The Horned Dorset Primavera Inc. v. Francisco Domenech Fernandez and Veronica Ferraiuoli Hornedo

United States Bankruptcy Court, D. Puerto Rico·Decided September 18, 2018·No. 16-00141·Unknown

Opinion

IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO IN RE: CASE NO. 15-03837 (ESL) The Horned Dorset Primavera Inc. CHAPTER 11 Debtor ADV. PROC. NO. 16-00141 The Horned Dorset Primavera Inc. Plaintiff/Debtors vs. Francisco Domenech Fernandez and Veronica Ferraiuoli Hornedo Defendants

OPINION AND ORDER This case is before the court upon the Urgent Motion to Vacate or Modify Restraining Order filed by Plaintiff, The Horned Dorset Primavera Inc. (the “Horned Dorset” or “Plaintiff”) (Docket No. 78). For the reasons stated below, Plaintiff’s Urgent Motion to Vacate or Modify Restraining Order, which enjoined the Plaintiff from disconnecting the utility services to the Defendant, is denied. However, Plaintiff’s request to modify the Order to require bond from the Defendants pursuant to Fed. R. Civ. P. 65(c) is hereby granted. Jurisdiction The Court has jurisdiction pursuant to 28 U.S.C. §§1334(b) and 157(a). This is a core proceeding pursuant to 28 U.S.C. §157(b)(1) and (b)(2)(C). Venue is proper under 28 U.S.C. § 1409. Procedural Background On July 7, 2016, the Horned Dorset, filed the instant Adversary Proceeding, which included, as Count I, a request for preliminary and permanent injunction relief against Francisco Domenech Fernandez and Veronica Ferraiuoli Hornedo (the “Defendants” or “Movants”) to order them to empty and clean the swimming pool located within the Defendants’ property (Docket No. 1). On July 8, 2016, Plaintiff requested a Preliminary Injunction, considering that the unmaintained swimming pool located in the Defendants’ property was infested with mosquitos and represented a sanitary hazard to the hotel guests and staff (Docket No. 4). The Plaintiff had been visited by the Puerto Rico Department of Health due to the claims of mosquito hatchery and, as a result, the operations of the hotel were at risk. During the hearing held on July 15, 2016, regarding the preliminary injunction, the parties informed the court that the swimming pool had been cleaned, which mooted the request for a preliminary injunction (Docket No. 13). However, the Plaintiff alerted the court that the swimming pool issue could be a “recurring problem because the villa had no electricity and the pool had no filter motor”. The court ordered the parties to file an agreement as to the future maintenance of the pool, to which the Defendants complied (Docket No. 16). On January 20, 2017, Defendant Veronica Ferraiuoli, appearing pro se, filed an Urgent Motion Requesting Order (Docket No. 43), stating that further issues with the maintenance of the pool had arisen because the Horned Dorset had disconnected the electrical power directed to Unit No. 10 since year 2015, and proper maintenance to the pool was unattainable without electricity. The Defendant requested the court to order the restitution of electricity to Unit No. 10 in order to maintain the swimming pool algae free, which could be achieved with an electrical pump running. The Defendants were at risk of incurring in contempt with the court as the swimming pool could not be properly maintained without a pump and electrical power. The Defendant further argued that the lack of electricity had impeded them to enjoy their property and had provoke several property maintenance issues. Defendant Ferraiuoli requested the court to determine a suitable compensation to Plaintiff for the utility consumption of Unit No. 10 and suggested $50.00 a month, as an interim amount while the court made a final determination. On January 23, 2017, Plaintiff filed a Motion Informing Debtor in Possession[’s] Intent to Oppose Urgent Motion Filed at Docket No. 43, requesting until January 27, 2017, to state its position as to the Defendant’s Urgent Motion and otherwise plead. On January 27, 2017, the court scheduled a hearing to consider the Defendant’s Urgent Motion (Docket No. 47). On January 27, 2017, the Horned Dorset filed its Opposition to Urgent Motion Requesting Order, alleging that (1) it had no legal duty to provide utility services to the private property of the Defendants; (2) the electric power and water service accounts are not part of the usufruct, and pertain to the Plaintiff, which opened them over thirty (30) years ago; (3) the Horned Dorset had allowed Defendants to use electricity from Plaintiff’s account while the Defendants’ property was part of the hotel’s room pool and they “contributed” to the payment of the utilities expenses but, when the parties’ “joint venture” ended, the Horned Dorset decided to no longer allow the Defendant’s to receive utility services from the hotel’s account; (4) if the Defendant’s “so urgently need or require electricity and water service”, the Defendants should request each utility company to open an account under their names; (5) for the court to grant the Defendant’s request, the court must first make a determination that the Horned Dorset has the legal obligation to provide the utility services under its utilities accounts, obligation that does not originate from the Deed of Usufruct or the Deed of Restrictive Covenants; and (6) if, arguendo, the Plaintiff had an obligation to provide utility services to Defendant, the amount of $50.00 is unreasonable as a commercial rate applies to the utility accounts, and expert testimony is required to make said determination. The Plaintiff further argued that Defendant’s requests constituted a misuse of the urgent motion mechanism, as they have been without electricity for over a year. (Docket No. 50). During the hearing held on June 9, 2017, the parties informed the court that they were attempting to solve the matters addressed at Dockets Nos. 43 and 50, and the court granted the parties a term of fourteen (14) days to file a settlement agreement or otherwise move the court. (Docket No. 68). On July 7, 2017, the Plaintiff filed a Motion to Inform Status of Settlement Negotiations (Docket No. 69) stating that no agreement had been reached between the parties, that the Horned Dorset had no obligation to provide utility services and, further, that it was legally impeded to provide the utility services to the Defendants, pursuant to Article A of Section X of Regulation No. 7982 of the Puerto Rico Electric Power Authority (“PREPA”) and Article 2.08 of the Puerto Rico Aqueduct and Sewer Authority (“PRASA”) Regulation No. 8901 (Docket No. 69). On July 14, 2017, the court ordered Defendants to state their position as to Plaintiff’s Motion to Inform Status of Settlement Negotiations within fourteen (14) days (Docket No. 70). On July 27, 2017, the Defendants requested an extension of time of twenty (20) days to comply with the court’s order (Docket No. 72), which was granted at Docket No. 73. On August 7, 2017, the Defendants filed an Urgent Motion Requesting Order Preserving Status Quo and Response to “Motion to Inform Status of Settlement Negotiation” (Docket No. 75). Defendants stated that, pursuant to an agreement reached amongst the parties on June 9, 2017, the Plaintiff restored electricity to Defendants’ property on June 28, 2017. However, on August 3, 2017, the Plaintiff disconnected the electrical power, without warning or notification. Defendants sustained that: (1) electricity is necessary to keep the swimming pool clean and sanitary; (2) they had agreed to pay for the power consumed; (3) certain electric equipment in the property was damaged as a result of Plaintiff’s determination to cut power off; (4) the Plaintiff is not the owner of the

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