WILFREDO QUINONES CRUZ and JOSEFINA A GARCIA JIMENEZ

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IN THE UNITED STATES BANKRUPTCY COURT FOR
THE DISTRICT OF PUERTO RICO
IN RE:
WILFREDO 	QUINONES CRUZ 	CASE NO. 11-08947 BKT
JOSEFINA A GARCIA JIMENEZ 	Chapter 13
XXX-XX-6665
XXX-XX-2384
FILED & ENTERED ON 07/05/2012
Debtor(s)
ORDER AND ORDER
Before the Court is Debtors’ Objection to Claim No. 8 [Dkt. No. 18], the
Creditor’s answer to Debtors’ objection to Claim No. 8 [Dkt. No. 23], Debtors’
position regarding the Creditor’s response to objection to Claim No. 8 [Dkt. No.
29], the Creditor’s motion in compliance with order and for reconsideration of
order [Dkt. No.33], and Debtors’ motion in compliance with order [Dkt. No. 35].
For the reasons set forth below, the Creditor’s motion for reconsideration[Dkt.
No.33] is DENIED. 	The bench order of March 29, 2012 remains in effect.
I. 	Facts and Procedural Background
On July 20, 2006, Norman L. Santiago (“Creditor”), obtained a judgment in
his favor against the Debtors, Wilfredo Quiñonez Cruz and Josefina Altagracia
García Jiménez, in the amount of $57,841.97 plus 9.75% in interest and attorney
fees in the amount of $1,500.00 (the “Judgment”). On October 18, 2011, Debtors
filed a chapter 13 bankruptcy petition [Dkt. No. 1]. On November 8, 2011, a title
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study was made, and it confirmed that the Judgment was registered in the Registry
of the Property on September 7, 2006. Moreover, Certification No. 1318 issued
under the signature of Hon. Namyr I. Hernández Sánchez, Registrar of the Property
of Bayamon’s Section III, in fact certified that the Judgment was recorded in the
Registry of Judgments on November 9, 2011, at folio 56, entry number 232, Volume
5.
On 	November 	29, 	2011,Creditor 	filed 	a 	proof 	of 	claim 	(Claim 	No. 	8),
claiming that a portion of his claim was secured in the amount of $92,729.00. The
other portion of the claim was general unsecured for $1,500.00. On January 10,
2012,Debtors filed the objection to Claim No. 8[Dkt. No. 18] alleging that the
Creditor’s 	claim 	failed 	to 	provide 	sufficient 	evidence 	of 	perfection 	of 	the
purported lien. Debtors also argued that five (5) years and ninety (90) days had
elapsed since the Judgment was registered at the Registry of Property and that
the 	Creditor 	took 	no 	action 	to 	execute 	the 	judicial 	lien 	in 	his 	favor.
Accordingly, Debtors argued that Creditor’s Claim No. 8 should be completely
classified as a general unsecured claim.
On February 15,2012, the Creditor filed his answer to Debtors’ objection
Claim No. 8 [Dkt. No. 23]. 	Creditor asserted that even when the Judgment was
registered on September 07, 2006, according to the Certification No. 1318, the
Judgment was not recorded in the Registry of Judgments until November 9, 2011.It
is the Creditor’s contention that the latter date establishes the commencement of
the right to exercise a secured preference under Puerto Rico law to recover the
amount 	of 	$57,841.97 	plus 	interests, 	costs 	and 	fees. 	For 	that 	reason, 	the
Creditor alleged that there is a perfected judgment lien over Debtors’ property,
and claimed a secured interest over said property. The Creditor requested from
this court to deny Debtors’ request to classify Creditor’s Claim No. 8 as a
general unsecured claim.
On 	March 	25, 	2012, 	Debtors 	filed 	their 	position 	regarding 	Creditor’s
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response to objection to Claim No. 8 [Dkt. No. 29]. Debtors argued that the
Judgment could be cancelled at Debtors’ request after five (5) years from its
registration at Registry of the Property. Therefore, on March 14, 2012,Debtors
purportedly filed with the Registry of the Property a request for cancellation of
the recorded judgment. Debtors’ request for cancellation of the judgment lien is
based on the following arguments:
First, Debtors aver that pursuant to Puerto Rico Mortgage Law, any judgment
lien has a validity of five (5) years from the inscription or registration of the
judgment with the Registrar of the Property. Debtors point out that more than
five 	years 	had 	elapsed 	from 	the 	Judgment 	registration 	until 	the 	filing 	of
voluntary 	petition. 	As 	such, 	said 	lien 	was 	no 	longer 	valid 	and 	should 	be
cancelled. Debtors also aver that, based on the title study prepared and provided
by 	the 	Creditor, 	the 	Judgment 	had 	been 	withdrawn 	from 	the 	Registry 	of 	the
Property.
