REDONDO CONSTRUCTION CORPORATION

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
In re: :
:
REDONDO CONSTRUCTION CORPORATION, : Case No. 02-02887 (GAC)
:
Debtor : Chapter 11
___________________________________:
DECISION AND ORDER
At a hearing held on December 16, 2008, the Court entered an
order concluding that part of the funds from an arbitration award
related to highway PR-53 corresponded to General Power (“GP”) and
that the funds were not property of the estate. The Court
concluded that GP was entitled to $200,344.47, less $77,958.77, its
share of the litigation expenses. The minutes of the hearing were
entered on January 20, 2009 (dkt. #2105).
On January 30, 2009, GP filed a motion to alter or amend the
order (dkt. #2109). On February 2, 2009, Banco Popular de Puerto
Rico (“BPPR”) also filed a motion to alter or amend (dkt. #2111),
a notice of appeal (dkt. #2112) and a motion for stay pending
appeal (dkt. #2114). On February 3, 2009, General Electric Capital
Corporation of Puerto Rico (“GEC”) filed a motion joining BPPR’s
motion to alter or amend (dkt. #2118). GP filed a cross-appeal
(dkt. #2135).
DISCUSSION
I. Legal Standard
GP seeks to alter or amend the judgment pursuant to Federal
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Rule of Bankruptcy Procedure 9023, which makes Federal Rule of
Civil Procedure 59 applicable. This Rule states that “[a]ny motion
to alter or amend a judgment must be filed no later than 10 days
after entry of the judgment.” Fed. R. Civ. P. 59(e). In seeking
reconsideration under Federal Rule of Civil Procedure 59(e), “the
moving party must ‘either clearly establish a manifest error of law
or must present newly discovered evidence.’” Marie v. Allied Home
Mortgage 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)). In Marie, the First Circuit also cited a leading
treatise, noting four grounds for granting a motion for
reconsideration under Federal Rule of Civil Procedure 59(e). These
are “manifest errors of law or fact, newly discovered or previously
unavailable evidence, manifest injustice, and an intervening change
in controlling law.” Marie v. Allied Home Mortgage Corp., 402 F.3d
at 7 n. 2 (citing 11 C. Wright et al., Federal Practice & Procedure
§ 2810.1 (2d ed.1995)).
As BPPR and GEC did not file their motion to alter or amend
within ten days, they are held to the more stringent standard of
Federal Rule of Civil Procedure 60(b), made applicable by Federal
Rule of Bankruptcy Procedure 9024. The First Circuit Court of
Appeals has stated that relief from judgment under Federal Rule of
Civil Procedure Rule 60(b) is an extraordinary remedy and that
motions seeking to invoke that rule should be granted sparingly.
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Gonzalez-Pina v. Rodriguez, 407 F.3d 425, 433 (1st Cir.
2005)(citing Karak v. Bursaw Oil Corp., 288 F.3d 15, 19 (1st Cir.
2002)). The basic grounds for granting relief from judgment under
this rule are mistake, inadvertence, surprise, excusable neglect,
newly discovered evidence, fraud, or a contention that the judgment
is void or that it has been satisfied, released or discharged. See
Fed. R. Civ. P. 60(b).
II. GP’s Motion to Alter or Amend
GP claims that the Court erred in calculating the award
attributed to GP. The Court indicated that it was awarding GP
$200,344.47, less $77,958.77, its share of the litigation expenses.
Upon further review, however, the Court concludes that an error was
made in the calculation of the amount due GP. The total initial
award was $472,760.63, of which 42.38% corresponded to GP, or
$200,344.47. However, the total of the award, after interest,
increased to $750,000. GP’s 42.38% of the award, increased to
$317,850, with interest. The total expenses were $183,951.80.
GP’s share of the expenses, proportional to its share of the award,
is $77,958.77. Thus, the total due GP is $317,850, less
$77,958.77, for a total of $239,891.23. The award to GP will be
adjusted accordingly.
