In Re: Fernando J. Amador Martinez
| Decision Date | 12 October 2010 |
| Docket Number | CASE NO. 09-03315 |
| Parties | In re: FERNANDO J. AMADOR MARTINEZ; A/K/A GASOLINERA AMADOR 1, INC. Debtor |
| Court | U.S. Bankruptcy Court — District of Puerto Rico |
This proceeding is before the court upon an urgent motion to set hearing for sale of property filed on October 1, 2010 by Wilfredo Segarra Miranda, the Chapter 7 trustee (hereinafter referred to as the "Trustee") (Docket No. 93). The Trustee filed the urgent motion because there is a buyer (Mr. Jorge Lebron Otero and his wife Aurea Soto Rivera) for one (1) of Debtor's real properties; and Banco Popular de Puerto Rico has approved the financing of $450,000.00 for the purchase of said property which expires on October 17, 2010 pursuant to a letter from Mr. Ezequiel Cruz of Banco Popular de Puerto Rico dated September 17, 2010 (Docket No. 92, Exhibit I). The Trustee in its urgent motion requests a hearing to resolve the following issues: (i) King Oil Corporation's (hereinafter referred to as "King Oil" or "Creditor") request to lift the automatic stay; and (ii) the summary judgment issues. Both basically revolve around one (1) core issue, namely, to determine that the Trustee as a bona fide purchaser of real property under the "strong arm powers" of 11 U.S.C. §544(a)(3) of the Bankruptcy Code may avoid an unrecorded attachment lien in conformity with the Mortgage Law of the Commonwealth of Puerto Rico.
The Trustee filed the motion for summary judgment on September 27, 2010 (Docket No. 91). On October 1, 2010, King Oil filed an opposition to the motion for summary judgment arguing that, (i) "... the prohibition to alienate, included in the Order ("Orden de Mandamiento de Embargo al Registrador") issued by the State Court, was duly registered in the Registry of Property;" (ii) and "... the attached study title indicates that the Order and Writ of Attachment ("Se acompaha Orden y Mandamiento, debidamente certificados") was pending the inscription at the Registry of Property" (Docket No. 93). For the reasons set forth below the Trustee's motion for summary judgment isgranted and King Oil's cross motion for summary judgment is denied.
_Fernando J. Amador Martinez a/k/a Gasolinera Amador 1, Inc. (hereinafter referred to as "Debtor" or "Mr. Amador") filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code on April 28, 2009. The 341 meeting of creditors was held on June 9, 2009 (Docket No. 16) and closed on July 10, 2009 (Docket No. 19). Mr. Amador included King Oil in his Schedule D-Creditors Holding Secured Claims as having a disputed secured claim in the amount of $ 174, 980.00 which was incurred in 08/2006 as a result of a judgment lien over a gas station in Quebradilla, Puerto Paco (Docket No. 5). On August 7, 2009, King Oil filed proof of claim number 5-1 in the amount of $494,745.74 alleging that the same was secured in its entirety.
On April 6, 2010 this case was converted to Chapter 7. The 341 meeting of creditors under Chapter 7 was held on June 9, 2010 and was held open for potential asset recovery (Docket No. 66)
On May 18, 2010, King Oil filed a motion to lift the automatic stay pursuant to Sections 362(d)(1) and (d)(2) alleging that its claim was secured by an attachment lien filed at the Puerto Rico Real Property Registry of Arecibo, Section II, at entry #1459 of the Book of Daily Operations #308 on April 2, 2008 (Docket No. 56). The Trustee opposed King's Oil motion for relief from the automatic stay based on the following: (Docket No. 63, paragraph 5, Exhibit I).
Subsequently, on July 12, 2010, the Trustee filed amotion for sale of property free and clear of liens and notice of intended sale by which he represented that he intends to sell the real property1 in controversy in the amount of $525,000.00 based on an option for sale agreement (Docket No. 75, Exhibit 2). The Trustee indicated as part of his proposed distribution of funds analysis that King Oil would receive the amount of $264,961.00 which corresponds to its attachment lien which in turn is based on a Certification issued by the Property Registrar of Arecibo, Sectionn, Hon. Maria V. Jimenez Maldonado, on June 21, 2010 of the above referenced real property (Docket No. 75, Exhibit I).
