RIDEL ALEGRE FERNANDEZ ROSADO

OCR transcription for search; preserved printed pages are authoritative

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 fEntered:03/15/10 09:44:14 Desc: Main
Document Page 1 of 11

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

—

IN RE: : CASE NO. 07-05871
RIDEL ALEGRE FERNANDEZ ROSADO : CHAPTER 7
Debtor :

Oo Oo NSN DN ON Fe YW WH

OPINION AND ORDER

ht
i)

This case is before the court upon the Motion to Dismiss filed jointly by Mr. Celedonio

—
ay

Corredera Pablo (“Mr. Corredera”), Pablo Lopez Baez (“Mr. Lopez”), Emma Teresa Benitez (“Mrs.

—,
i)

Benitez) and Osiris Delgado (“Mrs. Delgado”) (hereinafter referred collectively as the “Creditors”)

—
Qo

on April 28, 2009 pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code and a “Memorandum In

—
—

Support Of Motion for Reconsideration /Set Aside Of Order & Supplementing Opposition to Motion

—
Ww

to Dismiss”(the “Motion for Reconsideration” or “Opposition to Motion to Dismiss”) filed by Ridel

—
nN

Alegre Fernandez (the “Debtor”) on November 24, 2009 (Docket No. 76), of the Order entered in this

—
~

case on May 29, 2009 (Docket No. 61) denying Debtor’s second request that a discharge be entered
forthwith pursuant to Fed. R. Bankr. P. 4004(c)(1)(B) and (D). On December 21, 2009, Mr. Ldpez,

a
Oo co

Mrs. Benitez and Mrs. Delgado jointly filed their reply to the opposition to the motion to dismiss

i)
joe)

(Docket No. 80). On December 31, 2009 Mr. Corredera filed his Opposition to Debtor’s Motion for

NO
—

Reconsideration (Docket No. 83). For the reasons stated below the Motion for Reconsideration is

No
bo

hereby denied, and an evidentiary hearing on the motion to dismiss will be scheduled to determine

N
LoS)

whether Debtor filed its bankruptcy petition in bad faith.

NO
&

Facts and Procedural Background

bo
tr

Defendant Ridel Alegre Fernandez Rosado filed a bankruptcy petition under Chapter 7 of the

i)
oO

Bankruptcy Code on October 9, 2007. Creditors were included in Schedule F (Creditors Holding

NO
~]

Unsecured Nonpriority Claims) as unsecured and all debts were labeled of a personal nature. Debtor

NO
lo.)

in Schedule F listed the debts as follows: (i) Don Celedonio Correderra Pablos a personal debt

AUTHENTEPATED
US. GOVERMENT
INFORMAPFION

GPO

oOo OF ST BD A BP WD NO &

NO NO KN NY NO DO DD DR DR i rk ak
oH NY NHN OO FPF WHO NH KFK DOD O0O Oo ND HR Wn F&F W YPY KK |

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 2 of 11

{incurred in the year 2005 in the amount of $68,400.00; (ii) Dr. Osiris Delgado a personal debt

incurred in the year 2005 in the amount of $25,000.00; (iii) Dr. Pablo Lopez Baez a personal debt
incurred in the year 2005 in the amount of $11,000.00; and (iv) Emma Teresa Benitez a personal debt
incurred in the year 2006 in the amount of $27,000.00. Debtor on line item 4 of its Statement of
Financial Affairs listed the following four (4) state court proceedings for collection of monies: (1)

Pablo Lopez Baez, Cristine Wechgeler vs. Ridel Fernandez H/N/C Galeria Ridel K1CD2007-0083;

