MAXON ENGINEERING SERVICES INC v. ASPHALT PRESICION JJ INC

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IN THE UNITED STATES BANKRUPTCY COURT FOR
THE DISTRICT OF PUERTO RICO
IN RE: 	CASE NO. 04-04781 MCF
MAXON ENGINEERING SERVICES INC
Debtor
Chapter 7
MAXON ENGINEERING SERVICES INC
Plaintiff,
v.
ASPHALT PRECISION JJ, INC.
Defendant
Adv. No. 07-0048 (MCF)
FILED & ENTERED ON 04/05/2010
DECISION AND ORDER
BACKGROUND
The debtor filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code on May 4, 2004 (Case No. 04-04781, Docket
No. 1). 	On May 24, 2004, the debtor filed schedules and disclosed
those 	payments 	made 	within 	ninety 	days 	of 	the 	filing 	of 	the
bankruptcy petition (Case No. 04-04781, Docket No. 40 at pp. 114-
135). 	The case was later converted to a proceeding under Chapter 7
of 	the 	Bankruptcy 	Code 	on 	June 	13, 	2006, 	and 	Noreen 	Wiscovitch-
Rentas was appointed as interim trustee on June 14, 2006 (Case No.
04-04781, Docket No. 1003).
The Chapter 7 trustee filed the instant adversary proceeding
Case:07-00048-MCF Doc#:48 Filed:04/05/10 Entered:04/05/10 15:26:05 Desc: Main
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for recovery of certain preferential payments made to the defendant
on 	account 	of 	a 	prepetition 	debt 	on 	March 	21, 	2007 	(Adv. 	No. 	07-
048, Docket No. 1). 	On January 10, 2009, defendant requested the
dismissal of the adversary proceeding alleging that the complaint
at 	bar 	is 	time 	barred 	(Adv. 	No. 	07-048, 	Docket 	No. 	36). 	The
Chapter 7 trustee opposed the motion to dismiss contending that the
statute 	of 	limitations 	was 	equitably 	tolled 	(Adv. 	No. 	07-048,
Docket 	No. 	38). 	The 	trustee’s 	argument 	is 	founded 	on 	the 	theory
that debtor’s representative, as part of a predetermined strategy,
extended 	and 	prolonged 	the 	Chapter 	11 	case 	until 	the 	limitation
period 	expired 	in 	order 	to 	prevent 	the 	trustee 	from 	exercising
avoiding 	powers 	and 	suing 	insiders, 	who 	allegedly 	transferred
millions of dollars to the Dominican Republic, and others1.
DISCUSSION
Section 	546 	of 	the 	Bankruptcy 	Code 	establishes 	a 	limitation
period on the trustee’s ability to avoid prepetition preferences.
11 U.S.C. § 546(a) states that:
(a) 	An action or proceeding under section 544, 545, 547,
548, or 553 of this title may not be commenced after
the earlier of—
(1) the later of—
(A) 2 years after the entry of the order for relief;
or
(B) 1 year after the appointment or election of the
first 	trustee 	under 	section 	702, 	1104, 	1163, 	1202,
or 	1302 	of 	this 	title 	if 	such 	appointment 	or 	such
election occurs before the expiration of the period
1 Trustee filed a motion for summary judgment on December 22, 2008 (Adv. No. 07-
048, Docket No. 32) which was opposed by defendant on January 10, 2009 (Adv. No.
07-048, Docket No. 37). 	The court did not consider these two documents for the
reasons 	herein 	discussed. 	As 	such, 	the 	motion 	for 	summary 	judgment 	and 	its
opposition are considered MOOT.
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specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
Pursuant 	to 	Section 	546 	of 	the 	Bankruptcy 	Code, 	a 	trustee’s
limitation period for exercising avoidance actions for prepetition
preferences 	is 	two 	years 	after 	the 	order 	for 	relief 	or 	one 	year
after 	the 	appointment 	of 	a 	Chapter 	7 	trustee, 	if 	the 	trustee 	is
appointed within the initial two year period.
The present adversary proceeding was not filed within the two
years 	after 	the 	entry 	of 	the 	order 	for 	relief. 	Furthermore, 	the
appointment of the Chapter 7 trustee did not occur within the two
years 	after 	the 	entry 	of 	the 	order 	for 	relief. 	As 	such, 	by
utilizing a strict application of the statute of limitations found
in 11 U.S.C. § 546(a), the instant action would be time barred.
With regards to the Chapter 7 trustee’s argument for extension
of the statute of limitations by way of equitable tolling, after an
extensive 	review 	of 	the 	trustee’s 	contentions 	and 	independent
research performed by this court, the court finds that the opinion
expressed by the Honorable U.S. Bankruptcy Judge Gerardo A. Carlo
in 	the 	case 	of 	Maxon 	Engineering 	Services, 	Inc. 	v. 	Alex 	Hornedo
Robles 	& 	Assoc., 	et 	al, 	397 	B.R. 	228 	(Bankr. 	D.P.R. 	2008), 	as
sustained in Wiscovitch-Rentas v. Jose D. Almonte, 2009 WL 349360
(D.P.R. 	2009), 	Wiscovitch-Rentas 	v. 	Plastic 	Piping 	Products 	of
Puerto 	Rico, 	Inc., 	2009 	WL 	393639 	(D.P.R. 	2009), 	and 	Wiscovitch-
Rentas v. Super Roof & General Contractor, 2009 WL 1286406 (D.P.R.
2009), 	is 	applicable 	to 	the 	instant 	case. 	Therefore, 	this 	court
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adopts 	the 	well-reasoned 	opinion 	of 	Maxon 	Engineering 	Services,
Inc. 	v. 	Alex 	Hornedo 	Robles 	& 	Assoc., 	et 	al 	and 	will 	proceed 	to
dismiss the present adversary proceeding.
ORDER
WHEREFORE 	IT 	IS 	ORDERED 	that 	defendant’s 	motion 	to 	dismiss
(Adv. No. 07-048, Docket No. 36) shall be, and hereby is, GRANTED.
SO ORDERED.
Ponce, Puerto Rico, this 05 day of April, 2010.
MILDRED CABAN FLORES
U.S. Bankruptcy Judge
C: 	DEBTOR
CARMEN D CONDE TORRES
NOREEN WISCOVITCH RENTAS
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