In re: Teresa Guillen Lugo v. Hector Luis Baez Rivera; Nancy Casanova Vazquez; Ileana Fontanez Fuentes, Esq; Insurance Companies X, Y or Z

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: November 17, 2017
• Docket: 14-00175
• Status: Unknown

Opinion

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

2 IN RE: CASE NO. 12-05293 (ESL) 3 TERESA GUILLEN LUGO CHAPTER 13 4 Debtor 5 ADV. PROC. NO. 14-00175 (ESL) 6 TERESA GUILLEN LUGO

7 Plaintiff

8 v.

9 HECTOR LUIS BAEZ RIVERA; 10 NANCY CASANOVA VAZQUEZ; ILEANA FONTANEZ FUENTES, 11 ESQ; INSURANCE COMPANIES X, Y OR Z 12 Defendants 13

15 OPINION AND ORDER 16 17 The instant adversary proceeding was filed by the Debtor/Plaintiff against the 18 Creditors/Defendants alleging that the Defendants violated the automatic stay provisions of 11 19 U.S.C. §362(a)(2) and (6). The adversary proceeding is before the court upon Plaintiff’s Motion 20 for Partial Summary Judgement and Memorandum of Law in Support Thereof (Docket No. 30 21 22 and Docket No. 31) and Defendants’ Memorandum of Law in Support of Their Opposition to 23 Plaintiff’s Motion for Summary Judgment and in Support of Defendants’ Cross Motion for 24 Summary Judgment (Docket No. 48). In addition, there is the Reply to Defendants’ Opposition to 25 Motion for Partial Summary Judgment (Docket No. 59) and Defendants’ Supplement to Motion 26 in Opposition to Summary Judgment and Request that Adversary Proceeding be Dismissed 27 (Docket No. 84) and the Plaintiff’s Reply to Defendants’ Supplement to Opposition to Motion for 1 Partial Summary Judgment (Docket No. 88). 2 3 Jurisdiction 4 The court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core 5 proceeding pursuant to 28 U.S.C. §157(b)(1) and (b)(2). Venue of this proceeding is proper under 6 28 U.S.C. §§ 1408 and 1409. 7 Procedural Background 8 9 On July 17, 2014, the Debtor/Plaintiff filed the instant adversary proceeding alleging that 10 the Creditors/Defendants and defendant Ileana Fontanez Fuentes violated the automatic stay 11 provisions against the Debtor and the Guillén-Fernández conjugal partnership by continuing to 12 make collection efforts as to the conjugal partnership’s property. On September 22, 2014, the 13 Defendants filed their Answer to the Complaint (Docket No. 15). On November 21, 2014, a 14 preliminary pretrial hearing was held in which the court granted the parties sixty (60) days to file 15 16 a settlement agreement and the pretrial hearing was continued without a date (Docket No. 20). 17 On March 17, 2015, the Debtor filed a Motion for Extension of the Case Management 18 Deadline to File Dispositive and Pre-Trial Motions (Docket No. 22) and the same was granted 19 on March 23, 2015 (Docket No. 23). On April 2, 2015, the Debtor filed a Motion for Extension 20 of Time to Answer Interrogatories and for Extension of Case Management Deadline to File 21 Dispositive and Pre-Trial Motions (Docket No. 25) and the court granted the same on April 9, 22 23 2015 (Docket No. 27). 24 On April 13, 2015, the Debtor/Plaintiff filed a Motion for Partial Summary Judgment and 25 Memorandum of Law in Support Thereof contending that the Defendants violated the automatic 26 stay provisions pursuant to 11 U.S.C. §362(a)(6) premised upon the following arguments: (i) the 27 conjugal partnership’s property is protected by the automatic stay; (ii) “[t]he inevitable conclusion is that where one spouse files bankruptcy in Puerto Rico, all th[e] debtor’s property as well as the 1 community property becomes property of the estate by operation of §541(a)(2)(A). In re Bobonis 2 3 Lang, 191 B.R. [268, 172 (Bankr. D.P.R. 1995)];” and (iii) “[t]he continuance of judicial 4 proceedings constituted a direct and continuous threat of garnishment of Guillen’s personal funds 5 and other property, as well as the conjugal partnership’s property. These proceedings were 6 affirmative ‘acts’ to collect or to recover Defendants’ pre-petition claim within the broad intended 7 scope of 11 U.S.C. §362(a)(6). These acts amount to a willful violation of the automatic stay and 8 give rise to an action for actual damages” (Docket No. 30). On April 13, 2015, the Plaintiff filed 9 10 her Statement of Uncontested Facts Pursuant to District Court Local Rule 56(b) in Support of 11 Motion for Summary Judgment (Docket No. 31). 12 On April 21, 2015, the Plaintiff filed a Motion for Extension of to File English 13 Translations of Spanish Language Documents (Docket No. 34) and the same was granted on April 14 22, 2015 (Docket No. 35). On April 27, 2015, the Defendants filed a Motion for Extension of 15 Time to File Opposition to Summary Judgment (Docket No. 37) and the motion for extension of 16 time was granted on April 30, 2015 (Docket No. 38). On May 18, 2015, the Defendants filed a 17 18 second Motion for Extension of Time to File Opposition to Summary Judgment (Docket No. 40) 19 and the court granted said motion for extension of time on May 19, 2015 (Docket No. 41). On 20 May 27, 2015, the Defendants filed a third Motion for Extension of Time to File Opposition to 21 Summary Judgment (Docket No. 43) and the same was granted (Docket No. 45). On May 28, 22 2015, the Plaintiff filed a Motion Submitting English Translations of Spanish Language 23 Documents (Docket No. 44). 24 Subsequently, on June 3, 2015, the Defendants filed their Answer to Plaintiff’s Statement 25 26 of Undisputed Facts in Support of Summary Judgment and Defendant’s Statement of Uncontested 27 Facts in Support of Cross Motion for Summary Judgment (Docket No. 47). Also on June 3, 2015, the Defendants filed their Memorandum of Law in Support of their Opposition to Plaintiff’s 1 Motion for Summary Judgment and in Support of Defendants’ Cross Motion for Summary 2 3 Judgment arguing that they did not violate the automatic stay provisions. (Docket No. 48). 4 On June 10, 2015, the Debtor/Plaintiff filed a Motion Requesting Leave and an Extension 5 to File Reply to Defendant’s Memorandum of Law in Support of Their Opposition to Debtor’s 6 Motion for Summary Judgment (Docket No. 49). The same was granted on June 16, 2015 (Docket 7 No. 52). On June 24, 2015, the Debtor/Plaintiff filed a Motion Requesting an Extension to File 8 Reply to Defendant’s Memorandum of Law in Support of Their Opposition to Debtor’s Motion 9 10 for Summary Judgment (Docket No. 54) and the motion requesting extension was granted on June 11 25, 2015 (Docket No. 56). 12 On July 8, 2015, the Debtor/Plaintiff filed her Reply Memorandum to Defendant’s 13 Opposition to Motion for Summary Judgment. (Docket No. 59). On July 15, 2015, Plaintiff 14 filed her Reply Statement to Defendants’ Response to Uncontested Facts and to Defendants’ 15 Additional Statement of Uncontested Facts (Docket No. 66). 16 On October 16, 2015 a hearing was held in which the court heard oral arguments as to the 17 18 motion for summary judgment and the opposition. The court granted the parties thirty (30) days 19 to file a settlement agreement or otherwise move the court. Plaintiff’s counsel provided an 20 overview of facts leading to the filing of the instant adversary proceeding. Defendants’ counsel 21 argued that documents referenced by plaintiff do not show the entire story. Defendants have filed 22 a proof of claim and do not question the distribution scheme. The Court gave an overview of how 23 it sees the case and invited counsels to discuss settlement. A transcript was requested (Docket No. 24 71). On March 18, 2016, a status hearing was held in which the parties informed the court that 25 26 they had not reached an agreement. The court granted Defendants twenty-one (21) days to 27 supplement the opposition for summary judgment. Plaintiff was granted twenty-one (21) days to 1 reply (Docket No. 82). 