Montalvo v. Vela (In re Montalvo)

• Decision Date: 14 October 2016
• Docket Number: CASE NO: 16–70186,ADVERSARY NO. 16–7010
• Citation: 559 B.R. 825
• Parties: In re: Jose Marcos Montalvo; dba Montalvo Roofing and Construction; dba Montalvo Roofing ; dba Montalvo Enterprises LLC; dba Montalvo Enterprises, LLC, Debtor Jose Marcos Montalvo, Plaintiff v. Adolfo Vela, et al, Defendants
• Court: U.S. Bankruptcy Court — Southern District of Texas

559 B.R. 825

In re: Jose Marcos Montalvo; dba Montalvo Roofing and Construction; dba Montalvo Roofing ; dba Montalvo Enterprises LLC; dba Montalvo Enterprises, LLC, DebtorJose Marcos Montalvo, Plaintiff

v.Adolfo Vela, et al, Defendants

CASE NO: 16–70186

ADVERSARY NO. 16–7010

United States Bankruptcy Court, S.D. Texas, McAllen Division.

Signed October 14, 2016

Antonio Martinez, Jr., Attorney at Law, McAllen, TX, Marcel C. Notzon, The Notzon Law Fim, Laredo, TX, for Plaintiff.

Harold K. Tummel, Tummel and Casso, Edinburg, TX, Mark Alan Twenhafel, Walker & Twenhafel LLP, McAllen, TX, for Defendants.

MEMORANDUM OPINION DENYING DEFENDANT ADOLFO VELA'S MOTION FOR REMAND

[Resolving ECF No. 12 ]

Eduardo V. Rodriguez

, United States Bankruptcy Judge

I. INTRODUCTION

Pending before the Court is a single motion, self-styled as “Motion for Remand,” filed by Adolfo Vela (“Vela ”), a defendant, on June 9, 2016. [ECF No. 2] (including as amended, the “Motion ”); see also [ECF No. 12]. The Motion seeks to have this Court return the Adversary Proceeding, having been removed from the 93rd District Court of Hidalgo County, Texas, back to said court on the basis of abstention, pursuant to 28 U.S.C. § 1334(c)

. Id. at ¶ 7. This Court, having considered the pleadings filed by the parties, the arguments made, the evidence, and the remainder of the record, finds that Vela's Motion should be DENIED as to mandatory abstention, pursuant to § 1334(c)(2), discretionary abstention under § 1334(c)(1), and equitable remand under § 1452.

II. FINDINGS OF FACT

This Court makes the following Findings of Fact and Conclusions of Law pursuant to Fed. R. Bankr. P. 7052

, which incorporates Fed. R. Civ. P. 52, and Fed. R. Bankr. P. 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such.

The seemingly never ending saga of the underlying state court litigation begins with Jose Marcos Montalvo, individually, and Marcos Montalvo d/b/a Montalvo Roofing & Construction (collectively, “Montalvo ”) alleging that the facts in a prior state court case, not currently before this Court, demonstrate Adolfo Vela, individually, and d/b/a Adelco Enterprises (“Vela ”), entered into a construction contract with Enriquez Enterprises, Inc., which lead to a construction subcontract for labor with Montalvo. [ECF No. 1–4 at 2].

On January 13, 2009, Vela filed a petition in the 275th District Court for Hidalgo County, Texas in Case No. C–095–09–E (“C095–09 ”), wherein it is alleged Montalvo breached his contractual obligations with Vela. See generally Vela Exh. 2(A). The 275^THState District Court granted summary judgment in favor of Vela and against Montalvo in the amount of $21,967.00, pre-judgment interest of $2,200 and attorney's fees of $7,500 for a total judgment in the amount of $31,667.00. [ECF No. 1–12]; Vela Exh. 1.

On March 20, 2012, and per the judgment rendered by the 275^thState District Court in C–095–09, a Writ of Execution was subsequently entered. [ECF Nos. 1–21, 22]. The following tracts of land were noticed to be sold by sheriff's sale in a writ of execution on March 20, 2012 and July 19, 2012: Tract 1,¹ Tract 2,² Tract 3,³ Tract 4,⁴ Tract 5,⁵ and Tract 6.⁶ See generally Montalvo Exh. F (collectively, the “Real Property ”). Montalvo's Real Property were levied, seized, and sold at a sheriff's sale in order to satisfy the original monetary judgment in Case No. C–095–09. See Montalvo Exh. F. Tracts 1 through 4 were struck off to TCPSP Corporation at the May 2012 sheriff's foreclosure sale occurring on the first Tuesday of the month as follows: Tract 1 was sold for $650.00, Tract 2 was sold for $650.00, Tract 3 was sold for $650.00, and Tract 4 was sold for $650.00. See generally Montalvo Exh. G; [ECF No. 1–4]. However, Montalvo alleges that Tracts 5 and 6 were also sold at the same sheriff's sale as Tracts 1 through 4. See [ECF No. 1–4 at 2].

On August 22, 2012, Montalvo filed his “Petition For Bill of Review” in the 275th District Court for Hidalgo County, Texas, styled as Case No. C–2559–12–E (“C–2559–12 ”). [ECF No. 1–13]; Vela Exh. 3(A). On December 5, 2015 a Final Take Nothing Judgment was entered against Montalvo. [ECF No. 1–15]; Vela Exh. 4.

C–2559–12 was subsequently appealed to the Thirteenth Court of Appeals, which affirmed the lower court decision. Vela Exh. 5. After filing C–2559–12, Montalvo allegedly filed a second bill of review in 2014 before the 275th District Court of Hidalgo County, Texas that has not been removed to this Court according to the arguments presented by Montalvo's Counsel at the August 26, 2016 hearing.

