Scotiabank de Puerto Rico v. Burgos, 1st Cir. (2014)

7/26/2019 Scotiabank de Puerto Rico v. Burgos, 1st Cir. (2014)

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United States Court of AppealsFor the First Circuit

No. 12- 9005

I N RE: THE PLAZA RESORT AT PALMAS, I NC. ,

Debt or .

SCOTI ABANK DE PUERTO RI CO,

Pl ai nt i f f , Appel l ant ,

v.

J OSEPH BURGOS; GI LDA CRUZ; LETI CI A FLORES BERGANZO;NOREEN ORTI Z; ELI SELI NA ROSARI O; DAVI D NI ETO CARRERO;

LI SSETTE VARGAS VALLE; RAFAEL ALMODVAR;FRANCI SCO SI ERRA MNDEZ; MAR A RODR GUEZ DE SI ERRA;

CRUZ A. TORRES COLN; PAULI TA COLN FLORES; ERNESTO BRI TO;MARI GLORI A DEL VALLE; CLAUDI O MEDI NA; MAR A ROMERO,

Def endant s, Appel l ees.

APPEAL FROM THE BANKRUPTCY APPELLATE PANELFOR THE FI RST CI RCUI T

Bef or e

Tor r uel l a, Sel ya and Li pez,Ci r cui t J udges.

V ct or J . Qui ones, wi t h whomMorel l Bauz Car t agena & Dapena,was on br i ef f or appel l ant .

Ger ardo Pav a- Cabani l l as, wi t h whom Pav a & Lzar o, PSC, was

on br i ef f or appel l ees Er nest o Br i t o and Mar i gl or i a Del Val l e.

J anuar y 16, 2014


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TORRUELLA, Circuit Judge. The i ssue t o be deci ded i n

t hi s appeal i s whet her Def endant s/ Appel l ees Er nest o Br i t o and

Mar i gl or i a Del Val l e have a real pr oper t y i nt er est i n an apar t ment

t hat i s par t of a t i meshar e r eal est at e vent ur e under goi ng Chapt er

11 bankrupt cy proceedi ngs. At summar y j udgment , based on t he

Puer t o Ri co Ti meshare and Vacat i on Cl ub Act ( t he "Ti meshare Act " or

t he "Act " ) , P. R. Laws Ann. t i t . 31, 1251, et seq. , and t he sal e

cont r act bet ween Br i t o, Del Val l e, and t he devel oper of t he

t i meshar e vent ur e ( t he "Devel oper " ) , t he bankr upt cy cour t answer ed

t hat quest i on i n t he af f i r mat i ve. 1 The Bankr upt cy Appel l at e Panel

( "BAP") af f i r med. I n di sagr eement , Pl ai nt i f f / Appel l ant Scot i abank

de Puer t o Ri co asks us t o rever se the bankr upt cy cour t ' s hol di ng on

t he gr ound t hat t he r equi r ement s f or cr eat i ng r eal pr oper t y r i ght s

under t he Ti meshar e Act wer e al l egedl y never sat i sf i ed. Af t er

car ef ul l y revi ewi ng t he r ecor d and t he appl i cabl e l aw, we af f i r m.

I. Background

The chr onol ogy of event s l eadi ng up t o t hi s appeal has

been pr oper l y del i neat ed by t he cour t s bel ow. See I n r e Pl aza

Resor t at Pal mas, I nc. , 469 B. R. 398 ( B. A. P. 1st Ci r . 2012) ; I n r e

Pl aza Resor t at Pal mas, I nc. , Ch. 11 Case No. 09- 09980( SEK) , Adv.

No. 10- 00175 ( Bankr . D. P. R. May 4, 2011) . We t her ef ore by- pass al l

1 I n a subsequent opi ni on and order , t he bankr upt cy cour t ext endedi t s hol di ng t o al l ot her t i meshar e owner s si mi l ar l y si t uat ed. Ourhol di ng equal l y appl i es t o t hose t i meshar e owner s, al t hough we omi tf ur t her r ef er ence t o t hem f or t he sake of si mpl i ci t y.

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i nci dent al det ai l s and f ocus our f act ual nar r at i ve on t he

di sposi t i ve i ssues of t hi s appeal , r ef er enci ng onl y t hose f act s

t hat ar e pr oper l y document ed i n t he summar y j udgment r ecord.

The t i meshar e r egi me at t he cent er of t hi s l i t i gat i on was

const i t ut ed on J une 1, 2001, t hr ough a publ i c deed ent i t l ed

"Dedi cat i on of Ti meshare Regi me ( The Pl aza Resor t at Pal mas, A Ti me

Share Regi me) " ( t he "Deed") . Accordi ng t o t he Deed, t he t i meshar e

pr oper t y i s l ocat ed i n Humacao, Puer t o Ri co, and encompasses 25

apar t ment s " f or i ndependent use and occupancy" as vacat i on

r esi dences. The Deed al so del i neates t he t er ms and condi t i ons

gover ni ng t he t i meshar e r egi me as wel l as t he r i ght s and

obl i gat i ons of bot h t he Devel oper and pr ospect i ve t i meshar e owner s.

The Deed was dul y r ecor ded i n t he Puer t o Ri co Regi st r y of Pr oper t y.

Al so on J une 1, 2001, t he Devel oper gr ant ed t he Bank and

Tr ust of Puer t o Ri co a f i r st mor t gage ( t he "Mor t gage") over t he

t i meshare pr oper t y t o secur e payment on a l oan obt ai ned t o devel op

t he t i meshare r egi me. R- G Premi er Bank of Puer t o Ri co succeeded

t he Bank and Trust of Puer t o Ri co as t he mor t gagee. But t he FDI C

t ook over R- G, and Scot i abank became t he successor - i n- i nt er est and

t he hol der of t he Mor t gage. The Mor t gage cont ai ns t he f ol l owi ng

subordi nat i on cl ause: "The Mor t gagee, wi t hout payment , her eby

agr ees t o subor di nat e t he l i en cr eat ed her eby i n f avor of t he

personal ownershi p i nt erest of each owner of an accommodat i on[ ] or

t i meshar e . . . so l ong as such owner r emai ns i n good st andi ng wi t h

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r espect t o hi s/ her obl i gat i ons under t he t i meshar e pl an document s

. . . . " Li ke t he Deed, t he Mor t gage was dul y r ecor ded i n t he

Regi st r y of Pr oper t y.

The Devel oper f or mal l y commenced mar ket i ng t he t i meshar e

r egi me ar ound J ul y 2001. I t s mar ket i ng ef f or t s i ncl uded t he

i ssuance of a Publ i c Of f er i ng St at ement expl ai ni ng t o pr ospect i ve

owners t he t erms and condi t i ons gover ni ng t he t i meshare r egi me.

The Of f er i ng St at ement made pl ai n t hat " t wo mor t gages encumber [ ed]

t he r eal pr oper t y under l yi ng [ t he t i meshar e r egi me] " and t hat bot h

mor t gages wer e subor di nat ed " t o t he r i ght s of t he . . . owner of

any Uni t [ t her ei n] . " 2

Appr oxi mat el y a year l at er , on J une 1, 2002, t he

Devel oper , Br i t o, and Del Val l e ent er ed i nt o a pur chase agr eement

( t he "Sal e Cont r act " ) pur suant t o whi ch t he Devel oper t r ansf er r ed

t o Br i t o and Del Val l e "a per i od of owner shi p . . . of seven ( 7)

days" i n Uni t No. F1 of t he t i meshar e regi me i n exchange f or

$18, 200. The "per i od of owner shi p" - - whi ch was t r ansf er r ed i n

per pet ui t y, f r ee and cl ear of al l encumbr ances except t axes and

assessment s - - af f or ded Br i t o and Del Val l e t he excl usi ve r i ght t o

use and occupy Uni t No. F1 dur i ng one week wi t hi n a revol vi ng

year l y schedul e. The Sal e Cont r act al so est abl i shed t hat Br i t o and

Del Val l e' s " per i od of owner shi p" r equi r ed t hemt o be "r esponsi bl e

2 The hol der of t he second mor t gage was t he ent i t y t hat sol d t ot he Devel oper t he r eal pr oper t y dedi cat ed t o t he t i meshar e r egi me.

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subor di nat ed t o t hei r owner shi p i nt er est pur suant t o t he

subor di nat i on cl ause of t he Mor t gage.

Af t er pr el i mi nary pr ocedur al nuances, Scot i abank moved

f or summar y j udgment , r easser t i ng i t s cont ent i on that Br i t o and Del

Val l e di d not have a secur i t y i nt er est over t he t i meshar e pr oper t y.

Scot i abank al so advanced t he ar gument present ed t o us on appeal ;

namel y, t hat Br i t o and Del Val l e di d not have a r eal pr oper t y

i nt er est because the appl i cabl e f or mal i t i es of t he Ti meshar e Act

had not been sat i sf i ed. Speci f i cal l y, Scot i abank ar gued t hat "when

t i meshar e r i ght s ar e cr eat ed as r eal pr oper t y r i ght s [ under t he

Ti meshar e Act ] , t he t r ansf er or sal e of sai d r i ghts may onl y t ake

pl ace t hr ough t he execut i on and r ecor dat i on of a publ i c deed. "4

Because nei t her of t hose f or mal i t i es had been f ol l owed, Scot i abank

r easoned, t he Sal e Cont r act onl y af f or ded Br i t o and Del Val l e t he

r i ght t o use and occupy Uni t No. F1 dur i ng t he so- cal l ed per i od of

owner shi p.

Br i t o and Del Val l e opposed and cr ossed- moved f or summar y

j udgment , ar gui ng t hat t he Sal e Cont r act made pl ai n t hat t hey wer e

4 Scot i abank al so under scor ed ot her f or mal i t i es al l egedl y r equi r ed

i n connect i on wi t h t he r ecor dat i on pr ocess. Mor eover , al t hough i tr ecogni zed bei ng bound by t he subordi nat i on cl ause, Scot i abankal l eged t hat t hi s cl ause mer el y pr ot ect ed t he cont r act r i ght s( r at her t han t he r eal pr oper t y r i ght s) gr ant ed t o Br i t o and DelVal l e. Scot i abank made these same ar gument s t o the BAP and r epeat st hem bef or e t hi s cour t . Never t hel ess, i n l i ght of our hol di ng,t here i s no need f or us t o pass upon t hem.

