Acosta v. Reparto Saman Inc. (In re Acosta)
Acosta v. Reparto Saman Inc. (In re Acosta)
Opinion of the Court
OPINION AND ORDER
This case is before the court upon the Plaintiffs’ Motion Requesting Reconsideration of Judgment Dismissing Case (the “Motion for Reconsideration”, Docket No. 82) and the Defendant’s Opposition thereto (Docket No. 84). The Plaintiffs seek to vacate and set aside the Judgment dismissing the instant adversary proceeding for failure to prosecute (Docket No. 79), alleging that their counsel had unsuccessfully attempted to reach Defendant’s attorney on several occasions to procure a settlement of the instant case and/or coordinate the discovery. The Defendant sustains that no agreement was ever reached and that the Plaintiffs failed to provide the initial mandatory disclosures. For the reasons stated below, the Plaintiffs’ Motion for Reconsideration is hereby denied.
Procedural Background
The Plaintiffs filed a voluntary Chapter 7 bankruptcy petition on August 2, 1999 (Lead Case Docket No. 1). In Schedule A, they listed one real property located at Reparto Saman, Street No. 10, Lot Q-17, Cabo Rojo, Puerto Rico (the “Real Proper
On September 17, 1999, the Plaintiffs filed an Amended Schedule D, in which they clarified that the registration of “first mortgage on debtors [sic ] house [referring to the Real Property] ... is pending before the [Property Registry]” and that “the validity of this mortgage depends upon compliance of creditor [with] certain requirements” (Lead Case Docket No. 5, p. 2).
On December 21, 1999, the Chapter 7 Trustee (the “Trustee”) filed a Notice of Abandonment for the Real Property stating that it had no value or is burdensome to the estate (Lead Case Docket No. 8) and also on that same date filed a Report of No Distribution (Lead Case Docket No. 9). No objections were filed. The Trustee listed the Real Property as secured in the amount of $36,505 and determined that this was a no-asset case (Notice of Abandonment, Lead Case Docket No. 8).
On February 11, 2000, the court entered the Discharge of Debtors and the Order Discharging Trustee and Closing Case (Lead Case Dockets Nos. 13 and 14).
On August 28, 2008, the Plaintiffs filed a Motion to Reopen Chapter 7 Case (Lead Case Docket No. 17), which was initially granted on September 28, 2008 (Lead Case Docket No. 19) but later re-closed on February 13, 2009 for lack of prosecution (Lead Case Docket No. 21). On June 23, 2011, the Plaintiffs again moved to reopen the case (Lead Case Docket No. 25), and on July 8, 2011 said request was granted (Lead Case Docket No. 29).
On July 12, 2011, the Plaintiffs filed the instant adversary proceeding for violation of the discharge injunction pursuant to 11 U.S.C. § 727(b), claiming that the Defendant had filed, recorded and registered a mortgage deed after the filing of this bankruptcy case and had also initiated foreclosure proceedings against the Plaintiffs in violation of the discharge injunction.
On August 1, 2011, the Defendant filed a Motion to Dismiss (Docket No. 6) under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted under 11 .U.S.C. §§ 546, 362(b)(3) and 546(b)(1). On August 31, 2011, the Plaintiffs moved for partial summary judgment on the Defendant’s alleged violation of the permanent discharge injunction
On October 10, 2011, the Defendants filed a Sur-reply (Docket No. 20) arguing that the Complaint was not well-pleaded. The Defendant did not address or contested the Plaintiffs’ allegation that the mortgage had been withdrawn from the Property Registry during the Plaintiffs’ bankruptcy proceeding.
After due notice to all interested parties, including the Trustee, a pre-trial and argu-
On December 2, 2011, the court entered an Order and Notice (Docket No. 31) scheduling an evidentiary hearing on damages for February 21, 2012 at 2:00 p.m. and ordering the parties to file 10 days prior to the hearing proposed findings of fact, including a detail of the damages being requested, with specific reference to witnesses and/or documents, which were ordered to be attached.
On February 15, 2012, the Plaintiffs filed a Motion Requesting Continuance of Valuation Hearing (Docket No. 43) alleging that they had made an offer in writing to the Defendant, who needed 30 days to reply to the same, and that due to technical difficulties, they had not been able to timely file their proposed findings of fact and attach their documentary evidence. On February 16, 2012, the court granted the Plaintiffs’ Motion Requesting Continuance of Valuation Hearing and ordered the Plaintiffs to move the court within 30 days. See Docket No. 44.
