Opinion
CASE NO. 00-00852 BKT ADVERSARY NO. 01-00077
06-27-2012
In re: LUIS G VAZQUEZ LABOY CARMEN D GARCIA CALDERO Debtor(s) LUIS G VAZQUEZ LABOY CARMEN D GARCIA CALDERO Plaintiff v. DORAL FINANCIAL CORPORATION; et als Defendant(s)
CHAPTER 7
OPINION AND ORDER
Before this Court is Defendant's Motion for Summary Judgment on Issue of Damages [Dkt. No. 223], Defendant's Statement of Material Facts on Motion for Summary Judgment [Dkt. No. 223-1 Appendix], Plaintiff's Opposition to Doral's Motion for Summary Judgment on the Issue of Damages [Dkt. No. 230], and Plaintiff's Statement Opposing Uncontested Facts and Plaintiff's Statement of Uncontested Facts [Dkt. No. 231]. For the reasons set forth below, the Defendant's Motion for Summary Judgment is DENIED.
On January 31, 2000, Debtors Luis G. Vázquez Laboy and Carmen D. García Calderón filed a Chapter 13 bankruptcy petition. The Plaintiffs/Debtors filed the captioned adversary proceeding on August 22, 2001, claiming that Defendant, Doral Financial Corporation's presentation of a mortgage deed in the Puerto Rico registry of property post-petition willfully violated the automatic stay under 11 U.S.C. § 362 and they prayed for various relief, including damages, costs, and fees. Defendant moved to dismiss the adversary proceeding complaint. The Plaintiff's filed a motion for partial summary judgment on liability. Thereafter followed numerous filings. Finally, on August 29, 2003, the bankruptcy court dismissed the adversary, holding that Defendant's post-petition attempt to perfect its mortgage fell under an exception to the automatic stay, specifically 11 U.S.C. § 362(b)(3). At a later date, the Plaintiffs moved for reconsideration, and after three years, the bankruptcy court obliged by reversing itself, granting Plaintiffs motion for partial summary judgment and denying Defendant's dispositive motion. The Court recognized that Defendant had been aware of the bankruptcy filing well in advance to the deed presentation, that its mortgage was unrecorded and concluded that the attempt to perfect the mortgage had constituted a violation of the automatic stay. The Court ordered Defendant to withdraw the mortgage deed and turn it over to the Plaintiffs for cancellation.
The Plaintiff's petitioned the bankruptcy court for damages, pursuant to 11 U.S.C. § 362(h), which stated at that time: "An individual injured by any willful violation of a stay provided by this section shall recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, may recover punitive damages." The Plaintiffs explicitly sought both a preliminary conference and a full hearing on damages. The bankruptcy court acceded to the request for a conference, which occurred on June 22, 2007, but the hearing on damages never took place. On October 8, 2008, the bankruptcy court denied both the request for a hearing and damages, and attorneys' fees, finding that the cancellation of the mortgage was remedy enough. On December 17, 2008, the bankruptcy court entered a final judgment denying damages. The Plaintiffs appealed that ruling to the Bankruptcy Appellate Panel. On October 23, 2009, the Bankruptcy Appellate Panel affirmed the bankruptcy court's denial of the Plaintiff's motion requesting an evidentiary hearing, and the Plaintiffs appealed that ruling to the First Circuit Court of Appeals. On May 27, 2011, the Court of Appeals, reversed the bankruptcy court's denial of a hearing on damages resulting from the appellee's willful violation of the automatic stay, vacated its rejection of damages and remanded for further proceedings. Following the remand from the Court of Appeals, the bankruptcy court held a hearing on October 19, 2011. Defendant's motion for summary judgment followed.
In order to understand the argument raised by Defendant in its Motion, it is relevant to mention that while this adversary was in the appeals process, a second adversary proceeding [Case 10-000259] was filed by Plaintiff/Debtors on February 23, 2010. That complaint, alleged that Defendant had committed unlawful and deceptive practices in connection with its efforts to collect a debt discharged by the Debtors' bankruptcy under 11 U.SC §524. Plaintiffs were seeking to redress the damages caused by Defendant when on or about April 21, 2009, they filed an "In Rem" foreclosure complaint pertaining to the subject mortgage, against the Plaintiffs in state court. The Defendant informed the bankruptcy court on May 16, 2011, that the parties had reached a settlement. On May 23, 2011, the second adversary was dismissed with prejudice and closed [Dkt. No. 50; Adv. No. 10-00029].
