Mikhail et al v. ESJ TOWERS INC et al

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
IN RE
ESJ TOWERS INC
Debtor
CASE NO. 22-01676 (ESL)
CHAPTER 11
MAGDY MIKHAIL; OLGA GARCIA-
MIKHAIL
Plaintiffs
vs.
FORTALEZA EQUITY PARTNERS 2,
LLC; FORTALEZA HOSPITALITY L.L.C.;
FORTALEZA ESJ, L.L.C.; ESJ TOWERS
VACATION CLUB LLC; BLACK BRIAR
PUERTO RICO LIMITED LIABILITY
COMPANY; BLACK BRIAR ADVISORS
LLC; and ESJ TOWERS, INC.
Defendants
ADVERSARY NO. 25-00005
FILED AND ENTERED 7/22/2026.
OPINION AND ORDER
The present adversary proceeding is before the court upon the Motion for Reconsideration
filed by Plaintiffs (dkt. #116) requesting that the Opinion and Order (dkt. #111) and Judgment
(dkt. #112) entered on February 24, 2026 be reconsidered and vacated under Fed. R. Civ. P. 59(e),
that Plaintiffs be allowed to file an amended complaint, and that the motions to dismiss filed by
Fortaleza Equity Partners 2, LLC (“Fortaleza Equity”), Fortaleza Hospitality L.L.C. (“Fortaleza
Hospitality”), Fortaleza ESJ, L.L.C. (“Fortaleza ESJ”), and ESJ Towers Vacation Club LLC
(“ESJ Towers Vacation Club”, and jointly with Fortaleza Equity, Fortaleza Hospitality and
Fortaleza ESJ, “Fortaleza”) (dkt. #75, 76), Black Briar Puerto Rico LLC (“Black Briar PR”)
and Black Briar Advisors LLC (“Black Briar Advisors”, and jointly with Black Briar PR, “Black
Briar”) (dkt. #88), and ESJ Towers, Inc. (“Debtor”, and jointly with Fortaleza and Black Briar,
the “Defendants”) (dkt. #90, 94) be denied because Plaintiffs’ claims arise directly from the
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administration of the bankruptcy case and the interpretation of this court’s own orders. Also
before the court are Fortaleza’s response (dkt. #117), Black Briar’s opposition (dkt. #118),
Plaintiffs’ omnibus reply (dkt. #125), and Black Briar’s sur-reply (dkt. #131).
Applicable Law and Discussion
(A) 	Motion for Reconsideration Standard under Fed. R. Civ. P. 59(e)
Motions for reconsideration “are not recognized by the Federal Rules of Civil Procedure
or the Federal Rules of Bankruptcy Procedure in haec verba.” In re Mujica, 470 B.R. 251, 253
(Bankr. D.P.R. 2012), aff'd, 492 B.R. 355 (D.P.R. 2013). See also Lavespere v. Niagara Mach. &
Tool Works Inc., 910 F.2d 167, 173 (5th Cir. 1990), cert. denied, 510 U.S. 859 (1993), abrogated
on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069, 1075–76 (5th Cir. 1994); In re
Pabon Rodriguez, 233 B.R. 212, 218 (Bankr. D.P.R. 1999), aff'd, 2000 WL 35916017 (B.A.P. 1st
Cir. 2000), aff'd, 17 F. App'x 5 (1st Cir. 2001), citing Van Skiver v. United States, 952 F.2d 1241,
1243 (10th Cir. 1991); Portugues–Santa v. B. Fernandez Hermanos, Inc., 614 F.Supp.2d 221, 225
(D.P.R. 2009); In re Martinez, 2013 WL 3808076, at *4 (Bankr. D.P.R. 2013); In re Acosta, 497
B.R. 25, 31 (Bankr. 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 of
judgment or order under Fed. R. Civ. P. 60(b)1 . See Fisher v. Kadant, Inc., 589 F.3d 505, 512 (1st
Cir. 2009) (noting a motion for reconsideration implicated either Fed. R. Civ. P. 59(e) or 60(b)).