Second, Debtors argue, in the alternative, that if the Court were to find
that the five (5) year period provided by the Puerto Rico Mortgage Law to cancel
the lien commenced from the recordation and not the registration of the lien,
then the Registrar of Property was forbidden by the provisions of the automatic
stay from making any annotations after the filing of the bankruptcy petition.
During the confirmation hearing held on March 29, 2012,in light of the
arguments presented by the parties, and because of the fact that over five (5)
years had transpired from the registration of the Judgment, Debtors’ objection to
Claim No. 8 [Dkt. No.18] was granted [Dkt. No. 31]. 	On April 17, 2012, Creditors
filed a motion in compliance with order and requesting reconsideration of the
bench order of March 29, 2012 [Dkt. No.33].
In 	his 	motion 	in 	compliance 	with 	order 	filed 	on 	April 	17, 	2012 	[Dkt.
No.33], the Creditor requested reconsideration under Section 1808, P.R. Laws Ann.
30 §1808, which provides that:
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“When the lien has been established as provided by §§ 1801-1813 of
this title, it shall continue in effect until it is cancelled, which
shall be done by petition of the interested party to the property
registrar through action, after the term of five years from the date
of said recording in the registry of judgments”.
P.R. Laws Ann. 30 §1808
Creditor argues that, pursuant to said Section 1808, the lien continues in
force until it is cancelled. 	Hence, at the time of the filing of the petition
and when the automatic stay came into effect, the judgment lien was in full force
and in effect. 	Creditor claims to still have a security interest in Debtors’
only real estate property. [Dkt. No. 33]. Creditor further argues that Debtors
cannot request that the lien be cancelled at this time in order to obtain the
retroactive effect of cancelling the judgment lien. 	Creditor asserts that it
would be inequitable and an error of law to deny him the protection of his
secured 	rights 	as 	they 	existed 	at 	the 	time 	of 	the 	filing 	of 	the 	bankruptcy
petition.
II. 	Discussion
A. 	Relief from a judgment or order
Federal Rules of Bankruptcy Proceeding, Rule 9024, which makes Federal
Rules of Civil Procedure 60 applicable to bankruptcy proceedings, affords six
categories of reasons or grounds on which to base a motion seeking relief from a
final judgment, order, or proceeding. 	Federal Rules of Civil Procedure 60(b)
seeks to balance the interest in the stability of judgments with the interest in
seeing that judgments not become instruments of oppression and fraud. 	10 Collier
on Bankruptcy ¶9024.03 (15th ed. rev.). 	“[T]he court may relieve a party . . .
from a final judgment, order, or proceedings for . . . mistake, inadvertence,
surprise, or excusable neglect." Fed R. Civ. P. 60(b)(1); Rule 60(b)(6) permits
relief "for any other reason that justifies relief." 	Fed R. Civ. P. 60(b)(6).
Relief under Rule 60(b) is extraordinary in nature and motions invoking
that rule should be granted sparingly. 	Karak v. Bursaw Oil Corp., 288 F.3d 15,
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19 	(1st 	Cir.2002). 	Such 	relief 	is 	available 	in 	our 	jurisdiction 	only 	when
exceptional circumstances exist to justify this extraordinary relief. 	In re
Rodriguez Camacho, 361 B.R. 294 (1st Cir.BAP, 2007)(citing Simon v. Navon, 116
F.3d 1, 5 (1st Cir.1997)). 	A party who seeks relief under Rule 60(b) must
persuade the court, at a bare minimum, that exceptional circumstances exist,
favoring extraordinary relief; that if the judgment is set aside, he has the
right stuff to mount a potentially meritorious claim or defense, and that no
unfair 	prejudice 	will 	accrue 	to 	the 	opposing 	parties 	should 	the 	motion 	be
granted. 	Rodriguez Camacho, supra (citing Karak v. Bursaw Oil Corp., 288 F.3d
15, 19 (1st Cir.2002)).
Creditor has failed to show that any exceptional circumstances exist that
would require an extraordinary relief under Rule 60. 	Creditor has failed to
allege details showing excusable neglect under a Rule 60(b)(1), and has failed to
justify the relief under a Rule 60(b). 	As such, Creditor has failed to meet its
burden for reconsideration under Fed. R. Bktcy P. 9024.
B. 	Judgment lien under Puerto Rico law
Creditor’s main argument is based on the validity and currentness of the
post-judgment provisional remedy, in the nature of a judgment lien on Debtors’
real property. 	The controversy in this case is whether Creditor’s judgment lien
constituted a valid lien, and whether said lien is still in effect and is, thus,
enforceable.
