S.C. § 158(a)(3). The First Circuit has made clear that the “[a]pplication of 7 [section] 158(a)(3) review of interlocutory orders mirrors application of [28 U.S.C.] § 1292(b).” 8 || Inre Watson, 309 B.R. at 659 (citing In re Bank of New England Corp., 218 B.R. 643, 652 (B.A.P. 9 |] 1st Cir. 1998)). As section 158 does not provide any express criteria for how the federal courts 10 || should exercise their discretion-in determining whether to preside over an interlocutory appeal, the 11 || courts look to section 1292(b), which sets the standard for the jurisdiction of courts of appeals over 12 || interlocutory appeals. See In re Watson, 309 B.R, at 659. 13 “Section 1292(b) permits appellate review of ‘certain interlocutory orders, decrees and 14 || judgments [. . .] to allow appeals from orders other than final judgments when they have a final 15 || and irreparable effect on the rights of the parties.’” Id. (quoting In re Bank of New England Corp., 16 B.R. at 652 n.17). To ascertain whether this court will exercise its discretion in considering 17 || the appeal, it must “consider whether (1) the order involves a controlling question of law (2) as to 18 || which there is substantial ground for difference of opinion, and (3) whether an immediate appeal 19 || from the order may materially advance the ultimate termination of the litigation.” In re Watson, 20 B.R. at 659 (citations omitted). Moreover, “[t]he First Circuit has instructed courts to grant 21 leave sparingly and only in exceptional circumstances.” Rodriguez-Borges v. Lugo-Mender, 938 92 || F. Supp. 2d 202, 212 (D.P.R. 2013). 23 24

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1 ll. Relevant Factual and Procedural Background 2 Shortly after the filing of the above-captioned Chapter 11 petition, attorneys Modesto Bigas 3 Mendez and Alexandra Bigas Valedon filed, on Debtor’s behalf, an application for approval of 4 ||employment of attorney, requesting the Bankruptcy Court approve them as Debtor’s counsel in the 5 || aforementioned bankruptcy proceeding. (Bankr. Case No. 14-4946 (EAG), Docket No. 9.) The 6 || Bankruptcy Court approved Debtor’s request for employment of counsel. Id. at Docket No. 21. 7 || As part of the reorganization proceedings, on May 29, 2015, Debtor moved the Bankruptcy Court 8 for leave to sell a parcel of real property for $800,000, pursuant to 11 U.S.C, § 363(b). Id. at 9 || Docket No. 87. Debtor also filed an application to employ attorney Juan C. Bigas as notary public 10 || for the sale of Debtor’s real property. Id. at Docket No. 93. Both the sale of property and the 11 |}employment of notary public were later approved by the court. 12 Shortly thereafter, on July 13, 2015, attorney Alexandra Bigas Valedon filed a motion to 13 || withdraw as Debtor’s legal representation. On that same day, Modesto Bigas filed an amended 14 || application to employ notary public, requesting the court approve the employment attorney 15 || Alexandra Bigas Valedon as notary public for the sale of Debtor’s property because Juan C. Bigas 16 || would be out of the jurisdiction at the time the sale was scheduled to take place. Id, at Docket No. 17 || 105. The U.S. Trustee objected to the employment of attorney Alexandra Bigas Valedon as notary 18 || public, arguing the Bankruptcy Court has previously prohibited a debtor’s application to retain his 19 || bankruptcy lawyer to serve as the notary public in a transaction involving the sale of the debtor’s 20 || assets in In re Amjad H. Badran, Case No. 15-60 (EAG) (applying Puerto Rico law regarding 21 conflicts of interests in the practice of notary.) (Bankr. Case No. 14-4946 (EAG), Docket No. 22 |) 113). 23 24

