UNITED STATES BANKRUPTCY COURT DISTRICT OF PUERTO RICO

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1 UNITED STATES BANKRUPTCY COURT DISTRICT OF PUERTO RICO IN RE: ROBERTO SEBELÉN MEDINA BETSIE MARIE CORUJO MARTÍNEZ Debtors CASE NO Chapter 11 ROBERTO SEBELÉN MEDINA BETSIE MARIE CORUJO MARTÍNEZ Plaintiffs v. BANCO POPULAR DE PUERTO RICO ADSUAR MUÑIZ GOYCO SEDA & PEREZ-OCHOA, P.S.C., Adv. Proc No. Turnover of Property; Determination of validity, priority or extent of lien or other interest in property and Damages Defendants CO M P L A I N T NOW COME Roberto Sebelén Medina and Betsie Marie Corujo Martínez, Debtors in Possession, through the undersigned counsels and show and pray as follows: JURISDICTION AND VENUE 1. This is an action under 11 U.S.C. sec. 542 for turnover of property of the estate which Debtor in possession may use, sell or lease under 11 U.S.C. sec. 363 for the benefit of the Estate; sec.544 for recovery of damages arising of breach of 1

2 contract and torts under 31 LPRA sec and the determination of the validity, priority or extent of lien or other interest in property. 2. The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. sec and 157(b)(2)(A)(B)(E)(K) and (O) and the General Referral Order of the United States District Court for the District of Puerto Rico, dated July 19, Venue in this district is based on 28 U.S.C sec and sec The action is brought within the Reorganization Proceeding Case No , before the same district. Debtor s domicile, principal place of business and assets have been located within the district for more than 180 days. 4. This Adversary Proceeding is initiated under Rule 7001 of the Bankruptcy Rules of Procedure and is a core proceeding pursuant to 28 U.S.C. sec PARTIES 5. Roberto Sebelén Medina and Betsie Marie Corujo Martínez ( debtors ) are individuals, debtors in possession in Case No and residents of San Juan, Puerto Rico. 6. Banco Popular de Puerto Rico, ( BPPR ) is a state bank, duly registered and authorized to operate as a financial institution in the Commonwealth of Puerto Rico. 7. Adsuar Muñiz Goyco Seda & Pérez-Ochoa, P.S.C. ( Adsuar-Muñiz ) is a Professional Services Corporation, duly registered and authorized to operate as a professional services corporation in Puerto Rico, with offices in San Juan, Puerto Rico. 8. Adsuar- Muñiz has represented BPPR before the local courts. 2

3 GENERAL ALLEGATIONS AND PROCEDURAL BACKGROUND 9. On February 10, 1999, WESTERNBANK PUERTO RICO, ( Westernbank ) and plaintiffs, executed a Financing Contract ( Contract A ). Loan number for BPPR. This loan consisted of: A. Loan for the amount of $845,000 guaranteed by three mortgage notes: Mortgage Note number 1 for $400,000 guaranteed by a mortgage executed through the Deed number 108 ( deed 108 ) of March 30, 1998 before Notary Public William M. Vidal Carvajal and Mortgage Note number 2 for $345,000, guaranteed through the Deed 49 of February 10, 1999 before the same Notary Public and over the following property: ---URBANA: Solar número 7 de la manzana 19 del Municipio de Carolina. Compuesto de 419 metros cuadrados con 88 centímetros de otro; en lindes, por el Norte en 14 metros con 63 centímetros de otro, con los solares número 12,17 y 18 de la manzana 19, por el Sur en 14 metros con 63 centímetros con La Calle La Cruz, por el Este en 28 metros con 70 centímetros, con el solar Número 6 de la misma manzana y por el Oeste con 28 metros con 70 centímetros con el solar número 8 de la misma manzana. ---Contiene una estructura de hormigón de cinco (5) plantas Finca número 6,428 inscrita al folio 163 del tomo 153 de Carolina, Registro de la Propiedad de Carolina, Sección Segunda The Mortgage Note number 3 for $100,000 was guaranteed through the Deed Number 50 of February 10, 1999 before the same Notary Public over the following property: --- URBANA: Solar número 17 de la manzana 19 del plano del Municipio de Carolina compuesto de metros cuadrados en lindes por el Norte en

