REDONDO CONSTRUCTION CORPORATION et al v. PUERTO RICO HIGHWAY AUTHORITY

OCR transcription for search; preserved printed pages are authoritative

Case:@2-00113-ESL Doc#:389 Filed:12/10/09 Entered:12/11/09 11:02:59 Desc: Main

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

REDONDO CONSTRUCTION : CASE NO. 02-02887 (GAC)
CORPORATION, CORP., :

Debtor : CHAPTER 11
‘ FILED 2 ENT!

REDONDO CONSTRUCTION :
CORPORATION, CORP., : DEC 1 1 2099

Plaintiff

PUERTO RICO HIGHWAY AND
TRANSPORTATION AUTHORITY

Defendant

OPINION AND ORDER

This case is before the court upon its own order (Docket #383)
raising sua sponte the question concerning the entry of final
judgment by a bankruptcy judge in a non-core matter, as opposed to
submitting to the district court the Decision and Order entered on
August 31, 2009 by the Honorable Gerardo A. Carlo (Docket #373), as
proposed findings of fact and conclusions of law, and for entry of
final judgment.

I. Procedural and Factual Background

Redondo Construction, Corp. ("Redondo"), filed the present
adversary proceeding to determine if the Puerto Rico Highway and
Transportation Authority (“PRHTA”) was required to pay Redondo
additional compensation, including interests, for unpaid claims and

damages allegedly resulting from the work performed by Redondo

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under the following contracts: Contract AC-019916 (Las Cumbres
Avenue, El Capa); Contract AC-020303 (Rio Grande de Loiza Bridge) ;
Contract AC-220095 (Kennedy Avenue - Caparra Interchange); Contract
AC-100029 (Ponce Adjuntas - PR-19) and Contract AC-800135 (Third
Millennium Park). The trial was held on November 27-30, 2006;
December 1, 2006; March 9, 2007; March 15, 2007; March 19-21, 2007;
June 46 and 25-27, 2007 and November 5-7, 2008.

Before trial, on March 20, 2006 the court entered an order
concluding that the present adversary proceeding was a non-core
proceeding (Docket #155). On December 5, 2008, the court reaffirmed
that the matter was a non-core proceeding and asked PRHTA if it
agreed that the court enter a final opinion and order because if
not, it would have to issue proposed findings of fact and
conclusions of law to the district court. The court ordered PRHTA
to file the agreement in writing, and concluded that if PRHTA did
not move the court within twenty days, then the court would enter
proposed findings of fact and conclusion of law pursuant to 28
U.S.C. § 157(c) (1). (Docket #351, pages 131-134).

On March 27, 2009, PRHTA filed the post trial brief with
proposed findings of fact and conclusions of law (Docket #364) and
on the same day, Redondo filed the post trial brief and the
memorandum with the finding of facts (Dockets #365 and #366).

On August 31, 2009, the court (Carlo, B.J.)entered its
Decision and Order disposing of the adversary proceeding in its
entirety (Docket #373). The court decided that PRHTA would

compensate Redondo in the total amount of $4,506,828.29, plus legal

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interest at 6%, from August 10, 2001, for the Project Las Cumbres
Avenue; that PRHTA would compensate Redondo in the total amount
$1,258,475.13, plus legal interest at 6% from August 10, 2001, for
the Project Rio Grande de Loiza Bridge; that PRHTA would compensate
Redondo in the total amount $655,550.19, plus legal interest at 6%
from July 18, 1999, plus $ 217,079.49, for the Project Kennedy
Avenue; that PRHTA would compensate Redondo in the total amount
$2,177,799.94, plus legal interest at 6% from August 10, 2001, plus
$46,650.60 for the Project Ponce-Adjuntas and that PRHTA would
compensate Redondo in the amount of $1,644,875.03, plus legal
interest at 6% from December 3, 2000, for the Project The Third
Millennium Park. Judgment was also entered, however it mistakenly
provided that in connection with the Ponce-Adjuntas project PRHTA
would compensate Redondo the amount of $11,644.875.33 when the
correct amount was $1,644,875.33 (Docket #374). Redondo’s motion
requesting entry of order for nunc pro tunc correction of Judgment
(Docket #375) ensued. On September 3, 2009 this court entered an
order granting Redondo’s motion and amending the Decision and Order
and the Judgment entered by the Honorable Gerardo A. Carlo (Docket
#376).

On September 4, 2009, PRHTA filed a motion requesting an
extension of time to file objections to Decision and Order pursuant
to Fed. R. Bankr. P. 9033 (B) and (C) (Docket #379). On September
9, 2009, Redondo filed and opposition to PRHTA’s motion for
extension of time to file objections to Decision and Order (Docket

#381). On the same day, Redondo filed another motion requesting

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entry of order clarifying nun pro tunc correction of judgment
(Docket #382).

