Candelario-Del Moral v. UBS Financial Services Incorporated of Puerto Rico

Filing 86

OPINION AND ORDER. MOOT 19 MOTION to Strike UBS' Defense of Lack of Diversity Jurirdiction filed by Madeleine Candelario-Del Moral; GRANTED in part and DENIED in part 21 MOTION for Summary Judgment filed by UBS Financial Services Inco rporated of Puerto Rico; GRANTED in part and DENIED in part 37 MOTION for Summary Judgment filed by Madeleine Candelario-Del Moral; NOTED 85 Motion In Compliance with Order (DE 83) to File English Translations of Decisions by PR Supreme Court. Signed by Judge Salvador E Casellas on 1/13/2010.(LB)

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IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO

M A D E L IN E CANDELARIO DEL M ORAL P la in tif f v. U B S FINANCIAL SERVICES IN C O R P O R A T E D OF PUERTO RICO D e f e n d a n ts Civil No. 08-1833 (SEC)

O P I N IO N and ORDER P e n d in g before this Court is Defendant UBS Financial Services Incorporated of Puerto R ic o 's ("UBS") Motion for Summary Judgment (Dockets ## 23 & 24), Plaintiff Madeline C a n d e la rio del Moral's ("Candelario" or "Plaintiff") opposition thereto (Docket # 31), UBS's re p ly (Docket # 43), and Plaintiff's sur-reply (Docket # 59). Plaintiff then filed a Cross-Motion f o r Summary Judgment (Dockets ## 38 & 39), to which UBS opposed (Dockets ## 54 & 56), P la in tif f replied (Dockets ## 67-69), and UBS sur-repied (Docket # 72). Upon reviewing the f ilin g s , and the applicable law, Plaintiff's motion is GRANTED in part and DENIED in part, a n d UBS's motion is GRANTED in part and DENIED in part. F a c tu a l Background O n August 8, 2008, Plaintiff filed the present diversity under Article 1802 of the Puerto R ic o Civil Code, P.R. Laws Ann. tit. 31, §§ 5141. In the complaint, Plaintiff alleges that UBS f a ile d to conserve, and negligently released her ex-husband, David Efrón's ("Efrón") assets, d e s p ite the Commonwealth court's orders of seizure and attachment issued in October 2006 (" O rd e r and Writ of Execution"). Candelario argues that, as a result of UBS's actions, Efrón d e p le te d his accounts with UBS, and consequently, she did not receive $3,808,739.48, plus in te re s t that she was entitled to pursuant to the Commonwealth courts' rulings.

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On April 3, 2009, UBS moved for summary judgment, arguing that Plaintiff's claims 3 w e r e time-barred. UBS further contends that Plaintiff has no actionable claim under Article 4 1 8 0 2 . Dockets ## 23 & 24. In support thereof, UBS posits that the October 2006 Order and 5 W rit of Execution were verbally vacated by Puerto Rico Superior Court Judge, Charles Jiménez6 N e ttle s h ip ("Judge Jiménez-Nettleship"), during a hearing held on November 13, 2006. UBS 7 f u r t h e r argues that the attachment of Efrón's accounts was removed after a careful review of 8 th e Superior Court's verbal order issued in open court, the Minutes for said proceedings, 9 P la in tif f 's appeals to the Puerto Rico Court of Appeals and Supreme Court, and said courts' 10 ru lin g s on the matter. 11 P la in tif f opposed, and on May 6, 2009, she filed a cross motion for summary judgment. 12 D o c k e t ## 37-39. According to Plaintiff, the Order and Writ of Execution, issued in accordance 13 w ith the Puerto Rico Court of Appeals' February 16, 2006 Judgment, constitute the law of the 14 c a s e . Plaintiff further avers that Judge Jiménez-Nettleship's verbal order did not affect the Order 15 a n d Writ of Execution's validity. According to Plaintiff, the Minutes of the November 13, 2006 16 h e a rin g were never signed by the Judge, nor certified and notified to the parties by the 17 C o u rtro o m Clerk, as required by the Rule 32(b)(1) for the Administration of the Court of First 18 In sta n c e of the Commonwealth of Puerto Rico (Rule 32), P.R. Laws Ann. tit. 4, R. 32. As a 19 re su lt thereof, Plaintiff argues that Judge Jiménez-Nettleship's verbal order was never valid or 20 e n f o rc e a b le . 21 The parties filed numerous replies and sur-replies. On October 20, 2009, in light of the 22 is s u e s of state law raised in the present case, this Court requested Certification from the 23 S u p re m e Court of Puerto Rico. Docket # 80. However, On November 13, 2009, the Supreme 24 C o u rt declined to exercise its jurisdiction in the present case. See Docket # 84. As such, this 25 C o u rt must now rule upon the pending motions for summary judgment. 26

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3 R . FED. CIV. P. 56 4 T h e Court may grant a motion for summary judgment when "the pleadings, depositions, 5 a n s w e rs to interrogatories, and admissions on file, together with the affidavits, if any, show that 6 th e re is no genuine issue as to any material fact and that the moving party is entitled to judgment 7 a s a matter of law." FED.R.CIV.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 8 2 4 8 (1986); Ramírez Rodríguez v. Boehringer Ingelheim, 425 F.3d 67, 77 (1 st Cir. 2005). In 9 re a c h in g such a determination, the Court may not weigh the evidence. Casas Office Machs., 10 In c . v. Mita Copystar Am., Inc., 42 F.3d 668 (1st Cir. 1994). At this stage, the court examines 11 th e record in the "light most favorable to the nonmovant," and indulges all "reasonable 12 in f e re n c e s in that party's favor." Maldonado-Denis v. Castillo-Rodríguez, 23 F.3d 576, 581 (1 st 13 C ir. 1994). 14 O n c e the movant has averred that there is an absence of evidence to support the 15 n o n m o v in g party's case, the burden shifts to the nonmovant to establish the existence of at least 16 o n e fact in issue that is both genuine and material. Garside v. Osco Drug, Inc., 895 F.2d 46, 48 17 (1st Cir. 1990) (citations omitted). "A factual issue is `genuine' if `it may reasonably be 18 re so lv e d in favor of either party and, therefore, requires the finder of fact to make `a choice 19 b e tw e e n the parties' differing versions of the truth at trial.'" DePoutout v. Raffaelly, 424 F.3d 20 1 1 2 , 116 (1st Cir. 2005)(citing Garside, 895 F.2d at 48 (1 st Cir. 1990)); see also SEC v. Ficken, 21 5 4 6 F.3d 45, 51 (1st Cir. 2008). 22 In order to defeat summary judgment, the opposing party may not rest on conclusory 23 a lle g a tio n s , improbable inferences, and unsupported speculation. See Hadfield v. McDonough, 24 4 0 7 F.3d 11, 15 (1st Cir. 2005) (citing Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 25 5 , 8 (1st Cir. 1990). Nor will "effusive rhetoric" and "optimistic surmise" suffice to establish 26

