In re Kersting

IN RE: DEBORAH ANN KERSTING Debtor

CASE NO. 15-06919 (ESL)

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO

September 19, 2019

CHAPTER 7

OPINION AND ORDER

This case is before the court upon the Motion for Reconsideration; To Alter and Amend Opinion and Order (FRBP 9023); and for Relief of Opinion and Order (FRBP 9024) (the "Motion for Reconsideration") filed by Mr. Tirso R. Castillo (hereinafter referred to as "Mr. Castillo or "Creditor") (Docket No. 77) and the Debtor's Opposition to "Motion for Reconsideration; To Alter and Amend Opinion and Order (FRBP 9023); and for Relief of Opinion and Order (FRBP 9024)" (Docket No. 83). Also, before the court is the Creditor's Motion to Inform Recent Case Law Applicable to Pending Matters (Docket No. 91) and the Debtor's Reply to Informative Motion Regarding Recent Case Law, etc. (Docket No. 92). For the reasons stated below the Motion for Reconsideration is hereby denied.

Jurisdiction

The court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core proceeding pursuant to 28 U.S.C. §157(b)(1) and (b)(2)(A) and (B). Venue of this proceeding is proper under 28 U.S.C. §§ 1408 and 1409.

Applicable Law and Analysis

Fed. R. Civ. P 59(e)

"Motions to reconsider are not recognized by the Federal Rules of Civil Procedure or the Federal Rules of Bankruptcy Procedure in haec verba." In re Lozada Rivera, 470 B.R. 109, 112 (Bankr. D.P.R. 2012), citing Jimenez v. Rodriguez (In re Rodriguez), 233 B.R. 212, 218-219(Bankr. D.P.R. 1999), conf'd 17 Fed. Appx. 5 (1^st Cir. 2001); Van Skiver v. United States, 952 F.2d 1241, 1243 (10^th Cir. 1991); Lavespere v. Niagara Mach. & Tool Works Inc., 910 F.2d 167, 173 (5^th Cir. 1990), cert. denied 510 U.S. 859, abrogated on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069, 1075-1076 (5^th Cir. 1994). 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 under Fed. R. Civ. P. 60(b). See Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1^st Cir. 2009) (noting a motion for reconsideration implicated either Fed. R. Civ. P. 59(e) or 60(b)); Equity Security Holders' Committee v. Wedgestone Financial (In re Wedgestone Financial), 152 B.R. 786, 788 (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 [fourteen¹] days of the rendition of judgment, the motion ordinarily will fall under Rule 59(e). If the motion is served after that time, it falls under Rule 60(b)." In re Lozada Rivera, 470 B.R. at 113, quoting Van Skiver, 952 F.2d at 1243. Also see Universal Ins. Co. v. DOJ, 866 F. Supp. 2d 49, 73 (D.P.R. 2012) ("A motion is characterized pursuant to [Fed. R. Civ. P.] 59(e) or [Fed. R. Civ. P.] 60(b) based upon its filing date.") "The substance of the motion, not the nomenclature used or labels placed on motions, is controlling." In re Lozada Rivera, 470 B.R. at 113. Under either rule, "the granting of a motion for reconsideration is 'an extraordinary remedy which should be used sparingly.'" Palmer v. Champion Mortg., 465 F.3d 24, 30 (1^st Cir. 2006) (citations omitted). In the instant case, the Creditor's Motion for Reconsideration was filed fourteen (14) days after the Opinion and Order for which reconsideration was sought was entered. Therefore, the motion will be treated as one under Fed. R. Civ. P. 59(e) made applicable here through Fed. R. Bankr. P. 9023.

Fed. R. Civ. P. 59(e) authorizes the filing of a written motion to alter or amend a judgment after its entry. The motion must demonstrate the "reason why the court should reconsider its prior decision" and "must set forth facts or law of a strongly convincing nature" to induce the court toreverse its earlier decision. Pabon Rodriguez, 233 B.R. at 218 (citations omitted). The movant "must either clearly establish a manifest error of law or must present newly discovered evidence that could not have been discovered during the case" BBVA v. Vazquez (In re Vazquez), 471 B.R. 752, 760 (B.A.P. 1st Cir. 2012), citing Aybar v. Crispin-Reyes, 118 F.3d 10, 16 (1st Cir. 1997). "A motion for reconsideration is not the venue to undo procedural snafus or permit a party to advance arguments it should have developed prior to judgment, nor is it a mechanism to regurgitate old arguments previously considered and rejected." Biltcliffe v. CitiMortgage, Inc., 772 F. 3d 925, 930 (1^st Cir. 2014) (citations omitted). "In practice, [Rule] 59(e) motions are typically denied because of the narrow purposes for which they are intended." In re Ortiz Arroyo, 544 B.R. 751, 757 (Bankr. D.P.R. 2015).

