In re Millan

510 B.R. 674, 2014 WL 2119995, 2014 Bankr. LEXIS 2254
CourtUnited States Bankruptcy Court, D. Puerto Rico
DecidedMay 21, 2014
DocketNo. 13-08676 BKT
StatusPublished

This text of 510 B.R. 674 (In re Millan) 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
In re Millan, 510 B.R. 674, 2014 WL 2119995, 2014 Bankr. LEXIS 2254 (prb 2014).

Opinion

OPINION AND ORDER

BRIAN K. TESTER, Bankruptcy-Judge.

Before this Court is a Motion to Alter or Amend Order and/or For Reconsideration of Dismissal [Dkt. No. 51] filed by Debtor, Juan Adames Millan (“Debtor” or “Mr. Adames”). For the reasons set forth below, Debtor’s Motion to Alter or Amend Judgment and/or For Reconsideration is DENIED.

I. Factual Background

On October 18, 2013, Mr. Adames filed his voluntary petition seeking relief pursuant to Chapter 7 of the Bankruptcy Code [Dkt. No. 1]. This is the first time Mr. Adames has filed for bankruptcy relief. The motion before the court stems from Mr. Adames’ failure to obtain a credit counseling briefing during the 180 day period preceding his petition’s filing. While Mr. Adames eventually filed his Certificate of Debtor Education on December 9, 2013 [Dkt. No. 42], he never timely filed a request for a temporary waiver pursuant to 11 U.S.C. § 109(h).

On December 23, 2013, the court entered an order dismissing his case [Dkt. No. 47]. In its order, the court reasoned that dismissal was appropriate due to Mr. Adames’ failure to file a request to waive the pre-petition credit counseling requirement. Moreover, dismissal was warranted because Mr. Adames did not file Exhibit D — “Individual Debtor Statement of Compliance with Credit Counseling Requirement,” an integral part of the voluntary petition.

Mr. Adames then filed the motion for reconsideration that is before the court. Because Mr. Adames’ motion fell outside of the 14 days provided by Fed. R. Bankr.P. 9023, the court will treat his motion for reconsideration pursuant to Fed. R. Bankr.P. 9024.

II. Legal Analysis and Discussion

Mr. Adames fails to establish grounds for relief under Fed. R. Bankr.P. 9024 and Fed.R.Civ.P. 60. Fed. R. Bankr.P. 9024 incorporates Fed.R.Civ.P. 60 with some limited exceptions. Fed. R.Civ.P. 60(b) provides for grounds for relief from a final judgment, order, or proceeding. This rule “seeks to balance the interest in the stability of judgments with the interest in seeing that judgments not become instruments of oppression and fraud.” In re Lugo, 12-04983 BKT, 2014 WL 1117081 (Bankr.D.P.R.2014). However, a motion pursuant to Fed.R.Civ.P. 60(b) is extraordinary in nature and motions invoking the rule should be granted sparingly. Karak v. Bursaw Oil Corp., 288 F.3d 15, 19 (1st Cir.2002). “Thus, a party who seeks recourse under Rule 60(b) must persuade the trial court, at a bare minimum, that his motion is timely; that exceptional circumstances exist, favoring extraordinary relief; that if the judgment is set aside, he has the right stuff to mount a potentially meritorious claim or defense; and that no unfair prejudice will accrue to the opposing parties should the motion be granted.” Id. Mr. Adames has failed to [677]*677allege details showing any inadvertence, mistake and/or excusable neglect. Likewise, no exceptional circumstances exist to justify extraordinary relief. However, even if the court were to entertain his motion as timely filed pursuant to Fed. R. Bankr.P. 9023 and Fed.R.Civ.P. 59, Mr. Adames would still not be entitled to relief.

In order to have his motion granted pursuant to Fed.R.Civ.P. 59(e), Mr. Adames must clearly establish a manifest error of law. F.D.I.C. v. World U. Inc., 978 F.2d 10, 16 (1st Cir.1992) (citing F.D.I.C. v. Meyer, 781 F.2d 1260, 1268 (7th Cir.1986)). Specifically, unless Mr. Adames presents controlling jurisprudence that the court overlooked and may reasonably be expected to amend or alter its conclusion, his motion will be denied. Est. of Rivera v. Dr. Susoni Hosp., Inc., 323 F.Supp.2d 262, 265 (D.P.R.2004) (citing Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2nd Cir.1995)). In his motion, Mr. Adames cites In re Rios, 336 B.R. 177 (Bankr.S.D.N.Y.2005) (citing In Re Hubbard, 333 B.R. 377, 388 (Bankr.S.D.Tex. 2005) and In re Thompson, 344 B.R. 899 (Bankr.S.D.Ind.2006) subsequently vacated, 249 Fed.Appx. 475 (7th Cir.2007) (unpublished) for the proposition that failure to comply with 11 U.S.C. § 109(h)’s credit counseling requirement should result in the striking of his petition, as opposed to its dismissal. However, more recent and persuasive jurisprudence suggests that dismissal is the appropriate result.

While this issue has not been addressed in the First Circuit, in 2006 the Second Circuit Court of Appeals dealt with a factually analogous matter. In re Zarnel, 619 F.3d 156, 158-60 (2d Cir.2010). A debtor, represented by counsel, filed a voluntary Chapter 7 petition on November 29, 2005. Id. at 158. This was the debtor’s first filing, and while her petition was accompanied by the correct schedules, she neither filed a credit counseling certificate, nor sought an extension of time to do so. Id. Approximately two months later, the United States Trustee moved to dismiss the case. Id. at 159. However, instead of dismissing, the bankruptcy court decided to have the case stricken. Id.

Relying on the reasoning in Rios and Hubbard, the bankruptcy court “found that the statutory language of § 109(h), which provides that an individual ‘may not be a debtor’ without prior credit counseling, bars such filers from commencing a case under 11 U.S.C. § 301.” Id. As a result, the bankruptcy court held “that because Congress had not explicitly directed the action a court should take in response to a bankruptcy petition failing to commence a case, it had the power to strike the petitions before it rather than to dismiss the cases.” Id. at 160.

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Related

Adams v. Zarnel
619 F.3d 156 (Second Circuit, 2010)
Karak v. Bursaw Oil Corp.
288 F.3d 15 (First Circuit, 2002)
Bruce C. Shrader v. Csx Transportation, Inc.
70 F.3d 255 (Second Circuit, 1995)
In Re Thompson
344 B.R. 899 (S.D. Indiana, 2006)
In Re Hubbard
333 B.R. 377 (S.D. Texas, 2005)
In Re Rios
336 B.R. 177 (S.D. New York, 2005)
Estate of Rivera v. Doctor Susoni Hospital Inc.
323 F. Supp. 2d 262 (D. Puerto Rico, 2004)
Gargula, Nancy J. v. Thompson, Gregory A.
249 F. App'x 475 (Seventh Circuit, 2007)
In re Osborne
490 B.R. 75 (S.D. New York, 2013)

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Bluebook (online)
510 B.R. 674, 2014 WL 2119995, 2014 Bankr. LEXIS 2254, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-millan-prb-2014.