CASAS MORALES v. BANCO POPULAR PR

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IN THE UNITED STATES BANKRUPTCY COURT FOR
THE DISTRICT OF PUERTO RICO
IN RE:
LEILA MARGARITA CASAS MORALES
CASE NO. 10-04800 BKT
DEBTOR
Chapter 13
LEILA MARGARITA CASAS MORALES
PLAINTIFF 	ADV. NO.: 10-0133
VS.
BANCO POPLAR DE PUERTO RICO, ET ALS.
DEFENDANTS
FILED & ENTERED ON 09/26/2011
OPINION AND ORDER
Before the Court is Plaintiff's Motion for Partial Summary Judgment on
Liability [Dkt. No. 14], Defendant's Cross Motion for Summary Judgment [Dkt. No.
24], 	and 	Defendant's 	Opposition 	to 	Plaintiff's 	Motion 	for 	Partial 	Summary
Judgment [Dkt. No. 32]. For the reasons set forth below, the Plaintiff’s motion
for partial summary judgment is DENIED, and the Defendant's Cross Motion for
Summary Judgment is GRANTED.
I. SUMMARY JUDGMENT STANDARD
Under Federal Rule of Civil Procedure 56(c), made applicable in bankruptcy
by Federal Rule of Bankruptcy Procedure 7056, summary judgment is available if
the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(c); Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d
1, 4 (1st Cir. 2010). 	As to issues on which the movant, at trial, would be
compelled to carry the burden of proof, it must identify those portions of the
pleadings 	which 	it 	believes 	demonstrates 	that 	there 	is 	no 	genuine 	issue 	of
material fact. 	In re Edgardo Ryan Rijos & Julia E. Cruz Nieves v. Banco Bilbao
Vizcaya & Citibank (In re Rijos), 263 B.R. 382, 388 (B.A.P. 1st Cir. 2001). 	A
fact is deemed "material" if it potentially could affect the outcome of the suit.
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Borges at 5. 	Moreover, there will only be a "genuine" or "trial worthy" issue as
to such a "material fact," "if a reasonable fact-finder, examining the evidence
and drawing all reasonable inferences helpful to the party resisting summary
judgment, could resolve the dispute in that party's favor." 	Id. at 4. 	The Court
must view the evidence in a light most favorable to the nonmoving party. 	Alt.
Sys. 	Concepts, 	Inc. 	v. 	Synopsys, 	Inc., 	374 	F.3d 	23, 	26 	(1st 	Cir. 	2004).
Therefore, summary judgment is “inappropriate if inferences are necessary for the
judgment and those inferences are not mandated by the record.” 	Rijos at 388.
II. FACTUAL BACKGROUND
The Plaintiff/ Debtor filed the present adversary proceeding alleging that
the Defendant Banco Popular de Puerto Rico (“BPPR”) is liable and in contempt for
willful violations of the automatic stay provisions of 11 U.S.C. § 362(a). 	The
Plaintiff, Leila M. Casas Morales is a debtor in a chapter 13 case filed on May
31, 2010. Because Plaintiff was a co-debtor in her deceased mother’s credit cards
with 	Defendant, 	American 	Express 	account 	#3400 	and 	Visa 	account 	#2052 	were
included 	in 	Schedule 	F 	as 	unsecured 	nonpriority 	claims 	of 	$4,945.08 	and
$4,199.00, respectively.1 On June 3, 2010, the Bankruptcy Court served BPPR by
first class mail with notice of the filing of the bankruptcy and, thus, Defendant
clearly had notice of Plaintiff’s bankruptcy case. Additionally, Defendant has
admitted that it obtained notice of Plaintiff’s bankruptcy within a week of the
filing thereof through a publication known as the “Boletín de Puerto Rico.” The
violation 	allegations 	stem 	from 	an 	incident 	on 	June 	28, 	2010, 	whereby 	debt
collector 	ILCA 	Collection 	Agency, 	Inc., 	at 	the 	direction 	and 	on 	behalf 	of
Defendant, sent two separate debt collection letters to Plaintiff’s deceased
mother demanding payment on the above-mentioned credit card debts.2 The postal
address provided by the deceased mother, Emma Morales Alverio, to Defendant when
the 	Visa 	and 	American 	Express 	credit 	cards 	were 	opened, 	is 	the 	same 	postal
address provided by the Debtor in her bankruptcy petition. No other collection
actions, besides the two (2) collection letters sent to Emma Morales Alverio by
ILCA Collection Agency, Inc., on behalf of Defendant, BPPR, have been made. Thus,
there are no other material facts in dispute and so we turn to the issue of
whether summary judgment is appropriate.
