IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO
2 IN RE: CASE NO. 09-04089 (ESL) 3 LEIDA OTERO RIVERA CHAPTER 12 4 Debtor 5 LEIDA OTERO RIVERA ADV. PROC. NO. 11-00043 (ESL) 6 Plaintiff 7 vs. 8 LAKE BERKLEY RESORT MASTER 9 ASSOCIATION, INC., THE MANORS AT 10 LAKE BERKLEY HOME OWNERS ASSOCIATION, INC., SRK ASSOCIATION 11 MANAGEMENT, ET AL.
12 Defendants 13 OPINION AND ORDER 14 15 This case is before the court upon the Motion to Set Aside Default Judgment and Orders 16 (the “Motion to Set Aside Judgment”, Docket No. 74) filed by the defendants under Fed. R. Civ. 17 P. 60(b)(1) on October 6, 2014 to set aside the Opinion and Order and Judgment entered on May 18 29, 2014 (Docket Nos. 63 and 64) declaring them jointly and severally liable to the Plaintiff for 19 having willfully violated the automatic stay and awarding the Plaintiff actual damages in the 20 amount of $23,750.00 for lost rent, $2,000.00 for maintenance fees retained, $2,500.00 for travel 21 expenses to Florida, $100,000.00 for emotional damages, $100,000.00 in punitive damages and 22 attorney’s fees. The Opinion and Order is published at 511 B.R. 6 (Bankr. D.P.R. 2014) and 23 contains a detailed procedural background of the instant adversary proceeding. The Defendants 24 allege that they did not receive notice of the legal proceedings by their attorneys1 and hence, 25 1 One of the Defendants’ attorneys, Mr. Mario R. Oronoz, Esq., provided a deficient email address for his CM/ECF 26 account, which has now been corrected upon the court’s initiative. The foregoing does not alter the court’s ultimate conclusion in the instant case. Moreover, Mr. Oronoz has been filing electronically in the instant case 27 through CM/ECF since May 31, 2011 (Docket No. 27) and since then bears the responsibility of keeping his CM/ECF account current. See CM/ECF Manual for the U.S. District Court for the District of Puerto Rico, p. 7 1 they were not aware of the entry of the Opinion and Order entered by the court or the preceding 2 orders that led to the evidentiary hearing held on March 21, 2014. 3 Also before the court is the Opposition to Motion to Set Aside Judgment and Orders filed 4 by the Plaintiff on November 4, 2014 (Docket No. 78) arguing that the Defendants have not 5 raised any exceptional circumstances sufficient to meet their burden under Fed. R. Civ. P. 60(b). 6 The Plaintiff asserts that: (a) the Defendants voluntarily chose their attorneys as their legal 7 representatives in the instant case; (b) they cannot now avoid the consequences of the acts or 8 omissions of their freely selected agents; and (c) if their “attorneys did not act upon the pending 9 and developing matters in the docket, that is a dispute between defendants and their attorneys, 10 rather than one the court should rectify through the discretionary power of Rule 60(b)” (Docket 11 No. 78, p. 4-7). 12 On November 11, 2014, the Defendants filed a Reply to Opposition to Set Aside Judgment 13 and Orders (Docket No. 85) restating their lack of knowledge of the latter part of the instant 14 proceeding due to their attorneys’ neglect to notify them of the status of the case. 15 On December 5, 2014, the Defendants filed a Motion to Stay Proceedings to Enforce 16 Judgment and Order (Docket No. 88) claiming that there is a strong possibility that the Rule 60 17 motion will be successful and therefore the execution of the judgment and orders should be 18 stayed pending disposition of the Motion to Set Aside Judgment under Fed. R. Bankr. P. 19 7062(b). 