Carrion v. USDA Rural Housing Serv. (In re Roldan)
| Decision Date | 13 June 2012 |
| Docket Number | CASE NO. 10-10792 (ESL),ADVERSARY NO. 11-00094 |
| Parties | In re: MARIELEXYS CESTARY ROLDAN Debtor JOSE R. CARRION Chapter 13 Trustee Plaintiff v. USDA RURAL HOUSING SERVICE Defendant |
| Court | U.S. Bankruptcy Court — District of Puerto Rico |
This adversary proceeding is before the court upon a Motion for Summary Judgment (Docket No. 26) filed by the Debtor, subsequently adopted by the Chapter 13 Trustee (the "Trustee", Docket No. 46), seeking an order to have the USDA Rural Housing Service ("USDA") return to the bankruptcy estate her mortgage note for cancellation purposes and for the USDA's Claim No. 2 to be allowed as a general unsecured creditor. The USDA filed its Opposition thereto (Docket No. 27) also requesting that summary judgment be entered dismissing the instant Complaint, to which Debtor replied (Docket No. 32). The parties filed a Joint Motion Submitting Uncontested Facts (Docket No. 25) and filed their respective memoranda of law (Docket Nos. 27, 28 & 33). After considering all the arguments and pleadings, for the reasons stated herein, the Debtor's and Trustee's Motion for Summary Judgment (Docket Nos. 26 & 46) is granted and the USDA's Opposition (Docket No. 32) is denied.
The Debtor filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code on November 16, 2010 (Lead Case Docket No. 1). In Schedule A, Debtor listed two real properties, including Lot No. 75-G located in Urb. Altamira, Fajardo, Puerto Rico (the "Real Property") with a scheduled value of $90,000 (without deducting any secured claim or exemption) and a secured claim over it of $70,216 (Lead Case Docket No. 1, p. 21). The Debtor also included the USDA asa secured creditor in Schedule D (Creditors Holding Secured Claims) in the amount of $57,903.00 (Schedule D, Lead Case Docket No. 1, p. 27). On December 10, 2010 and November 7, 2011, the USDA filed a secured proof of claim and an amended proof of claim, respectively, both in the amount of $86,790.87 (Claim Nos. 2-1 & 2-2).
On April 4, 2011, the Debtor filed the instant Complaint (Docket No. 1) claiming that she acquired and received possession of the Real Property on April 16, 1998 through a loan with the USDA, but that the latter filed and withdrew the mortgage deed from the Fajardo Property Registry (the "Property Registry"). The Debtor avers that after filing and withdrawing the same mortgage deed on several occasions, the latest refiling of those mortgage documents was on November 3, 2010 at Entry No. 779, Daily Register 229. Thus, she contends that because she filed for bankruptcy 13 days later (to wit, on November 16, 2010) the USDA's refiling of its mortgage deed constitutes a transfer of interest that occurred within 90 days prior to the bankruptcy petition and that as a result the mortgage lien can be avoided as a preferential transfer under 11 U.S.C. § 547(b). Based on the foregoing, the Debtor seeks a judgment against the USDA to return to the bankruptcy estate the mortgage note for cancellation purposes and to have the USDA's Claim No. 2 be deemed as unsecured.
On July 5, 2011, the USDA filed its Answer to the Complaint (Docket No. 15) admitting most of the factual allegations but denying the Debtor's legal conclusions. The USDA affirmatively alleges that the mortgage lien the Debtor seeks to avoid falls under the exception provided in 11 U.S.C. § 547(c)(3) for it enabled the Debtor to acquire the Real Property, and that the delay in the registration of the deeds of sale and mortgage at the Property Registry was the result of acts and/or omissions of third parties not attributable to the USDA. It also sustains that the transfer of interest in this case took place from the date of the initial filing of the deed of sale and mortgage, to wit, on May 11, 1998.
On November 11, 2011, the Debtor and the USDA filed a Joint Motion Submitting Uncontested Facts to which they attached the corresponding supporting documentary evidence (Docket No. 25). That same day, the Debtor filed her Motion for Summary Judgment and Memorandum of Law in Support [Thereof] (Docket Nos. 26 & 28), and the USDA filed its ownMemorandum of Law and Request for Summary Judgment (Docket No. 27). In essence, the Debtor sustains that the transfer of her interest in the Real Property happened on November 3, 2010 and that pursuant to Puerto Rico Law, the actual transfer of interest is not valid against her as a hypothetical judicial lien holder and thus can be set aside and avoided under 11 U.S.C. § 547 because it happened 13 days prior to the bankruptcy petition. Conversely, the USDA contends that the transfer of the Real Property occurred at the sale of the Real Property on April 16, 1998, to wit, 4,507 days prior to the bankruptcy petition and that therefore 11 U.S.C. § 547 is inapplicable.