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a genuine issue of material fact. Cadle Co. v. Hayes, 116 F.3d 957, 960 (1 st Cir. 1997). Once 3 th e party moving for summary judgment has established an absence of material facts in dispute, 4 a n d that he or she is entitled to judgment as a matter of law, the "party opposing summary 5 ju d g m e n t must present definite, competent evidence to rebut the motion." Méndez-Laboy v. 6 A b b o t Lab., 424 F.3d 35, 37 (1st Cir. 2005) (citing Maldonado-Denis v. Castillo Rodríguez, 23 7 F .3 d 576, 581 (1st Cir. 1994). "The non-movant must `produce specific facts, in suitable 8 e v id e n tia ry form' sufficient to limn a trial-worthy issue. . . . Failure to do so allows the 9 s u m m a ry judgment engine to operate at full throttle." Id.; see also Kelly v. United States, 924 10 F .2 d 355, 358 (1st Cir. 1991) (warning that "the decision to sit idly by and allow the summary 11 ju d g m e n t proponent to configure the record is likely to prove fraught with consequence."); 12 M e d in a -M u ñ o z , 896 F.2d at 8 (citing Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1 st 13 C ir. 1989)) (holding that "[t]he evidence illustrating the factual controversy cannot be 14 c o n je c tu ra l or problematic; it must have substance in the sense that it limns differing versions 15 o f the truth which a factfinder must resolve."). 16 Because the instant motions are for summary judgment, the parties must comply with the 17 re q u ire m e n ts of Local Rule 56, and file a statement of facts, set forth in numbered paragraphs, 18 a n d supported by record citations. See Local Rule 56(b). In turn, when confronted with a motion 19 f o r summary judgment, the opposing party must: 20 21 22 23 L o c a l Rule 56(c). If the opposing party fails to do so, "summary judgment should, if 24 a p p ro p r i a t e , be entered." FED. R. CIV. P. 56(e)(2). These rules "are meant to ease the district 25 c o u rt's operose task and to prevent parties from unfairly shifting the burdens of litigation to the 26 [ s ]u b m it with its opposition a separate, short, and concise statement of material f a c ts . The opposition shall admit, deny or qualify the facts by reference to each n u m b e re d paragraph of the moving party's statement of material facts and unless a fact is admitted, shall support each denial or qualification by a record citation a s required by this rule.

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c o u rt." Cabán-Hernández v. Phillip Morris USA, Inc., 486 F.3d 1, 8(1 st Cir. 2007). When the 3 p a rtie s ignore the Local Rule, they do so at their peril. See Ruiz-Rivera v. Riley, 209 F. 3d 24, 4 2 8 (1st Cir. 2000). 5 U n c o n te s te d Facts 6 C a n d e la rio is of legal age, a citizen of the United States, and a resident of Florida. 7 P la in tif f 's Statement of Uncontested Facts (Docket # 38) ("Plaintiff's SUMF") ¶ 1. She is an 8 a tto rn e y at law, graduated from the Interamerican University of Law in 1976, and also earned 9 a Masters Degree in Law from the University of Miami in 1977. UBS's Statement of 10 U n c o n te s te d Facts (Docket # 23) ("UBS's SUMF") ¶ 3. UBS is a wholly owned subsidiary of 11 U B S Financial Services, Inc., and a registered broker-dealer authorized to do business in Puerto 12 R ic o . UBS's SUMF ¶ 1. It is a corporation created under the laws of Puerto Rico, with its 13 p rin c ip a l place of business in Puerto Rico, with capacity to sue and be sued. Plaintiff's SUMF 14 ¶ 2; UBS's SUMF ¶ 1. Plaintiff was married to Efrón, and both of them formed part of a 15 c o m m u n ity property regime. Plaintiff's SUMF ¶ 3; UBS's SUMF ¶ 3. On May 3, 2001, the 16 m a rria g e ended in divorce by Judgment of the Court of First Instance of Puerto Rico, San Juan 17 S e c tio n ("Superior Court"). Plaintiff's SUMF ¶ 4; UBS's SUMF ¶ 3. Since then, they have been 18 e n g a g e d in litigation before the Superior Court regarding the liquidation of their marital 19 c o m m u n ity property. UBS's SUMF ¶ 3. 20 During the proceedings, Superior Court Judge Orama-Monroig entered judgment in favor 21 o f Candelario for the monthly payment of $50,000.00, as part of her participation in the assets 22 o f the conjugal partnership previously constituted by her and Efrón. Plaintiff's SUMF ¶ 5. The 23 a s se ts of Efrón and Candelario's conjugal partnership exceed $70,000,000, all under the 24 a b s o l u te control of Efrón. Id. The $50,000 monthly payments were to be paid from June 4, 25 2 0 0 1 . Id. Both Efrón and Candelario appealed on different grounds to the Puerto Rico Court 26