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l The Bankruptcy Court ultimately denied attorney Alexandra Bigas Valedon’s request due 2 conflict of interest and stated: “The application to employ notary public Alexandra Bigas [at 3 || Docket No.] 105 is hereby denied. Attorney Bigas Valedon appeared on behalf of the debtor at the 4 || status conference held on 9/17/2014 (as per [Docket Nos.] 33 & 34).” (Bankr. Case No, 14-4946 5 || (EAG), at Docket No. 116.) 6 Debtor moved to appeal the court’s order denying Alexandra Bigas Valedon’s employment 7 notary public. Id. at Docket No. 134. In her request for appeal, Debtor argues the Bankruptcy 8 |) Court erred by denying the employment of attorney Alexandra Bigas Valedon as notary public due 9 |{to conflict of interest. Namely, Debtor argues there is no First Circuit precedent that establishes 10 prohibition and that the Bankruptcy Court improperly applied Puerto Rico Supreme Court 11 || precedent, which the Debtor contends is “totally unrelated” to the facts of this case. (Docket No. 12 |} 1-2.) In objection to Debtor’s Motion for leave to appeal, the Trustee argues: first, that the appeal 13 || appears to be constitutionally moot and is not ripe because the bankruptcy court approved the sale 14 || of the property and thus there is no need for Bigas Valedon to serve as notary, and; second, that the 15 || criteria for a discretionary interlocutory appeal under 28 U.S.C. § 158(a)@G) is not met. (Docket 16 || No. 5 at 7-12) 17 IV. Discussion 18 When deciding whether to grant or deny a motion for interlocutory appeal, a district court 19 ||examines “whether (1) the order involves a controlling question of law Q) as to which there is 20 || substantial ground for difference of opinion, and (3) whether “an immediate appeal from the order 2] materially advance the ultimate termination of the litigation.” In re Bank of New England 22 |i Corp., 218 B.R. 643, 652 (B.A.P. Ist Cir. 1998) (citing In re Prudential Lines, Inc., 160 B.R. 32, 23 24

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1 1/34 (S.D.N.Y. 1993) (noting an additional element to the interlocutory appeal analysis, the 2 || existence of “exceptional circumstances”)). 3 It is firmly established that Bankruptcy Courts have discretion over the approval of 4 employment professionals under section 327 of the Bankruptcy Code, Section 327(a) states that 5 “[e]xcept as otherwise provided in this section, the trustee, with the court’s approval, may employ 6 or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do 7 hold or represent an interest adverse to the estate, and that are disinterested persons, to 8 || represent or assist the trustee in carrying out the trustee’s duties under this title.” See 11 U.S.C. § 9 ||/327(a). “Bankruptcy courts historically have been accorded wide discretion to oversee the terms 10 || and conditions of a debtor’s engagement of professionals because “[t]he bankruptcy judge is on the 11 || front line, in the best position to gauge the ongoing interplay of factors and to make the delicate 12 judgment calls which such a decision entails.” In re Indep. Eng’g Co., Inc., 197 F.3d 13, 17 (Ist 13 |} Cir, 1999). 14 There is abundant Puerto Rico Supreme Court precedent discussing the ethical implications 15 || of the dual role of attorneys as counsel and notary public. See e.g., In Re Colon Ramery, 133 P.R. 16 || Dec. 555, (P.R. 1993); In re El San Juan Hotel Corp., 239 B.R, 635 (B.A.P. [st Cir. 1999) □□□□□□ 17 || 230 F.3d 1347 (ist Cir. 2000). To that effect, Rule 5 of the Puerto Rico Notary Regulations 18 || establishes the following prohibitions: 19 The practice of law may occasionally be incompatible with notarial practice. A notary public who officializes a public document is forbidden from later acting as attorney for one of the executing parties in contentious litigation to demand compliance with the obligations assumed by any other party in the document executed before him or her, 22 The notary is forbidden from legally representing a client in contentious litigation and, at the same time, acting as notary public in the same case due to the possible 23 conflicts of interest or incompatibilities that may arise therefrom, 24

