Ortiz v. Lugo (In re Lugo)

• Decision Date: 18 September 2013
• Docket Number: Adversary No. 13–00119 ESL.,Bankruptcy No. 13–00346 ESL.
• Citation: 503 B.R. 13
• Parties: In re Felix A. RIVERA LUGO, Ramonita Rivera Rivera, Debtors. Victor Santiago Ortiz; Victor Joel Santiago Cabrera; Eulogio Batista Melendez; Janelis Batista Rivera; Wilfredo Rosas Lebron; Blanca Rosa Rosas, Plaintiffs v. Felix A. Rivera Lugo, Ramonita Rivera Rivera, Defendants.
• Court: U.S. Bankruptcy Court — District of Puerto Rico

503 B.R. 13

In re Felix A. RIVERA LUGO, Ramonita Rivera Rivera, Debtors.Victor Santiago Ortiz; Victor Joel Santiago Cabrera; Eulogio Batista Melendez; Janelis Batista Rivera; Wilfredo Rosas Lebron; Blanca Rosa Rosas, Plaintiffs

v.Felix A. Rivera Lugo, Ramonita Rivera Rivera, Defendants.

Bankruptcy No. 13–00346 ESL.

Adversary No. 13–00119 ESL.

United States Bankruptcy Court, D. Puerto Rico.

Sept. 18, 2013.

Nylca J. Munoz Sosa, Hato Rey, PR, for Plaintiffs.

Wigberto Lugo Mender, Lugo Mender & Co, Guaynabo, PR, for Defendants.

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

This case is before the court upon the Motion Requesting Leave to Join Complaint (the “ Motion for Joinder ”, Docket No. 8) filed by creditor Desarrollos Acuarios, Corp. (“Desarrollos Acuarios”) seeking to join the instant case as a plaintiff under Fed.R.Civ.P. 20(a)(1), applicable in bankruptcy proceeding through Fed. R. Bankr.P. 7020, arguing that it has similar claims and objections to the discharge of the debtors as the ones alleged by the Plaintiffs in their Complaint. For the reasons stated below, the Motion for Joinder is hereby denied.

Procedural Background

On January 18, 2013, the Debtors filed a voluntary Chapter 11 bankruptcy petition with its corresponding schedules (Lead Case Docket No. 1).

On January 24, 2013, a Notice to Creditors (Lead Case Docket. No. 6) was entered scheduling the meeting of creditors for February 25, 2013 and establishing the deadline to file a complaint to contest dischargeability for April 26, 2013.

On February 25, 2013, the meeting of creditors was held and closed (Lead Case Docket No. 24).

On April 26, 2013, creditors Víctor Santiago Ortiz, Víctor Joel Santiago Cabrera, Eulogio Batista Meléndez, Janelis Batista Meléndez, Wilfredo Rosas Lebrón, Blanca Rosa Rosas (the Plaintiffs in the instant adversary proceeding) and Desarrollos Acuarios filed a joint Motion Requesting Extension of Time Pursuant Rule 4007¹ through their respective attorneys requesting a thirty (30) day extension of time, until Monday, May 27, 2013 ², to file the dischargeability complaint under Section 523 of the Bankruptcy Code (Lead Case Docket No. 39). On May 8, 2013, the court granted the extension as requested (Lead Case Docket No. 42).

On June 7, 2013, the Plaintiffs filed the instant Complaint (Docket No. 1) alleging that the Debtor's debts with them are not dischargeable under Sections 523(a)(2)(A) and 523(a)(6) of the Bankruptcy Code because they constitute willful and malicious injury through false and fraudulent pretenses and representations. Desarrollos Acuarios did not file any complaint. Instead, on June 11, 2013, creditor Desarrollos Acuarios filed a Motion Requesting Leave to Join Complaint (Lead Case Docket No. 57) averring that it holds similar claims and objections to the dischargeability of debt as the ones alleged by the Plaintiffs and therefore should be allowed to join their Complaint pursuant to Fed. R. Bankr.P. 7020 and Fed.R.Civ.P. 20. On June 14, 2013, the Motion was denied without prejudice to making the request within the adversary proceeding (Lead Case Docket No. 58).

