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

• Decision Date: 27 December 2011
• Docket Number: Bankruptcy No. 99–10119(ESL).,Adversary No. 11–00146(ESL).
• Citation: 464 B.R. 86
• Parties: In re Santos Surita ACOSTA, Carmen Cruz Silva, Debtors.Santos Surita Acosta, Carmen Cruz Silva, Plaintiffs v. Reparto Saman Inc., Defendant.
• Court: U.S. Bankruptcy Court — District of Puerto Rico

464 B.R. 86

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.

Dec. 27, 2011.

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

Myrta Estrella Nieves Blas, Mayaguez, PR, for Defendant.

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

Before this court is Defendant's Motion to Dismiss (Docket No. 6) under Fed.R.Civ.P. 12(b)(6) claiming that the Complaint's factual allegations are insufficient and that Section 362(b)(3) of the Bankruptcy Code, 11 U.S.C. § 362(b)(3), provides an exception to the automatic stay to perfect or continue to perfect an interest in property pursuant to 11 U.S.C. § 546(b). Also pending before the Court is Plaintiffs' Motion for Partial Summary Judgment (Docket No. 11) claiming that although Defendant had a pre-petition interest in Plaintiffs' property, they subsequently withdrew their mortgage from the Property Registry and then proceeded to re-file and record the same after the commencement of the case. Plaintiffs therefore seek partial summary judgment regarding the alleged violation of the bankruptcy discharge. A pre-trial hearing was held on November 22, 2011 (Docket No. 27). After considering the arguments and pleadings on record, based on the totality of the circumstances, for the reasons stated herein Defendant's Motion to Dismiss (Docket No. 6) is denied and Plaintiffs' Motion for Partial Summary Judgment (Docket No. 11) is granted.

Procedural Background

Plaintiffs filed a voluntary Chapter 7 bankruptcy petition on August 2, 1999 (Lead Case No. 99–10119, Docket No. 1 ¹). In Schedule A (Real Property), 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 (Secured Claims), they listed Defendant Reparto Saman, Inc. as their only secured creditor (Lead Case Docket No. 1, p. 9).

On September 17, 1999, 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 indicating that it has no value or is burdensome to the estate (Lead Case Docket No. 8) and 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 Discharge of Debtors and the Order Discharging Trustee and Closing Case were entered (Lead Case Dockets Nos. 13 & 14).

On August 28, 2008, 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, Plaintiffs again moved to reopen the case (Lead Case Docket No. 25), and on July 8, 2011 said petition was granted (Lead Case Docket No. 29).

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

On August 1, 2011, Defendant filed a Motion to Dismiss (Docket No. 6) pursuant to 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). Id., p. 6. On August 31, 2011, Plaintiffs moved for partial summary judgment on Defendant's alleged violation of the permanent discharge injunction ² pursuant to 11 U.S.C. § 727 (Docket No. 11). Plaintiffs also filed on that date an opposition to Defendant's Motion to Dismiss (Docket No. 12), arguing that the mortgage had been withdrawn on October 18, 1999, that as a result the reach back provision in Puerto Rico's Mortgage Law is not applicable and that the same was not properly constituted at the time of Plaintiffs' discharge on February 11, 2000. On October 10, 2011, Defendant filed a Sur-reply (Docket No. 20) arguing solely that the Complaint was not well-pleaded. However, Defendant did not address or contest Plaintiffs' allegation that the mortgage had been withdrawn from the Property Registry during Plaintiffs' bankruptcy proceeding.

After due notice to all interested parties, including the Trustee, a pre-trial and argumentative hearing was initially set for November 21, 2011 but later rescheduled for November 22, 2011. See Dockets Nos. 3, 4, 21, 22, 23, 24, 27 & 29. Both parties presented their respective arguments before the court. The following material facts are uncontested by Defendant's admission and/or stem from the Docket entries in the Lead Case:

Material Uncontested Facts

1. On May 13, 1996, Plaintiffs purchased the Real Property by virtue

of Purchase and Mortgage Deed No. 98 (the “ Purchase and Mortgage Deed ”) executed on that day before Notary Public Susan Baez Dixon.

2. The Real Property was purchased for $35,800, of which $35,000 was secured by a mortgage to Defendant. The Purchase and Mortgage Deed was filed at the corresponding section of Puerto Rico Property Registry on October 7, 1998.

3. On August 2, 1999, Plaintiffs filed a voluntary Chapter 7 bankruptcy petition (Lead Case No. 99–10119, Docket No. 1) ³

4. On August 20, 1999, the Property Registrar notified certain defects (“faltas”) in the documents presented.

5. On October 18, 1999, the Purchase and Mortgage Deed was withdrawn from the Property Registry by Notary Public Susan Baez Dixon Baez.

6. On February 11, 2000, the Discharge of Debtors and the Order Discharging Trustee and Closing Case were entered (Lead Case Dockets Nos. 13 & 14) ⁴.

7. On March 29, 2000, Defendant filed foreclosure Complaint before the Court of First Instance at Cabo Rojo Court (Case No. I4CI20000211) which was dismissed by a Judgment entered on June 12, 2000 in light of the automatic stay resulting from this bankruptcy proceeding.

8. On June 26, 2001, the Purchase and Mortgage Deed was re-filed at the Property Registry.

9. On July 13, 2003, the mortgage was recorded by the Property Registrar.

10. On January 23, 2008, the Defendant filed another foreclosure Complaint before the Court of First Instance, Superior Court of Cabo Rojo (Case No. I4CI200800054).

The court noted that the Trustee was not present at the hearing, although he was adequately notified. See Docket No. 27.

Applicable Law & Analysis

(A) Defendant's Motion to Dismiss

Fed. R. Bankr.P. 7012 makes Fed.R.Civ.P. 12(b)(6) applicable to adversary proceedings such as this one.

Pursuant to Fed.R.Civ.P. 8(a)(2), a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Although detailed factual allegations are not required, the Rule does call for sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. Therefore, to survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Twombly, 550 U.S. at 556, 127 S.Ct. 1955. This new “plausibility” standard replaced the traditional standard, under which the movant was required to show “beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.” Milton I. Shadurupdates and Mary P. Squiers, 2–12 Moore's Federal Practice–Civil § 12.34[1][a]. The current standard requires sufficient facts that “raise the right to relief above the speculative level”. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. See also Wright & Miller, Federal Practice and Procedure: Civil 3d § 1357. The plausibility standard is not akin to a “probability requirement”, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of entitlement to relief.” Twombly, 550 U.S. at 557, 127 S.Ct. 1955. The Twombly standard was further developed by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), advising lower courts that “determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” 129 S.Ct. at 1950. “In keeping with these principles, a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950. In sum, allegations in a complaint cannot be speculative and must cross “the line between the...