In re: Edwin Rivera Vazquez and Nohilda Garcia Ramirez

Opinion

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2

4 IN RE: CASE NO. 13-04935 BKT 5 Chapter 13 EDWIN RIVERA VAZQUEZ 6 NOHILDA GARCIA RAMIREZ 7 Debtor FILED & ENTERED ON 7/21/2014 8 9

10 OPINION AND ORDER 11 Before the court is Debtors’ motion requesting the set aside of the order dismissing the 12 case (the “Reconsideration”) [Dkt No. 52], and the opposition to the Reconsideration filed by PR 13 Asset Portfolio 2013-1 International LLC (“PRAPI”) [Dkt No. 53]. For the reasons set forth 14 15 below, the Reconsideration is denied, and the case remains dismissed. However, the court 16 reconsiders the two year bar to refile and reduces the same to 180 days. The Debtor is hereby 17 barred from filing any bankruptcy petition for a period of 180 days from the entry date of this 18 order. 19 I. Background 20 21 On June 14, 2013, Debtors filed their voluntary petition under the provisions of chapter 22 13 of the Bankruptcy Code [Dkt No. 1]. On February 18, 2012, PRAPI filed a motion to dismiss 23 the case with prejudice due to bad faith filings and requested a two year bar to refile (the 24 “Motion to Dismiss”) [Dkt No. 40]. The Motion to Dismiss was grounded on the following 25 allegations: (a) that the Debtors filed their bankruptcy petition to stall the public sale of PRAPI’s collateral; (b) that Debtors failed to give notice to PRAPI of the filing of their bankruptcy case; 1 (c) that Debtors failed to make payments to PRAPI’s loans since August of 2010; and (d) that 2 Debtors lacked good faith because they filed a plan that is not feasible, as it proposes funding of 3 the plan from the sale of PRAPI’s collateral, without retaining the services of a realtor, identify 4 any prospective buyers, or present a strategy to sell the property and fund the plan. 5 6 On February 20, 2014, Debtors filed an adversary proceeding against PRAPI to 7 determine the validity and extent of its lien and to determine PRAPI’s claim as unsecured. 8 [Adversary Proceeding #: 14-00046-BKT]. Soon thereafter, PRAPI filed a motion requesting 9 entry of an order dismissing the case with prejudice, upon Debtors’ failure to respond to the 10 11 Motion to Dismiss, or cure arrears to PRAPI’s claim [Dkt. No. 48]. After considering the merits 12 of PRAPI’s unopposed motions, the court entered an order dismissing the case with prejudice 13 and granting the two year bar to refile [Dkt. No. 49]. 14 Debtors seek reconsideration of the court’s order dismissing the case. Debtors argue that 15 PRAPI failed to give proper notice of the Motion to Dismiss. In that sense, Debtors claim that 16 17 the Motion to Dismiss was procedurally defective because service of summons and complaint 18 were lacking. Debtors also argue that the Motion to Dismiss should be denied on the merits 19 because it fails to allege sufficient facts to support such a remedy [Dkt No. 52]. Debtors do not 20 contest or even address the allegations included in the motion to Dismiss. 21 PRAPI filed an opposition to Debtors request for reconsideration [Dkt No. 53] stating 22 23 that the request for reconsideration should be denied because: (a) the Motion to Dismiss met the 24 notice requirements of Fed R. Bankr. P. 9014 & Fed R. Bankr. P. 7004(b)(1); (b) PRAPI 25 provided evidence to support a finding that Debtors filed their bankruptcy case in bad faith and

in abuse of the bankruptcy system; (c) Debtors failed to respond to the Motion to Dismiss and 1 motion requesting entry of a dismissal order; (d) Debtors admitted that they failed to notify 2 PRAPI of the current bankruptcy case; (e) the reconsideration fails to comply with Fed. R. Civ. 3 P. 59(e), as it fails to provide any newly discovered evidence, or evidence which was in the 4 record but not considered by the court, so as to establish an error of law or fact and move this 5 6 court to reconsider and vacate the dismissal order. 7 The court agrees with PRAPI’s assessment. Debtor has failed to establish any manifest 8 error of law or fact or offer compelling newly discovered evidence which would merit this 9 court’s reconsideration of the order dismissing the case. Therefore, the court has not been put in 10 11 a position that warrants the reversal of the dismissal order. 12 II. Discussion 13 Debtors seek reconsideration of the dismissal order under Federal Rule of Civil 14 Procedure 60, applicable to bankruptcy proceedings under Fed R Bankr P 9024. But, because 15 the reconsideration was filed within fourteen days of the entry of the order dismissing the case, 16 17 the court will also consider reconsideration under Federal Rule of Civil Procedure 59, applicable 18 under Fed R Bankr P 9023. 19 A. Altering or amending a judgment 20 Fed R Bankr P 9023 provides in part as follows: 21 “A motion for a new trial or to alter or amend a judgment shall be filed, and a court may on its own order a new trial, no later than 14 days after 22 entry of judgment.” 23 Accordingly, the 28-day period to file a motion to alter or amend a judgment under Rule 24 59 is reduced to 14 days, as per Fed R Bankr P 9023. This 14-day time period is jurisdictional 25 and may not be extended. 10 Collier on Bankruptcy ¶9023.07 (16th ed.). In fact, Rule