On June 20, 2013, creditor Desarrollos Acuarios filed the Motion for Joinder in the instant adversary proceeding restating that it holds similar claims ³ and objections to the dischargeability of the Debtors as alleged by the Plaintiffs and therefore should be allowed to join their Complaint pursuant to Fed. R. Bankr.P. 7020 and Fed.R.Civ.P. 20.

On July 26, 2013, the Defendants filed an Opposition to Motion [for Joinder] (Docket No. 12) arguing that Desarrollos Acuarios had failed to comply with Fed.R.Civ.P. 20(a) since it contains different issues of law and fact from the Plaintiffs' Complaint. The Defendants also argue that Desarrollos Acuarios' Motion is untimely pursuant to Fed. R. Bankr.P. 4007(c).

On July 29, 2013, Desarrollos Acuarios filed a Motion Requesting Leave and Extension of Time to File Reply to Opposition to Motion [for Joinder] (Docket No. 13) alleging that the Defendants' Opposition was based on an incorrect legal interpretation of Fed.R.Civ.P. 20(a) and requested until August 5, 2013 to file a reply. The court granted the extension of time on July 30, 2013 (Docket No. 15).

On August 5, 2013, Desarrollos Acuarios filed a Reply to Defendants' Opposition to Motion [for Joinder] (Docket No. 18) insisting that its Motion for Joinder complies with Fed.R.Civ.P. 20 because its causes of actions stem from the same transaction and occurrence as the causes of action brought by the Plaintiffs and that it was timely filed.

No further replies or briefs were filed.

Jurisdiction

The court has jurisdiction over the instant adversary proceeding pursuant to 28 U.S.C. §§ 157(a) and 1334(b). This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(1) and 157(b)(2)(B) and (I).

Legal Analysis and Discussion

(A) Motions for Joinder

Fed. R. Bankr.P. 7020 makes Fed.R.Civ.P. 20 applicable to bankruptcy proceedings. “The central purpose of [Fed.R.Civ.P.] 20 is to promote trial convenience and expedite the resolution of disputes, thereby eliminating unnecessary lawsuits.” Saunders v. Shaw, 2011 U.S. Dist. LEXIS 53779 at *2, 2011 WL 1931319 at *1 (M.D.Fla.2011), quoting Alexander v. Fulton County, 207 F.3d 1303, 1323 (11th Cir.2000), overruled on other grounds by Manders v. Lee, 338 F.3d 1304 (11th Cir.2003).

Fed.R.Civ.P. 20(a)(1) governs the permissive joinder of parties as plaintiffs as follows:

(1) Persons may join in one action as plaintiffs if:

(A) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and

(B) any question of law or fact common to all plaintiffs will arise in the action.

Thus, “[p]laintiffs may be joined together in a single action [under Fed.R.Civ.P. 20(a)(1) ] if they can assert a joint right to relief arising out of the same transaction or occurrence, and if there is any question of law or fact common to all plaintiffs.” Contawe v. Crescent Heights of Am., Inc., 2005 U.S. Dist. LEXIS 11557 at **5–6 (E.D.Pa.2005) ⁴. “It is important to note the joinder provided by [ Fed.R.Civ.P.] 20 is permissive, not mandatory.” Rodgers v. Target Corp., 2012 U.S. Dist. LEXIS 141012 at *8, 2012 WL 4482422 at *3 (W.D.La.2012)

