Velazquez v. Quinones (In re Quinones)

OPINION AND ORDER

EDWARD A. GODOY, U.S. BANKRUPTCY JUDGE

Pending before the court is the motion for partial summary judgment filed by Dr. Crespo, the opposition and cross-motion for partial summary judgment filed by Ms. Santiago, and the parties' various replies. (Adv. Dkt. Nos. 93, 118, 127, 132, & 139.) For the reasons stated below, the court denies both motions for partial summary judgment.

I. Jurisdiction.

This court has jurisdiction over the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a), Local Civil Rule 83K(a), and the General Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of Puerto Rico dated July 19, 1984 (Torruella, CJ.).^[1] This is a core proceeding in accordance with 28 U.S.C. § 157(b).

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II. Procedural History.

On January 13, 2017, Oscar Crespo Quiñones ("Dr. Crespo" or "debtor") filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.^[2] (Bankr. Dkt. No. 1.) No plan was confirmed, and the case was converted to chapter 7 in August 2018, on the debtor's request. (Bankr. Dkt. No. 189 & 193.)

On July 12, 2019, the debtor's ex-wife Arlene Santiago Vazquez ("Ms. Santiago") filed an adversary proceeding against the debtor for nondischargeability of debts incurred by false pretenses, false representations or actual fraud under section 52 3(a) (2) and for debts incurred by defendant's willful and malicious injury under section 523(a)(6). (Adv. Dkt. No. 1.) On September 6, 2019, Dr. Crespo filed an answer and counterclaims seeking a declaratory judgment that neither of Ms. Santiago's two proofs of claim qualify as domestic support obligations ("DSO"), as well as counts for violation of the automatic stay and civil contempt. (Adv. Dkt. No. 16.)

Both parties filed motions to dismiss. (Adv. Dkt. No. 24 & 53.) While this matter was pending before the court, Dr. Crespo moved for offensive summary judgment as to the declaratory judgment count of his counterclaims on August 3, 2020. (Adv. Dkt. No. 93.)

On March 26, 2021, the bankruptcy court entered an opinion and order granting Dr. Crespo's motion to dismiss the complaint and denying Ms. Santiago's motion to dismiss the

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counterclaims. (Adv. Dkt. No. 109.) The court set a deadline for Ms. Santiago to respond to Dr. Crespo's motion for partial summary judgment, which was later extended. (Adv. Dkt. Nos. 110, 121.)

On May 11, 2021, Ms. Santiago filed her opposition and cross-motion for partial summary judgment. (Adv. Dkt. No. 118.) Both parties have since replied. (Adv. Dkt. Nos. 127, 132, & 139.)

On September 3, 2021, Ms. Santiago moved to dismiss the main bankruptcy case with a two-year bar to re-file, arguing that the debtor converted the case to chapter 7 in bad faith since he acknowledged that such a conversion would not be to the benefit of the estate or its creditors. (Bankr. Dkt. No. 297.) Ms. Santiago also argued that the case is essentially a two-party dispute and reiterated prior arguments alleging that Dr. Crespo concealed assets. Id. Dr. Crespo opposed on October 11, 2021, and Ms. Santiago's reply is not yet due. (Bankr. Dkt. Nos. 309, 310, 312, & 313.)

On October 26, 2021, oral arguments on the motions for summary judgment were heard. III. Uncontested Facts.

The following facts are uncontested pursuant to Rule 56 and Local Civil Rule 56, made applicable to these proceedings by Bankruptcy Rules 9014(c) and 7056 and Local Bankruptcy Rules 1001-1(b) and (d):

Dr. Crespo and Ms. Santiago met in 1997, while Ms. Santiago was working as a medical sales representative. (Adv. Dkt. No. 118 at p. 12; Adv. Dkt. No. 127 at p. 7; Adv. Dkt. No. 118-2

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at p. 6.) The two courted for several years before marrying on May 18, 1999 in San Juan, Id.

Prior to getting married, Dr. Crespo requested that Ms. Santiago "stop working and in exchange, he offered her as guarantee support of $5, 000 [per] month to be payable in the event that they divorced."^[3] (Adv. Dkt. No. 118 at p. 13; Adv. Dkt. No. 127 at p. 8; Adv. Dkt. No. 118-2 at p. 6.) To memorialize this, Dr. Crespo and Ms. Santiago entered into a prenuptial agreement, which was executed by a public deed dated April 15, 1999. (Adv. Dkt. No. 118 at p. 13; Adv. Dkt. No. 127 at p. 9; Adv. Dkt. No. 118-2 at p. 7.) The agreement included, among other things, the following clause:

FOURTH: The parties clarify and agree that the appearing party Arlene Ethel Santiago at present has a salary from her current job of Five Thousand Dollars monthly. In the event that the appearing parties divorce, appearing party Oscar Crespo Quiñones agrees to establish a support for a value equivalent to said Five Thousand Dollars, taking in consideration the cost of living that said amount represents at this time

Id.