2 3 On April 6, 2016, the Defendants filed their Supplement to Motion in Opposition to 4 Summary Judgment and Request that Adversary Proceeding be Dismissed. (Docket No. 84). On 5 April 27, 2016, the Plaintiff filed a Motion for Brief Extension to Respond to Defendants’ 6 Supplement to Opposition to Summary Judgment per Court Order at Docket No. 82 (Docket No. 7 86). The same was granted on May 4, 2016 (Docket No. 87). 8 On May 7, 2016, Plaintiff filed her Reply to Defendants’ Supplement to Opposition to 9 10 Motion for Partial Summary Judgment alleging the following: (i) “Defendants admit they sought 11 execution of judgment against the conjugal partnership property.” “The actual motions filed with 12 the Puerto Rico Court of First Instance specifically allege, “[n]either the community property nor 13 Victor Roberto Fernández have submitted a bankruptcy petition. In fact, Bankruptcy Code does 14 not recognize the community property and requested for the court to continue post-judgment 15 proceedings against all, but Mrs. Teresa Guillen’s property.” See Docket No. 44, Exhibit 5 (state 16 court Order to continue judgment execution proceedings against community property and Victor 17 18 Fernández); (ii) the state court Order which renewed the previous execution motion, included a 19 request for a Mandate of Embargo (Docket Nos. 59, Exhibit 1 & Docket Nos 67, Exhibit 1). It is 20 these proceedings which the Defendants sought to renew against the conjugal partnership property 21 and the private property of Mr. Victor Fernández; (iii) the Defendants moved the state court to 22 continue post-judgment proceedings against property of the estate, the marital residence and all 23 the income producing properties of the spouses, thus violating the automatic stay provisions; See 24 In re Passmore, 156 B.R. 595, 599 (Bankr. E.D. Wis. 1993); In re Diaz Collazo, 524 B.R. 431, 25 26 436 (Bankr. D. P.R. 2015); (iv) “[t]he post-petition Order issued by the Puerto Rico Court for 27 continuation of post-judgment proceedings against the Conjugal Partnership and Mr. Fernández was issued as requested by Defendant. See Docket No. 44, Exhibits 2, 4 and 5. It was said Order 1 which was appealed by the non-filing spouse as a protection from the sought attacks on 2 3 community property and his own property;” and (v) “[i]n deciding to allow post-judgment 4 proceedings against all but Teresa Guillen’s private property (until the Court of Appeals and 5 finally, the Supreme Court corrected said decision), the conjugal partnership and its real and 6 personal property were exposed to actual garnishment by Defendants after this Honorable Court’s 7 stay was in effect” (Docket No. 88). 8 On August 3, 2016, a hearing was held in which counsel for the parties argued their 9 10 respective positions. Moving creditors requested to lift the stay as to Mr. Fernández and his private 11 property because the Supreme Court determined that the stay was in effect until the bankruptcy 12 proceedings conclude or the stay is lifted. Debtor’s counsel alleges that it is a conjugal partnership 13 debt and not of the individuals constituting the conjugal society and that the conjugal partnership 14 is protected under 11 U.S.C. §362(a). The court ordered Debtor’s counsel to submit copy of Court 15 of Appeals of Puerto Rico Judgment dated April 12, 2013 within five (5) days. Thereafter, the 16 matter would be deemed submitted (Docket No. 91). 17 18 Uncontested Facts 19 The parties agree as to the following uncontested material facts (Docket Nos. 31, 47 and 20 66): 21 1. On August 9, 2007, Mr. Héctor Baez Rivera and Nancy Casanova filed a complaint 22 numbered EAC 2007-0500 against Víctor Fernández and Teresa Guillén at the First Instance 23 Court of Caguas, Puerto Rico in which they requested that Víctor and Teresa must comply with 24 a contract, on the alternative they requested that the contract be voided plus the damages caused. 25 26 2. The complaint was filed against Víctor Fernández and his wife Teresa Guillén because 27 they made several misrepresentations and acted with bad faith by stating that a plot of land of 1 2,500 square meters out of 185 “cuerdas” owned by Mr. Víctor Fernández could be segregated 2 3 and sold. 4 3. The First Instance Court of Caguas granted judgment in favor of Héctor Baez and 5 Nancy Casanova on August 16, 2010 in case EAC 2007-0500 and declared that Víctor Fernández 6 and Teresa Guillén acted in bad faith and they deliberately portrayed that the plot of land could 7 be sold but they knew that the zoning of the area was agricultural conservation and therefore the 8 segregation was impossible. 9 10 4. The Puerto Rico Court of Appeals confirmed the Judgment of case EAC 2007-0500 11 and only modified the amount of the Judgment in favor of Nancy Casanova and Héctor Baez to 12 the amount of $216,760.73, Judgment of the PR Court of Appeals KLAN 2010-1453. 13 5. The Judgment in case EAC 2007-500 became final and non-appealable, and the 14 Defendants, Nancy Casanova and Héctor Baez requested the execution of said Judgment. 15 6. On June 11, 2012, the codefendants filed before the Puerto Rico Court of First Instance 16 Court, Caguas Part, a Motion Requesting the Execution of Judgment issued by the court in 17 18 codefendants’ favor. The Motion states that the Judgment execution will serve the purpose of 19 seizing enough property to cover the amount claimed. 20 7. On July 3, 2012, Plaintiff Guillen filed a Chapter 13 bankruptcy petition. On line 21 item #16 of the Statement of Financial Affairs, the Debtor informed to have constituted a conjugal 22 partnership under Puerto Rico law with Mr. Víctor Fernández. 23 8. On Schedule G, Executory Contracts, the Debtor listed several lease agreements of 24 private properties that belong to her husband. 25 26 9. On August 3, 2012, codefendant Héctor Luis Báez, through attorney Felipe Sanabria 27 appeared at the 341 meeting of creditors held in case No. 12-05293. 10. On August 24, 2012, Víctor Fernández, by himself and without mentioning Plaintiff 1 in this case or the conjugal partnership, filed a new case in the Court of First Instance, Caguas 2 3 Part, case number EAC 2012-0275, in which he sought relief from the Judgment rendered in case 4 EAC 2007-0500. 5 11. On September 4, 2012, Víctor Fernández requested that the proceedings in case EAC 6 2007-0500 be stayed. 7 12. After due notice, on September 4, 2012, the Puerto Rico Court of First Instance in 8 Civil Case No. EAC 2007-0500, issued a Resolution staying the proceedings because of 9 10 Plaintiff’s bankruptcy filing. 11 13. All Defendants submitted themselves to the jurisdiction of this court after due notice 12 of the Debtor’s bankruptcy. 13 14. All Defendants had knowledge of the filing of Mrs. Guillen’s bankruptcy petition and 14 of the automatic stay provisions of the Bankruptcy Code. 15 15. On September 18, 2012, the Defendants filed a motion for reconsideration in which 16 they requested that all proceedings should only be stayed as to the Debtor in case 12-05293. 17 18 16. On September 28, 2012, the Plaintiff in this case and Víctor Fernández filed an 19 opposition to the reconsideration. 20 17. On October 1, 2012, Defendants through codefendant Ileana Fontanez, filed a Reply 21 to Opposition to Motion to Reconsider Stay and in said reply Ileana Fontanez specifically stated 22 the request that the Order staying the proceedings be applied only to Mrs. Teresa Guillén which 23 is the only debtor in case 12-05293. 24 25 18. On October 9, 2012, the Puerto Rico Court of First Instance notified an Amended 26 27 Resolution to its September 4, 2012 order, and allowed continuation of garnishment proceedings 1 against Víctor Fernández and the Guillén-Fernández conjugal partnership which property 2 3 comprises the Chapter 13 estate. 4 19. On October 22, 2012, Defendants Baez and Casanova filed a prof of claim before this 5 court in case No. 12-05293. 6 20. On October 29, 2012, Víctor Fernández filed a certiorari petition before the Puerto 7 Rico Court of Appeals in which he sought that the October 9, 2012 Amended Resolution in case 8 EAC 2007-0500 would be reversed. 