Courts consider two requirements to rule on motions for joinder under Fed.R.Civ.P. 20(a)(1): (1) the right to relief asserted by each plaintiff must arise out of the same transaction, occurrence, or series of transactions or occurrences, and (2) a question of law or fact common to all plaintiffs will arise in the action. See Maldonado Cordero v. AT & T, 190 F.R.D. 26, 28 (D.P.R.1999); Don King Prods., Inc. v. Colon–Rosario, 561 F.Supp.2d 189, 191 (D.P.R.2008). Fed.R.Civ.P. 20(a) is liberallyconstrued in order to promote the broadest scope of action consistent with fairness to the parties. See Matthews Metals Products, Inc. v. RBM Precision Metal Products, Inc., 186 F.R.D. 581, 583 (N.D.Cal.1999). citing League to Save Lake Tahoe v. Tahoe Regional Planning Agency, 558 F.2d 914, 917 (9th Cir.1977). “There is not, as of yet, a clearly established rule in the First Circuit as to what constitutes the same ‘transaction or occurrence’ for purposes of joinder under [Fed.R.Civ.P.] 20(a).” SBO Pictures v. Does 1–41, 2012 U.S. Dist. LEXIS 159536 at **6–7, 2012 WL 5464182 at *3 (D.Mass.2012). In Third Degree Films v. Does 1–47, 286 F.R.D. 188, 194 (D.Mass.2012), the U.S. District Court for the District of Massachusetts applied the “logical relationship” test adopted by the Federal Circuit in a recent patent infringement case, In re EMC Corp., 677 F.3d 1351, 1358 (Fed.Cir.2012). Under that test, individual claims are deemed to have met the “same transaction or occurrence” requirement of Fed.R.Civ.P. 20(a) where “the defendants' alleged infringing acts, which give rise to the individual claims of infringement, ... share an aggregate of operative facts.” Id., quoting In re EMC Corp., 677 F.3d at 1358 (emphasis omitted).

Notwithstanding, Fed.R.Civ.P. 20 “deals solely with joinder of parties and becomes relevant only when there is more than one party on one or both sides of the action.” Wright, Miller & Kane, Federal Practice and Procedure, Civil 3d, Vol. 7, § 1655 (2013) (emphasis added). It then follows that only a person or entity that is already a party in a case may make a motion for joinder. See Arrow v. Gambler's Supply Inc., 55 F.3d 407, 409 (8th Cir.1995); Thompson v. Boggs, 33 F.3d 847, 858 n. 10 (7th Cir.1994)cert. denied514 U.S. 1063, 115 S.Ct. 1692, 131 L.Ed.2d 556 (1995) (noting the lack of any precedent granting a non-party's motion for joinder). Thus, “[a] nonparty cannot on its own motion join as a party under [Fed. Rs. Civ. P.] 19 or 20”. Premier Foods of Bruton, Inc. v. City of Orlando, 192 F.R.D. 310, 312 (M.D.Fla.2000). Also see Hubner v. Schoonmaker, 1990 U.S. Dist. LEXIS 13035 at *13, 1990 WL 149207 at *4 (E.D.Pa.1990) (“If an existing party is seeking to bring in an outsider the court should apply the joinder provisions of [Fed. Rs. Civ. P.] 19 and 20; if the outsider is seeking to enter the suit of his own accord, the court should apply the intervention provisions set forth in [Fed.R.Civ.P.] 24.”)

In the instant adversary proceeding, Desarrollos Acuarios is not a plaintiff or a defendant: it is simply a non-party who seeks to be included as a plaintiff and piggyback on the Plaintiffs' prayers for relief. As a non-party, the remedies afforded in Fed.R.Civ.P. 20 are not applicable to it.

(B) Untimeliness of Desarrollos Acuarios' Motion for Joinder

The Defendants allege that Desarrollos Acuarios' Motion for Joinder is untimely under Fed. R. Bankr.P. 4007(c) because it was filed on June 20, 2013, that is, 24 days after the extended deadline granted by the court ⁵. See Docket No. 12, pp. 4–5, and Lead Case Docket Nos. 39 and 42. Desarrollos Acuarios seems to imply that...