GERENA MENDEZ v. MATTEI MARTINEZ

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO

IN THE MATTER OF
JOSE JULIO PIETRI BIAGGI, : CASE NO. 05-0428 (SEK)

DEBTOR : CHAPTER 7

JORGE LUIS GERENA MENDEZ, as
Trustee for the estate of Julio
Pietri Biaggi, ;

PLAINTIFF : ADV. NO. 05-00230
Vv.
MURIEL MATTEL MARTINEZ, FILED & ENTERED
DEFENDANT 2 0 MAR 2006
CLERK
U.S. BANKRUPTCY COURT
SAN JUAN, PUERTO RICO

OPINION AND ORDER

Before the Court is the Trustee’s motion for entry of
summary judgment based on facts deemed admitted as per order
docketed on February 21, 2006. We deny the motion for reasons
stated below.

BACKGROUND AND UNDISPUTED FACTS
Defendant is the former spouse of the Debtor. While
married, they purchased the parcels of land described in the
sixth paragraph of the complaint. On January 20, 2005, Debtor
filed for bankruptcy protection, and his undivided interest in
the mentioned realty became an estate assets. Four months later,

the case was converted to Chapter 7 and Plaintiff was appointed

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as Trustee.

The Trustee filed this complaint indicating he intended to
sell both the estate’s interest in the realty and the interest of
the co-owner, former spouse, at private sales pursuant to options
attached to the complaint. He also claimed that the sales price
for both realties “constitute the fair market value of the real
property and is the best offer received by the Trustee”.
Furthermore, he “proposes to sale [sic] the aforementioned
properties within the terms provided in” the attached option
contracts. The Trustee then prays for the following remedies:

(a) Grant the private sale of properties object of the
complaint as described in Exhibits A and B [the option
contracts].

{o) Order Debtor to appear at closing for the execution
of sales deeds.

{c) To issue an immediate order of eviction of
defendant from the property described at paragraph 6 (a)
located in Urb. Los Pinos, No. 429 Dalia Street, Yauco,
Puerto Rico.

(c) [sic] Impose sanctions and attorneys fees upon the
defendant in the amount of $2,500.00 for costs and
prejudice caused upon the bankruptcy estate for her
temerary conduct being said amount deducted from the
proceeds of the sales that should be paid to her.

{d) Order that the defendant paid [sic] all the loss of
equity due to the increase in the mortgage payoff
balances that has resulted from her temerary and
unreasonable denial to sign the deeds of sale.”

Defendant answered the complaint, admitting she is co-owner
of the realty, and asserts the following pertinent affirmative
defenses. First, she questioned the Trustee’s statement
indicating that there is a proposed sale as the Trustee has not

filed any notice of sale. Next, she questions whether the

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options’ price reflect the fair market value of the real estate
based on her knowledge of ongoing sales of similar realty in the
same neighborhoods. She then questions whether Debtor’s aunt is
a good faith purchaser, or acts as a figurehead for the Debtor.

During the January 19, 2006 hearing, Defendant informed the
court she had and her minor children were no longer living in the
optioned realty located in Los Pinos Urb. We ordered her to
immediately deliver the keys and beeper to the Trustee. She also
claimed Debtor owed child support which should be paid from the
proceeds, stating the posed sales was below market value. She
was unable to provide an appraisal due to her dire economic
situation.

The Trustee recognized the priority status for child support
alleged by the Defendant, indicating she has not filed a proof of
claim evidencing the existence of such a debt.

Thereafter, the Trustee filed a motion for summary judgment
requesting entry of judgment granting the relief requested in the
complaint and ordering “the Marshall of the Court be in charge of
signing the sales deed of both properties instead of defendant,
Muriel Mattei Martinez.”

