Rivera v. Lake Berkley Resort Master Ass'n, Inc. (In re Rivera)

511 B.R. 6

In re Leida Otero RIVERA, Debtor.Leida Otero Rivera, Plaintiff

v.Lake Berkley Resort Master Association, Inc., The Manors at Lake Berkley Home Owners Association, Inc., SRK Association Management, et al., Defendants.

Bankruptcy No. 09–04089 (ESL).

Adversary No. 11–00043 (ESL).

United States Bankruptcy Court, D. Puerto Rico.

Signed May 29, 2014.

Luis F. Del Valle Emmanuelli, Juan Manuel Suarez Cobo, Legal Partners PSC, San Juan, PR, for Plaintiff.

Maxwell & Stanley PL, Orlando, FL, Mario R. Oronoz, Guaynabo, PR, for Defendants.

OPINION AND ORDER

ENRIQUE S. LAMOUTTE, Bankruptcy Judge.

This case came before the court on March 21, 2014 for an evidentiary hearing to determine the damages Leida Otero Rivera (“Plaintiff”) suffered as a consequence of the Defendants' willful violation of the automatic stay. Partial judgment (Docket No. 58) had been entered for the Plaintiff on the issue of liability after the Defendants Lake Berkley Resort Master Association, Inc., The Manors at Lake Berkley Home Owners Association, Inc. and SRK Residential Communities, LLC, failed to show cause why Plaintiff's motion for partial summary judgment should not be granted on the issue of their liability for the willful violation of the automatic stay provisions (Docket No. 51). The Defendants' default was entered for their failure to show cause (Docket No. 58). The court notes that the Defendants did not appear at the hearing on damages to defend their position. The hearing was held as scheduled.The Plaintiff's testimony, which the court found credible, and the documents submitted constitute the evidence heard by the court.

Procedural Background

On February 14, 2011, the Plaintiff filed a verified complaint that initiated this adversary proceeding. The Defendants made their first appearance on March 21, 2011, when they requested through local counsel leave to temporarily file pleadings and other documents in physical form (Docket No. 13). On the very same date, the Defendants' stateside attorney applied for admission pro hac vice (Docket No. 14). Both requests were granted by the court (Docket Nos. 15 and 16). Also on March 21, 2011, separate Answers to the Verified Complaint were filed by Lake Berkley Resort Master Association, Inc., The Manors at Lake Berkley Home Owners Association, Inc. and SRK Residential Communities, LLC. See Docket Nos. 17, 19 and 21, respectively.

Thereafter, multiple requests for the continuance of the pretrial conference were filed, mostly by the parties jointly (Docket Nos. 28, 33, 37, 41 and 47). On October 25, 2012, the court continued the pretrial conference without a date (Docket No. 48). On August 5, 2013, the Plaintiff moved for partial summary judgment against Defendants for their willful violation of the automatic stay (Docket No. 50). On September 5, 2013 the court ordered the Defendants to “show cause within twenty one (21) days why partial summary judgment should not be entered in favor of plaintiff on the issue of liability for having willfully violated that automatic stay provisions” and “scheduling an evidentiary hearing on damages” (Docket No. 51). The Defendants did not reply to the court's order to show cause, and on October 15, 2013, the Plaintiff moved the court to adjudicate the pending motion for partial summary judgment. The motion was granted (Docket No. 54).

Meanwhile, while this adversary proceeding was pending, a hearing was held on November 20, 2013 in the lead case, in which Plaintiff's main bankruptcy case was dismissed in open court due to her failure to make current payments to the Chapter 12 Trustee as per the terms of the confirmed plan. See Lead Case Docket No. 118. The Plaintiff moved the court to retain jurisdiction over the instant adversary proceeding in the lead case and in the instant case. See Lead Case Docket No. 122 and Docket No. 56. The motion pleaded with particularity the facts leading to the request and included the legal support for the same. On January 21, 2014, the court granted such request in the instant case. See Docket No. 57. On February 11, 2014, the court also granted such request in the lead case. See Lead Case Docket No. 124. The dismissal of a bankruptcy petition does not automatically divest the bankruptcy court of jurisdiction over an adversary proceeding. In re Morris, 950 F.2d 1531 (11th Cir.1992); In re Carrahar, 971 F.2d 327 (9th Cir.1992); Porges v. Gruntal & Co. (In re Porges), 44 F.3d 159, 162 (2nd Cir.1995); In re Lower Bucks Hosp., 471 B.R. 419 (Bankr.E.D.Pa.2012); Certain Underwriters at Lloyd's, London v. ABB Lummus Global, Inc., 337 B.R. 22, 25 (S.D.N.Y.2005) (“[e]ven the dismissal of an underlying bankruptcy case does not automatically strip a federal court of jurisdiction over an adversary proceeding which was related to the bankruptcy case at the time of its commencement”). The bankruptcy court may retain jurisdiction over an action for damages under 11 U.S.C. § 362(k) despite the dismissal of the bankruptcy petition due to a default in payments. See Johnson v. Smith (In re Johnson), 575 F.3d 1079, 1083 (10th Cir.2009) (“[t]he great weight of case authority supports our conclusion that a § 362(k)(1) proceeding remains viable after termination of the underlying bankruptcy case”). The dismissal of a bankruptcy petition does not validate a violation of the automatic stay. See In re D'Alfonso, 211 B.R. 508, 513 (Bankr.E.D.Pa.1997).

