In re: William A. Ruiz Martinez and Ileana Ortiz Santiago

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: July 31, 2014
• Docket: 08-02404
• Status: Unknown

Opinion

IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2 IN RE: CASE NO. 08-02404 (ESL) 3 WILLIAM A. RUIZ MARTINEZ CHAPTER 13 4 ILEANA ORTIZ SANTIAGO

5 Debtors 6 OPINION AND ORDER 7 8 This case is before the court upon creditor Cooperativa de Ahorro y Crédito de Camuy’s 9 (“Cooperativa”) Motion Requesting Order (Docket No. 34) to recover the monies disbursed by 10 the Chapter 13 Trustee (the “Trustee”) to other unsecured creditors pursuant to the confirmed 11 plan dated June 10, 2008, alleging that it mistakenly inverted the secured and unsecured 12 amounts in its Proof of Claim No. 12-1. Also before the court is the Trustee’s Certification 13 Related to Discharge… (Docket No. 35) seeking an order to discharge the Debtors and to close 14 the case. For the reasons stated herein, the Motion Requesting Order filed by Cooperativa 15 (Docket No. 34) is hereby denied and the Certification Related to Discharge… filed by the 16 Trustee (Docket No. 35) is hereby granted. 17 Procedural Background 18 The Debtors filed the instant Chapter 13 bankruptcy petition on April 18, 2008 (Docket 19 No. 1). The Debtors also filed their Chapter 13 Plan dated April 9, 2008 on April 18, 2008 20 (Docket No. 2). The Debtors filed amendments to their Chapter 13 Plan, the last one dated June 21 10, 2008 (the “Plan”, Docket Nos. 10 and 13). Such Plan had a payment schedule of 12 22 payments of $410.00, 18 payments of $450.00, and 30 payments of $540.00 for a plan base of 23 $29,220.00. The Plan provided for the surrender of shares that Debtors had with Cooperativa 24 and the payment in full of an unsecured debt with such entity, account number 20063, in the 25 amount of $20,773.04. See Docket No. 13, p. 2. 26 Parties in interest, including Cooperativa, did not file an objection to the confirmation of 27 the amended Chapter 13 Plan dated June 10, 2008. 1 On July 3, 2008, the Chapter 13 Trustee filed a Favorable Report on Proposed Plan 2 Confirmation under § 1325 (Docket No. 14). On July 18, 2008, the court entered an Order 3 Confirming Plan (Docket No. 16). 4 On August 18, 2008, Cooperativa filed Proof of Claim No. 12-1 in the amount of 5 $26,817.50, of which $19,901.40 was secured with shares and deposits, and $6,916.10 was 6 unsecured. Proof of Claim No. 12-1 also states that the value of the property serving as 7 collateral, meaning and shares and deposits, is $19,901.40. See Claims Register No. 12-1, p. 1. 8 The Debtors completed Plan payments on May of 2013. See Docket No. 42, p. 2, ¶ 4. 9 On July 8, 2013, Cooperativa filed amended Proof of Claim No. 12-2 in the total amount 10 of $26,817.50 of which $19,901.40 was claimed as unsecured and $6,916.10 was claimed as 11 secured. The value of the shares and deposits, which served as collateral, was not included in 12 the face of Proof of Claim No. 12-2. See Claims Register No. 12-2, p. 1. 13 On August 21, 2013, Cooperativa filed a Motion Requesting Order (Docket No. 34) 14 alleging that it had made a clerical mistake on Proof of Claim No. 12-1 to the extent that it 15 inverted the secured and unsecured portions of the total amount of $26,817.50 and that the 16 mistake could be easily verified with the supporting documentation attached thereto. Hence, 17 Cooperativa seeks an order for the Chapter 13 Trustee to recover the moneies paid to other 18 unsecured creditors in order to pay 100% of its claim in Proof of Claim No. 12-2. 19 On August 23, 2013, the Chapter 13 Trustee filed a Positive Standing Chapter 13 20 Trustee’s Certification Related to Discharge pursuant to 11 USC § 1328(a), (g)(1), (h) and 21 Rules 1007(b)(7) & 8 of the FRBP and LBR 3015-2(j) (Docket No. 35) sustaining that the 22 Debtors had complied with the required conditions to be entitled to a Chapter 13 discharge and 23 hence requested that an order be entered discharging them and closing the case after the 24 Trustee’s Final Report was approved. That same day, the Chapter 13 Trustee also filed a Final 25 Report and Account (Docket No. 36) informing, inter alia, that Cooperativa was paid 26 $6,916.10, that is, the total unsecured amount claimed in Proof of Claim No. 12-1. 