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Part IX General Provisions

Monge v. Rojas, et al. (September 25, 2014)
Issues: Individual Debtors (as Plaintiffs), brought adversary proceeding against multiple Defendants. All secondary Defendants settled prior to and during trial; only primary Defendants remained. Most of Plaintiffs’ claims against remaining Defendants and Defendants’ counterclaims against Plaintiffs were based exclusively on state law causes of action, and some claims and counterclaims were based on the Bankruptcy Code. Prior to trial, all remaining parties consented to entry of a final judgment by the Bankruptcy Court. However, given the recent holdings of the Fifth Circuit regarding the constitutional authority of the Bankruptcy Court to enter a final judgment on state law claims even with consent of the parties, the Bankruptcy Court submitted 178 pages of Proposed Findings of Fact and Conclusions of Law to the District Court for review under 28 U.S.C. §157(c)(2) and Bankruptcy Rule 9033. Following review, the District Court largely adopted the Bankruptcy Court’s proposed findings and conclusions, and entered final judgment for Plaintiffs.
The disputes centered around four different residential properties and commercial property developments located in the States of New Mexico and Texas. In general, Plaintiffs sought turnover of and declaratory relief regarding certain real property in the possession of Defendants, and actual and exemplary damages based on breach of contract, fraud, breach of fiduciary duty, negligence, gross negligence, the Texas Deceptive Trade Practices Act, equitable theories under state law, and violation of the automatic stay. In general, the remaining Defendants asserted counterclaims and affirmative defenses based on the Texas Property Code, breach of contract, equitable theories under state law, statute of limitations, and section 365(i) of the Bankruptcy Code. The Bankruptcy Court conducted a six-day trial on the merits, which featured over 15 witnesses and thousands of documents. Holdings: The Bankruptcy Court proposed (and the District Court adopted) a judgment in favor of Plaintiffs and against the remaining Defendants for turnover of possession of one of the real properties, and actual damages, attorneys fees, and pre-judgment interest totaling about $1 million. In general, the Bankruptcy Court’s proposed findings and conclusions (1) awarded damages to Plaintiffs based on breach of contract and violation of the automatic stay; (2) determined that Plaintiffs were entitled to possession and turnover of certain real property held by Defendants; (3) found that the Texas Property Code did not apply to real property located in the State of New Mexico; (4) found that section 365(i) of the Bankruptcy Code did not apply to a lease/option which expired by its terms prior to Plaintiffs’ bankruptcy filing; (5) found that several of Plaintiffs’ causes of action relating to some of the properties were barred by the statute of limitations; (6) determined that the fraud-based claims of Plaintiffs should be denied; and (7) found that some of the damages sought by both Plaintiffs and Defendants were speculative.
Smart-Fill Management Group, Inc. v. Froiland (July 6, 2018)  Issue: Creditor and Debtor agreed to a fixed-date deadline by which any objections to discharge under section 727 and dischargeability of debt under section 523 were required to be filed. The fixed-date deadline was then approved and established by an agreed order entered by the Court. The fixed-date deadline fell on a legal holiday—Martin Luther King Jr.’s birthday.  Creditor filed its Complaint objecting to discharge and dischargeability one day after the fixed-date deadline, and Debtor moved to dismiss the Complaint as time-barred. The Court addressed whether Bankruptcy Rule 9006(a) automatically extended the filing deadline by one day, since the deadline fell on a legal holiday. Holding: The Court held that Bankruptcy Rule 9006(a) does not extend a deadline for filing pleadings when the date is a legal holiday, if a fixed-date deadline has been set by order of a court. Bankruptcy Rule 9006(a) was amended in 2009 to clarify that an automatic extension of time is allowed only when the filing deadline must be computed in days (such as “no later than 60 days after”).  However, when a fixed-date deadline is set for filing pleadings (such as “until January 15, 2018”), no automatic extension of time is allowed under amended Bankruptcy Rule 9006(a). Here, since the filing deadline was a fixed date set by Court order, Bankruptcy Rule 9006(a) did not extend the deadline, even though the deadline fell on a legal holiday. As a result, the Court dismissed the Complaint filed by the Creditor as time-barred.