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1 The regulations contained in the preceding two paragraphs shall apply to the notary personally and not to those notaries and attorneys who are or have been his or her 2 partners or coworkers. Nevertheless, the partners or coworkers of an authorizing notary may not represent an executing party in a public document officialized by 3 him or her, when the validity of any of the agreements arising from the document is challenged in litigation or if an allegation is made that agreements related to the 4 same matter were omitted from said document, or when the actions of the authorizing notary are questioned for any other reason. > Nonetheless, the attorney may act as notary in all ex parte, voluntary jurisdiction 6 actions, and in governmental remedies unless his or her action is expressly prohibited by law or case law doctrine. Also, the notary may act as attorney in the 7 same matter when prior to litigation the notary had only attested to the authenticity of signatures, and neither the signatures nor the document where such signatures appear are at issue as the main object of the claim. It is always left to the better judgment of the notary and his or her partners or 9 coworkers, within their professional responsibility, to decide when to refrain from p Pp acting, even when such action may be allowed, if the ethical aspects of the 10 particular circumstances could generate a potential conflict of interest or the appearance of improper conduct. 11 P.R. LAWS ANN. tit 4 App. XXIV, § □□ 12 To warrant interlocutory review, the order on appeal “must also involve a legal issue on 13 which there is substantial ground for difference of opinion. Circuit law limits the statutory 14 anodyne of certification to rare cases, where the proposed intermediate appeal presents one or 15 more difficult and pivotal questions of law not settled by controlling authority.” In re Bank of 16 New England Corp., 218 B.R. 643, 653 (B.A.P. Ist Cir. 1998) (emphasis added) (citing In re San 17 Juan Dupont Plaza Hotel Fire Litigation, 859 F.2d 1007, 1010 n.1 (Ist Cir, 1988); McGillicuddy 18 v. Clements, 746 F.2d 76, 76 n. 1 (1st Cir. 1984)). 19 20 |j———_ 21 ' The Puerto Rico Supreme Court has raised the bar as to Rule 5’s prohibition by ruling that “a notary should abstain from authorizing public documents regarding property involved in a legal proceeding in which is 99 |}or she is acting as attorney. Said rule, which derives from an interpretation of Rule 5 of the [Notary] Rules of Puerto Rico, will have prospective effect.” In re Matos Bonet, 153 P.R. Dec. 296, 301, Offic. Slip. Trans. at 4 (P.R. 2001) (emphasis in original), Later, in In re Aviles Tosado, 157 P.R. Dec. 867 (P.R. 2002), the Puerto Rico 23 Supreme Court went even further and traced a clear line distinguishing when an attorney is prohibited from acting as notary public. Inre Aviles Tosado, 157 P.R. Dec. 867, 24

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1 Because the bankruptcy court had discretion to deny the appointment of attorney Alexandra 2 ||Bigas Valedon as notary, the undersigned is highly skeptical as to the eminence of Debtor’s 3 arguments, and finds it difficult to consider that these fall even remotely close to an issue to which 4 there is substantial ground for difference of opinion, as mandated by section 1292(b). The 5 || Bankruptcy Court relied on straight-forward Puerto Rico Supreme Court precedent that made it 6 clear that attorney Bigas Valedon was prohibited from acting as notary public in the sale of 7 ||Debtor’s assets. “For an issue to rise to the level of difficulty and significance required under § 8 || 1292(b), the case must involve ‘difficult and pivotal questions of law not settled by controlling 9 ||authority.’” Rodriguez-Borges v. Lugo-Mender, 938 F. Supp. 2d 202, 212 (D.P.R. 2013) (quoting 10 |) In re San Juan Dupont Plaza, 859 F.2d 1007, 1010 n.1 (Ist Cir. 1988)). It is pellucid that the case 11 || specific issues raised on appeal do not rise to the level of difficulty and significance required under 12 section 1292(b). 13 Turning to the third prong this court must consider when deciding whether to grant or deny 14 request for interlocutory appeal, the Bankruptcy Court’s order denying the appointment of a 15 || specific notary public to carry out a sale of Debtor’s property is a procedural matter that does not 16 || advance, or even alter, the termination of this litigation, For eleven months, attorney Bigas 17 || Valedon appeared as Debtor’s attorney in the bankruptcy proceedings. Because of attorney Bigas 18 || Valedon’s appearance as counsel, the Bankruptcy Court denied her request, finding she was 19 || prohibited to act as notary public due to conflict of interest. 20 Even though counsel for Debtor would have liked the Bankruptcy Court to have ruled 21 || differently, this does not convert the court’s ruling to one that merits this court’s immediate 22 ||review. See Pacamor Bearings, Inc. v. Minibea Co. Ltd., 892 F. Supp. 347, 361-62 (D.N.H. 1995) 23 24

