In re: Ridel Alegre Fernandez Rosado

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: March 15, 2010
• Docket: 07-05871
• Status: Unknown

Opinion

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

IN RE: : CASE NO. 07-05871 RIDEL ALEGRE FERNANDEZ ROSADO CHAPTER 7 ° Debtor 6 : , □□

8 OPINION AND ORDER 10 This case is before the court upon the Motion to Dismiss filed jointly by Mr. Celedonio Corredera Pablo (“Mr. Corredera”), Pablo Lopez Baez (“Mr. Lopez”), Emma Teresa Benitez (“Mrs. 12 Benitez) and Osiris Delgado (“Mrs. Delgado”) (hereinafter referred collectively as the “Creditors”) 13 on April 28, 2009 pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code and a “Memorandum In 14 Support Of Motion for Reconsideration /Set Aside Of Order & Supplementing Opposition to Motion 15 to Dismiss”(the “Motion for Reconsideration” or “Opposition to Motion to Dismiss”) filed by Ridel 16 Alegre Fernandez (the “Debtor”) on November 24, 2009 (Docket No. 76), of the Order entered in this V7 case on May 29, 2009 (Docket No. 61) denying Debtor’s second request that a discharge be entered '8 | rorthwith pursuant to Fed. R. Bankr. P. 4004(c)(1)(B) and (D). On December 21, 2009, Mr. Lopez, 19 Mrs. Benitez and Mrs. Delgado jointly filed their reply to the opposition to the motion to dismiss 20 (Docket No. 80). On December 31, 2009 Mr. Corredera filed his Opposition to Debtor’s Motion for 21 Reconsideration (Docket No. 83). For the reasons stated below the Motion for Reconsideration is 22 hereby denied, and an evidentiary hearing on the motion to dismiss will be scheduled to determine 23 whether Debtor filed its bankruptcy petition in bad faith. Facts and Procedural Background 25 Defendant Ridel Alegre Fernandez Rosado filed a bankruptcy petition under Chapter 7 of the 26 Bankruptcy Code on October 9, 2007. Creditors were included in Schedule F (Creditors Holding 27 Unsecured Nonpriority Claims) as unsecured and all debts were labeled of a personal nature. Debtor 28 in Schedule F listed the debts as follows: (i) Don Celedonio Correderra Pablos a personal debt

1 | incurred in the year 2005 in the amount of $68,400.00; (ii) Dr. Osiris Delgado a personal debt 2 |jincurred in the year 2005 in the amount of $25,000.00; (iii) Dr. Pablo Lopez Baez a personal debt 3 |lincurred in the year 2005 in the amount of $11,000.00; and (iv) Emma Teresa Benitez a personal debt 4 |lincurred in the year 2006 in the amount of $27,000.00. Debtor on line item 4 of its Statement of 5 Financial Affairs listed the following four (4) state court proceedings for collection of monies: (1) 6 ||Pablo Lopez Baez, Cristine Wechgeler vs. Ridel Fernandez H/N/C Galeria Ridel K1CD2007-0083; 7 |\(2) Don Celedonio Corredera Pablos vs. Galeria Ridel, Inc. and Ridel Fernandez KCD2007-0809; (3) 8 Teresa vs. Ridel Fernandez KCD2007-11424; and (4) Dr. Osiris Delgado vs. Ridel Fernandez 9 Galeria Ridel KCD2007-1759. The 341 meeting of creditors was initially scheduled for 10 November 1, 2007 (Docket No. 4). The meeting of creditors was rescheduled to November 15, 2007 11 |(Docket No. 7 in lead case); and subsequently continued to December 13, 2007 (Docket No. 12 in 12 case) and January 10, 2008 (Docket No. 20 in lead case). The deadline to file objections to the 13 |\discharge and the dischargeability of debts was December 31, 2007 (Docket No. 4 in lead case). 14 On April 28, 2009 Creditors filed a Motion To Dismiss (Docket No. 55) alleging that Debtor 15 its bankruptcy petition in bad faith and should be dismissed pursuant to 11 U.S.C. §707(a) of 16 |[the Bankruptcy Code. Creditors allege that Debtor’s bad faith is based on the following: (i) “...to 17 a discharge of debts incurred as a result of Fernandez’s fraudulent representations to the 18 ||Consignors and other similarly situated creditors and as a result of Debtor misappropriating or using 19 |}without consent money or property belonging to the Consignors and other similarly situated creditors” 20 ||\(Docket No. 55, paragraph 5); (ii) “[t]his cumulative debt of at least $112,000.00 was incurred by 21 |)Debtor as a direct result of Fernandez using artworks that had been given to him on consignment for 22 ||sale by the Consignors to pay for his own debts and from Fernandez using the proceeds of the sales 23 |jof artworks given to him by the Consignors to pay for his own debts” (Docket No. 55, paragraph 7); 24 ||(iii) “Debtor has admitted that title over the artworks given to him on consignment for sale by the 25 |Consignors remained in the Consignors. Therefore, the proceeds of the sales of those artworks 26 ||belonged to the Consignors” (Docket No. 55, paragraph 8); (iv) “Fernandez fraudulently or under 27 |\false pretenses made the Consignors provide him with the artworks on consignment for sale, under 28 |jthe pretense that he would turnover to them the proceeds of the sales of the consigned artworks, less