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o f Appeals, which affirmed the Superior Court's judgment in favor of Candelario. Id. 3 T h e re a f te r, Judge Orama-Monroig was reassigned, and replaced by Judge Jiménez-Nettleship. 4 P la in tif f 's SUMF ¶ 6. Pursuant to Efrón's request, Judge Jiménez-Nettleship reduced the 5 m o n th ly payment from $50,000 to $20,000.00. Id. Once again, Efrón and Candelario appealed 6 to the Puerto Rico Court of Appeals, which denied Efrón's petition, and granted Candelario's 7 r e q u e s t. Id. To wit, on February 16, 2006, the Puerto Rico Court of Appeals entered an 8 A m e n d e d Judgment reinstating the $50,000 monthly payments to be made by Efrón from June 9 4 , 2001, plus interest from that date. Id. 10 Pursuant to the abovementioned Judgment of the Court of Appeals, on October 9 and 16, 11 2 0 0 6 , respectively, the Superior Court issued the Order, and Writ of Execution. Plaintiff's 12 S U M F ¶ 7 & 8. On October 20, 2006, a Superior Court Marshal served upon UBS the following 13 th re e documents, issued in case Madeleine Candelario del Moral v. David Efrón, K DI199914 1 4 2 1 , K DI1999-1808, pending before the Superior Court: (a) Order to Execute Judgment 15 (" O rd e n de Ejecución de Sentencia") issued by Superior Judge Jiménez-Nettleship, (b) Writ Of 16 E x e c u ti o n Of Judgment ("Mandamiento de Ejecución de Sentencia") issued by the Regional 17 C le rk of the Court of First Instance Rebecca Rivera Torres, Esq., and (c) Statement of Assets 18 (" S e ñ a la m ie n to de Bienes") signed by Michelle Pirallo Di Cristina, Esq. ("Pirallo" or 19 " P la in tif f 's counsel"), counsel for Plaintiff. UBS's SUMF ¶ 4; Plaintiff's SUMF ¶ 10. 20 The Order to Execute Judgment provided, among other issues, for the attachment and/or 21 g a rn is h m e n t of Efrón's real and personal property, even if the property was in the possession 22 o f third parties, and if the property was not liquid and available when the attachment and/or 23 g a rn is h m e n t was carried out. UBS's SUMF ¶ 4; Plaintiff's SUMF ¶ 7. The Marshal was to 24 re q u e st that the third parties retain the property when it liquidated, so that in due course the 25 f u n d s would be remitted to the court in an amount sufficient to satisfy the principal sum of 26

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$ 4 ,1 6 0 ,5 2 2 .6 1 , plus interest thereon at the rate of 10.50% per annum, from June 4, 2001 until 3 th e debt is fully paid. UBS's SUMF ¶ 4; Plaintiff's SUMF ¶ 7. Candelario's Statement of 4 A s s e ts requested UBS to garnish the assets in UBS accounts JX-36196, M9-16106, JX-60059, 5 a n d in any other account maintained by Efrón at UBS. UBS's SUMF ¶ 6; Plaintiff's SUMF ¶ 6 9 . The Order and Writ of Execution, and the Statement Of Assets were drafted by Plaintiff's 7 c o u n s e l, and issued by the Superior Court without any noticeable changes. UBS's SUMF ¶ 7. 8 In accordance with the Order and Writ of Execution, on October 20, 2006, UBS attached 9 th e following three accounts, JX-60059, WR-00855 and 5V-50203. UBS's SUMF ¶ 8.1 10 A c c o u n t 5V-50203 is a Credit Line Agreement and Premier Variable Credit Line Account with 11 U B S Bank USA. UBS's SUMF ¶ 8; UBS's SUMF ¶ 27 & 28. Pursuant to the Credit Line 12 A g re e m e n t, UBS Bank USA, a corporation organized and existing under the laws of Utah, had 13 a perfected first-priority lien and security interest over the assets in Efrón's Investment Account 14 J X 6 0 0 5 9 , to secure the loans advanced to Efrón in Account 5V-50203. UBS's SUMF ¶ 8 & 28. 15 M o re o v e r, if the collateral account (JX60059), or any portion thereof, was terminated, attached 16 o r subjected to a levy, the loan obligations would be immediately due and payable. UBS's 17 S U M F ¶ 28. While his accounts were restrained, Efrón could not purchase or sell securities in 18 a c c o u n t JX-60059, nor withdraw funds from this account to pay the interest charged to loan 19 A c c o u n t 5V-50203. UBS's SUMF ¶ 8. Pursuant to Efrón's motion questioning the Order and 20 W rit of Execution's legality, an emergency hearing regarding this issue was set for November 21 1 3 , 2006. Plaintiff's SUMF ¶ 12. 22 On October 27, 2006, UBS filed a "Motion to Clarify Order" in the Superior Court, 23 s ta tin g that Efrón did not have enough cash to satisfy the amount set forth in the judgment, and 24 25 26 Accounts M9-16106 and JX36196 were closed prior to the October 20, 2006 Order and Writ of Execution. UBS's SUMF ¶ 8.
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a c k n o w le d g in g , however, that some of Efrón's assets would have to be sold to pay off said 3 a m o u n t. Plaintiff's SUMF ¶ 11. In said motion, UBS also sought instructions from the Superior 4 C o u r t regarding which of Efrón's assets should be liquidated in order to satisfy the court's 5 ju d g m e n t, and addressed alleged discrepancies regarding the principal amount owed. Id. UBS 6 f u rth e r suggested to the court that the matter be clarified by the court and the parties at the 7 N o v e m b e r 13, 2006 hearing, to be held before Judge Jiménez-Nettleship. Id. 8 The hearing regarding the Order and Writ of Execution was held on November 13, 2006. 9 U B S 's SUMF ¶ 10. Plaintiff was timely notified about the hearing; attended the hearing; had 10 th e opportunity to present oral arguments and evidence; and was given the opportunity to ask 11 th e court to reconsider its ruling. UBS's SUMF ¶ 10. During the same, and after considering the 12 p a rtie s ' arguments and their testimony, Judge Jiménez-Nettleship verbally vacated the Order 13 a n d Writ of Execution issued in October 2006. Plaintiff's SUMF ¶ 13; UBS's SUMF ¶ 11. 14 S p e c if ic a lly, the Judge stated: "[w]e are vacating the order and the notations of attachment," and 15 s h o rtly thereafter, he denied Plaintiff's counsel request for reconsideration. UBS's SUMF ¶ 11. 16 M in u te s of the hearing were transcribed on December 12, 2006, and included in the case 17 f ile by the Courtroom Clerk. Id. The Minutes of the proceedings state: "the orders and 18 a n n o ta tio n s of attachments are hereby set aside." UBS's SUMF ¶ 12. Plaintiff and her counsel 19 w e r e aware of the fact that Judge Jiménez-Nettleship verbally vacated the Order and Writ of 20 E x e c u tio n during the hearing. UBS's SUMF ¶ 13 & 14. Plaintiff did not request that Judge 21 J im é n e z -N e ttle sh ip issue a written order vacating the Order to Execute Judgment, or produce 22 a n d notify a copy of the Minutes of the Proceedings, nor did she hire a private court reporter to 23 p re p a re a transcript of the hearing. UBS's SUMF ¶ 15 & 16.2 Candelario did not file a written 24 25 26 Defendant argues that Plaintiff's counsel should have requested that the verbal order be issued in writing. However, UBS provides no record citations or case law in support of said assertion of fact.
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m o tio n for reconsideration of Judge Jiménez-Nettleship's order vacating the Order to Execute 3 J u d g m e n t. Id. at 17. She never notified UBS that Judge Jiménez-Nettleship verbally vacated the 4 O rd e r and Writ of Execution. Id. at 18. Since UBS was unaware of Judge Jiménez-Nettleship 5 v e rb a l order, Efrón's accounts at UBS remained attached pursuant to the Order and Writ of 6 E x e c u tio n , until their release on February 16, 2007. Id. at 19. 7 On November 16, 2006, Candelario filed a Motion in Aid of Jurisdiction and Request 8 f o r Mandamus before the Puerto Rico Court of Appeals, seeking to revoke and set aside the 9 v e rb a l order. Plaintiff's SUMF ¶ 14; UBS's SUMF ¶ 20. She further requested that the appeals 10 c o u rt order Judge Jiménez-Nettleship to immediately comply with his ministerial duty, and order 11 th e execution of the Amended Judgment rendered by the Court of Appeals on February 16, 12 2 0 0 6 , and the Superior Court's October 2006 Order and Writ of Execution. Plaintiff's SUMF 13 ¶ 14.3 14 O n November 21, 2006, the Court of Appeals dismissed Candelario's request, upon 15 f in d in g that it lacked jurisdiction to entertain the same. Plaintiff's SUMF ¶ 15; UBS's SUMF 16 ¶ 22. To wit, the appeals court expressed, in pertinent part, that: 17 18 19 20 21 22 23 24 25 26 As such, UBS's arguments on this front fail. Specifically, Candelario requested the Court of Appeals to issue the Writ of Mandamus and: "(i) Order the immediate stay of the verbal orders of Judge Charles Jiménez-Nettleship, in consolidated cases KDI 1999-1421 (708) and KDI 1998-1808 (708), that are contrary to the execution of the judgment; (ii) Order Judge Charles Jiménez-Nettleship to immediately comply with his ministerial duty and order the execution of the Amended Judgment rendered by [the Court of Appeals] on February 16, 2006; (iii) Order to set aside any ruling, act or order rendered by Judge Jiménez-Nettleship that is contrary to the execution of the Amended Judgment rendered by this Court; (iv) Order Judge JiménezNettleship to strict compliance of the mandate issued by the Supreme Court of Puerto Rico on September 8, 2006; (v) Order Judge Jiménez-Nettleship to immediately place in force the order of execution of judgment dated October 9, 2006; (iv) Render any other order or ruling proper under law or equity." UBS's SUMF ¶ 21.
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R u le 32(b)(1) for the Administration of the Court of First Instance of the C o m m o n w e a lth of Puerto Rico, 4 L.P.R.A. Ap II-B R.32, provides the following:

