Acosta v. Reparto Saman Inc. (In re Acosta)

• Citation: 497 B.R. 25
• Decision Date: 17 July 2013
• Docket Number: Bankruptcy No. 99–10119 (ESL).,Adversary No. 11–00146 (ESL).
• Parties: In re Santos Surita ACOSTA, Carmen Cruz Silva, Debtors. Santos Surita Acosta, Carmen Cruz Silva, Plaintiffs v. Reparto Saman Inc., Defendant.
• Court: United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of Puerto Rico

497 B.R. 25

In re Santos Surita ACOSTA, Carmen Cruz Silva, Debtors.

Santos Surita Acosta, Carmen Cruz Silva, Plaintiffs

v.Reparto Saman Inc., Defendant.

Bankruptcy No. 99–10119 (ESL).

Adversary No. 11–00146 (ESL).

United States Bankruptcy Court,

D. Puerto Rico.

July 17, 2013.

Alberto O. Lozada Colon, Bufete Lozada Colon, Mayaguez, PR, for Plaintiffs.

Myrta Estrella Nieves Blas, Luis Roberto Santos Baez, Mayaguez, PR, for Defendant.

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

This case is before the court upon the Plaintiffs' Motion Requesting Reconsideration of Judgment Dismissing Case (the “ Motion for Reconsideration ”, Docket No. 82) and the Defendant's Opposition thereto (Docket No. 84). The Plaintiffs seek to vacate and set aside the Judgment dismissing the instant adversary proceeding for failure to prosecute (Docket No. 79), alleging that their counsel had unsuccessfully attempted to reach Defendant's attorney on several occasions to procure a settlement of the instant case and/or coordinate the discovery. The Defendant sustains that no agreement was ever reached and that the Plaintiffs failed to provide the initial mandatory disclosures. For the reasons stated below, the Plaintiffs' Motion for Reconsideration is hereby denied.

Procedural Background

The Plaintiffs filed a voluntary Chapter 7 bankruptcy petition on August 2, 1999 (Lead Case Docket No. 1). In Schedule A, they listed one real property located at Reparto Saman, Street No. 10, Lot Q–17, Cabo Rojo, Puerto Rico (the “Real Property”)(Lead Case Docket No. 1, p. 5). In Schedule D, they listed the Defendant as their only secured creditor (Lead Case Docket No. 1, p. 9).

On September 17, 1999, the Plaintiffs filed an Amended Schedule D, in which they clarified that the registration of “first mortgage on debtors [ sic ] house [referring to the Real Property] ... is pending before the [Property Registry]” and that “the validity of this mortgage depends upon compliance of creditor [with] certain requirements” (Lead Case Docket No. 5, p. 2).

On December 21, 1999, the Chapter 7 Trustee (the “Trustee”) filed a Notice of Abandonment for the Real Property stating that it had no value or is burdensome to the estate (Lead Case Docket No. 8) and also on that same date filed a Report of No Distribution (Lead Case Docket No. 9). No objections were filed. The Trustee listed the Real Property as secured in the amount of $36,505 and determined that this was a no-asset case ( Notice of Abandonment, Lead Case Docket No. 8).

On February 11, 2000, the court entered the Discharge of Debtors and the Order Discharging Trustee and Closing Case (Lead Case Dockets Nos. 13 and 14).

On August 28, 2008, the Plaintiffs filed a Motion to Reopen Chapter 7 Case (Lead Case Docket No. 17), which was initially granted on September 28, 2008 (Lead Case Docket No. 19) but later re-closed on February 13, 2009 for lack of prosecution (Lead Case Docket No. 21). On June 23, 2011, the Plaintiffs again moved to reopen the case (Lead Case Docket No. 25), and on July 8, 2011 said request was granted (Lead Case Docket No. 29).

On July 12, 2011, the Plaintiffs filed the instant adversary proceeding for violation of the discharge injunction pursuant to 11 U.S.C. § 727(b), claiming that the Defendant had filed, recorded and registered a mortgage deed after the filing of this bankruptcy case and had also initiated foreclosure proceedings against the Plaintiffs in violation of the discharge injunction.

On August 1, 2011, the Defendant filed a Motion to Dismiss (Docket No. 6) under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted under 11 U.S.C. §§ 546, 362(b)(3) and 546(b)(1). On August 31, 2011, the Plaintiffs moved for partial summary judgment on the Defendant's alleged violation of the permanent discharge injunction ¹ pursuant to 11 U.S.C. § 727 (Docket No. 11). The Plaintiffs also filed on that same date an Opposition to the Defendant's Motion to Dismiss (Docket No. 12) arguing that the mortgage had been withdrawn on October 18, 1999, which makes Puerto Rico's Mortgage Law's relation-back provision ² inapplicable and therefore, the mortgage on the Real Property was not properly constituted at the time of the Plaintiffs' discharge.

