IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2
3 IN RE: CASE NO. 19-02177 (MCF)
4 SANDRA MARIA DE FATIMA CHAPTER 13 BARLETTA 5
6 Debtor 7 8 OPINION & ORDER 9 The Debtor, Sandra Maria de Fatima Barletta, moves this court to reconsider an order 10 authorizing Lazaro Diaz de Tuesta to withdraw consigned funds in the amount of $25,000.00. 11 Mr. Diaz de Tuesta was a potential buyer of Debtor’s Condado property who had deposited that 12 amount in relation to the purchase of the property. After he was unsuccessful in purchasing the 13 property, he appeared with counsel before the court to request that the Debtor return the deposit. 14 The Debtor opposed the return of the monies because she understands that this amount was paid 15 in consideration to secure the purchase from her. After careful review of the Debtor’s arguments, 16 we deny the motion for reconsideration. 17 18 Standard for Reconsideration 19 The party moving for the alteration or amendment of a judgment under Rule 59 of the 20 Federal Rules of Civil Procedure, made applicable to bankruptcy proceedings under Fed. R. Bankr. 21 P. 9023, must establish a manifest error of law and fact, present newly discovered evidence or 22 previous unavailable evidence; manifest injustice; or an intervening change in controlling law. 23 Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7 n.2 (1st Cir. 2005).1 A motion under this rule must clearly establish at least one these elements. 24 25 26 1 Pursuant to Fed. R. Civ. P. 59(e), a motion to alter or amend a judgment must be filed no later than 28 days after the 27 entry of the judgment. However, in bankruptcy, Fed. R. Bankr. P. 9023 reduces the period to 14 days after entry of judgment in bankruptcy proceedings. Legal Analysis 1 2 The Debtor points out that the court erred as a matter of law and fact. The Debtor 3 incorrectly avers that the court should have taken all the facts alleged by her as true.2 The Debtor 4 further argues that her contract with Mr. Diaz de Tuesta was not an adhesion contract; that the 5 contract was not an unilateral contract that is not covered under Article 358(c) of the Puerto Rico 6 Civil Code of 2020; that the ambiguous language in the contract cannot be used to make 7 unreasonable presumptions as to her; that the court erred in applying rules of contract 8 construction; and that the Debtor did not breach the contract with Mr. Diaz de Tuesta. 9 Mr. Diaz de Tuesta opposes the motion for reconsideration because he believes that the 10 Debtor’s legal arguments are misleading to the court; that certain factual matters brought up by 11 the Debtor are irrelevant to solving the issue at hand; that the Debtor is abusing the judicial process 12 by trying to keep the deposit when she has already sold the property to someone else; and requests 13 that this court find that the Debtor’s conduct is bad faith, thus she should bear his legal expenses. 14 The court does not agree with the Debtor. The Puerto Rico Supreme Court has long 15 determined that in an option contract, ambiguous provisions are interpreted against the party that 16 was in the position to place the greater number of onerous conditions. Cooperativa la Sagrada 17 Familia v. Castillo Sánchez, 7 P.R. Offic. Trans. 449 (1978), 107 D.P.R. 405 (1978). This fifty- 18 four-year-old case regarded the purchase sale of a lot of land, where the plaintiff credit union 19 wanted to build its headquarters. Id. Mr. Castillo Sanchez was the seller of the lot of land and 20 subscribed a purchase option contract with the credit union. Id. at 449-451. Pursuant to the 21 agreement, the lot would be sold for $80,000.00 of which the credit union paid pursuant to the 22 option contract $19,000.00 in legal tender and $11,000.00 in a check. Id. at 450-451. These 23 amounts were to be applied to the agreed purchase price. Id. The parties also convened that the 24 purchase sale deed would be executed upon the segregation of the lot that the credit union wanted 25 to purchase. Id. 26