1 |Debtor’s rightful part of said proceeds” (Docket No. 55, paragraph 9); and (v) “Debtor has constantly 2 to provide the Consignors with the information requested at the meetings of creditors with 3 ||regards to whom and for what amount were the consigned artworks sold and if they had been paid to 4 ||him by the respective buyers” (Docket No. 55, paragraph 11). 5 Subsequently, on May 29, 2009 the court dismissed the instant case for the reasons set forth 6 Creditors’ motion to dismiss. On June 1, 2009 Debtor filed a motion for reconsideration of 7 ||\dismissal under Fed. R. Bankr. P. 7055(c) (Docket No. 67). Debtor filed his Answer and Opposition 8 the Motion to Dismiss on June 1, 2009 (Docket No. 68). Debtor as part of its Affirmative Defenses 9 lin its Opposition to the Motion to Dismiss argues that there is no good faith filing requirement under 10 U.S.C. §707(a) of the Bankruptcy Code. On June 19, 2009 Creditors filed their opposition to 11 |Debtor’s motion for reconsideration pursuant to Fed. R. Bankr. P. 7055(c) (Docket No. 69). The 12 on September 9, 2009, granted Debtor’s motion for reconsideration of the dismissal order since 13 same was entered prematurely. The order dismissing the case was vacated and set aside. (Docket 14 70). On October 20, 2009, Creditors jointly filed a motion to stay the pretrial hearing until the 15 |jcourt rules on the motion to dismiss (Docket No. 72). Creditors through this motion also requested 16 court to convert the motion to dismiss to a motion for summary judgment. On October 21, 2009 17 court ordered the pretrial hearing scheduled for October 23, 2009 to be continued without a date, 18 |[pending a decision on Creditors’ motion to dismiss (Docket No. 73). 19 On November 24, 2009 Debtor filed his Opposition to Motion to Dismiss and Memorandum 20 Law (Dockets No. 75 & 76) arguing the following: (i) the motion to dismiss should not be granted 21 |lwithout a hearing since Debtor should be given a full and fair opportunity to be heard pursuant to 11 22 §§707(a), 102(1) of the Bankruptcy Code and P.R. LBR 9013-1(d); (ii) Creditors have not 23 |loffered any evidence whatsoever in support of their motion to dismiss based on bad faith pursuant 24 11 U.S.C. §707(a) of the Bankruptcy Code; (iii) the movant bears the burden for establishing that 25 is “cause” for dismissal pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code; (iv) a motion 26 ||to dismiss which is devoid of any evidence whatsoever but relies on unspecific allegations of fraud 27 |jand innuendos fails to establish “cause” pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code; (v) 28 ||*...Debtor respectfully submits that any perceived failure to respond to the Motion to Dismiss with

