Rivera v. First Bank Puerto Rico (In re Rivera)
| Decision Date | 24 October 2019 |
| Docket Number | CASE NO. 18-05896 (ESL),ADV. PROC. NO. 18-00140 (ESL) |
| Citation | 610 B.R. 174 |
| Parties | IN RE: Jose Luis BIRRIEL RIVERA and Lydia Iris Ocasio Burgos, Debtors Jose Luis Birriel Rivera and Lydia Iris Ocasio Burgos, Plaintiffs v. First Bank Puerto Rico, Defendant |
| Court | U.S. Bankruptcy Court — District of Puerto Rico |
Roberto Figueroa Carrasquillo, Caguas, PR, for Plaintiffs.
Rafael A. Ojeda Diez, Patricia I. Varela Harrison, Martinez & Torres Law Offices PSC, San Juan, PR, for Defendant.
This adversary proceeding is before the court upon the Motion to Dismiss Complaint under Fed. R. Civ. P. 12(b)(6) (Docket No. 16) filed by defendant, FirstBank Puerto Rico (hereinafter referred to as the "Defendant" or "Firstbank") arguing: (i) that Plaintiffs' allegations are not sufficient at law to establish a cause of action for which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6) because continuation of the recordation of the mortgage is not precluded by the automatic stay pursuant to 11 U.S.C. §§ 362(b)(3) and 546(b) ; and (ii) the entry of presentation of the mortgage deed remains in effect at the Property Registry, since the same has not been canceled or extinguished, nor have the documents by virtue of which the entry was created have been removed or withdrawn. The recordation of the mortgage will become effective retroactively as soon as the Property Registrar passes judgment on the deeds that have been presented for recordation. The Debtors/Plaintiffs filed their Reply to Motion to Dismiss Complaint under Fed. R. Civ. P. 12(b)(6) (Docket No. 17) contending that: (i) the "... Plaintiffs have alleged the grounds for the court's jurisdiction, they have asserted a statement of a claim showing that the pleader is entitled to relief and they have alleged a demand for relief;" (ii) the Defendant's reasoning is based on a "presumption" that the mortgage deed presented at the Property Registry will be presumably recorded; (iii) the Defendant's reasoning is based on a "defective presumption" since the facts surrounding the Defendant's mortgage deed 184 demonstrate that said mortgage is not valid. "If a ‘presumption’ is to be used to solve the present issue before the Court the same should be based on the factual situation at the Property Registry concerning lot 379 which facts anticipate that the Defendant's mortgage will not be recorded;" (iii) "[t]he facts surrounding the presentation of the Defendant's deed number 184 create defects which are of such nature that said mortgage deed cannot and will not be recorded;" and (iv) "[t]he facts surrounding the Defendant's mortgage deed do not allow recordation of this deed, thus, the Defendant does not have a mortgage lien on the Property." Firstbank filed its Sur-Reply to Plaintiffs' Reply to Motion to Dismiss Complaint under Fed. R. Civ. P. 12(b)(6) (Docket No. 24). For the reasons stated herein, the Defendants' Motion to Dismiss is hereby granted.
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). Venue of this proceeding is proper under 28 U.S.C. §§ 1408 and 1409.
The Debtor Jose Luis Birriel Rivera filed a bankruptcy petition under Chapter 7 of the Bankruptcy Code on October 9, 2018 (Case No. 18-05896). The Debtor Lydia Iris Ocasio Burgos filed a bankruptcy petition under chapter 7 of the Bankruptcy Code also on October 9, 2018 (Case No. 18-05898). On October 11, 2018, the Debtors filed a Joint Motion for Order of Substantive Consolidation (Docket No. 7) which was granted on October 31, 2018 (Docket No. 9). The Debtors included in Schedule A/B: Real Property the real property in controversy with a current value of $112,000 (Case No. 18-05896, Docket No. 10, pg. 1). The Debtors listed in Schedule C: The Property You Claim as Exempt, the real property in controversy in the amount of $112,000, which is 100% of the fair market value (Case No. 18-05386, Docket No. 10, pg. 7). The Debtor Jose Luis Birriel Rivera listed in Schedule E/F: Creditors Who Have Unsecured Claims, Firstbank's claim in the amount of $157,822 (Case No. 18-05896, Docket No. 1, pg. 15). On November 6, 2018, Firstbank filed proof of claim #3-1 as a secured mortgage claimant in the amount of $159,391.47. On February 4, 2019, the Chapter 7 Trustee filed a report of no distribution (Case No. 18-05896, Docket No, 23).
