IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2 IN RE: 3 CASE NO. 13-08961 INSTITUTO MEDICO DEL NORTE, 4 INC. CHAPTER 11
5 Debtors 6 INSTITUTO MEDICO DEL NORTE,
8 Plaintiff ADV. PROC. 21-00046 9 vs. 10 GREENGIFT CAPITAL, LLC 11 Defendant 12
14 OPINION AND ORDER 15 This adversary proceeding is before the court upon the motion for reconsideration of the 16 Opinion and Order at dkt. #73 filed by plaintiff/counter-defendant Instituto Médico del Norte, 17 Inc. (“Instituto”) (dkt. #78), the opposition filed by Greengift Capital, LLC (“Greengift”) (dkt. 18 #95), and the reply filed by Instituto (dkt. #101). For the reasons stated below, plaintiff/counter- 19 defendant’s motion for reconsideration is denied. 20 This court in the opinion and order entered on May 27, 2022 (dkt. #73) denied Instituto’s 21 motion to dismiss the counterclaim and ordered Instituto to show cause within 21 days why the 22 complaint should not be dismissed for failure to state a claim upon which relief may be granted 23 as the court concluded that the rebus sic stantibus doctrine does not apply to the facts of this case. 24 The court incorporates the explication and reasoning of the May 27, 2022, opinion and order to 25 the instant opinion and order. However, the court highlights some parts of the same in the 26 following paragraphs. 27 1 “The complaint seeks a declaratory judgment on the applicability of the 2 rebus sic stantibus doctrine. The answer to the complaint denies its applicability. 3 The counterclaim seeks a declaratory judgment establishing that the Debtor has 4 breached its obligations under the Loan and is currently in default with the terms 5 of the confirmed Plan of Reorganization; requests that the court orders the 6 immediate payment of all the obligations; and that in the absence of full payment, 7 the court should order the foreclosure of the mortgage notes and the public sale of 8 the property. The creditor also requests the court to order the garnishment and the 9 foreclosure of all other property encumbered by Condado, in absence of payment 10 in full.” 11 . . . 12 “Clearly, both the complaint and the counterclaim center on determining 13 whether the binding effect of the confirmed plan should be set aside under the rebus 14 sic stantibus doctrine. There is no dispute over the fact that Instituto has not 15 complied with the terms of the confirmed Chapter 11 plan as it relates to payments 16 to Greengift. The issue is whether the non-compliance is excused by the rebus sic 17 stantibus doctrine. Therefore, both are inextricably intertwined. Based on this 18 conclusion and the court having found to have post-confirmation jurisdiction on 19 matters affecting the confirmed chapter 11 plan, the motion to dismiss the 20 counterclaim is hereby denied.” 21 . . . 22 “For the foregoing reasons, the Court concludes that the rebus sic stantibus 23 doctrine is inapplicable in the present case and that the Debtor’s allegations are 24 insufficient. Applying the doctrine to this case seems to provoke exactly what the 25 Supreme Court [of Puerto Rico] tried to avoid in Sucn. Talavera, that is, to fail the 26 principle of confidence and the duty of loyalty amongst the parties. The Debtor’s 27 pretension to modify, once again, the terms of the agreement doesn’t acknowledge 1 its reinstated inability to perform under the loan and the claim under the rebus sic 2 stantibus doctrine fails good faith principles.” 4 Instituto 5 Instituto commences the argument by stating the effects of the motion for reconsideration 6 to the time within which to file an appeal under Fed. R. Bankr. P. 8002(b). Instituto prays for relief 7 pursuant to Fed. R. Civ. P. 59(e) to provide “the Honorable Court an opportunity to correct its 8 erroneous determination to deny Plaintiff’s motion to dismiss Condado’s counterclaim and the 9 Court’s erroneous analysis of the elements of the rebus sic stantibus doctrine as applied to the 10 complaint.” Instituto alleges that “[u]nfortunately, the Opinion lacks a legal analysis in relation to 11 its denial of Instituto’s motion to dismiss Condado’s counterclaim. The Court’s determination to 12 deny Instituto’s motion to dismiss is explained in only one paragraph out of the nineteen-page 13 Opinion.” Instituto then proceeds to reargue its legal analysis in support of the applicability of the 14 rebus sic stantibus doctrine. 15 Greengift 16 Greengift initially alleges that Instituto failed to comply with PR LBR 9013-1(c) by not 17 including a response time. The court agrees. However, the court opts to decide the motion for 18 reconsideration on the merits. 