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1 || (holding that a party’s dissatisfaction with court’s standing decision did not amount to “substantial 2 {| ground for difference of opinion.”). 3 As such, this court finds that the Bankruptcy Court’s denial of attorney Bigas Valedon’s 4 ||request to be appointed as notary public for the sale of Debtor’s property is not a determination 5 may materially advance the ultimate termination of the litigation, Consequently, under the 6 || applicable law, this court’s exercise of discretionary appellate jurisdiction is not recommended. As 7 || such, the undersigned DENIES Debtor’s request for interlocutory appeal.” 8 V. Conclusion 9 Accordingly, the court DENIES Debtor’s Motion for Leave to appeal. 10 SO ORDERED. 11 In San Juan, Puerto Rico this 10th day of November, 2015. 12 s/ Gustavo A, Gelpi GUSTAVO A. GELPI 13 United States District Judge 14 15 16 17 18 19 20 21 The court also notes that Debtor’s request for interlocutory appeal is moot. The proceedings before the 49 Bankruptcy Court are still ongoing. Debtor’s property was sold on August 14, 2015, (Bankr. Case No. 14-1916, Docket No, 147}, therefore, the remedy sought is no longer available. Notwithstanding the above, the issue raised by Debtor may fall within the mootness exception of issues “capable of repetition, yet evading review.” 23 ||See Southern Pac. Terminal Co. v. ICC, 219 U.S. 498 (1911); CMM Cable Rep., Inc. v. Ocean Coast Properties, Inc., 48 F.3d 618, 622 (1st Cir. 1995), However, at this interlocutory juncture, Debtor’s arguments on appeal do 24 || not warrant this courts’ intervention.

CASECLOSED United States District Court District of Pucrto Rico (San Juan} CIVIL DOCKET FOR CASE #: 3:15-ev-02064-GAG In Re: Denisse J. Rodriguez-Martinez Tate Filed: 08/04/2015 Assigned to: Judge Gustavo A. Gelpi Date Terminated: 11/10/2015 Case in other court: U.S. Bankruptcy Court Puerto Rico, 14-04946 EAGI1 Jury Demand: None Cause; 28:0158 Notice of Appeal re Bankmiptey Matter (BA Nature of Suit: 422 Bankruptcy Appeal (801) Jurisdiction: Federal Question Appellant Denisse J Rodriguez-Martinez represented by Modesto Bigas-Mendez PO. Box 7462 Ponce, PR 00732-7462 787-844-1444 Fax: 787-842-4090 Email: modestobigas@yahoo.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Appellee US Trustee represented by Jill E. Kelso United States Department of Justice Office of the Trustee 400 W. Washington Street Suite 1100 Orlando, FL 32801 407-648-6301 x-137 Fan: 407-648-6323 Email: jill ketso@usdoj. gov LBAD ATTORNEY ATTORNEY TO BE NOTICED Nancy Pujals U.§. Trustee Office Ochoa Bldg. Suite 301 500 Tanea St. San Juan, PR 00901-1922 787-729-7444 Fax: 787-729-7449 Email: nancy. pujals@usdoj.gov LEAD ATTORNEY ATTORNEY TO BE NOTICED acrid [Dose 08/04/2015 1 | NOTICE OF APPEAL - Transinittal from Banknuptey Court Bankeuptey Court Case Number 14-04946 EAGIE, filed by Denisse J Rodriguez Martinez. (Attachments: # 1 Notice of Appeal and Election to USDC, # 2 Motiion for Leave to Appeal, #3 Order Appealed, #4 Certified Docket}U.3. Bankruptey Court, Lizette Torres) (Entered: 08/04/2015) 08/05/2015 NOTICE OF JUDGE ASSIGNMENT Case has been assigned to Judge Gustavo A. Gelpi (arg) (Entered: 08/05/2015) 08/06/2015 3 | ORDER; Appellant's brief is duc on or before September 8, 2015. Appellee's brief is due 30 days thereafter. Signed by Judge Gustavo A. Gelpi on 8/6/2015. (MET) (Entered: 08/06/2015) 4 | ?**FTLED IN ERROR-LACKING ELECTRONIC SIGNATURE*** OBJECTION to Deétor’s Motion for Leave to Appeal fand Certificate of Service) filed by US Trustee filed by US Trustee. (Pujals, Nancy) Modified on 8/E4/2015 Gne). (Entered: 08/13/2015) OBJECTION to Debtor's Motion for Leave ta Appeal (and Certificate of Service} filed by US Trustee filed by US Trustee. (Pujals, Nancy} (Entered: 08/13/2015) 08/13/2015 MOTION to Stay Ariefing Schedule (and Certificate of Service} re: 3 Order, Set Deadlines filed by Nancy Pujals on behalf of US Trustee Suggestions in opposition/response due by 8/31/2015 (Related document(s) 3 } (Pujais, Nancy) (Entered: 68/13/2015) 08/53/2015 7 | ORDER: Appellant shall show cause on or before Friday, August 21, 2015, as to why this appeal should not be dismissed as requested by the U.S. Trustee. Signed by Judge Gustavo A. Gelpi on 8/13/2015 (AS) Modified on 8/17/2015 to add signature date {mr), (Entered; 08/13/2015) 08/14/2015 NOTICE of Docket Text Modification by Deputy Clerk re: 4 Objection to Debtor's Motion for Leave to Appeal (and Certificate of Service). ***FILED IN ERROR-LACKEING ELECTRONIC SIGNATURE. Correct Document was re-filed at DE 5.*** (mr) (Entered: 08/14/2015) 08/19/2015 § | RESPONSE TO ORDER TO SHOW CAUSE filed by Denisse J Rodriguez-Maninez Re: 7 Order, filed by Denisse J Rodriguez-Martinez. (Bigas-Mendez, Modesto} (Entered: 08/19/2015) 08/28/2015 9 | TRANSMITTAL of Incomplete Record on Appeal! from Banknuptoy Court. Bankruptey Court case number 14-04946 EAGEL. Appellant Brief due by 9/17/2055. (Attachments: # 1 Certified Docket}(U.8. Bankruptcy Court, Lizette Torres) (Entered: 08/28/2015} 09/09/2015 | 10 | STANDING ORDERS: (1) DISCOVERY DISPUTES, (2) COURTESY COPIES, (3) COMMUNICATIONS BY COUNSEL OR THEIR STAFF WITH JUDGE GELPI'S LAW CLERKS, (4) CONSENT TO PROCEED BEFORE A MAGISTRATE JUDGE, (5) DEPOSITIONS IN CIVIL CASES. Signed by Judge Gustavo