1 Defendant states in his cross motion for summary judgment that Debtor/Plaintiff is co-debtor only to the Visa
credit card account of her deceased mother.
2 Defendant states in his cross motion for summary judgment that a third collection letter dated July 8, 2010, was
also mailed in the deceased mother's name to Debtor/Plaintiff. Although the third collection letter is included as an
exhibit in Defendant's Motion, Plaintiff makes no mention of this third letter in the complaint nor in the Motion for
Partial Summary Judgment as to Liability.
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III. LEGAL ANALYSIS AND DISCUSSION
11 	U.S.C. 	§ 	362(a) 	establishes 	what 	actions 	are 	protected 	from 	the
commencement, 	continuation, 	enforcement, 	creation 	or 	collection 	procedures
against the debtor or property of the estate. In order to trigger the automatic
stay, there must be an act against either the debtor or against property of the
debtor or the estate. The automatic stay generally does not bar acts against non-
debtors (such as a co-debtor who is liable on a debt with the debtor). 11 U.S.C.
§ 362(a). 	A basic tenet of federal bankruptcy law is that the automatic stay
suspends creditor collection efforts and litigation against a debtor that files
for bankruptcy protection, but does not apply to actions directed toward non-
debtor third-parties. F.D.I.C. v. Torrefaccion Cafe Cialitos, Inc., 62 F.3d 439
(D.Puerto Rico, 1995). Although the scope of the protections of the automatic
stay is broad, the automatic stay only stays actions against the debtor, and so
the 	protections 	of 	the 	stay 	do 	not 	extend 	to 	entities 	such 	as 	sureties,
guarantors, co-obligors, or others with a similar legal or factual nexus to the
debtors. In re R&G Financial Corp., 441 B.R. 401 (Bkrtcy.D.Puerto Rico, 2010).
Protection 	of 	the 	automatic 	stay 	may 	be 	extended 	to 	nondebtors 	if 	“unusual
circumstances” are found, such as (1) the nondebtor and debtor enjoy such an
identity 	of 	interests 	that 	the 	suit 	of 	the 	nondebtor 	is 	essentially 	a 	suit
against the debtor, or (2) the third-party action will have an adverse impact on
the debtor's ability to accomplish reorganization. Id; In re Bora Bora, Inc., 424
B.R. 17 (Bkrtcy.D.Puerto Rico, 2010). However, such circumstances are not found
in the case at bar. 	Also, the automatic stay protection would extend to a non-
debtor in a Chapter 13 case if the bankruptcy debtor is the primary obligee on
the debt and a non-filing guarantor exists. See, 11 U.S.C. § 1301. However, from
the 	facts 	provided 	in 	the 	statement 	of 	material 	facts, 	that 	was 	not 	the
circumstance in our case either because the bankruptcy debtor (Plaintiff) is the
guarantor, not the primary obligee, and it is unknown whether the debts are
consumer debts. Moreover, the Plaintiff does not assert a violation of § 1301.
From a plain reading of the statute, it is evident that actions against a
third party or a non debtor are not protected under the Bankruptcy Code, unless
one of the previous exceptions is present, which they are not in this case. 	It
is imperative to bear in mind that in the instant case the collection letters
were addressed to Emma Morales Alverio (a non debtor or third party) and not to
Leila 	M. 	Casas 	Morales 	(Debtor/Plaintiff). 	It 	is 	undisputed 	from 	the 	record
before us that after the filing of Plaintiff’s bankruptcy petition on May 31,
2010, Plaintiff was never called via telephone or received collections letters
either 	by 	Defendant, 	BPPR 	or 	ILCA 	Collection 	Agency, 	Inc., 	requesting 	the
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payments of the credit card debts of Emma Morales Alverio. 	Furthermore, the
letters 	sent 	to 	the 	registered 	address 	were 	not 	addressed 	in 	the 	name 	of
Plaintiff, as the co-debtor of the credit card debts. Under this scenario of
undisputed facts there is not a violation of the automatic stay and therefore,
the plaintiff is not entitled to recover damages.
WHEREFORE, IT IS ORDERED that the Plaintiff’s motion for partial summary
judgment 	shall 	be, 	and 	hereby 	is, 	DENIED, 	and 	Defendant's 	Cross 	Motion 	for
Summary 	Judgment 	is 	GRANTED. 	Clerk 	to 	enter 	the 	judgment 	for 	Defendant
accordingly.
IT IS SO ORDERED.
San Juan, Puerto Rico this 26 day of September, 2011.
Brian K. Tester
U.S. Bankruptcy Judge
CC: 	ALL CREDITORS
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