On September 10, 2009 this court granted the extension of time
requested by PRHTA to file oppositions to the Decision and Order
(Docket #383). The court further stated that it would not address
the issue of whether or not the proceedings in this case are
governed by 28 U.S.C. § 157 for being non-core as it was already
decided in the order of March 20, 2006 (Docket #155) (Carlo, B.J.).
Considering the above limitation to the entry of a final order by
a bankruptcy judge in a non-core matter, this court raised sua
sponte the question concerning the entry of a final judgment, as
opposed to submitting to the district court, the Decision and
Order, and for the entry of final judgment by the district court.
The court ordered the parties to brief within twenty days the issue
of whether the final judgment should be set aside and the Decision
and Order submitted to the district court as proposed findings of
fact and conclusions of law.

On September 30, 2009, Redondo filed a motion and memorandum
in compliance with the order and to sustain judgment (Docket #385).
On the same day, PRHTA filed the objection to the court’s Decision
and Order (Docket #386) and a motion in compliance with order and
to set aside judgment (Docket #387). Finally, on October 10, 2009,
Redondo filed a motion requesting extension of time to respond to
PRHTA’s objection to Decision and Order (Docket #388), which has

not been granted. However, no response has been filed.

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II. Position of the Parties

A. Redondo

Redondo asserts that on March 1, 2006, PRHTA filed a motion
requesting the non-core determination and that it expressed an
overt willingness to acquiesce to a final order and judgment, with
the conditions that Redondo waive its jury trial demand, and that
the court give them reasonable time to adequately present all of
its defenses and set off claims against Redondo (Docket #105).
Redondo asserts that it complied with PRHTA’s conditions by filing
on March 8, 2006, a motion of acquiescence to non-jury trial
(Docket #115).

Redondo asserts that throughout the two years of trial the
record shows that PRHTA was allowed more than enough time, and
given every opportunity, to present all the evidence, and formulate
all the claims necessary for a successful defense of its case. It
argues that the trial was continued in several occasions at PRHTA’s
request to accommodate its trial preparation and was given the
opportunity to amend its expert report, to adjust it to PRHTA’s
defenses, in order to set off Redondo’s claim, particularly in
regard to an alleged back-charge that PRHTA was claiming, of over
one million dollars, in relation to the Ponce-Adjuntas project
(Dockets #142, #166, #198, #243, #309). Redondo also argues that
after the trial ended, on March 27, 2009, PRHTA filed its post-
trial memorandum, in which it amply discussed all of its claims and
defenses, and in a clear and unambiguous language, asked the court

to enter a judgment in favor of Redondo, for the amount of

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$230,702.53, after offsetting PRHTA’s alleged claims and defenses
(Docket #364).

Redondo contends that PRHTA unequivocally and expressly waived
the non-core protection, and that unlike the issue of subject
matter jurisdiction, which may neither be waived nor forfeited by
the parties, the protections afforded by the core/non-core
distinction may be waived or forfeited, either by consenting to the
bankruptcy court's treatment of an otherwise non-core proceeding as
core, or failing to raise or pursue the issue adequately on appeal.

Redondo further argues that PRHTA cannot attempt to go against
its own’s acts of waiver, by claiming now that this matter is non-
core, and therefore merits a de novo review, when in actuality this
matter has been treated as a core proceeding, precisely because
PRHTA expressly requested it. Thus, Redondo concludes that having
both parties consented the entry of judgment, and having a final
judgment been entered, neither party can now claim a right to de
novo review. Redondo requests that the court sustain the Judgment
entered on August 31, 2009, based on the consent of the parties to
allow a final judgment in this non-core proceeding.

B. PRHTA

PRHTA asserts that it has not consented and does not consent
to the entry of judgment by the bankruptcy court. PRHTA contend
that the previous legal representation in its post trial brief,
filed on March 27, 2009, inadvertently made a clerical error by
writing in the conclusion that: “Based on the foregoing findings of

fact and conclusions of law, this Honorable Court must enter final

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1 |} judgment of $230,702.53 in favor of Plaintiff” (Docket #364 page

21/99). It asserts that this can be clearly perceived as an
3 involuntary “error,” when nothing else in the brief brings about
4 said conclusion. PRHTA contends that the amount of $230,702.53 is
> not sustained by any legal of factual background, any evidence or
data mentioned in the brief.

’ PRHTA asserts that it clearly raised its jurisdictional
challenge that the bankruptcy court lacked authority to enter final
10 judgment, and the court explicitly declared the proceeding as non-

ll core (Docket #155). PRHTA asserts that it clearly did not consent
12 || t° the entry of judgment and it particularly states it, in addition
13 || to preserving said defense during trial. Furthermore, it asserts
14} that in the proposed pretrial order, filed on February 24, 2006,

15 | clearly maintains that this is a non-core proceeding that could be

16 | resolved in state court as a simple breach of contract.