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( b )(1 ) Minutes. ­The minutes shall be the official record of the most important in c id e n c e s occurred during the judicial hearing in the courtroom and in chambers. ... T h e minutes shall not be notified to the parties or to their attorneys, except if it includes a ruling or order and rendered by the judge in open court, in which c a s e , it shall be signed by the judge and notified to the parties. ... In Sánchez v. Dr. Pila Hospital, opinion of December 6, 2002 J.T.S. 154, it was ruled that: " T h e ruling or order issued on June 8, 2001 verbally in open court, w h e re b y the request of the petitioners to use two additional experts w a s denied was not notified to the parties in the manner set forth in Rule 32B. Because a notice in writing of the finding of the in s ta n c e court denying the request of the plaintiffs to present a d d itio n a l experts was not sent to the parties, the reconsideration f ile d by the plaintiffs was premature." ... W e rule that a verbal notice "of an interlocutory finding of the first instance court in a civil case does not constitute a notice that is required to activate the term p ro v id e d by law to file a motion for reconsideration or a recourse of certiorari b e f o re the Circuit Court. The notice that activates these terms must be set forth in writing and said document must be notified to the parties." P la in tif f 's SUMF ¶ 16. T h u s the Court of Appeals, citing Sánchez v. Dr. Pila Hospital, 158 P.R. Dec. 255 (2 0 0 2 ), found that it lacked jurisdiction to entertain Candelario's request for mandamus because J u d g e Jiménez-Nettleship's verbal order did not comply with Rule 32. Plaintiff's SUMF ¶ 17. T h e appeals court also noted that "one cannot resort before the Court of Appeals until [an order is s u e d by the lower court] is transcribed in rulings or minutes." Id. In light of the foregoing, on December 15, 2006, Candelario filed an Urgent Informative M o tio n and Petition for Certiorari with the Puerto Rico Supreme Court, seeking to set aside the J u d g m e n t rendered by the Court of Appeals; Judge Jiménez-Nettleship's rulings other than the e x e c u tio n of the Court of Appeal's February 16, 2006 Amended Judgment; and requesting that J u d g e Jiménez-Nettleship be ordered to execute said Amended Judgment. Plaintiff's SUMF ¶