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acqui r i ng a r eal pr oper t y i nt er est over Uni t No. F1. They f ur t her

aver r ed t hat ( 1) t he Deed and t he Mor t gage expr essl y pr ovi ded t hat

Scot i abank was subor di nat ed t o t hei r owner shi p i nt er est and ( 2)

bot h document s had been dul y recor ded, so t hat t he pr ot ect i ons of

t he Ti meshar e Act had come i nt o pl ay. Last l y, Br i t o and Del Val l e

cl ai med t hat t hey had acqui r ed a st at ut or y l i en over t he t i meshar e

pr oper t y as soon as t he pr ot ect i ons of t he Ti meshar e Act ki cked i n.

The bankr upt cy cour t gr ant ed Br i t o and Del Val l e' s cr oss- mot i on.

I n so doi ng, i t f i r st hel d t hat t he subor di nat i on cl ause of t he

Mor t gage unequi vocal l y est abl i shed t he mor t gagee' s agr eement t o

subor di nat e i t s l i en i n f avor of t he owner shi p i nt er est of t he

t i meshar e owners, " i r r espect i ve of whether t he accommodat i on or

t i me shar e i s of t he t ype coupl ed wi t h speci al pr oper t y r i ght s or

not . " I n r e Pl aza Resor t at Pal mas, I nc. , Ch. 11 Case No. 09-

09980( SEK) , Adv. No. 10- 00175, sl i p op. at 9. For t hat r eason, t he

cour t not ed, " t he i ssue i s not whet her t he pur chasers obt ai ned a

secur i t y i nt er est by vi r t ue of t hei r agr eement s wi t h [ t he

Devel oper ] or by oper at i on of l aw. Thei r i nt er est i s pr ot ect ed by

. . . vi r t ue of t he subor di nat i on agr eement i t sel f . " I d.

The cour t next exami ned t he t er ms of t he Deed, t he

Of f er i ng St at ement , and t he Sal e Cont r act t o est abl i sh t he extent

of t he par t i es' bar gai n. I d. at 10. I n det er mi ni ng t hat t hey had

agr eed t o t r ansf er and obt ai n a real pr oper t y i nt er est i n Uni t

No. F1, t he cour t st at ed:

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[ I ] t i s cl ear f r om t he document s, t aken as awhol e, t hat [ t he Devel oper ] i nt ended t ot r ansf er i nt er est s i n r eal pr oper t y t o t hepur chaser s and t hat t he pur chaser s i nt ended t oacqui r e an i nt er est i n r eal pr oper t y. Thepur chase cont r act s cl ear l y evi nce a sal e of

t he t i meshar e i nt er est s, wi t h t i t l e t o uni tweeks bei ng f r ee and cl ear of al l encumbr ancesexcept t axes and assessment s. Ti t l e was al sot r ansf er r ed i n per pet ui t y, unl i ke a r i ght t ouse i nt er est t hat gr ant s a cont r act ual r i ghtt o use a vacat i on f aci l i t y f or a speci f i ednumber of year s.

I d. The cour t acknowl edged t he f act t hat t he Sal e Cont r act had

nei t her been f or mal i zed i nt o a publ i c deed5 nor pr esent ed f or

r ecor dat i on at t he Puer t o Ri co Regi st r y of Pr oper t y. I d. The

cour t , however , i mpl i edl y di scarded Scot i abank' s argument t hat t he

Ti meshar e Act r equi r ed such f or mal i t i es f or t he cr eat i on of r eal

pr oper t y ri ght s, under scor i ng t wo gener al pr i nci pl es of Puer t o Ri co

l aw: ( 1) t hat "proper t y r i ght s ar e acqui r ed and t r ansmi t t ed[ , i nt er

al i a, ] . . . i n consequence of cer t ai n cont r act s"; and ( 2) t hat t he

Puer t o Ri co " [ R] egi st r y [of Pr oper t y] does not gi ve or t ake away

r i ght s. " I d. ( ci t i ng, r especti vel y, P. R. Laws Ann. t i t . 31, 1931;

5 A publ i c deed i n t he Ci vi l Law t r adi t i on, i s a publ i c documentt hat descr i bes a l egal t r ansact i on, composed by a "not ar y [ who]shal l wr i t e r egar di ng t he cont r act or act submi t t ed f or hi saut hor i zat i on si gned by t he gr ant or s . . . si gned, mar ked, andf l our i shed by t he not ar y hi msel f . " P. R. Laws. Ann. t i t . 4, 2031.

The not ar y has t he power t o at t est as t o t he aut hent i ci t y of t hecont ent s of al l publ i c document s he or she aut hors. P. R. Laws Ann.t i t . 4, 2002. Though a publ i c document i s r equi r ed f or t hecr eat i on of cer t ai n l egal i nst r ument s, such as t r ust s, P. R. LawsAnn. t i t . 31, 2543, and mor t gages, P. R. Laws Ann. t i t . 30, 2607, i t i s not r equi r ed f or t he conveyance of r eal pr oper t yi nt er ests.

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and P. R. Pr od. Cr edi t Assoc. v. Regi st r ador , 23 P. R. Of f i c. Tr ans.

213 ( 1989) ) .

Scot i abank appeal ed t o t he BAP, whi ch af f i r med t he

bankrupt cy cour t on al l f r ont s. Thi s appeal i mmedi at el y f ol l owed.

II. Discussion

Feder al Rul e of Ci vi l Pr ocedur e 56, appl i cabl e i n

bankr upt cy t hr ough Bankr upt cy Rul e 7056, was t he pr ocedur al vessel

t hat gave r i se t o t hi s appeal . Our i nqui r y t her ef or e seeks t o

answer whether t he movi ng par t y i s ent i t l ed t o j udgment as a mat t er

of l aw. Est at e of Hevi a v. Por t r i o Cor p. , 602 F. 3d 34, 40 ( 1st

Ci r . 2010) . At t hi s j unct ur e, we r evi ew t he r ecor d de novo, i n t he

l i ght most f avor abl e t o t he nonmovi ng par t y, dr awi ng al l r easonabl e

i nf er ences i n i t s f avor . I d. Bei ng pl enar y, our r evi ew need not

f ol l ow t he r at i onal e espoused by t he l ower cour t , and we may af f i r m

"t he gr ant of summary j udgment on any basi s t hat i s mani f est i n the

r ecor d. " J ohan G. Dani el son, I nc. v. Wi nchest er - Conant Pr ops.

I nc. , 322 F. 3d 26, 37 ( 1st Ci r . 2003) .

As st at ed above, Scot i abank' s chal l enge to t he bankr upt cy

cour t ' s hol di ng cent er s on t he f or mal i t i es t hat t he Ti meshar e Act

al l egedl y r equi r es f or t he cr eat i on of i ndi vi dual r eal pr oper t y

r i ght s. Our i nqui r y t her ef or e seeks t o det er mi ne whet her those

f or mal i t i es ar e i ndeed encompassed wi t hi n t he Act . Gener al l y, "we

l ook t o t he pr onouncement s of a st at e' s hi ghest cour t i n or der t o

di scer n t he cont our s of t hat st at e' s l aw. " Gonzl ez- Fi guer oa v.

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J . C. Penney P. R. , I nc. , 568 F. 3d 313, 318 ( 1st Ci r . 2009) ( ci t i ng

Andr ew Robi nson I nt ' l , I nc. v. Har t f or d Fi r e I ns. Co. , 547 F. 3d 48,

51 ( 1st Ci r . 2008) ) . Wher e, as her e, on- poi nt aut hor i t y f r om t he

hi ghest st at e cour t i s unavai l abl e, however , "our t ask i s t o

vat i ci nat e how t hat cour t l i kel y woul d deci de t he i ssue. " I d. For

t hi s endeavor we empl oy "t he same met hod and approach t hat t he

st at e' s hi ghest cour t woul d use. " I MS Heal t h v. Ayot t e, 550 F. 3d

42, 61 ( 1st Ci r . 2008) .

St at ut or y const r uct i on i n Puer t o Ri co begi ns wi t h t he

t ext of t he under l yi ng st at ut e, and ends t her e as wel l i f t he t ext

i s unambi guous. I n t hi s r espect , t he Puer t o Ri co Ci vi l Code t el l s

us t hat "when a l aw i s cl ear and f r ee f r om al l ambi gui t y, t he

l et t er of t he same shal l not be di sr egar ded, under t he pr et ext of

f ul f i l l i ng t he spi r i t t her eof . " P. R. Laws Ann. t i t . 31, 14; see

al so, e. g. , War ner Lamber t Co. v. Tr i bunal Super i or , 1 P. R. Of f i c.

Tr ans. 527, 559 ( 1973) ( "No ambi gui t y i n t he l et t er of t he l aw nor

doubt s about t he l egi sl at i ve i nt ent i on exi st . To enl ar ge by

j udi ci al const r uct i on t he def i ni t i on of j ust cause, as suggest ed by

t he i nt er vener , woul d be t ant amount t o subver t i ng t he t r ue sense

and pur pose of t he st at ut e. " ) . Her e, we f i nd no ambi gui t y i n t he

pr ovi si ons of t he Ti meshar e Act t hat Scot i abank rel i es upon, and,

i n keepi ng wi t h Puer t o Ri co' s her meneut i c r ul es, we l ook no f ur t her

t han t he t ext of t hose pr ovi si ons. Bef or e del vi ng i nt o t he mer i t s

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of Scot i abank' s cont ent i ons, however , br i ef cont ext ual r emar ks

about t he Act ar e i n or der .

Enact ed i n 1995, t he Ti meshare Act i s a compr ehensi ve

pi ece of l egi sl at i on whi ch const i t ut es "t he sol e and excl usi ve l aw

of Puer t o Ri co gover ni ng t he cr eat i on and di sposi t i on of

accommodat i ons, t i meshar es and vacat i on cl ub r i ght s. " P. R. Laws

Ann. t i t . 31, 1269. The st atement of pur pose and scope of t he

Ti meshar e Act unequi vocal l y est abl i sh i t s pl ace of pr omi nence

wi t hi n Puer t o Ri co' s economi c l egi sl at i on: "t h[ e] [ t i meshar i ng]

segment of t he t our i sm i ndust r y cont i nues t o gr ow, bot h i n vol ume

of sal es and i n compl exi t y and var i et y of pr oduct st r uct ur e;

[ accor di ngl y] . . . a uni f or m and consi st ent met hod of r egul at i on

i s necessar y i n or der t o saf eguar d Puer t o Ri co' s t our i sm i ndust r y,

Puer t o Ri co' s consumer s and Puer t o Ri co' s economi c wel l - bei ng. "

I d. 1251.

