Juan Jose Melendez Alvarez and Marla Yenis Bonilla Santiago v. RG Mortgage Corporation, et als.

Opinion

THE DISTRICT OF PUERTO RICO 2

3 IN RE: CASE NO. 09-11014 4 Chapter 13 MARLA YENIS BONILLA SANTIAGO 6

7 Adversary No. 10-00119

8 Debtor(s)

11 Plaintiff vs. 12 RG MORTGAGE CORPORATION,et als. 13

14 FILED & ENTERED ON 06/04/2012 Defendant 15

17 18 Before the Court is Plaintiff's Motion for Summary Judgment [Dkt. No. 44], Defendant's 19 Motion for Summary Judgment [Dkt. No. 46], Defendant's Statement of Material Facts Not in Issue 20 [Dkt. No. 47], Defendant’s Memorandum of Law in Support of Motion for Summary Judgment [Dkt. 21 22 No. 48], Plaintiff’s Reply to Defendant’s Memorandum of Facts and Memorandum of Law Related 23 to Motion for Summary Judgment [Dkt. No. 61], Defendant’s Opposition to Plaintiffs’ Motion for 24 Summary Judgment [Dkt. No. 69], Defendant’s Counter Statement of Material Facts in Issue [Dkt. 25 No. 70], Defendant’s Memorandum of Law in Support of Opposition to Plaintiffs’ Motion for Summary Judgment [Dkt. No. 71], Defendant’s Reply to Plaintiff’s Reply to Defendant’s Memorandum of Facts and Memorandum of Law Related to Motion for Summary Judgment [Dkt. No. 72], and Defendant’s Counter Statement of Material Facts in Issue (Amended) [Dkt. No. 73]. 1 For the reasons set forth below, the Plaintiff’s Motion for Summary Judgment and the Defendant's 2 Cross Motion for Summary Judgment are DENIED. 3 Under Federal Rules of Civil Procedure 56(c), made applicable in bankruptcy by Federal 4 5 Rules of Bankruptcy Procedure 7056, summary judgment is available if the pleadings, depositions, 6 answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there 7 is no genuine issue as to any material fact and that the moving party is entitled to judgment as a 8 9 matter of law. Fed. R. Civ. P. 56(c); Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 4 (1st Cir. 10 2010). As to issues on which the movant, at trial, would be compelled to carry the burden of proof, 11 it must identify those portions of the pleadings which it believes demonstrates that there is no 12 13 genuine issue of material fact. In re Edgardo Ryan Rijos & Julia E. Cruz Nieves v. Banco Bilbao 14 Vizcaya & Citibank (In re Rijos), 263 B.R. 382, 388 (B.A.P. 1st Cir. 2001). A fact is deemed 15 "material" if it potentially could affect the outcome of the suit. Borges at 5. Moreover, there will 16 17 only be a "genuine" or "trial worthy" issue as to such a "material fact," "if a reasonable fact-finder, 18 examining the evidence and drawing all reasonable inferences helpful to the party resisting summary 19 20 judgment, could resolve the dispute in that party's favor." Id. at 4. The Court must view the 21 evidence in a light most favorable to the nonmoving party. Alt. Sys. Concepts, Inc. v. Synopsys, 22 Inc., 374 F.3d 23, 26 (1st Cir. 2004). Therefore, summary judgment is “inappropriate if inferences 23 are necessary for the judgment and those inferences are not mandated by the record.” Rijos at 388. 24 25 The Plaintiffs/Debtors filed the present adversary proceeding alleging that the Defendant RG

Mortgage/Scotiabank (hereinafter “Bank”) had breached the contractual agreement signed with Plaintiffs (31 P.R, Laws Ann. §5141, §3018 and §3052), and that they also violated the stay as per 11 U.S.C. §362(a) enforced by 11 U.S.C. §541(a)(5). Plaintiffs, Juan José Meléndez Álvarez and Marla 1 Yenir Bonilla Santiago, are debtors in a chapter 13 case filed on December 23, 2009. Before filing 2 the bankruptcy petition, the Debtors and the Bank had negotiations for a loss mitigation stipulation 3 agreement called “Home Affordability and Stability Plan,” or “FDIC Loan Modification Program” 4 5 in order to reduce the Debtors' mortgage payment and prevent foreclosure. 6 On December 21, 2009, both parties executed the FDIC Loan Modification Program Trial 7 Period Plan (hereinafter "FDIC LMP"). The FDIC LMP provided clients with a three month 8 9 probationary trial period followed by the possibility of executing a permanent Modification 10 Agreement. Two days after signing the FDIC LMP, the Debtors filed bankruptcy. On April 13, 11 2010, during the last month of the trial period, the Bank sent a letter cancelling the Debtor's 12 13 continued participation in the Program because the FDIC LMP did not allow a client to be in 14 bankruptcy. 15 Plaintiffs/Debtors argue that they were not informed of the consequences of the bankruptcy 16 17 filing on the Program and that the bank was aware of their intention to file. The Bank claims they 18 provided Plaintiffs/Debtors a document titled “FDIC Loan Modification Program” [Exhibit F, Dkt. 19 No. 47] that states that loans subject to these contracts are typically eligible for modification…if “the 20 21 borrower is currently not in bankruptcy, or has not been discharged from Chapter 7 bankruptcy since 22 the loan was originated.” The Plaintiffs/Debtors argue to the contrary that said document was not 23 provided to them. 24 25 After reviewing all the documents presented with the summary judgment motions, there are

still contested material facts that mandate an evidentiary hearing. First, whether the Bank had an obligation to inform the Plaintiffs/Debtors that filing a bankruptcy case during the probation period would result in not executing a Modification Agreement; Second, regardless of the obligation to 1 || inform, did the Bank actually inform the Plaintiffs/Debtors the consequences of a bankruptcy filin on the Modification Agreement. 4 WHEREFORE, IT IS ORDERED that the motions requesting summary judgment shall be || and it hereby are, DENIED. Clerk to schedule a pre-trial hearing. 6 7 In San Juan, Puerto Rico this 4th day of June, 2012. 8 9 10

U.S. Bankruptcy Judge 13 14 15 16 17 18 19 20 21 22 23 24 25