REDONDO CONSTRUCTION CORPORATION v. SUMMERTIME DEVELOPERS CORPORATION et al

OCR transcription for search; preserved printed pages are authoritative

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO

IN RE:

REDONDO CONSTRUCTION : CASE NO. 02-02887 (GAC)
CORPORATION, CORP. :

Debtor. : CHAPTER 1i1

REDONDO CONSTRUCTION
CORPORATION, CORP.

Plaintiff.
Ve : ADV. NO. G4-00017

SUMMERTIME DEVELOPERS
CORPORATION et al.

Defendants.

ORDER

I. PROCEDURAL AND FACTUAL BACKGROUND

Pending before the Court is a Motion for Reconsideration of
the Court’s Decision and Order entered on October 3, 2005 (Docket
#1229) filed by Ramon Martinez Perez (“Martinez”) and Summertime
Developers Corporation (“Summertime”) (hereinafter referred to
jointly as “Defendants”); and an Opposition to Defendants’ Motion
for Reconsideration (Docket #1234) filed by Redondo Construction
Corporation (“Debtor”).

On October 8, 2003, Debtor filed a motion for an order to show
cause against Summertime and its president, Mr. Martinez, for

violation of the automatic stay (Docket #586). ‘Phe Debtor claimed

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION
GPO

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that Defendants withneld the sum of $390,579.00 that it owed to
Debtor for work performed on the Casa de Playa/Summertime Beach
Resort project (“project”) and that these funds were property of ©
the estate. The Court issued an order to show cause, requiring
Defendants to show cause as to why they had willfully violated the
automatic stay (Docket #632).

In its Answer to the order to show cause (Docket #668),
Summertime argued that Debtor had not complied with its duties
under the contract, and thus any entitlement to the sums were
disputed. In a separate motion filed on December 1, 2003,
Summertime requested leave to deposit the disputed amounts with the
Court (Docket #669). Debtor replied that it had no objection to
the funds being deposited (Docket #676); and the Court granted
Summertime’ s request to deposit the funds. id.

On February 9, 2004, Debtor filed an Urgent Motion requesting
that Summertime be ordered to deposit the amount of $390,579.00
(Docket #742). The Court ordered Summertime to show cause as to
why it failed to deposit the funds (Docket #743). On February 9,
2004, Debtor also filed the instant adversary proceeding, seeking
the collection of money allegedly owed by Summertime under the
construction contract and for turnover of property of the estate

(Adv. No. 04-00017) .!

‘Debtor filed the instant adversary in response to the Court's order to
do so.

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At a hearing held on March 24, 2004, the Court again ordered
Summertime to deposit the funds with the Court within ten (10)
calendar days and to file an informative motion in compliance with
the orders to show cause (Docket #775). On April 5, 2004,
Summertime filed a motion for reconsideration of the Court’s order
to deposit the funds (Docket #804). The Debtor responded to
Summertime’s motion with an Urgent Motion for civil contempt as a
result of Summertime’ failure to deposit the funds (Docket #811).

The Court scheduled a hearing on contempt for April 27, 2004,
and ordered Debtor to give notice and file certificate of service
within five (5) days. On April 15, 2005, Debtor filed a
certificate of service in compliance with the Court’s order (Docket
#812). On the basis of testimony offered by Debtor at the hearing
held on April 27, 2005, the Court held that Defendants had ignored
the Court’s orders to deposit the funds, and instead sold the
project identified as Case de Playa/Summertime Beach Resort,
receiving approximately $250,000 as a down payment, $500,000, at
closing, and a $500,000 note. The Court also made the following
findings: there was possible irreparable harm to debtor; strong
possibility of prevailing on the merits; and no public interest
against issuing a temporary remedy. Thus, the Court ordered
Summertime and/or Martinez together with BT to deposit for
safekeeping with the Clerk of the Court the $500,000 note, product

of the sale of the project of reference, until the matter is

a i ta

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finally heard and decided (Docket #819). The Court also ordered
Defendants to pay a $10,000 fine as sanctions for violation of
prior orders for violation of the Court’s prior orders.* At a
hearing held on January 25, 2005, the Court took the matter under
advisement.

On October 3, 2005, the Court issued a Decision and Order
requiring Defendants, within fifteen (15) days, to comply with the
Court’s previous orders to deposit the sum of $390,579.00, noting
that it was in reference to Adv. 04-00017, and to pay the $10,000
fine previously imposed by the Court (Docket #1185, in Legal Case
No. 02-02887; Docket #56, in Adv. Case No. 04-00017. The Court
also noted that the remedy was only provisional and the Debtor’s
actual right to obtain the funds was subject to the outcome of the
adversary proceeding filed. Accordingly, Summertime’s motion for
relief from the Court’s orders was denied.

On October 19, 2005, Summertime and Martinez filed a Motion
for Reconsideration of the Court’s Decision and Order (Docket
#1229, in Legal Case No. 02-02887; Docket #63, in Adv. Case No.
04-O00017). In Summertime’s most recent motion for reconsideration,
it argues that its offer to deposit the $390,579.00 was made when
it thought that it could deposit the money; that due to a change in

the projected sale of the Casa de Playa project, resulting in a

"the Court also ordered Summertime and/or Martinez and the Bank & Trust
of Puerto Rico (“BT”) to deposit the $500,000 note payable with the Court
until the matter was decided.