On March 20, 2012, the Plaintiffs filed a Motion Requesting Hearing to Determine Damages (Docket No. 47) informing that their counsel had tried to reach an agreement with the Defendant but the same had not been possible and that they would proceed to file 10 days prior to the hearing their proposed findings of fact. They also requested the court to reschedule an evi-dentiary hearing on damages. On March 21, 2012, the court entered a second Order and Notice (Docket No. 48) scheduling an evidentiary hearing on damages for June 12, 2012 and ordering the parties to file proposed findings of fact, including a detail of the damages being requested, with specific reference to witnesses and/or documents, which were ordered to be attached.
Because the Plaintiffs and the Defendant failed to file their proposed findings of fact, on June 7, 2012, the court entered an Order continuing the hearing without a date and ordering the parties to show cause within 14 days as to why sanctions should not be imposed for failure to prosecute to comply with this court’s order by failing to file the proposed findings of fact. See Docket No. 51. The Order also forewarned that the sanctions may include a finding that the Plaintiffs have waived their claim for damages. Id., p. 2.
On June 20, 2012, the Plaintiffs filed their Proposed Findings of Fact (Docket No. 53). They did not attach any document nor made references to any witness.
On June 21, 2012, the Plaintiffs filed an Answer to Order to Show Cause (Docket No. 54) averring that they had prepared their proposed findings of fact since February 22, 2012, that on that date their attorney mailed a letter to Defendant’s counsel to meet in order to prepare and file a joint document, and that they had made previous attempts to contact him for this purpose on several prior occasions to no avail. Plaintiffs’ counsel also acknowledged that they should have informed these facts to the court sooner. Id., p. 2, ¶ 7. On that same date, the Defendant filed its Proposed Statement of Uncontested
On July 2, 2012, the court entered a third Order and Notice (Docket No. 57) scheduling an evidentiary hearing on damages for October 2, 2012 and ordering the parties to file 10 days prior to the hearing proposed findings of fact, including a detail of the damages being requested, with specific reference to witnesses and/or documents, which were ordered to be attached.
At the October 2, 2012 hearing, the Defendant moved the court to exclude the Plaintiffs’ testimonies as they were never disclosed as witnesses under Fed.R.Civ.P. 26
Because neither party moved the court within the time established by the court or informed it of discovery or settlement negotiations, on January 24, 2013, an Order was entered (Docket No. 73) for the Plaintiff to show cause within 21 days why the instant adversary proceeding should not be dismissed for failure to prosecute.
On February 11, 2013, the Plaintiffs filed an Answer to Order to Show Cause (Docket No. 75) claiming that their counsel had on several occasions tried to communicate with Defendant’s attorney to try and reach an agreement or comply with LBR 7026-1, but received no reply whatsoever. They also informed that they did not intend to use discovery in this case, amend the pleadings or mediate it. In addition, they disclosed that they would not present documentary evidence to prove their damages (except for the certification of the Real Property from Puerto Rico’s Property Registry).
On February 20, 2013, the court entered a fourth Order and Notice (Docket No. 76) scheduling a hearing for April 30, 2013 to consider the Order to Show Cause for Plaintiffs’ failure to prosecute (Docket No. 73) and Plaintiffs’ Answer thereto (Docket No. 75). The court also ordered the parties once again to file proposed findings of fact with specific reference to witnesses and/or documents 7 days prior to the hearing.
On March 26, 2013, the court entered an Order (Docket No. 78) ruling that “[i]n spite of the time that has elapsed, Plaintiffs have failed to comply with this court’s
On May 10, 2013, the Plaintiffs filed their Motion for Reconsideration (Docket No. 82) seeking the Order and Judgment (Docket Nos. 78 and 79) to be vacated and set aside alleging in essence that they were trying to reach a settlement with the Defendant but were unable to prior to the dismissal of the case. The evidence submitted by the Plaintiffs to support their allegations that their attorney tried to contact the Defendants’ counsel were letters dated April 8, 23 and 30, 2013 (Docket No. 82-1, pp. 1-6).
