Perez Mujica v. FirstBank Puerto Rico (In Re Perez Mujica)
457 B.R. 177
Bankr. D.P.R.2011Background
- Debtor filed Chapter 13 bankruptcy on Sept 12, 2009; 341 meeting completed by Dec 4, 2009.
- Debtor co-owns a residence in Rio Grande, Puerto Rico, with 50% interest; title not registered due to tracto/chain defects.
- FirstBank Puerto Rico held a prepetition mortgage (note and deed) originating with Pan American Financial Corp., though the mortgage was not recorded at the petition date.
- Debtor challenged FirstBank’s secured status on two grounds: (a) defective tracto and failure of Article 57 to allow lien; (b) lack of timely registration under Article 188 of the Mortgage Law.
- FirstBank argued for post-petition perfection under 11 U.S.C. §362(b)(3) and §546(b)(1)(A) and for a relation-back mechanism under Article 53 of the Mortgage Law.
- The court granted Debtor’s motion for summary judgment, finding FirstBank failed to perfect under §362(b)(3) and §546(b)(1)(A) due to a missing tracto in the title history, rendering its lien unsecured.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §362(b)(3) permits post-petition perfection of a prepetition mortgage lien. | Perez Mujica argues no perfection due to missing tracto; lien cannot relate back. | FirstBank contends §362(b)(3) and §546(b)(1)(A) allow post-petition perfection and relation-back. | Not met; creditor failed to perfect due to missing tracto; lien unsecured. |
| Whether Puerto Rico Mortgage Law Article 53/related provisions allow relation-back to the date of presentation. | Debtor argues lien cannot relate back because registry chain is broken. | FirstBank argues relation-back mechanism ensures effectiveness prior to petition. | Relation-back not established due to interrupted tract history; lien not perfected. |
| Whether FirstBank had a prepetition property interest and could perfect during bankruptcy. | Prepetition interest exists only if chain of title is intact; here it is defective. | Prepetition interest exists; can be perfected post-petition under state law. | Prepetition interest acknowledged but blocked by defective tract history; no perfection. |
Key Cases Cited
- In re Soto Rios, 420 B.R. 57 (Bankr.D.P.R. 2009) (Bankr.D.P.R. 2009) (analyzed prepetition interests and postpetition perfection under §362(b)(3))
- In re 229 Main St., 262 F.3d 1 (1st Cir. 2001) (1st Cir. 2001) (section 362(b)(3) permits perfection if prepetition interest exists and state law allows perfection)
- Soto Rios v. Banco Popular (In re Soto Rios), 420 B.R. 57 (Bankr.D.P.R. 2009) (Bankr.D.P.R. 2009) (discusses prepetition interests and timing of perfection under Puerto Rico law)
- Parr Meadows Racing Ass’n v. Lincoln Sav. Bank, FSB, 880 F.2d 1540 (2d Cir. 1989) (2d Cir. 1989) (preemption and timing principles for perfection under state law)