On February 21, 2006, we granted Defendant 10 days to oppose
the motion. If she did not comply, then facts alleged in the
motion were to be deemed admitted, and we could go on to grant

the motion without a hearing. Defendant has not opposed the

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motion.
Pursuant to the mentioned order the following facts are
deemed admitted:

(1) On September 30, 2005 the appearing Trustee filed a
Complaint, in his official capacity, against Defendant
Muriel Mattei Martinez, requesting judgment granting the
sale of the following two real estate assets of the
bankruptcy estate under the administration of the
trustee:

{a) Parcel of land located in the Montalva Ward of
the Municipality of Guanica with a superficial area of
500 square meters. It is identified as lot number six of
Block A. I bounders to the North, with lot number seven
block A of said development; superficial area of 500.00
square meters. It is identified as lot number six (6) of
block “A” as per the inscription plan. It bounders to the
North , with lot number 7, block “A” of said development;
South, with lot number five (5), block "A" of said
Development, to the East, with street number two (2) of
said Development; to the West, with lots number 1 and 2,
block “A” of said Development.

(b) Residential Property Located at Urb. Los Pinos,
H-17, Dalia St. Yauco, Puerto Rico. Estate number 14,339
of Yauco, recorded at page 211 of book 407, Ponce
Property Registry.

(2) Debtor, Mr. Jose Julio Pietri Biaggi filed a Chapter
7 case on January 20°, 2005, at which time was married
to defendant, Muriel Mattei. After the filing of the
bankruptcy petition the defendant and debtor were
divorced by sentence issued by the Ponce Superior Court.
(3) The two aforementioned real properties were acquired
by debtor and defendant during their marriage and the
debts reported by debtor and defendant were debts
incurred by the couple and the conjugal partnership or
“Sociedad de Bienes Gananciales” composed by them.

(4) The titles over both properties are duly recorded in
the Puerto Rico Property Registry. Attached to this
motion is as Exhibit I Title search prepared by L.J.N.
Title Search Company, Inc. and as Exhibit II Title search
prepared by Marysol Montes, of Servicios Paralegales.
Both documents present the recording data of the real
properties.

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DISCUSSION
Fed. R. Bankr. P. 7056 applies F. R. Civ. P. 56 in adversary
proceedings like the one at hand. The relevant part of Rule
56{(c) states:
The judgment sought shall be rendered forthwith if the
pleadings ... and admissions on file ... show that
there is no genuine issue as to the material fact and

that the moving party is entitled to a judgment as a
matter of law. (our emphasis)

Developments in this proceeding show there is no need to
order the Defendant to vacate the realty located in Urb. Los
Pinos, so that this request for relief is moot.

Next, the undisputed facts show the Trustee is the
administrates Debtor’s interest in the realty to be sold, and he
may sell Defendant’s interest in these assets if the sale meets
the requirements of 11 U.S.C. § 363 (f£) and he follows the

procedure indicated in Fed. R. Bankr. P. 6004. The record shows

the Trustee has not followed the procedure required by Fed. R.
Bankr. 6004(c). Therefore, we deny first request for relief.

As to remedies concerning the execution of deeds at closing,
we note that once the Trustee is authorized to sell a co-owner’s
interest in property, there is no longer any need to order the
co-owner to execute the deed of sale. The party with standing to
execute such a deed is the Trustee. Hence, remedies concerning
this matter are denied.

As to sanctions by way of attorney fees and costs due to

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Defendant’s temerity, the record shows the Defendant raised valid
defenses such as, non compliance with Fed. R. Bankr. 6004, the
price did not reflect the market value of the real properties to
be sold, and one of the purchasers was not acting in good faith
and at arms length. These defenses have not been rebutted by the
Trustee in his motion for entry of summary judgment. Hence, this

relief is also denied.

Lastly, the Trustee seeks damages for loss to the estate
caused by the Defendant when she refused to sign the private
deeds of sale. We find that the undisputed facts do not
substantiate this remedy, and Defendant was entitled under the
law oppose the request by the Trustee and have a court resolve
this legitimate controversy. Thus, this remedy is also denied.

The only remedy we are able to grant here, is a declaratory
judgment authorizing the Trustee to sell the real properties free
of Defendant's interest provided he follows Fed. R. Bankr. P.
6004(c), and we shall enter judgment accordingly.

SO ORDERED, in San Juan, Puerto Rico, on March 20, 2006.

WZ

SARA DE JE ‘
U.S./Bankrupt Judge