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1 8 ; UBS's SUMF ¶ 22.4 On February 15, 2007, the Puerto Rico Supreme Court denied 3 C a n d e la rio 's Petition for Certiorari stating that the same "[lacked] the necessary documents 4 re f le c tin g what was ruled in the oral hearing before the First Instance Court on November 13, 5 2 0 0 6 " . Plaintiff's SUMF ¶ 20; UBS's SUMF ¶ 23. 6 On or about February 15, 2007, UBS received copies of the following documents: 7 M in u te s of the hearing held before Judge Jiménez-Nettleship on November 13, 2006, Motion 8 In Aid of Jurisdiction and Petition for Mandamus filed by Candelario with the Puerto Rico 9 C o u rt of Appeals (Case Number KLRX2006-00058), Judgment rendered by the Court of 10 A p p e a ls denying Candelario's Petition for Mandamus, Urgent Informative Motion and Petition 11 f o r Certiorari filed by Candelario with the Supreme Court of Puerto Rico (Case Number CC12 2 0 0 6 -1 1 3 8 ), and Puerto Rico Supreme Court Resolution denying Candelario's Petition for 13 C e r tio r a r i. UBS's SUMF ¶ 24. On February 16, 2007, after an evaluation of these documents 14 b y its counsel, UBS released the restraints on Efrón's three accounts. Id. 15 On February 27, 2007, counsel for UBS, Guillermo J. Bobonis, Esq. ("Bobonis" or 16 " U B S 's counsel"), sent Plaintiff's counsel a fax along with a copy of a document titled 17 " M in u te s ." Plaintiff's SUMF ¶ 22. On March 17, 2007, Candelario filed a Motion for 18 R e c o n s id e ra tio n and in Aid of Jurisdiction before the Supreme Court, to which she attached a 19 c o p y of the Minutes of the hearing held before Judge Jiménez-Nettleship on November 13, 20 2 0 0 6 . Plaintiff's SUMF ¶ 21; UBS's SUMF ¶ 23. Therein, she requested the Supreme Court to 21 re c o n sid e r its resolution declining review of the Judgment of the Court of Appeals and to, 22 23 24 25 26 Candelario moved the Supreme Court to: "repeal the Judgment issued by the Court of Appeals"; "grant the petition of mandamus which is presented before the Court of Appeals, and consequently, order [the Judge] to abide by the execution of the Amended Judgment [of] February 16, 2006...to abide by the mandate issued by [the Supreme Court] on September 8, 2006"; "set aside any ruling issued by [the Judge] other than the execution of the Amended Judgment," and to issue "any other ruling proper under the law and/or equity." Plaintiff's SUMF ¶ 19.
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a m o n g others, "order the First Instance Court through its Administrative Judge, Honorable 3 Isa b e l Llompart, to notify the appearing party of the Minute of the hearing of November 13, 4 2 0 0 6 and/or any other order, ruling or judgment for all corresponding legal purposes." 5 P la in tif f 's SUMF ¶ 2. The Supreme Court denied Plaintiff's request for reconsideration. UBS's 6 S U M F ¶ 23. 7 T h e Minutes for the November 13, 2006 hearing are not signed by Judge Charles 8 J im é n e z -N e ttle sh ip or any other judge, nor were notified to the parties by the Courtroom Clerk. 9 P la in tif f 's SUMF ¶ 24. The first time that Candelario, or her attorneys, became aware of the 10 e x is te n c e of the Minutes was when Bobonis sent Pirallo a copy of the document via fax on 11 F e b ru a ry 27, 2007. Id. 12 In a letter dated February 9, 2007, Pirallo advised Bobonis that "even though the [Order 13 o f Attachment] was verbally revoked by [the Judge] said ruling has never been notified and 14 th e re f o re , it is not final and binding." Plaintiff's SUMF ¶ 26. Plaintiff's counsel sent two 15 a d d itio n a l letters, on March 2 and 29, 2007, requesting counsel for UBS to maintain Efrón's 16 a c c o u n ts "frozen" as Candelario had filed a petition before the Supreme Court, and reiterating 17 th a t the verbal order by Judge Jiménez-Nettleship was not final or binding because the Minutes 18 o f the November 13, 2006 hearing were never notified. Plaintiff's SUMF ¶ 27 & 28. On or 19 a b o u t March 1, 2007, Candelario's attorney also provided UBS with a copy of the Motion for 20 R e c o n s id e ra tio n and in Aid Of Jurisdiction filed with the Supreme Court of Puerto Rico. UBS's 21 S U M F ¶ 24. Later on, UBS obtained from the Clerk's Office of the Supreme Court of Puerto 22 R ic o a certified copy of a Resolution issued by said court on March 7, 2007 denying 23 C a n d e la rio 's Motion for Reconsideration. Id. 24 O n May 2, 2007, UBS sent a letter to Efrón stating that when served with the attachment 25 o rd e r UBS asked their attorneys "to call the court [that is Judge Jiménez-Nettleship] to ascertain 26

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[ th e real meaning and scope of the order]"; that "the exchange between counsel [for UBS] and 3 th e court (that is Judge Jiménez-Nettleship) was immediately communicated by [UBS's] 4 a tto rn e y's to Diana Méndez Ondina, Esq. [Efrón's attorney]; a that "at no time did [Jiménez5 N e t tl e s h ip ] verbally order UBS PR through [its] attorneys to liquidate positions in [Efrón's] 6 a c c o u n ts ." Plaintiff's SUMF ¶ 29. In said letter, Margarita Landaburu, Esq., UBS's Assistant 7 G e n e ra l Counsel, acknowledged that UBS "learned about the ruling when [Efrón] provided a 8 c o p y of the minutes of the hearing as well as a copy of the judgment rendered by the Court of 9 A p p e a ls refusing to revoke the lower court's ruling. Once [Efrón] advised UBS PR of the 10 c o u rt's ruling, UBS acted swiftly. Upon reviewing the documents, the firm removed the 11 re stric tio n on [Efrón's] accounts in a matter of days." Plaintiff's SUMF ¶ 30. 12 On August 20, 2007, Superior Court Judge Arlene Sellés Guerrini issued an "Order for 13 th e Sale of Assets," acknowledging UBS's motion to clarify dated October 27, 2006, and setting 14 f o rth specific instructions for UBS regarding the liquidation of assets belonging to Efrón. 15 P la in tif f 's SUMF ¶ 33; UBS's SUMF ¶ 26. Therein, UBS was ordered to immediately sell and 16 liq u id a te Efrón's assets until the amount of $4,160,522.61 was reached, and thereafter issue a 17 c h e c k payable to Candelario for said amount. Plaintiff's SUMF ¶ 34. UBS was also "ordered 18 to maintain Efrón's account frozen until the amount of interest accrued on the debt as of the day 19 o f the aforementioned payment is calculated and until otherwise ordered by this Court." 20 P la in tif f 's SUMF ¶ 35. The court also ordered Efrón to immediately comply with his obligation 21 to pay Plaintiff $50,000 every month until final liquidation of the assets of the Community 22 P ro p e rty Regime. Plaintiff's SUMF ¶ 36. On August 27, 2007, UBS PR was served with a copy 23 o f the aforementioned Order Concerning the Sale of Assets. UBS's SUMF ¶ 26. On August 29, 24 2 0 0 7 , UBS restrained the accounts maintained by Efrón at that time. Id. 25 26

