BMW Fin. Servs., N.A. v. Rivas (In re Rivas)
| Decision Date | 21 October 2016 |
| Docket Number | Adv. Pro. No. 14-1469 (VFP),Case No. 14-14111 (VFP) |
| Citation | 558 B.R. 690 |
| Parties | In re: Reyvis D. Rivas, Debtor. BMW Financial Services, N.A., LLC, Plaintiff, v. Reyvis D. Rivas, Defendant. |
| Court | U.S. Bankruptcy Court — District of New Jersey |
MESTER & SCHWARTZ, PC, Jason Brett Schwartz, Esq., 1333 Race Street, Philadelphia, PA 19017, Attorneys for Plaintiff
FITZGERALD & ASSOCIATES, Nicholas Fitzgerald, Esq., 649 Newark Avenue, Jersey City, NJ 07306, Attorneys for Defendant
VINCENT F. PAPALIA
This matter is before the Court on the trial of BMW Financial Services' (the “Plaintiff” or “BMW”) Complaint objecting to the discharge of Reyvis D. Rivas (the “Debtor”) under §§ 727(a)(2), (a)(3) and (a)(5) of the Bankruptcy Code
based primarily on the “disappearance” of a 2011 BMW X6 vehicle purchased by Debtor (the “Vehicle”). Debtor claims it was stolen; BMW claims its theft was orchestrated by the Debtor. Trial was conducted on April 9, 2015, after which the Court directed the parties to make post-trial submissions. Subsequent to trial and the post-trial submissions, the Debtor advised the Court that the Vehicle had been located in California (Dkt. Nos. 34 and 35). As a result, the parties requested and were granted time to make additional submissions regarding this newly discovered evidence. The record was closed in this matter on July 18, 2016. The Court considered the testimony, the evidence at trial and the parties' pre- and post-trial submissions (to the extent referred to in this Opinion), and now renders its decision.
The Court has jurisdiction over this matter under 28 U.S.C. §§ 1334(a)
and 157(a) and the Standing Order of the United States District Court dated July 10, 1984, as amended September 18, 2012, referring all bankruptcy cases to the bankruptcy court. This matter is a core proceeding within the meaning of 28 U.S.C. §§ 157(b)(2)(A) and (J). Venue is proper in this Court pursuant to 28 U.S.C. § 1408. The following constitutes the Court's findings of fact and conclusions of law as required by FED. R. BANKR. P. 7052.1
On March 6, 2014, the Debtor filed a Chapter 7 bankruptcy petition (Main Dkt. No. 1). On May 13, 2014, the Plaintiff timely filed an Adversary Complaint objecting to the Debtor's discharge under §§ 727 (a)(2), (a)(3) and (a)(5) of the Bankruptcy Code
At two prior hearings on the case, the first on July 15, 2014, at which the Court denied Debtor's motion for summary judgment or to dismiss the complaint, and the second on December 16, 2014, at which the Court denied Plaintiff's motion to amend the complaint, Judge Kaplan (who was previously assigned to this case) limited the factual bases of Plaintiff's claims to the Debtor's loss or theft of the Vehicle as conduct that may require the Court to deny Debtor's discharge under 11 U.S.C. §§ 727(a)(2)(A)
, (a)(3) or (a)(5). The Court made clear that it would not allow Debtor's failure to provide insurance as a basis to deny discharge under 11 U.S.C. § 727(a)(3) (). At the July 15, 2014 hearing, the Court observed:
I'm looking at the complaint. The only possibility I would see as a basis for a 727 objection to discharge would be if there was some collusion between Mr. Rivas and whoever stole the vehicle, and ... the vehicle was liquidated, sold as part of some machinations.
(Dkt. No. 23, 7/15/14 Hr'g Tr. 2:16-21). Later in that hearing, the Court rejected Plaintiff's proposal to base the § 727(a)(3)
claim on any failure by Debtor to provide proof of insurance of the Vehicle:
(Dkt. No. 23, 7/15/14 Hr'g Tr. 4:1-20).
On December 16, 2014, the Court denied the Plaintiff's motion to amend the complaint to include a count under 11 U.S.C. § 523
to except the debt from discharge or make Debtor's conduct in entering the retail installment contract a basis for denying discharge under § 727(a).2 The Court opened the hearing with the question:
[W]hat have you discovered in—uncovered in discovery that goes to the theft of the vehicle or a basis that you wouldn't have had before?