On July 12, 2010, the Trustee also filed an objection to King Oil's proof of claim number 5 arguing that King Oil's attachment lien2 was only secured for the principal amount of $264,961.00 based on a title search for the above referenced real property, hence the remaining amount of $229,784.74 being unsecured (Docket No. 76). The Trustee further argues that pursuant to Section 544(a)(3) a trustee may avoid any transfer of property of the debtor or avoid any obligation incurred by the debtor that is voidable by a bonafide purchase of real property, thus King Oil's attachment lien is secured up to the registered amount of $264,961.00 which appears in the Property Registry (Docket No. 76).
On July 13, 2010, a hearing was held regarding King Oil's motion relief from the automatic stay in which the court granted King Oil thirty (30) days to file a legal memorandum and fifteen (15) days for the Trustee to reply (Docket No. 81). On August 4, 2010, King Oil filed its opposition to the Trustee's proposed sale of real property arguing that: (i) the term of thirty (30) days granted by this court to file the memorandum of law has not lapsed; and (ii) the state court order and writ of attachment to the Property Registrar is not limited to the pre-judgment attachment lien but alsoincludes a prohibition of sale or encumbrance (Docket No. 83). Subsequently, on August 15, 2010, King Oil filed its memorandum of law in support of its motion from relief from the automatic stay and reply to the Trustee's objection to claim number five presenting the following arguments: (i) "...the property affected by the prohibition to alienate secures the total amount of the Judgment entered, including the post-judgment interest that accrues at the per diem rate of $135.94" and the prohibition to alienate included in the Order and Writ of Attachment to the Property Registrar impedes the sale of such real property; (ii) "...King Oil must receive payment of the totality of its Judgment as part of the proceeds of any sale of the property or be allowed to have the stay lifted in its favor in order to proceed with the public sale of the property to make its judgment credit effective;" and (hi) (Docket No. 85). On August 27, 2010 the Trustee filed his reply to King Oil's memorandum of law regarding its motion for relief from the automatic stay and claim number five and its opposition to the proposed sale of property free and clear of lien adducing the following legal arguments: (i) King Oil's lien is limited to the secured amount in the cautionary notice of attachment recorded at the Properly Registry pursuant to Articles 53, 123, 105 and 112 of the Puerto Rico Mortgage Law, 30 L.P.R.A. §§ 2256, 2412, 2355 and 2401 and Registry of Property Regulations Nos. 122.1-7 and 122.2-3, given that King Oil failed to record the final state court judgment which was for a greater amount than the previously recorded attachment lien, thus King Oil is only secured up to the amount of the pre-petition attachment lien ($264,961.00) recorded at the Property Registry; and (ii) the Trustee pursuant to Section 544(a)(3) and as a hypothetical bonafide purchaser of real property can void the unrecorded attachment lien in the amount of $229,784.74 which was not presented by Creditor for registration and thus, not recorded by the Property Registrar and included as part of the state court judgment which was rendered at a later date than the Order and Writ of Attachment (Docket No. 88).
Lastly, the Trustee filed a motion for summary judgment on September 27, 2010 which presents the same legal arguments included in his reply to King Oil's memorandum of law regarding the motion for relief of stay and claim number 5 and apposition to the proposed sale of properly free and clear of lien and which are included herein (Docket No. 91). On September 30, 2010, Creditor filed an opposition to the motion for summary judgment (Docket No. 93).
In a nutshell, the legal controversy in the instant case is whether the Trustee as a hypothetical lien creditor and bonafide purchaser of real property pursuant to Sections 544(a)(1) and (3) may void King Oil's unrecorded attachment in the amount of $229,784.74 which was not presented by Creditor for registration and thus, not recorded by the Property Registrar and included as part of the state court judgment which was rendered at a later date than the Order and Writ of Attachment.
Rule 56 of the Federal Rules of Civil Procedure, is applicable to this proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure, provides that summary judgment should be entered "if the pleadings, depositions, answers to...
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