Figueroa v. Banco Popular de P.R. (In re Figueroa), 09-07725 (MCF)
| Decision Date | 07 December 2021 |
| Docket Number | 09-07725 (MCF),Adversary 19-00032 |
| Parties | IN RE: JOSE V. FELICIANO FIGUEROA Debtor JOSE V. FELICIANO FIGUEROA Plaintiff, v. BANCO POPULAR DE PUERTO RICO; A INSURANCE; B INSURANCE Defendants |
| Court | U.S. Bankruptcy Court — District of Puerto Rico |
IN RE: JOSE V. FELICIANO FIGUEROA Debtor
JOSE V. FELICIANO FIGUEROA Plaintiff,
v.
BANCO POPULAR DE PUERTO RICO; A INSURANCE; B INSURANCE Defendants
No. 09-07725 (MCF)
Adversary No. 19-00032
United States Bankruptcy Court, D. Puerto Rico
December 7, 2021
CHAPTER 13
OPINION AND ORDER
MILDRED CABAN FLORES, UNITED STATES BANKRUPTCY JUDGE
The Plaintiff, Jose V. Feliciano Figueroa ("Debtor"), alleges that the Defendant, Banco Popular de Puerto Rico ("BPPR"), violated the automatic stay and the discharge injunction. The dispute centers around BPPR's application of post-discharge payments of a mortgage loan to periods that were within the bankruptcy proceeding, which resulted in a foreclosure proceeding against the Debtor after completing his bankruptcy.
I. UNDISPUTED FACTS AND PROCEDURAL HISTORY
Pre-bankruptcy events
On April 29, 2009, Doral Bank ("Doral") filed a complaint in the Court of First Instance, Rio Grande Part against the Debtor for collection of monies and
foreclosure (Civil Case No. FCCI2009-0237). Doral was the holder of the mortgage note that was secured by a lien on the Debtor's residence.
Events during the bankruptcy
The Debtor filed a voluntary petition under chapter 13 of the Bankruptcy Code on September 15, 2009 and included Doral as a creditor. Bankruptcy Case No. 09-07725 (MCF). On October 21, 2009, Doral filed proof of claim 3-1 in the amount of $107, 629.45, claimed as secured. The Debtor's pre-petition arrears to Doral amounted to $20, 307.71. Five days later, Doral through its counsel filed a notice of appearance and request for notice in the bankruptcy case. Docket No. 23, Case No. 09-07725-MCF. The foreclosure proceeding was stayed on December 10, 2009.
On July 16, 2010, the bankruptcy court entered an order confirming the chapter 13 plan, which provided for a cure of the default by payment of the arrears through the chapter 13 trustee and maintenance of current post-petition payments on the mortgage by the Debtor during the pendency of the plan. Subsequently, the Debtor fell behind on his post-petition mortgage payments to Doral. On September 24, 2012, Doral filed a motion for relief from stay. Docket No. 75, Case No. 09-07725-MCF. Doral amended its claim on November 8, 2012 (POC 3-2) and five days later withdrew the motion for relief from stay. Docket No. 86, Case No. 09-07725-MCF. On December 13, 2012, Doral amended its claim again, to include $3, 149.24 in post-petition arrears (POC 3-3). A second motion for relief from stay was filed by Doral on August 15, 2013. Docket No. 96, Case No. 09-07725-MCF. The Debtor amended his plan on October 7, 2013 and provided for payment of the post-petition mortgage arrears owed in the amount of $3, 149.24 for the months of May, August, September and October 2012 and post-petition mortgage arrears owed in the amount of $2, 475.00 for the months of July, August, and September 2013. Docket No. 106, Case No. 09-07725-MCF. On October 18, 2013, Doral amended its proof of claim and claimed $75, 587 as principal owed and $2, 472.18 in post-petition
arrears (POC 3-4). The motion for relief from stay was withdrawn by Doral two months later. Docket No. 120, Case No. 09-07725-MCF.
On January 23, 2015, the Trustee filed a Notice of Final Cure Mortgage Payment, pursuant to Fed.R.Bankr.P. 3002.1. Docket No. 130, Case No. 09-07725-MCF. The notice was not answered by Doral as required by sub-section (g) of the rule. On February 18, 2015, the Trustee filed a "Chapter 13 Standing Trustee's Final Report and Account." Docket No. 132, Case No. 09-07725-MCF. The report indicated that the Trustee paid Doral $5, 621.42 and $20, 307.71. Id. The following day, the court entered the order of discharge. Docket No. 134, Case No. 09-07725-MCF. Doral was notified of the order of discharge. Docket No. 135, Case No. 09-7725-MCF.