1 | specific facts in evidence should not provide a basis for the Court to grant the motion, and most 2 Ilcertainly should not justify doing so without a hearing” (Docket No. 76, p. 12); and (vi) the motion 3 dismiss under Section 707(a) is an untimely Section 707(b)(3)(A) motion in disguise. On 4 |December 21, 2009 Mr. Lopez, Mrs. Benitez and Mrs. Delgado jointly filed their reply to the 5 llopposition to the motion to dismiss (Docket No. 80) by which they present transcribed portions of 6 341 creditor’s meeting, Debtor’s answer to interrogatories and Debtor’s deposition in which he 7 acknowledged having received the works from Mr. Lopez, Mrs. Benitez and Mrs. Delgado in 8 |iconsignment and selling the same to third parties and paying other debts with the proceeds from the 9 |jartworks but never remitting the proceeds from such artworks to the consignors. Lastly, Mr. 10 ||Corredera in his opposition to the motion for reconsideration argues the following: (i) “[nJeither 11 11 U.S.C. §707(a) nor LBR 9013-1(d) require that an actual hearing be held, unless a party in interest 12 |lrequests such an actual hearing” (Docket No. 83, paragraph 5); (ii) “...Debtor’s motion for 13 |jreconsideration of the order dismissing the case nor in Debtor’s opposition to the Motion to Dismiss 14 Debtor request that an actual hearing be held as to the Motion to Dismiss” (Docket No. 83, 15 |}paragraph 6); and (iii) Debtor’s lack of good faith pursuant to Section 707(a) consisted in 16 |lmisappropriating the artworks that had been given to him on consignment for sale and using the 17 ||proceeds of the consigned artworks to pay other debts and thus, failing to remit the proceeds from 18 artworks to the consignors. 19 Applicable Law and Analysis 20 ||Right to a Hearing Pursuant to 11 U.S.C. $$707(a) & 102(1) 21 Section 707(a) authorizes a bankruptcy court to, “dismiss a case under this chapter only after 22 |Inotice and a hearing and only for cause.” 11 U.S.C. §707(a). The phrase “after notice and a hearing” 23 Section 102(1) is construed to mean such notice and opportunity for a hearing “as is appropriate 24 the particular circumstances.” 11 U.S.C. 102(1)(A). However, after proper notice is given, a 25 |lhearing is not required under three (3) circumstances, namely: (i) ifno party in interest timely requests 26 |ja hearing; (ii) if there is insufficient time for the hearing to be commenced before the act must be 27 |\done and (iii) the bankruptcy court has sufficient information to act without a hearing even if one was 28 llrequested by a party in interest. 11 U.S.C. §102(1)(B); Alan N. Resnick & Henry J. Sommer, 2