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A s of May 2007, Efrón's Investment Account WR-00855 had no assets. UBS's SUMF 3 ¶ 27. On August 21, 2007, Account 5V-50203, the Credit Line with UBS Bank USA, had a loan 4 b a la n c e of $804,043. UBS's SUMF ¶ 28. On August 30, 2007 UBS, as a securities intermediary 5 w ith in the meaning of the Uniform Commercial Code of Utah, liquidated the securities in UBS 6 a c c o u n t number JX-60059. UBS's SUMF ¶ 29. On August 31, 2007, UBS PR wired 7 $ 8 1 0 ,0 7 1 .8 7 to UBS Bank USA to pay the balance owed by Efrón in Account 5V-50203. 8 U B S 's SUMF ¶ 29. Since September 3, 2007 was a legal holiday, on September 4, 2007, UBS 9 is s u e d a check to the order of Candelario in the amount of $351,783.13, the net balance 10 re m a in in g in the account after paying off said loan. UBS's SUMF ¶ 29; Plaintiff's SUMF ¶ 37. 11 T h e check was personally picked up by Candelario's counsel. UBS's SUMF ¶ 29. 12 By "Motion Complying with Order to Show Cause," filed by UBS with the Superior 13 C o u rt on September 7, 2007, UBS informed that it had sold the shares in Efrón's accounts. 14 P la i n t i f f ' s SUMF ¶ 39. UBS further informed that part of the monies, to wit $810,071.87, 15 re c e iv e d from the sale were used to pay off Account 5V-50203, the credit line extended to 16 E f ró n . Plaintiff's SUMF ¶ 39; UBS's SUMF ¶ 29. In the motion, UBS also informed that after 17 p a yin g the credit line debt, the cash balance left over was $351,783.13, and that UBS wrote a 18 c h e c k to Candelario for that amount. Plaintiff's SUMF ¶ 40; UBS's SUMF ¶ 29. 19 The Court of Appeals denied Efrón's petition for certiorari, which sought to set aside 20 th e August 20, 2007 Order on the sale of assets. Plaintiff's SUMF ¶ 41. In so doing, the appeals 21 c o u rt noted that the its prior November 21, 2006 Judgment, dismissing Candelario's request for 22 m a n d a m u s , was based on the fact that the Superior Court's verbal order, at that time, was still 23 u n d e r the consideration of the court, and a written decision had not been issued yet. Plaintiff's 24 S U M F ¶ 41. The court also stated that the Superior Court could not revisit the issues resolved 25 in the Amended Judgment of February 16, 2006, which ordered the payment of $50,000 26

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m o n th ly. Id. Lastly, the Court held that the Superior Court did not err by ordering the execution 3 o f said Amended Judgment to secure the monthly payments awarded to Candelario. Id. 4 A p p lic a b le Law and Analysis 5 S ta tu te of Limitation 6 In its motion for summary judgment, UBS posits that Plaintiff's claims are time-barred 7 in so f a r as the one-year statute of limitation for her Article 1802 claims began on November 13, 8 2 0 0 6 , when Judge Jiménez-Nettleship verbally vacated the order of attachment. In opposition, 9 P la in tif f argues that she had knowledge of the alleged injury on September 4, 2007, when she 10 re c e iv e d a check for $351,783.13 instead of the amount she was entitled to pursuant to the 11 S u p e rio r Court's August 2007 order of attachment. Article 1869 of the Puerto Rico Civil Code 12 p ro v id e s a one year statute of limitation for tort claims arising under Article 1802. P.R. Laws 13 a n n . tit 31,§ 5298. However, said period begins when the aggrieved party has knowledge of the 14 in ju ry. Id. In the present case, Plaintiff learned on September 4, 2007 about the method applied 15 b y UBS to liquidate Efrón's assets. Since Plaintiff's present suit focuses on UBS's alleged 16 n e g lig e n c e in the management, and liquidation of Efrón's assets, this Court finds that Plaintiff's 17 c la im s accrued from the date she learned of her injury, that is, September 4, 2007. As a result, 18 h e r claims are not time-barred. 19 Article 1802 claims 20 T h is Court notes that Candelario sets forth negligence claims against UBS, which are 21 p ro p e rly addressed under Article 1802 of the Puerto Rico Civil Code.5 Article 1802 states that 22 " [ a ] person who by an act or omission causes damage to another through fault or negligence 23 24 25 26 When jurisdiction is based on diversity of citizenship, federal courts must apply state substantive law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 92 (1938); Morel v. Damler Chrysler AG, 557 F. Supp. 2d 240 (D.P.R. 2008). Since the present case arises under diversity jurisdiction, Puerto Rico
substantive law, and applicable case law, applies.
5

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s h a ll be obliged to repair the damage so done." See Albertorio-Santiago v. Reliable Financial 3 S e rv ic e s , 612 F. Supp.2d 159 (D.P.R. 2009). The First Circuit has noted that "negligence has 4 b e e n defined by the Commonwealth courts as the failure to exercise due diligence to avoid 5 f o re s e e a b le risks." Id. (citing De-Jesus-Adorno, v. Browning Ferris Industries of Puerto Rico, 6 In c ., 160 F.3d 839, 842 (1 st Cir.1998)). 7 In order to prevail in an Article 1802 claim, the plaintiff must establish "(1) a duty 8 re q u irin g the defendant to conform to a certain standard of conduct, (2) a breach of that duty, 9 (3 ) proof of damage, and (4) a causal connection between the damage and the tortious conduct." 10 D e -J e s u s -A d o rn o , 160 F.3d at 842 (quoting Woods-Leber v. Hyatt Hotels of Puerto Rico, Inc., 11 1 2 4 F.3d 47, 50 (1st Cir.1997)); see also Sociedad de Gananciales v. González Padín, 17 P.R. 12 O f f ic . Trans. 111, 125, 117 P.R. Dec. 94, 105 (1986). Under Puerto Rico law, a legal duty arises 13 in one of three ways: (1) by a statute, regulation, ordinance, bylaw, or contract; (2) as the result 14 o f a special relationship between the parties that has arisen through custom; or (3) as the result 15 o f a traditionally recognized duty of care particular to the situation. Id. (citations omitted). 16 The mere existence of an injury or damages is not grounds for liability under Article 17 1 8 0 2 . A defendant will be liable only for those reasonably foreseeable consequences to its 18 c o n d u c t. Wojciechowicz v. United States, 576 F. Supp. 2d 241 (D.P.R. 2008) (citing 19 D e -J e s u s -A d o rn o , 160 F.3d at 842). Specifically, "the omission that generates a liability under 20 A rtic le 1802 happens when `the law imposes a duty of care requiring the defendant to conform 21 to a certain standard of conduct for the protection of others against unreasonable risk.'" 22 Z a b a la -C a ld e ro n v. U.S., 616 F. Supp. 2d 195, (1999 D.P.R. 2008) (citing F.C. Imports, Inc. v. 23 F irs t Nat'l Bank of Boston, N.A., 816 F. Supp. 78, 94 (D.P.R.1993)). The duty of care owed "is 24 d e f in e d by the general rule that one must act as would a prudent and reasonable person under 25 th e circumstances." Vazquez-Filippetti v. Banco Popular de Puerto Rico, 504 F.3d 43, 49 26