On October 10, 2011, the Defendants filed a Sur-reply (Docket No. 20) arguing that the Complaint was not well-pleaded. The Defendant did not address or contested the Plaintiffs' allegation that the mortgage had been withdrawn from the Property Registry during the Plaintiffs' bankruptcy proceeding.

After due notice to all interested parties, including the Trustee, a pre-trial and argumentativehearing was initially set for November 21, 2011 but later rescheduled for November 22, 2011. See Docket Nos. 3, 4, 21, 22, 23, 24, 27 and 29. After hearing the parties' arguments, the court denied the Defendant's Motion to Dismiss, granted the Plaintiffs' Motion for Partial Summary Judgment and ruled that a hearing on the damages would be scheduled. See Docket Nos. 27 ( Minute Entry ) and 42 ( Transcript ). An Opinion and Order³ and Partial Summary Judgment to that effect were entered on December 27, 2011 (Docket Nos. 37 and 38).

On December 2, 2011, the court entered an Order and Notice (Docket No. 31) scheduling an evidentiary hearing on damages for February 21, 2012 at 2:00 p.m. and ordering the parties to file 10 days prior to the hearing proposed findings of fact, including a detail of the damages being requested, with specific reference to witnesses and/or documents, which were ordered to be attached.

On February 15, 2012, the Plaintiffs filed a Motion Requesting Continuance of Valuation Hearing (Docket No. 43) alleging that they had made an offer in writing to the Defendant, who needed 30 days to reply to the same, and that due to technical difficulties, they had not been able to timely file their proposed findings of fact and attach their documentary evidence. On February 16, 2012, the court granted the Plaintiffs' Motion Requesting Continuance of Valuation Hearing and ordered the Plaintiffs to move the court within 30 days. See Docket No. 44.

On March 20, 2012, the Plaintiffs filed a Motion Requesting Hearing to Determine Damages (Docket No. 47) informing that their counsel had tried to reach an agreement with the Defendant but the same had not been possible and that they would proceed to file 10 days prior to the hearing their proposed findings of fact. They also requested the court to reschedule an evidentiary hearing on damages. On March 21, 2012, the court entered a second Order and Notice (Docket No. 48) scheduling an evidentiary hearing on damages for June 12, 2012 and ordering the parties to file proposed findings of fact, including a detail of the damages being requested, with specific reference to witnesses and/or documents, which were ordered to be attached.

Because the Plaintiffs and the Defendant failed to file their proposed findings of fact, on June 7, 2012, the court entered an Order continuing the hearing without a date and ordering the parties to show cause within 14 days as to why sanctions should not be imposed for failure to prosecute to comply with this court's order by failing to file the proposed findings of fact. See Docket No. 51. The Order also forewarned that the sanctions may include a finding that the Plaintiffs have waived their claim for damages. Id., p. 2.

On June 20, 2012, the Plaintiffs filed their Proposed Findings of Fact (Docket No. 53). They did not attach any document nor made references to any witness.

On June 21, 2012, the Plaintiffs filed an Answer to Order to Show Cause (Docket No. 54) averring that they had prepared their proposed findings of fact since February 22, 2012, that on that date their attorney mailed a letter to Defendant's counsel to meet in order to prepare and file a joint document, and that they had made previous attempts to contact him for this purpose on several prior occasions to no avail. Plaintiffs' counsel also acknowledged that they should have informed these facts to the court sooner. Id., p. 2, ¶ 7. On that same date, the Defendant filed its Proposed Statement of Uncontested

Material Facts

(Docket No. 55). Like the Plaintiffs, the Defendant did not attach any document nor made any reference to a proposed document or witness. Likewise, also on June 21, 2012, the Defendant filed a Reply to Order to Show Cause (Docket No. 56) contending that it had been awaiting for Plaintiffs' proposed findings in order to defend itself against the damages that they claim, that the Plaintiffs made a written offer to settle, not to meet to stipulate uncontested facts, and that it is willing to cancel the mortgage on Plaintiffs' Real Property once the instant case is finished. The Defendant also requested a 60 day discovery period in order to investigate the Plaintiffs' alleged damages through interrogatories, request for production of documents and other discovery mechanisms. Id., p. 2, ¶¶ 8–9.

On July 2, 2012, the court entered a third Order and Notice (Docket No. 57) scheduling an evidentiary hearing on damages for October 2, 2012 and ordering the parties to file 10 days prior to the hearing proposed findings of fact, including a detail of the damages being requested, with specific reference to witnesses and/or documents, which were ordered to be attached.

At the October 2, 2012 hearing, the Defendant moved the court to exclude the Plaintiffs' testimonies as they were never disclosed as witnesses under Fed.R.Civ.P. 26⁴, which the court granted. In addition, the court ruled that the Plaintiffs failed to comply with the Order and Notice entered on December 2, 2011 (Docket No. 31) and with LBR ⁵ 7026–1 regarding the disclosure of evidence. Thus, the court continued the evidentiary hearing without a date and ordered the Plaintiffs to comply with the mandatory disclosures and move the court informing the status of the case within 90 days. See Docket Nos. 65 and 67.

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