To ef f ect uat e i t s pur pose, t he Ti meshar e Act set s f or t h

a number of f ormal i t i es t hat a t i meshar e devel oper must f ol l ow when

est abl i shi ng a t i meshar e r egi me. The pr ocess st ar t s wi t h a

t i meshar i ng per mi t appl i cat i on f i l ed wi t h t he Puer t o Ri co Tour i sm

Company ( t he "Company") , pr ovi di ng speci f i c i nf ormat i on about t he

devel oper , t he t i meshar e pr oper t y, and t he t i meshar e pl an. I d.

1252a - 1252e. I f t he Company gr ant s t he t i meshar e permi t , t he

devel oper must est abl i sh t he so- cal l ed t i meshar e r egi me t hr ough t he

i ssuance and r ecor dat i on of a publ i c deed. I d. 1252a. "The deed

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. . . shal l . . . cl ear l y and pr eci sel y st at e t he use t o whi ch al l

t he area i ncl uded i n t he r eal pr oper t y and dedi cat ed t o t he r egi me

shal l be devot ed . . . . " I d. 1262. 6 Moreover , " [ o] nce

dedi cated, t he t i meshar e . . . r egi me may onl y be modi f i ed or

t er mi nat ed wi t h t he expr ess conf or mi t y of t he Company . . . . " I d.

The Act af f or ds several saf eguar ds t o pr ospect i ve and

act ual t i meshar e owner s. For exampl e, t he devel oper i s r equi r ed t o

pr ovi de pr ospect i ve owner s wi t h an of f er i ng st at ement del i neat i ng

t he t er ms and condi t i ons t hat woul d gover n a possi bl e pur chase as

wel l as t he r i ght s and obl i gat i ons t hat woul d ar i se once a pur chase

i s cl osed. I d. 1255- 1255d. Fur t her mor e, upon cl osi ng, a

t i meshar e owner i s aut omat i cal l y pr ot ect ed agai nst cer t ai n l i ens

and encumbr ances i nasmuch as t he Act r equi r es al l l i enhol der s wi t h

an i nt er est i n t he t i meshar e pr oper t y t o "execut e[ ] and r ecor d[ ]

among t he appr opr i at e publ i c r ecor ds . . . a subor di nat i on

agr eement " r ecogni zi ng t he super i or r i ght s of t i meshar e owner s.

I d. 1254. Such pr ot ect i on i s "ef f ect i ve agai nst t he subor di nat i ng

l i enhol der ' s successors and assi gns and any ot her per son who

6 The publ i c deed must al so i ncl ude speci f i c and gener ali nf ormat i on about t he t i meshar e r egi me, i ncl udi ng, among othert hi ngs, ( 1) a descr i pt i on of each accommodat i on as wel l as a

descr i pt i on of t he f aci l i t i es of t he pr oper t y; ( 2) t he t er mof t het i meshar e r egi me; ( 3) t he area of al l t he accommodat i ons i n t hepr oper t y and area of each accommodat i on; ( 4) t he share of eachaccommodat i on i n t he cor r espondi ng common f aci l i t i es; and (5) adescr i pt i on of t he ent i t y t hat wi l l manage t he r egi me as wel l ast he dut i es, r esponsi bi l i t i es, and obl i gat i ons of t he same. P. R.Laws Ann. t i t . 31, 1264.

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acqui r es t he accommodat i on . . . t hr ough f or ecl osur e, by deed i n

l i eu of f or ecl osur e or by any ot her l egal means . . . . " I d.

1262a- 1.

Scot i abank does not di sput e t hat a t i meshare r egi me and

a bi ndi ng subor di nat i on agr eement ar e i n pl ace. Scot i abank i nst ead

ur ges us t o f ocus our si ght on t he t ype of r i ght s avai l abl e t o

Br i t o and Del Val l e under t he t i meshar e r egi me. Sect i on 1252a of

t he Act pr ovi des a devel oper of a t i meshar e r egi me wi t h t he opt i on

t o conf er t o t i meshar e owner s ei t her ( 1) "a cont r act ual r i ght t o

use and occupy an accommodat i on, " or ( 2) "a speci al t ype of

pr oper t y ri ght wi t h r espect t o a par t i cul ar accommodat i on . . . . "

I d. 1251a. Accor di ng t o Scot i abank, cer t ai n f or mal i t i es must be

f ol l owed when t he devel oper ' s i nt ent i on i s t o conf er speci al r eal

pr oper t y r i ght s. I n par t i cul ar , Scot i abank poi nt s t o 1262a and

1264a, 7 whi ch i t ci t es t o suppor t i t s l i ve- or - di e pr oposi t i on t hat

"when a t i meshar e r egi me i s cr eat ed t o conf er r eal pr oper t y r i ght s,

t he t r ansf er or sal e of sai d r i ght s may onl y take pl ace t hr ough t he

execut i on and r ecor dat i on of a publ i c deed. " That pr oposi t i on,

however , f i nds no suppor t i n t he pl ai n t ext of 1262a and 1264a.

I n per t i nent par t , 1262a est abl i shes that "[ o] nce t he

pr oper t y i s dedi cat ed t o t he t i meshar e . . . r egi me . . . t he

accommodat i ons, may be . . . t he obj ect of . . . al l t ypes of

7 Sect i ons 1262a and 1264a onl y appl y i f t he t i meshare devel operhas s t r uct ur ed t he t i meshar e regi me to conf er speci al r eal pr oper t yr i ght s. P. R. Laws Ann. t i t . 31, 1262.

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j ur i di c[ al ] act s . . . and t he cor r espondi ng t i t l es may be r ecor ded

i n t he Regi st r y of Pr oper t y . . . . " ( emphasi s suppl i ed) . Sect i on

1264a, i n t ur n, est abl i shes t hat

[ t ] he deed of t r ansf er of each i ndi vi dualaccommodat i on shal l st at e [ par t i cul ari nf or mat i on about ] t he accommodat i on concer nedand, al so, t he shar e per t ai ni ng t o sai daccommodat i on i n t he f aci l i t i es.Fur t her mor e, sai d deed of t r ansf er shal lcont ai n a war ni ng . . . st at i ng t hat t heaccommodat i on bei ng t r ansf er r ed pur suant t osuch deed i s not subj ect t o t he . . .Hor i zont al Pr oper t y Act of Puer t o Ri co8 . . .[ or ] t he pr ot ect i ve measur es af f or ded[ t her ei n] . . . .

To di scar d Scot i abank' s cont ent i ons, we need go no

f ur t her t han t he "may be r ecorded" phr ase i n 1262a. That phr ase

unambi guousl y i ndi cat es t hat r ecor dat i on of speci al r eal pr oper t y

r i ght s i s an opt i on, not an obl i gat i on. See, e. g. , Bl at t & Udel l

v. Cor e Cel l , 10 P. R. Of f i c. Tr ans. 179 ( 1980) ( not i ng t hat t he

ver b "may" gener al l y denotes di scr et i on r ather t han a mandate) ; see

al so Lpez v. Davi s, 531 U. S. 230, 240 ( 1997) ( not i ng t hat t he

l egi sl at i ve use of t he wor d "may" gener al l y i ndi cat es a gr ant of

di scret i on) ; Rasel l i v. War den, Met r o. Cor r . Ct r . , 782 F. 2d 17,

23 ( 2d Ci r . 1986) ( "The use of a per mi ssi ve ver b - - ' may r evi ew'

i nst ead of ' shal l r evi ew' - - suggest s a di scret i onar y r at her t han

8 The Hor i zont al Proper t y Act , now known as the Condomi ni um Act ,P. R. Laws Ann. t i t . 31, 1291, et seq. , pr ovi des a r egi me, andor gani zat i on r equi r ement s per t ai ni ng t ypi cal l y t o condomi ni ums andmul t i uni t r esi dent i al devel opment s.

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mandat or y r evi ew pr ocess. " ) 9. Fur t hermore, t he Act uses t he same

"may be recorded" phr ase when ref er enci ng the i ndi vi dual t i meshar e

r i ght s t hat can access t he Regi st r y - - "[ The t i meshar e[ ] . . .

r i ght s whi ch may be r ecor ded . . . . " P. R. Laws Ann. t i t . 31,

1265a ( emphasi s suppl i ed) . Ther e can hardl y be a cl earer

i ndi cat i on t hat r ecor dat i on i s not r equi r ed f or t he creat i on of

i ndi vi dual r eal pr oper t y r i ght s. See Puebl o de P. R. v. Her nndez-

Mal donado, 1991 P. R. - Eng. 735, 865, P. R. Of f i c. Tr ans. ( 1991)

( "St atut es shoul d be t r eated as a har moni ous whol e, and shoul d be

r ead t oget her and not const r ued as di vor ced f r om t hei r

pr ovi si ons. ") ( i nt er nal quot at i ons omi t t ed) ; see al so Rat zl af v.

Uni t ed St at es, 510 U. S. 135, 143 ( 1994) ( "A t er m appear i ng i n

sever al pl aces i n a st at ut or y text i s gener al l y r ead t he same way

each t i me i t appear s. " ) . Al t hough our anal ysi s coul d ver y wel l end

her e, see P. R. Laws Ann. t i t . 31, 14, t her e ar e at l east t wo

ot her r easons why Scot i abank mi sses t he mar k.

The f i r st r eason i s t hat , r at her t han acknowl edgi ng t he

per mi ss i ve natur e of 1262a' s l anguage, much l ess at t empt i ng t o

9 The "may be r ecor ded" phr ase became par t of 1262a i n 1999 asone of a number of amendment s i nt r oduced i nt o t he st at ut e t hatyear . 1999 P. R. Laws 003 ( amendi ng 1995 P. R. Laws 252) . The newl anguage r epl aced t he phr ase " shal l be r ecor dabl e. " Unf or t unat el y,

t he speci f i c r easons behi nd t he change i n 1262a ar e notascer t ai nabl e, as t her e appear s t o be no l egi sl at i ve hi st or y ori nt er pr et at i ve comment ary i n t hi s r egard. We, however , see nor eason t o i nt erpr et t he amendment as anyt hi ng ot her t han an at t emptt o cl ar i f y that r ecor dat i on i s not a condi t i o si ne qua non under 1262a by j et t i soni ng f r omi t s t ext t he mandat or y ver b " shal l " andr epl aci ng i t wi t h t he per mi ssi ve, "may. "

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r econci l e t he obvi ous t ensi on bet ween that l anguage and i t s

cont ent i ons, Scot i abank di si ngenuousl y r est s i t s case ent i r el y on

t he one- sent ence, per f unct or y pr oposi t i on pr evi ousl y quot ed. We

r out i nel y di scar d l ackl uster ef f or t s of t hat sor t . See, e. g. ,

Uni t ed St at es v. Zanni no, 895 F. 2d 1, 17 ( 1st Ci r . 1990) ( " [ T] he

set t l ed appel l at e r ul e [ i s] t hat i ssues adver t ed t o i n a

per f unct or y manner , unaccompani ed by some ef f or t at devel oped

argument at i on, are deemed wai ved. " ) .