“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 (14)] 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).” Pabon
Rodriguez, 233 B.R. at 219, quoting Van Skiver, 952 F.2d at 1243.
“The substance of the motion, not the nomenclature used or labels placed on motions, is
controlling.” In re Lozada Rivera, 470 B.R. 109, 112–113 (Bankr. D.P.R. 2012). Thus, for
1 Fed. R. Civ. P. 59(e) and 60(b)(1) are made applicable to adversary proceedings under Fed. R. Bankr. P. 9023 and
9024, respectively.
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example, even if filed within the time limit for a motion under Fed. R. Civ. P. 59(e), a motion
seeking relief on grounds of “excusable neglect” will be treated as a Fed. R. Civ. P. 60(b)(1)
motion, because Fed. R. Civ. P. 59(e) does not provide a vehicle for a party to undo its own
procedural failures. See In re Lozada Rivera, 470 B.R. at 113, citing 12–60 Moore's Federal
Practice Civil § 60.03. Also see United States v. $23,000 in U.S. Currency, 356 F.3d 157, 164–
165 (1st Cir. 2004) (even if timely filed under Fed. R. Civ. P. 59(e), a motion seeking relief on
grounds of excusable neglect will be treated as Fed. R. Civ. P. 60(b)(1) motion, because Fed. R.
Civ. P. 59(e) does not provide a vehicle for party to undo its own procedural failures); Jennings
v. Rivers, 394 F.3d 850, 854–856 (10th Cir. 2005) (a motion timely filed under Fed. R. Civ. P.
59(e) but asserting ground for relief specified under Fed. R. Civ. P. 60(b), should be evaluated
under standards applicable to Fed. R. Civ. P. 60(b) motions).
Fed. R. Civ. P. 59(e) authorizes the filing of a written motion to alter or amend a judgment
after its entry. To meet the threshold requirements of a successful Fed. R. Civ. P. 59(e) motion,
such 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 to reverse its
earlier decision. In re Schwartz, 409 B.R. 240, 250 (B.A.P. 1st Cir. 2008), citing Pabon Rodriguez,
233 B.R. at 218. See also Mujica, 470 B.R. at 254. For a motion for reconsideration to succeed,
“the movant must demonstrate either that newly discovered evidence (not previously available)
has come to light or that the rendering court committed a manifest error of law.” In re Redondo
Constr. Corp., 2019 WL 6130938, at *3 (Bankr. D.P.R. 2019), aff'd, 621 B.R. 81 (D.P.R. 2020),
quoting Mulero-Abreu v. P.R. Police Dep't, 675 F.3d 88, 94 (1st Cir. 2012). See also Pabon
Rodriguez, 233 B.R. at 218; 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); In re Zutrau, 563 B.R.
431, 449 (B.A.P. 1st Cir. 2017), citing Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7, n. 2
(1st Cir. 2005), quoting Pomerleau v. W. Springfield Pub. Sch., 362 F.3d 143, 146, n. 2 (1st Cir.
2004).
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Federal courts have consistently stated that a motion for reconsideration of a previous
order is an extraordinary remedy that must be used sparingly because of interest in finality and
conservation of scarce judicial resources. See Pabon Rodriguez, 233 B.R. at 218. In practice, Fed.
R. Civ. P. 59(e) motions are typically denied because of the narrow purposes for which they are
intended. See id.; Global Naps, Inc. v. Verizon New England, Inc., 489 F.3d 13, 245 (1st Cir.
2007) (motions under Fed. R. Civ. P. 59(e) are reviewed for abuse of discretion, reversing only
where “the original judgment evidenced a manifest error of law ... or in certain other narrow
situations”).
“A motion for reconsideration ‘does not provide a vehicle for a party to undo its own
procedural failures and it certainly does not allow a party to introduce new evidence or advance
arguments that could or should have been presented to the district court prior to the judgment.”