9 10 21. On November 30, 2012, the codefendants Baez and Casanova filed their answer to the 11 certiorari in which they asserted that Mr. Víctor Fernández was responsible for the debt and that 12 his private property was not covered by Plaintiff’s bankruptcy petition. 13 22. On February 14, 2013, the Puerto Rico Court of Appeals issued a Judgment reversing 14 the lower court’s decision and thus, stayed all proceedings including those against Víctor 15 Fernández’s private property. 16 23. On March 12, 2013, Defendants filed a Motion for Reconsideration to the Court of 17 18 Appeals, requesting the Court of Appeals to reconsider its Judgment, to the effect that said 19 Judgment is modified so that the privately-owned property of Víctor Fernández Ramos is not 20 protected by the bankruptcy estate and therefore the proceeding can continue against Mr. 21 Fernández’s private property. 22 24. On April 12, 2013, the Puerto Rico Appeals Court issued an Amended Judgment, 23 allowing the execution of the Judgment in case EAC 2007-0500 to continue only against Mr. 24 Fernández’s private property, and not against Debtor Guillen or the Conjugal Partnership’s 25 26 property. 27 25. On April 23, 2013, the Puerto Rico Court of Appeals denied Víctor Fernández’s Motion for Reconsideration. 1 2 26. There has been no special counsel appointed in case 12-05293. 3 27. Attorney Primitivo Pagán is not an appointed special counsel or appointed 4 professional in case 12-05293. 5 28. Plaintiff bankruptcy attorney reviewed the documents submitted to the Court of First 6 Instance, Caguas Part and billed for those services. 7 Standard for Motion for Summary Judgment 8 9 Rule 56 of the Federal Rules of Civil Procedure, is applicable to this proceeding by Rule 10 7056 of the Federal Rules of Bankruptcy Procedure. Summary judgment should be entered “if the 11 pleadings, depositions, answers to interrogatories, and admissions on file, together with the 12 affidavits, if any, show that there is no genuine issue as to any material fact and that the moving 13 party is entitled to a judgment as a matter of law.” Fed. R. Bankr. P. 7056; see also, In re 14 Colarusso, 382 F.3d 51 (1st Cir. 2004), citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 15 16 (1986). 17 “The summary-judgment procedure authorized by Rule 56 is a method for promptly 18 disposing of actions in which there is no genuine issue as to any material fact or in which only a 19 question of law is involved.” Wright, Miller & Kane, Federal Practice and Procedure, 3d, Vol 20 10A, § 2712 at 198. “Rule 56 provides the means by which a party may pierce the allegations in 21 the pleadings and obtain relief by introducing outside evidence showing that there are no fact 22 23 issues that need to be tried.” Id. at 202-203. Summary judgment is not a substitute for a trial of 24 disputed facts; the court may only determine whether there are issues to be tried, and it is improper 25 if the existence of a material fact is uncertain. Id. at 205-206. 26 Summary judgment is warranted where, after adequate time for discovery and upon 27 motion, a party fails to make a showing sufficient to establish the existence of an element essential to its case and upon which it carries the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 1 317, 322 (1986). The moving party must “show that there is no genuine issue as to any material 2 3 fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). 4 For there to be a “genuine” issue, facts which are supported by substantial evidence must 5 be in dispute, thereby requiring deference to the finder of fact. Furthermore, the disputed facts 6 must be “material” or determinative of the outcome of the litigation. Hahn v. Sargent, 523 F.2d 7 461, 464 (1st Cir. 1975), cert. denied, 425 U.S. 904 (1976). When considering a petition for 8 summary judgment, the court must view the evidence in the light most favorable to the nonmoving 9 10 party. Poller v. Columbia Broadcasting Systems, Inc., 368 U.S. 464, 473 (1962); Daury v. Smith, 11 842 F.2d 9, 11 (1st Cir. 1988). 12 The moving party invariably bears both the initial as well as the ultimate burden in 13 demonstrating its legal entitlement to summary judgment. Adickes v. Kress & Co., 398 U.S. 144, 14 157 (1970). See also López v. Corporación Azucarera de Puerto Rico, 938 F.2d 1510, 1516 (1st 15 Cir. 1991). It is essential that the moving party explain its reasons for concluding that the record 16 does not contain any genuine issue of material fact in addition to making a showing of support 17 18 for those claims for which it bears the burden of trial. Bias v. Advantage International, Inc., 905 19 F.2d 1558, 1560-61 (D.C. Cir. 1990), cert. denied, 498 U.S. 958 (1990). 20 The moving party cannot prevail if any essential element of its claim or defense requires 21 trial. López, 938 F.2d at 1516. In addition, the moving party is required to demonstrate that there 22 is an absence of evidence supporting the nonmoving party’s case. Celotex, 477 U.S. at 325. See 23 also, Prokey v. Watkins, 942 F.2d 67, 72 (1st Cir. 1991); Daury, 842 F.2d at 11. In its opposition, 24 the nonmoving party must show genuine issues of material facts precluding summary judgment; 25 26 the existence of some factual dispute does not defeat summary judgment. Kennedy v. Josepthal 27 & Co., Inc., 814 F.2d 798, 804 (1st Cir. 1987). See also, Kauffman v. Puerto Rico Telephone Co., 841 F.2d 1169, 1172 (1st Cir. 1988); Hahn, 523 F.2d at 464. A party may not rely upon bare 1 allegations to create a factual dispute but is required to point to specific facts contained in 2 3 affidavits, depositions and other supporting documents which, if established at trial, could lead to 4 a finding for the nonmoving party. Over the Road Drivers, Inc. v. Transport Insurance Co., 637 5 F.2d 816, 818 (1st Cir. 1980). 6 The moving party has the burden to establish that it is entitled to summary judgment; no 7 defense is required where an insufficient showing is made. López, 938 F.2d at 1517. The 8 nonmoving party need only oppose a summary judgment motion once the moving party has met 9 10 its burden. Adickes, 398 U.S. at 159. 11 For the reasons explained below, this court denies the Plaintiff’s Motion for Partial 12 Summary Judgment and grants the Defendants’ Opposition to Motion for Partial Summary 13 Judgment. 14 Plaintiff’s arguments regarding violation of the automatic stay 15 The Debtor argues that the Defendants violated the automatic stay provisions pursuant to 16 11 U.S.C. §362(a)(6) because of the continued judicial proceedings and continued collection 17 18 efforts against the community property which is part of the bankruptcy estate. The particular 19 allegations regarding violations of the automatic stay are as follows: (i) “[i]n a brazen violation 20 of the automatic stay, on September 18, 2012, Defendants filed a Motion for Reconsideration 21 before the Caguas Court demanding that the court continue garnishment proceedings against the 22 Guillen’s conjugal partnership’s property, including Debtor Guillen’s conjugal partnership 23 residence” (Docket No. 30, pg., 7); (ii) “… on October 1, 2012, Defendants through co-defendant 24 Ileana Fontanez, filed a Reply to Opposition to Motion to Reconsider Stay, again seeking 25 26 prosecution of the judgment against the Guillén-Fernández conjugal partnership property. As in 27 the Motion to Reconsider, codefendant Attorney Fontánez clearly contended that the conjugal partnership was not protected by Mrs. Guillen’s bankruptcy filing, and so, garnishment 1 proceedings could proceed as to the conjugal partnership;” (Docket No. 30, pgs. 7-8); and (iii) 2 3 “… on March 12, 2013, Defendant Fontanez continued to violate the Bankruptcy Court automatic 4 stay and submitted another Motion for Reconsideration to the Appeals Court, demanding the 5 annulment of said Court’s Judgment and that said court allow the garnishment of Mr. Fernandez’s 6 and the conjugal partnership’s property;” (Docket No. 30, pg. 9). The Plaintiff alleges that the 7 Defendants willfully violated the automatic stay provisions because they continued collection 8 efforts against the community property. 