IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2 IN RE: LEAD CASE NO. 12-10094 (MCF) 3 IVETTE MELENDEZ QUINONES CHAPTER 13 4 Debtor 5 ADV. PROC. NO. 15-00255 (MCF) 6 IVETTE MELENDEZ QUINONES
7 Plaintiff
8 vs.
9 CITIMORTGAGE, INC. 10 Defendant 11 JOSE R. CARRION 12
Chapter 13 Trustee 13 OPINION AND ORDER 14 The issue before the court is whether plaintiff’s ex-husband co-signatory to a 15 loan agreement and mortgage deed is a required party under Rule 19 of the Federal Rules of 16 Civil Procedure.1 Defendant CitiMortgage, Inc. filed a motion to dismiss the adversary 17 complaint for failure to join a required party, pursuant to Fed. R. Civ. P. 12(b)(7)2 or in the 18 alternative to request that joinder be ordered (Docket No. 15). Plaintiff Ivette Melendez 19 Quinones filed an opposition motion (Docket No. 16) and CitiMortgage filed a reply motion 20 (Docket No. 17). For the reasons stated below, the court denies the motion to dismiss without 21 prejudice and orders that within twenty-eight (28) days plaintiff join her ex-husband, Joel 22 Fernandez Quinones Pabon, to the complaint as a required party. 23 Plaintiff filed an adversary complaint against CitiMortgage to obtain a 24 declaratory judgment that states: 1) CitiMortgage is an unsecured creditor, 2) CitiMortgage has 25 26 1 Rule 19 of the Federal Rules of Civil Procedure is made applicable by Rule 7019 of the Federal Rules of 27 Bankruptcy Procedure with a few exceptions that are not pertinent in this case. 2 Rule 12(b)(7) of the Federal Rules of Civil Procedure is made applicable by Rule 7012(b) of the Federal Rules of 1 no interest on plaintiff’s property or estate property, and 3) CitiMortgage’s recorded mortgage 2 lien is null. 3 The allegations of the complaint aver that prior to the filing of the petition 4 plaintiff and Joel F. Quinones Pabon (now ex-husband) purchased the Rio Grande property and 5 their title was registered in the property registry. Two years after the purchase, they entered into 6 a loan transaction with First Equity Mortgage Bankers, Inc. that was guaranteed by a mortgage 7 over their real property. Together with the loan, both parties executed a mortgage deed. 8 Sometime after, defendant CitiMortgage acquired the rights to the mortgage. The mortgage 9 deed was presented by fax to the property registry for recordation. A few years later, they filed 10 a joint voluntary petition under chapter 7 and obtained a discharge. Another bankruptcy case 11 was filed by plaintiff under chapter 13 but was later dismissed. In 2010, the property registry 12 notified the notary that the mortgage deed could not be recorded over the property and that the 13 defect had to be corrected by November 2, 2010. Such correction was not made, resulting in the 14 inability to record the mortgage deed in the property registry. Plaintiff avers that she is the sole 15 owner of the property by virtue of a divorce decree and/or divorce agreement. 16 Plaintiff filed a third bankruptcy case wherein she scheduled CitiMortgage as an 17 unsecured creditor. After the chapter 13 plan was confirmed and plaintiff’s objection to 18 CitiMortgage’s secured proof of claim was granted, CitiMortgage produced a property 19 certification reflecting that the mortgage deed was recorded in the property registry after a 20 hearing in the legal case was held on June 8, 2015. 21 CitiMortgage argues in its Rule 12(b)(7) motion that the adversary complaint 22 does not include plaintiff’s ex-husband, Joel Fernando Quinones Pabón, who is needed in the 23 litigation because he signed, along with plaintiff, a deed of first mortgage over a real property 24 located in Rio Grande and that he is a co-borrower. Any determination in the case will have a 25 direct impact on the ex-husband, as CitiMortgage’s co-borrower. 