19 Greengift argues that the court did not commit errors of law as to subject matter 20 jurisdiction, the court correctly applied the criteria and standards under Fed. R. Civ. P. 12(b)(6), 21 and correctly analyzed the doctrine of rebus sic stantibus and good faith. Greengift provided its 22 legal analysis to the allegations. 23 Instituto 24 Instituto replied to Greengift’s opposition with further legal analysis of its position. 25 Motion for reconsideration standard 26 A motion for reconsideration of an order or judgment is not recognized by the Federal 27 Rules of Civil Procedure. In re Pabon Rodriguez, 233 B.R. 212, 218 (Bankr. D.P.R. 1999) aff'd, 1 2001 WL 958803 (1st Cir. 2001) (citing Van Skiver v. United States, 952 F. 2d 1241, 1243 (10th 2 Cir. 1991)). Federal courts treat such a motion as either a motion to alter or amend judgment under 3 Fed. R. Civ. P. 59(e) or a motion for relief of judgment under Fed. R. Civ. P. 60(b). “These two 4 rules are distinct; they serve different purposes and produce different consequences. Which rule 5 applies depends essentially on the time a motion is served. If a motion is served within fourteen 6 (14) days of the rendition of judgment, the motion ordinarily will fall under Rule 59(e). If the 7 motion is served after that time, it falls under Rule 60(b). Id. 8 In the instant case, Instituto's motion for reconsideration was filed within fourteen (14) 9 days from the date that the dismissal order was entered. Therefore, the motion will be treated as 10 one under Fed. R. Civ. P. 59(e) made applicable here through Fed. R. Bankr. P. 9023. 11 Fed. R. Civ. P. 59(e) authorizes the filing of a written motion to alter or amend a judgment 12 after its entry. The motion must demonstrate the “reason why the court should reconsider its prior 13 decision” and “must set forth facts or law of a strongly convincing nature” to induce the court to 14 reverse its earlier decision. Pabon Rodriguez, 233 B.R. at 218 (citations omitted). The movant 15 “must either clearly establish a manifest error of law or must present newly discovered evidence.” 16 Id. See also; BBVA v. Vazquez (In re Vazquez), 471 B.R. 752, 760 (B.A.P. 1st Cir. 2012), citing 17 Aybar v. Crispin–Reyes, 118 F.3d 10, 16 (1st Cir. 1997).
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IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2 IN RE: 3 CASE NO. 13-08961 INSTITUTO MEDICO DEL NORTE, 4 INC. CHAPTER 11
5 Debtors 6 INSTITUTO MEDICO DEL NORTE,
8 Plaintiff ADV. PROC. 21-00046 9 vs. 10 GREENGIFT CAPITAL, LLC 11 Defendant 12
14 OPINION AND ORDER 15 This adversary proceeding is before the court upon the motion for reconsideration of the 16 Opinion and Order at dkt. #73 filed by plaintiff/counter-defendant Instituto Médico del Norte, 17 Inc. (“Instituto”) (dkt. #78), the opposition filed by Greengift Capital, LLC (“Greengift”) (dkt. 18 #95), and the reply filed by Instituto (dkt. #101). For the reasons stated below, plaintiff/counter- 19 defendant’s motion for reconsideration is denied. 20 This court in the opinion and order entered on May 27, 2022 (dkt. #73) denied Instituto’s 21 motion to dismiss the counterclaim and ordered Instituto to show cause within 21 days why the 22 complaint should not be dismissed for failure to state a claim upon which relief may be granted 23 as the court concluded that the rebus sic stantibus doctrine does not apply to the facts of this case. 24 The court incorporates the explication and reasoning of the May 27, 2022, opinion and order to 25 the instant opinion and order. However, the court highlights some parts of the same in the 26 following paragraphs. 27 1 “The complaint seeks a declaratory judgment on the applicability of the 2 rebus sic stantibus doctrine. The answer to the complaint denies its applicability. 3 The counterclaim seeks a declaratory judgment establishing that the Debtor has 4 breached its obligations under the Loan and is currently in default with the terms 5 of the confirmed Plan of Reorganization; requests that the court orders the 6 immediate payment of all the obligations; and that in the absence of full payment, 7 the court should order the foreclosure of the mortgage notes and the public sale of 8 the property. The creditor also requests the court to order the garnishment and the 9 foreclosure of all other property encumbered by Condado, in absence of payment 10 in full.” 11 . . . 