On January 21, 2014, the court entered a Partial Judgment against Defendants Lake Berkley Resort Master Association, Inc., The Manors at Lake Berkley Home Owners Association, Inc. and SRK Residential Communities, LLC, finding them to have violated the automatic stay provisions of 11 U.S.C. § 362(a), and scheduled an evidentiary hearing to be held on March 21, 2014 to determine the extent of the Plaintiff's damages. See Docket No. 58. The hearing was held on March 21, 2014. See Docket No. 61 ( Audio File ).

Findings of Fact

1. Leida A. Otero Rivera filed a Chapter 12 petition under the Bankruptcy Code on May 20, 2009. See Lead Case Docket No. 1.

2. The Plaintiff was living in the municipality of Aibonito, Puerto Rico, when she filed for bankruptcy.

3. The Plaintiff was in the business of poultry production for the Picú company.

4. The Plaintiff's late husband, Máximo Rodríguez, was also in the business of poultry production with the Plaintiff.

5. When the Plaintiff filed for bankruptcy on May 20, 2009, the Picú company had been closed for two years.

6. Defendant Lake Berkley Resort Master Association, Inc. is a non-profit corporation with standing to sue and be sued. Its address is 6220 South Orange Blossom Trail, Suite 105, Orlando, FL 32809. See Docket Nos. 1, ¶ 6, and 17, ¶ 6.

7. Defendant The Manors at Lake Berkley Home Owners Association, Inc. (“Manors at Lake Berkley HOA”) is a non-profit corporation with standing to sue and be sued. Its address is 6220 South Orange Blossom Trail, Suite 105, Orlando, FL 32809. See Docket Nos. 1, ¶ 7, and 19, ¶ 7.

8. Defendant SRK Residential Communities, LLC (“SRK”) is a limited liability company organized under the laws of the State of Florida, and Stephen Klosterman serves as its President. See Docket No. 21, ¶ 79.

9. SRK administered both associations.

10. Defendant SRK Residential Communities, LLC voluntarily submitted to the jurisdiction of this Court. See Docket No. 21.

11. The Plaintiff's Chapter 12 Plan was confirmed on June 15, 2010. See Lead Case Docket No. 62.

12. The Plaintiff has owned a residence at the Manors at Lake Berkley HOA since 2003, specifically at 927 Lake Berkley Drive, Kissimmee, Florida 34746.

13. Since approximately 2007, the Plaintiff had leased the referenced property to a woman and her son, both handicapped.

14. Lake Berkley Resort Master Association, Inc. was generally formed to provide for maintenance, operation, preservation and architectural control of Lake Berkley, a private gated resort community in the State of Florida run by the former, comprising a mixed-use resort community which includes single and multi-family accommodations and recreational facilities.

15. As part of its duties and obligations to the Lake Berkley communities, Lake Berkley Resort Master Association, Inc. is charged with collecting from the communities' annual assessments and charges, or special assessments for capital improvements, to pay the cost of operating and maintaining all administrative functions of the association, among others.

16. The Manors at Lake Berkley is one of the residential communities within Lake Berkley.

17. In 2009, the Plaintiff was being charged approximately $641.00 in fees and assessments every quarter by the Defendants.

18. In addition, in 2008, SRK had imposed a special assessment of $200.00 to offset the lack of funds created by the increasing number of residences under foreclosure.

19. When the Plaintiff filed for bankruptcy, she was current on her payments to the Manors at Lake Berkley HOA, but owed a fee to the Lake Berkley Resort Master Association, Inc., including the $200.00 special assessment which she included in her plan with the Bankruptcy Court.

20. At all times relevant to the above captioned bankruptcy, Defendant Lake Berkley Resort Master Association, Inc. was included as creditor, listed in the master address list and in the list of creditors filed in the Plaintiff's lead bankruptcy case. See Docket Nos. 1, ¶ 21, and 17, ¶ 21.

21. At all times relevant to the above captioned bankruptcy, Defendants Lake Berkley Resort Master Association, Inc. and the Manors at Lake Berkley HOA were informed and had actual knowledge of the filing of the bankruptcy petition. See Docket Nos. 1, ¶ 22, and 17, ¶ 22.

22. On September 21, 2009, Proof of Claims No. 9 and 10 were filed by the Plaintiff's bankruptcy attorney on behalf of Defendants Lake Berkley Resort Master Association, Inc. and the Manors at Lake Berkley HOA, respectively, inasmuch as these Defendants refused to recognize the authority of the U.S....