| A. Gelpi,(mr} (Entered: 09/09/2015) 09/10/2015 i i INFORMATIVE Motion regarding Confirmation of Sale filed by Jill E. Kelso on behalf of US Trustee Suggestions in opposition/response due by 9/28/2015 | (Atlachments: # 1 Exhibit Motion to Inform Sale (Bankr. Dkt. No. 147))(Kelso, Jill) (Entered: 09/10/2015) 09/11/2015 12 ORDER: Noted 1] INFORMATIVE motion. Appellant shall SHOW CAUSE, on or before Tuesday, September 15, 2085 at AT NOON, as to why this appeal is —_Enot moot. No extensions will be allowed. Signed by Judge Gustavo A. Gelpi on 9/1 1/2015, (MET) (Entered: 09/11/2015) 3 RESPONSE TO ORDER TO SHOW CAUSE filed by All Plaintiffs Re: 12 Order on Informative Motion, Ll INFORMATIVE Motion regarding Confirmation of | | Sale fited by US Trustee filed by All Plaintiffs. (Bigas-Mendez, Modesto) (Entered: 09/15/2015) weer | 4 | ORDER: Granting 6 Motion to Stay, Signed by Judge Gustavo A. Getpi on 11/10/2015, (MET) (Entered: 11/10/2015) 13 | OPINION AND ORDER: Exnying Debtor Denisse Rodriquez Martinez's Motion for Leave to file Tnteclocutory Appeal of Bankruptcy Court order at Docket No. i i L. Signed by Judge Gustavo A. Gelpi on 11/10/2015.(MET) Entered: 11/10/2015) E1/10/2015 i 16 i JUDGMENT is hereby entered dismissing this case. Signed by Judge Gustavo A. Gelpi on 11/10/2015. (MET) (Entered: 11/10/2055) | | Notice of Clerk notifying Bankruptey Court of disposition of ease re: 16 Judgment, 15 Opinion and Order. (mr) (Entered: 11/12/2015)

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