The second r eason i s pr emi sed on t he of t - quot ed maxi mof

st at ut or y i nt er pr et at i on expr essi o uni us est excl usi o al t er i us,

whi ch t el l s us t hat when a l egi sl at ur e "i ncl udes par t i cul ar

l anguage i n one sect i on of a st at ut e but omi t s i t i n anot her . . .

i t i s gener al l y pr esumed t hat [ t he l egi sl at ur e] act s i nt ent i onal l y

and pur posel y i n t he di spar at e i ncl usi on or excl usi on. " Russel l o

v. Uni t ed St at es, 464 U. S. 16, 23 ( 1983) ( i nt er nal quot at i on mar ks

and ci t at i ons omi t t ed) . Her e, t he Ti meshare Act , when so r equi r ed,

unequi vocal l y est abl i shes t he speci f i c f or mal i t i es a gi ven document

must f ol l ow. For i nst ance, 1251a expr essl y and unequi vocal l y

est abl i shes t hat t he t i meshar e regi me comes i nt o bei ng onl y af t er

both t he i ssuance of a publ i c deed and r ecordat i on. The same

expr essed mandate i s cont ai ned i n many ot her sect i ons of t he Act .

See P. R. Laws Ann. t i t . 31, 1254, 1264, 1264a, 1266e.

Accor di ngl y, t he f act t hat 1262a nowher e ment i ons " publ i cat i on"

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or "r ecor dat i on" as r equi si t e f or mal i t i es f or ecl oses Scot i abank' s

cont ent i ons.

Sect i on 1264a does not provi de Scot i abank any mor e

suppor t . That sect i on set s f or t h some of t he speci f i cs t hat a deed

of t r ansf er must i ncl ude, and, i n so doi ng, ar guabl y requi r es t he

execut i on of such a document when f ormal i zi ng t he t r ansf er of

i ndi vi dual t i meshar e r i ght s. Sect i on 1264a, however , nowher e

r equi r es t hat t he "deed of t r ansf er " be embodi ed i n any par t i cul ar

f or m. Nei t her does i t r equi r e t hat i t be f or mal i zed i nt o a publ i c

deed, nor t hat i t be r ecor ded ( whi ch, of cour se, woul d cont r adi ct

t he "may be r ecorded" l anguage of 1262a and 1265a) . Mor eover ,

t he t er m "deed of t r ansf er " i s not def i ned i n t he secti on

cont ai ni ng t he t er ms of ar t of t he Act , and Scot i abank has f ai l ed

t o pr ovi de us wi t h any appl i cabl e aut hor i t y ascr i bi ng a speci f i c

meani ng t o such a phr ase. We t heref ore f ai l t o see why or how

Scot i abank reads t he t er ms " publ i c deed" and " r ecor dat i on" i nt o

sect i on 1264a. The f act t hat Scot i abank ci t es 1264a wi t hout

ar t i cul at i ng a si ngl e wor d t o expl ai n why thi s pr ovi si on i s

cont r ol l i ng, does not hi ng t o advance i t s cause.

The di ssent woul d have us dr aw another t heor y f r om

Scot i abank' s appeal , t hough admi t t edl y not wi t hout a gener ous

r eadi ng. Thr oughout i t s br i ef , Scot i abank ment i ons r epeat edl y t hat

t he Deed cr eated onl y personal cont r actual r i ght s. One mi ght

const r ue t hi s bl anket asser t i on as a hi nt of a chal l enge t o t he

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bankrupt cy cour t ' s concl usi on t hat t he r i ght s conveyed t o Br i t o and

Del Val l e by way of t he Deed ar e r eal pr oper t y r i ght s. The di ssent

r eci t es Scot i abank' s empt y pr ocl amat i on, as pr oof t hat such an

ar gument has been preser ved. As t he cat al ogue provi ded by our

br other i n t he appendi x shows however , Scot i abank' s l i t any amount s

t o l i t t l e mor e t han a concl usor y asser t i on wi t h essent i al l y no

expl anat i on or suppor t pr ovi ded. A mer e passi ng r ef er ence on t he

par t of Scot i abank, however many t i mes r epeat ed, does not amount t o

an ar gument t hat commands our at t ent i on. Zanni no, 895 F. 2d at 17.

The di ssent even ci t es t o speci f i c sect i ons of t he Deed as wel l as

t he Publ i c Of f er i ng St at ement , i n an at t empt t o const r uct t he

cont r act r i ght s ar gument , an endeavor ent i r el y f or egone by

Scot i abank. Accor di ngl y, we decl i ne t o af f or d a sophi st i cat ed

pl ai nt i f f an ar gument i t has not made or el abor at ed, and t hat t he

opposi ng l i t i gant has had no oppor t uni t y t o addr ess. Landr au-

Romero v. Banco Popul ar de P. R. , 212 F. 3d 607, 616 ( 1st Ci r . 2000)

( "I t i s wel l set t l ed t hat ar gument s not r ai sed i n an appel l ant ' s

i ni t i al br i ef ar e wai ved. " ( c i t at i ons omi t t ed) ) .

I n any event t he ar gument , i f t her e i s one, f ai l s.

Per usal of t he Deed r eveal s i t i s f ar f r om enl i ght eni ng, and at

best ambi guous as t o t he nat ur e of t he r i ght s i n quest i on. Though

Sect i on V of t he Deed st ates t hat an "Accommodat i on Uni t " i s

submi t t ed t o the t i meshar e regi me vi a a cont r act t hat gr ant s t he

buyer t he r i ght t o use and occupy t he uni t , Sect i on I I def i nes

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"Accommodat i on Uni t " as a "Uni t . " "Uni t " i s i n t ur n def i ned as

" t hat par t of t he Ti meshar e Pr oper t y whi ch i s subj ect t o owner shi p

by one or more persons. " ( emphasi s suppl i ed) . The Deed def i nes

"Ti meshar e Pr oper t y" as " The Par cel t oget her wi t h t he concr et e

bui l di ngs and ot her i mpr ovement s const r uct ed t hereon, any easement s

and ot her r i ght s appur t enant t o such bui l di ngs and i mpr ovement s and

any per sonal pr oper t y l ocat ed t her eon i nt ended f or t he use

speci f i ed i n t he next par agr aph her eof , now exi st i ng or her eaf t er

acqui r ed. " ( emphasi s suppl i ed) . The Deed i ncont r over t i bl y def i nes

"Par cel " as r eal pr oper t y: "cer t ai n par cel of l and l ocat ed i n

Humacao, Puer t o Ri co" t hat " i s r ecor ded i n t he Regi st r y at page 197

of vol ume 382 of Humacao, proper t y number 16, 851. " Because

"Ti meshar e Pr oper t y" i s def i ned as speci f i c r eal pr oper t y, a "Uni t "

and, t her ef ore, an "Accommodat i on Uni t , " seemt o mean r eal pr oper t y

t hat has been submi t t ed to t he t i meshar e regi me f or owner shi p.

Fur t her , t he def i ni t i on of t he t er m "Uni t " al so est abl i shes t he

r i ght s t hat are conveyed by way of t he cont r act t o use and occupy,

r ef er r ed t o i n Sect i on V; t he cont r act t o use and occupy conveys a

"Uni t Week" on an "Uni t . " Yet another def i ned t er m, "Uni t Week" i s

equi val ent t o a "per i od of owner shi p i n an Uni t . " ( emphasi s

suppl i ed) . Fur t her exami nat i on of t he Deed onl y compl i cat es the

i nqui r y. Ther ef or e, Scot i abank' s unsubst ant i at ed asser t i ons as t o

t he Deed' s l uci di t y ar e cl ear l y wr ong.

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Our br other r ej ect s our t ake on t he Deed as, at most ,

ambi guous, and poi nt s t o ot her l anguage t hat , accor di ng t o t he

di ssent , makes cl ear t hat t he Deed gr ant s cont r act r i ght s.

Respect f ul l y, t hi s vi ew seems t o i gnor e t he l anguage of t he Deed

t hat we quot e above r egar di ng t he def i ni t i on of a "Uni t " and

"Ti meshar e Pr oper t y, " and the, at best , ambi guous nat ur e of t he

Deed. The di ssent al so di smi sses, t hough t he bankr upt cy cour t di d

not , t hat t he Deed pr ovi des f or t he "Uni t s" t o be t r ansf er r ed "f r ee

and cl ear of al l encumbr ances" and i n per pet ui t y. These ar e r ar el y

t he f eat ur es of a cont r act r i ght , but r at her ar e t r ai t s usual l y

r eser ved f or t r ansf er s of t i t l e t o r eal pr oper t y. That t he l ower

cour t ' s t ake on t he mat t er i s cont r ar y t o t hat of t he di ssent i s

al one qui t e t el l i ng of t he Deed' s, at best , ambi guous nat ur e.

I n any event , we need not cont i nue down t he pat h of

her meneut i cs. Scot i abank, marshal s no subst ant i al chal l enge her e

on appeal t o t he bankr upt cy cour t ' s r easoni ng and f i ndi ngs. We

t hus l eave undi st ur bed t he bankrupt cy cour t ' s anal ysi s, and i t s

concl usi on, t hat t he t i meshar e hol der s wi el d r eal pr oper t y r i ght s.

Landr au- Romer o, 212 F. 3d at 616.

Not wi t hst andi ng Scot i abank' s f ai l ur e t o chal l enge, on

appeal t he bankr upt cy cour t ' s f i ndi ngs r egar di ng t he par t i es'

i nt ent and t he t i meshare document s, t he di ssent woul d embar k us on

a f l i ght of f ancy t o consi der ext r i nsi c evi dence as t o t he par t i es'

st at e of mi nd. Our br ot her appar ent l y f ai l s t o not e t hat

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Scot i abank not onl y f ai l ed t o make such an argument , but al so

expl i ci t l y stat ed i n i t s br i ef bef or e us t hat r esor t i ng t o t he

par t i es' i nt ent i s i napposi t e. 10 Never t hel ess, t he di ssent i nsi st s

t hat we l ook t o the Publ i c Of f er i ng St at ement and Sal e Cont r act t o

addr ess an i ssue speci f i cal l y r enounced by Scot i abank. We br i ef l y

br ush thi s or phaned cont ent i on, arguendo.