20 Applicable Law and Analysis 21 Fed. R. Civ. P. 60(b), applicable to bankruptcy cases through Fed. R. Bankr. P. 9024, 22 seeks to balance the interest in the stability of judgments and orders with the interest in seeing 23 they do not become instruments of oppression and fraud. See Alan N. Resnick and Henry J. 24 Sommer, 10 Collier on Bankruptcy ¶ 9024.03 (16th ed. 2013). Hence, “the court may relieve a 25 party ... from a final judgment, order, or proceedings for ... mistake, inadvertence, surprise, or 26 excusable neglect.” Fed. R. Civ. P. 60(b)(1). “[R]elief under Rule 60(b) is extraordinary in 27 1 nature and [] motions invoking that rule should be granted sparingly.” Karak v. Bursaw Oil 2 Corp., 288 F.3d 15, 19 (1st Cir. 2002). 3 In Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 395 4 (1993), the Supreme Court ruled that the determination of what constitutes “excusable neglect” 5 is an equitable one, taking into consideration the following factors: (1) the length of the delay 6 and its potential impact on judicial proceedings; (2) the reason for the delay, including whether 7 it was within the reasonable control of the movant; (3) whether the movant acted in good faith; 8 and (4) whether granting the relief will prejudice the opposing party. The Supreme Court 9 concluded that “excusable neglect” is a flexible concept that is not limited to circumstances 10 beyond the control of the movant. Id. at 388. Prior to the Supreme Court’s decision in Pioneer, 11 the U.S. Court of Appeals for the First Circuit (the “First Circuit”) had ruled that Fed. R. Civ. P. 12 60(b) was a vehicle for extraordinary relief, and that motions invoking the rule should only be 13 granted under exceptional circumstances. See Lepore v. Vidockler, 792 F.2d 272, 274 (1st Cir. 14 1986). Subsequently, in Pratt v. Philbook, 109 F.3d 18 (1st Cir. 1997), the First Circuit 15 incorporated the Pioneer doctrine and has sustained it ever since. See United States v. Union 16 Bank for Sav. & Inv.(Jordan), 487 F.3d 8, 24 (1st Cir. 2007); Aja v. Fitzgerald (In re Aja), 441 17 B.R. 173, 177 (B.A.P. 1st Cir. 2011) (upholding the Pioneer test). The most important factor in 18 this test is the reason for the delay, which requires a statement of the reasons and a satisfactory 19 explanation. See Graphic Communications Int’l Union v. Quebecor Printing Providence, Inc., 20 270 F.3d 1, 6 (1st Cir. 2001); EnvisioNet Computer Servs., Inc. v. ECS Funding LLC, 288 B.R. 21 163, 166 (D.Me. 2002). No “excusable neglect” can be determined in the absence of unique or 22 extraordinary circumstances. Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1st Cir. 2009); 23 Haddock-Rivera v. ASUME, 486 B.R. 574, 578 (B.A.P. 1st Cir. 2013), citing Morse v. Earle (In 24 re Earle), 2008 Bankr. LEXIS 3961, 2008 WL 8664763 (B.A.P. 1st Cir. 2008). Trial courts 25 have wide discretion to determine the existence of neglect or lack thereof and whether it was 26 excusable or not. See Graphic Communs. Int’l Union, Local 12-N, 270 F.3d at 6-7; $23,000 in 27 U.S. Currency, 356 F.
Free access — add to your briefcase to read the full text and ask questions with AI
IN THE UNITED STATES BANKRUPTCY COURT 1 FOR THE DISTRICT OF PUERTO RICO
2 IN RE: CASE NO. 09-04089 (ESL) 3 LEIDA OTERO RIVERA CHAPTER 12 4 Debtor 5 LEIDA OTERO RIVERA ADV. PROC. NO. 11-00043 (ESL) 6 Plaintiff 7 vs. 8 LAKE BERKLEY RESORT MASTER 9 ASSOCIATION, INC., THE MANORS AT 10 LAKE BERKLEY HOME OWNERS ASSOCIATION, INC., SRK ASSOCIATION 11 MANAGEMENT, ET AL.