27 1 On September 13, 2013, Cooperativa filed an Opposition to Trustee[’s] Fnal Report and 2 Account Plan Completed (Docket No. 38) restating its previous arguments seeking an order to 3 recover the moneies paid to other unsecured creditors in order to pay Cooperativa 100% of 4 amended Proof of Claim No. 12-2 before the case is closed. 5 On October 4, 2014, the Chapter 13 Trustee filed a Reply to Opposition to Trustee’s 6 Final Report and Account Plan Completed (Docket No. 42) sustaining that Cooperativa’s Proof 7 of Claim No. 12-1 was deemed allowed as unopposed and became prima facie evidence of the 8 amount owed for the unsecured portion of the debt, which was, $6,916.10, and that this is the 9 document that must be considered by the Chapter 13 Trustee when making disbursements. The 10 Chapter 13 Trustee also contends that it was not until July 8, 2013, after all Plan payments and 11 disbursements were made, that Cooperativa filed its amended Proof of Claim No. 12-2 to 12 correct the unsecured and secured portions of its claimed debt. Hence, the Chapter 13 Trustee 13 concludes that he made correct disbursements, as per the amounts listed in Proof of Claim No. 14 12-1, and that he should not be obligated to make a recovery in order to pay any further 15 amounts to Cooperativa. 16 On October 18, 2013, the Debtors filed their Position as to Objection to Trustee’s Final 17 Report and Account asserting that they proposed a fully funded plan that was confirmed by the 18 court “to pay [Cooperativa], whether six thousand or nineteen thousand, and they fully expect 19 its provisions and the court’s order of confirmation to be enforced and upheld under the law” 20 (Docket No. 43, p. 2, ¶ 5). They conclude that they cannot be “found liable, or otherwise 21 obligated to pay --again-- for this claim” (Docket No. 43, p. 2, ¶ 6). 22 On November 20, 2013, the court held a hearing ruling that a discharge order would be 23 entered as the Debtors had completed the Plan payments and affording the parties thirty (30) 24 days to file legal memoranda on this contested matter. See Docket Nos. 46 (Minute Entry) and 25 55 (Transcript). The court forewarned that it had “not been placed in a position to make a 26 ruling” and that the parties must provide the legal analysis, for the court would not “do it 27 independently” (Docket No. 12, p. 55, line 25, and p. 14, lines 16-18). 1 On December 20, 2013, Cooperativa filed a Memorandum of Law in Support of the 2 Motion Requesting Order (Docket No. 50) acknowledging that it had made a clerical mistake in 3 its Proof of Claim No. 12-1 but arguing that under 11 U.S.C. §§ 704 and 1302, the Chapter 13 4 Trustee has the duty to verify the amounts claimed by creditors in their proofs of claims. 5 Cooperativa also asserts that its Proof of Claim 12-1 does not constitute prima facie evidence of 6 the amount regarding its unsecured and secured portions because the supporting evidence filed 7 therewith demonstrated the correct amounts for each portion (Docket No. 50, p. 7, ¶ 20). 8 On January 2, 2014, Debtors filed their Position Re: Dkt 51 contending that 9 Cooperativa’s mistake is unfortunate but “[a]s to who should take the loss and bear the burden 10 of the mistake concerning claim 12, [their] position is simple: [a]nyone except the Debtors” 11 (Docket No. 53, p. 1, ¶ 3). 12 On January 22, 2014, the Chapter 13 Trustee filed a Reply to Creditor Cooperativa … 13 Memorandum of Law in Support of the Motion Requesting Order and Opposition to Trustee 14 Final Report and Account Plan Completed (Docket No. 54) arguing that the validity of Proof of 15 Claim No. 12-1 was never in question and, therefore, he did not have any reason to object to it, 16 that it was Cooperativa who provided incorrect information on its Proof of Claim No. 12-1 and 17 thus it has the burden of handling the situation, especially considering that Cooperativa had 18 more than enough time to correct this situation before Plan payments were completed. The 19 Chapter 13 Trustee also sustains that other parties should not be penalized because of 20 Cooperativa’s inaction throughout this bankruptcy proceeding. 