OTERO RIVERA v. LAKE BERKLEY RESORT MASTER ASSOCIATION INC

Opinion

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 Defendant’s Expedited Motion for Stay Pending 16 Appeal seeking to “stay this adversary proceeding pending the appeal of this [] Court’s order 17 denying Defendants’ motion to set aside the judgment [entered at Docket No. 65]” (Docket No. 18 116, p. 1, ¶ 1, the “Motion for Stay Pending Appeal”). 19 Some of the arguments in the Motion for Stay Pending Appeal have already been 20 addressed by the court. For instance, the argument that the Defendants’ previous attorneys 21 “abandoned” them (Docket No. 116, p. 5, ¶ 22) has already been addressed in the Opinion and 22 Ordered entered on December 10, 2014 (Docket No. 91), 2014 Bankr. LEXIS 4976, 2014 WL 23 6983403 (Bankr. D.P.R. 2014), which denied the Defendants’ Motion to Set Aside Default 24 Judgment and Orders (Docket No. 74). The court will not revisit such arguments at this 25 juncture. 26 The only new argument presented by the Defendants is that “absent a stay pending 27 appeal, [they] will become insolvent” (Docket No. 116, p. 11, ¶ 39). They sustain that they are 1 “non-profit organizations that operate pursuant to the provisions for Homeowners’ Associations 2 in the Florida Statutes” (Docket No. 116, p. 12, ¶ 43), that they “operate to provide services to 3 the different communities that compose each association” (id., ¶ 42), and that “the enforcement 4 of the judgment pending appeal, taking into consideration the current financial conditions of the 5 Defendants, would imminently render the three insolvent, resulting in irreparable harm” (id., ¶ 6 44). 7 “A motion for stay pending appeal is governed by Fed. R. Bankr. P. 8007. The 8 allowance of a motion for stay pending appeal is discretionary.” In re MJS Las Croabas Props., 9 2015 Bankr. LEXIS 1159 at *4, 2015 WL 1651085 at *2 (Bankr. D.P.R. 2015). Courts 10 consider the traditional four-part standard applicable to preliminary injunctions. See Acevedo- 11 García v. Vera-Monroig, 296 F.3d 13, 16 (1st Cir. 2002). The court must consider “(1) whether 12 the applicant has made a strong showing of success on the merits; (2) whether the applicant will 13 be irreparably harmed absent injunctive relief; (3) whether issuance of the stay will injure other 14 parties; and (4) where the public interest lies.” Id. at 16, fn. 3, citing Hilton v. Braunskill, 481 15 U.S. 770, 776-777 (1987). “A motion for stay pending appeal is an extraordinary remedy and 16 requires a substantial showing on the part of the movant. In order to grant the motion for stay 17 pending appeal all four prongs must be satisfied. Failure to meet the four prongs dooms the 18 motion.” In re MEDSCI Diagnostics, Inc., 2011 WL 280866 at *3, 2011 Bankr. LEXIS 283 at 19 *8 (Bankr. D.P.R. 2011) (citations omitted). “Failure to satisfy even one of those requirements 20 justifies denial of the stay.” Gail v. New Eng. Gas Co., 2008 U.S. Dist. LEXIS 102678 at *38, 21 2008 WL 5245331 at *9 (D.R.I. 2008), citing In re Power Recovery Sys. Inc., 950 F.2d 798, 22 804 n.31 (1st Cir. 1991). Also see In re Turner, 207 B.R. 373, 374 (BAP 2nd Cir. 1997); In re 23 Bijan-Sara Corp., 203 B.R. 358, 360 (BAP 2nd Cir. 1996). These factors are weighed according 24 to the unique circumstances of each case to ensure a just result. See Palazzetti Imp./Exp., Inc., 25 2002 U.S. Dist. LEXIS 6558 at *7, 2002 WL 562654 at *2 (S.D.N.Y. 2001). In conducting this 26 analysis, the U.S. Supreme Court has stated that the first two factors are the “most critical”. See 27 Nken v. Holder, 129 S. Ct. 1749, 1761 (2009). Of those two factors, “‘[t]he sine qua non [of 1 the stay pending appeal standard] is whether the [movants] are likely to succeed on the merits.’” 2 Acevedo-García v. Vera-Monroig, 296 F.3d at 16, quoting Weaver v. Henderson, 984 F.2d 11, 3 12 (1st Cir. 1993). Also see Elias v. Sumski (In re Elias), 182 Fed. Appx. 3, 4 (1st Cir. 2006) 4 (“the sine qua non of the stay pending appeal standard is whether the movants are likely to 5 succeed on the merits”). Although the degree of likelihood of success is not determinative, it 6 must be balanced with the hardships caused to the parties if the injunction is not granted. If the 7 movant’s showing of probable success on the merits is uncertain, he/she/it may be entitled to a 8 preliminary injunction if he/she/it demonstrates a strong probability that he/she/it will be injured 9 if the court fails to act. See Wright, Miller & Kane, 11A Federal Practice and Procedure § 10 2948.3 (2nd ed. 2014). To establish irreparable harm, the movant does not need to show that the 11 injunctive relief will be fatal to the business, only that its legal remedies are inadequate. See 12 Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 15 (1st Cir. 1996). 13 In Daly v. St. Germain (In re Norwich Historic Pres. Trust), 2005 US Dist. LEXIS 7171, 14 2005 WL 977067 (D. Conn. 2005), the U.S. District Court for the District of Connecticut 15 declined to stay a sale of real property pending resolution of unsecured creditor’s appeal 16 because, although creditor showed irreparable harm, he did not satisfy other requirements for 17 obtaining the stay. 18 In the instant case, based on the totality of the circumstances, the Defendants’ assertion 19 that “absent a stay pending appeal, [they] will become insolvent” (Docket No. 116, p. 11, ¶ 39) 20 is insufficient for this court to grant it. The Defendants have not established the sine qua non 21 requirement for a stay pending appeal, to wit, the likelihood to succeed on the merits. Their 22 argument to the effect that they “should not be made to suffer for [their attorneys’] failures” 23 (Docket No. 116, p. 7, ¶ 26), significantly deviates from the binding norm established by the 24 U.S. Court of Appeals for the First Circuit that “[a]ttorneys act for their clients, and the neglect 25 of an attorney acting within the scope of his or her authority is attributable to the client”, 26 Nansamba v. North Shore Med. Ctr., Inc., 727 F.3d 33, 38 (1st Cir. 2013), and that “keeping a 27 suit alive ‘merely because [defendants] should not be penalized for the omissions of [their] own 1 || attorney[s] would be visiting the sins of the [defendants’] lawyer upon the [plaintiff]’” Damiani 2 R.L Hosp., 704 F.2d 12, 17 Cir. 1983). 3 In view of the foregoing, the Motion for Stay Pending Appeal filed by the Defendants 4 || (Docket No. 116) is hereby denied. 5 SO ORDERED. 6 In San Juan, Puerto Rico, this 22"! day of June, 2015. 7

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