17 PRHTA asserts that it expressly stated that it does not
18 consent for the entry of a judgment. Thus, PRHTA request that the
19 court set aside the Judgment issued on August 31, 2009, and submit
“8 this court’s Decision and Order as proposed findings of fact and
. conclusions of law to the district court pursuant to Federal Rule
54 of Bankruptcy Procedure 9033(b).

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TII. Applicable Law

Title 28 of the United States Code § 157(c)(1), establishes
the judicial procedures when a bankruptcy judge may hear non-core
proceedings:

(c) (1) A bankruptcy judge may hear a proceeding
that is not a core proceeding but that is
otherwise related to a case under title 11. In
such proceeding, the bankruptcy judge shall
submit proposed findings of fact and conclusions
of law to the district court, and any final order
or judgment shall be entered by the district
judge after considering the bankruptcy judge's
proposed findings and conclusions and after
reviewing de novo those matters to which any
party has timely and specifically objected.

Federal Rule of Bankruptcy Procedure 9033, incorporates 28
U.S.C. § 157(c) (1), and prescribes the procedure for the bankruptcy
court to follow when it has to enter proposed findings of fact and
conclusions of law in non-core proceedings. Federal Rule of
Bankruptcy Procedure 9033 provides:

(a) Service

In non-core proceedings heard pursuant to 28
U.S.C. §157(c) (1), the bankruptcy Judge shall
file proposed findings of fact and conclusions of
law. The clerk shall serve forthwith copies on
all parties by mail and note the date of mailing
on the docket.

(bo) Objections: time for filing

Within 10 days after being served with a copy of
the proposed findings of fact and conclusions of
law a party may serve and file with the clerk
written objections which identify the specific
proposed findings or conclusions objected to and
state the grounds for such objection. A party may
respond to another party's objections within 10
days after being served with a copy thereof. A
party objecting to the bankruptcy judge's
proposed findings or conclusions shall arrange
promptly for the transcription of the record, or
such portions of it as all parties may agree upon

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or the bankruptcy judge deems sufficient, unless
the district judge otherwise directs.

(ob) Objections: time for filing

Within 14 days after being served with a copy of
the proposed findings of fact and conclusions of
law a party may serve and file with the clerk
written objections which identify the specific
proposed findings or conclusions objected to and
state the grounds for such objection. A party may
respond to another party's objections within 14
days after being served with a copy thereof. A
party objecting to the bankruptcy judge's
proposed findings or conclusions shall arrange
promptly for the transcription of the record, or
such portions of it as all parties may agree upon
or the bankruptcy judge deems sufficient, unless
the district judge otherwise directs.

(c) Extension of time

The bankruptcy judge may for cause extend the
time for filing objections by any party for a
period not to exceed 20 days from the expiration
of the time otherwise prescribed by this rule. A
request to extend the time for filing objections
must be made before the time for filing
objections has expired, except that a request
made no more than 20 days after the expiration of
the time for filing objections may be granted
upon a showing of excusable neglect.

(d) Standard of review

The district ‘judge shall make a de novo review
upon the record or, after additional evidence, of
any portion of the bankruptcy judge's findings of
fact or conclusions of law to which specific
written objection has been made in accordance
with this rule. The district judge may accept,
reject, or modify the proposed findings of fact
or conclusions of law, receive further evidence,
or recommit the matter to the bankruptcy Judge
with instructions.
(Emphasis ours)

The court entered a Decision and Order concluding that the
adversary proceeding was a non-core proceeding (Docket #155).
Furthermore, after the conclusion of the trial, the court concluded

that if PRHTA did not file within twenty days that it agree that

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1] the court enter a final judgment then, the court would understand
2)}that it would have to enter the proposed findings of fact and
3] conclusion of law under Federal Rule of Bankruptcy Procedure 9033.
4 This court concludes that because the matter is non-core, and
7 because PRHTA did not file a motion stating that they did agreed to
6 the entry of a final judgment within the time frame provided, then
’ fthis court must refer the Decision and Order as proposed findings
of fact and conclusions of law for the district court to review and
10 enter a final judgment.

1 CONCLUSION

2 In view of the foregoing, the court hereby orders the Clerk of
1S the Bankruptcy Court to refer the Decision and Order entered by the
i Honorable Gerardo A. Carlo on August 31, 2009 (Docket #373) to the
7 U.S. District Court for the District of Puerto Rico as proposed
7 findings of fact and conclusions of law and for entry of a final
18 judgment. The Clerk shall also forward the order entered by this
19 court on September 10, 2009 (Docket #383).
20 SO ORDERED. YA
21 San Juan, Puerto Rico, this LO Gay of December 2009.

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