21 Jurisdiction 22 The court has jurisdiction over the instant contested matter pursuant to 28 U.S.C. §§ 23 157(a) and 1334(b). This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(1) and 24 157(b)(2)(E) and thus, the court has the authority to enter a final order. 25 26 27 1 Legal Analysis and Discussion 2 (A) Proofs of Claims and Amendments 3 Proofs of claims are the basis for distribution in bankruptcy. See 11 U.S.C. §§ 501 and 4 502; William D. Warren, Daniel J. Bussel & David A. Skeel, Jr., Bankruptcy, Foundation Press, 5 9th ed., 2012, p. 78. “The Bankruptcy Code and Bankruptcy Rules govern the requirements for 6 the filing and allowance of proofs of claim.” In re González Aleman, 499 B.R. 236, 239 (Bank. 7 D.P.R. 2013), citing Municipality of Carolina v. Baker González (In re Baker González), 490 8 B.R. 642, 647 (B.A.P. 1st Cir. 2013). Creditors may file proofs of claims in bankruptcy 9 proceedings pursuant to 11 U.S.C. § 501. Filed claims are “deemed allowed, unless a party in 10 interest ... objects.” 11 U.S.C. § 502(a). Disallowed claims will not participate in the case or 11 receive any payment with regards to that claim. See Alan N. Resnick & Henry J. Sommer, 5 12 Collier on Bankruptcy ¶ 502.01 (16th ed. 2012); In re Pick & Save, Inc., 487 B.R. 110, 121 13 (Bankr. D.P.R. 2012). A proof of claim filed in accordance with Federal Rules of Bankruptcy 14 Procedure “constitute[s] prima facie evidence of the validity and amount of the claim”. Fed. R. 15 Bankr. P. 3001(f). 16 “Fed. R. Bankr. P. 3002(a) requires the filing of a proof of claim by unsecured creditors 17 and equity security holders for the claim or interest to be allowed.” In re Alvarado Jurado, 318 18 B.R. 251, 254 (Bankr. D.P.R. 2004). “[T]here is no requirement in the Bankruptcy Code and 19 Bankruptcy Rules that a proof of claim be filed in order to confirm a plan.” In re Alvarado 20 Jurado, 318 B.R. at 257. However, “[i]n order to receive a distribution under a confirmed 21 Chapter 13 plan, even secured creditors must first file a proof of claim or have one filed on their 22 behalf.” In re Baldridge, 232 B.R. 394, 396 (Bankr. N.D. Ind. 1999). “Absent a timely proof of 23 claim, a creditor is not entitled to receive a distribution even though the confirmed plan provides 24 for payments on the claim.” Zich v. Wheeler Wolf Attys. (In re Zich), 291 B.R. 883, 886 25 (Bankr. M.D. Ga. 2003). Also see Hon. Nancy C. Dreher, Hon. Joan N. Feeney and Michael S. 26 Stepan, Esq., Bankruptcy Law Manual, Vol. 1 § 6:6 (2013-1), p. 1063. 27 1 Section 502(b)(9) of the Bankruptcy Code provides that a proof of claim may be 2 disallowed if:

4 [it] is not timely filed, except to the extent tardily filed as permitted under paragraph (1), (2), or (3) of section 726(a) of this title or under the Federal Rules 5 of Bankruptcy Procedure, except that a claim of a governmental unit shall be timely filed if it is filed before 180 days after the date of the order for relief or 6 such later time as the Federal Rules of Bankruptcy Procedure may provide, and except that in a case under chapter 13, a claim of a governmental unit for a tax 7 with respect to a return filed under section 1308 shall be timely if the claim is 8 filed on or before the date that is 60 days after the date on which such return was filed as required. 11 U.S.C. § 502(b)(9). 