Julio Oscar Acevedo Barreto dba Panaderia Familiar v. Gloria Esther Perez Cardona, AAA, Dept Trabajo, Wigberto Lugo Mender, State Insurance Fund

• Court: United States Bankruptcy Court, D. Puerto Rico
• Decided: April 2, 2014
• Docket: 10-00064
• Status: Unknown

Opinion

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2

4 IN RE: CASE NO. 07-01435-BKT7 5 Chapter 13 6 JULIO OSCAR ACEVEDO BARRETO dba PANADERIA FAMILIAR Adversary No. 10-00064-BKT 7

8 Debtor(s) 9 JULIO OSCAR ACEVEDO BARRETO 10 dba PANADERIA FAMILIAR 11 GLORIA ESTHER PEREZ CARDONA 12 Plaintiff 13 vs. 14 AAA, DEPT TRABAJO, 15 WIGBERTO LUGO MENDER, 16 STATE INSURANCE FUND 17 18 Defendants FILED & ENTERED ON 4/2/2014

21 OPINION AND ORDER 22 Before the court is the Motion for Judgment on the Pleadings filed by the Puerto Rico 23 24 Aqueduct and Sewer Authority (“PRASA”) [Dkt. No. 157] and Plaintiffs’ Opposition [Dkt. No. 25 160]. For the reasons set forth below, Defendant’s Motion for Judgment on the Pleadings is DENIED. I. Background On April 14, 2010, Plaintiffs brought this action against PRASA for an alleged violation of 1 the automatic stay under 11 USC §362 (k). In their Third Amended Complaint, Plaintiffs demand an 2 award for actual damages, punitive damages, pre and post judgment prevailing legal interest, and 3 taxing of all costs and expenses of the proceeding, including reasonable attorney’s fees against 4 5 PRASA. PRASA filed a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) 6 asserting that: (i) plaintiffs failed to allege facts amounting to a willful violation of the stay by 7 failing to allege improper actions by PRASA, therefore no damages may be awarded; (ii) there is no 8 9 cause of action for either emotional or punitive damages available against PRASA, as a 10 governmental unit; (iii) there being no valid claim for violation of the stay against PRASA, no 11 attorney fees may be awarded. 12 13 In their opposition, Plaintiffs withdrew their claim for punitive damages. Pending, however, 14 are Plaintiffs’ claim for willful violation of the automatic stay and the taxing all costs and expenses 15 of the proceeding, including reasonable attorney’s fees. 16 17 II. Standard of review 18 A. Motion for Judgment on the Pleadings 19 After the pleadings are closed--but early enough not to delay trial--a party may move for 20 21 judgment on the pleadings. Fed. R. Civ. P. 12(c). The pleadings in this case closed after PRASA’s 22 answer to the Third Amended Complaint was filed. As with the Rule 12(b)(6) motion, in reviewing 23 a motion for judgment on the pleadings the court must accept the nonmovant’s allegations as true, 24 25 viewing the facts in the light most favorable to the nonmoving party.” Feliciano v. State of R.I., 160 F.3d 780, 788 (1st Cir. 1998) (“[T]he district court must accept all of the nonmoving party's well- pleaded factual averments as true and draw all reasonable inferences in her favor”); Rivera-Gomez v. Adolfo de Castro, 843 F.2d 631, 635 (1st Cir. 1988). “Judgment on the pleadings under Rule 1 12(c) may not be entered unless it appears beyond a doubt that the nonmoving party can prove no set 2 of facts in support of her claim which would entitle her to relief.” Feliciano, 160 F.3d at 788. 3 4 B. Stay violation 5 “The Bankruptcy Code provides a remedy for individual debtors who are injured by 6 violations of the automatic stay”. In re Vázquez Laboy, 416 BR 325, 332 (1st Cir.BAP 2009) 7 8 (reversed on other grounds). Section 362(k)(1) dictates that “[a]n individual injured by any willful 9 violation of a stay provided by this section shall recover actual damages, including costs and 10 attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.” 11 U.S.C. § 11 12 362(k)(1). The words “shall recover” have been interpreted within the First Circuit to indicate that 13 “Congress intended that the award of actual damages, costs and attorney's fees be mandatory upon a 14 finding of a willful violation of the stay.” In re Heghmann, 316 B.R. 395, 405 n. 9 (1st Cir.BAP 15 2004) (citing Ramirez v. Fuselier (In re Ramirez), 183 B.R. 583, 589 (9th Cir. BAP 1995)). 16 17 Damages, however, are not imposed as a matter of course. Vázquez Laboy, supra. “[A]ctual 18 damages should be awarded only if there is concrete evidence supporting the award of a definite 19 amount.” Heghmann, 316 B.R. at 405. 20 21 Emotional distress is an actual injury for which a debtor may recover damages. Fleet 22 Mortgage Group v. Kaneb, 196 F.3d 265, 269 (1st Cir.1999). Therefore, a debtor is entitled to 23 recover actual damages and, in appropriate circumstances, punitive damages when the debtor proves 24 25 that he has been injured by a creditor’s willful acts to enforce any lien against the debtor after the filing of a bankruptcy petition, unless the creditor received authorization from the bankruptcy court. In re Vázquez Laboy, supra. However, once a party has proven damages, he/she needs to show the 1 amount of damages with reasonable certainty, as a damages award cannot be based on mere 2 speculation, guess or conjecture. Heghmann, supra. 3 4 C. Imposition of attorney’s fees 5 Rule 44.1 of the 2009 Rules of Civil Procedure of Puerto Rico establishes that “… Should 6 7 the Commonwealth of Puerto Rico, its municipalities, agencies or instrumentalities have acted 8 recklessly or frivolously, the court shall impose in its judgment an amount for attorney's fees, except 9 as expressly exempted by law for payment of attorney fees.” As a rule, in cases of collection of 10 11 money and damages against the state or municipalities, there shall not be an imposition of attorney 12 fees for recklessness. The prohibition of payment applies only to those cases. Colondres Vélez v. 13 Bayrón Vélez, 114 D.P.R. 833 (1983); Ortiz y otros v. Municipio de Lajas, 153 D.P.R. 744 (2001). 14 15 III. Discussion 16 In the Third Amended Complaint, Plaintiffs affirm that PRASA performed various acts in 17 18 willful violation of the stay, including: 19 a. Commence or continue an action against Plaintiffs/Debtors to recover a claim that arose 20 before the commencement of the bankruptcy case; and 21 b. Collect, assess or recover a claim against the Plaintiffs/Debtors that arose before the 22 commencement of the bankruptcy case. 23 c. Continued to send Plaintiffs/Debtors written collection notices of debts included in the bankruptcy schedules. 24

25 Plaintiffs merit this court’s determination on the extent of PRASA’s knowledge and resulting liability for breach of the automatic stay, if any. Once this threshold is surpassed, the court will entertain Plaintiffs’ allegations on damages. Therefore, PRASA’s Motion for Judgment on the Pleadings is hereby denied. 1 WHEREFORE, IT IS ORDERED that the Motion for Judgment on the Pleadings filed b PRASA shall be, and it hereby is, DENIED.

4 In San Juan, Puerto Rico this 2nd day of April, 2014. 5 6 . OD Se Bie Brian K. Tester 9 U.S. Bankruptcy Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25