26 27 1 Plaintiff responds that she is the sole owner of the subject property by virtue of a 2 divorce decree and/or divorce agreement and both plaintiff and her ex-husband received a 3 chapter 7 discharge resulting in their discharge of their obligations to CitiMortgage. 4 CitiMortgage replies that no documentary evidence was submitted to substantiate 5 that the ex-husband was divested of any interest in the property. 6 A Rule 12(b)(7) motion to dismiss serves to challenge the plaintiff’s failure to 7 join a required party under Rule 19. The purpose of Rule 19 is to protect the legitimate interests 8 of an absent party and to dissuade repetitive litigation. Askew v. Sheriff of Cook Cty., 568 F.3d 9 632, 634 (7th Cir. 2009). Rule 19(a) sets for the test to ascertain when a person is required, to 10 wit: (1) A person who is subject to service of process and whose 11 joinder will not deprive the court of subject-matter jurisdiction 12 must be joined as a party if: (A) in that person’s absence, the court cannot accord 13 complete relief among existing parties; or (B) that person claims an interest relating to the subject of 14 the action and is so situated that disposing of the action in the person’s absence may: 15 (i) as a practical matter impair or impede the 16 person’s ability to protect the interest; or (ii) leave an existing party subject to a 17 substantial risk of incurring double, multiple, or otherwise inconsistent 18 obligations because of the interest. 19 Fed. R. Civ. P. 19(a)(1). 20 The court’s determination is flexible under Rule 19. Picciotto v. Continental 21 Cas. Co., 512 F.3d 9, 14-15 (1st Cir. 2008). A court may go outside the pleadings and look to 22 extrinsic evidence such as affidavits or documents in ruling on Rule 12(b)(7) motion. Davis 23 Cos. v. Emerald Casino, Inc., 268 F.3d 477, 480 n.4 (7th Cir. 2001). 24 In applying the test set forth in Rule 19, the court holds that the ex-husband is a 25 required party to the litigation because he is the registered co-owner of the mortgaged property 26 and is a co-borrower of the loan obligation as expressed in the complaint. Plaintiff alleges in 27 the complaint that both parties initially owned the property and are registered title owners. 1 Being a registered title owner of the property, the ex-husband has a legal interest in the 2 property. Although plaintiff claims that she later became sole owner of the property through 3 divorce proceedings, which is accepted as true under a dismissal standard, plaintiff does not 4 allege in the complaint that her sole ownership was presented and/or recorded in the property 5 registry making her the sole registered property owner. Generally, when a property ownership is 6 registered in the property registry, both parties must be included in the litigation involving that 7 property. Metropolitan Marble Corp. v. Pichardo, 145 D.P.R. 607 (1998)(A judicial proceeding 8 for the execution of judgment and public sale of a jointly owned real property is void when one 9 of the co-owners is absent from the litigation.). See also Rodriguez Rodriguez v. Moreno 10 Rodriguez, 135 D.P.R. 623, 627 (1994)(an indispensable party is one that could have his rights 11 or interests affected at the moment that judgment is issued). Plaintiff is attempting to remove a 12 mortgage lien that has been recorded over the Rio Grande property where plaintiff and her ex- 13 husband appear as co-owners.
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IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO 2 IN RE: LEAD CASE NO. 12-10094 (MCF) 3 IVETTE MELENDEZ QUINONES CHAPTER 13 4 Debtor 5 ADV. PROC. NO. 15-00255 (MCF) 6 IVETTE MELENDEZ QUINONES
7 Plaintiff
8 vs.
