Whitman-Nieves v. P.R. Fed. Credit Union (In re Whitman-Nieves)
| Decision Date | 03 October 2014 |
| Docket Number | Adversary No. 12–00392 ESL.,Bankruptcy No. 12–00519 ESL. |
| Citation | 519 B.R. 1 |
| Parties | In re Stephen WHITMAN–NIEVES; Josephine M. Barnes Adams, Debtors. Stephen Whitman–Nieves; Josephine M. Barnes Adams, Plaintiffs v. Puerto Rico Federal Credit Union, Defendant. Norma Adams–Irizarry, Party in Interest. Roberto Román Valentin, Chapter 7 Trustee. |
| Court | U.S. Bankruptcy Court — District of Puerto Rico |
Gloryvette Arroyo Arocho, ALS Legal, PSC, Mayaguez, PR, for Plaintiffs.
Jessenia Ramos Talavera, Ramos & Bague Law Office, Caguas, PR, for Defendant.
ENRIQUE S. LAMOUTTE INCLAN, Bankruptcy Judge.
This case is before the court upon the Motion for Summary Judgment (Docket No. 50) filed by defendant Puerto Rico Federal Credit Union (“PRFCU”) arguing that the automatic stay and the discharge injunction provided for in 11 U.S.C. §§ 362 and 524 do not apply to non-debtor third parties. Also before the court is the Response in Opposition to Defendant's Motion for Summary Judgment (the “Opposition ”, Docket No. 51) filed by the Plaintiffs contending that the protection of the automatic stay and discharge injunction is applicable to a non-debtor third party, namely the guarantor and party in interest, Ms. Norma Adams–Irizarry (the “Guarantor” or “Ms. Adams”), who is the mother of co-debtor Josephine M. Barnes–Adams (“Barnes–Adams”). For the reasons stated herein the Motion for Summary Judgment (Docket No. 50) is granted in part and denied in part.
The court has jurisdiction pursuant to 28 U.S.C. §§ 157(a) and 1334(b). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(F). Fed. Rs. Bankr.P. 7001(2) and 7001(9) provide that proceedings to determine the validity, priority or extent of a lien or other interest in property and to obtain a declaratory judgment relating to such validity are adversary proceedings.
From the totality of the record, undisputed documents, stipulations and admissions made by the parties in the instant case, the courts finds uncontested the following material facts under Fed.R.Civ.P. 56 :
1. On July 8, 2011, co-debtor Barnes–Adams renewed a loan with the PRFCU. The loan is evidenced through Promissory Note No. 131248 signed by Barnes–Adams in the amount of $10,600. See Docket Nos. 1, p. 22, 45, p. 2, ¶ 1, 50, p. 3, ¶ 3, and 51, p. 5. Her membership number with the PRFCU is 26983. See Docket No. 1, pp. 22 and 24.
2. On July 8, 2011, co-debtor Barnes–Adams signed a Pignoration and Authorization Document. See Docket Nos. 1, p. 29, 45, p. 2, ¶ 2, 50, p. 3, ¶ 4, and 51, p. 5. The document states as follows:
In consideration of all and any loan granted, that may be granted, or continue to be granted up to now and to the credit financing facilities granted during the past, that may granted [sic ] or continue to be granted in the future by the [PRFCU] to the undersigned, and/or from now on jointly denominated “the Debtors”[ ], by virtue of the present document, the undersigned pledges, assigns, leaves as surety, gives, and transfers to the [PRFCU], in order to guarantee and assure payment of all and any other debts and obligations of the debtors, irrespectively of the kind and nature of such debts and obligations, that are due or are currently required, or that will become past due and are required in the future, plus interests, late payment charges, surcharges, costs, expenses, disbursements, and attorney's fees in case of nonpayment authorize the [PRFCU] to withdraw and collect all the money deposited in the undersigned credit account, as well as the interest due, proceed and payable now and prospectively in relation to the money deposited that is evidenced as follows:
...
On that date, the Pignoration and Authorization Document was only signed by Barnes–Adams (PRFCU member 26983) and an officer from PRFCU.
3. On September 28, 2011, PRFCU “through its representative Eric Sánchez, Service and Credit Supervisor, subscribed ... a letter where certifies that Plaintiffs['] loan was guaranteed by [the Guarantor'] savings certificate” (Docket No. 45, p. 3, ¶ 15). The letter was subscribed by PRFCU's Service Supervisor, addressed to the Guarantor referencing account number 24613 and states as follows:
4. On January 29, 2012, the Plaintiffs filed a Chapter 7 Bankruptcy Petition along with corresponding schedules (Lead Case Docket Nos. 1–3). On Schedule D they included PRFCU as a partially secured creditor with the following explanation:
5. PRFCU was notified of the bankruptcy filing by the Plaintiffs. See Docket Nos. 45, p. 2, ¶ 4, 50, p. 3, ¶ 7, and 51, p. 5.