(2) Don Celedonio Corredera Pablos vs. Galeria Ridel, Inc. and Ridel Fernandez KCD2007-0809; (3)
Emma Teresa vs. Ridel Fernandez KCD2007-11424; and (4) Dr. Osiris Delgado vs. Ridel Fernandez

and Galeria Ridel KCD2007-1759. The 341 meeting of creditors was initially scheduled for
November 1, 2007 (Docket No. 4). The meeting of creditors was rescheduled to November 15, 2007
(Docket No. 7 in lead case); and subsequently continued to December 13, 2007 (Docket No. 12 in
lead case) and January 10, 2008 (Docket No. 20 in lead case). The deadline to file objections to the
discharge and the dischargeability of debts was December 31, 2007 (Docket No. 4 in lead case).
On April 28, 2009 Creditors filed a Motion To Dismiss (Docket No. 55) alleging that Debtor
filed its bankruptcy petition in bad faith and should be dismissed pursuant to 11 U.S.C. §707(a) of
the Bankruptcy Code. Creditors allege that Debtor’s bad faith is based on the following: (i) “...to
obtain a discharge of debts incurred as a result of Fernandez’s fraudulent representations to the
Consignors and other similarly situated creditors and as a result of Debtor misappropriating or using
without consent money or property belonging to the Consignors and other similarly situated creditors”
(Docket No. 55, paragraph 5); (ii) “[t]his cumulative debt of at least $112,000.00 was incurred by
Debtor as a direct result of Fernandez using artworks that had been given to him on consignment for
sale by the Consignors to pay for his own debts and from Fernandez using the proceeds of the sales
of artworks given to him by the Consignors to pay for his own debts” (Docket No. 55, paragraph 7);
(iii) “Debtor has admitted that title over the artworks given to him on consignment for sale by the
Consignors remained in the Consignors. Therefore, the proceeds of the sales of those artworks
belonged to the Consignors” (Docket No. 55, paragraph 8); (iv) “Fernandez fraudulently or under
false pretenses made the Consignors provide him with the artworks on consignment for sale, under

the pretense that he would turnover to them the proceeds of the sales of the consigned artworks, less

2

Oo CO NN HN WO ee WD Le

NO NO NO KN NY NN DN DDR mmm ed
oOo nN EN OO FSP DY NY KF DOD CO Oo ND DH OH Be WHO YN & OC

|Debtor’s rightful part of said proceeds” (Docket No. 55, paragraph 9); and (v) “Debtor has constantly

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 3 of 11

failed to provide the Consignors with the information requested at the meetings of creditors with
regards to whom and for what amount were the consigned artworks sold and if they had been paid to
him by the respective buyers” (Docket No. 55, paragraph 11).

Subsequently, on May 29, 2009 the court dismissed the instant case for the reasons set forth
in Creditors’ motion to dismiss. On June 1, 2009 Debtor filed a motion for reconsideration of
dismissal under Fed. R. Bankr. P. 7055(c) (Docket No. 67). Debtor filed his Answer and Opposition
to the Motion to Dismiss on June 1, 2009 (Docket No. 68). Debtor as part of its Affirmative Defenses
in its Opposition to the Motion to Dismiss argues that there is no good faith filing requirement under
11 U.S.C. §707(a) of the Bankruptcy Code. On June 19, 2009 Creditors filed their opposition to
Debtor’s motion for reconsideration pursuant to Fed. R. Bankr. P. 7055(c) (Docket No. 69). The
court, on September 9, 2009, granted Debtor’s motion for reconsideration of the dismissal order since
the same was entered prematurely. The order dismissing the case was vacated and set aside. (Docket
No. 70). On October 20, 2009, Creditors jointly filed a motion to stay the pretrial hearing until the
court rules on the motion to dismiss (Docket No. 72). Creditors through this motion also requested
the court to convert the motion to dismiss to a motion for summary judgment. On October 21, 2009
the court ordered the pretrial hearing scheduled for October 23, 2009 to be continued without a date,
pending a decision on Creditors’ motion to dismiss (Docket No. 73).

On November 24, 2009 Debtor filed his Opposition to Motion to Dismiss and Memorandum
of Law (Dockets No. 75 & 76) arguing the following: (i) the motion to dismiss should not be granted
without a hearing since Debtor should be given a full and fair opportunity to be heard pursuant to 11
U.S.C. §§707(a), 102(1) of the Bankruptcy Code and P.R. LBR 9013-1(d); (ii) Creditors have not
offered any evidence whatsoever in support of their motion to dismiss based on bad faith pursuant
to 11 U.S.C. §707(a) of the Bankruptcy Code; (iii) the movant bears the burden for establishing that
there is “cause” for dismissal pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code; (iv) a motion
to dismiss which is devoid of any evidence whatsoever but relies on unspecific allegations of fraud
and innuendos fails to establish “cause” pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code; (v)