On June 4, 2013, the Defendant filed an Opposition to Motion for Reconsideration (Docket No. 84) contending that there was no need to meet with Plaintiffs’ counsel because Fed.R.Civ.P. 26 is mandatory, automatic and does not require a discovery request. It also avers that the letters attached to the Motion for Reconsideration (Docket No. 82-1, pp. 1-6) are all post-dismissal and were made to “coerce [Defendant] into filing a stipulation in a case already dismissed” (Docket No. 84, p. 2). Furthermore, it contends that no agreement had ever been reached, contrary to the representations made by Plaintiffs’ counsel.
Applicable Law and Analysis
(A) Motions for Reconsideration
Motions for reconsideration are not recognized by the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure in haec verba. See Jimenez v. Rodriguez (In re Rodriguez), 233 B.R. 212, 218-219 (Bankr.D.P.R. 1999), aff'd 17 Fed.Appx. 5 (1st Cir. 2001); Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir. 1991); Lavespere v. Niagara Mach. & Tool Works Inc., 910 F.2d 167, 173 (5th Cir. 1990), cert. denied 510 U.S. 859, 114 S.Ct. 171, 126 L.Ed.2d 131 (1993), abrogated on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069, 1075-76 (5th Cir. 1994); Perez Mujica v. FirstBank P.R. (In re Perez Mujica), 470 B.R. 251, 253 (Bankr.D.P.R. 2012), aff'd 492 B.R. 355 (D.P.R. 2013). Rather, federal courts have considered motions so denominated as either a motion to “alter or amend” under Fed.R.Civ.P. 59(e) or a motion for relief from judgment or order under Fed. R.Civ.P. 60(b). See Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1st Cir. 2009) (noting a motion for reconsideration implicated either Fed. R. Civ. Pro. 59(e) or 60(b)); Equity Security Holders’ Committee v. Wedgestone Financial (In re Wedgestone Financial), 152 B.R. 786, 788 (Bankr.D.Mass. 1993). “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 [fourteen]
The Plaintiffs in the instant case did not denominate either Fed.R.Civ.P. 59 or Fed.
(B) Fed. R. Civ. P. 60(b)(1) Standard
Fed.R.Civ.P. 60(b) seeks to balance the interest in the stability of judgments and orders with the interest in seeing they do not become instruments of oppression and fraud. See Alan N. Resnick and Henry J. Sommer, 10 Collier on Bankruptcy ¶ 9024.03 (16th ed. 2013). Hence, “the court may relieve a party ... from a final judgment, order, or proceedings for ... mistake, inadvertence, surprise, or excusable neglect.” Fed.R.Civ.P. 60(b)(1).
In Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), the Supreme Court ruled that the determination of what constitutes “excusable neglect” is an equitable one, taking into consideration the following factors: (1) the length of the delay and its potential impact on judicial proceedings; (2) the reason for the delay, including whether it was within the reasonable control of the movant; (3) whether the movant acted in good faith; and (4) whether granting the relief will prejudice the opposing party. The Supreme Court concluded that “excusable neglect” is a flexible concept that is not limited to circumstances beyond the control of the movant. Id. at 388. Prior to the Supreme Court’s decision in Pioneer, the First Circuit had ruled that Fed. R.Civ.P. 60(b) was a vehicle for extraordinary relief, and that motions invoking the rule should only be granted under exceptional circumstances. See Lepore v. Vidockler, 792 F.2d 272, 274 (1st Cir. 1986). Subsequently, in Pratt v. Philbrook, 109 F.3d 18 (1st Cir. 1997), the First Circuit incorporated the Pioneer doctrine and has sustained it ever since. See United States v. Union Bank for Sav. & Inv. (Jordan), 487 F.3d 8, 24 (1st Cir. 2007); Aja v. Fitzgerald (In re Aja), 441 B.R. 173, 177 (1st Cir. BAP 2011) (upholding the Pioneer test). The most important factor in this test is the reason for the delay, which requires a statement of the reasons and a satisfactory explanation for the delay. See Graphic Communications Int’l Union v. Quebecor Printing Providence, Inc., 270 F.3d 1, 6 (1st Cir. 2001); EnvisioNet Computer Servs., Inc. v. ECS Funding LLC, 288 B.R. 163, 166 (D.Me. 2002). No “excusable neglect” can be determined in the absence of unique or extraordinary circumstances. Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1st Cir. 2009); Haddock-Rivera v. ASUME, 486 B.R. 574, 578 (1st Cir. BAP 2013), citing Morse v. Earle (In re Earle), 2008 Bankr.LEXIS 3961, 2008 WL 8664763 (1st Cir. BAP 2008). The trial court has wide discretion to determine the existence of neglect or lack thereof and whether it was excusable or not. See Graphic Communs. Int’l Union, Local 12-N, 270 F.3d at 6-7; U.S. v. $23,000 in U.S. Currency, 356 F.3d 157, 165 (1st Cir. 2004) (“[Trial] courts enjoy considerable discretion in deciding motions brought under Civil Rule 60(b)”); In re Shepherds Hill Development Co., 316 B.R. 406, 418 (1st Cir. BAP 2004).