4 metros con la Calle Narciso Font y en 1.00 metros con el solar número 8 de la manzana 19; por el Sur en 6.60 metros con los solares 7,8 y en 2.70 metros con el solar 12 por el Este en metros con el solar número 18; por el Oeste en metros con el solar número 16 y 3.36 metros con el solar número Finca número 32,215 inscrita al folio 233 vuelto del tomo 108 de Carolina, Registro de la Propiedad de Carolina Sección Segunda B. Mortgage Notes 1, 2 and 3 were pledged through a Pledge Contract ( Contract B ) in favor of Westernbank. C. On February 10, 1999 plaintiffs executed an Operational Promissory Note in the amount of $845,000. With a maturity date of February 10, On March 1, 2005 Westernbank and plaintiffs, executed a Contract of insallments Loan ( Contract C ). Loan number of BPPR. This loan consisted of: A. Loan for the amount of $100,000 guaranteed by an Agreement of Mobility Lien ( Contract D ) executed on March 1, B. On that same date plaintiffs executed an Operational Note in the amount of $100, On August 28, 2007 Westerbank and the plaintiffs executed a Line of Credit of an Interim Construction Loan, ( Contract E ), Loan number of BPPR. This loan consisted of: A. Interim construction financing in the amount of $4,000,000. B. On that same date the plaintiffs executed a Matrix Note in the amount of $4,000,000. C. Westernbank and plaintiffs executed an Agreement of Security Interest, ( Contract F ). 4

5 D. Plaintiffs pledged Mortgage Notes numbers 1, 2 and 3 according to said Agreement, and furnished those Notes to Westernbank. E. As an additional guaranty, plaintiffs also pledged the Mortgage Note number 4 in the amount of $2,240,000, executed on August 28, 2007; Mortgage note number 5 in the amount of $1,360,000, executed on July 23, 2007; Mortgage Note number 6 in the amount of $100,000, executed on July 24, 2007 and Mortgage Note number 7 in the amount of $44,000, executed on July 23, F. The mortgage notes numbers 4 and 5 are also guaranteed by mortgages executed through Deed number 545 ( Deed 545 ) of August 28, 2007 and Deed number 674 ( Deed 674 ) of July 24, 2007, before the Notary Public Juan Manuel Casanova Rivera over the following property: ---URBANA: Solar radicado en el Reparto Santa María del Barrio Monacillos de Rio Piedras, hoy capital de Puerto Rico, que se marca con el número cuarenta (40) en el plano de inscripción con una cabida superficial de cinco mil trescientos veintidós punto treinta y uno (5,322.31) metros cuadrados. En lindes por el SUROESTE, su frente, en forma de arco, en una distancia de veinticinco punto cero dos (25.02) metros con Calle Santa María; por el NORESTE, su fondo, en forma irregular y en una distancia de ciento once punto cincuenta y ocho (11.58) metros con Reparto Santa María Sección Segunda; por el SURESTE, su derecha entrando, en una distancia de ciento dos punto doce (102.12) metros con solar número treinta y ocho (38) hoy del Doctor Anibal Lugo; por el NOROESTE en una distancia de setenta y ocho (78.00) metros con el solar número cuarenta y nueve (49.00) hoy de Pedro Maldonado, separados por una acera o sendero Enclava una casa en concreto de una sola planta dedicada a vivienda Finca número 3,567 inscrita al folio 60 del tomo 99 de Monacillos, Registro de la Propiedad de Puerto Rico, Sección Tercera de San Juan G. Mortgage note 6 is guaranteed by a mortgage executed through Deed number 449 of July 24, 2007 before Notary Public Juan Manuel Casanova, and Mortgage Note 7 is guaranteed by a mortgage executed through Deed 675 of 5

6 July 23, 2007 before Notary Public Juan C. Ortega Torres. Both mortgages were executed over piece of property 6,428 supra. H. In order to guarantee the obligations represented by the Matrix Note of $4,000,000 the plaintiffs executed and Assignment Contract ( Contract G ) on August 28, 2007, through which they assigned to Westernbank all the plans, permits, authorizations and construction contract obtained to build a residence at 93 Orquídea Street, Santa María, in San Juan, Puerto Rico. I. On September 30, 2009 the plaintiffs renewed Contract G, supra, through another Line of Credit of an Interim Construction Loan ( Contract H ). That same day the plaintiffs executed an Operational Promissory Note in the amount of $4,000,000. J. In order to further guaranty that obligation of $4,000,000 the plaintiffs executed on September 30, 2009 an Agreement of Security Interest ( Contract I ) to pledge Mortgage note 1 through 7. K. As additional guaranty the plaintiffs executed on September 30, 2009 an Assignment Agreement, ( Contract J ) through which they assigned to Westernbank all the plans, permits, authorizations and construction contract obtained to build a residence at 93 Orquidea Street, Santa María, in San Juan, Puerto Rico. 12. On October 3, 2008 the plaintiff executed a Promissory Note in the amount of $40,000, Loan number of BPPR ( Contract K ). In order to guaranty this obligation the plaintiffs pledged Mortgage Notes 1, 2 and 3 supra. 6