“...Debtor respectfully submits that any perceived failure to respond to the Motion to Dismiss with

3

oOo Oo SN HD Oe BP WD YO

ND NO DO NHN FPO NO KN KRNO —RO me eee ee
Oo NUN BN ON &® DH NY KF DOD OO ON KN OH Be BUN UlULELHLUD

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 4 of 11

iispecific facts in evidence should not provide a basis for the Court to grant the motion, and most

certainly should not justify doing so without a hearing” (Docket No. 76, p. 12); and (vi) the motion
to dismiss under Section 707(a) is an untimely Section 707(b)(3)(A) motion in disguise. On
December 21, 2009 Mr. Lopez, Mrs. Benitez and Mrs. Delgado jointly filed their reply to the
opposition to the motion to dismiss (Docket No. 80) by which they present transcribed portions of
the 341 creditor’s meeting, Debtor’s answer to interrogatories and Debtor’s deposition in which he
acknowledged having received the works from Mr. Lopez, Mrs. Benitez and Mrs. Delgado in
consignment and selling the same to third parties and paying other debts with the proceeds from the
artworks but never remitting the proceeds from such artworks to the consignors. Lastly, Mr.
Corredera in his opposition to the motion for reconsideration argues the following: (i) “[nJeither 11
U.S.C. §707(a) nor LBR 9013-1(d) require that an actual hearing be held, unless a party in interest
requests such an actual hearing” (Docket No. 83, paragraph 5); (i) “...Debtor’s motion for
reconsideration of the order dismissing the case nor in Debtor’s opposition to the Motion to Dismiss
did Debtor request that an actual hearing be held as to the Motion to Dismiss” (Docket No. 83,
paragraph 6); and (ili) Debtor’s lack of good faith pursuant to Section 707(a) consisted in
misappropriating the artworks that had been given to him on consignment for sale and using the
proceeds of the consigned artworks to pay other debts and thus, failing to remit the proceeds from
these artworks to the consignors.
Applicable Law and Analysis
Right to a Hearing Pursuant to 11 U.S.C. §$707(a) & 102(1)

Section 707(a) authorizes a bankruptcy court to, “dismiss a case under this chapter only after
notice and a hearing and only for cause.” 11 U.S.C. §707(a). The phrase “after notice and a hearing”
under Section 102(1) is construed to mean such notice and opportunity for a hearing “‘as is appropriate
in the particular circumstances.” 11 U.S.C. 102(1)(A). However, after proper notice is given, a
hearing is not required under three (3) circumstances, namely: (i) ifno party in interest timely requests
a hearing; (ii) if there is insufficient time for the hearing to be commenced before the act must be
done and (iii) the bankruptcy court has sufficient information to act without a hearing even if one was

requested by a party in interest. 11 U.S.C. §102(1)(B); Alan N. Resnick & Henry J. Sommer, 2

4

Oo CO SN DN Oe WD NO

NY NO NO NHN KN NY KN DD rm em ieee pam pm fmm um as mk
oOo KN DN A FP WHO NY KF COS Oo Oo ND HAHN FPF WD] NYY KY OC

ICase:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 5 of 11

Collier on Bankruptcy ¥102.03[a]-[c] (16 ed. 2009). “The particular circumstances of a motion to
dismiss include the fact that dismissal is one of the most critical determinations to be made in a
Chapter 7 case, affecting the vital bankruptcy interests of all parties.” In re Dinova, 212 B.R. 437, 442
(B.A.P. 2d Cir. 1997). Moreover, “[t]he purpose of the “notice and hearing” requirement of Section
707(a) is to enlighten the court’s determination of ‘cause’ by the adversary process.” Id at 444. Courts
must generally recognize litigant’s due process rights, thus allowing the same the opportunity to be
heard “at a meaningful time and in a meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 333,
47 L. Ed. 2d 18, 96 S. Ct. 893 (1976).