27 2 Under Fed. R. Civ. P. 56, made applicable to bankruptcy under Fed. R. Bankr. P. 7056, the court does not need to take the statements of uncontested facts as true. This standard proposed by the Debtor is proper for Fed. R. Civ. P. 1 The credit union ultimately opted not to buy the lot and requested its deposit back because 2 Mr. Castillo Sanchez did not change the zoning of the lot for commercial use. Id. at 452. Litigation 3 ensued and the controversy arrived at the Puerto Rico Supreme Court. In analyzing the 4 controversy, the Puerto Rico Supreme Court observed that it was obvious that the credit union 5 wanted to establish its headquarters in the lot and that maintaining the lot classified for residential 6 use would prevent the credit union from doing business in the property. Id. at 453-454. Mr. 7 Castillo Sanchez relied on the language of the option contract to allege that he had no 8 responsibility to change the zoning of the lot. Id. at 455. The Puerto Rico Supreme Court resolved 9 the controversy in favor of the credit union because it found the option contract to be void. Id. at 10 461. The Supreme Court also noted that Mr. Castillo Sanchez could have been precluded from 11 making the credit union comply with the option contract because the document was drafted solely 12 by him. Id. at 462. Thus, when an ambiguous contract is drafted exclusively by one party, it will 13 be interpreted in favor of the non-drafting party.3 This observation was made by interpreting 14 Article 1240 of the Puerto Rico Civil Code of 1930.4 31 L.P.R.A. 3478 (repealed). 15 Article 1240 of the previous civil code was incorporated in Article 358 of the Puerto Rico 16 Civil Code of 2020. 31 L.P.R.A. § 6346. Mr. Diaz de Tuesta correctly points out in his opposition 17 to the motion for reconsideration that Article 358(b) of the Puerto Rico Civil Code of 2020 is 18 applicable to this controversy because it helps solve the issue of ambiguity in favor of the greatest 19 proportionality of interest. Docket No. 233 at 3. Mr. Diaz de Tuesta argues that the concept of 20 “greatest proportionality of interest” found in the Civil Code of 2020 was phrased as “greatest 21 reciprocity of interest” in the Puerto Rico Civil Code of 1930. Id. He explains that this means that 22 doubts regarding the contract language used should be solved in a way that causes minimum 23 24
25 3 At the beginning of the opinion, the Puerto Rico Supreme Court summarizes the contract doctrines applied in the case. The section numbered eleven discusses "contract of option" and reads: "[w]hen a contract of promise to sell is 26 drafted by the seller in his own way and without the participation of the purchaser, a court should construe its text in the manner that is less favorable to the party that was in a position to impose the greater number of 27 onerous conditions"(emphasis ours). Cooperativa La Sagrada Familia, 7 P.R. Offic. Trans. at 449. 4 Article 1240 of the Puerto Rico Civil Code of 1930 read: “[t]he interpretation of obscure stipulations of a contract 1 effect, among all other possible effects. Id. As such, Mr. Diaz de Tuesta states that allowing the 2 Debtor to keep the $25,000.00 is not a minimum effect. Id.
Free access — add to your briefcase to read the full text and ask questions with AI
IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2
3 IN RE: CASE NO. 19-02177 (MCF)
4 SANDRA MARIA DE FATIMA CHAPTER 13 BARLETTA 5
6 Debtor 7 8 OPINION & ORDER 9 The Debtor, Sandra Maria de Fatima Barletta, moves this court to reconsider an order 10 authorizing Lazaro Diaz de Tuesta to withdraw consigned funds in the amount of $25,000.00. 11 Mr. Diaz de Tuesta was a potential buyer of Debtor’s Condado property who had deposited that 12 amount in relation to the purchase of the property. After he was unsuccessful in purchasing the 13 property, he appeared with counsel before the court to request that the Debtor return the deposit. 14 The Debtor opposed the return of the monies because she understands that this amount was paid 15 in consideration to secure the purchase from her. After careful review of the Debtor’s arguments, 16 we deny the motion for reconsideration. 17 18 Standard for Reconsideration 19 The party moving for the alteration or amendment of a judgment under Rule 59 of the 20 Federal Rules of Civil Procedure, made applicable to bankruptcy proceedings under Fed. R. Bankr. 21 P. 9023, must establish a manifest error of law and fact, present newly discovered evidence or 22 previous unavailable evidence; manifest injustice; or an intervening change in controlling law. 23 Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7 n.2 (1st Cir. 2005).1 A motion under this rule must clearly establish at least one these elements. 