12 “Clearly, both the complaint and the counterclaim center on determining 13 whether the binding effect of the confirmed plan should be set aside under the rebus 14 sic stantibus doctrine. There is no dispute over the fact that Instituto has not 15 complied with the terms of the confirmed Chapter 11 plan as it relates to payments 16 to Greengift. The issue is whether the non-compliance is excused by the rebus sic 17 stantibus doctrine. Therefore, both are inextricably intertwined. Based on this 18 conclusion and the court having found to have post-confirmation jurisdiction on 19 matters affecting the confirmed chapter 11 plan, the motion to dismiss the 20 counterclaim is hereby denied.” 21 . . . 22 “For the foregoing reasons, the Court concludes that the rebus sic stantibus 23 doctrine is inapplicable in the present case and that the Debtor’s allegations are 24 insufficient. Applying the doctrine to this case seems to provoke exactly what the 25 Supreme Court [of Puerto Rico] tried to avoid in Sucn. Talavera, that is, to fail the 26 principle of confidence and the duty of loyalty amongst the parties. The Debtor’s 27 pretension to modify, once again, the terms of the agreement doesn’t acknowledge 1 its reinstated inability to perform under the loan and the claim under the rebus sic 2 stantibus doctrine fails good faith principles.” 4 Instituto 5 Instituto commences the argument by stating the effects of the motion for reconsideration 6 to the time within which to file an appeal under Fed. R. Bankr. P. 8002(b). Instituto prays for relief 7 pursuant to Fed. R. Civ. P. 59(e) to provide “the Honorable Court an opportunity to correct its 8 erroneous determination to deny Plaintiff’s motion to dismiss Condado’s counterclaim and the 9 Court’s erroneous analysis of the elements of the rebus sic stantibus doctrine as applied to the 10 complaint.” Instituto alleges that “[u]nfortunately, the Opinion lacks a legal analysis in relation to 11 its denial of Instituto’s motion to dismiss Condado’s counterclaim. The Court’s determination to 12 deny Instituto’s motion to dismiss is explained in only one paragraph out of the nineteen-page 13 Opinion.” Instituto then proceeds to reargue its legal analysis in support of the applicability of the 14 rebus sic stantibus doctrine. 15 Greengift 16 Greengift initially alleges that Instituto failed to comply with PR LBR 9013-1(c) by not 17 including a response time. The court agrees. However, the court opts to decide the motion for 18 reconsideration on the merits. 19 Greengift argues that the court did not commit errors of law as to subject matter 20 jurisdiction, the court correctly applied the criteria and standards under Fed. R. Civ. P. 12(b)(6), 21 and correctly analyzed the doctrine of rebus sic stantibus and good faith. Greengift provided its 22 legal analysis to the allegations. 23 Instituto 24 Instituto replied to Greengift’s opposition with further legal analysis of its position. 25 Motion for reconsideration standard 26 A motion for reconsideration of an order or judgment is not recognized by the Federal 27 Rules of Civil Procedure. In re Pabon Rodriguez, 233 B.R. 212, 218 (Bankr. D.P.R. 1999) aff'd, 1 2001 WL 958803 (1st Cir. 2001) (citing Van Skiver v. United States, 952 F. 2d 1241, 1243 (10th 2 Cir. 1991)). Federal courts treat such a motion as either a motion to alter or amend judgment under 3 Fed. R. Civ. P. 59(e) or a motion for relief of judgment under Fed. R. Civ. P. 60(b). “These two 4 rules are distinct; they serve different purposes and produce different consequences. Which rule 5 applies depends essentially on the time a motion is served. If a motion is served within fourteen 6 (14) days of the rendition of judgment, the motion ordinarily will fall under Rule 59(e). If the 7 motion is served after that time, it falls under Rule 60(b). Id. 8 In the instant case, Instituto's motion for reconsideration was filed within fourteen (14) 9 days from the date that the dismissal order was entered. Therefore, the motion will be treated as 10 one under Fed. R. Civ. P. 59(e) made applicable here through Fed. R. Bankr. P. 9023. 11 Fed. R. Civ. P. 59(e) authorizes the filing of a written motion to alter or amend a judgment 12 after its entry. The motion must demonstrate the “reason why the court should reconsider its prior 13 decision” and “must set forth facts or law of a strongly convincing nature” to induce the court to 14 reverse its earlier decision. Pabon Rodriguez, 233 B.R. at 218 (citations omitted). The movant 15 “must either clearly establish a manifest error of law or must present newly discovered evidence.” 