9 10 The Plaintiff in her Reply Memorandum to Defendant’s Opposition to Motion for 11 Summary Judgment further contends that: (i) “[b]y Defendants’ own admission, they continued 12 garnishment proceedings against the property of the conjugal partnership comprised of Debtor- 13 Plaintiff and Mr. Fernandez. Therefore, it is uncontested that Defendants continued legal action 14 against property of the bankruptcy estate, as is defined in 11 U.S.C. §541(a)(2)(A);” (ii) the post- 15 petition continuance of legal action against the conjugal partnership constitutes a violation of the 16 automatic stay pursuant to 11 U.S.C. §362(a)(2); (iii) as stated in In re Ortiz, 2011 Bankr. Lexis 17 18 4491, *13 (Bankr. D.P.R. 2011), “…any PR court motions for execution of the judgment against 19 conjugal partnership property constituted willful violations of the automatic stay.” That is to say 20 that term ‘action’ as used in 11 U.S.C. §362 is not limited to instances of specific seizure or 21 liquidation of a certain asset by a party after obtaining judgment in its favor, as Defendants seem 22 to contend.” Defendants’ motion in state court for the execution of the judgment against the 23 conjugal partnership property constituted a willful violation of the automatic stay. “The fact that 24 they did not mention a specific property is inconsequential to the fact that they persisted in their 25 26 legal actions against the conjugal property;” (iv) “[t]he fact that their intention was to proceed 27 ‘solely’ against the conjugal partnership is a clear admission of the willful nature of the automatic stay violation;” (v) “…starting on September 18, 2012, Defendants committed a series of acts 1 directed at enforcing the collection of a prepetition debt against the conjugal partnership 2 3 composed by Plaintiff Guillen and her husband, including the request to garnish property; and 4 (vi) “Plaintiff was far from inactive after filing the bankruptcy case, all the time she defended 5 herself from the constant onslaught of legal proceedings, before various state courts, by 6 Defendants’ legal counsel. Thus, the doctrine of laches is not applicable in the present case” 7 (Docket No. 59). 8 Defendants’ arguments regarding alleged violation of the automatic stay 9 10 The Defendants argued that they did not violate the provisions of the automatic stay due 11 to the following: (i) the conjugal partnership is not a debtor in this case pursuant to 11 U.S.C. 12 §101(13) and 101(41), therefore it is not protected by the provisions of the automatic stay; (ii) the 13 conjugal partnership is not protected by the automatic stay because it is not a debtor; (iii) what is 14 protected is Debtor’s interests in community property with her spouse. Defendants did not attempt 15 to enforce the Judgment against any particular property or any interest of the debtor in any 16 community property which may be regarded as “property of the estate.” “Defendants did not have 17 18 an order to sell, execute or dispose of any specific property and have never been in the position 19 to foreclose their Judgment against any property of the estate in bankruptcy;” (iv) “community 20 property” is not tantamount to the “conjugal partnership,” the former refers to the assets of the 21 estate and the latter to the person holding title over such estate. To determine whether a specific 22 property is property of the estate we must delve into state law; (v) “[t]he conflict in this case was 23 created by Plaintiff husband when he requested that ‘all proceedings be stayed since the defendant 24 in case EAC 2007-0500 filed for bankruptcy’ this misled the Caguas Court into staying all 25 26 proceedings including moving forward against private property owned by someone who is not a 27 debtor (Víctor Fernández Ramos);” (vi) Mrs. Teresa Guillén has never been mentioned in any of Defendants’ documents or motions and no process has been directed against her. Defendants have 1 moved against Mr. Víctor Fernández because he is not a debtor; (vii) on March 12, 2012, 2 3 Defendants filed a Reconsideration to the February 25, 2013 Order, requesting that the 4 proceedings against Mr. Víctor Fernández be allowed; (viii) “… Plaintiff’s husband is trying to 5 avoid having to pay the Judgment Defendants obtained against him in case EAC 2007-0500 6 without having to submit himself or his personal property (‘bienes privativos’) to the Bankruptcy 7 Court jurisdiction, nor the jurisdiction of the local court since he alleges that his wife’s automatic 8 stay also protects him; and (ix) Plaintiff waited 22 months after the first alleged violation of the 9 10 automatic stay to file the instant adversary proceeding, thus failing to mitigate damages and 11 incurring in laches and should not be entitled to seek compensation due to her own inaction 12 (Docket No. 48). 13 The Defendants filed a Supplement to Motion in Opposition to Summary Judgment and 14 Request that Adversary Proceeding be Dismissed arguing as follows: (i) Defendants did not take 15 any action against the Debtor or against property of her estate. Therefore, the legal issue is 16 whether the motions filed by Defendants requesting that the state courts determine whether the 17 18 Debtor’s husband and the conjugal partnership were protected by the automatic stay constituted 19 a willful violation of the stay; (ii) given that there is concurrent jurisdiction (state court and 20 bankruptcy court) to determine the extent of the protection afforded by the automatic stay 21 provisions there cannot be a violation of the automatic stay because the Defendants’ only action 22 was to argue the extent and application of the automatic stay; and (iii) therefore, the complaint 23 does not contain any claim upon which relief can be granted and this adversary proceeding should 24 be dismissed pursuant to Fed. R. Bankr. P. 7012 for failure to state a claim upon which relief can 25 26 be granted (Docket No. 84). 27 Discussion – Violation of the Automatic Stay 1 In the instant adversary proceeding the Debtor alleges that the Creditors violated the 2 3 automatic stay pursuant to 11 U.S.C. §362(a)(2) and (6). Sections 362(a)(2) and (6) operate as a 4 stay against the enforcement of any collection act against the debtor or property from the estate. 5 Section 362(a)(2) operates as a stay regarding “…the enforcement, against the debtor or against 6 property of the estate, of a judgment obtained before the commencement of the case under this 7 title.” 11 U.S.C. §362(a)(2). Section 362(a)(6) operates as a stay of “any act to collect, assess, or 8 recover a claim against the debtor that arose before the commencement of the case under this 9 10 title.” 11 U.S.C. §362(a)(6). Thus, the provisions of the automatic stay prohibit a creditor from 11 continuing any action to recover against the “debtor” and/or “property of the estate,” which 12 includes community property. The non-debtor spouse, as an individual, and his or her private 13 property, do not enjoy the protections afforded by the automatic stay or any other provisions of 14 the Bankruptcy Code since he or she did not file for bankruptcy protection. Moreover, the non- 15 debtor spouse’s private property does not constitute property of the bankruptcy estate. 16 The court notes that the Supreme Court of Puerto Rico rendered a Judgment and ordered 17 18 that all the proceedings be stayed until Mrs. Guillen concludes the bankruptcy process or the 19 Bankruptcy Court provides relief from the automatic stay provisions.1 The issue of whether the 20

