110 F.4th 54
1st Cir.2024Background
- In 2006, Banco Popular de Puerto Rico filed a Chapter 11 involuntary bankruptcy petition against Edgar Reyes-Colón, which was eventually dismissed for failure to join enough creditors.
- After dismissal and affirmation by the First Circuit, Reyes-Colón sought attorney’s fees and costs under 11 U.S.C. § 303(i)(1) nearly a year after the mandate issued.
- The bankruptcy court denied the fee motion for lack of jurisdiction; the district court affirmed, reasoning that post-dismissal jurisdiction required an explicit retention statement, and also found the fee request untimely under local rules.
- Separately, Reyes-Colón initiated an adversary proceeding alleging Banco Popular acted in bad faith under § 303(i)(2), seeking damages and a jury trial; he filed a motion for withdrawal of reference for the district court to handle the claim.
- The district court denied this motion as untimely and dismissed the adversary proceeding with prejudice, conflating the timeliness of withdrawal with the underlying fee motion and jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bankruptcy court’s jurisdiction over § 303(i) fee motion after dismissal | Bankruptcy court retains jurisdiction post-dismissal for § 303(i) motions. | Court needed to expressly retain jurisdiction to rule on § 303(i) after dismissal. | Bankruptcy court retains post-dismissal jurisdiction over § 303(i) fee motions. |
| Timeliness of Reyes-Colón's § 303(i)(1) fee motion | Local rules don't apply; no set deadline for § 303(i)(1) motions. | Local rules set a 14-day post-mandate deadline for fee requests. | Fee motion was untimely; affirmed dismissal on this ground. |
| Timeliness of motion for withdrawal of reference | Timeliness should run from filing of adversary complaint, not original dismissal. | Timeliness should be measured from the date of original petition dismissal. | Motion for withdrawal was timely; district court's denial vacated. |
| Dismissal with prejudice of adversary proceeding | Adversary proceeding should not be dismissed solely due to withdrawal motion issues. | Supported dismissal based on untimeliness of withdrawal motion. | Dismissal was error; remedy is remand for further withdrawal analysis. |
Key Cases Cited
- In re Reyes-Colón, 922 F.3d 13 (1st Cir. 2019) (affirmed the bankruptcy court’s dismissal of the involuntary petition for lack of sufficient creditors)
- Gupta v. Quincy Med. Ctr., 858 F.3d 657 (1st Cir. 2017) (discussed the scope of bankruptcy court jurisdiction)
- In re Montreal, Me. & Atl. Ry., Ltd., 956 F.3d 1 (1st Cir. 2020) (outlined standards for bankruptcy appellate review)