In re Ruben Terron Hernandez Sylvette Perez Collado

• Decision Date: 02 October 2014
• Docket Number: CASE NO. 13-08012 (ESL)
• Parties: IN RE: RUBEN TERRON HERNANDEZ SYLVETTE PEREZ COLLADO Debtors
• Court: U.S. Bankruptcy Court — District of Puerto Rico

IN RE: RUBEN TERRON HERNANDEZ SYLVETTE PEREZ COLLADO Debtors

CASE NO. 13-08012 (ESL)

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO

October 2, 2014

CHAPTER 7

OPINION AND ORDER

This case is before the court upon the Debtors['] Reconsideration Upon the Opinion and Order Granting Motion for Sanctions, Reasonable Expenses and Attorneys' Fees Pursuant to Federal Bankruptcy Rule 9011 [Sic] (the "Motion for Reconsideration") filed by the Debtors' counsel on June 17, 2014 (Docket No. 53). The Debtors' counsel alleges that the court in its Opinion and Order¹ entered on June 2, 2014 (the "Opinion and Order", Docket No. 50) misapplied the requirements of Fed. R. Bankr. P. 9011 in light of the different interpretations to which Section 109(g)(2), 11 U.S.C. § 109(g)(2), may be subject, and also that the sanctions are excessive.

Jurisdiction

The court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core proceeding pursuant to 28 U.S.C. §157(b)(1) and (b)(2)(A). Venue of this proceeding is proper under 28 U.S.C. §§ 1408 and 1409.

Procedural Background

The procedural background leading to the Opinion and Order is detailed in the same and is incorporated herein. See In re Terron Hernandez, 513 B.R. at 175-179.

Applicable Law and Analysis

"Motions to reconsider are not recognized by the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure in haec verba." In re Lozada Rivera, 470 B.R. 109, 112(Bankr. D.P.R. 2012), citing Jimenez v. Rodriguez (In re Rodriguez), 233 B.R. 212, 218-219 (Bankr. D.P.R. 1999), conf'd 17 Fed. Appx. 5 (1^st Cir. 2001); Van Skiver v. United States, 952 F.2d 1241, 1243 (10^th Cir. 1991); Lavespere v. Niagara Mach. & Tool Works Inc., 910 F.2d 167, 173 (5^th Cir. 1990), cert. denied 510 U.S. 859, abrogated on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069, 1075-1076 (5^th Cir. 1994). Rather, federal courts have considered motions so denominated as either a motion to "alter or amend" under Fed. R. Civ. P. 59(e) or a motion for relief from judgment under Fed. R. Civ. P. 60(b). See Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1^st Cir. 2009) (noting a motion for reconsideration implicated either Fed. R. Civ. P. 59(e) or 60(b)); Equity Security Holders' Committee v. Wedgestone Financial (In re Wedgestone Financial), 152 B.R. 786, 788 (D. Mass. 1993). "These two rules are distinct; they serve different purposes and produce different consequences. Which rule applies depends essentially on the time a motion is served. If a motion is served within [fourteen²] days of the rendition of judgment, the motion ordinarily will fall under Rule 59(e). If the motion is served after that time, it falls under Rule 60(b)." In re Lozada Rivera, 470 B.R. at 113, quoting Van Skiver, 952 F.2d at 1243. Also see Universal Ins. Co. v. DOJ, 866 F. Supp. 2d 49, 73 (D.P.R. 2012) ("A motion is characterized pursuant to [Fed. R. Civ. P.] 59(e) or [Fed. R. Civ. P.] 60(b) based upon its filing date.") "The substance of the motion, not the nomenclature used or labels placed on motions, is controlling." In re Lozada Rivera, 470 B.R. at 113. Under either rule, "the granting of a motion for reconsideration is 'an extraordinary remedy which should be used sparingly.'" Palmer v. Champion Mortg., 465 F.3d 24, 30 (1^st Cir. 2006) (citations omitted).

Because the Motion for Reconsideration was timely filed, it will be considered under Fed. R. Civ. P. 59(e), applicable to bankruptcy proceedings through Fed. R. Bankr. P. 9023.

Fed. R. Civ. P. 59(e) itself does not state the grounds on which relief under the rule may be granted. Therefore, trial courts have considerable discretion in deciding whether to grant ordeny a motion to alter or amend under Fed. R. Civ. P. 59(e). See ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 55 (1^st Cir. 2008) ("[Trial] courts enjoy considerable discretion in deciding [Fed. R. Civ. P.] 59(e) motions, subject to circumstances developed in the case law."); Venegas-Hernández v. Sonolux Records, 370 F.3d 183, 190 (1^st Cir. 2004), citing Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 355 (5^th Cir. 1993); Robinson v. Watts Detective Agency, 685 F.2d 729, 743 (1^st Cir. 1982). Generally, in order for a motion for reconsideration to proceed under Fed. R. Civ. P. 59(e), the movant must clearly establish a manifest error of law or present newly discovered evidence that could not have been diligently found during the case. See Schwartz v. Schwartz (In re Schwartz), 409 B.R. 240, 250 (B.A.P. 1^st Cir. 2008), citing In re Rodríguez, 233 B.R. at 219. The Court of Appeals for the "First Circuit has explained that a motion for reconsideration brought under Fed. R. Civ. P. 59(e) must be based upon newly discovered evidence or a manifest error of law or fact." BBVA v. Vazquez (In re Vasquez), 471 B.R. 752, 760 (B.A.P. 1^st Cir. 2012), citing Aybar v. Crispin-Reyes, 118 F.3d 10, 16 (1^st Cir. 1997). "To meet the threshold requirements of a successful [Fed. R. Civ. P.] 59(e) motion, the motion must demonstrate the reason why the court should reconsider its prior decision and must set forth facts or law of a strongly convincing nature to induce the court to reverse its earlier decision." In re Schwartz, 409 B.R. at 250 (citations omitted).

