IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF PUERTO RICO

IN RE: CASE NO. 20-02193 ESL

CLODOALDO QUEIPO NAVARRO, CHAPTER 7

Debtor.

OPPOSITION TO REOPENING OF CASE

TO THE HONORABLE COURT:

Palo Alto Consulting, LLC and Oreste Ramos Díaz, who were served with Debtor’s Motion

to Reopen the administration of this closed Chapter 7 case, and through their undersigned counsel

respectfully submit their response on the following grounds:

Procedural Background

Debtor has moved to reopen—with the ensuing administrative consequences it would

carry1—the above-captioned bankruptcy Chapter 7 case. [Doc. No. 19]. Debtor filed his Petition

on June 8, 2020, and on September 9, 2020 the Trustee was discharged and the case was closed. In

this bankruptcy, the Trustee did not distribute any assets to creditors.

The stated purpose given to reopen the case is to enable Debtor to file an Amended Schedule

E/F. As the reason or justification for seeking such reopening is that after the Discharge Order was

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Often overlooked in the cases which discuss the relative equities affecting the debtor and the creditor is the sheer
administrative burden that re-opening cases places on the court. The clerk of the court must put the case back on to
the court's computerized docketing system, a trustee must be appointed, and a “tickler” must be set up to make sure
the case is again closed (especially in those cases in which a trustee is not appointed, as provided in Bankruptcy Rule
5010). The court must of course handle the paperwork as well, a consideration that in one case is not significant, but
which becomes more important against the backdrop of over 6,500 pending cases. If there is no reason under the Code
or the rules to entertain such motions, the machinery of the court should not be set into motion simply to make the
debtor (or, more likely, the debtor's lawyer) feel better.

In re Musgraves, 129 B.R. 119, 120, 5 Tex. Bankr. Ct. Rep. 373, 1991 WL 126343 (Bankr. W.D. Tex. 1991)
entered, Debtor informed counsel of the existence of a post-petition complaint filed against him.

The nature of the complaint that was filed against the Debtor and the potential judgment that he is

interested in avoiding is simply described as a “tort for alleged negligent actions which occurred

during year 2019.” Debtor offers no other description of the action, nor does he attempt to excuse

his delay in acting to protect his interests or to otherwise excuse his negligence.

Aside from just stating the date on which the case was filed and the date it was closed, and

the interest in filing an amended Schedule E/F, Debtor makes no showing as to whether a non-

bankruptcy forum, such as the Puerto Rico Court of First Instance, has the ability to determine the

issue sought to be posed by the Debtor; whether prior litigation in bankruptcy court implicitly

determined that the state court would be the appropriate forum to determine the rights, post-

bankruptcy, of the parties; whether any parties would be prejudiced were the case reopened or

not reopened; the extent of the benefit which Debtor seeks to achieve by reopening; and whether it

is clear at the outset that Debtor would not be entitled to any relief after the case were reopened.

All of these are factors that the Court would need to analyze, as explained below.

The action which debtor seeks to avoid is a civil action before the Court of First Instance,

San Juan Part, Civil No. SJ2020CV03281 filed solely against Clodoaldo Queipo Navarro for

damages caused due to water leakage flowing from Mr. Queipo’s residence. The damages to the

apartment directly below Mr. Queipo’s property—belonging to co-plaintiff in such action, Palo

Alto Consulting—are calculated to be less than $10,000.00. There is an injunctive component in

the lawsuit to order Mr. Queipo to allow workers inside his property for any necessary repairs and

there is an action by Oreste Ramos for the moral damages and mental anguish suffered during the

course of time that his efforts have lasted in order to have his residence repaired and the common

elements of the condominium inspected, evaluated and repaired. An in-house counsel of Universal

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Insurance Company has appeared in the action and is contesting Queipo’s liability to Plaintiffs.

There is pending discovery to inspect the structure of the floor and ceiling between the apartments

to determine whether there is any structural damage for which Defendant Queipo (or his insurer)

would be liable to the Condominium proper as it is the Condominium Owners Council the entity

responsible for maintenance and repair of such ceiling/floor, as it is a common element of the

condominium.

Mr. Queipo was served with process on July 10, 2020 after numerous attempts to serve him

at home. On September 4, 2020 Mr. Queipo answered the Complaint and presented 17 discrete

“Affirmative Defenses”. Notably, the Court of First Instance, unsatisfied by Defendant’s not

meeting the specificity requirements of Rules 6.2 and 6.3 of the Puerto Rico Rules of Civil

Procedure, at Plaintiff’s request ordered Queipo to amend his Answer to meet such requirements.

On September 22, Defendant Queipo filed an Amended Answer to the Complaint reducing his

“Affirmative Defenses” to 13. The cut-off date for discovery is December 18 and there is a Pre-

Trial/Settlement Conference slated for February 4, 2021.

