Maxon Engineering Services Inc v. Asphalt Precision JJ, Inc.

Opinion

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

3 IN RE: CASE NO. 04-04781 MCF 4 MAXON ENGINEERING SERVICES INC Chapter 7 5 6 Debtor

7 MAXON ENGINEERING SERVICES INC 8 Plaintiff, Adv. No. 07-0048 (MCF) 9

10 v. 11 12 ASPHALT PRECISION JJ, INC. FILED & ENTERED ON 04/05/2010 13 Defendant 14

15 DECISION AND ORDER 16

17 BACKGROUND

18 The debtor filed a voluntary petition for relief under Chapter 19 11 of the Bankruptcy Code on May 4, 2004 (Case No. 04-04781, Docket 20 No. 1). On May 24, 2004, the debtor filed schedules and disclosed 21 22 those payments made within ninety days of the filing of the 23 bankruptcy petition (Case No. 04-04781, Docket No. 40 at pp. 114- 24 135). The case was later converted to a proceeding under Chapter 7 25 of the Bankruptcy Code on June 13, 2006, and Noreen Wiscovitch-

Rentas was appointed as interim trustee on June 14, 2006 (Case No. 04-04781, Docket No. 1003). The Chapter 7 trustee filed the instant adversary proceeding 1 for recovery of certain preferential payments made to the defendant 2 on account of a prepetition debt on March 21, 2007 (Adv. No. 07- 3 048, Docket No. 1). On January 10, 2009, defendant requested the 4 dismissal of the adversary proceeding alleging that the complaint 5 6 at bar is time barred (Adv. No. 07-048, Docket No. 36). The 7 Chapter 7 trustee opposed the motion to dismiss contending that the 8 statute of limitations was equitably tolled (Adv. No. 07-048, 9 Docket No. 38). The trustee’s argument is founded on the theory 10 that debtor’s representative, as part of a predetermined strategy, 11 12 extended and prolonged the Chapter 11 case until the limitation 13 period expired in order to prevent the trustee from exercising 14 avoiding powers and suing insiders, who allegedly transferred 15 millions of dollars to the Dominican Republic, and others1. 16 17 DISCUSSION 18 Section 546 of the Bankruptcy Code establishes a limitation 19 period on the trustee’s ability to avoid prepetition preferences. 20 11 U.S.C. § 546(a) states that: 21 (a) An action or proceeding under section 544, 545, 547, 22 548, or 553 of this title may not be commenced after 23 the earlier of— (1) the later of— 24 (A) 2 years after the entry of the order for relief; or 25 (B) 1 year after the appointment or election of the first trustee under section 702, 1104, 1163, 1202, or 1302 of this title if such appointment or such election occurs before the expiration of the period

1 Trustee filed a motion for summary judgment on December 22, 2008 (Adv. No. 07- 048, Docket No. 32) which was opposed by defendant on January 10, 2009 (Adv. No. 07-048, Docket No. 37). The court did not consider these two documents for the reasons herein discussed. As such, the motion for summary judgment and its opposition are considered MOOT. 1 specified in subparagraph (A); or (2) the time the case is closed or dismissed. 2 3 Pursuant to Section 546 of the Bankruptcy Code, a trustee’s 4 limitation period for exercising avoidance actions for prepetition 5 preferences is two years after the order for relief or one year 6 after the appointment of a Chapter 7 trustee, if the trustee is 7 appointed within the initial two year period. 8 9 The present adversary proceeding was not filed within the two 10 years after the entry of the order for relief. Furthermore, the 11 appointment of the Chapter 7 trustee did not occur within the two 12 years after the entry of the order for relief. As such, by 13 14 utilizing a strict application of the statute of limitations found 15 in 11 U.S.C. § 546(a), the instant action would be time barred. 16 With regards to the Chapter 7 trustee’s argument for extension 17 of the statute of limitations by way of equitable tolling, after an 18 extensive review of the trustee’s contentions and independent 19 20 research performed by this court, the court finds that the opinion 21 expressed by the Honorable U.S. Bankruptcy Judge Gerardo A. Carlo 22 in the case of Maxon Engineering Services, Inc. v. Alex Hornedo 23 Robles & Assoc., et al, 397 B.R. 228 (Bankr. D.P.R. 2008), as 24 sustained in Wiscovitch-Rentas v. Jose D. Almonte, 2009 WL 349360 25 (D.P.R. 2009), Wiscovitch-Rentas v. Plastic Piping Products of Puerto Rico, Inc., 2009 WL 393639 (D.P.R. 2009), and Wiscovitch- Rentas v. Super Roof & General Contractor, 2009 WL 1286406 (D.P.R. 2009), is applicable to the instant case. Therefore, this court 1 |ladopts the well-reasoned opinion of Maxon Engineering Services, 2 Inc. v. Alex Hornedo Robles & Assoc., et al and will proceed to 3 dismiss the present adversary proceeding. 4 5 ORDER 6 WHEREFORE IT IS ORDERED that defendant’s motion to dismiss 7 (Adv. No. 07-048, Docket No. 36) shall be, and hereby is, GRANTED. 8 SO ORDERED. 9 10 Ponce, Puerto Rico, this 05 day of April, 2010. 11 12 - 14 15 MILDRED CABAN FLORES U.S. Bankruptcy Judge 16 17 ||C: DEBTOR CARMEN D CONDE TORRES 18 NOREEN WISCOVITCH RENTAS 19 20 21 22 23 24 25