9 CITIMORTGAGE, INC. 10 Defendant 11 JOSE R. CARRION 12
Chapter 13 Trustee 13 OPINION AND ORDER 14 The issue before the court is whether plaintiff’s ex-husband co-signatory to a 15 loan agreement and mortgage deed is a required party under Rule 19 of the Federal Rules of 16 Civil Procedure.1 Defendant CitiMortgage, Inc. filed a motion to dismiss the adversary 17 complaint for failure to join a required party, pursuant to Fed. R. Civ. P. 12(b)(7)2 or in the 18 alternative to request that joinder be ordered (Docket No. 15). Plaintiff Ivette Melendez 19 Quinones filed an opposition motion (Docket No. 16) and CitiMortgage filed a reply motion 20 (Docket No. 17). For the reasons stated below, the court denies the motion to dismiss without 21 prejudice and orders that within twenty-eight (28) days plaintiff join her ex-husband, Joel 22 Fernandez Quinones Pabon, to the complaint as a required party. 23 Plaintiff filed an adversary complaint against CitiMortgage to obtain a 24 declaratory judgment that states: 1) CitiMortgage is an unsecured creditor, 2) CitiMortgage has 25 26 1 Rule 19 of the Federal Rules of Civil Procedure is made applicable by Rule 7019 of the Federal Rules of 27 Bankruptcy Procedure with a few exceptions that are not pertinent in this case. 2 Rule 12(b)(7) of the Federal Rules of Civil Procedure is made applicable by Rule 7012(b) of the Federal Rules of 1 no interest on plaintiff’s property or estate property, and 3) CitiMortgage’s recorded mortgage 2 lien is null. 3 The allegations of the complaint aver that prior to the filing of the petition 4 plaintiff and Joel F. Quinones Pabon (now ex-husband) purchased the Rio Grande property and 5 their title was registered in the property registry. Two years after the purchase, they entered into 6 a loan transaction with First Equity Mortgage Bankers, Inc. that was guaranteed by a mortgage 7 over their real property. Together with the loan, both parties executed a mortgage deed. 8 Sometime after, defendant CitiMortgage acquired the rights to the mortgage. The mortgage 9 deed was presented by fax to the property registry for recordation. A few years later, they filed 10 a joint voluntary petition under chapter 7 and obtained a discharge. Another bankruptcy case 11 was filed by plaintiff under chapter 13 but was later dismissed. In 2010, the property registry 12 notified the notary that the mortgage deed could not be recorded over the property and that the 13 defect had to be corrected by November 2, 2010. Such correction was not made, resulting in the 14 inability to record the mortgage deed in the property registry. Plaintiff avers that she is the sole 15 owner of the property by virtue of a divorce decree and/or divorce agreement. 16 Plaintiff filed a third bankruptcy case wherein she scheduled CitiMortgage as an 17 unsecured creditor. After the chapter 13 plan was confirmed and plaintiff’s objection to 18 CitiMortgage’s secured proof of claim was granted, CitiMortgage produced a property 19 certification reflecting that the mortgage deed was recorded in the property registry after a 20 hearing in the legal case was held on June 8, 2015. 21 CitiMortgage argues in its Rule 12(b)(7) motion that the adversary complaint 22 does not include plaintiff’s ex-husband, Joel Fernando Quinones Pabón, who is needed in the 23 litigation because he signed, along with plaintiff, a deed of first mortgage over a real property 24 located in Rio Grande and that he is a co-borrower. Any determination in the case will have a 25 direct impact on the ex-husband, as CitiMortgage’s co-borrower. 26 27 1 Plaintiff responds that she is the sole owner of the subject property by virtue of a 2 divorce decree and/or divorce agreement and both plaintiff and her ex-husband received a 3 chapter 7 discharge resulting in their discharge of their obligations to CitiMortgage. 4 CitiMortgage replies that no documentary evidence was submitted to substantiate 5 that the ex-husband was divested of any interest in the property. 