Post-discharge events
Nine days later, on February 27, 2015, Doral was closed, and the FDIC was named as its receiver. On that same date, BPPR acquired the mortgage note. On this same month, the Debtor's employer ceased operations and laid off its employees. As a result of the Debtor's unemployment, he defaulted payment for the months of February 2015 and March 2015. The Debtor attempted to pay February 2015 and March 2015 and was informed by an employee of BPPR that he had five months in mortgage arrears, stemming from November 2014 up to March 2015 and that payments would be applied to the previously owed account statements. On May 26, 2015, BPPR handed to the Debtor a document titled "Post-Petition Payment Reinstatement Figures." This document indicated that the Debtor was in arrears for the months of August 2011, November 2011, February 2012, August 2014, March 2015, April 2015, and May 2015. The Debtor began receiving notices of delinquency from BPPR that warned him that his home might be foreclosed if he did not become current on his monthly payments. This prompted the Debtor to engage in conversations with BPPR to settle what he deemed to be an accounting error.
On September 21, 2015, BPPR appeared in the foreclosure case at the local court and requested the reopening of proceedings and to substitute Doral as plaintiff in the case. On October 7, 2015, the local court granted the request to reopen the proceedings and allowed BPPR to substitute Doral in the case. On June 29, 2016, BPPR requested the local court to enter default as to the Debtor. The Debtor filed a motion to dismiss on September 1, 2016, alleging that the allegations in the complaint were moot because he had paid all the mortgage arrears claimed in the complaint. On November 30, 2016, the local court denied the motion to dismiss. After several procedural events at the local court, judgment was entered against the Debtor on March 2, 2017. Notwithstanding, the local court stayed the judgment on April 4, 2017, after learning that the Debtor had applied for loss mitigation. The Debtor was unable to sign the final loss mitigation agreement. This adversary proceeding ensued. Both parties filed cross motions for summary judgment and oppositions. Docket Nos. 60, 66, 90 & 91.
II. DISPUTED ISSUE
Whether BPPR violated the automatic stay and the discharge injunction by applying post-discharge mortgage payments to months during the bankruptcy.
III. PARTIES CONTENTIONS
The Debtor argues that he paid his pre-petition and post-petition arrears through the life of the bankruptcy case. After simultaneously obtaining his discharge and losing his employment, he defaulted on his post-discharge payments of February and March 2015. When he tried to pay these arrears, BPPR informed him that they would credit payments from November 2014 onwards, because he was in arrears since that date. The Debtor contends that this accounting error led BPPR to continue the foreclosure proceeding that was stayed due to the bankruptcy proceeding and
eventually obtained a foreclosure judgment. According to the Debtor, BPPR's application of payments to alleged arrears from when he was in bankruptcy violate the automatic stay and that BPPR's behavior violated the discharge order.
BPPR denies that the Debtor made all direct post-petition mortgage payments while in bankruptcy. It argues that according to Doral's books and records, the Debtor defaulted with several post-petition mortgage payments as required by the plan. BPPR accuses the Debtor of laches because he unreasonably allowed BPPR to proceed with foreclosure litigation and sought protection from the bankruptcy court after BPPR had obtained its foreclosure judgment. It also states that the claims for violation of the automatic stay must be dismissed because the facts pled in the complaint relate to facts that occurred after the discharge order was entered. With regards to the post-discharge counts, BPPR claims that the Debtor's mortgage debt is not dischargeable and that it can proceed to foreclose in rem for any deficiency. BPPR does not address the failure of its predecessor, Doral, to reply to the Trustee's Notice of Final Cure Mortgage Payment, pursuant to Fed.R.Bankr.P. 3002.1 as required by section (g) of the rule.
IV. LEGAL STANDARD
Under Fed.R.Civ.P. 56, made applicable in bankruptcy by Fed.R.Bankr.P. 7056, a summary judgment is available if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 4 (1st Cir. 2010). Summary judgment is appropriate for piercing the pleadings and assessing the proof to determine whether a trial is required. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is proper to enter summary judgment when the movant shows that there are no genuine disputes of
material fact and consequently the movant is entitled to judgment as a matter of law. Id. at 322; Policastro v. Northwest Airlines, Inc., 297 F.3d 535, 538 (6th Cir. 2002). When both parties move for summary judgment, each party must carry its own burden of proof as the moving party in its cross motions and as the nonmoving party in response to the other party's motion. Wells Real Estate Inv. Trust II, Inc., 615 F.3d 45, 51 (1st Cir. 2010). If there are no disputed material facts, only one party is entitled to judgment as a matter of law. Encanto Rests., Inc. v. Aquino Vidal (In re Cousins Int'l Food Corp.), 553 B.R. 197, 205 (Bankr. D.P.R. 2016). This matter is appropriate for summary judgment disposition as there are no material facts in dispute and it is a matter of...
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