As t o t he Publ i c Of f er i ng St at ement , our di ssent i ng

col l eague "f ocuses wi t h l aser - l i ke i nt ensi t y" i ndeed, on t he phr ase

"cont r act ual owner shi p i nt er est s" f or t he pr oposi t i on t hat t he

t i meshare r egi me was meant t o be cont r act ual . However , t he Publ i c

Of f er i ng St at ement al so pr ovi des t hat " [ t ] he Ti meshar e I nt er est s

wi l l be sol d t o Pur chaser s pur suant t o a Pur chase Cont r act bet ween

t he Pur chaser and t he Devel oper . " Accor di ngl y, " Cont r act ual

owner shi p i nt er est s" coul d reasonabl y mean those r eal pr oper t y

owner shi p i nt er est s speci f i ed i n, and sol d by way of , t he Sal e

Cont r act .

As t o t he Sal e Cont r act , t he di ssent , but not Scot i abank,

pur por t edl y i dent i f i es t wo l eads i n f avor of t he cont r act r i ght s

t heor y. Fi r st , t hat t he agr eement r equi r es t he buyer t o pay f or

t he f i l i ng f ees necessar y t o per f ect a secur i t y i nt er est over a

pur chased t i meshar e uni t , i n f avor of a speci f i c l ender i dent i f i ed

as Banco Fi nanci er o de Puer t o Ri co. Thi s l ender appar ent l y of f er ed

t o pr ovi de f i nanci ng t o buyer s, and r equi r ed a secur i t y i nt er est

10 Appel l ant ' s Br . at 19.

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over t he sol d uni t s as col l at er al i n consi der at i on f or cr edi t . The

di ssent ' s t heor y f ol l ows, t hat si nce under Puer t o Ri co l aw secur i t y

i nt er est s over r eal pr oper t y ar e per f ect ed vi a r ecor dat i on i n t he

Regi st r y of Pr oper t y, and not t hr ough UCC f i l i ngs, t hi s poi nt s t o

t he par t i es' bel i ef t hat t hey bar gai ned f or cont r act r i ght s onl y.

Par t i cul ar l y damni ng t o t hi s pr oposi t i on i s t hat t he

r ecor d i s devoi d of any i ndi cat i on t hat any par t y her e even

at t empt ed t o per f ect a secur i t y i nt er est . Fur t her mor e, and t o say

not hi ng of t he i nf er ent i al l eap r equi r ed of t hi s i magi nar y peek

i nt o the mi nd of a buyer , t hi s t heor y rest s on t he assumpt i on t hat

t he appel l ees her e sought f i nanci ng as pr ovi ded i n t he Sal e

Cont r act . And t hough t he Sal e Cont r act bet ween t he par t i es hi nt s

t hat t he br unt of t he pur chase pr i ce woul d be f i nanced, t he

agr eement al so requi r es t hat l oan document s t o t hat ef f ect be

submi t t ed wi t h t he Sal e Cont r act . Yet t her e are no l oan document s

bef or e us, nor anythi ng el se i n t he r ecor d, t hat al l ow such an

assumpt i on. Mor eover , our col l eague' s t heor y r est s on yet anot her

assumpt i on; t hat t he UCC f i l i ng r egi me' s except i ons appl y under t he

Ti meshar e Act . The pr obl em wi t h t hi s assumpt i on i s t hat t he

Ti meshar e Act nowhere st at es as much, and Puer t o Ri co cour t s have

t hus f ar r emai ned si l ent on t he mat t er . Normal l y, when pr esent ed

wi t h unanswer ed i nqui r i es of st ate l aw we endeavor t o r esol ve

mat t ers as best we can sur mi se t he st at e cour t woul d. Hat ch v.

Tr ai l Ki ng I ndus. , I nc. , 699 F. 3d 38, 46 ( 1st Ci r . 2012) . The

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quest i on her e i s par t i cul ar l y nuanced, gi ven t hat t he Ti meshar e Act

expr essl y cr eat es a "speci al t ype of pr oper t y r i ght . " P. R. Laws

Ann. t i t . 31, 1251a. However , we agai n decl i ne t o at t empt t o

answer i t on a bar r en r ecor d, wher e nei t her par t y has br i ef ed t he

i ssue, nor have t he cour t s bel ow addr essed i t . See Landr au- Romer o,

212 F. 3d at 616. Mor e i s needed i ndeed.

Second, t he di ssent poi nt s t o t he Sal e Cont r act ' s

pur por t ed f ai l ur e t o descr i be t he t i meshar e uni t s i n t he det ai l ed

manner r equi r ed by 1264a and 1264( 1) ( b) of t he Ti meshare Act

f or r eal est at e conveyances. However , t he Sal e Cont r act expr essl y

st at es, " [ t ] he t er ms used i n t hi s Cont r act shal l have t he same

meani ng as t he i dent i cal t er ms ut i l i zed i n t he Deed ( def i ned bel ow)

f or t hi s t i meshar e Pl an ( def i ne[ d] bel ow) unl ess such t er ms are

ot her wi se def i ne[ d] her ei n. " Each Sal e Cont r act speci f i es a Uni t

No. , and t he Deed descr i bes t he Uni t cor r espondi ng to each Uni t No.

i n ever y bi t of det ai l r equi r ed by t he Ti meshar e Act . Ther ef or e,

t he Sal e Cont r act compl i es wi t h t he Ti meshar e Act by expr essl y

i ncorporat i ng t hese meani ngs f r om t he Deed. 11

11 The di ssent al so cont ends t hat t he appel l ees' f ai l ur e t o r ecor dt hei r r eal pr oper t y i nt er est i n t he Pr oper t y Regi st r y, i s yetanot her omen t hat t he par t i es i nt ended t o t r ansf er cont r act ual andnot r eal pr oper t y r i ght s. On t hat poi nt , el sewher e i n our opi ni on

we have al r eady di scussed t hat t he permi ss i ve l anguage of 1262aand 1265a of t he Ti meshare Act makes cl ear t hat r ecor dat i on oft i meshar e pr oper t y i nt er est s i s not mandat or y. The di ssent i t sel fagr ees t hat i t " i s bot h t r ue and uncont r over si al " t hat "r ecor dat i onof pur chase agr eement s at t he Regi st r y of Pr oper t y i s not anabsol ut e requi r ement f or t he cr eat i on of a real pr oper t y t i meshar er egi me. " Fur t her mor e, and as t he bankr upt cy cour t dul y not ed, i t

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I n any event , we rei t er at e our st eadf ast opposi t i on t o

addr essi ng document s not al l uded t o by Scot i abank, i n l i ght of

argument s not f orwarded by i t ei t her . Landr au- Romer o, 212 F. 3d at

616. The bankr upt cy cour t ' s f i ndi ng t hat t he t i meshar e r egi me

t r ansf er r ed r eal pr oper t y r i ght s, as wel l as t he f act ual f i ndi ngs

r egar di ng t he par t i es' i nt ent , went unchal l enged and ar e f or ecl osed

f r om our r evi ew.

As our di ssent i ng col l eague cogent l y poi nt s out , t he

appel l ant s' pur por t ed argument s were "awkwardl y devel oped i n some

r espect s and di d not al ways hi ghl i ght t he most t el l i ng aspect s of

t he rel evant document s, " whi ch "evi nces s l oppy l awyer i ng. "

Never t hel ess, accor di ng t o hi s vi ew, we ar e r equi r ed t o under t ake

"some i ndependent i nqui r y, " because t he appel l ant s "di d enough, i f

bar el y, t o pr eser ve [ t he r eal pr oper t y i ssue] f or r evi ew. " Thi s,

of cour se, i s a degr ee of benevol ence not nor mal l y of f er ed by a

cour t t o a par t y i n our adver sar i al syst em, par t i cul ar l y when

deal i ng wi t h one t hat har dl y cl assi f i es as an i ndi gent pr o se

l i t i gant , or i s l acki ng compet ent l egal r epr esent at i on. Eur eka

Br oadband Corp. v. Went wor t h Leasi ng Corp. , 400 F. 3d 62, 70 ( 1st

Ci r . 2005) . Accordi ngl y, t hough we shoul d not have t o addr ess our

i s an axi omat i c pr i nci pl e of Puer t o Ri co l aw t hat t he Pr oper t yRegi st r y "does not gi ve or t ake away r i ght s. " P. R. Pr od. Cr edi tAssoc. v. Regi st r ador , 123 P. R. 231, 237- 38 ( 1941) , 23 P. R. Of f i c.Tr ans. 213 ( 1989) . Ther ef or e, t he appel l ees' f ai l ur e t o r ecor dt hei r r eal pr oper t y i nt er est , t hough per haps unwi se on t hei r par t ,i s f ar f r om t he smoki ng gun t he di ssent pur por t s i t t o be.

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br ot her ' s r emai ni ng t hought s on t hi s mat t er , we ar e par t i cul ar l y

concer ned wi t h t he i ssues r ai sed by the di ssent r egar di ng t he

speci f i c t r eatment gi ven t o t i meshare buyer s by the Bankr upt cy Code

pur suant t o 11 U. S. C. 101 ( 53D) , 365( h) - ( j ) . I t i s most t el l i ng

t hat t he di ssent concl udes t hat " t her e ar e no f i ndi ngs" by t he

pr i or cour t s that deal t wi t h t hese pr ovi si ons. The l i kel y r eason

f or t hat , i s t hat t her e i s no ment i on of 101 ( 53D) t o be f ound

anywher e i n t he record, and 365( h) - ( j ) was not addr essed by

ei t her par t y i n t he bankr upt cy cour t . Cour t s do not usual l y make

f i ndi ngs on i ssues not r ai sed bef or e t hem.

The l ong and shor t of i t i s t hat t he Ti meshare Act

unambi guousl y pr ovi des t hat nei t her publ i cat i on nor r ecor dat i on i s

a condi t i o si ne qua non f or t he cr eat i on of i ndi vi dual r eal

pr oper t y r i ght s. Accor di ngl y, t he bankrupt cy cour t cor r ect l y

endeavor ed t o determi ne whether t he par t i es had i nt ended t o cr eat e

r eal pr oper t y r i ght s wi t h t hei r bar gai n. Scot i abank f ai l ed t o

chal l enge on appeal t he bankr upt cy cour t ' s f i ndi ng r egar di ng t he

i nt ent i on of t he par t i es as t o t he cr eat i on and t r ansf er of r eal

pr oper t y i nt er est s. Thus, t he bankrupt cy cour t ' s concl usi ons ar e

ent i t l ed t o r emai n unal t er ed. Landr au- Romer o, 212 F. 3d at 616.