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reduction of the sale price, it was unable to comply with the
Court’s Order; instead, the proceeds of the sale were not
dissipated, but were used to pay expenses of the project.?
Defendants also argue that the Court’s order to deposit the funds
has the effect of constructively granting an attachment of
$390,579.00, without requiring Debtor to post a bond. Finally,
Defendants argue that they have been denied due process in that
they were not properly notified of the hearing held on April 27,
2004, and thus were not prepared to present their case or to
conduct and effective cross-examination of witnesses presented by
Debtor. The Defendants request that the Court reconsider its
Decision and Order of October 3, 2005; vacate the order to deposit
the $390,579.00; and vacate the order imposed on Defendants as a
fine in the amount of $10,000.

On October 28, 2005, Debtor Tiled an Opposition to the Motion
for Reconsideration (Docket #1234, in Legal Case No. 02-02887;
Docket #65, in Adv. Case No. O04-00017). Debtor argues that
Defendants are repeating the same arguments made in the previous
motion for reconsideration filed on April 5, 2004 (Docket #804}.
Debtor further argues that the defense of impossibility or
inability to comply is not applicable to this case because any

inability to comply is self-induced; the relief at issue is

ithe Court takes note of the fact that Summertime made this same
argument in its Motion for Reconsideration filed on April 5, 2004 (Docket
#804) .

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preliminary in nature and Defendants are not foreclosed from
appealing any final order of the Court; and that Defendant’s
counsel informed the Court that they were duly notified of the
hearing, thus they were afforded due process.

IT. STANDARD UNDER RULE 59 FRD. R. CIV. P

Motions for reconsideration under Fed. R. Civ. P. 59, made
applicable in bankruptcy cases by Fed. R. Bankr. P. 9023, are
entertained by courts if they seek to correct manifest errors of

law or fact; present newly discovered evidence; or when there is an

intervening change in the law. Standard Quimica De Venezuela v.

Central Hispano ~ntern., Inc., 189 F.R.D. 202 (D. P.R. 1999}

(citing Jorge Surillo & Co. v. Falconer Glass Industries, 37 F.3d

25, 29 (Ist Cir. 1994); F.D.T. Corp. v. World University, Inc.,

978 F.2d 10, 16 (1st Cir. 1992); Cherena v. Coors Brewing Co., 20

F.Supp.2d 282, 286 (D. P.R. 1998). Motions for reconsideration
must demonstrate why the court should reconsider its prior
decision, and must set forth facts or law of strongly convincing

nature to induce the court to reverse its decision. In Re Pabon

Rodriguez, 233 B.R. 212, 219 (Bankr. D. P.R. 1999). A motion for
reconsideration may not be used to “repeat old arguments previously
considered and rejected, or to raise new legal theories that should

have been raised earlier.” National Metal Finishing Co. v.

Barclays American/Commercial, Inc., 899 F.2d 119, 123 (ist Cir.

1999).

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First, the Court finds that the Motion for Reconsideration
filed by Summertime and Martinez was untimely. Pursuant to Rule
59(e), any motion to alter or amend judgment must be filed no, later
than ten (10) days after the entry of the judgment. In the instant
case, Summertime and Martinez filed their Motion for
Reconsideration on October 19, 2005, sixteen (16) days after the
Court issued its Decision and Order.

Second, the Court finds that the arguments made by Summertime
and Martinez are not new and have already been addressed by the
Court. Moreover, it did not present any newly discovered evidence;
and it has not presented any intervening changes in the law which
would affect the decision made by the Court.

Finally, the Court holds that the Defendants’ argument that
they were denied due process, has little merit. In the instant
case, a hearing on contempt was held on April 27, 2004, and Debtor
filed a certificate of service as proof that Defendants had been
duly served with the hearing notice. Defendants appeared
represented by counsel and argued that they had not received notice
of the hearing and were not prepared to present their case. As a
result, the Court decided to allow the witnesses brought before the
Court by Debtor to testify, and allow Defendants to cross-examine
the witnesses as best they could. The Court further stated that
Defendants’ counsel could conduct the cross-examination in writing

or recall the witnesses at a later hearing (see Docket #820, pp.

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13-14). Although the contested matter on civil contempt was
subsequently continued to June 10, 2004, and then to September 10,
2004, and January 25, 2005, along with the pre-trial in adversary
proceeding 04-00017; the Court takes note of the fact that
Defendants never requested to recall any of the witnesses
presented; nor did it file a motion requesting a hearing to conduct
a more extensive cross-examination.

In addition to the numerous court appearances in the instant
case, Defendants have had the opportunity to present their case
through motions, including two separate motions for reconsideration
of the Court’s orders to deposit the funds. Thus, in rendering its
decision, the Court duly considered all the evidence presented by
both parties and rendered its decision accordingly.

WHEREFORE IT TS ORDERED that Defendants’ Motion requesting
reconsideration of the Court’s Decision and Order (Docket #1229, in
Legal Case No. 02-2887; Docket #63, in Adv. Case No. 04~00017),
shall be, and hereby is DENTED.

SO ORDERED.

San Juan, Puerto Rico, this _23rd_ day of November, 2005.

/s/ Gerardo A. Carlo Altieri.

Gerardo A. Carlo Altieri
Chief, U.S. Bankruptcy Judge