MAXON ENGINEERING SERVICES INC v. INDUSTRIAL LIGHTING SERVICES

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
IN RE:
MAXON 	ENGINEERING 	SERVICES,
INC.,
Debtor(s)
Case No. 04-04781 (MCF)
Chapter 7
MAXON 	ENGINEERING 	SERVICES,
INC.,
Plaintiff(s),
v.
INDUSTRIAL LIGHTING SUPPLY,
Defendant(s).
Adv. No. 07-00218 (MCF)
OPINION AND ORDER
The 	debtor, 	Maxon 	Engineering 	Services, 	Inc. 	("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, 	Debtor 	filed 	its 	schedules 	and 	disclosed
those 	payments 	made 	within 	ninety 	days 	of 	the 	filing 	of 	the
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 	trustee 	on 	June 	14, 	2006 	(Case 	No. 	04-04781,
Docket No. 1003).
The 	Chapter 	7 	trustee 	filed 	the 	instant 	adversary
proceeding 	for 	recovery 	of 	certain 	preferential 	payments 	made 	to
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the 	defendant, 	Industrial 	Lighting 	Supply 	("Defendant"), 	on
account 	of 	a 	prepetition 	debt 	on 	June 	11, 	2007 	(Adv. 	No. 	07-
00128, 	Docket 	No. 	1). 	On 	June 	7, 	2010, 	Defendant 	requested 	the
dismissal 	of 	the 	adversary 	proceeding 	alleging 	that 	the
complaint is time barred under 11 	U.S.C. 	§ 	546(a)(Adv. 	No. 	07-
00218, 	Docket 	No. 	41). 	The 	Chapter 	7 	trustee 	has 	not 	opposed
Defendant's motion to dismiss to date.
Section 	546 	of 	the 	Bankruptcy 	Code 	establishes 	a 	limitation
period 	on 	the 	trustee’s 	ability 	to 	avoid 	prepetition
preferences. 	It 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 specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
11 U.S.C. § 546(a).
Hence, 	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. 11 U.S.C. § 546(a).
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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.
After 	an 	extensive 	review 	of 	Defendant's 	contentions 	and
independent 	research 	performed, 	the 	court 	finds 	that 	the
opinions 	expressed 	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), 	are 	applicable 	to 	the
instant 	case. 	Therefore, 	this 	court 	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.
WHEREFORE, 	the 	Court 	grants 	Defendant's 	motion 	to 	dismiss
(Adv. No. 07-00218, Docket No. 41).
SO ORDERED.
Ponce, Puerto Rico, this 13 day of August, 2010.
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BY THE COURT:
s/ Mildred Caban____
MILDRED CABAN FLORES
U.S. Bankruptcy Judge
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