Velez Arcay v. Banco Santander de Puerto Rico (In re Velez Arcay)

499 B.R. 225
CourtUnited States Bankruptcy Court, D. Puerto Rico
DecidedSeptember 27, 2013
DocketBankruptcy No. 11-06828 (ESL); Adversary No. 12-00396 (ESL)
StatusPublished
Cited by5 cases

This text of 499 B.R. 225 (Velez Arcay v. Banco Santander de Puerto Rico (In re Velez Arcay)) is published on Counsel Stack Legal Research, covering United States Bankruptcy 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
Velez Arcay v. Banco Santander de Puerto Rico (In re Velez Arcay), 499 B.R. 225 (prb 2013).

Opinion

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

This case is before the court upon the Motion for Summary Judgement and Memorandum of Law in Support Thereof (the “Motion for Summary Judgement ”, Docket No. 9) filed by the Defendant Ban-co Santander de Puerto Rico (“Banco San-tander” or the “Defendant”) arguing that it did not violate the automatic stay when it sought to reopen a foreclosure proceeding pending before the Puerto Rico Court of First Instance, Superior Court of Bay-amón, after the confirmation of the Chapter 13 Plan (which included a modification of the automatic stay for Santander to foreclose on the Plaintiffs real property) and obtained a foreclosure judgment that included both in rem and in personam remedies against the Plaintiff. Also before the court is the Opposition to Santan-der’s Motion for Summary Judgement (Docket No. 32) filed by José L. Vélez Arcay (the “Plaintiff’ or the “Debtor”) arguing that Banco Santander deliberately violated the automatic stay and exceeded the scope of the modification of the Chapter 13 Plan. For the reasons stated below, Banco Santander’s Motion for Summary Judgement is hereby denied.

Procedural Background

Banco Santander filed a foreclosure complaint against the Debtor at the Puerto Rico Court of First Instance, Superior Court of Bayamón (the “State Court”), Case No. D CD2011-0652 (503), prior to the filing of the bankruptcy petition (Lead Case Docket No. 1).

On August 13, 2011, the Plaintiff filed a voluntary Chapter 13 petition (Lead Case Docket No. 1). In Schedules A and D, he reported a three-bedroom real property located at Edif. IX Gold Village Condo in Vega Alta, Puerto Rico (the “Real Proper[228]*228ty”), which is encumbered with a mortgage in favor of Banco Santander (Lead Case Docket No. 17, pp. 13 and 22). The meeting of creditors was held and closed on October 12, 2011 (Lead Case Docket No. 27).

On October 25, 2011, Banco Santander filed a secured Proof of Claim in the amount of $129,186.67. See Claims Register No. 20-1. The Debtor did not object it.

On February 20 2012, Plain tiff filed an Amended [Chapter IS] Plan Dated February 20, 201S (the “Amended Chapter IS Plan”, Lead Case Docket No. 66), which was confirmed on March 20, 2012 (Lead Case Docket No. 73). The Amended Chapter 13 Plan provided for the modification of the automatic stay so that Banco Santander could foreclose the Real Property (Lead Case Docket No. 66, p. 4).

On July 18, 2012, the Defendant filed a Motion Requesting Re-Opening of the Case (Docket No. 37-3, p. 38) and a Motion in Compliance with Order And Reiterating Request for Judgment Without Hearing (Docket No. 37-3, p. 16) before the State Court. The Defendant’s Motions resulted in the State Court entering Judgment on July 24, 2012 in favor of Banco Santander for collection of monies and foreclosure of mortgage (Docket No. 37-3, pp. 42-45). In that Judgment, the State Court expressly ordered the sale of the Real Property at public auction and “if the proceeds from said sale are insufficient to cover payment, the Bailiff may proceed with the seizure of other goods owned by the [Debtor]”. State Court Judgment in Default, p. 4 (Docket No. 37-3, p. 45).

On October 30, 2012, the Plaintiff filed the instant adversary proceeding arguing that Banco Santander exceeded the limited scope of the modification to the automatic stay and willfully violated it. It further alleges that Banco Santander has a significant history of violating automatic stays and discharge orders and has failed to implement an effective policy to assure that its collection personnel comply with the provisions of the Bankruptcy Code. As a result, the Plaintiff seeks actual and punitive damages, legal and attorneys’ fees, and that Banco Santander be held in contempt and be ordered to cease and desist from violations of the automatic stay. See the Complaint, Docket No. 1.

On December 26, 2012, without answering the Complaint, the Defendant filed a Motion for Summary Judgment with its corresponding Statement of Uncontested Material Facts alleging that the Plaintiff had failed to state a claim upon which relief may be granted because the confirmed Amended Chapter 13 Plan provided for lift the automatic stay for Banco Santander to foreclose the Real Property. It further contends that it only requested from the State Court an in rem foreclosure relief, not an in personam relief, and that it had no control over the contents of the State Court’s Default Judgment. See Docket Nos. 9 and 9-1.

Initially, the Plaintiff filed a Motion for Deferment Under Fed.R.Civ.P. 56(d) on January 22, 2013 alleging that he needed to conduct discovery to file a duly supported opposition (Docket No. 14), which the court granted on February 20, 2013 (Docket No. 23). After conducting the requested discovery, the Plaintiff filed an Opposition to Santander’s Motion for Summary Judgment on June 28, 2013 (Docket No. 32) arguing that Banco San-tander “willfully violated the automatic stay in plaintiffs bankruptcy by submitting a draft judgment to the [SJtate [C]ourt which openly contradicted and exceeded the limited scope of the modification to the automatic stay that allowed this creditor to proceed exclusively with in rem relief against the collateral guaranteeing [229]*229plaintiffs loan with [Banco] Santander” (Docket No. 32, p. 4). The Plaintiff further avers that the Defendant “was the main moving force behind the offending judgment that granted [its] foreclosure and collection of monies action against plaintiff personally and/or any other personal goods of the plaintiff sufficient to satisfy the amounts demanded by [Banco] Santander, that is, beyond the scope of plaintiffs amended plan” (Docket No. 32, p. 4). The Plaintiff did not seek summary judgment relief in his favor.

On August 19, 2013, the Defendant filed a Reply to Plaintiff’s Opposition to Banco Santander’s Motion for Summary Judgment (Docket No. 37) acknowledging that although its local counsel inadvertently submitted a “defective judgment draft”, it is the State Court Judge’s responsibility to ensure every judgment is correct, not Ban-co Santander’s, and thus it cannot be held accountable for the mistaken Judgment against the Plaintiff that included both in rem and in personam remedies. Banco Santander also insists that its State Court counsel only requested the foreclosure of its collateral in rem when it requested the reopening of the case against the Plaintiff in the State Court.

Material Uncontested Facts

The court proceeds to determine the material uncontested facts pursuant to Fed.R.Civ.P. 56(g)1, applicable to bankruptcy proceedings through Fed. R. Bankr.P. 7056:

1.Banco Santander filed a pre-petition action in the State Court for foreclosure and collection of monies against the Plaintiff, Case No. D CD2011-0656 (503). See Docket Nos. 9-1, p. 2, and 32-1, p. 2.
2.

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Cite This Page — Counsel Stack

Bluebook (online)
499 B.R. 225, Counsel Stack Legal Research, https://law.counselstack.com/opinion/velez-arcay-v-banco-santander-de-puerto-rico-in-re-velez-arcay-prb-2013.