MARRERO NARVAEZ et al v. DEL RIO REY

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
In re: :
:
JOSE MARRERO NARVAEZ, : Case No. 02-5917 (GAC)
MARIA HERNANDEZ RODRIGUEZ, :
:
Debtor : Chapter 13
___________________________________:
:
JOSE MARRERO NARVAEZ, :
MARIA HERNANDEZ RODRIGUEZ, :
:
:
Plaintiff, :
:
v. : Adv. No. 05-00039
:
FRANCISCO M. DEL RIO REY, :
:
Defendant :
___________________________________:
DECISION AND ORDER
BACKGROUND
The debtors filed this adversary proceeding seeking the turn
over of property and damages for breach of contract. The parties
filed cross-motions for summary judgment. For the reasons set
forth below, the debtors’ cross motion for summary judgment will be
granted, in part.
A commercial real property owned by the debtors was sold to
Francisco Del Rio Rey (“Del Rio”) during the bankruptcy proceeding
with the Court’s authorization. There were liens on the property
in favor of Banco Santander, IRS, CRIM and a third party.
Santander’s secured claim was paid through the sale. The lien in
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favor of the third party was inscribed post-petition and has been
cancelled pursuant to an adversary proceeding challenging the
validity of the lien (Adv. No. 04-259).
The sale incorporated the terms of a Sales Purchase Agreement
and indicated that the purchase price was $300,000. Del Rio made
a down payment of $5,600, which included a $1,600 payment to the
debtors and $4,000 to the Chapter 13 trustee. Thereafter, Del Rio
paid Banco Santander’s secured claim of $110,000 and $47,802.54 to
the Chapter 13 trustee. Del Rio was to make monthly payments of
$2,400. Del Rio made a payment of $13,800 to the debtors prior to
the conveyance deed and of the $2,400 in monthly payments, Del Rio
made payments of $33,000. Thus, the total amount paid was
$210,202.54 for a remaining balance of $89,797.46.
The purchase was to be free and clear of all liens and the
parties agreed in the Sales Purchase Agreement that funds would be
escrowed for the payment of debts to the IRS and CRIM. Del Rio
retained in escrow $12,935.67, for a debt owed by the debtors to
the IRS and $23,800.27, for a debt owed by the debtors to CRIM, for
a total of $36,735.94. The Sales Purchase Agreement referenced
this federal attachment in the amount of $12,935.67 and unpaid
property taxes in the amount of $23,800.27. The Purchase and Sale
Option Agreement and the Sales Purchase Agreement also specifically
provided that sellers would be held liable for any debt for which
the real property was liable. Del Rio was authorized by these
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agreements to pay any other balance for any other debt in existence
on the property, object of the purchase-sale.
The actual certifications obtained from CRIM and the IRS are
in the amounts $23,800.27 and $26,380.23, respectively. The
evidence clearly demonstrates that the debtors agreed to the
payment of these sums, although now they argue that they only
agreed to the amount of $12,935.67 to the IRS, which was the amount
escrowed for the IRS. The official checks from Banco Popular,
dated February 25, 2004, show that CRIM was paid the amount of
$24,588 and the IRS was paid the sum of $26,380.23. Likewise, the
tax certification from the IRS shows that on March 9, 2004, the IRS
received a check totaling $26,380.23 to fully pay the balance owed
by the debtors to the IRS for the release of the tax lien.
Thus, the Court concludes that Del Rio owed the remaining
balance of $89,797.46, less the authorized payment of the debts to
CRIM and the IRS, $24,588 and $26,380.23, respectively, for a total
remaining balance of $38,829.23. The Court further concludes that
Del Rio breached the agreement by failing to pay the $38,829.23.
Final payment was due in November of 2006. Accordingly, the
debtors will be awarded $38,829.23, plus legal interest since the
default on May 8, 2004.
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ORDER
WHEREFORE IT IS ORDERED that the debtors’ opposition to the
defendant’s motion for summary judgment and the debtors’ cross-
motion for summary judgment is granted, in part. The defendant,
Francisco M. Del Rio Rey, is liable to the debtors for the amount
of $38,829.23, plus legal interest since his default on May 8,
2004, for his breach of contract.
SO ORDERED.
San Juan, Puerto Rico, this 13th day of November, 2008.
BY THE COURT:
s/ Gerardo A. Carlo
_______________________
GERARDO A. CARLO
U.S. Bankruptcy Judge
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