9 10 Fed. R. Bankr. P. 3002(c) provides that a nongovernmental proof of claim filed in a 11 Chapter 13 case is timely “if it is filed not later than 90 days after the first date set for the 12 meeting of creditors called under 341(a) of the Code.” The claims bar date “does not ‘function 13 merely as procedural gauntlet ... but as an integral part of the reorganization process.’” In re 14 Coover, 2006 WL 4491439 at *5, 2006 Bankr. LEXIS 2401 at *18 (Bankr. D. Kan. 2006), 15 quoting In re Enron Corp., 328 B.R. 75, 86-87 (Bankr. S.D.N.Y. 2005). It “‘serves the 16 important purpose of enabling the parties to a bankruptcy case to identify with reasonable 17 promptness the identity of those making claims against the bankruptcy estate and the general 18 amount of the claims, a necessary step in achieving the goal of successful reorganization.’” In 19 re Keene Corp., 188 B.R. 903, 907 (Bankr. S.D.N.Y. 1995), quoting First Fidelity Bank, NA. v. 20 Hooker Invs., Inc. (In re Hooker Invs., Inc.), 937 F.2d 833, 840 (2nd Cir. 1991)). 21 Creditors may amend their proofs of claims. “Amendments to proofs of claim timely 22 filed are to be freely allowed, whether for purposes of particularizing the amount due under a 23 previously-asserted right to payment, or simply to cure technical defects in the original proof of 24 claim.” Woburn Associates v. Kahn (In re Hemingway Transp. Inc.), 954 F.2d 1, 10 (1st Cir. 25 1992), cert. denied 510 U.S. 914 (1993). Also see In re Crane Rental Co., 341 B.R. 118, 120 26 (Bankr. D. Ma. 2006). The decision to grant or deny an amendment to a timely-filed proof of 27 claim rests with the sound discretion of a bankruptcy judge. See Gens v. Resolution Trust Corp. 1 (In re Gens), 112 F.3d 569, 575 (1st Cir. 1997); In re McLean Industries, Inc., 121 B.R. 704, 708 2 (Bankr. S.D.N.Y. 1990); Committee Notes on Fed. R. Bankr. P. 3001 (2011 Amendment I). 3 “Although amendments to proofs of claim should in the absence of contrary equitable 4 considerations or prejudice to the opposing party be freely permitted, such amendments are not 5 automatic.” In re W.T. Grant Co., 53 B.R. 417, 420 (Bankr. S.D.N.Y. 1985). 6 “[N]either the Bankruptcy Code nor the Bankruptcy Rules directly address amendment 7 of a proof of claim”. In re Enron Creditors Recovery Corp., 370 B.R. 90, 95 (Bankr. S.D.N.Y. 8 2007). Also see George M. Cheever and Ronda Winnecour, The Fine Art of Amending Claims 9 in Chapter 13 Cases, 2010 No. 4 Norton Bankr. L. Adviser 2 (2010), p. 1. In In re Hemingway 10 Transp. Inc., the U.S. Court of Appeals for the First Circuit (the “First Circuit”) established that 11 when deciding whether to permit an amendment to a proof of claim, bankruptcy courts:

12 must scrutinize both the substance of the proposed amendment and the original 13 proof of claim to ensure that the amendment meets three criteria. First, the proposed amendment must not be a veiled attempt to assert a distinctly new right 14 to payment as to which the debtor estate was not fairly alerted by the original proof of claim. Second, the amendment must not result in unfair prejudice to 15 other holders of unsecured claims against the estate. Third, the need to amend must not be the product of bad faith or dilatory tactics on the part of the claimant. 16 954 F.2d at 10 (citations omitted.) 17 In re Gens, supra, involved an objection by the debtor to an original and amended proof 18 of claim filed by an agent of the Resolution Trust Corp. (RTC) which incorrectly identified the 19 creditor, mischaracterized the claim and misidentified the date of the original objection. The 20 debtor in Gens argued that the court erred in allowing the creditor to amend its original proof of 21 claim because RTC failed to file a proof of claim in its own name prior to the bar date and 22 hence, there was no timely proof of claim to be amended. The First Circuit stated that a 23 bankruptcy court’s decision to allow amendment of a proof of claim is reviewed for abuse of 24 discretion under the three criteria established in In re Hemingway Transp. Inc., 954 F.2d at 10. 25 In Gens, the First Circuit did not find “undue prejudice”, “bad faith” or “dilatory motive” by the 26 27 1 creditor because none was alleged and further ruled that “something more than mere creditor 2 disappointment is required to preclude amendment”. 112 F.3d at 575. 3 The Court of Appeals for the Second Circuit has adopted a similar two-prong test and 4 developed additional useful criteria to apply it. See Midland Cogeneration Venture L.P. v. 5 Enron Corp. (In re Enron Corp.), 419 F.3d 115, 133 (2nd Cir. 2005); Integrated Resources, Inc. 6 v. Ameritrust Co. N.A. (In re Integrated Resources, Inc.), 157 B.R. 66, 70 (S.D.N.Y. 1993). 