Legal standard

A bankruptcy case may be reopened to administer assets, accord relief to the debtor, or for

other cause. 11 U.S.C. § 350(b). The power afforded to the court to reopen a case is great and the

bankruptcy court has broad discretion, reviewable only for abuse. In re Crocker, 362 B.R. 49, 53,

2007 WL 93223 (B.A.P. 1st Cir. 2007). Poncebank v. Memorial Products Co., Inc. (In re Memorial

Products Co., Inc.) 212 B.R. 178, 181 (1st Cir. BAP 1997). As the moving party, the debtor has the

burden of demonstrating the grounds for reopening his case. In re Crocker, supra.

Rule 1009(a) expressly permits a debtor to amend the schedules “as a matter of course at

any time before the case is closed,” F.R.Bankr.P. 1009(a)2 but it specifies no standard for

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amendment after the case is closed. The relevant standard is supplied by Rule 9006(b)(1)3 subject

to exceptions not applicable here, when the bankruptcy rules require that an act be done, or permit

it to be done, within a specified period and the movant moves to enlarge the period only after it

expires, “the court for cause shown may at any time in its discretion ... permit the act to be done

where the failure to act was the result of excusable neglect.” F.R.Bankr.P. 9006(b)(1). A debtor

seeking to schedule a creditor after the case is closed bears the burden of establishing (1) that failure

to amend the list of creditors and the schedule of liabilities before the close of the case—that is,

within the time permitted by Rule 1009(a)—was the result of excusable neglect and (2) that cause

exists to schedule the creditor. The determination of what circumstances constitute cause to amend

is entrusted to the sound discretion of the bankruptcy judge. F.R.Bankr.P. 9006(b)(1) (“the court ...

may ... in its discretion ... permit the act to be done”. In re Redondo Constr. Corp., No. 02-02887

(ESL), 2019 WL 1549726, at *9 (Bankr. D.P.R. Apr. 8, 2019), reconsideration denied, No. 02-

02887 ESL, 2019 WL 6130938 (Bankr. D.P.R. Nov. 18, 2019)

In a closed no-asset Chapter 7 case, reopening has been likened to an exercise in futility.

See In re Moretti, 260 B.R. 602, 2001 WL 357373 (B.A.P. 1st Cir. 2001) (holding that the denial

of debtor's motion to amend schedules to add creditors after no-asset Chapter 7 case had closed was

not abuse of bankruptcy court's discretion.) There are other ways to litigate dischargeability after a

case is closed, one of them being in state court where the matter being defended by Debtor’s

insurance company is pending. Queipo is evidently insolvent and judgment-proof and the only

possible recourse will come from insurance proceeds which Plaintiffs need to pursue in the state

court action. Palo Alto and Oreste Ramos do not seek redress from Queipo for any debt for which

he has been discharged. The ‘fresh start’ of Chapter 7 is intended to apply only to debtors and is

not intended to provide a mechanism for insurers to escape liability. In re Farley, 194 B.R. 553,

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555 (Bankr.S.D.N.Y.1996). See also, Houston v. Edgeworth (In re Edgeworth), 993 F.2d 51 (5th

Cir.1993), (holding that 11 USCA § 524 does not preclude tort plaintiffs from pursuing state court

claims against the debtor as a nominal defendant in order to establish the insurance carrier's liability

on the claim as a “discharge in bankruptcy does not extinguish the debt itself, but merely releases

the debtor from personal liability for the debt”).

WHEREFORE, in light of the equities before the court, it is respectfully requested that

Debtor’s Motion to Reopen be denied.

RESPECTFULLY SUBMITTED.

In San Juan, Puerto Rico, this 5th day of October 2020.

WE HEREBY CERTIFY that on this same date, we electronically filed the foregoing that

on this same date, I electronically filed the present Opposition to Motion to Reopen Case with the

Clerk of the Court using the CM/ECF System which will send notification to: Monsita Lecaroz

Arribas, ustpregion21.hr.ecf@usdoj.gov and Roberto Román Valentín, romanch7@gmail.com and

to Debtor’s counsel, Nilda M. González-Cordero, ngonzalezc@ngclawpr.com.

DEL TORO & SANTANA

Attorneys for PALO ALTO CONSULTING, LLC
and ORESTE RAMOS DIAZ
Plaza 273, Suite 900
273 Ponce de León Avenue
San Juan, Puerto Rico 00917
Tel. (787) 754-8700

s/ Osvaldo H. Puig Hernández

OSVALDO H. PUIG HERNÁNDEZ
E-mail: opuig@dtslaw.com
USDC-PR 207207

s/ Roberto Santana Aparicio

ROBERTO SANTANA APARICIO
E-mail: rsantana@dtslaw.com
USDC-PR 122811

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