Scotiabank Puerto Rico v. Morales-Otero, 3:17-cv-01816

Debtors Sara Morales-Otero and Juan B. Sánchez Marrero filed Chapter 11 bankruptcy; Scotiabank filed Proof of Claim #10 asserting a $65,073.39 mortgage claim.
Scotiabank’s claim package mistakenly included a promissory note from a different loan; other documents (deed, title search, certification) named R&G as the interest owner, not Scotiabank.
The only document linking Debtors and Scotiabank was a payoff letter listing Scotiabank as servicer for $65,073.39.
Debtors objected, arguing the proof of claim lacked evidence that Scotiabank held the note or beneficial mortgage interest; the bankruptcy court sustained the objection and disallowed the claim.
Scotiabank moved for reconsideration, submitted the correct promissory note, and explained the prior filing error; the bankruptcy court denied the motion as untimely and lacking exceptional circumstances.
The district court reviewed the appeal, applying de novo review to legal conclusions, clearly erroneous to factual findings, and abuse-of-discretion to the reconsideration denial, and affirmed the bankruptcy court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Proof of Claim #10 was enforceable against Debtors	Debtors: claim lacked proof Scotiabank held the note or mortgage interest	Scotiabank: supporting documents plus payoff letter established its claim/servicing role	Court: Proof of Claim unenforceable; supporting docs did not show Scotiabank held the interest or that debt was owed to it
Whether denial of motion for reconsideration was an abuse of discretion	Scotiabank: denial improper because mistake was inadvertent and correct note was later produced	Debtors: Scotiabank had opportunities to detect/correct error and offered no developed argument of exceptional circumstances	Court: No abuse of discretion; Rule 60(b) applies, Scotiabank failed to show exceptional circumstances or absence of prejudice

In re Vazquez, 471 B.R. 752 (B.A.P. 1st Cir. 2012) (standards of review for bankruptcy appeals)
United States v. Zannino, 895 F.2d 1 (1st Cir. 1990) (arguments not developed are deemed waived)
In re Rodriguez Gonzalez, 396 B.R. 790 (B.A.P. 1st Cir. 2008) (Rule 60(b) standards in bankruptcy)
In re Nivea, 470 B.R. 251 (Bankr. D.P.R. 2012) (treatment of motions for reconsideration under Rules 59 and 60)
Perry v. Warner (In re Warner), 247 B.R. 24 (1st Cir. BAP 2000) (abuse of discretion framework)
Indep. Oil & Chem. Workers of Quincy, Inc. v. Procter & Gamble Mfg. Co., 864 F.2d 927 (1st Cir. 1988) (definition of abuse of discretion)