On December 10, 2013, Montalvo filed a lawsuit against Vela, individually, and Vela d/b/a Adelco Enterprises (“Adelco ”), and TCPSP Corporation (“TCPSP ,” and collectively, “Defendants ”) in the 93rd Judicial District Court of Hidalgo County, Texas, styled as Case No. C–7344–13–B (“C–7344–13 ”). See [Case No. 16–7010, ECF No. 1–2 at 1]. Thereafter, Montalvo filed for chapter 13 bankruptcy on April 27, 2016, which is concurrently pending before this Court. [Case 16–70186, ECF No. 1]. On May 24, 2016, Montalvo filed his self-styled “Application of Removal,” pursuant to 28 U.S.C. §§ 1334

and 1452(a), and Fed. R. Bankr. P. 9027(a)(1), and removed C–7344–13 to this Court, which stayed all pending litigation in C–7344–13 in state court, and initiated this Adversary Proceeding.

[ECF No. 54]; see also [Case No. 16–7010, ECF No. 1].

Montalvo's claims in C–7344–13, now this Adversary Proceeding due to its removal, are premised on the adverse rulings of the state court in C–095–09 and are as follows: (i) Fraud By Misrepresentation and Nondisclosure; (ii) Promissory Estoppel; (iii) Negligent Misrepresentation; (iv) Malicious Prosecution; (v) Breach of Fiduciary Duty; (vi) Conversion; (vii) Intentional Infliction of Emotional Distress; (viii) Declaratory Judgment—Suit To Quiet Title; (ix) Abuse of Process; and (x) Damages For Mental Anguish. [ECF No. 1–16]; Vela Exh. 6(A). Montalvo seeks the following relief: (i) Compensatory Damages; (ii) Exemplary Damages; (iii) Temporary Restraining Order; (iv) Temporary Injunction; (v) Permanent Injunction, as to Tract 5 only; and (vi) Attorney's Fees. [ECF No.1–16]; Vela Exh. 6(A). Montalvo essentially argues the foreclosures were not properly noticed, and if the execution sales are voided, then, as a result, the Real Property or monetary damages would enter into the Debtor's Bankruptcy estate. See generally [ECF No. 1–16]; see also 11 U.S.C. § 541

.

On June 9, 2016, Vela responded to Montalvo's Application of Removal with his Motion averring this Court does not have jurisdiction over the Montalvo claims—the C–095–09 Case—because the state court did not have jurisdiction to begin with. [ECF No. 2]; see also [ECF No. 12] (amending the Motion). Vela's Motion For Remand essentially contends that Montalvo's original petition is in fact a cloaked bill-of-review⁷ that collaterally attacks the previously rendered judgment in favor of Vela and against Montalvo in C–095–09–E. [ECF No. 12 at 2]. Thus, Vela argues the 275th District Court of Texas that originally rendered a judgment in Case No. C–095–09, has exclusive jurisdiction over any bill-of-review seeking to attack that judgment, and therefore the 93rd District Court of Texas, in C–7344–13, lacks the requisite jurisdiction to entertain said petition cloaked as a bill-of-review filed in the 275th State District Court. Id. Correspondingly, Vela suggests this Court also lacks jurisdiction over the Montalvo's cloaked bill-of-review claims against Vela. Id. Vela requests this Court abstain from hearing Montalvo's “bill-of-review” claims, as well as all ancillary claims pertaining to the Adversary Proceeding at bar, which is to actually say that Vela seeks relief pursuant to 28 U.S.C. § 1334(c)

. Shortly thereafter, TCPSP filed its Motion for Summary Judgment declaring a statute of limitations bar on the wrongful foreclosures or execution claims Montalvo brings before the Court. [ECF No. 3]; see also [ECF No. 13] (amending TCPSP's Motion for Summary Judgment).

On July 31, 2016, Montalvo filed his response to the Motion. [ECF No. 5] (the “Response ”). Montalvo's Response, incorporating a Motion to Strike, argues that the Motion is procedurally improper based on non-compliance with BLR 9013–1, as applicable in adversary proceedings via BLR 7007–1. Id. at ¶ 1. The portion of the Response that is actually responding to the Motion alleges that some of the representations made are “disingenuous at best” and, for the most part, denies each allegation made in the Motion. See generally [ECF No. 5 at ¶¶ 4–15]. Montalvo also “seeks sanctions and attorney fees” against Vela and his counsel on the basis of the alleged misrepresentations. Id. at ¶ 15; c.f. Fed. R. Bankr. P. 9011(b)

. But see Fed. R. Bankr. P. 9011(c).

On August 15, 2016, Vela filed his First Amended Motion for Remand. [ECF No. 12]. The First Amended Motion for Remand contains the negative notice language that the Response complained the Motion lacked, but otherwise is substantively similar to the Motion. Compare [ECF No. 12] with [ECF NO. 2]; see also [ECF No. 5]; BLR 9013–1(b). Vela subsequently filed a reply to Montalvo's Response, wherein he argues that the First Amended Motion for Remand “resolves Plaintiff/Debtor's issues.” [ECF No. 15 at ¶ 1].

On August 26, 2016, this Court conducted an evidentiary hearing (the “Hearing ”) on the Motion. At the Hearing, Counsels for Vela and TCPSP appeared as did Counsels for Montalvo. The parties respectively offered exhibits and substantial arguments were presented.

The Exhibits offered and admitted:

1. By Montalvo:

Exhibit A: Summary Judgment By Submission in Case No. C–095–09–E in the 275th District Court of Hidalgo County, Texas;

Exhibit B: Judgment in Case No. 13–14–0016–CV before the Thirteenth Court of Appeals, Texas;

Exhibit C: Montalvo's Second

...