Mr. Corredera argues that Debtor does not have a right to a hearing because his request was
untimely since Debtor did not request a hearing in its motion for reconsideration (Docket No. 67)
requesting dismissal of the case nor in its opposition to the motion to dismiss (Docket No. 68). Debtor
filed the motion requesting reconsideration of dismissal and its Opposition to the Motion to Dismiss
on June 1, 2009 (Dockets No. 67 & 68). The court granted Debtor’s motion for reconsideration on
September 9, 2009, thus vacating the May 29, 2009 dismissal order since the same was entered
prematurely (Docket No. 70). On October 20, 2009, Creditors jointly filed a motion to stay the pretrial
hearing until the court rules on the motion to dismiss (Docket No. 72). The court, on October 21,
2009, ordered the pretrial hearing scheduled for October 23, 2009 to be continued without a date,
pending a decision on Creditors’ motion to dismiss (Docket No. 73). On November 24, 2009, the
Debtor through its Opposition to the Motion to Dismiss argues that his case should not be dismissed
absent a hearing.

This court finds that the Debtor pursuant to Sections 707(a) and 102(1)(A) of the Bankruptcy
Code is entitled to an evidentiary hearing to determine the dismissal of the case on the ground that
the Debtor filed its bankruptcy petition in bad faith. The court clarifies that the May 29, 2009 order
(Docket No. 60) dismissing the case was granted erroneously pursuant to P.R. L.B.R. 9013-1(d)(1)
because Debtor had not filed an objection to Creditors’ motion to dismiss. However, P.R. L.B.R.

9013-1(d) do not preclude the court to act upon the motion to dismiss without a hearing.

oO SS SN DR A BP WO Ne

BRB NO DO NO PO KN KN NO NO mw Re
oa XA NH A fF WD NO —&§ OD OO DB NY WB HH FP WD YY —|& &

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 6 of 11

‘Bad Faith as Cause under 11 U.S.C. §707(a)

Section 707(a) of the Bankruptcy Code provides in part that, “[t]he court may dismiss a case
under this chapter only after notice and a hearing and only for cause,” and provides three (3) non-
exclusive examples of “cause” warranting dismissal. 11 U.S.C. §707(a). The Bankruptcy Code is
silent as to what constitutes “cause” under Section 707(a). The examples provided in Section 707(a)

of the Bankruptcy Code are not exhaustive of what may constitute “cause” for dismissal in a chapter

7 case. See In re Zick, 931 F. 2d 1124, 1126 (6" Cir. 1991); In re Huckfeldt, 39 F. 3d 829, 831 (8
Cir. 1994). There is currently a split amongst the courts on the issue of whether bad faith constitutes
“cause” for dismissal of a chapter 7 case pursuant to Section 707(a). The Third and Sixth Circuits
have held that bad faith is a valid cause for dismissal ofa chapter 7 case under §707(a). See Industrial

Ins. Servs., Inc. v. Zick (In re Zick), 931 F. 2d 1124, 1127 (6 Cir. 1991); In re Tamecki, 229 F. 3d

205, 207 (3 Cir. 2000); Perlin v. Hitachi Capital America Corp., 497 F. 3d 364 (3 Cir. 2007).

However, both the Third and Sixth Circuits employ narrowly bad faith as “cause” for dismissal of a
chapter 7 case and limit its scope to “egregious cases that entail concealed or misrepresented assets
and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based upon
conduct akin to fraud, misconduct or gross negligence.” In re Zick, 931 F. 2d at 1129. The Eight and
Ninth Circuits have taken the opposite viewpoint and held that bad faith generally does not constitute
“cause” under Section 707(a). See In re Padilla, 222 F. 3d 1184, 1191 (9" Cir. 2000); Inre Huckfeldt,
39 F. 3d at 832 citing In re Khan, 172 B.R. 613 (Bankr. D. Minn. 1994) (“...bad faith under §707(a)

be limited to extreme misconduct falling outside the purview of more specific Code provisions, such
as using bankruptcy as a ‘scorched earth’ tactic against a diligent creditor, or using bankruptcy as a
refuge from another court’s jurisdiction.”).