6 A Rule 12(b)(7) motion to dismiss serves to challenge the plaintiff’s failure to 7 join a required party under Rule 19. The purpose of Rule 19 is to protect the legitimate interests 8 of an absent party and to dissuade repetitive litigation. Askew v. Sheriff of Cook Cty., 568 F.3d 9 632, 634 (7th Cir. 2009). Rule 19(a) sets for the test to ascertain when a person is required, to 10 wit: (1) A person who is subject to service of process and whose 11 joinder will not deprive the court of subject-matter jurisdiction 12 must be joined as a party if: (A) in that person’s absence, the court cannot accord 13 complete relief among existing parties; or (B) that person claims an interest relating to the subject of 14 the action and is so situated that disposing of the action in the person’s absence may: 15 (i) as a practical matter impair or impede the 16 person’s ability to protect the interest; or (ii) leave an existing party subject to a 17 substantial risk of incurring double, multiple, or otherwise inconsistent 18 obligations because of the interest. 19 Fed. R. Civ. P. 19(a)(1). 20 The court’s determination is flexible under Rule 19. Picciotto v. Continental 21 Cas. Co., 512 F.3d 9, 14-15 (1st Cir. 2008). A court may go outside the pleadings and look to 22 extrinsic evidence such as affidavits or documents in ruling on Rule 12(b)(7) motion. Davis 23 Cos. v. Emerald Casino, Inc., 268 F.3d 477, 480 n.4 (7th Cir. 2001). 24 In applying the test set forth in Rule 19, the court holds that the ex-husband is a 25 required party to the litigation because he is the registered co-owner of the mortgaged property 26 and is a co-borrower of the loan obligation as expressed in the complaint. Plaintiff alleges in 27 the complaint that both parties initially owned the property and are registered title owners. 1 Being a registered title owner of the property, the ex-husband has a legal interest in the 2 property. Although plaintiff claims that she later became sole owner of the property through 3 divorce proceedings, which is accepted as true under a dismissal standard, plaintiff does not 4 allege in the complaint that her sole ownership was presented and/or recorded in the property 5 registry making her the sole registered property owner. Generally, when a property ownership is 6 registered in the property registry, both parties must be included in the litigation involving that 7 property. Metropolitan Marble Corp. v. Pichardo, 145 D.P.R. 607 (1998)(A judicial proceeding 8 for the execution of judgment and public sale of a jointly owned real property is void when one 9 of the co-owners is absent from the litigation.). See also Rodriguez Rodriguez v. Moreno 10 Rodriguez, 135 D.P.R. 623, 627 (1994)(an indispensable party is one that could have his rights 11 or interests affected at the moment that judgment is issued). Plaintiff is attempting to remove a 12 mortgage lien that has been recorded over the Rio Grande property where plaintiff and her ex- 13 husband appear as co-owners. 14 Even if plaintiff registered her sole legal title to the property, her ex-husband did 15 sign the loan document and the mortgage deed as stated in the complaint. He continues to be a 16 borrower of the mortgagee and therefore has a legal interest in the litigation. See Teachers 17 Annuity v. Sociedad de Gananciales, 115 D.PR. 277, 15 P.R. Offic. Trans. 372 (1984)(In order 18 to change a borrower, the consent of the creditor is required). Plaintiff argues that her and ex- 19 husband’s obligations have been discharged in the chapter 7 case and that the property registry 20 should never have recorded the mortgage lien when the period to cure the defect had expired. If 21 plaintiff is able to prove her case, the ex-husband would be benefitted from the removal of the 22 mortgage lien over a property that he appears as one of the registered owners. He should, 23 nevertheless, have a right to be heard in the action to ensure that plaintiff is successful in 24 obtaining a favorable judgment that in turn would benefit him. He should be afforded the 25 opportunity to protect his interest, if any and avoid any risk that could impact him. 26 Although the court agrees with CitiMortgage that the ex-husband is a required 27 party, the court does not agree that the appropriate action is to dismiss the adversary case. 1 || Plaintiff is therefore ordered, within twenty-eight (28) days, to join the ex-husband, Joel 2 || Fernando Quinones Pabon. 3 IT IS SO ORDERED. 4 In San Juan, Puerto Rico, this 30th day of December, 2015. 5 6 . Vilctiech Gban 7 Mildred Caban Flores 8 U.S. Bankruptcy Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27