1 ||Collier on Bankruptcy 4102.03[a]-[c] (16" ed. 2009). “The particular circumstances of a motion to 2 ||dismiss include the fact that dismissal is one of the most critical determinations to be made in a 3 ||Chapter 7 case, affecting the vital bankruptcy interests of all parties.” In re Dinova, 212 B.R. 437, 442 4 |\(B.A.P. 2d Cir. 1997). Moreover, “[t]he purpose of the “notice and hearing” requirement of Section 5 ||707(a) is to enlighten the court’s determination of ‘cause’ by the adversary process.” Id at 444. Courts 6 |Imust generally recognize litigant’s due process rights, thus allowing the same the opportunity to be 7 “at a meaningful time and in a meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 333, 8 147 L. Ed. 2d 18, 96 S. Ct. 893 (1976). 9 Mr. Corredera argues that Debtor does not have a right to a hearing because his request was 10 lluntimely since Debtor did not request a hearing in its motion for reconsideration (Docket No. 67) 11 |jrequesting dismissal of the case nor in its opposition to the motion to dismiss (Docket No. 68). Debtor 12 the motion requesting reconsideration of dismissal and its Opposition to the Motion to Dismiss 13 jon June 1, 2009 (Dockets No. 67 & 68). The court granted Debtor’s motion for reconsideration on 14 September 9, 2009, thus vacating the May 29, 2009 dismissal order since the same was entered 15 |lprematurely (Docket No. 70). On October 20, 2009, Creditors jointly filed a motion to stay the pretrial 16 ||hearing until the court rules on the motion to dismiss (Docket No. 72). The court, on October 21, 17 ordered the pretrial hearing scheduled for October 23, 2009 to be continued without a date, 18 |lpending a decision on Creditors’ motion to dismiss (Docket No. 73). On November 24, 2009, the 19 ||Debtor through its Opposition to the Motion to Dismiss argues that his case should not be dismissed 20 llabsent a hearing. 21 This court finds that the Debtor pursuant to Sections 707(a) and 102(1)(A) of the Bankruptcy 22 is entitled to an evidentiary hearing to determine the dismissal of the case on the ground that 23 |jthe Debtor filed its bankruptcy petition in bad faith. The court clarifies that the May 29, 2009 order 24 |\(Docket No. 60) dismissing the case was granted erroneously pursuant to P.R. L.B.R. 9013-1(d)(1) 25 |ibecause Debtor had not filed an objection to Creditors’ motion to dismiss. However, P.R. L.B.R. 26 |/9013-1(d) do not preclude the court to act upon the motion to dismiss without a hearing. 27 28

1 | Bad Faith as Cause under 11 U.S.C. $707(a) 2 Section 707(a) of the Bankruptcy Code provides in part that, “[t]he court may dismiss a case 3 this chapter only after notice and a hearing and only for cause,” and provides three (3) non- 4 |lexclusive examples of “cause” warranting dismissal. 11 U.S.C. §707(a). The Bankruptcy Code is 5 as to what constitutes “cause” under Section 707(a). The examples provided in Section 707(a) 6 |lof the Bankruptcy Code are not exhaustive of what may constitute “cause” for dismissal in a chapter 7 |I7 case. See In re Zick, 931 F. 2d 1124, 1126 (6" Cir. 1991); In re Huckfeldt, 39 F. 3d 829, 831 (8 8 ||Cir. 1994). There is currently a split amongst the courts on the issue of whether bad faith constitutes 9 |I“*cause” for dismissal of a chapter 7 case pursuant to Section 707(a). The Third and Sixth Circuits 10 held that bad faith is a valid cause for dismissal of a chapter 7 case under §707(a). See Industrial 11 Servs., Inc. v. Zick (In re Zick), 931 F. 2d 1124, 1127 (6 Cir. 1991); In re Tamecki, 229 F. 3d 12 207 (3 Cir. 2000); Perlin v. Hitachi Capital America Corp., 497 F. 3d 364 (3% Cir. 2007). 13 However, both the Third and Sixth Circuits employ narrowly bad faith as “cause” for dismissal of a 14 ||chapter 7 case and limit its scope to “egregious cases that entail concealed or misrepresented assets 15 sources of income, lavish lifestyles, and intention to avoid a large single debt based upon 16 ||conduct akin to fraud, misconduct or gross negligence.” In re Zick, 931 F. 2d at 1129. The Eight and 17 Circuits have taken the opposite viewpoint and held that bad faith generally does not constitute 18 ||cause” under Section 707(a). See Inre Padilla, 222 F.3d 1184, 1191 (9" Cir. 2000); In re Huckfeldt, 19 F. 3d at 832 citing In re Khan, 172 B.R. 613 (Bankr. D. Minn. 1994) (“...bad faith under §707(a) 20 limited to extreme misconduct falling outside the purview of more specific Code provisions, such 21 |las using bankruptcy as a ‘scorched earth’ tactic against a diligent creditor, or using bankruptcy as a 22 from another court’s jurisdiction.”). 23 There is no controlling precedent from the First Circuit Court of Appeals. However, it must 24 noted that the Bankruptcy Court of Massachusetts has addressed this particular issue and has 25 |laligned itself with the reasoning employed by the Eighth and Ninth Circuits. See In re Linehan, 326 26 IB.R. 474 (Bankr. D. Mass. 2005); In re Pina, 363 B.R. 314 (Bankr. D. Mass. 2007). The Bankruptcy 27 ||Court of New Hampshire contrary to the Bankruptcy Court of Massachusetts has held that bad faith 28 ||constitutes “cause” for a chapter 7 dismissal and that the factors included in Cabral v. Shamban (In