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(D .P .R . 2007). Moreover, a tortfeasor's duty of care is anticipating reasonably probable injuries 3 to probable victims. Marshall v. Perez Arzuaga, 828 F.2d 845, 847 (1st Cir. 1987). However, 4 " th e foreseeability required under [Article] 1802 does not extend to all imaginable effects 5 re su ltin g from defendant's conduct. This would be tantamount to turning the defendant into an 6 a b s o lu te insurer of its acts and omissions." Wojciechowicz, 576 F. Supp. 2d at 272. 7 Therefore, a person breaches the duty of reasonable care when his actions create 8 re a s o n a b ly foreseeable risks. Vazquez-Filippetti, 504 F.3d 43, 49. Thus a plaintiff must 9 d e m o n s tra te the foreseeable risks created by defendant's acts or omissions in order to carry his 10 b u rd e n as to this element of a tort claim. After the plaintiff has demonstrated that the defendant 11 w a s negligent, that is, the defendant breached its duty of care, she must then demonstrate that 12 th e defendant's negligence was the proximate cause of her injuries. A defendant's actions may 13 o n ly be the proximate cause of a plaintiff's injuries if they in fact caused the injuries, and the 14 d e f e n d a n t could have reasonably foreseen that the injuries would result from his actions. Id. at 15 n . 6. A plaintiff might rely on similar, or even identical, factual evidence to show that Defendant 16 b re a c h e d the duty of care, and that his actions are the proximate cause of her injuries. Id. 17 In the present case, there are no controversies regarding the material issues of fact. 18 P u rs u a n t to the uncontested facts, it is undisputed that Judge Jiménez-Nettleship issued a verbal 19 o rd e r during the November 13, 2006 hearing, and that the Minutes for said proceedings, 20 tra n s c rib e d on December 12, 2006, lack the Judge's signature, and were never properly notified 21 to the parties. Instead, the parties disagree on the interpretation of the applicable law regarding 22 th e validity of Judge Jiménez-Nettleship's verbal order. Accordingly, this Court must determine 23 w h e t h e r a verbal order, issued in open court at the Commonwealth level, is valid and 24 e n f o rc e a b l e from its issuance, if it was not notified to the parties in Minutes signed by the 25 p re s id in g Judge. 26

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T h e Puerto Rico Supreme Court has not specifically addressed this issue. 3 Notwithstanding, the Supreme Court has held that a verbal interlocutory order issued in open 4 c o u rt is insufficient to start the 15-day period to request reconsideration of the same, and the 305 d a y time period to file a writ of certiorari before the Puerto Rico Court of Appeals. See Sanchez 6 v . Dr. Pila Hospital, 158 P.R. Dec. 255, 260 (2002) (certified translation). Accordingly, the 7 c o u rt held that such a petition is premature, and dismissal was proper. Therein, the appeals court 8 a ls o noted that pursuant to the Puerto Rico Court of First Instance Administration Rule 32(b)(1), 9 m in u te s of the proceedings held before the court will not be notified to the parties or their 10 c o u n s e l unless they include an order issued by the Judge in open court, in which case it shall 11 b e signed by the Judge and notified to the parties. Furthermore, Puerto Rico Rule of Civil 12 P ro c e d u re 65.3, 65.3, P.R. Laws Ann. tit. 32, App. III R. 65.3, requires that "[i]mmediately 13 u p o n the entry of an order or judgment, the clerk shall serve notice thereof upon all the 14 p a rtie s ...in the manner proscribed in Rule 67." 15 From the Superior Court's Minutes,6 it is clear that Judge Jiménez-Nettleship verbally 16 s e t aside the October 2006 Order and Writ of Execution. However, the minutes of the hearing 17 w e re never notified to the parties or signed by the Judge. This Court finds that such an order 18 is not final, and thus enforceable, until the Courtroom Clerk issues the Minutes for the 19 p ro c e e d in g s , the Judge signs the same, and the parties are notified in accordance with Rule 65.3. 20 UBS argues that Plaintiff's request for reconsideration, and her appeals of the same, 21 a c k n o w le d g e the validity of Judge Jiménez-Nettlehip's verbal order.7 This does not, however, 22 23 24 25 26 Although Plaintiff's counsel questions the validity of the Minutes sent by Bobonis, she admits that she later verified that said Minutes were in the court's case file. See Plaintiff's SUMF ¶¶ 22 & 24, and accompanying exhibits. Therefore, there is no controversy as to the fact that the hearing's Minutes were entered in the case's file, albeit in December 2006. Plaintiff knew that Judge Jiménez-Nettleship issued a verbal order during the November 13, 2006 hearing, vacating the Order to Execute Judgment served upon UBS on October 20, 2006. UBS's
7 6