9006(b)(2) prohibits the enlargement of any of the time periods established by Rule 9023. In conformity with Federal Rule of Civil Procedure 59, a party seeking reconsideration 1 “must either clearly establish a manifest error of law or must present newly discovered 2 evidence.” Marie v. Allied Home Mortgage Corp., 402 F. 3rd 1, 7 n. 2 (1st Cir. 2005) quoting 3 Pomerleau v. W. Springfield Pub. Sch., 362 F. 3d 143, 146 n. 2 (1st Cir. 2004). In Marie, the 4 First Circuit also cited a leading treatise, noting four grounds for granting a motion for 5 6 reconsideration under Federal Rules of Civil Procedure 59 (e). The grounds are “manifest errors 7 of law or fact, newly discovered or previously unavailable evidence, manifest injustice, and an 8 intervening change in controlling law.” Marie v. Allied Home Mortgage Corp., 402 F 3rd at 7 9 (citing 11 C. Wright et al., Federal Practice & Procedure § 2810.1 (2d ed. 1995)). 10 11 Reconsideration of a judgment under Rule 59 is an extraordinary remedy that is used 12 sparingly and only when the need for justice outweighs the interests advanced by a final 13 judgment. It is directed at allowing a court to correct its own errors. White v. New Hampshire 14 Dept. of Employment Security, 455 U.S. 445, 450 (1982). Moreover, it is well settled that Rule 15 59 (e) does not exist to give parties a second chance to prevail on the merits generally. Rule 59 16 17 (e) is not to be used to reassert arguments and theories previously rejected by the Court. The rule 18 is that Rule 59(e) motions are to be “aimed at reconsideration, not initial consideration.” Harley- 19 Davidson Motor Co., Inc. v. Bank of New England-Old Colony, N.A., 897 F.2d 611, 616 (1st 20 Cir. 1990). See also, Nat’l Metal Finishing Co. v. BarclaysAmerican/Commercial, Inc., 899 F. 21 2d 119, 123 (1st Cir. 1999) (Rule 59 (e) does not allow the losing party to rehash old arguments, 22 23 previously considered and rejected). Thus, parties should not use Rule 59(e) motions to raise 24 arguments which could, and should, have been made before judgment issued. Id. (quoting 25 Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260, 1268 (7th Cir.1986)). “Motions under Rule

59(e) must either clearly establish a manifest error of law or must present newly discovered 1 evidence . . . [t]hey may not be used to argue a new legal theory.” Id. 2 The arguments brought by Debtors by way of reconsideration neither reveal a manifest 3 error of law nor present newly discovered evidence. Consequently, reconsideration under Rule 4 59 is improper. Furthermore, in their reconsideration, Debtors set forth, for the first time, 5 6 arguments which could, and should, have been made before the order dismissing the case was 7 entered. This is true for Debtors’ assertion of lack of proper notice of the Motion to Dismiss and 8 their allegation that the Motion to Dismiss lacks sufficient facts in support of the remedy 9 requested. 10 11 Instead, Debtors opted to not answer the motion to dismiss. To this date, Debtors have 12 failed to address PRAPI’s allegations as to lack of service of the bankruptcy petition, postpetition 13 arrears and bad faith filing. As such, the dismissal allegations stand unopposed and uncontested. 14 B. Relief from a Judgment or Order 15 Debtors’ request for relief under Fed R Bankr P 9024 and Federal Rule of Civil 16 17 Procedure 60 is similarly flawed. Rule 60 affords six categories of reasons or grounds on which 18 to base a motion seeking relief from a final judgment, order, or proceeding. Particularly, Debtors 19 proffer that the order dismissing the case should be vacated under the good cause standard. 20 Federal Rule of Civil Procedure 60(b) seeks to balance the interest in the stability of 21 judgments with the interest in seeing that judgments not become instruments of oppression and 22 23 fraud. 10 Collier on Bankruptcy ¶9024.03 (16th ed.). “[T]he court may relieve a party . . . from a 24 final judgment, order, or proceedings for . . . any other reason that justifies relief.” Fed R. Civ. 25 P. 60(b)(6).