Scot i abank f ai l ed t o chal l enge t he cour t ' s i nt er pr et at i on of t he

document s under l yi ng t he par t i es' agr eement , and rat her pi nned i t s

appeal onl y on a f l awed i nt er pr et at i on of t he Ti meshar e Act . The

r esul t of t hat st r at egy i s now bi ndi ng on Scot i abank.

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III. Conclusion

I f pr esent ed wi t h t he r ecor d bef or e us, we ar e conf i dent

t hat t he Puer t o Ri co Supr eme Cour t woul d ar r i ve at t he same

concl usi ons we r each t oday. The bankr upt cy cour t ' s j udgment i s

t her ef or e af f i r med.

Affirmed.

"Dissenting opinion follows"

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r est i ng on concl usi ons of t he bankr upt cy cour t ( conveni ent l y

deemi ng t hem unchal l enged) .

But I cannot accept t he maj or i t y' s i pse di xi t t hat t he

appel l ant i s f or ecl osed f r om ar gui ng t hat t he t i meshar e r egi me i s

st r uct ur ed t o convey whol l y cont r act ual r i ght s. Thi s ar gument has

been a mai nst ay of t he appel l ant ' s case t hr oughout t he t or t uous

cour se of t hi s l i t i gat i on. As t he maj or i t y i t sel f concedes, t he

ar gument i s "ment i on[ ed] r epeat edl y" i n t he appel l ant ' s br i ef .

Ant e at 17. I ndeed, t he appel l ant spot l i ght s t hi s i ssue i n t he

ver y f i r st sent ence of i t s argument summar y, desi gnat es i t as a

cont r over t ed i ssue on appeal , and r ef er s t o i t many t i mes i n t he

body of i t s br i ef . 12

Nor was t he argument wai ved bel ow. The appel l ant r ai sed

i t bef ore both t he Bankr upt cy Appel l ate Panel and t he bankr upt cy

cour t ( and both of t hose t r i bunal s acknowl edged as much) . See I n

r e Pl aza Resor t at Pal mas, I nc. , 469 B. R. 398, 404- 05 ( B. A. P. 1st

Ci r . 2012) ; I n r e Pl aza Resor t at Pal mas, I nc. , Ch. 11 Case No. 09-

09980, Adv. No. 10- 00175, sl i p op. at 5 ( Bankr . D. P. R. May 4,

2011) ; see al so Appendi x A. To t he ext ent t hat t he bankr upt cy

cour t f ound t he t i meshar e i nt er est s t o be r eal pr oper t y, see ant e

12 I enumer at e some exampl es i n Appendi x A. I n t he same appendi x,I l i kewi se l i st exampl es of si mi l ar ar gument s pr essed by t heappel l ant bef ore t he Bankr upt cy Appel l at e Panel and t he bankr upt cycourt.

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at 20, t he appel l ant pr eserved t he quest i on by cont i nui ng t o pr ess

t he poi nt t o t he Bankr upt cy Appel l ate Panel and now t o us.

I n an ef f or t t o det our ar ound t hi s wel l - document ed t r ai l ,

t he maj or i t y quest i ons whet her t he appel l ant has devel oped i t s

ar gument wi t h suf f i ci ent met i cul ousness. I n f r ami ng t hi s quest i on,

however , t he maj or i t y set s t he bar t oo hi gh. 13

I t i s t r ue, of cour se, t hat an ar gument "adver t ed t o i n

a per f unct ory manner " i s wai ved. Uni t ed St ates v. Zanni no, 895

F. 2d 1, 17 ( 1st Ci r . 1990) . Thi s r ul e of pr act i ce, however , does

not r equi r e t hat ar gument s be pr eci se t o t he poi nt of pedant r y.

Where, as here, an i ssue has been squarel y advanced, an appel l at e

cour t can and i n t he i nt er est s of j ust i ce shoul d " go beyond t he

r easons . . . ar t i cul at ed i n t he par t i es' br i ef s t o r each a r esul t

suppor t ed by l aw. " Uni t ed St ates v. One Ur ban Lot Located at 1 St .

A- 1, 885 F. 2d 994, 1001 ( 1st Ci r . 1989) ( emphasi s i n or i gi nal ) .

The Supr eme Cour t has made t hi s poi nt wi t h conspi cuous cl ar i t y:

"[ w] hen an i ssue or cl ai m i s pr oper l y bef or e t he cour t , t he cour t

i s not l i mi t ed t o t he par t i cul ar l egal t heor i es advanced by t he

par t i es, but r at her r et ai ns t he i ndependent power t o i dent i f y and

appl y t he pr oper const r uct i on of governi ng l aw. " Kamen v. Kemper

Fi n. Ser vs. , I nc. , 500 U. S. 90, 99 ( 1991) . The i nqui r y, t hen,

13 Thi s at t empt t o evade t he i ssue i s par t i cul ar l y i r oni c becauset he maj or i t y r el i es on an i nt er pr et at i on of t he Ti meshar e Act , seeant e at 14- 17, t hat t he appel l ees have never ment i oned at any st ageof thi s l i t i gat i on.

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i nevi t abl y t ur ns on t he l evel of speci f i ci t y t hat a cour t shoul d

r equi r e i n order t o deem an argument pr eser ved.

I n t hi s case, t he appel l ant has sur passed t he r equi si t e

l evel of speci f i ci t y. I t advanced i t s cont r act ual r i ght s ar gument

pl ai nl y, pr omi nent l y, and per si st ent l y. Even t he maj or i t y

acknowl edges t hat t hi s ar gument pr esent s t he pr i nci pal i ssue t o be

deci ded on appeal . See ant e at 2.

To be sur e, t he cont r act ual r i ght s ar gument was awkwar dl y

devel oped i n some respect s and di d not al ways hi ghl i ght t he most

t el l i ng aspect s of t he r el evant document s. But an ar gument i s not

wai ved mer el y because i t i s i nar t f ul l y craf t ed. See, e. g. , Uni t ed

St at es v. Dunbar , 553 F. 3d 48, 63 n. 4 ( 1st Ci r . 2009) ( t r eat i ng

i ssue as preserved even t hough t he "br i ef does not st at e [ t he]

cl ai m ar t f ul l y") ; Mi chel son v. Di gi t al Fi n. Ser vs. , 167 F. 3d 715,

719- 20 ( 1st Ci r . 1999) ( si mi l ar ) . What count s i s t hat t he

appel l ant hi nged i t s ar gument t o the f r amework of t he t i meshar e

r egi me. That i t di d not parse each and every document evi nces

sl oppy l awyer i ng, but t hat f ai l ur e, wi t hout mor e, does not pr oduce

a wai ver . The document s ar e i n t he r ecord, and an i nqui r i ng cour t

must be expect ed t o car r y out some i ndependent i nqui r y.

Vi ewed agai nst t hi s backdr op, i t i s obvi ous t o me t hat

t he i ssue i s pr oper l y bef or e t hi s cour t . The appel l ant di d enough,

i f bar el y, t o pr eser ve i t f or r evi ew. We ar e, t her ef or e, dut y-

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bound t o r esol ve t he i ssue based on the record and t he gover ni ng

l aw.

Thi s br i ngs me t o t he meat of t he appeal . The t i meshar e

document s, r ead i n l i ght of t he Ti meshar e Act , demonst r at e t hat t he

par t i es pur posed t o t r ansf er cont r act ual i nt er est s, not r eal

pr oper t y. The Ti meshar e Act , whi ch pr ovi des t hat t he nat ur e of t he

i nt er est s t o be conveyed i s at t he "opt i on of t he decl ar er , " put s

t he dedi cat i on deed ( t he Deed) at t he cent er of t hi s i nqui r y. P. R.

Laws Ann. t i t . 31, 1251a.

Al t hough t he Deed wi l l not wi n any pr i ze f or l egal

wr i t i ng, i t f i r ml y suppor t s t he concl usi on t hat t he i nt er est s

conveyed ar e cont r act ual . I descr i be some sal i ent f eat ur es:

C Sect i on V of t he Deed i s t i t l ed "Speci f i c Ti meshar e

Ri ght s i n Ti meshar e. ( Cont r act ual I nt er est s i n Uni t

Weeks and Appur t enant Ri ght s) . "

C The same sect i on speaks of execut i on of a "cont r act of

r i ght t o use and occupy, " t hr ough whi ch t he devel oper

wi l l gr ant "t he cont r act ual r i ght t o use and occupy. "

C The Deed def i ni t i ons cal l f or "Uni t s" t o be commi t t ed t o

t he r egi me upon t he execut i on of "cont r act [ s] of r i ght t o

use and occupy. "

Gi ven t hi s st r ai ght f or war d l anguage, I di sagr ee wi t h t he maj or i t y' s

char act er i zat i on of t he Deed as "ambi guous. " Ant e at 18. To t he

exact cont r ar y, i t descr i bes t he cont r act ual nat ur e of t he r egi me

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i n t er ms t hat cl osel y t r ack sect i on 1251a of t he Ti meshar e Act .

See P. R. Ann. t i t . 31, 1251a ( descr i bi ng "[ a] cont r act ual r i ght

t o use and occupy") .

Even i f t he Deed wer e ambi guous on t hi s poi nt , ext r i nsi c

evi dence woul d then become rel evant t o an ensui ng i nqui r y i nt o t he

par t i es' i nt ent i ons. See Smar t v. Gi l l et t e Co. LTD Pl an, 70 F. 3d

173, 178 ( 1st Ci r . 1995) ( descr i bi ng appr opr i at e uses of ext r i nsi c

evi dence t o ai d i nt er pr et at i on of ambi guous cont r act ) . As thi s

case was deci ded bel ow at summar y j udgment , our r evi ew i s de novo.

The publ i c of f er i ng st at ement and t he pur chase- and- sal e agreement

are key pi eces of ext r i nsi c evi dence i n the summary j udgment r ecord

and our i nspect i on of t hese document s conf i r ms t hat t hese

t i meshar e i nt er est s are cont r act ual .

Under t he Ti meshar e Act , a publ i c of f er i ng st atement must

be approved by t he Puer t o Ri co Tour i sm Company and present ed t o

ever y pr ospect i ve buyer pr i or t o any pur chase of a Uni t . P. R. Laws

Ann. t i t . 31, 1255. The publ i c of f er i ng st at ement f or t hi s

devel opment i s par t of t he r ecor d, as are t he appel l ees'

r epr esent at i ons t hat t hey recei ved, r evi ewed, and f ul l y under st ood

i t . Consequent l y, t he publ i c of f er i ng st at ement i s a pr i me sour ce

of ext r i nsi c evi dence her e.