21 1 In Wiscovitch Rentas v. Marchand Serrano (In re Morales Garcia) 553 B.R. 1, 15-16 (Bankr. D.P.R. 2016), this court stated the following: “To determine whether a ‘proceeding is subject to the automatic stay under section 362(a)(1), many courts 22 have followed the analysis employed in the Third Circuit which is the following:

23 ‘Whether a specific judicial proceeding falls within the scope of the automatic stay must be determined by looking at the proceeding ‘at its inception.’ ‘That determination should not change depending on the particular stage 24 of the litigation at which the filing of the petition in bankruptcy occurs.’ Thus, the dispositive question is whether a proceeding was ‘originally brought against the debtor.’ Maritime Elec. Co. v. United Jersey Bank, 959 F. 2d 1194, 25 1204-1205 (3rd Cir. 1992) (citations omitted). ‘All proceedings in a single case are not lumped together for purposes of automatic stay analysis. Even if the 26 first claim filed in a case was originally brought against the debtor, section 362 does not necessarily stay all other claims in the case. Within a single case, some actions may be stayed, others not. Multiple claim and multiple party 27 litigation must be disaggregated so that particular claims, counterclaims, crossclaims and third-party claims are treated independently when determining which of their respective proceedings are subject to the bankruptcy stay. Thus, within Defendants have willfully violated the automatic stay provisions pursuant to 11 U.S.C. §362(a)(2) 1 and (6) was not before the state court. Thus, the state court has not adjudicated this particular 2 3 legal issue. The issue that was before the Court of First Instance, the Appellate Court and the 4 Supreme Court of Puerto Rico was the extent of the automatic stay provisions and whether the 5 same covered the non-debtor spouse, the private assets of the non-debtor spouse, the conjugal 6 partnership and the community property. 7 The automatic stay in 11 U.S.C. §362(a) is one of the basic protections under the 8 Bankruptcy Code and becomes operative by the filing of the bankruptcy petition. Soares v. 9 10 Brockton Credit Union (In re Soares), 107 F. 3d 969, 971 (1st Cir. 1997). The automatic stay is 11 extremely broad in scope and, "aside from the limited exceptions of subsection (b), applies to 12 almost any type of formal or informal action taken against the debtor or the property of the estate." 13 Alan N. Resnick & Henry J. Sommer, 3 Collier on Bankruptcy ¶ 362.03 (16th ed. 2016). 14 Furthermore, the automatic stay also protects creditors since it prevents the "dismemberment of 15 a debtor's assets by individual creditors levying on the property. This promotes the bankruptcy 16 goal of equality of distribution" Id. The automatic stay provides debtors with one of the 17 18 cornerstone protections under bankruptcy law, giving debtors a "breathing room" from the 19 pressures of their creditors. See In re Soares, 107 F. 3d at 975. Given its utmost importance in the 20 bankruptcy system, courts "must display a certain rigor in reacting to violations of the automatic 21 stay." In re Soares, 107 F. 3d. at 975-976. 22