16 Id. See also; BBVA v. Vazquez (In re Vazquez), 471 B.R. 752, 760 (B.A.P. 1st Cir. 2012), citing 17 Aybar v. Crispin–Reyes, 118 F.3d 10, 16 (1st Cir. 1997). The party cannot use a Rule 59(e) motion 18 to cure its own procedural failures or to introduce new evidence or advance arguments that could 19 and should have been presented originally to the court. Id. Generally, when a party is made aware 20 that a particular issue will be relevant to its case but fails to produce readily available evidence 21 pertaining to that issue, the party may not introduce that evidence to support a Rule 59(e) motion. 22 Id. Neither can the party use this motion to raise novel legal theories that it had the ability to 23 address in first instance. Id. The federal courts have consistently stated that a motion for 24 reconsideration of a previous order is an extraordinary remedy that must be used sparingly because 25 of interest in finality and conservation of scarce judicial resources. Id. In practice, Fed. R. Civ. P. 26 59(e) motions are typically denied because of the narrow purposes for which they are intended. Id. 27 1 Discussion 2 Instituto’s motion reargues and expands its position on the arguments which prompted this 3 court’s May 27, 2022, Opinion and Order. Greengift also answers and opposes the request for 4 reconsideration supporting the court’s analysis. The court is not moved by the legal arguments 5 raised by Instituto and declines to further expand or correct the May 27, 2022, Opinion and Order. 6 As stated at the beginning, “the court incorporates the explication and reasoning of the May 27, 7 2022, order to the instant opinion and order.” The court does not find that there is legal error in its 8 May 27, 2022, Opinion and Order. 9 The court notes that on March 1, 2022, it entered an order in a related adversary proceeding 10 between the same parties, AP 21-00033, wherein Instituto’s complaint was dismissed. Therein, 11 the court stated as a historical background the following: 12 “Ponce Bank’s loan has been transferred since 1984 sequentially to the 13 following financial institutions: Banco Bilbao Vizcaya Argentaria, Oriental Bank, 14 Condado 7, LLC, and now, Greengift. Instituto accepts that there are moneys owed 15 as of December 2020, but limited to $3,854,581.34, and not the $4,544,070.39 16 claimed by Condado 7. In sum, more than 37 years have lapsed since the original 17 loan and there is still a balance owed.” 18 The court concluded that: 19 “Instituto has failed to present to the court evidence or reasonable support 20 for its allegation that the stipulation between the debtor (Instituto) and Oriental 21 Bank (“Oriental”), as well as the confirmed plan, provide that the portion of the 22 credit in the amount of $3,585,388.53 does not generate interest. Moreover, even if 23 the $3,585,388.53 did not generate interest at some point in time, Instituto has failed 24 to provide evidence that it has complied with the payments as provided for in the 25 confirmed plan and the stipulation. Conclusory allegations do not suffice. On the 26 other hand, assuming the truth of all well-plead facts in the amended complaint and 27 giving the benefit of all reasonable inferences therefrom, the court concludes that ] the complaint does not plead a plausible claim as it is based on conclusions not 2 supported by the facts. Plaintiff Instituto has had a reasonable opportunity to fill the 3 factual gap and has been unable to do so.” 4 The judgment of dismissal was appealed to the U. S. District Court on March 7, 202 5 || (Appeal No: 22-cv-01122), and is pending a decision as of this date. 6 The court further notes that on July 1, 2022, Instituto filed a complaint against Greengi 7 || Capital, LLC, AP 22-00046. Instituto alleges that due to the dismissal of Case No. 21-00033, albei 8 ||the dismissal order is pending appeal, Plaintiff was precluded from litigating its rights unde 9 || Article 1220 of the Puerto Rico Civil Code which governs the right to extinguish a litigated credi 10 || that is sold. Instituto further prays the court to determine the extent of Greengift’s secured clai 11 |} pursuant to 11 U.S.C. § 506. 12 The references to the two other related adversary proceedings are meant to accentuate th 13 || litigious history of the repayment by Instituto of its subject loan since 1984 to the present. 15 In view of the foregoing, the motion for reconsideration filed by Instituto is hereby denied, 17 In San Juan, Puerto Rico, this 1* day of August 2022. 18 19 0 unitéd states Bankruptcy Judge 21 22 23 24 25 26 27 -6-