Thi s st at ement l eaves no doubt but t hat t he t i meshar e

r egi me was meant t o be cont r act ual . I t pr ovi des unequi vocal l y t hat

" [ u] nder t he t i meshar e r egi me, cont r act ual owner shi p i nt er est s wi l l

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be sol d t o t he Pur chasers. " I t goes on t o say t hat t he owner s wi l l

be gi ven " t he excl usi ve use and occupancy" of cer t ai n Uni t s by

means of "cont r act ual owner shi p i nt er est s. " To ci nch mat t er s, i t

def i nes "Ti meshar e I nt er est " and "Uni t Week" as " t he t i meshar e

cont r act ual owner shi p i nt er est i n t he Pl aza Resor t owned by the

Owner , whi ch t i meshar e cont r act ual owner shi p i nt er est gi ves t he

Owner t he excl usi ve use and occupancy of " a cer t ai n Uni t . Read i n

i t s ent i r et y, t he publ i c of f er i ng st at ement f ur ni shes

i ncont r over t i bl e evi dence of t he devel oper ' s i nt ent t o cr eat e and

t r ansf er cont r actual r i ght s.

I f mor e i s needed, t he t i meshar e i nt er est s her e wer e

conveyed by a purchase- and- sal e agr eement ( t he Sal e Cont r act )

t ai l or ed t o t hi s t i meshar e r egi me. The Sal e Cont r act qui t e cl ear l y

i ndi cat es t hat t he par t i es i nt ended t o t r ansf er and r ecei ve

cont r act ual i nt er est s. For exampl e, t he devel oper f aci l i t at ed bank

f i nanci ng f or pur chaser s, and t he Sal e Cont r act r equi r es t he

pur chaser s t o pay t he " f ees r el at i ng t o t he UCC f i l i ng t o per f ect

t he secur i t y i nt er est " of t he l ender i n t hei r Uni t s. Whet her or

not t hese buyer s act ual l y avai l ed t hemsel ves of t hi s f i nanci ng

ar r angement , t hi s pr ovi si on i s mat er i al because, under appl i cabl e

Puer t o Ri co l aw, 14 secur i t y i nt er est s i n r eal pr oper t y ar e per f ect ed

14 Puer t o Ri co r ecent l y r evi sed i t s ver si on of t he UCC. See Puer t oRi co Act No. 21 of J an. 17, 2012. Those r evi si ons, not yetcodi f i ed, do not appl y t o t he mat t er s at i ssue her e. Accor di ngl y,an expl i cat i on of t hem woul d serve no usef ul pur pose.

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t hr ough r ecor di ng i n t he Regi st r y of Pr oper t y, see P. R. Laws Ann.

t i t . 30, 2577, not t hr ough UCC f i l i ngs, see i d. t i t . 19,

2004( j ) ( excl udi ng r eal pr oper t y i nt er est s f r om scope of UCC

f i l i ng r egi me) . Seen i n t hi s l i ght , i t i s evi dent t hat t he

appel l ees di d not consi der t he pur chase of t hei r Uni t t o be a r eal -

est at e t r ansact i on.

The Sal e Cont r act suppl i es yet another cl ue t hat t he

par t i es meant t o make t he t r ansf er r ed owner shi p cont r act ual i n

nat ur e. Sect i on 1264a of t he Ti meshar e Act appl i es onl y t o r eal

pr oper t y t i meshar e r egi mes. See i d. t i t . 31, 1262. Al t hough t he

maj or i t y i s cor r ect i n not i ng t hat t hi s pr ovi si on does not

expl i ci t l y requi r e t he i nst r ument of t r ansf er t o "be embodi ed i n

any par t i cul ar f or m, " ant e at 17, i t does demand t hat , as a r eal -

est at e conveyance, t he i nst r ument i ncl ude " t he par t i cul ar s

pr escri bed i n [ sect i on] 1264( 1) ( b) . " P. R. Laws Ann. t i t . 31,

1264a. I n t ur n, sect i on 1264( 1) ( b) r equi r es a descr i pt i on of t he

Uni t , i ncl udi ng "i t s measur es, l ocat i on, r ooms, " and ot her speci f i c

det ai l s. I d. 1264( 1) ( b) .

Her e, t he Sal e Cont r act whi ch di d not cont ai n t hi s

i nf or mat i on const i t ut ed t he i nst r ument of t r ansf er . I t woul d

seem, t her ef or e, t hat t he Sal e Cont r act was i ncapabl e of conveyi ng

an i nt er est i n r eal pr oper t y.

The maj or i t y' s r i post e st ems f r oma pr o f or ma decl ar at i on

t hat t erms used i n the cont r act shal l have the same meani ng as

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i dent i cal t er ms used i n t he Deed. From t hi s si ngl e sent ence, t he

maj or i t y ext r avagant l y concl udes t hat t he Sal e Cont r act compl i es

wi t h sect i on 1264a. Ant e at 23. I t hi nk t hat t hi s concl usi on i s

over l y opt i mi st i c and, i n al l event s, i t woul d be hi ghl y unusual

f or par t i es t o dr af t a r eal est at e conveyance t hat omi t t ed a

meani ngf ul l egal descr i pt i on of t he pr oper t y conveyed. At t he ver y

l east , such a gl ar i ng omi ssi on woul d make any f ai r - mi nded obser ver

skept i cal of whet her t he par t i es i nt ended t o t r ansf er r eal pr oper t y

at al l .

Thi s power f ul ar r ay of document ar y evi dence i s not

di mi ni shed by the maj or i t y' s r el i ance on t he use of wor ds l i ke

"owner " and "owner shi p" i n t he Deed. See, e. g. , ant e at 19. The

Ti meshar e Act def i nes t he t er m "owner" i n a manner t hat r eaches

t i meshar e buyer s under both cont r actual and r eal pr oper t y r egi mes.

See P. R. Laws Ann. t i t . 31, 1251b( 25) ( def i ni ng "owner " ) .

Mor eover , t he concept of "owner shi p" appl i es nat ur al l y t o bot h

cont r act ual i nt er est s and r eal pr oper t y i nt er est s and t he f or mer

r eadi ng i s a super i or f i t f or t he l anguage of t he Deed and ot her

t r ansact i on document s. I f t hi s wer e not t he case, phr ases l i ke

"cont r act ual owner shi p i nt er est " woul d make no sense.

Much t he same i s t r ue of t he bankr upt cy cour t ' s emphasi s

on t he phr ase " f r ee and cl ear of al l encumbr ances" and t he f act

t hat t he gr ant ed r i ght s run i n per pet ui t y. See I n r e Pl aza Resor t

at Pal mas, I nc. , Ch. 11 Case No. 09- 09980 (SEK) , Adv. No. 10- 00175,

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sl i p op. at 10- 11. These t r ansact i on t er ms ar e neut r al ; t her e i s

no ear t hl y r eason why t hei r use woul d be i nappr opr i ate under a

cont r act ual r i ght s regi me.

Based on t he t ot al i t y of t he document ar y evi dence, i t

seems vi r t ual l y unar guabl e not onl y that t he devel oper i nt ended t o

cr eat e and t r ansf er cont r act ual t i meshar e i nt er est s but al so t hat

t he appel l ees accept ed t hei r Uni t on such an under st andi ng. I t

f ol l ows t hat t he maj or i t y' s heavy r el i ance on t he per mi ssi ve "may

be r ecorded" l anguage of sect i on 1262a, see ant e at 14- 17, i s

mi spl aced. Af t er al l , t he Ti meshar e Act speci f i cal l y excl udes

cont r act ual t i meshar e r egi mes f r omt he gr asp of sect i on 1262a. See

P. R. Laws Ann. t i t . 31, 1262.

I ndeed, i f t he par t i es' f ai l ur e t o r ecor d i s rel evant at

al l , i t cut s the ot her way. Had t he appel l ees bel i eved t hat t hey

wer e pur chasi ng r eal pr oper t y i nt er est s, t hey al most cer t ai nl y

woul d have r ecorded t hose i nt er est s. I t i s common gr ound t hat an

owner ' s f ai l ur e t o r ecor d an i nt er est i n r eal pr oper t y exposes t he

owner t o si gni f i cant r i sk. Shoul d a subsequent good- f ai t h

pur chaser of t he same pr oper t y recor d f i r st , he wi l l become t he

r i ght f ul owner even t hough hi s deed i s l at er i n t i me. See P. R.

Laws Ann. t i t . 31, 3822; see al so Uni t ed St ates v. One Ur ban Lot

Locat ed at 1 St . A- 1, 865 F. 2d 427, 429 ( 1st Ci r . 1989) ( di scussi ng

t he "saf eguar ds of [ Puer t o Ri co' s] st r i ct Regi st r y syst em") ; Uni t ed

St ates v. V & E Eng' g & Const r . Co. , 819 F. 2d 331, 333 ( 1st Ci r .

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1987) ( descr i bi ng Puer t o Ri co' s r egi st r y syst em as pr omot i ng

"r el i ance on publ i c r ecor ds of pr oper t y owner shi p" ) . Because

r ecor dat i on pr ovi des such i mpor t ant pr ot ect i ons f or r eal pr oper t y

buyer s, i t woul d be hi ghl y unusual f or anyone, l et al one par t i es

who had l awyer s and f i nanci ng banks l ooki ng over t hei r shoul der s,

t o st r uct ur e a r eal - est at e conveyance wi t hout pr ovi di ng f or

r ecor dat i on. 15

To sumup, I di sagree wi t h t he maj or i t y' s concl usi on t hat

t he r i ght s possessed by t he appel l ees ar e r eal pr oper t y r i ght s. I

al so di sagr ee wi t h t he maj or i t y' s assumpt i on t hat answer i ng t hi s

quest i on ends t he i nqui r y. Let me expl ai n.

Thi s case was commenced as an adver sar y pr oceedi ng t hat

sought a decl arat i on as t o whether t he appel l ees shoul d be r egarded

as secur ed cr edi t or s. But r egar dl ess of whet her t he appel l ees

possess cont r actual or r eal pr oper t y i nt er est s, t hei r cl ai m t o

secur ed cr edi t or st at us r equi r es a f ur t her det er mi nat i on because

t he Bankr upt cy Code i ncl udes speci f i c saf eguar ds f or t i meshar e

buyer s. See 11 U. S. C. 101( 53D) , 365( h) - ( j ) ; see al so 3 Col l i er

on Bankr upt cy 365. 11( 4) , 365. 12( 3) ( Al an N. Resni ck & Henr y J .