Relief under Rule 60(b) is extraordinary in nature and motions invoking that rule should be granted sparingly. Karak v. Bursaw Oil Corp., 288 F.3d 15, 19 (1st Cir.2002). Such relief is 1 available in our jurisdiction only when exceptional circumstances exist to justify this 2 extraordinary relief. In re Rodriguez Camacho, 1st Cir.BAP (P.R.) 2007, 361 B.R. 294 (citing 3 Simon v. Navon, 116 F.3d 1, 5 (1st Cir.1997)). A party who seeks relief under Rule 60(b) must 4 persuade the court, at a bare minimum, that exceptional circumstances exist, favoring 5 6 extraordinary relief; that if the judgment is set aside, he has the right stuff to mount a potentially 7 meritorious claim or defense; and that no unfair prejudice will accrue to the opposing parties 8 should the motion be granted. Rodriguez Camacho, supra (citing Karak v. Bursaw Oil Corp., 9 288 F.3d 15, 19 (1st Cir.2002)). None of the above factors have been demonstrated. Debtors 10 11 have failed to allege details showing “any other reason justifying relief” under a Rule 60(b)(6). 12 But, because the procedural allegation of lack of proper service would affect Debtors’ due 13 process, the court will entertain the same. 14 C. Required notice for the motion to dismiss 15 PRAPI’s motion to dismiss was predicated on section §1307(c), 349(a), 109(g) and 16 17 105(a) of the Bankruptcy Code. Section 1307 of the Bankruptcy Code provides, in the pertinent 18 part, that “on request of a party in interest … and after notice and a hearing, the court may … 19 dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for 20 cause.” 11 U.S.C. §1307. The procedure for dismissals that are not a matter of right is governed 21 by Federal Rule of Bankruptcy Procedure 1017. Rule 1017(f), in turn, provides that Rule 9014 22 23 governs a proceeding to dismiss under §1307(c). 24 Rule 9014 covers contested matters. A contested matter is a dispute between parties who 25 are opposing each other with respect to relief sought by one of them. 10 Collier on Bankruptcy

¶9014.01 (16th ed.). In contrast, Rule 7001 applies to adversary proceedings, which are similar 1 disputes specifically listed in said rule. Rule 9014(a) provides that a contested matter that is not 2 otherwise governed by the Bankruptcy Rules is commenced by a motion. Thus, a proceeding 3 seeking dismissal of a bankruptcy case is commenced by a motion, and not a complaint, as 4 purported by the Debtors. 5 6 Rule 9014(a) also provides that “reasonable notice and opportunity for hearing shall be 7 afforded the party against whom relief is sought.” Fed R Bankr P 9014(a). “The clear intention 8 of Rule 9014 is that, when a response to a motion is filed, a hearing must be held in order to 9 determine the contested matter.” 10 Collier on Bankruptcy ¶ 9014.03 (16th ed.). Because 10 11 Debtors failed to respond to the Motion to Dismiss, the court had no need to hold a hearing on 12 the matter. 13 Pursuant to Rule 9014, a motion commencing a contested matter is to be served on the 14 party against whom relief is sought in the manner provided in Rule 7004. Rule 7004, provides 15 for service by mail as alternative means to personal service or service pursuant to state law. 16 17 Service upon the debtor and its attorney at the addresses shown in the petition will suffice; proof 18 of actual receipt is not required. 10 Collier on Bankruptcy ¶ 7004.03 (16th ed.). 19 In this case, PRAPI served copy of the Motion to Dismiss by regular mail to the Debtors 20 and Debtors’ attorney, in compliance with the notice requirements of Rules 9014 & 7004. 21 Debtors do not contest this fact. Contrariwise, Debtors’ allegation that the Motion to Dismiss 22 23 needed to be served by way of summons and complaint is unfounded. 24 III. Conclusion 25 Having considered Debtors’ procedural argument in support of the reconsideration, and

even taking into account arguments that should have been raised before the dismissal order was 1 entered, this court concludes that Debtors allegations are insufficient to alter the court’s 2 conclusion that the case should be dismissed. The court declines to rule on the applicability of 3 the remaining substantive matters because they were raised for the first time on reconsideration. 4 There was no reason why Debtors could not have made their arguments before the dismissal 5 6 order was entered. 7 Furthermore, there has been no showing of a manifest injustice or error of law that 8 outweighs the interests advanced by a final order. Debtors have failed to demonstrate the 9 reasons why the court should reconsider its prior decision and set forth facts or law of a strongly 10 11 convincing nature to induce the court to reverse its earlier decision. See In re Schwartz, 409 12 B.R. 240, 250 (1st Cir. BAP 2008) citing López Jiménez v. Pabón Rodríguez (In re Pabón 13 Rodríguez), 233 B.R. 212, 219 (Bankr.D.P.R.1999), aff'd, 17 Fed.Appx. 5 (1st Cir.2001). “The 14 moving party cannot use a Rule 59(e) motion to cure its procedural defects or to offer new 15 evidence or raise arguments that could and should have been presented originally to the court.” 16 17 In re Schwartz, supra. Finally, the court is unconvinced to reconsider its order dismissing the 18 case because the circumstances that warranted the dismissal remain. 19 Absent a showing of a clearly erroneous determination by this court, or a showing of a 20 manifest injustice or error of law that warrants reconsideration, Debtor’s request for 21 reconsideration of the order dismissing the case is DENIED. 22 23 WHEREFORE, IT IS ORDERED that Debtors’ motion requesting reconsideration shall 24 be, and it hereby is, DENIED. The case remains dismissed. However, the court hereby reduces 25 bar to refile to 180 days under 11 U.S.C. §109(g)(1). 1 In San Juan, Puerto Rico this 21st day of July, 2014. 2

Brian K. Tester 5 U.S. Bankruptcy Judge 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25