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c h a n g e the fact that the Minutes were never notified to the parties, or signed by the Judge. A lth o u g h Plaintiff's counsel verbally requested reconsideration in open court, and sought relief f ro m Judge Jiménez-Nettleship's verbal order by filing a petition to the Puerto Rico Court of A p p e a ls , and later to the Supreme Court, this alone does not confer validity upon the Judge's v e rb a l order, in light of the aforementioned applicable rules and case law. Especially

c o n s id e rin g that the Court of Appeals and the Supreme Court denied Plaintiff's requests for re lie f due to the lower court's non-compliance with Rule 32. Thus the appellate courts' refusals t o entertain Plaintiff's request were based solely on their lack of jurisdiction. Specifically, P la in tif f 's requests were premature absent a written order by the Superior Court. It is well s e ttle d law that dismissal for lack of jurisdiction does not operate as an adjudication on the m e rits. See Puerto Rico Rule of Civil Procedure 39.2, P.R. Laws. Ann. tit 32, Ap. III, and F e d e ra l Rule of Civil Procedure 41(b), 28 U.S.C. R. 41(b). Additionally, even though Plaintiff did not request that the Minutes be signed by the J u d g e , and notified to the parties, neither did Efrón or UBS prior to releasing Efrón's assets. It w a s clearly foreseeable that releasing Efrón's assets could be extremely prejudicial to Plaintiff. The mistake and omission by the Courtroom Clerk, and subsequently UBS's failure to a d e q u a te ly verify the Superior Court's final order, caused considerable injuries to Plaintiff.

SUMF ¶ 20. As a result, Plaintiff filed the afore-mentioned motion before the Court of Appeals, seeking to "[s]et aside the order of Execution of Judgment and announce[ment] that he was not going to render any order of execution," and questioning Judge Jiménez-Nettleship's "authority to... stay the execution of judgment," and to "refuse to issue an order of execution." Id. Plaintiff also characterized the ministerial duty that prompted the petition for mandamus as "[the] duty of ordering the execution of the judgment," and asked the following rhetorical question: "with what authority Judge Jiménez-Nettleship announced that he is not going to issue any order of execution?" Id. Finally, Plaintiff argued that, as a result of Judge Jiménez-Nettleship's ruling, the attachment order previously served upon UBS was "ineffective," as Efrón could freely dispose of his assets. Id. Specifically, she stated that "if the proceedings before the FIC [First Instance Court] are not immediately stayed, this would allow Efrón to transfer property which are now at UBS to foreign jurisdictions causing severe damage to Candelario and makes the judgment in this case ineffective."Id.

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A lb e it initially UBS sought to comply with the court's orders, and even requested further c la rif ic a tio n regarding its implementation, it finally released Efrón's assets in the absence of a v a lid written court order, or a specific instruction regarding this issue. Therefore, this Court f in d s that UBS failed to act like a prudent and reasonable person under the circumstances, and to exercise the owed duty of care. As a direct result of UBS's negligent actions, Plaintiff has s u f f e re d damages. Lastly, this Court notes that although UBS argues that it did not know about the N o v e m b e r 13, 2006 hearing nor the Judge's verbal order until February 2007, the uncontested f a c ts show that UBS was aware that a hearing would be held on November 13, 2006, and d e c id e d not to attend despite their questions about the extent of the Order and Writ of E x e c u tio n . Specifically, in its "Motion to Clarify Order," UBS suggested to the court that the O rd e r and Writ of Execution's scope be clarified by the court and the parties at the November 1 3 , 2006 hearing. Plaintiff's SUMF ¶ 11. Therefore, although Plaintiff's counsel had no o b l ig a tio n to inform UBS about said hearing, UBS's assertions that it was unaware that a h e a rin g would be held are incorrect. C o n s id e rin g the foregoing, this Court cannot conclude that Plaintiff's alleged a c k n o w le d g m e n t of the verbal order's validity, together with the appellate court's dismissals o f Plaintiff's petitions, amount to making Judge Jiménez-Nettleship's order enforceable from its issuance. UBS's reliance on unsigned Minutes, instead of a properly notified order or a s p e c if ic instruction from the Superior Court, shows negligence which is properly addressed u n d e r Article 1802. Monies owed A lth o u g h Defendant posits that Account WR-00855 had no value since May 2007, P la in tif f points out that purchases, sales, and transfers of assets took place on said account from O c to b e r 2006 to May 2007. See UBS's SUMF & Plaintiff's OSMF ¶ 27. Moreover, as of

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F e b ru a ry 2007, when Efrón's accounts were improperly released, Account JX60059 had values a n d assets worth over $11 million. See Docket # 23-31. By July 31, 2007, however, its value d e c re a s e d to $1,155,367.71. See Docket # 31-24. Finally, on August 31, 2007, the account's v a lu e was $351,783.13. Docket # 31-24. Said amount was subsequently paid to Candelario. See D o c k e t #23-25. T h is Court finds that insofar as Account JX60059 was pledged as a Collateral Account f o r loan Account 5V50203, UBS acted correctly in paying off loan account 5V50203 with the f u n d s from the former. However, as previously stated, from the date of their release in February 2 0 0 7 to July 31, 2007, the values and assets in Account JX60059 decreased from approximately $ 1 1 million to $1,155,367.71. Thus UBS's negligent release of Efrón's accounts in February 2 0 0 7 led to a significant decrease of the assets in Account JX60059, and ultimately deprived P la in tif f from receiving the amount ordered by the Superior Court. Specifically, the Superior C o u rt awarded Plaintiff $4,160,522.61, and she only received $351,783.19. Therefore, as a d ire c t result of UBS's negligence, Plaintiff did not receive $3,808,739.48. Insofar as UBS should not have released Efrón's assets absent a written court order, or s p e c if ic instruction from the Superior Court, this Court finds that UBS is liable to Plaintiff for th e amount of $3,808,739.48, plus interest over said sum at a rate of 10.50% annually from June 4 , 2001. Although, as previously noted, UBS did not err in paying off loan account 5V50203, a s of February 2007, Efrón's accounts had sufficient funds to satisfy said loan, as well as the O rd e r and Writ of Execution. Therefore, the payment of Loan Account 5V50203 would not h a v e adversely affected Plaintiff. Conclusion F o r the reasons stated above, Plaintiff's motion for summary judgment is GRANTED in part and DENIED in part, and UBS's motion for summary judgment is GRANTED in

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p a r t and DENIED in part. Plaintiff is entitled to receive $3,808,739.48, plus interest over said 3 s u m at a rate of 10.50% annually from June 4, 2001. 4 I T IS SO ORDERED. 5 In San Juan, Puerto Rico, this day 13th of January, 2010. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 S /S a lv a d o r E. Casellas S A L V A D O R E. CASELLAS U .S . Senior District Judge