There is no controlling precedent from the First Circuit Court of Appeals. However, it must
be noted that the Bankruptcy Court of Massachusetts has addressed this particular issue and has
aligned itself with the reasoning employed by the Eighth and Ninth Circuits. See In re Linehan, 326
B.R. 474 (Bankr. D. Mass. 2005); In re Pina, 363 B.R. 314 (Bankr. D. Mass. 2007). The Bankruptcy
Court of New Hampshire contrary to the Bankruptcy Court of Massachusetts has held that bad faith

constitutes “cause” for a chapter 7 dismissal and that the factors included in Cabral v. Shamban (In

6

Oo SF SN DWN UO BR WD Ne

NO NO NO NN DN KH YN KN Om om me rm teem emt pe fewnek pl
ono NN ND Un *&-— WH NO —&§ OF DOD fH HN DB WO F&F WD YH KH O&O

Pase:07-05871-ESL7 Doc#:84 Filed:03/15/10 lEntered:03/15/10 09:44:14 Desc: Main
Document Page 7 of 11

ire Cabral), 285 B.R. 563, 572 (B.A.P. 1* Cir. 2002)’ should be employed to determine the same. In

re Marsico, 2004 B.R. 1 (Bankr. D.N.H. 2004).

Notwithstanding, the split amongst the courts, chapter 7 dismissals based on bad faith are fact
intensive and fact specific and the moving party has the burden of proving that there is “cause” for
such dismissal. See In re Romany, 2006 Bankr. LEXIS 3807 (Bankr. D.P.R. 2006). At this juncture,
the court will refrain from issuing an opinion on the scope of bad faith as a “cause” for a chapter 7
dismissal and analyzing the testimonial evidence which has been submitted by Creditors until after
the hearing has taken place.

Fed. R. Civ. P. 60(b)

A motion for reconsideration of an order or judgment is not recognized by the Federal Rules
of Civil Procedure. In re Pabon Rodriguez, 233 B.R. 212, 218 (Bankr. D.P.R. 1999) aff'd, 2001 WL
958803 (Ist Cir. 2001) (citing Vank Skiver v. United States 952 F.2d 1241, 1243 (10" Cir. 1991)).

Federal courts treat such a motion as either a motion to alter or amend judgment under Fed. R. Civ.
P 59(e) or a motion for relief of judgment under Fed. R. Civ. P. 60(b). “These two rules are distinct;
they serve different purposes and produce different consequences. Which rule applies depends
essentially on the time a motion is served. If a motion is served within ten days of the rendition of
judgment, the motion ordinarily will fall under Rule 59(e). Ifthe motion is served after that time, it
falls under Rule 60(b).” Id. In the instant case Plaintiff's Motion for Reconsideration was filed one
hundred seventy eight (178) days after the order for which reconsideration is sought was entered.
Therefore, the motion will be treated as one filed under Fed. R. Civ. P. 60(b) made applicable here
through Fed. R. Bank. P. 9024.

Fed. R. Bankr. P. 9024 provides as follows:

Rule 60 F. R. Civ. P. applies in cases under the Code except that (1) a motion to
reopen a case under the Code or for the reconsideration of an order allowing or

'The following are the four (4) factors the court must consider: (1) whether the debtor
misrepresented facts in his petition, unfairly manipulated the Bankruptcy Code, or otherwise filed
his bankruptcy petition in an inequitable manner; (2) the debtor’s history of filings and dismissals;
(3) whether the debtor only intended to defeat state court litigation; and (4) whether egregious
behavior is present. These factors were used to reconvert a chapter 7 case to a chapter 13 case.

7

Oo CO SN DR CW BR BD NO me

NO NO NO BH NY WD DD RO DR ere ket
oOo NI OO UU S&F DH NY & DOD Oo SB NA NHB Wn FSP WY NPY KF O&O

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 fEntered:03/15/10 09:44:14 Desc: Main
Document Page 8 of 11

disallowing a claim against the estate entered without a contest is not subject to the
one year limitation prescribed in Rule 60(b), (2) a complaint to revoke a discharge in
a chapter 7 liquidation case may be filed only within the time allowed by section
727(e) of the Code , and (3) a complaint to revoke an order confirming a plan may be
filed only within the time allowed by section 1144, sec 1230, or sec 1330.

Rule 60 Relief from a Judgment or Order

(a) Corrections Based on Clerical Mistakes; Oversights and Omissions. The court
may correct a clerical mistake or a mistake arising from oversight or omission
whenever one is found in a judgment, order, or other part of the record. The court may
do so on motion or on its own, with or without notice. But after an appeal has been
docketed in the appellate court and while it is pending, such a mistake may be
corrected only with the appellate court's leave.

