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Victor Kearney v. Unsecured Creditors Committee

Summarizing by Amir Shachmurove

Rodriguez v. Banco Popular De Puerto Rico

Citation:
Rodriguez v. Banco Popular de Puerto Rico (In re Rodriguez), BAP No. PR 14-003, --- B.R. ----, 2014 WL 4244284 (1st Cir. BAP Aug. 26, 2014)
Tag(s):
Ruling:
The 1st Cir. BAP DISMISSED as untimely the appeal as to the first two orders appealed from and AFFIRMED as to the third due to the Debtors failure to demonstrate that the Bankruptcy Court for the District of Puerto Rico abused its discretion in declining to vacate an order granting the motion for reconsideration and to dismiss case with bar to refile brought by creditor Banco Popular de Puerto Rico ("BPPR"). With respect to the appeal of two orders entered on Nov. 15, 2013 (see procedural history), the BAP found the appeal period expired on Nov. 29, 2013 and was not tolled. As the Debtors did not file their notice of appeal until Jan. 21, 2014, the appeal of those orders was untimely and was dismissed. The appeal period began to run with respect to the third order on Jan. 8, 2013. Thus, the Debtors' appeal of the order denying their motion to vacate the Nov. 15, 2013 order granting BPPR's motion for reconsideration and request for dismissal with bar to refile was timely. The BAP found that the Debtors' motion to vacate the Nov. 15, 2013 order was properly treated as one brought under Rule 60(b) (made applicable by Bankr. Rule 9024) rather than one under Rule 59(e) (made applicable by Bankr. Rule 9023) as the motion was filed more than 14 days after entry of the Nov. 15, 2013 order. The BAP noted that the Bankruptcy Court's denial of the Debtors' Rule 60(b) motion "should be reviewed with 'the understanding that relief under Rule 60(b) is extraordinary in nature and that motions invoking that rule should be granted sparingly.'" The BAP found that the Debtors' did "not invoke the standards for relief set forth in Rule 60(b) or explain how the bankruptcy court abused its discretion when applying those standards." The Debtors argued that they filed a motion to convert their case from chapter 13 to chapter 7, which was a change in circumstances. The BAP stated that even if it considered the Debtors' argument as one under the catch-all provision of 60(b)(6), their argument failed because the Debtors could not satisfy the precondition to relief under Rule 60(b) that "vacating the judgment w[ould] not be an empty exercise." First, conversion was no longer possible because the Bankruptcy Court had already entered its Oct. 21, 2013 order dismissing the case for failure to pay the filing fee. Second, in granting BPPR's motion to reconsider the Oct. 21, 2013 order and instead grant in rem stay relief and dismiss the case with a two-year bar to refile, the BAP held the Bankruptcy Court had "implicitly found that the Debtors had filed their chapter 13 petition in bad faith, thus warranting dismissal with a two-year bar to refiling." The factors relied upon by the Bankruptcy Court in reaching that conclusion "would apply with equal force in a chapter 7 case." Thus, granting the Debtors' motion to vacate the Nov. 15, 2013 order granting BPPR's motion for reconsideration and to dismiss the case with bar to re-file "would have been an exercise in futility," the Debtors could not demonstrate the precondition to relief under Rule 60(b), and there was no abuse of discretion in denying the Debtors' motion.
Procedural context:
The Debtors filed their fourth in a series of Ch. 13 bankruptcies on Jul. 30, 2013. On Aug. 15, 2013, creditor Banco Popular de Puerto Rico ("BPPR") filed two motions: one for in rem relief from the automatic stay to permit it to proceed with a foreclosure of its mortgage on the Debtors' property and the other to dismiss the case under Section 1307(c) with a two-year bar to refilling. On Sept. 10, 2013, the clerk of the Bankruptcy Court filed a motion to dismiss the case for failure to pay the filing fee. The Bankruptcy Court entered an order on Oct. 21, 2013 granting the clerk's motion and dismissing the case. BPPR filed a motion for reconsideration and request for dismissal with bar to refile in which BPPR repeated its request for the relief sought in its Aug. 15, 2013 motions, i.e. that the Bankruptcy Court order in rem stay relief and dismiss the case with a two-year bar to refilling. The Debtors did not oppose BPPR's motion, but moved to vacate the Oct. 21, 2013 order dismissing the case and moved to convert the case to one under chapter 7. On Nov. 15, 2013, the Bankruptcy Court entered two orders: one granting BPPR's motion for reconsideration and request for dismissal with bar to refile and the other denying the Debtors' motion to vacate. On Dec. 16, 2013, the Debtors filed a motion to vacate the Nov. 15, 2013 order granting BPPR's motion. On Jan. 8, 2014, the Bankruptcy Court denied the Debtors' motion to vacate. On Jan. 21, 2014, the Debtors filed a notice of appeal with respect to the two Nov. 15, 2013 orders and the Jan. 8, 2014 order.
Facts:
The Debtors filed their fourth in a series of Ch. 13 bankruptcies on Jul. 30, 2013. The three previous cases were dismissed for failure to comply with an order to show cause, failure to comply with certain court orders, and failure to file certain information required by Section 1308 of the Code. In the fourth case, the Debtors listed Banco Popular de Puerto Rico ("BPPR") as a secured creditor. BPPR held a mortgage on the Debtors' property. Soon after the petition date, BPPR filed a motion for in rem relief from the automatic stay to permit it to foreclose on the mortgage and a motion to dismiss with a request that the Debtors be barred from re-filing a bankruptcy petition for two years on the grounds that the Debtors were serial filers with no real intention of reorganizing and filed their most recent chapter 13 petition in bad faith. A hearing was held on Sept. 13, 2013 and the parties were ordered to negotiate a resolution of the motions within 30 days and file a stipulation or, if no stipulation was filed, the in rem stay relief would be granted. No stipulation was filed. Three days before the hearing on BPPR's motions, on Sept. 10, 2013, the clerk of the Bankruptcy Court filed a motion to dismiss the case for failure to pay the filing fees. On Oct. 21, 2013, the Bankruptcy Court entered an order dismissing the Debtors' case for failure to pay the filing fee.
Judge(s):
Hillman, Hoffman, Finkle

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