(Dkt. No. 24, 12/16/14 Hr'g Tr. 4:7-9). The Court concluded by reiterating that the factual and legal issues for Plaintiff's claim were limited to the loss of the Vehicle:
(Dkt. No. 24, 12/16/14 Hr'g Tr. 8:16-9:7). The Court then denied the Plaintiff's motion to amend the complaint to include the § 523(a)
count (Dkt. No. 24, 12/16/14 Hr'g Tr. 9:13-14). This Court will not revisit any of these rulings by Judge Kaplan, as it was not expressly asked to do so, although some of Plaintiff's arguments seem to do so implicitly, and this Court agrees with Judge Kaplan's analysis in any event.
On April 9, 2015, a trial was held (Dkt. No. 30). The Debtor and his brother Gilberto M. Rivas were the only witnesses called (Dkt. No. 30). For the reasons that follow, the Court will deny Plaintiff's claims for relief and dismiss the Complaint, with prejudice and without costs.
On June 20, 2013, the Debtor's 21st birthday, the Debtor and his brother, Gilberto M. Rivas (“Gilberto” together with Debtor the “Rivases” or the “Rivas Brothers”), went to ANS Auto Sales, Inc. (“ANS”) in Teterboro, New Jersey with the intention of purchasing a vehicle (Dkt. No. 30, 4/9/15 Hr'g Tr. 50-53). At the time of the purchase, the Debtor was attending college, living with his mother, and making $10.50 an hour (Dkt. No. 30, 4/9/15 Hr'g Tr. 53:4-6; 73:10-11; 132:21-25; 133:1-25).
The Debtor testified that the Vehicle was being purchased mostly as a gift for him, as he could not afford to purchase the Vehicle himself. It was the first time he was purchasing a car (Dkt. No. 30, 4/9/15 Hr'g Tr. at 51:9-21). He also testified that while the car was a gift from his brother, he would help him pay for it whenever he could (Dkt. No. 30, 4/9/15 Hr'g Tr. 81:3-82:22). Debtor testified, and BMW has not disputed, that Gilberto conducted all the negotiations with ANS. Debtor further testified that, as a result, “when I signed, I was agreeing to whatever they said” (Pl.'s Ex. 14, 2/10/15 Debtor Dep. Tr. 46:23-47:2).
The Rivases both testified that they dealt with two men at the dealership, a man with a Russian accent and a man named Neff (Dkt. No. 30, 4/9/15 Hr'g Tr. 51:23-24). Both Rivases spoke with “Neff” and with the man with the Russian accent, but Gilberto, who is seven years older than the Debtor and is like a “father figure” to him, played the lead role in negotiations for the purchase of the Vehicle (Dkt. No. 30, 4/9/15 Hr'g Tr. 54:14-23; 55:15; 56:2; 113:5-13 and 24; 121:1-25; 141:22-142:1).
At trial, there was fairly extensive testimony regarding two documents signed by the Debtor in connection with the purchase: a Dealertrack loan application (Pl.'s Ex. 4) and a Retail Installment Contract (Pl.'s Ex. 5). The Debtor testified that he saw and signed only the last page of the Dealertrack loan application (Pl.'s Ex. 4). Debtor acknowledged that much of the personal information on the application was correct (e.g., name, address, phone number, date of birth, etc.), but also testified that some of it was not, such as the mortgage payment, rent, level of education and business telephone. Significantly, he also testified that the salary information ($74,000) was incorrect and that he was not the comptroller of his company. In fact, he did not know what a comptroller was (Dkt. No. 30, 4/9/15 Hr'g Tr. 58:6-24; 69:14-74:21). Debtor provided the dealer with three paystubs that showed his salary.
Other than the paystubs, Debtor testified that he did not tell them what his salary was (Dkt. No. 30, 4/9/15 Hr'g Tr. 58:12-14; 78:19-23). Debtor further testified that none of the numbers were on the Retail Installment Contract (Pl.'s Ex. 5) when he signed it and that he did not review it before signing because he trusted his brother (Dkt. No. 30, 4/9/15 Hr'g Tr. 57:9-18; 79:19-80:23).
Ultimately, an agreement was reached for the purchase of the Vehicle (Pl.'s Ex. 11, ¶ 4). The Debtor and Gilberto paid $4,000 and $6,000 in cash, respectively, and traded in Gilberto's 2006 Range Rover, valued at $18,000 as a trade-in (with no liens against it), resulting in a total down payment of $28,000 towards the purchase price of the Vehicle (Dkt. No. 30, 4/9/15 Hr'g Tr. 53:11-13 and 23; 54:8;...
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