Humberto T Gonzales

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
HUMBERTO T. GONZALES,
Debtor.
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Case No. 07-00466
(Chapter 11)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION AND ORDER (1) DENYING
CREDITOR OCEAN POINT ASSOCIATION, INC.’S, MOTION FOR
LEAVE TO FILE AN OPPOSITION TO DEBTOR’S MOTION TO SELL
REAL PROPERTY AND (2) STRIKING DEBTOR’S COUNTER MOTION FOR
ORDER COMPELLING PERFORMANCE OR, IN THE ALTERNATIVE, DAMAGES
Ocean Point Association, Inc. seeks leave to file an
untimely response to the debtor’s motion to sell real property
known as 345 Ocean Drive, Unit 616, Miami Beach, Florida 33137
(the “Property”) because Ocean Point Association, Inc. wishes to
exercise its right of first refusal to purchase the Property.
But the court has already granted the debtor’s motion to sell the
Property. 	Accordingly, the Association’s motion must be denied.
The debtor’s opposition asserts a counter-motion seeking to
compel the Association to issue papers to facilitate the sale or,
alternatively, to pay damages. 	That counter-motion will be
stricken.
The document below is hereby signed.
Signed: August 11, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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I
The debtor filed his motion to sell the Property on March 4,
2009, accompanied by a motion to shorten the time for objections
to the sale to five days. 	By an order entered on March 9, 2009,
the court granted the motion to shorten time, stating:
After a review of the pleadings in this matter and of
the file, the Court finds that there is good cause
shown to shorten the time to respond and that no
prejudice will come to any creditor on account of the
shortened time. The Court finds that the automatic stay
was lifted regarding this property because there is no
equity in the property, which continues to be the case
as demonstrated by the fact that the lender that is
secued [sic] by the property is absorbing more than a
two hundred thousand dollar ($200,000) loss in order to
receive a payment of two hundred twenty-five thousand
dollars ($225,000.) It is, therefore, the finding of
this Court that there will be no prejudice to the
estate or to creditors of the estate if the sale
happens on an expedited basis. 	The motion is therefore
GRANTED. 	The time to respond to the motion is hereby
shortened to FIVE (5) days from the date of service of
the motion.
That made oppositions to the motion to sell due by March 16,
2009, twelve days after filing of the motion (because, in
computing the deadline under Fed. R. Bankr. P. 9006, the
intervening weekend did not count and three days were added
because service was by mail). 	No timely opposition was filed.
The court granted the motion to sell by an order entered on
March 17, 2009. 	Not until July 16, 2009, did the Association
file its motion. 	In its motion for leave to file the untimely
opposition, the Association contends that:
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3. Pursuant to 11 U.S.C. § 363, the sale of the
Property requires a notice and hearing. 	A hearing on
Debtor’s Motion has not yet been scheduled.
4. Ocean Point just recently retained counsel on July
6, 2009.
5. The Property at issue in the Debtor’s Motion is
a condominium, governed by an Association, and is
subject to the Declaration of Condominium of The Ocean
Point, A Condominium (the “Declaration”). . . .
6. Section 13.1(a) of the Declaration provides
that, “Sale: No apartment owner may dispose of or
convey an apartment or any interest therein by sale
without written approval of the Association.”
Furthermore, Section 13.3(a) of the Declaration states
that in the event that the Association disapproves a
proposed sale, the Association has the right of first
refusal to purchase the unit at the price listed in the
disapproved sales contract.
7. In paragraph 5 of its Motion, Debtor proposes a
sale of the Property to his “relatives.” (Debtor’s
Mot., ¶ 5). 	Debtor states that Wells Fargo, who owns
the Note securing the Property, agreed to a short-sale
for two hundred twenty five thousand dollars ($225,000)
plus waiver of all claims against the Estate. (Debtor’s
Mot., ¶¶ 3, 5).
8. The Association disapproves of the proposed
sale and wishes to exercise its right of first refusal.
Though the Association has already informed the Debtor
of its disapproval and intention, Debtor has refused to
cooperate with the Association.
9. It is in the interests of justice to allow
Ocean Point leave to file an opposition to Debtor’s
Motion. 	Ocean Point’s opposition was delayed because
it attempted to address the matter directly with the
Debtor believing that he would adhere to the
Declaration. 	The Association retained counsel in this
matter only after Debtor’s continued refusal to
cooperate and failure to acknowledge the terms to which
he is bound. 	Leave to file an opposition would not
prejudice the Debtor as Ocean Point has already drafted
and filed its opposition and no hearing as yet been
scheduled on Debtor’s Motion.
The debtor has filed an opposition, noting that the Association
does not suggest that it has obtained any agreement from the
lender to permit a sale in which the lender accepts less than the
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amount owed it. 	The debtor also has included in its opposition a
Counter Motion for Order Compelling Performance or, in the
Alternative, Damages.
II
No hearing was required on the motion to sell as the notice
of opportunity to oppose the motion (and thereby to obtain a
hearing) met the requirements of notice and a hearing. 	See 11
U.S.C. § 102(1)(B). 	Any relief from the order approving the sale
must be pursued by a separate motion setting forth grounds for
vacating the order approving the sale, with the debtor to have
the usual eleven days after service within which to oppose the
motion to vacate.
III
If the right of first refusal has not expired (which would
appear to turn on whether the debtor gave notice that has caused
the right to expire), it is not at all clear to me that the
Association needs to have the order approving the sale vacated in
order to preserve its right of first refusal. 	Outside of
bankruptcy, if the debtor entered into a contract of sale, the
Association, upon notification of that contract, could proceed to
exercise its right of first refusal. 	The filing of bankruptcy
generally does not alter a debtor’s property rights. 	The sale
motion was not a motion to sell the property free and clear of
any interest of the Association in the Property. 	In other words,
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it would appear that the contract of sale of the Property entered
into and approved during the bankruptcy case would be subject to
the Association’s right of first refusal (unless the debtor can
convince me to the contrary).
But the right of first refusal would appear to be an
academic right if the Association cannot obtain the agreement of
Wells Fargo, the lender whose claim is secured by the Property,
to accept $250,000 in extinguishment of its secured claim. 	If,
however, the Association can obtain that agreement from Wells
Fargo, then the interests of the estate would appear to be
equally well served by a sale to the Association instead of a
sale to the purchasers under the contract approved by the court.
IV
If the right of first refusal has expired, then it would
appear that under nonbankruptcy law the debtor is entitled to
have the Association perform any obligations it has under
nonbankruptcy law to facilitate the sale. 	The debtor’s Counter
Motion seeks to compel the Association to facilitate the sale or,
alternatively, monetary damages. 	Under Fed. R. Bankr. P. 7001,
the debtor’s Counter Motion for Order Compelling Performance or,
in the Alternative, Damages ought to have been brought as an
adversary proceeding as it seeks injunctive relief and a recovery
of money.
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V
In accordance with the foregoing, it is
ORDERED that Creditor Ocean Point Association, Inc.'S,
Motion for Leave to File an Opposition to Debtor's Motion to Sell
Real Property (Dkt. No. 273) is DENIED. 	It is further
ORDERED that the Debtor's Counter Motion for Order
Compelling Performance Or, in the Alternative, Damages (contained
in the debtor’s opposition (Dkt. No. 297) to the creditor’s
motion) is STRICKEN.
[Signed and dated above.]
Copies to: Debtor; Debtor’s attorney; Office of United States
Trustee; Thomas M. Dunlap, Esq.
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