In order to understand the Debtors’ and Creditor’s arguments and ascertain
the extent of their rights, it is relevant to discuss the applicable aspects of
Puerto 	Rico’s 	Mortgage 	Law 	and 	related 	regulations. 	Upon 	enactment 	of 	the
Judgment Lien Act of March 8, 1906, a procedure was established enabling a party
with a judgment in its favor to obtain a general lien over all the immovable
property of the debtor. 	See In re San Juan Construction Co., 14 B.R. 576, 579
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(Bankr. D. Puerto Rico, 1981). 	This procedure requires that an abstract of the
judgment be presented at the Registry of the Property and, upon the docketing and
indexing of said judgment, it constitutes a general lien over debtor’s property,
which is either registered in that district or acquired and registered in the
future, up until the expiration of the lien by the passage of the statutory time
limit. 	Id at 579.
To that effect, Section 1806 of the Judgment Lien Act of March 8, 1906 (now
30 L.P.R.A. § 1806), provides that:
“When a judgment has been recorded and indexed, as provided for in
the preceding sections, it shall at once operate as a lien upon all
the immovable property of the defendant or defendants, not exempt
from 	execution, 	situated 	in 	the 	district 	where 	such 	abstract 	is
recorded, and upon the immovable property which the defendant or
defendants may thereafter acquire in such district, and such lien
shall 	be 	of 	like 	nature 	and 	preference 	as 	those 	mentioned 	in
subsection (5) of § 5193 of Title 31”.
P.R. Laws Ann. 30 § 1806 (1979)
Thus, 	generally, 	a 	judgment 	lien 	becomes 	a 	valid 	lien 	over 	all 	the
immovable 	property 	of 	the 	debtor 	once 	the 	judgment 	is 	recorded 	and 	indexed
according 	to 	law. 	This 	lien 	has 	similar 	effects 	as 	that 	of 	the 	cautionary
notices made by reason of attachments, sequestrations or executions of judgments
by virtue of a judicial mandate as provided for in the mortgage law, however, it
is a lien established by statute and not governed by the same requirements as the
latter. 	In re San Juan Construction Co., 14 B.R. at 579. 	The recording of a
judgment, unlike an attachment, is not a judicial action, but rather is the
exercise of a statutory right.
Likewise, under Puerto Rico’s Mortgage Law, liens become effective from the
date in which they are presented or registered with the Registry of the Property.
In that sense, Section 2256 provides, in the pertinent part, that: “Registered
titles 	shall 	become 	effective 	for 	third 	parties 	from 	the 	date 	of 	their
registration. 	For all intents and purposes, the registration date, including the
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determination 	term 	needed 	for 	cancellation 	of 	entries, 	must 	appear 	in 	the
registration itself.” 	P.R. Laws Ann. 30 § 2256 (1979).
As for the duration or expiration of this type of lien, Section 1808 sets
forth the statutory time limit as follows:
“When the lien has been established as provided by §§ 1801-1813 of
this title, it shall continue in effect until it is cancelled, which
shall be done by petition of the interested party to the property
registrar through action, after the term of five years from the date
of said recording in the registry of judgments”.
P.R. Laws Ann. 30 § 1808 (1979)
In this case, it is undisputed that Creditor’s judgment lien was presented
and recorded with the Registry of the Property on September 7, 2006.This is
evidenced from the title study submitted by the parties. 	As such, it became a
valid 	lien 	over 	Debtors’ 	real 	property 	from 	that 	date. 	The 	five 	(5) 	year
statutory period expired on or around September 2011. 	Although the judgment lien
was registered by the Property Registrar on November 9, 2011, as evidenced by the
certification submitted by the parties, it became effective for third parties
from the date of its registration, that is, on September 7, 2006. 	Thus, the lien
expired on or around September 2011, by the passage of the statutory time limit.
See 	In 	re 	San 	Juan 	Construction 	Co., 	supra 	at 	579. 	Upon 	expiration 	of 	the
judgment lien, Debtors were entitled to request cancellation of the same.
Having found that the judgment lien had a validity of five (5) years from
its registration with the Registrar of the Property, the Court need not entertain
Debtors’ alternative argument.
III. 	Conclusion
After reviewing the arguments of the parties and the relevant law, the
court finds that Creditor had an enforceable judgment lien that weighed over
Debtors’ real property, and was effective since the date it was recorded, on
September 7, 2006. However, the court concludes that the judgment lien expired on
or around September 2011, by virtue of the five (5) year statutory time limit of
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Section 1806, 30 L.P.R.A. § 1806. 	As such, Debtors were entitled to request
cancellation 	of 	the 	judgment 	lien. 	Creditor 	took 	no 	action 	to 	execute 	the
judicial lien in his favor within the five (5) year validity period. 	Creditor
also failed to show any affirmative action to maintain or renew his secured
status under Puerto Rico Law.
Absent a manifest error of law or newly found evidence, the court is not in
a position to alter or amend its previous order.
WHEREFORE, IT IS ORDERED that Creditor’s motion for reconsideration shall
be, and it hereby is, DENIED.
San Juan, Puerto Rico this 05 day of July, 2012.
Brian K. Tester
U.S. Bankruptcy Judge
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