1 Cabral), 285 B.R. 563, 572 (B.A.P. 1‘ Cir. 2002)! should be employed to determine the same. In 2 Marsico, 2004 B.R. 1 (Bankr. D.N.H. 2004). 3 Notwithstanding, the split amongst the courts, chapter 7 dismissals based on bad faith are fact 4 jlintensive and fact specific and the moving party has the burden of proving that there is “cause” for 5 dismissal. See In re Romany, 2006 Bankr. LEXIS 3807 (Bankr. D.P.R. 2006). At this juncture, 6 |ithe court will refrain from issuing an opinion on the scope of bad faith as a “cause” for a chapter 7 7 |\dismissal and analyzing the testimonial evidence which has been submitted by Creditors until after 8 |ithe hearing has taken place. 9 R. Civ. P. 60(b) 10 A motion for reconsideration of an order or judgment is not recognized by the Federal Rules 11 Civil Procedure. In re Pabon Rodriguez, 233 B.R. 212, 218 (Bankr. D.P.R. 1999) aff'd, 2001 WL 12 1958803 (1st Cir. 2001) (citing Vank Skiver v. United States 952 F.2d 1241, 1243 (10 Cir. 1991)). 13 ||Federal courts treat such a motion as either a motion to alter or amend judgment under Fed. R. Civ. 14 |P 59(e) or a motion for relief of judgment under Fed. R. Civ. P. 60(b). “These two rules are distinct; 15 |Ithey serve different purposes and produce different consequences. Which rule applies depends 16 |lessentially on the time a motion is served. If a motion is served within ten days of the rendition of 17 judgment, the motion ordinarily will fall under Rule 59(e). Ifthe motion is served after that time, it 18 |/falls under Rule 60(b).” Id. In the instant case Plaintiff's Motion for Reconsideration was filed one 19 |lhundred seventy eight (178) days after the order for which reconsideration is sought was entered. 20 ||Therefore, the motion will be treated as one filed under Fed. R. Civ. P. 60(b) made applicable here 21 |Ithrough Fed. R. Bank. P. 9024. 22 Fed. R. Bankr. P. 9024 provides as follows: 23 Rule 60 F. R. Civ. P. applies in cases under the Code except that (1) a motion to reopen a case under the Code or for the reconsideration of an order allowing or

aor ©. 26 'The following are the four (4) factors the court must consider: (1) whether the debtor misrepresented facts in his petition, unfairly manipulated the Bankruptcy Code, or otherwise filed 27 || his bankruptcy petition in an inequitable manner; (2) the debtor’s history of filings and dismissals; (3) whether the debtor only intended to defeat state court litigation; and (4) whether egregious 28 || behavior is present. These factors were used to reconvert a chapter 7 case to a chapter 13 case.