23 one case, actions against a debtor will be suspended even though closely related claims asserted by the debtor may continue.’ Id. at 1204-1205; see also; Parker v. Bain, 68 F. 3d 1131, 1138 (9th Cir. 1995) (holding a claim originally 24 brought by a person who subsequently filed bankruptcy under chapter 11 was not subject to the automatic stay); Carlson v. Norman, (In re Duncan), 987 F. 2d 490, 491 n. 2 (8th Cir. 1993) (holding that a third-party action instigated 25 by two debtors against a third party was not subject to the automatic stay); Gecy v. Bank of Ozarks (In re Gecy), 510 B.R. 510, 522-523 (Bankr. D.S.C. 2014) (holding that debtor did not prove that defendant creditors violated automatic 26 stay under 11 U.S.C. §362(a) with respect to their actions in a state court lawsuit because the creditors’ actions involved a counterclaim that debtor asserted and were in response to that counterclaim).” 27 Moreover, “[u]nless it is extended by the court, however, as a general rule the stay only 1 protects, by its terms, actions against the debtor, the debtor’s property, or property of the estate. 2 3 It does not, for example, protect nonparties, such as, for example, guarantors of debtor’s debt 4 (except in Chapters 12 and 13 where there is a codebtor stay); officers, directors, or shareholders 5 of a corporate debtor, partners of a partnership that is in bankruptcy (or the reverse); or a nonfiling 6 spouse of a debtor2.” Hon. Joan N. Feeney, Hon. Michael G. Williamson and Michael J. Stepan, 7 Esq., Bankruptcy Law Manual, §7:4 Vol. 1 (5th ed. 2017), pgs. 1531-1532. 8 9 The First Circuit in Laboy v. Doral Mortg. Corp. (In re Laboy), 647 F. 3d 367, 374 (1st 10 Cir. 2011) stated the following regarding whether a violation is deemed “willful:” “[a] violation 11 is ‘willful’ if a ‘creditor’s conduct was intentional (as distinguished from inadvertent), and 12 committed with knowledge of the pendency of the bankruptcy case.’” In re Laboy, 647 F. 3d. at 13 374 citing In re McMullen, 386 F. 3d 320, 330 (1st Cir. 2004). This court in the case of In re Soto 14 Rios, 2009 Bankr. Lexis 2992 (Bankr. D.P.R. 2009) discussed the standard for a willful violation 15 of the automatic under Section 362(k) and stated the following: 16 “Section 362(k)(1) allows an individual to recover actual damages, costs and attorneys' 17 fees, and in appropriate circumstances punitive damages when he or she is injured by a willful violation of the automatic stay. See 11 U.S.C. §362(k)(1). "A willful violation does 18 not require a specific intent to violate the automatic stay. The standard for a willful 19 violation of the automatic stay under §362(h) is met if there is knowledge of the stay and if the Defendant intended the actions which constituted the violation." 3 Fleet Mortg. 20 Group. Inc. v. Kaneb, 196 F. 3d 265, 269 (1st Cir. 1994). "The words 'shall recover' indicate that Congress intended that the award of actual damages, costs and attorneys' fees 21 be mandatory upon a finding of a willful violation of the stay." Heghmann v. Indorf (In re Heghmann), 316 B.R. 395, 405 footnote 9 (B.A.P. 1st Cir.2004) (quoting Ramirez v. 22 Fuselier (In re Ramirez), 183 B.R. 583, 589 (B.A.P. 9th Cir. 1995)); See In re Atamian, 23 344 B.R. 200, 205 (Bankr. D. Mass. 2006); Parker v. Boston Univ. (In re Parker), 334 B.R. 529, 536-537 (Bankr. D. Mass. 2005). Moreover, a good faith belief in a right to 24