(C) Failure to Prosecute under Fed. R. Civ. P. jl(b)
Because the instant case was dismissed for the Plaintiffs’ failure to pros-
Fed.R.Civ.P. 41(b), applicable to bankruptcy proceedings through Fed. Bankr.P. 7041, mandates as follows:
Involuntary Dismissal; Effect. If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal not under this rule — except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19 — operates as an adjudication on the merits.
Although Fed.R.Civ.P. 41(b) does not explicitly provide for a court’s sua sponte dismissal, its language is broad enough to authorize such dismissals on the same basis as it authorizes dismissals upon motion of a defendant. See Link v. Wabash R.R. Co., 370 U.S. 626, 630-632, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962); Donnelly v. Johns-Manville Sales Corp., 677 F.2d 339, 341 (3rd Cir. 1982). Thus, a trial court “may dismiss a case sua sponte for any of the reasons prescribed in Fed.R.Civ.P. 41(b).” Cintron-Lorenzo v. Departamento de Asuntos del Consumidor, 312 F.3d 522, 526 (1st Cir. 2002). Also see Pomales v. Celulares Telefonica, Inc., 342 F.3d 44, 48 (1st Cir. 2003).
Fed.R.Civ.P. 41(b) “is intended as a safeguard against delay in litigation and harassment of a defendant.” 9 Wright, Miller & Krane, Federal Practice and Procedure § 2370, p. 370 (3rd ed. 2013). Although dismissal under Fed. R.Civ.P. 41(b) is harsh sanction, a court must look not just to the impact of its decision on administration of justice in a particular case, “but to all cases in courthouse ... The sanction [of dismissal] is necessary if thousands of other litigants are to have their day in court, and if rules and directions of court are ever to be followed.” Quagliano v. United States, 293 F.Supp. 670, 672 (S.D.N.Y. 1968). Thus, Fed.R.Civ.P. 41(b) “serves not only to protect defendants but also to aid courts in keeping administrative control over their own dockets and to deter other litigants from engaging in dilatory behavior.” Washington v. Walker, 734 F.2d 1237, 1239 (7th Cir. 1984). Also see Nealey v. Transportacion Maritima Mexicana, S.A, 662 F.2d 1275, 1279 (9th Cir. 1980) (Fed. R.Civ.P. 41(b) is in large part a housekeeping measure related to the efficient admin
The trial court has wide discretion to dismiss for lack of prosecution under Fed.R.Civ.P. 41(b). Glo Co. v. Murchison & Co., 397 F.2d 928, 929 (3rd Cir. 1967), cert. denied 393 U.S. 939, 89 S.Ct. 290, 21 L.Ed.2d 276 (1968). “Though there are a wide variety of sanctions short of dismissal available, the district court need not exhaust them all before finally dismissing a case.” Nevijel v. North Coast Life Ins. Co., 651 F.2d 671, 674 (9th Cir. 1981). Also see Vazquez-Rijos v. Anhang, 654 F.3d 122, 130 (1st Cir. 2011) (“[although the district court should, before dismissing a case, consider whether lesser sanctions might be a punishment more suitable to the plaintiffs conduct, it need not do so explicitly”). Dismissal for lack of prosecution is appropriate even absent consideration of lesser sanctions where the plaintiff has engaged in “extreme conduct”, such as knowing disobedience of a court order. See Roman v. Carrion (In re Rodriguez Gonzalez), 396 B.R. 790, 798 (1st Cir. BAP 2008), citing Rivera Diaz v. American Airlines, Inc., 433 F.3d 120, 123 (1st Cir. 2005) (explaining that appellant challenging dismissal for disobedience of court order is confronted with a “heavy burden”). Also see Torres-Alamo v. Puerto Rico, 502 F.3d 20, 25 (1st Cir. 2007) (concluding that the trial court did not abuse its discretion in dismissing claims where appellant disregarded the court’s previous order to show cause why claims should not be