6. On February 24, 2012, PRFCU “through its representative Mr. Angel Calderín, Collection Supervisor, subscribed.... a letter where [it] certifies that Plaintiffs['] loan was guaranteed by [the Guarantor's] savings certificate” (Docket No. 45, p. 3, ¶ 16). The letter was subscribed by PRFCU's Collection Supervisor, addressed to co-debtor Barnes–Adams referencing account number 26983 and states as follows:
7. On February 2012, PRFCU “learned that Debtors' account was not secured by Party in Interest, Mrs. Norma Adams certificate of deposit” (Docket No. 45, p. 3, ¶ 17).
8. On March 2, 2012, Ms. Adams, to wit, the Guarantor, signed the Pignoration and Authorization Document securing Barnes–Adams' pre-petition loan with PRFCU. See Docket No. 45, p. 2, ¶ 6, 50, p. 4, ¶ 8.
9. On May 9, 2012, the court entered the Discharge of Joint Debtors (Lead Case Docket No. 19), which was notified to PRFCU. Also see Docket Nos. 45, p. 2, ¶ 7, and 50, p. 5, ¶ 21.
10. On July 2012, PRFCU sent a payment booklet addressed to co-debtor Barnes–Adams to the following address: Cond. Plaza Antillana Edificio 22 Apt. 2201 San Juan, PR 00918. See Docket No. 45, p. 2, ¶ 8, and 50, p. 4, ¶ 10. The address belongs to the Guarantor, Ms. Adams. See Docket Nos. 1, p. 5, ¶ 6, 50, p. 4, ¶ 10, and 51, p. 5.
11. During the pendency of the Lead Case, PRFCU was represented by counsel (Docket No. 50. p. 4, ¶ 11), who received notice of all events in the bankruptcy proceeding.See Docket No. 45, p. 2, ¶ 9.
On October 25, 2012, the Plaintiffs filed the instant Complaint (Docket No. 1) that initiated the instant adversary proceeding alleging that: (a) on March 2, 2012, the Guarantor visited the offices of PRFCU to request a copy of the documents signed at the date of the Plaintiffs' loan and that because she was told that it was not signed and she was given a document for her signature; (b) during the months of January and February of 2012, PRFCU collected the loan monthly payments on the loan; (c) PRFCU received notice of the discharge order in the lead bankruptcy case and had full knowledge of the automatic stay provisions and the discharge injunction; (d) pursuant to 11 U.S.C. § 524, PRFCU was required to stop any and all collection of monies against the Plaintiffs and their property; (e) on July of 2012, the Plaintiffs received, through a mail sent to the Guarantor's address, a payment notebook addressed to co-debtor Barnes–Adams requesting a payment of $1,259.59 on or before July 8, 2012 and subsequent monthly payments in the amount of $248.88 until July 8, 2013; (f) the Plaintiffs have not been able to enjoy the protections afforded by the automatic stay and the discharge injunction; (g) PRCFU's actions have caused the Plaintiffs severe embarrassment, harassment, emotional distress and anxiety episodes that have jeopardized their marriage due to stressful situations and the relationship between co-debtor Barnes–Adams and her mother, the Guarantor; and (h) PRCFU has limited the Guarantor's access to her property by retaining the certificate of deposit as collateral to the Plaintiff's discharged loan because the Guarantor signed the Pignoration and Authorization Document on March 2, 2012. The Plaintiffs claim damages, costs and attorney's fees under 11 U.S.C. §§ 105, 362 and 524.
On November 14, 2013, the parties filed a Joint Pretrial Report (Docket No. 45) with stipulations of fact.
On December 30, 2013, PRFCU filed the Motion for Summary Judgment (Docket No. 50). In regards to the automatic stay, PRFCU alleges that: (a) although Section 362 of the Bankruptcy Code precludes all proceedings against a debtor immediately following the filing of a bankruptcy petition, the protection is for the sole benefit and protection of the debtor and of property of the estate; (b) “property of the estate” as defined in Section 541 of the Bankruptcy Code does not include property belonging to a third party; (c) Section 362(c)(3)(B) is the only section in which a protection for a party in interest is provided and requires that such party requires so by a motion to that effect, which the Guarantor did not...
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