Under Federal Rules of Civil Procedure 56(c), made applicable in bankruptcy by Federal Rules 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. 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.
In the summary judgment motion presently before the court, Defendant argues that the legal doctrine of res judicata applies. "For a claim to be precluded, the following elements must be established: (1) a final judgment on the merits in an earlier action, (2) sufficient identity between the causes of action asserted in the earlier and later suits, and (3) sufficient identity between the parties in the two suits, "Porn v. National Grange Mutual Insurance Company, 93 F.3d 31, 34 (1st Cir. 1996). First, Defendant argues that the order approving the settlement agreement and the subsequent dismissal with prejudice reached in Adv. Proc. Case No. 10-00029 [Dkt. No. 50] should be considered adjudication on the merits. Second, that the same operative facts, gave rise to the captioned adversary proceeding and also to Adv. Proc. Case No. 10-00029. Third, that there is sufficient identity between the parties in relation with the claim because (1) the litigants of the suit are legal representatives of those who litigated in the preceding lawsuit; (2) they are jointly bound with each other; or (3) by the relations established by the indivisibility of payment in money or in services among those having a right to demand them, or the obligation to satisfy the claimed legal right. See R.G. Financial Corp. v. Vergara- Nunez, 446 F.3d 185, 186 (1st Cir. 1996).
In turn, Plaintiffs argue that in the case before the court there was no final judgment on the merits. It is uncontested that when this adversary proceeding was filed in the year 2001, no final judgment existed and it is also uncontested that when Adv. Proc. Case No. 10-00029 was filed in the year 2010, no final judgment existed at that time either. Second, there is a lack of sufficient identity between the causes of action asserted in the earlier adversary proceeding and later adversary proceeding. The facts that violated the automatic stay were allegedly intentionally committed in the year 2000, and the facts that violated the discharge injunction were allegedly intentionally committed in the year 2010. Also the Plaintiff's argue that in Porn, the appeals court considered the elements of time, space, origin or motivation. In the captioned case, the violation of stay consisted in a post-petition perfection of a pre-petition debt, while the discharge injunction violation in Adv. Proc. Case No. 10-00029 consisted of the filing of a second post-petition foreclosure complaint which was a post-discharge action. Third, it is undisputed that Defendant and its subsidiaries were parties to both adversary proceeding complaints.
After reviewing the arguments of the parties, the relevant law and the settlement agreement reached by the parties in Adv. Proc. Case No. 10-00029, this Court concludes that the settlement and dismissal with prejudice of Adv. Proc. Case No. 10-00029 [Dkt. No. 50] does not constitute res judicata and does not bar the hearing for adjudication of damages. It is unclear whether the settlement of the damages in Adv. Proc. Case No. 10-00029 [Dkt. No. 50], did not take into consideration the damages alleged in the captioned adversary currently before us. The only relevant portion in the settlement document on this point states: "Whereas, the parties to this agreement desire to close all present and future potential claims, of whatever type or nature related directly or indirectly to the Adversary Proceeding Litigation to close all present and future potential claims, of whatever type or nature related directly or indirectly to the Adversary Proceeding Litigation." If the intention was to include the damages sought in the captioned adversary proceeding in the settlement agreement, there were several opportunities to do so throughout that document and it was not done. In fact, this adversary was on appeal at the time the settlement of Adv. Proc. Case No. 10-00029 was reached and it was not even mentioned in the settlement document nor was it ever argued before this court or the court of appeals that the appeal was also settled or had become moot. Therefore, the disputed material fact that defeats summary judgment is whether it was the intention of the parties to include this adversary proceeding in the settlement agreement reached in Adv. Proc. Case. No. 10-00029.
WHEREFORE, IT IS ORDERED that the Defendant's Motion for Summary Judgment on Issue of Damages shall be, and it hereby is, DENIED. The Clerk will schedule a hearing on damages at the earliest mutually convenient date upon the entry of this Order.
SO ORDERED.
San Juan, Puerto Rico, this 27 day of June, 2012.
Brian K. Tester
U.S. Bankruptcy Judge