Sommer eds. , 16t h ed. 2013) .

The Bankr upt cy Code has l ong f ur ni shed speci al

pr ot ect i ons t o l essees or buyer s of r eal pr oper t y when t he l essor

15 I n t hi s regar d, i t i s not ewor t hy t hat t he t r ansact i on her e wasnot gear ed t o r ecor dat i on. For aught t hat appear s, t he si gnat ur eson t he per t i nent document s were not even not ar i zed.

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or sel l er ent er s bankrupt cy and seeks t o rej ect t he l ease or

pur chase agr eement as an execut ory cont r act . See 11 U. S. C.

365( h) - ( j ) . I n 1984, Congr ess ext ended t hese pr ot ect i ons t o

owner s of t i meshar e i nterest s. See Bankr upt cy Amendment s and

Feder al J udgeshi p Act of 1984, Pub. L. No. 98- 353, 401- 404, 98

St at . 333, 366- 67 ( 1984) . Thi s extensi on was i nt ended t o over r ul e

cases l i ke I n r e Sombr er o Reef Cl ub, I nc. , 18 B. R. 612 ( Bankr . S. D.

Fl a. 1982) , whi ch had al l owed t i meshar e agr eement s t o be rej ect ed

out of hand as execut ory cont r act s. See I n r e Lee Road Par t ners,

Lt d. , 155 B. R. 55, 61 ( Bankr. E. D. N. Y. 1993) ; 3 Col l i er on

Bankr upt cy, supr a, 365. 11( 4) .

Under t hi s prophyl axi s, when a bankr upt debt or seeks t o

r ej ect a t i meshar e agr eement as an execut ory cont r act , t he

t i meshar e owner has t wo opt i ons. I f t he t i meshar e owner i s i n

possessi on or t he ter m of t he t i meshar e i nt er est has commenced, he

may r emai n i n possessi on of hi s t i meshare i nt er est . 11 U. S. C.

365( h) ( 2) ( A) ( i i ) , ( i ) ( 1) . I f he does so, he can set of f any

damages caused by the debt or ' s post - r ej ect i on nonper f ormance

agai nst any payment s due t o t he debt or , i ncl udi ng def er r ed pur chase

pr i ce i nst al l ment s and annual mai nt enance f ees. I d.

365( h) ( 2) ( B) , ( i ) ( 2) ( A) .

As an al t er nat i ve, t he t i meshar e owner can t r eat t he

t i meshar e i nt er est as t er mi nat ed and f i l e a cl ai m f or damages

agai nst the bankr upt cy est at e. I d. 365( h) ( 2) ( A) ( i ) , ( i ) ( 1) .

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Under sect i on 365( i ) , hi s damages cl ai m woul d seem t o be secur ed

( at l east up t o t he amount of t he pur chase pr i ce pai d) . See i d.

365( j ) . Under sect i on 365( h) , however , t he cl ai m woul d seem t o

be unsecur ed. See 3 Col l i er on Bankr upt cy, supr a, 365. 11( 4)

( di scussi ng avai l abi l i t y of l i en under subsect i on ( i ) but not under

subsect i on ( h) ) .

The f act s here ar e i nscr ut abl e: t he r ecor d bef or e us does

not i ndi cat e whet her t he appel l ees' t i meshar e cont r act was ever

f or mal l y r ej ect ed. By l i ke t oken, i t does not i ndi cat e whet her t he

appel l ees wer e ever af f or ded an oppor t uni t y to make t hei r el ect i on

under sect i on 365.

An aut hor i t at i ve det er mi nat i on as t o whet her t he

appel l ees ar e secur ed cr edi t or s cannot be made i n a vacuum. On t he

one hand, unl ess and unt i l t he appel l ees' t i meshar e i nt er est i s

r ej ect ed, i t may repr esent a val i d and enf or ceabl e cont r act despi t e

t he bankr upt cy. On t he ot her hand, i f t he debt or has f or mal l y

r ej ect ed t he agr eement a cour se of act i on t hat seems consi st ent

wi t h t he r eorgani zat i on pl an sect i on 365 woul d come i nt o pl ay and

t he appel l ees woul d have t o be al l owed t o make el ect i ons as

pr ovi ded ther ei n.

The si t uat i on i s f ur t her compl i cat ed because t he

r el at i onshi p bet ween sect i ons 365( h) and 365( i ) i s especi al l y

t enebr ous i n t he t i meshar e cont ext . See i d. To t he extent t hat

t hese subsect i ons may be r el evant , i t seems l i kel y t hat f act ual

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40/42

f i ndi ngs wi l l be hel pf ul i n det er mi ni ng not onl y whi ch subsect i on

wi l l appl y but al so whet her t he appel l ees shoul d be consi der ed " i n

possessi on. " See gener al l y 3 Col l i er on Bankrupt cy, supr a,

365. 12( 3) ( di scussi ng uni que di f f i cul t y of "i n possessi on"

concept i n t i meshar e cont ext ) .

Her e, t her e ar e no f i ndi ngs. Wi t h onl y a si ngl e

( meani ngl ess) except i on, nei t her t he par t i es nor t he cour t s bel ow

have so much as acknowl edged the exi st ence of t he r el evant

st at ut or y pr ovi si ons.

Gi ven t he ut t er absence of such f i ndi ngs, t he appel l ees'

cl ai m t o secur ed credi t or st at us i s l ef t up i n t he ai r . I woul d,

t her ef or e, r ever se t he deci si on hol di ng t he appel l ees' t i meshar e

i nt er est t o be a real pr oper t y i nt er est and r emand t o the

Bankrupt cy Appel l at e Panel wi t h i nst r uct i ons t hat i t r emand t o t he

bankrupt cy cour t f or f ur t her pr oceedi ngs.

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APPENDIX A

Appellant's Court of Appeals Brief

The appel l ant ' s br i ef t o t hi s cour t cont ai ns i t s

cont r act ual r i ght s ar gument i n at l east t he f ol l owi ng pl aces:

C The appel l ant ' s ar gument summar y begi ns: " [ p] ur suant t ot he Ti meshar e Act , t he Regi me subj ect of t hi s appeal wasconst i t ut ed t o gr ant cont r act ual ( per sonal ) r i ght s t o t het i meshar e owner s si nce [ t he Deed] , whi ch dedi cat ed theRegi me, expl i ci t l y decl ar es so. "

C The appel l ant ' s second i ssue i s f r amed as " [ w] hether t heowner s . . . may be gr ant ed secur ed cr edi t or st at us. . . despi t e t he f act t hat t he Regi me was const i t ut ed by

[ t he Deed] t o gr ant cont r act ual ( per sonal ) r i ght s t o t het i meshar e owner s and no real pr oper t y i nt er est wasconveyed. "

C The f i r st bol ded header i n t he br i ef ' s ar gument sect i onr eads: " [ t ] he Ti meshar e Regi me was st r uct ur ed t o conf ercont r act ual ( per sonal ) r i ght s t o t he t i meshar e owner s. "

C Lat er i n t he br i ef t he appel l ant ar gues t hat " [ t he Deed]const i t ut ed t he Ti meshar e Regi me to gr ant cont r actual( per sonal ) r i ght s t o t he t i meshar e owner s and no realpr oper t y i nt er est was conveyed pur suant t o t he Ti meshar e

Act . "C The appel l ant al so decl ar es t hat " [ t he Deed] , whi ch

const i t ut ed t he Regi me i n t he pr esent case, expl i ci t l yst at es, usi ng t he st at ut or y l anguage, t hat t he t i meshar er i ght s i n t he Regi me ar e of a cont r act ual ( per sonal )nat ur e. "

Appellant's Brief to the Bankruptcy Appellate Panel

The appel l ant ' s br i ef t o t he Bankr upt cy Appel l at e Panel

cont ai ned i t s cont r act ual r i ght s ar gument i n at l east t he f ol l owi ng

pl aces:

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42/42

C The br i ef pr esent s t he second i ssue as " [ w] hether t heowners of t i meshar e r i ght s i n t he Regi me may be gr ant edsecur ed credi t or st at us . . . despi t e t he f act t hat t heRegi me was const i t ut ed by [ t he Deed] t o gr ant personal( cont r act ual ) r i ght s t o t he t i meshar e owner s and no r ealpr oper t y i nt er est was conveyed. "

C The second sent ence of t he br i ef ' s st at ement of t he caser eads: "[ t he Deed] speci f i cal l y st at es t hat t he t i meshar er i ght s i n t he Regi me ar e of a per sonal ( cont r act ual )nat ur e. "

C I n i t s synopsi s of t he f act s, i t decl ar es t hat "[ t heDeed] speci f i cal l y st at es t hat t he t i meshar e r i ght s i nt he Regi me ar e of a per sonal ( cont r act ual ) nat ur e. "

C The f i r st bol ded header of i t s di scussi on sect i on r eads:" [ t ] he Ti meshar e Regi me was st r uct ur ed t o conf er per sonal( cont r act ual ) r i ght s t o t he t i meshar e owner s. "

Proceedings Before the Bankruptcy Court

I n pr oceedi ngs bef or e t he bankr upt cy cour t , t he appel l ant

pr essed i t s cont r act ual r i ght s ar gument i n at l east t he f ol l owi ng

pl aces:

C

The appel l ant ' s i ni t i al adver sar i al compl ai nt ar gues t hat"[ t he Deed] speci f i cal l y st at es t hat t i meshar e r i ght s i nt he Regi me ar e of a per sonal ( cont r act ual ) nat ur e. "

C The f i r st paragraph of t he appel l ant ' s memor andumof l awi n suppor t of i t s mot i on f or summary j udgment argues t hat"t he owner s of t i meshar e r i ght s i n t hi s par t i cul ar r egi mehave no pr oper t y r i ght s, but mer el y a cont r act ual( per sonal ) r i ght . "

C The f i r st sentence of t he sect i on of t he appel l ant ' smemorandum of l aw i n suppor t of i t s mot i on f or summary

j udgment t hat appl i es t he l aw t o t he f act s r eads: " [ i ] nt hi s case, t he Ti meshar e Regi me was const i t ut ed to gr antper sonal ( cont r act ual ) r i ght s t o t i meshar e owner s. "

Scotiabank de Puerto Rico v. Burgos, 1st Cir. (2014)

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