25 2 See, e.g., In re Moore, 318 B.R. 679 (Bankr, W.D. Wis. 2004) (community property belonging to debtor and spouse as of commencement of case was protected by stay but not spouse’s separate property). 2.” Hon. Joan N. 26 Feeney, Hon. Michael G. Williamson and Michael J. Stepan, Esq., Bankruptcy Law Manual, §7:4 Vol. 1 (5th ed. 2017), pg. 1533, fn. 13. 27 3 Section 362(k)(1) was previously codified as subsection 362(h) of the Bankruptcy Code. certain property is irrelevant in determining the willfulness in an automatic stay violation. 1 Fleet Mortg. Group Inc. v. Kaneb, 196 F. 3d at 268-269. The burden is on the debtor to prove by a preponderance of the evidence that he suffered damages as a consequence of 2 the violation of the automatic stay. See In re Heghmann, 316 B.R. at 404-405. Under 3 Section 362(k)(1) of the Bankruptcy Code actual damages should only be awarded if there is concrete evidence which supports with reasonable certainty the amount of the 4 award. Id. At 405.” In re Soto Rios, 2009 Bankr. Lexis 2992, *13-14.

5 6 Section 362(a)(2) stays, “the enforcement, against the debtor or against property of the 7 estate, of a judgment obtained before the commencement of the case under this title.” 11 U.S.C. 8 §362(a)(2). “This would include, for example, garnishment, levy, or execution, post judgment 9 attachment, and the pursuit of proceedings supplemental to the entry of judgment.” Hon. Joan N. 10 Feeney, Hon. Michael G. Williamson and Michael J. Stepan, Esq., Bankruptcy Law Manual, §7:6 11 Vol. 1 (5th ed. 2017), pg. 1550. “Also stayed are levy and execution, pursuant to a prepetition 12 judgment, against the property of the estate and against property of the debtor. This stay protects 13 14 exempt assets that cease to be property of the estate and assets acquired after the commencement 15 of the case.” Alan N. Resnick & Henry J. Sommer, 3 Collier on Bankruptcy ¶ 362.03[4] (16th 16 ed. 2016). “In this regard, ‘property of the estate’ is expansively defined to include all legal and 17 equitable interests of the debtor in property as of the commencement of the case.” Id. at 18 ¶362.03[4]. 19 Section 362(a)(6) stays, “any act to collect, assess, or recover a claim against the debtor 20 that arose before the commencement of the case under this title.” 11 U.S.C. §362(a)(6). “This 21 22 provision of the Code may at times overlap with other provisions of §362(a), such as, for example, 23 §362(a)(1) (commencement or continuation of a judicial, administrative, or other action or 24 proceeding against the debtor that was or could have been commenced before the filing of the 25 case), §362(a)(2) (enforcement of a prepetition judgment), or §362(a)(3) (acts to obtain property 26 of or from the estate), but it is much broader.” Hon. Joan N. Feeney, Hon. Michael G. Williamson 27 and Michael J. Stepan, Esq., Bankruptcy Law Manual, §7:10 Vol. 1 (5th ed. 2017), pg. 1582. 1 “Thus, any act taken to collect, assess or recover a prepetition claim against the debtor, whether 2 3 the act is taken against the estate or against the debtor is stayed.” citing Alan N. Resnick & Henry 4 J. Sommer, 3 Collier on Bankruptcy ¶ 362.03[8] (16th ed. 2016). Amongst the acts covered by 5 section 362(a)(6) are actions taken by a creditor to induce debt payment, such as withholding a 6 student’s transcript. Id. at 362.03[8][a]. Some courts have applied a “coercive effects” test which 7 is basically whether a creditor “acts or fails to act, in a coercive manner, with the sole purpose of 8 collecting that debt. This ‘test’ can’t be found in the Code, and situations which it applies will be 9 10 rare, because most act or failures to act have multiple purposes, such as minimizing risk based on 11 creditworthiness.” In re Kuehn, 563 F. 3d 289, 292 (7th Cir. 2009); Eagle v. Big Muddy River 12 Correctional Center/Illinois Dept. of Corrections (In re Eagle), 2011 Bankr. Lexis 2352, *6 13 (Bankr. S.D. Ill. 2011) (“A creditor acts to collect a debt if it acts or fails to act, in a coercive 14 manner, with the sole purpose of collecting that debt”). 15 “Section 362(a)(6) is intended to prevent creditor harassment of the debtor in attempting 16 to collect prepetition debts. The conduct prohibited ranges from that of an informal nature, such 17 18 as by telephone contact or by dunning letters, to more formal judicial and administrative 19 proceedings that are also stayed under subsection (a)(1).” Id. The purpose of section 362(a)(6) is 20 “to benefit a debtor by preventing harassment and frustration of rehabilitation efforts through 21 pursuit by creditors in individual actions.” In re Duke, 79 F. 3d 43, 45 (7th Cir. 1996) citing 22 Matthews v. Rosene, 739 F. 2d 249, 251 (7th Cir. 1984). 23 In the instant case Plaintiff argues that the Defendants violated the automatic stay 24 provisions pursuant to 11 U.S.C. §362(a)(2), (6) because they filed a motion for reconsideration 25 26 on September 18, 2012 requesting the court to continue garnishment proceedings against the 27 Guillen-Fernández conjugal partnership’s property, including the Debtor Guillen’s conjugal 1 partnership residence. 2 3 The court notes that on even date it has entered an opinion and order in the lead bankruptcy 4 case concerning related issues. The court concluded the following: 5 . . . that the provisions of the automatic stay are not extensive to the non-debtor spouse or 6 to his private property. However, the provisions of the automatic stay are extensive to community property pursuant to 11 U.S.C. §541(a)(2). 7 In reaching its conclusion the court differentiates the legal issues in this case, namely, whether the provisions of the automatic stay are extensive to the private property 8 of the non-debtor spouse protecting the same from collection, and whether a creditor is entitled to collect on a community claim (“deuda ganancial”) from the private assets of 9 the non-debtor spouse as a purely state law issue (irrespective of whether one of the 10 spouses has filed for bankruptcy protection). The classification of a debt (whether it is a community debt or a private debt) incurred during marriage affects the way a creditor may 11 collect on the debt in conformity with state law.

