Wiscovitch-Rentas v. Plastic Piping Products of PR, No. 3:2008cv01736 - Document 17 (D.P.R. 2009)

Court Description: OPINION AND ORDER affirming the Bankruptcy Court's Decision and Order of June 2nd, 2008. Signed by Judge Gustavo A. Gelpi on 2/11/2009.(RS)

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1 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO 2 3 NOREEN WISCOVITCH-RENTAS, 4 Appellant, 5 6 7 v. PLASTIC PIPING PRODUCTS OF PUERTO RICO, INC., 9 OPINION AND ORDER 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Bankruptcy No. 04-04781 (GAC) Appellee. 8 11 Civil No. 08-1736 (GAG) Debtor Maxon Engineering Services, Inc. filed a voluntary petition under Chapter 11 on May 4, 2004. The debtor filed schedules on May 24, 2004 and disclosed payments made within ninety days of the filing of the petitions (Bankruptcy No. 04-04781, Docket No. 40 at 114-35). The case was converted to Chapter 7 on June 13, 2006 and Noreen Wiscovitch-Rentas was appointed interim trustee on June 14, 2006. On June 11, 2007, the Chapter 7 trustee filed various adversary proceedings for recovery of preferential payments made to several defendants on account of prepetitions debts. The defendants were primarily suppliers to the debtor corporation. All the defendants, among them Appellee Plastic Piping Products of Puerto Rico, Inc., moved to dismiss the complaints claiming that they were time-barred. The trustee opposed the motions to dismiss contending that the statute of limitations had been equitably tolled given that the debtor prolonged the Chapter 11 case until the limitations period expired in order to prevent the trustee from exercising her avoidance powers and suing insiders. The bankruptcy court granted the motions to dismiss finding that there was no equitable tolling of the statute of limitations and that, henceforth, the actions were time-barred. For the reasons set forth below, the court AFFIRMS the judgment of the Bankruptcy Court. I. Jurisdiction This is an appeal of the Decision and Order by the United States Bankruptcy Court for the District of Puerto Rico on June 2, 2008 in Bankruptcy Case No. 04-04781 (GAC). The Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. § 1334, which confers jurisdiction on this court as to Civil No. 08-1736 (GAG) 2 1 all matters arising under 11 U.S.C. §§ 101 et seq., and pursuant to this court s resolution dated July 2 19, 1984, which, in turn, refers all Title 11 matters to the United States Bankruptcy Court for the 3 District of Puerto Rico. This court has appellate jurisdiction pursuant to 28 U.S.C. § 158(a)(1). 4 II. Standard of Review 5 Appellate courts reviewing a bankruptcy appeal generally apply the clearly erroneous 6 standard to findings of fact and de novo review to conclusions of law. TI Fed. Credit Union v. 7 DelBonis, 72 F.3d 921, 928 (1st Cir. 1995); In re Savage Indus., Inc., 43 F.3d 714, 719-20 n.8 (1st 8 Cir. 1994). Where the issue on appeal is essentially one of statutory interpretation, appellate courts 9 review the issue de novo. In re San Miguel Sandoval, 327 B.R. 493, 506 (1st Cir. BAP 2005) (citing 10 Jeffrey v. Desmond, 70 F.3d 183, 185 (1st Cir. 1995)). In addition to the clearly erroneous and de 11 novo standards of review, [t]he appellate court in a bankruptcy appeal may apply an abuse of 12 discretion standard of review of a decision or action by a Bankruptcy Court when such decision is 13 within the discretion of the Bankruptcy Court. Id. (quoting 9E Am.Jur.2d Bankruptcy § 3512 14 (2004)). 15 IV. Discussion 16 After an extensive review of the appellant s and appellee s briefs, as well as the Decision and 17 Order by the Bankruptcy Court and independent research done by this court, the court finds that the 18 Bankruptcy Court s rationale in its Decision and Order was correct. Therefore, this court adopts the 19 well-reasoned opinion of the Bankruptcy Court. The Bankruptcy Court found that it would be 20 inequitable to allow the trustee to use the doctrine of equitable tolling to bring these actions against 21 general trade creditors for prepetition preferences, since these defendants played no role in the 22 alleged wrongful conduct perpetrated by the debtor s representative post-petition. In re Maxon 23 Engineering Services, Inc., 397 B.R. 228, 231 (Bankr.D.Puerto Rico 2008). Furthermore, this court 24 wants to emphasize that other courts have refused to equitably toll section 546(a) based upon a 25 case s conversion to chapter 7 after the limitation period as [sic] run on the ground that the estate s 26 creditors ought to ensure that a chapter 11 debtor in possession diligently pursues the estate s causes 27 of action prior to conversion. 5 Collier on Bankruptcy ¶ 546.02[3] (15th Ed. Rev. 2008) (citations 28 omitted). Civil No. 08-1736 (GAG) 1 2 3 V. 3 Conclusion For the aforementioned reasons, the judgment of the Bankruptcy Court is hereby AFFIRMED. 4 SO ORDERED. 5 In San Juan, Puerto Rico this 11th day of February 2009. 6 S/Gustavo A. Gelpí 7 GUSTAVO A. GELPI United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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