"A motion for reconsideration ' does not provide a vehicle for a party to undo its own procedural failures and it certainly does not allow a party to introduce new evidence or advance arguments that could or should have been presented to the district court prior to the judgment." Marks 3-Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc., 455 F.3d 7, 15-16 (1^st Cir. 2006) (citations omitted). Thus, a motion for reconsideration cannot be used as a vehicle to re-litigate matters already litigated and decided by the court. See Standard Química de Venezuela v. Central Hispano International, Inc., 189 F.R.D. 202, n.4 (D.P.R. 1999). In sum, "[a] party cannot use a Rule 59(e) motion to rehash arguments previously rejected or to raise ones that could, and should, have been made before judgment issued." See Soto-Padró v.Public Buildings Authority, 675 F.3d 1, 9 (1^st Cir. 2012) (citations omitted). Conversely, the court should renew and reconsider whether it "patently misunderstood a party ... or has made an error not of reasoning by apprehension." Ruiz Rivera v. Pfizer Pharmaceuticals, LLC, 521 F.3d 76, 82 (1^st Cir. 2008). Also see Mulero-Abreu v. Puerto Rico Police Department, 675 F.3d 88, 94-95 (1^st Cir. 2012) (granting reconsideration in cases of "manifest error of law"). "The granting of a motion for reconsideration is an extraordinary remedy which should be used sparingly." United States ex rel. Ge v. Takeda Pharm. Co., 737 F.3d 116, 127 (1^st Cir. 2013).

In summary, motions for reconsideration under Fed. R. Civ. P. Rule 59(e) are generally recognized for three grounds: an intervening change in the controlling law, a clear legal error, or newly discovered evidence. See Soto-Padró, 675 F.3d at 9.

In the Opinion and Order, the court concluded that:

Debtors' counsel filed the second bankruptcy petition for an improper purpose pursuant to Fed. R. Bankr. P. 9011(b)(1), that is, to delay and frustrate the continuance of the foreclosure proceedings in state court of a real property which were being executed by BPPR. The court also finds that the filing of the second bankruptcy petition was in direct contravention to Fed. R. Bankr. P. 9011(b)(2) and 11 U.S.C. § 704(b)(4)(C), given that these provisions require attorneys, in this case Debtors' attorney, to perform a reasonable preliminary investigation of the facts and the applicable law before filing a bankruptcy petition under Chapter 7 of the Bankruptcy Code. The court further finds that Debtors' attorney knew that the Debtors had filed a previous bankruptcy case since he filed a motion requesting the extension of the automatic stay pursuant to 11 U.S.C. § 362(c)(3) on the same date as the date the Chapter 7 bankruptcy petition was filed. Moreover, the Debtors' position and reasoning for requesting dismissal of its prior bankruptcy case and for filing the instant Chapter 7 bankruptcy petition are contradictory. Thus, BPPR's Motion for Sanctions (Docket No. 11) is hereby granted.

In re Terron Hernandez, 513 B.R. at 183.

The Motion for Reconsideration does not establish that there was an intervening change in the controlling law, a clear legal error, or newly discovered evidence. Thus, the Motion for Reconsideration is hereby denied to the extent that it seeks to alter the conclusion that the attorney violated Fed. R. Bankr. P. 9011.

Notwithstanding, the Debtors' counsel also questions the amount of sanctions imposed. At the time of the entry of the Opinion and Order the extent of the sanction in monetary terms was not known. The court found that:

this is the first time, that the court is aware of, that the Debtors' attorney has engaged in conduct contrary to Fed. R. Bankr. P. 9011(b) and Section 707(b)(4)(C) of the Bankruptcy Code. The pattern and conduct of counsel for the Debtors before this court has been characterized by professionalism. This case is an isolated event. Thus, the court admonishes the Debtors' attorney for his conduct, which resulted in unnecessary litigation. The court also imposes as a monetary sanction the amount of reasonable attorneys' fees and costs which BPPR had to incur to present its position on this matter.

In re Terron Hernandez, 513 B.R. at 183.

The court sanctioned Debtors' counsel as follows:

The court admonishes Debtors' attorney for his conduct and imposes as monetary sanctions the reasonable attorneys' fees and costs in favor of BPPR. BPPR shall file a statement within fourteen (14) days detailing the attorney's fees and costs incurred in opposing the filing this (second) petition.

In re Terron Hernandez, 513 B.R. at 183.

Banco Popular de Puerto Rico ("BPPR") filed a Motion in Compliance Opinion and Order detailing attorneys' fees in the amount of $9,151 (Docket No. 52...