12 Prior to the Debtor’s bankruptcy petition filing, the Creditors on June 11, 2012 filed a 13 14 Motion for Execution of Judgment before the state court with the purpose to embargo sufficient 15 property in order to collect the amount of the Judgment (Docket No. 59, pgs. 17-19). The 16 Creditors requested that the proceedings should only be stayed as to the Debtor. The Creditors in 17 their motion specifically stated that the non-debtor spouse did not file for bankruptcy protection 18 and as such the automatic stay does not afford him any protection (Docket No. 31-2). 19 After considering the uncontested material facts and the applicable law, the court finds 20 that the Creditor’s motion for reconsideration did not violate the provisions of the automatic stay 21 22 because they did not request the execution of the Judgment against the Debtor or against the 23 community property, such as the conjugal partnership’s residence. 24 The Debtor also alleges that the Creditors on October 1, 2012 violated the automatic stay 25 provisions when they filed a Reply to Opposition to Motion for Reconsider Stay in which they 26 sought execution of judgment against the conjugal partnership property. In this motion, the 27 Creditors once again requested the same remedy which is that the proceedings should only be 1 stayed as to the Debtor (Docket No. 31-4). Moreover, in said motion the Creditors did not request 2 3 that the execution of the judgment be against community property. Thus, the court concludes that 4 the Creditors’ motion did not violate the provisions of the automatic stay. 5 Lastly, the Debtor alleges that on March 12, 2013, the Defendants violated the provisions 6 of the automatic stay because they submitted another Motion for Reconsideration to the Appeals 7 Court, demanding the annulment of said Court’s Judgment and that said court allow the 8 garnishment of Mr. Fernandez’s and the conjugal partnership’s property. At this juncture, the 9 10 court would like to clarify that the Creditors in their reply brief (“Alegato de los Recurridos”) 11 (Docket No. 31-7) argued that the automatic stay does not protect the non-debtor and as such the 12 proceedings should not be stayed against the non-debtor (and his private assets)4. The Creditors 13 in said motion did not address the conjugal partnership or the community property. The Creditors 14 in the Motion for Reconsideration to the Appellate Court requested that the Judgment be modified 15 to state that the automatic stay provisions are extensive to Mr. Víctor Fernández and the conjugal 16 partnership comprised by the spouses, but not as to the private assets of Mr. Fernández5 (Docket 17 18 19 4 The Creditors argued as follows in the Appellant’s Reply Brief in the Spanish language: 20 “En el presente caso la codemandada Teresa Guillén Lugo presentó una solicitud de quiebra ante el Tribunal 21 Federal y dicho foro expidió una orden de paralización. De acuerdo con la Ley, dicha Orden sólo cubre al deudor que ha sometido ante dicho Tribunal una petición de quiebra. Véase 11 USC §362.

22 El peticionario alega que la quiebra sometida por su esposa le da cubierta a él, por lo que el Tribunal venía obligado a paralizar la ejecución de la sentencia y, en consecuencia, los comparecientes no pueden ejecutar 23 la misma. Si fuera correcto que la petición de quiebras de la señora Guillén Lugo le da cubierta a su esposo, en la petición de quiebras venían obligados a indicar todos los activos que les pertenecen a ambos y no lo 24 hicieron. Los activos que le corresponden al señor Fernández Ramos no surgen de dicha petición y sencillamente no surgen, porque él no es peticionario en dicho proceso” (Docket No. 31-7, pg. 4). 25 The court cites verbatim from the original document in Spanish for clarity purposes. The same applies to all future 26 references in Spanish.

27 5 The Creditors Motion for Reconsideration states as follows in the Spanish language: No. 31-9). The court finds that said motion did not request to enforce the Judgment against any 2 || Specific community property (such as the conjugal residence) or any interest of the Debtor in any 3 || particular type of community property contrary to the Debtor/Plaintiff s allegations. 4 Conclusion 5 In view of the foregoing, the court concludes that the Defendants did not violate the 6 provisions of the automatic stay. Thus, for the foregoing reasons, Plaintiff's motion for partial 4 summary judgment is denied and the Defendants’ opposition to partial summary judgment is 8 ranted. 9 10 IT IS SO ORDERED. 11 In San Juan, Puerto Rico, this 17" day of November 2017. 12 13 14 othe ip ique 5. te United States Bankruptcy Judge 15 16 17 18 19 20 21 22 23 24 AAA “Por lo que respetuosamente se solicita de este Honorable Tribunal que reconsidere su Sentencia, a los efecto 26 de que modifique la misma para que se haga constar que aun cuando la paralizaci6n emitida por el Tribuna de Quiebras cubre al Sr. Victor Roberto Fernandez Ramos y a la Sociedad Legal de Gananciales compuest 27 por ellos, los bienes privativos del codemandado Fernandez Ramos responden a sus acreedores, los aqu comparecientes” (Docket No. 31-9, pg. 4). -23-