12 Defendants 13 OPINION AND ORDER 14 15 This case is before the court upon the Motion to Set Aside Default Judgment and Orders 16 (the “Motion to Set Aside Judgment”, Docket No. 74) filed by the defendants under Fed. R. Civ. 17 P. 60(b)(1) on October 6, 2014 to set aside the Opinion and Order and Judgment entered on May 18 29, 2014 (Docket Nos. 63 and 64) declaring them jointly and severally liable to the Plaintiff for 19 having willfully violated the automatic stay and awarding the Plaintiff actual damages in the 20 amount of $23,750.00 for lost rent, $2,000.00 for maintenance fees retained, $2,500.00 for travel 21 expenses to Florida, $100,000.00 for emotional damages, $100,000.00 in punitive damages and 22 attorney’s fees. The Opinion and Order is published at 511 B.R. 6 (Bankr. D.P.R. 2014) and 23 contains a detailed procedural background of the instant adversary proceeding. The Defendants 24 allege that they did not receive notice of the legal proceedings by their attorneys1 and hence, 25 1 One of the Defendants’ attorneys, Mr. Mario R. Oronoz, Esq., provided a deficient email address for his CM/ECF 26 account, which has now been corrected upon the court’s initiative. The foregoing does not alter the court’s ultimate conclusion in the instant case. Moreover, Mr. Oronoz has been filing electronically in the instant case 27 through CM/ECF since May 31, 2011 (Docket No. 27) and since then bears the responsibility of keeping his CM/ECF account current. See CM/ECF Manual for the U.S. District Court for the District of Puerto Rico, p. 7 1 they were not aware of the entry of the Opinion and Order entered by the court or the preceding 2 orders that led to the evidentiary hearing held on March 21, 2014. 3 Also before the court is the Opposition to Motion to Set Aside Judgment and Orders filed 4 by the Plaintiff on November 4, 2014 (Docket No. 78) arguing that the Defendants have not 5 raised any exceptional circumstances sufficient to meet their burden under Fed. R. Civ. P. 60(b). 6 The Plaintiff asserts that: (a) the Defendants voluntarily chose their attorneys as their legal 7 representatives in the instant case; (b) they cannot now avoid the consequences of the acts or 8 omissions of their freely selected agents; and (c) if their “attorneys did not act upon the pending 9 and developing matters in the docket, that is a dispute between defendants and their attorneys, 10 rather than one the court should rectify through the discretionary power of Rule 60(b)” (Docket 11 No. 78, p. 4-7). 12 On November 11, 2014, the Defendants filed a Reply to Opposition to Set Aside Judgment 13 and Orders (Docket No. 85) restating their lack of knowledge of the latter part of the instant 14 proceeding due to their attorneys’ neglect to notify them of the status of the case. 15 On December 5, 2014, the Defendants filed a Motion to Stay Proceedings to Enforce 16 Judgment and Order (Docket No. 88) claiming that there is a strong possibility that the Rule 60 17 motion will be successful and therefore the execution of the judgment and orders should be 18 stayed pending disposition of the Motion to Set Aside Judgment under Fed. R. Bankr. P. 19 7062(b). 20 Applicable Law and Analysis 21 Fed. R. Civ. P. 60(b), applicable to bankruptcy cases through Fed. R. Bankr. P. 9024, 22 seeks to balance the interest in the stability of judgments and orders with the interest in seeing 23 they do not become instruments of oppression and fraud. See Alan N. Resnick and Henry J. 24 Sommer, 10 Collier on Bankruptcy ¶ 9024.03 (16th ed. 2013). Hence, “the court may relieve a 25 party ... from a final judgment, order, or proceedings for ... mistake, inadvertence, surprise, or 26 excusable neglect.” Fed. R. Civ. P. 60(b)(1). “[R]elief under Rule 60(b) is extraordinary in 27 1 nature and [] motions invoking that rule should be granted sparingly.” Karak v. Bursaw Oil 2 Corp., 288 F.3d 15, 19 (1st Cir. 2002). 3 In Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 395 4 (1993), the Supreme Court ruled that the determination of what constitutes “excusable neglect” 5 is an equitable one, taking into consideration the following factors: (1) the length of the delay 6 and its potential impact on judicial proceedings; (2) the reason for the delay, including whether 7 it was within the reasonable control of the movant; (3) whether the movant acted in good faith; 8 and (4) whether granting the relief will prejudice the opposing party. The Supreme Court 9 concluded that “excusable neglect” is a flexible concept that is not limited to circumstances 10 beyond the control of the movant. Id. at 388. Prior to the Supreme Court’s decision in Pioneer, 11 the U.S. Court of Appeals for the First Circuit (the “First Circuit”) had ruled that Fed. R. Civ. P. 12 60(b) was a vehicle for extraordinary relief, and that motions invoking the rule should only be 13 granted under exceptional circumstances. See Lepore v. Vidockler, 792 F.2d 272, 274 (1st Cir. 14 1986). Subsequently, in Pratt v. Philbook, 109 F.3d 18 (1st Cir. 1997), the First Circuit 15 incorporated the Pioneer doctrine and has sustained it ever since. See United States v. Union 16 Bank for Sav. & Inv.