dismissed); Enlace Mercan-til Internacional, Inc. v. Senior Industries, Inc., 848 F.2d 315, 317 (1st Cir. 1988) (dismissal for want of prosecution is appropriate when the plaintiffs misconduct has been “extreme”). “[Disobedience of court orders is inimical to the orderly administration of justice and, in and of itself, can constitute extreme misconduct.” Young v. Gordon, 330 F.3d 76, 81 (1st Cir. 2003). Defiance of court orders and ignoring previous warnings made by the court are also examples of extreme misconduct. Chamorro v. Puerto Rican Cars, Inc., 304 F.3d 1, 5 (1st Cir. 2002), citing Cosme Nieves v. Deshler, 826 F.2d 1, 2 (1st Cir. 1987); Roman-Samot v. Pontifical Catholic Univ., 831 F.Supp.2d 556, 558 (D.P.R. 2011). Prior notice is nevertheless an indispensable consideration in considering a Fed.R.Civ.P. 41(b) determination of dismissal for lack of prosecution. See Torres-Vargas v. Pereira, 431 F.3d 389, 393 (1st Cir. 2005) (“a party flouts a court order at his peril.”); Robson v. Hallenbeck, 81 F.3d 1, 2-3 (1st Cir. 1996) (“[cjounsel’s disregard of a prior warning from the court exacerbates the offense”); Roman-Samot v. Pontifical Catholic Univ., 831 F.Supp.2d at 559 (“plaintiffs pattern of noncompliance leaves th[e] court with no choice but to follow-up on its warning, and impose the harshest of sanctions upon him”). “In the face of the repeated and flagrant abuses in this record, the [trial] court [is] well within its discretion in choosing to dismiss the case after ... years of patience and the failure of alternative approaches.” Vazquez-Rijos v. Anhang, 654 F.3d at 130.
Since the Opinion and Order and Partial Summary Judgment (Docket Nos. 37 and 38) were entered on December 2 and 27, 2011, respectively, the court scheduled evidentiary hearings on the alleged damages on four separate instances. The first Order and Notice was entered on December 2, 2011 and scheduled an ev-identiary hearing for February 21, 2012 (Docket No. 31). The court also instructed as follows: “Ten (10) days prior to the hearing parties shall file proposed findings of fact, including a detail of the damages being requested. Each proposed finding of fact shall make reference to a witness or a document. The referenced document
It is evident that despite four prior opportunities to comply with this court’s orders, four scheduled evidentiary hearings that had to be continued and two orders to show cause, the Plaintiffs simply failed to comply with this court’s orders in about a year span. Such clear pattern of noncompliance constitutes in and of itself the “extreme misconduct” that warrants dismissal
Conclusion
In view of the foregoing, the Plaintiffs’ Motion to Reconsider is hereby denied.
SO ORDERED.
. The Plaintiffs requested that partial summary judgment be entered upon the Defendant’s alleged violation of the discharge and that the determination of actual and punitive damages be made at a later stage of the case. See Docket No. 11, p. 3, ¶¶ 13-14.
. See Article 53 of Puerto Rico’s Mortgage Law, 30 L.P.R.A. § 2256.
. The Opinion and Order was published at In re Acosta, 464 B.R. 86 (Bankr.D.P.R. 2011).
. Fed.R.Civ.P. 26 is applicable to bankruptcy proceedings through Fed. R. Bankr.P. 9026.
. References to the Local Bankruptcy Rules (LBR) in this Opinion and Order are to the ones adopted on September 14, 2007, which governed the proceedings at the time of the events, not the ones adopted on May 2, 2013.
. See the most recently amended version of Fed. R. Bankr.P. 9023.
Reference
- Full Case Name
- In re Santos Surita ACOSTA, Carmen Cruz Silva, Debtors. Santos Surita Acosta, Carmen Cruz Silva v. Reparto Saman Inc.
- Cited By
- 3 cases
- Status
- Published