(b) Grounds for Relief from a Final Judgment, Order, or Proceeding. On motion
and just terms, the court may relieve a party or its legal representative from a final
judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not have been
discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or
misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released or discharged; it is based on an earlier
judgment that has been reversed or vacated; or applying it prospectively is no longer
equitable; or

(6) any other reason that justifies relief.
(c) Timing and Effect of the Motion.

(1) Timing. A motion under Rule 60(b) must be made within a reasonable time--and
for reasons (1), (2), and (3) no more than a year after the entry of the judgment or
order or the date of the proceeding.

(2) Effect on Finality. The motion does not affect the judgment's finality or suspend
its operation.

Fed. R. Civ. P. 60(b)(1) is generally utilized for mistake, inadvertence, surprise, or excusable
neglect of a party involved in a legal proceeding. However, it is “not altogether clear” under what
circumstances such rule may be employed to seek relief regarding mistakes of the court. See 11

Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d_ § 2858 at 293. There is

disagreement amongst the circuits regarding the circumstances for which a party is entitled to Fed.
R. Civ. P. 60(b)(1) relief based on an error of the court. Id at 293-295. The Sixth and Tenth Circuit
have held that the term “mistake” as employed in Fed. R. Civ. P. 60(b)(1) encompasses errors of the

8

Oo Oo NIN DH WO Fe WD NY

NN pO DP KN KN KN DDD ieee
oOo NO NH BP WH NO KY OF ODO OB ANA HB A SP WD YO — BD

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 lEntered:03/15/10 09:44:14 Desc: Main
Document Page 9 of 11

court, including legal errors. See United States v. Reyes, 307 F. 3d 451, 455 (6" Cir. 2002); Cashner

v. Freedom Stores, Inc., 98 F. 3d 572, 576 (10" Cir. 1996). Contrary to the Sixth and Tenth Circuit,

the First Circuit has specifically held that Fed. R. Civ. P. 60(b)(1) is limited in scope and as such, a
legal error is not the type of mistake, inadvertence, surprise or excusable neglect that justifies relief
under Fed. R. Civ. P. 60(b)(1), since it is not inclusive of the relief under the rule for error of law
provided under Fed. R. Civ. P. 59(e). Silk v. Sandoval, 435 F. 2d 1266, 1268 (1* Cir. 1971), cert.
denied 91 S. Ct. 2189, 402 U.S. 1012, L. Ed. 2d 435. The First Circuit’s interpretation of Fed. R. Civ.

P. 60(b)(1) “seems to fit better the structure of the rules” and “makes more sense of the relation
between Rule 59(e) and Rule 60(b)(1).” 11 Wright, Miller & Kane, Federal Practice and Procedure:
Civil 2d_ § 2858 at 295.

Fed. R. Civ. P. 60(b)(6) as the catchall provision is generally employed only in extraordinary
circumstances that justify relief for cases which are brought before the court for post trial review after
the one (1) year limit or other time constraints mandated under other rules. 11 Wright, Miller & Kane,

Federal Practice and Procedure: Civil 2d § 2858 at 365; See United States v. One Urban Lot, 882 F.

2d 582, 585 (1* Cir. 1989) Valley Citizens for a Safe Environment v. Aldridge, 969 F. 2d, 1315

1317.“Given the limited number of situations in which ‘extraordinary circumstances’ have been
found, the courts have focused instead on whether the movant made a fair and deliberate choice at
some earlier time not to move for relief.” Id at 370. The First Circuit has held that the “bar for such
relief is set high because... there must be an end to litigation someday.” Paul Revere Variable Annuity

Inc. Co. v. Zang, 248 F. 3d 1, 5 (1* Cir. 2001) citing Ackermann v. United States, 340 U.S. 193, 198,

95 L. Ed. 207, 71 S. Ct. 209 (1950). Moreover, “the district courts have ‘broad discretion’ to

determine whether such circumstances exist.” Id.
Debtor’s Arguments & Discussion- Motion for Reconsideration