1 disallowing a claim against the estate entered without a contest is not subject to the one year limitation prescribed in Rule 60(b), (2) a complaint to revoke a discharge in 2 a chapter 7 liquidation case may be filed only within the time allowed by section 727(e) of the Code , and (3) a complaint to revoke an order confirming a plan may be 3 filed only within the time allowed by section 1144, sec 1230, or sec 1330. Rule 60 Relief from a Judgment or Order 4 (a) Corrections Based on Clerical Mistakes; Oversights and Omissions. The court 5 may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record. The court may 6 do so on motion or on its own, with or without notice. But after an appeal has been docketed in the appellate court and while it is pending, such a mistake may be 7 corrected only with the appellate court's leave. (b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion 8 and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: 9 (1) mistake, inadvertence, surprise, or excusable neglect; 10 (2) newly discovered evidence that, with reasonable diligence, could not have been 11 discovered in time to move for a new trial under Rule 59(b); 12 (3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; 13 (4) the judgment is void; 14 (5) the judgment has been satisfied, released or discharged; it is based on an earlier 15 judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or 16 (6) any other reason that justifies relief. 7 (c) Timing and Effect of the Motion. (1) Timing. A motion under Rule 60(b) must be made within a reasonable time--and 18 for reasons (1), (2), and (3) no more than a year after the entry of the judgment or 19 order or the date of the proceeding. (2) Effect on Finality. The motion does not affect the judgment's finality or suspend 20 its operation. 21 22 Fed. R. Civ. P. 60(b)(1) is generally utilized for mistake, inadvertence, surprise, or excusable 23 |Ineglect of a party involved in a legal proceeding. However, it is “not altogether clear” under what 24 |Icircumstances such rule may be employed to seek relief regarding mistakes of the court. See 11 25 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d_ § 2858 at 293. There is 26 |\disagreement amongst the circuits regarding the circumstances for which a party is entitled to Fed. 27 |IR. Civ. P. 60(b)(1) relief based on an error of the court. Id at 293-295. The Sixth and Tenth Circuit 28 held that the term “mistake” as employed in Fed. R. Civ. P. 60(b)(1) encompasses errors of the

1 court, including legal errors. See United States v. Reyes, 307 F. 3d 451, 455 (6" Cir. 2002); Cashner 2 Freedom Stores, Inc., 98 F. 3d 572, 576 (10" Cir. 1996). Contrary to the Sixth and Tenth Circuit, 3 First Circuit has specifically held that Fed. R. Civ. P. 60(b)(1) is limited in scope and as such, a 4 error is not the type of mistake, inadvertence, surprise or excusable neglect that justifies relief 5 jlunder Fed. R. Civ. P. 60(b)(1), since it is not inclusive of the relief under the rule for error of law 6 ||provided under Fed. R. Civ. P. 59(e). Silk v. Sandoval, 435 F. 2d 1266, 1268 (1* Cir. 1971), cert. 7 \\denied 91 S. Ct. 2189, 402 U.S. 1012, L. Ed. 2d 435. The First Circuit’s interpretation of Fed. R. Civ. 8 ||P. 60(b)(1) “seems to fit better the structure of the rules” and “makes more sense of the relation 9 between Rule 59(e) and Rule 60(b)(1).” 11 Wright, Miller & Kane, Federal Practice and Procedure: 10 ||Civil 2d § 2858 at 295. Fed. R. Civ. P. 60(b)(6) as the catchall provision is generally employed only in extraordinary 12 circumstances that justify relief for cases which are brought before the court for post trial review after 13 one (1) year limit or other time constraints mandated under other rules. 11 Wright, Miller & Kane, 14 lrederal Practice and Procedure: Civil 2d § 2858 at 365; See United States v. One Urban Lot, 882 F. 15 lod 582, 585 (1* Cir. 1989) Valley Citizens for a Safe Environment v. Aldridge, 969 F. 2d, 1315 16 11317.“Given the limited number of situations in which ‘extraordinary circumstances’ have been 17 found, the courts have focused instead on whether the movant made a fair and deliberate choice at 18 some earlier time not to move for relief.” Id at 370. The First Circuit has held that the “bar for such 19 Ireliefis set high because... there must be an end to litigation someday.” Paul Revere Variable Annuity 20 Co. v. Zang, 248 F. 3d 1, 5 (1 Cir. 2001) citing Ackermann v. United States, 340 U.S. 193, 198, 21 L. Ed. 207, 71 S. Ct. 209 (1950). Moreover, “the district courts have ‘broad discretion’ to 22 lldetermine whether such circumstances exist.” Id. Debtor’s Arguments & Discussion- Motion for Reconsideration

95 In his Motion for Reconsideration Debtor pursuant to Fed. R. Civ. P. 60(b)(1) and (6) presents 26 the following arguments: (i) the court erred in its application of Fed. R. Bankr. P. 4004(c)(1)(B) because plaintiffs through the filing of the adversary proceedings sought relief under 11 U.S.C. §523 28 of the Bankruptcy Code not pursuant to 11 U.S.C. §727 as provided by Fed. R. Bankr. P.