7 Afterwards, on February 26, 2010, a new note was executed with maturity date July 31, ( Contract L ). BREACH OF CONTRACT 13. On April 30, 2010 the Commissioner of Financial Institutions, ( CFI ) of the Commonwealth of Puerto Rico, closed Westernbank. Therefore, the CFI appointed the Federal Deposit Insurance Corporation ( FDIC ) as a trustee. 14. On April 30, 2010 BPPR executed a Purchase and Assumption Agreement with the Federal Deposit Insurance Corporation ( F.D.I.C. ) in order to purchase part of the commercial loans of Westernbank Puerto Rico. Allegedly, such purchase included the credit relations of plaintiffs. 15. BPPR never sent to the plaintiffs a document notifying that they became the holder and or the creditor or the contracts above. 16. On April 30, 2010 BPPR, as a result of the transaction with F.D.I.C., BPPR refused to make further disbursements from the Line of Credit of an Interim Construction Loan, supra; refused to pay the Construction Certification number 45 and stopped the construction project without any notice or explanation and against its contractual obligations with plaintiffs, (Annex 1). 17. On May 2, 2011 BPPR filed a Complaint against plaintiffs at the First Instance Court of Puerto Rico, San Juan Part, alleging that it was the holder in due course, by endorsement, of the notes and credit relations stated herein; that the plaintiffs had breached their contracts and that they had failed to pay the obligations referred to above, (Annex 2) All those pleadings were incorrect and false since 7

8 plaintiffs had complied with all the contractual terms and conditions and the corresponding payments of all credit relations. 18. BPPR also alleged that it had to accelerate the due date of said obligations since the plaintiffs failed to pay them according to the terms of the contracts. Notwithstanding BPPR pleadings, BPPR and /or Adsuar-Muñiz, have refused to show the original notes, showing their corresponding endorsements, and therefore, they have not showed so far their standing to sue, (Annex 3). 20. Contrary to BPPR allegations, the plaintiffs had complied with all their obligations according to the terms and conditions of the credit relations described herein and all the payments were up to date before the filing of the complaint by Banco Popular de Puerto Rico, (Annex 4). Therefore, it was BPPR who, in fact, willfully breached the contracts described before, since it refused to disburse from the construction credit line, then with a balance of about $400,000; stopped the construction project, refused to pay the Certification number 45 and illegally and wrongfully accelerated the maturity of the obligations. 21. Besides, contrary to the terms and conditions set forth by the loan agreements: and supra, between BPPR and the plaintiff; Banco Popular de Puerto Rico unilaterally changed and increased the interest rate, (Annex 5). 8

9 DETERMINATION OF VALIDITY, PRIORITY OR EXTENT OF A LIEN OR OTHER INTEREST IN PROPERTY 22. BPPR had no right to accelerate the due date or maturity of the credit relations of plaintiffs, but wrongfully accelerated them, and therefore, having breached the contracts between the parties, cannot enforce its security interest over the amounts loaned to plaintiffs. 23. The acceleration clauses, such as those included in the mortgage deeds referred to above are considered penal clauses, which cannot be exercised in absence of a breach of contract and no provisional remedy could be obtained under those circumstances. 24. BPPR cannot qualify as a secured creditor because the mortgages executed with Westernbank were illegally accelerated by BPPR and made unenforceable, and therefore its secured interests over the credit relations are hereby disputed. 25. BPPR claims against the estate should then be treated as unsecured as a consequence of BPPR breach of contract through the illegal and predatory use of the acceleration clauses. TURNOVER OF PROPERTY 26. The credit relations between the parties were not only up to date when BPPR filed the Complaint for collection of monies and foreclosure, but plaintiffs continued to make payments after the filing of the complaint for over $40,000, which BPPR decided to accept and illegally retain notwithstanding the fact that it had accelerated the due date or maturity of all the credit relations with plaintiffs, (Annex 9

10 4, supra). BPPR could not accelerate all the credit relations and mortgages, and simultaneously accept and retain the contractual partial payments, against the legal doctrine of estoppel. 27. Moreover, BPPR continued to add interests, charges and penalties against the debts, even when it illegally accelerated the due date or maturity of the credit relations with plaintiffs. 28. All the payments made by plaintiffs after the date that BPPR breached its contracts with plaintiffs should be turnover to the estate. The interests, charges and penalties illegally added to the debts should be turnover as well. 29. All interests, charges and penalties add against the debts by BPPR should also be turnover to the estate. DAMAGES 30. BPPR breach of contract provoked the interruption of the construction project undertaken by plaintiffs at 93 Orquidea, Santa María. The plaintiffs lost the opportunity of selling the residence and earn a profit of around $500, As a result of the project detention and defendants fraudulent, negligent and willful acts, the plaintiff s property has depreciated in value more than $830, As a result of the improper, illegal and fraudulent filing of a Complaint in the First Instance Court, San Juan Part, plaintiffs had to retain a group of professionals to support and defend their position in Court, and had to abstain from work, generate income or get involved in other enterprises for over four years, except supporting the defense of said Complaint, losing economic damages for over 10