Redondo, 2019 WL 6130938 at *2, quoting Marks 3-Zet-Ernst Marks GmBh & Co. KG v.
Presstek, Inc., 455 F.3d 7, 15-16 (1st Cir. 2006). When a party is made aware that a particular
issue will be relevant to its case but fails to produce readily available evidence pertaining to that
issue, the party may not introduce that evidence to support a Fed. R. Civ. P. 59(e) motion. See
Pabon Rodriguez, 233 B.R. at 218. “Where evidence is not newly discovered, a party may not
submit that evidence in support of a motion for reconsideration.” Redondo, 2019 WL 6130938 at
*3, quoting Lepore v. Vidockler, 792 F. 2d 272, 274 (1st Cir. 1986). Neither can the party use
this motion to raise novel legal theories that it had the ability to address in first instance. See
Pabon Rodriguez, 233 B.R. at 218. A motion for reconsideration cannot be used as a vehicle to
re-litigate matters already litigated and decided by the court. See Standard Química de Venezuela
v. Central Hispano International, Inc., 189 F.R.D. 202, 205, n. 4 (D.P.R. 1999). A such, a party
moving for Fed. R. Civ. P. 59(e) relief may not repeat arguments previously made, see Prescott
v. Higgins, 538 F.3d 32, 45 (1st Cir. 2008), “rehash arguments previously rejected or … raise
ones that ‘could, and should, have been made before judgment issued.” Soto-Padró v. Public
Buildings 	Authority, 	675 	F.3d 	1, 	9 	(1st 	Cir. 	2012) 	(citations 	omitted). 	“[M]otions 	for
reconsideration should not give parties a ‘second bite at the apple’ or ‘another roll of the dice’ ”.
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Redondo, 2019 WL 6130938 at *2, quoting Conway v. A.I. DuPont Hosp. for Children, 2009 WL
1492178, at *4 (E.D. Pa. 2009). Also see In re Vazquez, 471 B.R. at 761(“in denying
reconsideration, the bankruptcy court correctly applied the First Circuit precedent against a
second bite at the apple: litigants may not use Fed. R. Civ. P. 59(e) to advance arguments they
could have made earlier”). “It is therefore exceedingly difficult for a litigant to succeed in a Fed.
R. Civ. P. 59(e) motion.” In re Mujica, 470 B.R. at 254, citing ACA Fin. Guar. Corp. v. Advest,
Inc., 512 F.3d 46, 55 (1st Cir. 2008).
(B) 	Discussion
After 	due 	consideration 	of 	the 	allegations 	and 	arguments 	in 	the 	Motion 	for
Reconsideration, together with the detailed factual findings and legal analysis set forth in in this
court’s Opinion and Order entered on February 24, 2026 (dkt. #111), the court is not moved to
alter any of its conclusions. The court finds that the Motion for Reconsideration presents no newly
discovered evidence to warrant reconsideration of prior findings, and identifies no manifest error
of law. Contrary to the averments in the Motion for Reconsideration, the court may take judicial
notice of its own docket. See LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning Corp.),
196 F.3d 1, 8 (1st Cir. 1999) (“The bankruptcy court appropriately took judicial notice of its own
docket.”). As explained in its Opinion and Order, the court took judicial notice, pursuant to Fed.
R. Evid. 201, of the order in which Debtor’s assets were assigned, and of the certificates of service
and orders filed and entered in the lead bankruptcy case, as permitted under Fed. R. Civ. P.
12(b)(6). Thus, the court declines to revisit its decision dismissing this action, and reaffirms its
prior conclusion, that is:
Here, pursuant to Paragraph 8.1 of the confirmed plan, “[a]ll unexpired leases,
executory contracts and other contracts … which (i) have not expired by their own
terms on or prior to the Confirmation Date, (ii) have not been assumed and assigned
to the purchaser of Debtor’s assets, as indicated in the APA, prior to the Effective
Date, shall be deemed rejected.” Bankr. Case No. 22-01676, dkt. #1838-1, p. 23,
¶ 8.1 (boldface added). Pursuant to Paragraph 8.2 of the confirmed plan, “if the
rejection … results in a claim for damages … any claim for such damages, if not
evidenced by a filed proof of claim, shall be forever barred and shall not be
enforceable against Debtor, or its properties or agents, successors, or assigns,
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unless a proof of claim is filed with the Bankruptcy Court …” Id., ¶ 8.2 (boldface
added).