7 Bankruptcy Courts within the Second Circuit “examine each fact within the case and determine 8 whether it would be equitable to allow the amendment”. In re Enron Corp., 419 F.3d at 133. 9 Hence, they “must first look to whether there was timely assertion of a similar claim or demand 10 evidencing an intention to hold the estate liable.” In re Integrated Resources, Inc., 157 B.R. at 11 70 (citations omitted). If there was such a timely assertion, the court then examines each fact 12 within the case and determines whether it would be equitable to allow the amendment. Id. In 13 balancing the equities, the court considers the following equitable factors: (1) undue prejudice 14 to opposing party; (2) bad faith or dilatory behavior on part of the claimant; (3) whether other 15 creditors would receive a windfall were the amendment not allowed; (4) whether other 16 claimants might be harmed or prejudiced; and (5) the justification for the creditor’s inability to 17 file the amended claim at the time the original claim was filed. Id. As the Court of Appeals for 18 the Court of Appeals for the Fifth Circuit noted in In re Kolstad, 928 F.2d 171, 176 (5th Cir. 19 1991), these considerations really come down to two questions: (1) is the creditor attempting to 20 stray beyond the perimeters of its original proof of claim, effectively filing a new claim, and (2) 21 what is the degree and incidence of prejudice caused by the creditor’s delay. 22 Section 1326(c) of the Bankruptcy Code requires the Chapter 13 Trustee to make plan 23 distributions to creditors under the plan. The Chapter 13 Trustee can only make those 24 distributions on account of allowed claims. See Fed. R. Bankr. P. 3021 (“after a plan is 25 confirmed, distribution shall be made to creditors whose clams have been allowed”); In re 26 Dumain, 492 B.R. 140, 143 (Bankr. S.D.N.Y. 2013). 27 1 In the instant case, there is no dispute that Proof of Claim No. 12-1 was timely filed, not 2 objected, and therefore deemed allowed under 11 U.S.C. § 502(a). Consequently, the Chapter 3 13 Trustee made proper disbursements to Cooperativa pursuant to the claim filed under the 4 terms of the confirmed Plan pursuant to 11 U.S.C. § 1326(c) and Fed. R. Bankr. P. 3021. 5 Cooperativa did not object to the confirmation of the Plan or otherwise pleaded receiving less 6 money than it was entitled to under the provisions of the Plan. It was not until July 8, 2013, 7 when all Plan payments had been made, that Cooperativa filed amended Proof of Claim No. 12- 8 2. Then, about a month and half later, on August 21, 2013, Cooperativa sought an order for the 9 Chapter 13 Trustee to recover the money paid to other unsecured creditors in order to pay it 10 100% of its claim as established not in Proof of Claim No. 12-1, but in amended Proof of Claim 11 No. 12-2. Although the Chapter 13 Trustee did not expressly file an objection to the 12 amendment of Cooperativa’s Proof of Claim No. 12-1, he did file a Final Report and Account 13 and moved for the Debtors’ discharge, which opposes Cooperativa’s proposed amendment in 14 Proof of Claim No. 12-2. See Docket Nos. 35 and 36. 15 Cooperativa’s amended Proof of Claim No. 12-2 does not really constitute a new claim, 16 it merely attempts to correct the secured and unsecured portions disclosed in Proof of Claim No. 17 12-1. Hence, the court must consider if Cooperativa’s delay constitutes unfair prejudice to other 18 holders of unsecured claims against the estate and/or if the amendment is product of bad faith or 19 dilatory tactics on the part of Cooperativa. See In re Hemingway Transp. Inc., 954 F.2d at 10. 