24 25 26 1 Pursuant to Fed. R. Civ. P. 59(e), a motion to alter or amend a judgment must be filed no later than 28 days after the 27 entry of the judgment. However, in bankruptcy, Fed. R. Bankr. P. 9023 reduces the period to 14 days after entry of judgment in bankruptcy proceedings. Legal Analysis 1 2 The Debtor points out that the court erred as a matter of law and fact. The Debtor 3 incorrectly avers that the court should have taken all the facts alleged by her as true.2 The Debtor 4 further argues that her contract with Mr. Diaz de Tuesta was not an adhesion contract; that the 5 contract was not an unilateral contract that is not covered under Article 358(c) of the Puerto Rico 6 Civil Code of 2020; that the ambiguous language in the contract cannot be used to make 7 unreasonable presumptions as to her; that the court erred in applying rules of contract 8 construction; and that the Debtor did not breach the contract with Mr. Diaz de Tuesta. 9 Mr. Diaz de Tuesta opposes the motion for reconsideration because he believes that the 10 Debtor’s legal arguments are misleading to the court; that certain factual matters brought up by 11 the Debtor are irrelevant to solving the issue at hand; that the Debtor is abusing the judicial process 12 by trying to keep the deposit when she has already sold the property to someone else; and requests 13 that this court find that the Debtor’s conduct is bad faith, thus she should bear his legal expenses. 14 The court does not agree with the Debtor. The Puerto Rico Supreme Court has long 15 determined that in an option contract, ambiguous provisions are interpreted against the party that 16 was in the position to place the greater number of onerous conditions. Cooperativa la Sagrada 17 Familia v. Castillo Sánchez, 7 P.R. Offic. Trans. 449 (1978), 107 D.P.R. 405 (1978). This fifty- 18 four-year-old case regarded the purchase sale of a lot of land, where the plaintiff credit union 19 wanted to build its headquarters. Id. Mr. Castillo Sanchez was the seller of the lot of land and 20 subscribed a purchase option contract with the credit union. Id. at 449-451. Pursuant to the 21 agreement, the lot would be sold for $80,000.00 of which the credit union paid pursuant to the 22 option contract $19,000.00 in legal tender and $11,000.00 in a check. Id. at 450-451. These 23 amounts were to be applied to the agreed purchase price. Id. The parties also convened that the 24 purchase sale deed would be executed upon the segregation of the lot that the credit union wanted 25 to purchase. Id. 26
27 2 Under Fed. R. Civ. P. 56, made applicable to bankruptcy under Fed. R. Bankr. P. 7056, the court does not need to take the statements of uncontested facts as true. This standard proposed by the Debtor is proper for Fed. R. Civ. P. 1 The credit union ultimately opted not to buy the lot and requested its deposit back because 2 Mr. Castillo Sanchez did not change the zoning of the lot for commercial use. Id. at 452. Litigation 3 ensued and the controversy arrived at the Puerto Rico Supreme Court. In analyzing the 4 controversy, the Puerto Rico Supreme Court observed that it was obvious that the credit union 5 wanted to establish its headquarters in the lot and that maintaining the lot classified for residential 6 use would prevent the credit union from doing business in the property. Id. at 453-454. Mr. 7 Castillo Sanchez relied on the language of the option contract to allege that he had no 8 responsibility to change the zoning of the lot. Id. at 455. The Puerto Rico Supreme Court resolved 9 the controversy in favor of the credit union because it found the option contract to be void. Id. at 10 461. The Supreme Court also noted that Mr. Castillo Sanchez could have been precluded from 11 making the credit union comply with the option contract because the document was drafted solely 12 by him. Id. at 462. Thus, when an ambiguous contract is drafted exclusively by one party, it will 13 be interpreted in favor of the non-drafting party.3 This observation was made by interpreting 14 Article 1240 of the Puerto Rico Civil Code of 1930.4 31 L.P.R.A. 3478 (repealed). 15 Article 1240 of the previous civil code was incorporated in Article 358 of the Puerto Rico 16 Civil Code of 2020. 31 L.P.R.A. § 6346. Mr. Diaz de Tuesta correctly points out in his opposition 17 to the motion for reconsideration that Article 358(b) of the Puerto Rico Civil Code of 2020 is 18 applicable to this controversy because it helps solve the issue of ambiguity in favor of the greatest 19 proportionality of interest. Docket No. 233 at 3. Mr. Diaz de Tuesta argues that the concept of 20 “greatest proportionality of interest” found in the Civil Code of 2020 was phrased as “greatest 21 reciprocity of interest” in the Puerto Rico Civil Code of 1930. Id. He explains that this means that 22 doubts regarding the contract language used should be solved in a way that causes minimum 23 24