On December 2, 2011, the Debtor filed her Opposition to [USDA]'s Motion for Summary Judgment (Docket No. 32). On December 5, 2011, the USDA filed an Opposition to [Debtor]'s Memorandum of Law in Support of her Motion for Summary Judgment (Docket No. 33).
On February 9, 2012, this court raised sua sponte its concern as to whether the Debtor had standing to exercise the avoidance powers granted to trustees in Sections 544, 545 and 547 of the Bankruptcy Code under the requirements established in Dickson v. Countrywide Home Loans (In re Dickson), 655 F.3d 585 (6th Cir. 2011) and issued an Order for the parties to file joint or separate briefs on that matter in 15 days (Docket No. 34). On February 23, 2012, the USDA filed a Motion in Compliance insisting on the dismissal of the instant case (Docket No. 36). Debtor initially requested an extension of time to comply with said Order indicating that the Chapter 13 Trustee (the "Trustee") was considering the possibility of joining her as a plaintiff in this case and that they would be meeting to that extent. On March 9, 2012, the Trustee filed a Motion ... to Join the Above-Captioned Adversary Proceeding, to Ratify Averments and for Leave to Amend Complaint (Docket No. 40). To that extent, the Debtor filed that same day a Motion in Compliance with Order asserting that in view of the Trustee's Motion (referring to Docket No. 40), the standing issue had become moot (Docket No. 41). On March 13, 2012, the court granted the Trustee's Motion (Docket No. 42). On March 19, 2012, the Trustee filed an Amended Complaint (Docket No. 44) only to eliminate references to the Trustee as defendant and be named as plaintiff. The USDA and the Trustee filed separate Motions for [the] Disposition of Adversary Proceeding on April 11 and 12, 2012, respectively, arguing that because no new allegations had been made, and having the standing controversy been surpassed, the court was in position rule upon the dispositive motions submittedby the Debtor [as upheld by the Trustee] and the USDA (Docket Nos. 45 & 46).
After considering the totality of the record, including the Joint Motion Submitting Uncontested Facts (Docket No. 25), the following material facts are uncontested:
1. On April 16, 1998, the Debtor purchased the Real Property located at Lot No. 75-G, Urb. Altamira, Fajardo, Puerto Rico. On that same date, Deed of Purchase No. 32 (the "Purchase Deed") was executed before Notary Public Rosa Permuy Calderón whereby the Debtor acquired the Real Property from Xuapa, Inc.
2. The Debtor acquired the Real Property to use it as a residence, and she received possession of it upon signing the Purchase Deed.
3. On April 16, 1998, the Debtor also subscribed a Promissory Note for $65,000. The loan served the Debtor to obtain ownership of the Real Property with the assistance of the USDA, then known as Farmers Home Administration, through a program known as "Section 502 Direct Loan Program". The Promissory Note established an annual interest rate of 6.75%, with monthly payments to be made the 16th of every month beginning on May 16, 1998.
4. On April 16, 1998, the Debtor also executed a Deed of Mortgage No. 33 (the "Mortgage Deed") before Notary Public Rosa Permuy to create a voluntary mortgage on the Real Property to secure the loan obligation evidenced by the Promissory Note of $65,000. The Debtor also requested government subsidy assistance by subscribing a document titled Subsidy Repayment Agreement pursuant to Section 521 of the Housing Act of 1949 (42 U.S.C. §1490a). This Agreement indicates the circumstances in which the subsidy benefits awarded by the government to the benefit of the Debtor may be subject to recapture. In essence, the subsidy recapture depends on whether the Debtor complies with the terms of payment, and uses the Real Property pursuant to the term of the agreement with the USDA. The loan maturity was scheduled for April 16, 2031.
5. On May 11, 1998 both the Purchase Deed and the Mortgage Deed were filed before the Property Registry, Puerto Rico, at seats 245 and 246, respectively, of Book 130 of the Daily Register.
6. On February 15, 2007, the Registrar for the Property Registry issued a defect ("falta")for the registration of the Purchase Deed and Mortgage Deed. Specifically, the notice stated that the Plat1 lacked a Resolution of the Puerto Rico Permits Board, also known as A.R.Pe. The Registrar's notice indicated that pursuant to Article 70 of Puerto Rico's Mortgage Law, 30 L.P.R.A. § 2273, the defect ("falta") would be deemed consented ("consentida") on March 7, 2007, and lapsed ("caducada") on April 17, 2007.
7. On May 22, 2009, the Property Registrar issued another notice to the effect that there were defects ("faltas") to the registration of the Purchase Deed and Mortgage Deed. Specifically, the notice stated that the Plat lacked a Resolution of the Puerto Rico Permits Board. This second notice also indicated that pursuant to 30 L.P.R.A. § 2273, the defect would be deemed consented ("consentida") on June 11, 2009, and lapsed ("caducada") on July 21, 2009.
8. Both the Purchase Deed and...
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