Lastra v. Estevez (In re Bay Broadcasting, Inc.)

182 B.R. 369, 1995 U.S. Dist. LEXIS 7309
CourtDistrict Court, D. Puerto Rico
DecidedMay 25, 1995
DocketCiv. No. 91-1277 (DRD)
StatusPublished
Cited by4 cases

This text of 182 B.R. 369 (Lastra v. Estevez (In re Bay Broadcasting, Inc.)) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lastra v. Estevez (In re Bay Broadcasting, Inc.), 182 B.R. 369, 1995 U.S. Dist. LEXIS 7309 (prd 1995).

Opinion

OPINION AND ORDER

DOMINGUEZ, District Judge.

I. Introduction

This is an appeal from the Bankruptcy Court’s final Order entered on July 2, 1990 granting in favor of the Appellees their “Renewed Motion for Payment of Superpriority and Administrative Expense Claims” in the amount of $99,600.00

Jurisdiction is sought under 28 U.S.C. § 158(a) and Fed.R.Bankr.P. no. 8001.

II. Facts Pertinent to the Appeal

We restate briefly the facts relevant to the case according to appellant’s brief.1

The bankruptcy ease was originally filed as a 11 U.S.C. Chapter 11 reorganization proceeding in the United States Bankruptcy Court for the Southern District of Florida (“Florida”) and subsequently transferred to the Bankruptcy Court for the District of Puerto Rico (“P.R.”)

The Bankruptcy Courts have issued the following orders that are pertinent to the issues on appeal:

a). On May 14, 1987 the Florida Court issued an order granting Debtor leave to borrow up to $60,000.00 as a superpriority in order to meet past due payroll;

b). On August 13, 1987 the P.R. Court issued an order granting Debtor leave to borrow up to $200,000.00 as a superpriority administrative claim for its ordinary business;

c). On March 18, 1988 authorization was given by the P.R. Court to sell debtor’s assets (“sale order”);

d). On May 11,1988 an order was issued by the P.R. Court establishing conditions to be met in order to proceed with the sale of debtor’s assets.

Debtor and creditors agreed that the sale of the “station” as a going concern would be [372]*372the best solution to Debtor’s financial crisis. Several bids or purchase offers were received but none of them materialized.

Upon the collapse of one of the purchase offers, on February 3,1989, Appellees filed a “Motion for Payment of Administrative Claim” in which payment was claimed for expenses allegedly incurred to preserve Debtor’s estate during the negotiations of the proposed sale.

Appellees’ motion was later amended on September 13, 1989. The amended motion contains the following claims: under the order of May 14,

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Appellant filed separate answers to Appel-lees’ motions as amended on February 7, 1990 objecting specifically to each of the amounts claimed. Appellant claimed that Appellees were only entitled to a total of $17,500.00.

On March 9, 1990 the Bankruptcy Court issued an order converting the case to a chapter 7 liquidation.

On June 4, 1990 Appellees renewed their motion for payment making reference to the original motion for payment and the amended motion. The Bankruptcy Court scheduled a hearing for July 2, 1990, to consider two motions filed by Appellees: a) “Motion for Rehearing and Amendment of Order of March 9, 1990”, and “Request for Status Conference”. Appellant’s attorney requested a continuance of the hearing which was denied by the Court.2 The Court, however, allowed appellant to present its written position regarding the motions included in the schedule notice. Appellant filed its written position without renewing its position on the motions for payment previously filed by Ap-pellees.

At the hearing of July 2, 1990 the Court considered appellees’ motions for payment and issued an order granting them the amount of $99,000.00 from the original $159,-415.00 claimed.

Appellant claims that the hearing notice did not include the motions for payment and hence the Bankruptcy Court should not have addressed them. Appellees sustain that in one of the motions scheduled for July 2, 1990 they specifically requested consideration of their motions for payment.

III. Standard of Review

The standard of review upon orders implicating due process claims is plenary, de novo. In re Center Wholesale, Inc., 759 F.2d 1440 (9th Cir.1985). Questions of fact relating to said due process claim are examined under the clearly erroneous standard. In re Center Wholesale, Inc., ibid.

The standard of review upon orders implicating equitable discretion of bankruptcy court in directing payment of administrative expenses is abuse of discretion. In re Colortex Industries, Inc., 19 F.3d 1371 (11th Cir.1994); In re Hemingway Transport, Inc., 993 F.2d 915, 929 (1st Cir.1993).

IV. Discussion

Due Process Claim

Appellant argues that “[t]he Bankruptcy Court abused its discretion in holding a hearing to decide the issue of payment without notice that such a matter would be considered on July 2, 1990, and thus without granting Appellant reasonable notice and an opportunity to be heard in regard thereto, in clear violation of the due process clause of the 5th and 14th amendments to the Constitution of the United States.” Although appellant admits the filing of objections to the motions for payment, Appellant assures the Court that the Bankruptcy Court “did not even consider them.”

Appellees assert that the trustee filed three pleadings setting forth his position on the issue of payment. We find on the record the following written appearances by the [373]*373trustee: “Motion in Opposition of Payment of Administrative Claim” dated February 23, 1989, “Answer to Motion for Payment of Administrative Claim” dated February 7, 1990, and “Answer to Renewed Motion for Payment of Superpriority Administrative Claim” dated June 29, 1990. Based on the filed motions described above, Appellees contend that Appellant was not deprived of a meaningful opportunity to be heard regarding the correctness of the amounts claimed. The Court agrees.

Section 508(b) of the Bankruptcy Code provides in pertinent part that:

“After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under § 502(f) of this title.”

The record shows that at the hearing of December 6, 1989 the Court acknowledged the requests for payment filed by Appellees and ordered: “4 — Should the sale fail to come through during those specified periods of time then the Court may enter an order approving the motions for payment of administrative claims.”

The record also reveals that on their “Renewed Motion for Payment of Superpriority Administrative Expense Claim” Appellees specified the date of the hearing, July 2, 1990; that Trustee filed an “Answer to Renewed Motion for Payment of Superpriority Administrative Claim” in which it recited the names of the motions scheduled for hearing and specifically stated: “There is nothing else scheduled for said date in this case.” However, Trustee acknowledged the fact that there were two other matters pending which were the requests for payment. Trustee also specifically stated regarding the requests for payment that: “Both have been answered by Lastra and are sub judice.” Trustee acknowledges the renewed motion and states that appellees are misleading the parties in interest by creating an impression that said motion is set for hearing on July 2, 1990 at 2:00 pm

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Cite This Page — Counsel Stack

Bluebook (online)
182 B.R. 369, 1995 U.S. Dist. LEXIS 7309, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lastra-v-estevez-in-re-bay-broadcasting-inc-prd-1995.