25 3 At the beginning of the opinion, the Puerto Rico Supreme Court summarizes the contract doctrines applied in the case. The section numbered eleven discusses "contract of option" and reads: "[w]hen a contract of promise to sell is 26 drafted by the seller in his own way and without the participation of the purchaser, a court should construe its text in the manner that is less favorable to the party that was in a position to impose the greater number of 27 onerous conditions"(emphasis ours). Cooperativa La Sagrada Familia, 7 P.R. Offic. Trans. at 449. 4 Article 1240 of the Puerto Rico Civil Code of 1930 read: “[t]he interpretation of obscure stipulations of a contract 1 effect, among all other possible effects. Id. As such, Mr. Diaz de Tuesta states that allowing the 2 Debtor to keep the $25,000.00 is not a minimum effect. Id. 3 A bankruptcy decision in this district has referred to this concept and explained that it is 4 unreasonable that the solution to a doubt in a contract be the application of the maximum effect, 5 because it could result in a maximum error. In re Empresas Omajede, Inc., 537 B.R. 63, 97 & 6 n.22 (Bankr. D.P.R. 2015). As such, courts must look to the minimum effect. Id. 7 In the instant case, the court was notified of the proposed sale to Mr. Diaz de Tuesta on 8 September 8, 2021, at Docket No. 130. A review of the notice of private sale filed by the Debtor 9 shows that she informed the court that she had engaged in the sale of her Condado property and 10 that she had received an advance from the buyer. Docket No. 130 at 2. The motion also included 11 the option agreement. Id. at 8-13. By inspecting it, we once again arrive at the ambiguous 12 language of the option period in paragraph one (1). Id. at 8. We need not repeat our previous 13 analysis regarding this matter. One thing is clear; this agreement was a template solely drafted by 14 the seller’s side and used to expedite the approval of the sale of the property. The Debtor admits 15 that at that point in time she had been two years under bankruptcy protection and had not been 16 able to confirm a chapter 13 plan. Docket No. 231 at 5. It is noteworthy that she sold the property 17 for a higher price than that offered to Mr. Diaz de Tuesta. As such, Mr. Diaz de Tuesta is the party 18 that is left hung out to dry. 19 The court cannot endorse the Debtor’s theory, that because Mr. Diaz de Tuesta gave the 20 $25,000.00 in her name in consideration for the option agreement and to be applied to the 21 purchase price, she gets to keep the funds. Her purpose for filing bankruptcy was to reorganize 22 her finances and pay her debts under applicable bankruptcy law. To this end, she ultimately 23 decided to sell her Condado property, which she achieved. The Debtor cannot expect to profit 24 from a misunderstanding. She could only keep the $25,000.00 if the contract had been clear as to 25 what would occur if the potential buyer did not go through with the sale. The Debtor has reaped 26 from a higher sale price and now she wants to keep the deposit from the previous lower priced 27 offer. To agree with the Debtor would be to grant her the maximum effect, which would be 1 || contrary to the case law in this district. Puerto Rico law is clear; ambiguity cannot benefit the 2 || party that solely typed the agreement. Cooperativa la Sagrada Familia, 7 P.R. Offic. Trans. at 449 3 || & 462. 4 There is no relevant factual issue in the present controversy that precludes us from 5 || granting summary judgment in favor of Mr. Diaz de Tuesta. Regarding Mr. Diaz de Tuesta’s 6 || request for a finding of bad faith and imposition of costs and attorney fees, he may file a separate 7 || motion requesting this remedy with a legal memorandum in accordance with the applicable rules. 8 9 Conclusion 10 11 The motion for reconsideration filed by the Debtor (Docket No. 231) is denied because 12 || there is no error of fact and law and as such, Mr. Diaz de Tuesta is authorized to withdraw the 13 || consigned funds in the amount of $25,000.00. 14 15 IT IS SO ORDERED. 16 In San Juan, Puerto Rico, this 15th day of August, 2022. M7 * I MY .hclue cb Cobar MILDRED CABAN FLORES 19 United States Bankruptcy Judge 20 21 22 23 24 25 26 27