20 After considering the totality of circumstances and the history of the instant case, 21 contrary to In re Gens, supra, the court concludes that Cooperativa’s amendment in Proof of 22 Claim No. 12-2 and the Motion Requesting Order (Docket No. 34) are untimely and constitute a 23 dilatory tactic that unfairly prejudices other creditors. Granting Cooperativa’s Motion 24 Requesting Order (Docket No. 34) would result in having to recover disbursements made for 25 years to unsecured creditors after the completion of the Plan. Cooperativa also received 26 payments under the Plan for five years without ever objecting to the distributions made by the 27 1 Chapter 13 Trustee. Hence, Cooperativa is precluded from amending its Proof of Claim No. 12- 2 1 at this advanced juncture of the proceedings. 3 (B) Mistakes Made by Creditors in their Proofs of Claims 4 Cooperativa acknowledges that it mistakenly inverted the secured and unsecured 5 portions in its Proof of Claim No. 12-1. However, it contends that the Chapter 13 Trustee had 6 the duty to verify the amounts pursuant to the documents attached thereto and that pursuant to 7 such duty, he must correct mistakes on claim distribution, including recovery of money from 8 creditors. See Docket No. 50. On the other hand, the uncontested sequence of events 9 concerning the contested matter before the court shows that Cooperativa waited from August 10 18, 2008 when it filed Proof of Claim No. 12-1 until July 8, 2013, when it filed Proof of Claim 11 No. 12-2, a month after the Debtors had completed Plan payments, to attempt to correct its own 12 mistake. See Claim Register Nos. 12-1 and 12-2; Docket Nos. 16 and 42, p. 2, ¶ 14. 13 A similar situation arose in In re Taylor, 280 B.R. 711 (Bankr. S.D. Al. 2001), where 14 within three months of completing their 5 year plan under 11 U.S.C. § 502(a), the Chapter 13 15 debtors objected to a mortgage creditor’s amended proof of claim, arguing that the creditor’s 16 predecessor had filed an unsecured claim which would be paid in full under the plan. The 17 creditor argued that the debtors could not propose and confirm a plan which, according to the 18 creditor, violated 11 U.S.C. § 1322(c)(2). Hence, the creditor argued that it could claim 19 additional sums still due. The court first examined the timing of the filing of the creditor’s 20 claim and heavily weighed the fact that the debtors had almost paid the creditor’s claim through 21 their Chapter 13 plan. Id. at 713. The court rejected the creditor’s notion that the plan violated 22 11 U.S.C. § 1322(c)(2) because it provided full payment on all claims, no matter the status or 23 amount. Thus, the court emphasized that what the creditor “was paid depended solely upon 24 [it]” and that “[i]t needed to file a claim which would indicate its status and the amount of its 25 claim”. Id. at 714. The court also weighed the fact that the creditor did not object to the 26 confirmation of the plan and therefore it “had no right to object to its treatment under the plan at 27 this late date, regardless of what the treatment is”. Id. at 715. The court also made clear that 1 “the plan did not prevent [the creditor] from being paid its full claim. Its own proof of claim 2 did.” Id. In addition, the Taylor court determined that “[t]he fault of the problem lie[d] 3 squarely with [the creditor]” and that “[i]t is not the trustee’s or debtors’ responsibility to inform 4 [the creditor] or its counsel as to the proper manner in which to complete a claim form.” Id. at 5 716. The court further awarded $750.00 to Debtor’s counsel for the creditor’s prosecution of its 6 amended claim. Id. at 717. 7 In In re Brown, 2007 Bankr. LEXIS 1544, 2007 WL 1302537 (Bankr. E.D. Va. 2007), 8 the debtors filed an objection to the amendment of a creditor’s timely proof of claim after the 9 bar date. The debtors had surrendered a vehicle to the creditor and the claim was for the 10 deficiency. The primary issue was whether allowing the late-filed amendment would have 11 prejudiced the debtors or other unsecured creditors. Prejudice to unsecured creditors could have 12 resulted because these creditors, having anticipated a 100% recovery due to the sale of certain 13 of the debtors’ real property, would have received only a 65% recovery if the claim were 14 allowed. However, the debtors’ original plan provided for only a 34 percent recovery, and no 15 unsecured creditors objected to that distribution amount. Likewise, no unsecured creditors had 16 objected to the late-filed claim. The court found no prejudice to unsecured creditors. Prejudice 17 to the debtors could have resulted if the Trustee required the debtors to continue making plan 18 payments until the expiration of the commitment period, or pay the unsecured creditors 100%. 