The parties divorced in 2006. The divorce decree, entered October 30, 2006 and amended nunc pro tunc on December 27, 2006, incorporated the fourth clause of the prenuptial agreement, stating: "the stipulated clauses of the prenuptial agreements [sic] on the payment of the $5, 000 a month to benefit Mrs. Santiago will go into effect" on November 1, 2006. (Adv. Dkt. No. 118 at pp. 13-14; Adv. Dkt. No. 127 at pp. 10-11; Adv. Dkt. No. 118-1 at p. 4.) The divorce decree also stated that "there is [sic] no conjugal assets as the parties

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granted prenuptial agreements." (Adv. Dkt. No. 118-1 at p. 4.) The remainder of the divorce decree dealt with custody, visitation rights, and child support (including utility expenses for Ms. Santiago's residence), as well as educational, medical, and travel expenses for the two minor children. (Adv. Dkt. No. 118-1 at p. 3.)

Local Court Litigation

Dr. Crespo failed to make the payments, so in October 2008, Ms. Santiago moved the family court to find Dr. Crespo in contempt. (Adv. Dkt. No. 93 at p. 8; Adv. Dkt. No. 118 at p. 4; Adv. Dkt. No. 93-1.) Ms. Santiago alleged that, at that time, Mr. Crespo owed her $115, 000.00 in back payments. Id The family court denied Ms. Santiago's motion, stating that the matter must be resolved in a separate action. (Adv. Dkt. No. 93 at p. 9; Adv. Dkt. No. 119 at p. 5; Adv. 93-2 at p. 4.)

Ms. Santiago appealed, which the Puerto Rico Court of Appeals denied in a judgment dated November 18, 2009, stating:

[W]e consider that this dispute is one that should be adjudicated by the Courtroom of the Court of First Instance that is hearing the matter of the division of assets between the parties. What the petitioner is seeking is not the performance of an obligation that arises out of a court settlement agreement in a divorce on the grounds of mutual consent, which can be enforced through execution of judgment Igaravidez v. Ricci, 147 D.P.R. 1, 7 (2004), but rather the performance of an obligation that arises out of a prenuptial agreement, which must be claimed in an action for breach of contract. See, Articles 1077 and 1267 of the Civil Code, 31 L.P.R.A § 3052 and 3551. Furthermore what the petitioner is claiming cannot be the object of contempt of court. Pabón Rodríguez y Díaz López, Ex parte, 132 D.P.R. 898, 902 (1993). Therefore, there was no error in this regard

(Adv. Dkt. No. 93 at p. 10; Adv. Dkt. No. 118 at pp. 5-6; Adv. Dkt. No. 93-3 at p. 4.)

On December 14, 2010, Ms. Santiago filed a breach of contract and collection action against Dr. Crespo in Puerto Rico Superior Court, seeking to collect the amounts owed. See

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Civil Case No. K AC2010-1494. (Adv. Dkt. No. 93 at p. 10; Adv. Dkt. No. 119 at p. 6; Adv. Dkt. No. 93-4.) At the hearing, Ms. Santiago testified that Dr. Crespo agreed that the monthly payment would be paid "even when she were in a productive stage," which the court takes to mean even when if Ms. Santiago were employed, and that "[Dr. Crespo's] intention was to pay a lifelong support for her to dedicate herself to the care of the children and she would benefit for the rest of her life." (Adv. Dkt. No. 118 at p. 13; Adv. Dkt. No. 127 at p. 9; Adv. Dkt. No. 118-2 at pp. 8-9.)

In a judgment issued July 12, 2013, the Superior Court found for Ms. Santiago, holding that Dr. Crespo was liable for all payments missed since the divorce was decreed, plus legal interest. (Adv. Dkt. No. 118-2 at p. 22.) In doing so, the court reiterated that the lawsuit was not a claim for ex-spousal support, that the Puerto Rico Court of Appeals had already decided th issue making it the law of the case, and that "all that was left was to demand compliance of the contractual obligations through a lawsuit independent from the divorce." (Adv. Dkt. No. 93 at pp. 10-11; Adv. Dkt. No. 118 at p. 7; Adv. Dkt. No. 93-4 at pp. 19-21.)

Dr. Crespo moved to reconsider the judgment, which was denied. (Adv. Dkt. No. 93 at pp. 11-12; Adv. Dkt No. 118 at pp. 7-8; Adv. Dkt. No. 93-5.) The court echoed its previous statement, finding that:

The Court of Appeals was clear in its mandate when it concluded that the claim could not be settled within the divorce litigation, but in an independent litigation as one of specific compliance of the contract and not as a collection of nutritional support.

(Adv. Dkt. No. 93 at pp. 11-12; Adv. Dkt. No. 118 at pp. 7-8; Adv. Dkt. No. 93-5 at p. 3.)

Several years later, in the same lawsuit, Mr. Crespo filed a petition for a writ of certiorari to the Puerto Rico Court of Appeals to review an order issued by the Court of First

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Instance, Superior Court, on February 21, 2019. (Adv. Dkt. No. 93 at pp. 12-13; Adv. Dkt. No. 118- at pp. 8-9; Adv. Dkt. No. 93-6.) The Court of Appeals stated in a resolution dated April 2, 2019:

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