MAXON ENGINEERING SERVICES INC v. SR CONSTRUCTION & SERVICE INC

1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
In re: :
:
MAXON ENGINEERING SERVICES, INC., : Case No. 04-04781 (GAC)
:
Debtor : Chapter 7
___________________________________:
:
MAXON ENGINEERING SERVICES, INC., :
:
Plaintiff, :
:
v. : Adv. No. 07-00145
:
SR CONSTRUCTION & SERVICE, INC., :
:
Defendant :
___________________________________:
DECISION AND ORDER
The debtor filed a voluntary petition under Chapter 11 on May
4, 2004. The case was converted to Chapter 7 on June 13, 2006 and
Noreen Wiscovitch Rentas was appointed interim trustee on June 14,
2006. On June 11, 2007, the Chapter 7 trustee filed this adversary
proceeding for recovery of an alleged post-petition payment, in the
amount of $106,065.53, made to the defendant SR Construction &
Service, Inc. (“SR”) on account of a prepetition debt. The trustee
claims that the payment was not authorized by the Court and thus
must be returned to the estate pursuant to 11 U.S.C. § 549. SR
sought dismissal of the complaint contending that it is time barred
(dkt. #10). The trustee opposed the motion contending that the
statute of limitations was equitably tolled (dkt. #11 and dkt.
Case:07-00145-GAC Doc#:23 Filed:05/12/08 Entered:05/12/08 16:36:24 Desc: Main
Document Page 1 of 3

2
#16).
At a hearing held on February 15, 2008, the Court took the
matter under advisement (dkt. #20). At that hearing, SR argued
that not only had the statute of limitations expired, but that the
payment was authorized by the Court. The Court directed SR to
amend its motion to dismiss, which it has failed to do, but
nonetheless, the Court has reviewed the legal docket and concludes
that a payment of $179,503.23 to SR was specifically authorized by
the Court at a hearing held on June 15, 2006 (dkt. #1013). The
payment was related to USF&G’s release of bonded projects for which
SR provided construction services. Moreover, the funds related to
this payment, were retainage funds provided by the Puerto Rico
Housing Authority, rather than funds belonging to the debtor’s
estate.
In the complaint, the trustee does not indicate when the
alleged transfer took place. SR claimed in the motion to dismiss
that the payment relates to a payment made on or about June 30,
2004, but Court authorization for payment in a different amount,
occurred on June 15, 2006. The trustee’s answer to the motion to
dismiss relates to a prepetition preference, rather than an
unauthorized post-petition transfer, which is not relevant to the
complaint in this case. From the record, the Court is unable to
determine when the alleged transfer took place, whether it relates
to a payment authorized by the Court or whether the trustee’s
Case:07-00145-GAC Doc#:23 Filed:05/12/08 Entered:05/12/08 16:36:24 Desc: Main
Document Page 2 of 3

3
response to the motion to dismiss relates to this alleged post-
petition payment.
Accordingly, the trustee will be required to amend the
complaint to specifically allege the timing of the transfer which
she seeks to avoid to enable the Court to determine whether the
payment was authorized, whether recovery is time-barred or whether
the statute of limitations was tolled.
ORDER
WHEREFORE IT IS ORDERED that the trustee is granted twenty
(20) days to amend the complaint to indicate the timing of the
alleged transfer which she seeks to avoid.
SO ORDERED.
San Juan, Puerto Rico, this 8th day of May, 2008.
BY THE COURT:
s/ Gerardo A. Carlo
_______________________
GERARDO A. CARLO
U.S. Bankruptcy Judge
Case:07-00145-GAC Doc#:23 Filed:05/12/08 Entered:05/12/08 16:36:24 Desc: Main
Document Page 3 of 3