11 $1,500,000. Defendants acts, significantly reduced plaintiffs capacity to do business. 33. With or without the consent of BPPR, Adsuar-Muñiz, willfully and wantonly decided to file a fraudulent Complaint of collection of monies and foreclosure against the plaintiffs herein, knowing that the plaintiffs had complied with all their contractual obligations; had paid all the amounts loaned to them and were up to date in their payments with respect to all the credit relations referred herein. Besides, BPPR not only did not comply with its contractual obligations but also, did not comply with its own rules, by-laws and manuals of credit and operation. Besides, BPPR acted against the terms and conditions of the Purchase and Assumption Agreement, because it discriminated against former clients of Westernbank such as plaintiffs. 34. With or without the consent of BPPR, Adsuar-Muñiz obtained by deceit and fraud a provisional remedy from the First Instance Court, Part of San Juan, in order to arrest all the rents earned by plaintiffs over three pieces of land, two of which are referred to and described above and the other, which is not mortgaged in favor of BPPR. Those properties were rented to the Municipality of Carolina for it to operate a shelter for homeless people. 35. Adsuar-Muñiz knew not only that the pleadings of the Complaint were false, but that one of the pieces of land operated under the lease with the Municipality of Carolina was not mortgaged in its favor. Nonetheless, notwithstanding that knowledge, it deceitfully obtained an order from the Court without: a) complying with Rules 56 and 57 of the Rules of Civil Procedure of Puerto Rico, b) without a 11

12 hearing and c) without posting a bond as required; and arrested all the rents related to the lease contract, against the due process of law. 36. As a result of the deceitful, willful and wanton behavior of BPPR and its law firm Adsuar-Muñiz, plaintiffs had no choice but filing a petition for bankruptcy since the rents connected with the lease contract with the Municipality of Carolina generated more than 60% of their income and could not even sustain their legal defense. 37. BPPR and its attorneys Adsuar-Muñiz acted in bad faith, with negligence, default and deceit upon filing a fraudulent complaint and illegally arresting the rents pertaining to plaintiffs. 38. The estate is also subject to compensation for damages caused by BPPR breach of contract. 39. The estate is also subject to compensation for the damages caused by BPPR and Adsuar-Muñiz. 40. Other foreseeable consequence of defendants tortious acts was that the plaintiffs fell into a severe depression. They have been subject to mental anguish, intimidation, fear, insecurity, loss of sleep and intimacy, and growing feeling of frustration and worries concerning their reputation and self-esteem. 41. Defendants fraudulently performed their functions willfully and negligently, to the detriment of the plaintiffs-debtors, they breached their obligations, causing damages of no less than $5,000,

13 42. Defendants acts have caused significant damages to plaintiffs, which are compensable under Article 1802 of the Puerto Rico Civil Code, 31 L.P.R.A. sec As a result of their tortious acts, the defendants have caused serious economic damages to plaintiffs in an amount estimated as no less than $2,830,000, including property depreciation, loss of income and capacity to do business and loss of commercial opportunity. 44. The defendants acts have forced plaintiffs to incur in attorney s fees and other litigation expenses amounting to more than $300, In addition, defendants temerity obligates them to pay interest on the amounts owed, as of the date of the filing of the complaint at the First Instance Court, San Juan Part. WHEREFORE, based on the foregoing, plaintiffs respectfully pray that judgment be entered for plaintiffs against defendants, jointly and severally, finding that: A. The defendants be ordered to jointly pay to plaintiffs the amount estimated at no less than $5,000,000 for their tortious, fraudulent, and/or negligent acts. B. The defendant BPPR be ordered to turnover property of the estate as related in paragraphs 26 to 29. C. The defendant, BPPR claims against plaintiffs be considered and treated as unsecured. 13

14 D. The defendants be ordered to pay in addition to the above referred amounts, plaintiffs costs, attorney s fees, and disbursements in the action filed at the First Instance Court and in this action and; E. Grant plaintiffs such further reliefs as is just and fair. In San Juan, Puerto Rico this 11th day of August, S/ Manuel J. Pérez García, Esq. USDC-PR Ciudad Jardín de Bairoa 165 La Coruña Street Caguas, Puerto Rico (787) manueljperezpr@aol.com S/ Marcos Morales Sbert, Esq. USDC-PR Edificio Asociación de Maestros 452 Ave. Ponce de León, Suite 514 San Juan, PR Tel: (787) mgm@moralessbert.com 14

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO OPINION AND ORDER

Condado 3 CFL, LLC v. Bravo-Garcia et al Doc. 35 CONDADO 3 CFL, LLC, Plaintiff, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO v. BENJAMÍN BRAVO GARCÍA, et al. CIVIL NO.: 17-1001 (MEL)