(Jordan), 487 F.3d 8, 24 (1st Cir. 2007); Aja v. Fitzgerald (In re Aja), 441 17 B.R. 173, 177 (B.A.P. 1st Cir. 2011) (upholding the Pioneer test). The most important factor in 18 this test is the reason for the delay, which requires a statement of the reasons and a satisfactory 19 explanation. See Graphic Communications Int’l Union v. Quebecor Printing Providence, Inc., 20 270 F.3d 1, 6 (1st Cir. 2001); EnvisioNet Computer Servs., Inc. v. ECS Funding LLC, 288 B.R. 21 163, 166 (D.Me. 2002). No “excusable neglect” can be determined in the absence of unique or 22 extraordinary circumstances. Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1st Cir. 2009); 23 Haddock-Rivera v. ASUME, 486 B.R. 574, 578 (B.A.P. 1st Cir. 2013), citing Morse v. Earle (In 24 re Earle), 2008 Bankr. LEXIS 3961, 2008 WL 8664763 (B.A.P. 1st Cir. 2008). Trial courts 25 have wide discretion to determine the existence of neglect or lack thereof and whether it was 26 excusable or not. See Graphic Communs. Int’l Union, Local 12-N, 270 F.3d at 6-7; $23,000 in 27 U.S. Currency, 356 F. 3d at 165 (“[Trial] courts enjoy considerable discretion in deciding 1 motions brought under Civil Rule 60(b)”); In re Shepherds Hill Development Co., 316 B.R. 2 406, 418 (B.A.P. 1st Cir. 2004). 3 “Finality is an important element in the judicial process, and setting aside a final 4 judgment requires more than the frenzied brandishing of a cardboard sword.” Nansamba v. 5 North Shore Med. Ctr., Inc., 727 F.3d 33, 37 (1st Cir. 2013). A party seeking Rule 60 relief 6 must demonstrate, inter alia, that they have the “right stuff to mount a potentially meritorious 7 claim or defense”. Id. at 38. 8 “Attorneys act for their clients, and the neglect of an attorney acting within the scope of 9 his or her authority is attributable to the client.” Nansamba v. North Shore Med. Ctr., Inc., 727 10 F.3d at 38, citing Thibeault v. Square D Co., 960 F.2d 239, 246 (1st Cir. 1992) (rejecting 11 argument that attorney’s sins should not be visited upon client); Damiani v. R.I. Hosp., 704 F.2d 12 12, 16 (1st Cir. 1983) (same). “Any other notion would be wholly inconsistent with our system 13 of representative litigation, in which each party is deemed bound by the acts of his lawyer-agent 14 and is considered to have ‘notice of all facts, notice of which can be charged upon the 15 attorney.’” Damiani v. R.I. Hosp., 704 F.2d at 16, quoting Smith v. Ayer, 101 U.S. 320, 326 16 (1880). “[K]eeping a suit alive ‘merely because [defendants] should not be penalized for the 17 omissions of [their] own attorney[s] would be visiting the sins of the [defendants’] lawyer upon 18 the [plaintiff].’” Damiani v. R.I. Hosp., 704 F.2d at 17, quoting Link v. Wabash Railroad Co., 19 370 U.S. 626, 634 n. 10 (1962). Also see Corchado v. Puerto Rico Marine Management, Inc., 20 665 F.2d 410, 413 (1st Cir. 1981), cert. denied, 459 U.S. 826, 103 S. Ct. 60, 74 L. Ed. 2d 63 21 (1982); Pease v. Peters, 550 F.2d 698, 701 (1st Cir. 1977). 22 In the instant case, the Defendants solely rest on the allegation that their selected 23 attorneys did not notify them of the latter orders in the docket, including the one setting an 24 evidentiary hearing for March 21, 2014. As stated by the First Circuit in Rivera-Velazquez v. 25 Hartford Steam Boiler Inspection & Ins. Co., 750 F.3d 1, 5 (1st Cir. 2014): “[w]e are not without 26 some measure of sympathy for a client whose lawyer lets him down. But in litigation matters, 27 lawyers act for their clients; and this case is not the first (nor will it be the last) in which the 1 || [alleged] failings of an attorney are visited upon her client. After all, it is settled beyond hope of 2 || contradiction that the neglect of an attorney acting within the scope of his or her authority is 3 || attributable to the client” (citations omitted). In consideration of the totality of the record, the 4 ||court does not find that the Defendants’ allegations in their Motion to Set Aside Judgment 5 (Docket No. 74) constitute unique or extraordinary circumstances that demonstrate excusable 6 || neglect under Fed. R. Civ. P. 60(b)(1). 7 Conclusion 8 For the reasons stated herein, the Motion to Set Aside Judgment (Docket No. 74) is 9 ||hereby denied. Therefore, the Motion to Stay Proceedings to Enforce Judgment and Order 10 || (Docket No. 88) is hereby denied as moot. 11 SO ORDERED. 12 In San Juan, Puerto Rico, this 10° day of December, 2014. 13
15 unitdd states Eankruptcy Judge 16 17 18 19 20 21 22 23 24 25 26 27
5.