On December 5, 2018, the Plaintiffs filed the instant adversary proceeding to determine the validity of a mortgage lien over the Plaintiffs' real property held by Firstbank. The Plaintiffs' complaint is premised upon the following argument: "[t]o the extent FirstBank is claiming a security or a secured classification based on a mortgage lien which mortgage has not been recorded due to a failure to segregate lot number 379, FirstBank's mortgage lien is not a valid or perfected lien and, therefore, its unperfected security should be cancelled and/or annulled" and, "...therefore, FirstBank's claim must be classified as a ‘general unsecured claim’ " (Docket No. 1). The Plaintiffs request the court to determine that the alleged mortgage lien over the real property is not a valid lien because the Defendant's mortgage deed was not properly recorded and, thus, Firstbank does not hold a recorded mortgage that evinces its secured claim.
At this juncture, the only matter before the court is the Defendants' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and the opposition to the same by the Plaintiffs.
Defendants' motion to dismiss
The motion to dismiss filed by Defendants is based upon three arguments: (i) that Plaintiffs' allegations are not sufficient at law to establish a cause of action for which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6) because continuation of the recordation of the mortgage is not precluded by the automatic stay pursuant to 11 U.S.C. §§ 362(b)(3) and 546(b) ; (ii) Firstbank's mortgage deed was presented and is pending recordation at the Property Registry pursuant to Article 19 of the Puerto Rico Mortgage Law, 30 L.P.R.A. § 6034. The mortgage deed was filed with the Property Registry on October 10, 2009. Firstbank's interest should be properly deemed as secured and Firstbank should be allowed to perfect its lien under 11 U.S.C. §§ 362(b)(3) and 546(b)(1). The date of recordation of Firstbank's interest will relate back to the date the deed was originally presented in the Property Registry. Moreover, if a notice of defect is issued as to the Purchase and Mortgage Deed, Article 238 of the Puerto Rico Mortgage Law, 30 L.P.R.A. § 6390, provides an alternative to correct any defects notified by the Property Registrar within sixty (60) days from the date of notification. Under section 546(b)(1) this would be considered a pre-petition interest that could be perfected and does not constitute a violation of the automatic stay; and (iii) the entry of presentation of the mortgage deed remains in effect at the Property Registry, since the same has not been canceled or extinguished pursuant to Articles 201 and 203 of the Puerto Rico Mortgage Law, 30 L.P.R.A. §§ 6331 & 6333, nor have the documents by virtues of which the entry was created been removed or withdrawn. The recordation of the mortgage will become effective retroactively as soon as the Property Registrar passes judgment on the deeds that have been presented for recordation. The Defendant in its response further argues that: (i) the unsworn statement of an investigator cannot be considered as a substitute of the mandate given by law to the Property Registrar; (ii) until the Property Registrar passes judgment on the validity of the deeds filed for recording before him or her, they are presumed valid and correct. The investigator is not the person entitled by Law in Puerto Rico to pass judgment upon the validity of the deeds filed and pending verification before the Property Registrar; and (iii) the case of EMI Equity Mortg., Inc. v. Valdes-Morales, 315 F. Supp. 3d 694 (D.P.R. 2018) is inapposite from the instant case because in EMI the Registrar had passed judgment on the mortgage deed and notified certain defects on the same and the mortgage deed was not recorded. In the instant case, no defects have been notified, thus, the deeds presented have not been reviewed by the Property Registrar (Docket No. 24).
Plaintiffs in their Reply to Motion to Dismiss contend that: (i) prior to the filing of the bankruptcy petition, they contracted the services of Mr. Angel Urbina, a title investigator, to investigate the status of Firstbank's mortgage deed number 184. Mr. Urbina's investigation reveals that mortgage deed number 184 has not been recorded because its collateral, property or lot number 379, has not been segregated and the same does not exist as a separate property. Moreover, the Property Registry records indicate that the Property Registrar is unable to segregate the property of lot number 379 due to certain missing documents including a segregation plan and a "government resolution" required to authorize the segregation of lot number 379. Property lot number 379 is still part of the Seller's real property (parcel number 52,592) whose title owner is Borinquen Valley, S.E. Since the complimentary documents were never submitted to the Property Registry, the Registrar is unable to proceed with the segregation of the property lot number 379 in order to register the Defendant's mortgage deed number 184; (ii) the Defendant's reasoning is based on a defective "presumption" that the mortgage deed will presumably be recorded since the facts surrounding the Defendant's mortgage deed demonstrate that said mortgage is not valid; (iii) "... the facts reveal that lot 379 has not been segregated, that as a result of an investigation at the Property Registry the segregation deed for lot 379...
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