In his Motion for Reconsideration Debtor pursuant to Fed. R. Civ. P. 60(b)(1) and (6) presents
the following arguments: (i) the court erred in its application of Fed. R. Bankr. P. 4004(c)(1)(B)
because plaintiffs through the filing of the adversary proceedings sought relief under 11 U.S.C. §523
of the Bankruptcy Code not pursuant to 11 U.S.C. §727 as provided by Fed. R. Bankr. P.

oO Se SN HD HO Fe W] NO —

NON bBo NO KN BHO KN KN BD Pw wi mek
oo NIN DB A FSP WD NO —§ CO DO Se I DB A F&F WO YO — &

Pase:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 10 of 11

4004(c)(1)(B); (ii) even if Fed. R. Bankr. P. 4004(c)(1)(B) is applicable to complaints objecting to

the dischargeability of certain debts pursuant to 11 U.S.C. §523, such statute is not applicable to the
instant case because there are currently no pending adversary proceedings and judgments were entered
on April 9, 2009 in the adversary proceedings and the motions for reconsideration in the adversary
proceedings were disposed of as of May 20, 2009 and the same were closed on June 4, 2009; (iii) the
court erred in its application of Fed. R. Bankr. P. 4004(c)(1)(D) because a motion to dismiss pursuant
to 11 U.S.C. §707 of the Bankruptcy Code was not pending on expiration of the time fixed for filing
acomplaint objecting to discharge (December 31, 2007) and the time fixed filing a motion to dismiss
the case under 1017(e); (iv) in this case the motion to dismiss filed on April 28, 2009 (Docket No.
55) was not pending on the expiration of the complaints deadline (December 31, 2007) nor was the
same pending on April 9, 2009 when Debtor requested the discharge to be entered in this case
(Docket No. 54). Mr. Corredera in his Opposition to the Motion for Reconsideration states the
following arguments: (i) Debtor has failed to allege the occurrence of any mistake, inadvertence,
surprise, or excusable neglect or any other reason that would justify relief; and (ii) Debtor employed
Fed. R. Civ. P. 60(b) because he failed to act pursuant to the ten (10) day period mandated by Fed.

R. Civ. P. 59(e), thus Debtor’s Motion for Reconsideration is untimely.

This court finds that Fed. R. Civ. P. 60(b)(1) is inapplicable to the instant case, given that
Debtor’s motion for reconsideration is based on a legal error, namely this court’s interpretation and
application of Fed. R. Bankr. P. 4004(c)(1)(B) and (D), that should have been brought to this court’s
attention through the mechanism of Fed. R. Civ. P. 59(e). The court also concludes that Fed. R. Civ.
P. 60(b)(6) is inapplicable to the instant case since the same is devoid of “extraordinary
circumstances” that would justify relief and Debtor failed to move the court for relief pursuant to Fed.
R. Civ. P. 59(e). Furthermore, at this point in time the court pursuant to Fed. R. Bankr. P.
4004(c)(1)(D) may not enter a discharge order because there is currently pending a motion to dismiss

pursuant to 11 U.S.C. §707(a) of the Bankruptcy Code.

In view of the foregoing, the Motion for Reconsideration filed by Debtor is hereby denied.

This court finds that the Debtor is entitled to a hearing on the merits (evidentiary hearing) to consider

10

Oo SF SN DN OH FBP WY NH

NO wo WN PO KN KN PO PD Dw pe pe pm fm pk a mk ak
eo NAN NH UH FP WD NY KF TD YO TFB NI HB A FP WY NYO KF S&S

Case:07-05871-ESL7 Doc#:84 Filed:03/15/10 Entered:03/15/10 09:44:14 Desc: Main
Document Page 11 of 11

lCreditors’ motion to dismiss in which both parties shall bring forth evidence that supports their

respective arguments, namely whether Debtor filed its bankruptcy petition in bad faith. An evidentiary
hearing is scheduled for May 25, 2010 at 2:00 pm. Ten (10) days prior to the hearing the parties shall
file proposed findings of fact and conclusions of law. Each finding of fact shall refer to either a

document or witness. Copy of the document will be attached to the proposed findings.
SO ORDERED.

In San Juan, Puerto Rico, this ‘n day of March 2010.

U. S. Bankruptcy Judge

11