III. BPPR’s Motion to Alter or Amend (joined by GEC)
In essence, BPPR takes issue with the Court’s legal and
factual findings, and the evidence upon which the Court based its
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findings and conclusions. BPPR alleges that the Court erred in
concluding that the funds from the arbitration were deposited with
the Court; erred in concluding that the funds awarded to GP were
not property of the estate; erred in concluding that funds were
earmarked for GP in the arbitration award; erred in concluding that
GP claimed directly from the Puerto Rico Highway and Transportation
Authority and; erred in concluding that GP’s claim was a pass
through claim.
All of these issues were raised by BPPR and GEC prior to the
Court’s decision. The Court concludes that BPPR and GEC have not
alleged extraordinary grounds, nor addressed any of the specific
grounds for relief from judgment under Fed. R. Civ. P. 60(b).
Rather, they have merely reiterated arguments which the Court
previously considered and rejected. The Court will not rehash the
arguments here. Accordingly, the motions to alter or amend will be
denied.
III. BPPR’s Motion for Stay Pending Appeal
BPPR requests that the Court stay disbursement of funds to GP
pending resolution of all appeals. BPPR requests the stay to
safeguard the funds and prevent their dissipation prior to
resolution of the appeals.
A motion for stay pending appeal is filed pursuant to Federal
Rule of Bankruptcy Procedure 8005. Allowance of a motion for stay
pending appeal of a judgment is discretionary. Courts consider the
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traditional four-part standard applicable to injunctions. See
Acevedo-Garcia v. Vera-Monroig, 296 F.3d 13, 16 (1st Cir. 2002).
The Court must consider “(1) whether the applicant has made a
strong showing of success on the merits; (2) whether the applicant
will be irreparably harmed absent injunctive relief; (3) whether
issuance of the stay will injure other parties; and (4) where the
public interest lies.” Id. at 16 n. 3. “‘The sine qua non [of the
stay pending appeal standard] is whether the [movants] are likely
to succeed on the merits.’” Id. at 16 (quoting Weaver v.
Henderson, 984 F.2d 11, 12 (1st Cir. 1993)). “‘What matters ... is
not the raw amount of irreparable harm [a] party might conceivably
suffer, but rather the risk of such harm in light of the party’s
chance of success on the merits.’” P.R. Hosp. Supply, Inc. v.
Boston Scientific Corp., 426 F.3d 503, 507 n. 1 (1st Cir.
2005)(quoting the Massachusetts standard, which “closely tracks the
federal standard”).
The Court concludes that BPPR has demonstrated some likelihood
of prevailing on the merits of his appeal. An appellate court
could determine that all of the funds pertaining to the arbitration
award were property of the debtor’s estate, that the funds were not
earmarked for GP and that GP’s claim was not a pass through claim.
This would affect payment of GP’s claim, since it did not file a
claim against the bankruptcy estate.
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While the Court can not conclude that BPPR will be irreparably
harmed absent a stay, neither can the Court conclude that a stay
will injure any other party. The public interest would lie in not
distributing the funds, absent resolution of the appeals. Granting
a stay, will signify that the funds will remain on deposit with the
Court. Accordingly, the Court will grant stay pending appeal.
ORDER
WHEREFORE IT IS ORDERED that General Power’s motion to alter
or amend order (dkt. #2109) shall be, and it hereby is, GRANTED.
General Power is awarded the sum of $239,891.23.
IT IS FURTHER ORDERED that the motions for relief from
judgment filed by Banco Popular de Puerto Rico and General Electric
Capital Corporation of Puerto Rico (dkts. #2111 and #2118) shall
be, and hereby are, DENIED.
IT IS FURTHER ORDERED that Banco Popular de Puerto Rico’s
motion for stay pending appeal (dkt. #2114) shall be, and it hereby
is, GRANTED.
SO ORDERED.
San Juan, Puerto Rico, this 14th day of May, 2009.
BY THE COURT:
s/ Gerardo A. Carlo
_______________________
GERARDO A. CARLO
U.S. Bankruptcy Judge
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