1 14004(c)(1)(B); (ii) even if Fed. R. Bankr. P. 4004(c)(1)(B) is applicable to complaints objecting to 2 |Ithe dischargeability of certain debts pursuant to 11 U.S.C. §523, such statute is not applicable to the 3 |linstant case because there are currently no pending adversary proceedings and judgments were entered 4 jlon April 9, 2009 in the adversary proceedings and the motions for reconsideration in the adversary 5 ||proceedings were disposed of as of May 20, 2009 and the same were closed on June 4, 2009; (iii) the 6 erred in its application of Fed. R. Bankr. P. 4004(c)(1)(D) because a motion to dismiss pursuant 7 11 U.S.C. §707 of the Bankruptcy Code was not pending on expiration of the time fixed for filing 8 complaint objecting to discharge (December 31, 2007) and the time fixed filing a motion to dismiss 9 case under 1017(e); (iv) in this case the motion to dismiss filed on April 28, 2009 (Docket No. 10 55) was not pending on the expiration of the complaints deadline (December 31, 2007) nor was the 11 same pending on April 9, 2009 when Debtor requested the discharge to be entered in this case 12 (Docket No. 54). Mr. Corredera in his Opposition to the Motion for Reconsideration states the 13 ||following arguments: (i) Debtor has failed to allege the occurrence of any mistake, inadvertence, 14 |Isurprise, or excusable neglect or any other reason that would justify relief; and (ii) Debtor employed 15 ||Fed. R. Civ. P. 60(b) because he failed to act pursuant to the ten (10) day period mandated by Fed. 16 IR. Civ. P. 59(e), thus Debtor’s Motion for Reconsideration is untimely. 17 This court finds that Fed. R. Civ. P. 60(b)(1) is inapplicable to the instant case, given that 18 |IDebtor’s motion for reconsideration is based on a legal error, namely this court’s interpretation and 19 application of Fed. R. Bankr. P. 4004(c)(1)(B) and (D), that should have been brought to this court’s 20 llattention through the mechanism of Fed. R. Civ. P. 59(e). The court also concludes that Fed. R. Civ. 21 |p. 60(b)(6) is inapplicable to the instant case since the same is devoid of “extraordinary 22 | circumstances” that would justify relief and Debtor failed to move the court for relief pursuant to Fed. 23 IR. Civ. P. 59(e). Furthermore, at this point in time the court pursuant to Fed. R. Bankr. P. 24 4004(c)(1)(D) may not enter a discharge order because there is currently pending a motion to dismiss 25 pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code. *6 In view of the foregoing, the Motion for Reconsideration filed by Debtor is hereby denied. This court finds that the Debtor is entitled to a hearing on the merits (evidentiary hearing) to consider

1 | Creditors’ motion to dismiss in which both parties shall bring forth evidence that supports their 2 |jrespective arguments, namely whether Debtor filed its bankruptcy petition in bad faith. An evidentiary 3 |lhearing is scheduled for May 25, 2010 at 2:00 pm. Ten (10) days prior to the hearing the parties shall 4 proposed findings of fact and conclusions of law. Each finding of fact shall refer to either a 5 |document or witness. Copy of the document will be attached to the proposed findings. 6 SO ORDERED. In San Juan, Puerto Rico, this fd: day of March 2010.

ENRIQUE S. LAMOUTTE U. S. Bankruptcy Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 □ 26 27 28 11