The record does not reflect that the Agreements for Intervals 1264-29 and 1467-30
were formally assumed and/or assumed and assigned prior to plan confirmation or
as part of the sale of Debtor’s assets; that a proof of claim was timely filed by
Plaintiffs in accordance with the terms of the confirmed plan; that Plaintiffs
objected to either confirmation or the sale of Debtor’s assets; or, that Plaintiffs
petitioned the court for Debtor to assume or reject Intervals 1264-29 and 1467-30
within a specific time, or for adequate assurance of future performance. The record
does reflect that both confirmation and the sale of Debtor’s assets was consensual;
that if unexpired leases, executory contracts and other contracts were not assumed
and assigned prior to the closing of the sale, such agreement was deemed rejected
under the terms of the Confirmation Order, the Plan, the Sale Order, and the APA.
These facts, taken together, evince that Intervals 1264-29 and 1467-30 were
deemed rejected under the terms of the confirmed plan, which has res judicata
effect. See 11 U.S.C. § 1141(a).
To the extent Counts I, II, III, and IV seek relief against the Debtor in connection
with the rejection of Intervals 1264-29 and 1467-30, which are barred under the
Amended Bidding Procedures Order, Paragraph 8.2 of the Plan, the Confirmation
Order, the Sale Order, and the APA, and the assets are no longer property of the
Debtor or the bankruptcy estate, they fail to state a claim for which relief may be
granted under Fed. R. Civ. P. 12(b)(6). As such, Counts I, II, III, and IV are
dismissed with respect to the Debtor.
The court will now address the relief requested against the non-debtor third-parties
based on this court’s orders, the Agreements, and the Puerto Rico Vacation
Ownership Act. To the extent Count I seeks relief against (i) Fortaleza Equity, (ii)
Fortaleza ESJ, and (iii) ESJ Tower Vacation Club in connection with the rejection
of Intervals 1264-29 and 1467-30, which are barred under the Amended Bidding
Procedures Order, Paragraph 8.2 of the Plan, the Confirmation Order, the Sale
Order, and the APA, they fail to state a claim for which relief may be granted under
Fed. R. Civ. P. 12(b)(6). As such, Count I is dismissed with respect to (i) Fortaleza
Equity, (ii) Fortaleza ESJ, and (iii) ESJ Tower Vacation Club.
To the extent any remaining counts seek relief against non-debtor third parties,
namely (i) Fortaleza Equity, (ii) Fortaleza ESJ, (iii) ESJ Tower Vacation Club, (iv)
Fortaleza Hospitality, (v) Black Briar PR, and (vi) Black Briar Advisors on account
of alleged contractual or statutory vacation club membership rights under the Puerto
Rico Vacation Ownership Act, this court is moved to exercise its discretion to
permissively or discretionally abstain under 28 U.S.C. § 1334(c)(1). See In re
Harland Corporation, 2025 WL 338052 (Bankr. D.P.R. 2025) (noting that
abstention is appropriate where state law predominates). The effect or lack thereof
of any remaining counts on the administration of the Debtor’s bankruptcy estate
and/or the confirmed plan also moves this court to abstain. The foregoing does not
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bar Plaintiffs from pursuing their claims against the non-debtor parties in
accordance with Puerto Rico law.
dkt. #111, pp. 20-22, lines 1-2 (boldface original).
Conclusion
In view of the foregoing, Plaintiffs’ Motion for Reconsideration (dkt. #116) is hereby
DENIED.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 22 nd day of July 2026.
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