19 When the debtors sold their real property, they believed the sale would have paid off their plan 20 at 100% and they would receive their discharge. While such additional payment requirements 21 could have resulted in prejudice to the debtors, the court found no reason for the Trustee to have 22 required the debtors to continue paying when they had already distributed 65% to unsecured 23 creditors. 24 In In re Davis, 2007 Bankr. LEXIS 2469, 2007 WL 2126261 (Bankr. E.D. Va. 2007), a 25 Chapter 13 trustee objected to an amended proof of claim filed by a creditor four years after the 26 original claim was filed. The creditor had filed the original claim as a secured claim. Because 27 the plan proposed to surrender the debtor’s time share, the trustee did not administer the assets, 1 and the creditor was not entitled to any payment from the trustee on the secured claim. 2 Documentation showed that the creditor sold the time share at foreclosure, and the amount of 3 the new claim represented the deficiency upon foreclosure as an unsecured, nonpriority claim. 4 At the time of the amended claim, the trustee had disbursed virtually all plan funds received 5 from the debtor, with the debtor due to make the final plan payment. The trustee objected to the 6 amended claim on the ground that it was untimely, and the court agreed and disallowed the 7 claim. Although under some circumstances a trustee might be required to recover funds paid to 8 creditors for disbursement to an overlooked claimant, the court concluded that it would not be 9 appropriate in this case given the creditor’s four year delay in amending its claim. Hence, the 10 court ruled that allowing the claim after the long delay would cause undue prejudice to the 11 debtor. 12 The court follows and adopts the reasoning in these three cases. The court also 13 incorporates the following reasoning recently stated by the Court of Appeals for the First Circuit 14 in Candelario del Moral v. UBS Fin. Servs. (In re Efron), 746 F.3d 30, 32 (1st Cir. 2014):

16 For over four centuries, persons learned in the law have known that, when litigation is in prospect, vigilance is good and somnolence is bad. Commentators 17 and courts have phrased this sentiment in different ways. See e.g., In re Wood, [1883] 23 Ch.D. 644 at 653 (Eng.) (“It is a reasonable presumption that a man 18 who sleeps upon his rights has not got much right.”); Edmund Wingate, Maxims of Reason (1658) (“Laws come to the assistance of the vigilant, not of the 19 sleepy.”). The lesson to be derived is that “[t]he law ministers to the vigilant not 20 to those who sleep upon perceptible rights.” Puleio v. Vose, 830 F.2d 1197, 1203 (1st Cir. 1987). 21 22 The court therefore concludes that Cooperativa’s mistake in its Proof of Claim No. 12-1 23 can only be attributable to Cooperativa itself. Moreover, its inertia in correcting its mistake for 24 five years must also be attributable to Cooperativa. Consequently, Cooperativa may not amend 25 the claim at the juncture it did, as allowing the same will cause undue prejudice to the Debtors 26 and other creditors. Cooperativa’s debt is deemed fully paid in accordance with Proof of Claim 27 No. 12-1. Upon completion of the Plan payments there is no debt owing to Cooperativa. 1 Conclusion 2 In view of the foregoing, Cooperativa’s amended Proof of Claim No. 12-2 is hereby 3 || disallowed and its Motion Requesting Order (Docket No. 34) is hereby denied. In addition, the 4 || Chapter 13 Trustee’s Certification Related to Discharge... (Docket No. 35) is hereby granted. 5 SO ORDERED. 6 In San Juan, Puerto Rico, this 31“ day of July, 2014. 7

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