Opinion and Order under Reconsideration

The court, after conducting a thorough analysis, held that in this particular case the Debtor held a pre-existing ownership interest in the real property to which Creditor's judicial lien attached, and thus, the judicial lien is subject to avoidance under 11 U.S.C. §522(f). The court to analyzed other areas of the law, such as the Puerto Rico Civil Code, regarding estate and family law and the Home Protection Act. The court in its Opinion and Order, held that the Debtor, due to the dissolution of the conjugal partnership by death, has an undivided ownership interest of half of the property that was part of the conjugal partnership, including one-half of the real property (personal residence), which was acquired during the marriage and formed part of the conjugal partnership (Docket No. 73, pg. 17). Moreover, the court also concluded that: "[a]t this juncture, what is before the court is a real property whose ownership interest is fractioned, given that due to the dissolution of the conjugal partnership by death, the Debtor has an undivided ownership interest of half of the real property (the personal residence) and the remainder undivided part forms part of the hereditary patrimony (decedent's estate) of an unclaimed inheritance ("herencia yacente). In this case, the Debtor as the surviving spouse is entitled to a quota, in usufruct over the entire patrimony pursuant to the dispositions of Articles 761-766 ofthe Civil Code, 31 L.P.R.A. §§2411-2416. The court finds that the Debtor has a 50% undivided interest in the real property. Thus, 50% of the real property forms part of the Debtor's estate, given that the real property was abandoned by the Chapter 7 trustee" (Docket No. 73, pgs. 23-24).

The court also concluded that;

"[i]n the instant case the heirs that have been called by law have not accepted the inheritance. Therefore, a hereditary community may not be formed. The Debtor's children repudiated their father's inheritance, but there is no evidence that they did so in accordance with Article 962 of the Civil Code, meaning that they did not file the deed of repudiation with the state court. Moreover, the parties did not provide information whether the Debtor has grandchildren since they would be the next to inherit in their own right and not by representation pursuant to Article 886 of the Civil Code, 31 L.P.R.A. §2609. Therefore, there is no hereditary community and no effective repudiation of inheritance at this time. However, this does not conclude the determination of whether the Debtor can claim a homestead exemption over the property that she resides. Consequently, the court must analyze the intersection between the estate law pursuant to the Civil Code and the Home Protection Act. It is uncontested that the Debtor and her late husband, prior to the filing of the bankruptcy petition filed with the Property Registry a home protection deed and the same was recorded on August 10, 2012" (Docket No. 73, pg. 25-26).

As part of its analysis, the court differentiated this particular case from the case of Rivera García v. Hernández Sánchez, Property Registrar, 189 D.P.R. 628 (2016) and determined the following:

"[t]he case before us has some marked differences from the case of Rivera García v. Hernández Sánchez, Property Registrar. In the instant case, the Debtor and her husband presented the Home Protection Deed for registration in the Property Registry and the same was recorded on August 10, 2012. Moreover, unlike Rivera García v. Hernández Sánchez, Property Registrar, in this case there is no hereditary community given that an undivided half belongs to the Debtor as a member of the conjugal partnership and the remainder undivided part forms part of the hereditary patrimony (decedent's estate) of an unclaimed inheritance. As previously discussed, an unclaimed inheritance lacks an heir that will temporarily preserve and administer the patrimony. In an unclaimed inheritance there is an interruption in the ownership of the decedent's property, and as a result the rights and obligations that comprise the unclaimed inheritance are, as aptly labeled by commentator González Tejera, in a juridical limbo. In an unclaimed inheritance there is the juridical figure of the de facto administrator, which is preferably the surviving spouse that is familiarized with the patrimony and carries out all acts necessary to protect the hereditary patrimony" (Docket No. 73, pg. 29-30)Moreover, the court further concluded that:

".... in this particular case, the provisions of Article 6 of the Home Protection Act are applicable to the extent that the protection established in §1858b continues for the benefit of the surviving spouse as long as he or she continues to occupy the homestead. See 31 L.P.R.A. §§1858b & 1858c.

The homestead protection is afforded to the surviving spouse so that he or she is able to continue occupying the homestead. The protection afforded by the amended Home Protection Act is greater than the one under the prior law which was limited to a monetary amount (up to $15,000 by Act No. 116 of May 2, 2003 to amend sections 1 and 5 of Act No. 87 of May 13, 1936). However, the amended Home Protection Act in much

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