MB Auto Care Management, Inc. v. Plaza Carolina Mall, L.P. et al

Filing 24

ORDER. GRANTED 10 Motion for Judgment on the Pleadings. Signed by Judge Salvador E Casellas on 4/20/2010. (LB)

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I N THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO M B AUTO CARE MANAGEMENT, INC. D /B /A PRONTO WASH PLAZA C A R O L IN A Plaintiff v. P L A Z A CAROLINA MALL, L.P. ET AL D e f e n d a n ts Civil No. 10-1095 (SEC)

OPINION AND ORDER P e n d in g before this Court is Defendants Plaza Carolina Mall, L.P., et al's Motion for J u d g m e n t on the Pleadings (Docket # 10), Plaintiffs MB Auto Care Management, Inc. D/b/a P ro n to Wash Plaza Carolina's opposition (Docket # 18), and Defendants' reply (Docket # 19). A f te r reviewing the filings and the applicable law, Defendants' motion is GRANTED. Factual and Procedural Background O n February 2, 2010, Defendants removed the present suit to this Court, under diversity ju ris d ic tio n . 28 U.S.C. § 1441. Shortly thereafter, Defendants answered the complaint, and filed a cross claim against Plaintiff. Docket # 4. On March 8, 2010, Plaintiff moved to remand. D o c k e t # 13. According to Plaintiff, insofar as the complaint sought declaratory relief, the a m o u n t in controversy requirement was not met, and this Court lacked jurisdiction over the case. Id . Defendants opposed, arguing that the amounts sought in the complaint well exceeded the $ 7 5 ,0 0 0 minimum. Docket # 14. On this front, Defendants argued that in actions seeking d e c la ra to ry judgment, the amount in controversy is measured by the value of the object of litig a tio n , the protected right, and the extent of the injury to be prevented. Id.

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O n March 17, 2010, this Court denied Plaintiff's motion to remand. Docket # 15. In the in te r im , Defendants moved for judgment on the pleadings. Docket # 10. Plaintiff then opposed, a n d Defendants replied. Standard of Review F ED. R. CIV. P. 12 (c) states that "[a]fter the pleadings are closed but within such time a s not to delay the trial, any party may move for judgment on the pleadings." A judgment on the p le a d in g s is not proper "unless it appears beyond a doubt that the nonmoving party can prove n o set of facts in support of her claim which would entitle her to relief." Martinez v. Puerto R ic o , 594 F. Supp. 2d 181, 184 (D.P.R. 2009). A motion for judgment on the pleadings uses the s a m e standard as a motion to dismiss under FED. R. CIV. P. 12(b)(6). See Medina Pérez v. F a j a rd o , 257 F. Supp. 2d 467, 470-71 (D.P.R. 2003); see also Ad-Hoc Committee of Baruch B la c k & Hispanic Alumni Assoc. v. Bernard M. Baruch, 835 F. 2d 980, 982 (2 nd Cir. 1987). T o survive a Rule 12(b)(6) motion, Plaintiffs' "well-pleaded facts must possess enough h e f t to show that [they are] entitled to relief." Clark v. Boscher, 514 F. 3d 107, 112 (1 st Cir. 2 0 0 8 ).1 In evaluating whether Plaintiffs are entitled to relief, the court must accept as true all o f their "well-pleaded facts [and indulge] all reasonable inferences therefrom" in the plaintiff's f a v o r. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007). The First Circuit has held th a t "dismissal for failure to state a claim is appropriate if the complaint fails to set forth factual a lle g a tio n s , either direct or inferential, respecting each material element necessary to sustain re c o v e ry under some actionable legal theory." Gagliardi v. Sullivan, 513 F. 3d 301, 305(1 st Cir. 2 0 0 8 ). Courts "may augment the facts in the complaint by reference to documents annexed to

FED. R. CIV. P. 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to allow the defendant fair notice of what the claim is and the grounds upon which it rests. Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1964 (2007).

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th e complaint or fairly incorporated into it, and matters susceptible to judicial notice." Id. at 3 0 5 -3 0 6 . However, in judging the sufficiency of a complaint, courts must "differentiate b e tw e e n well-pleaded facts, on the one hand, and `bald assertions, unsupportable conclusions, p e rip h ra s tic circumlocution, and the like,' on the other hand; the former must be credited, but th e latter can safely be ignored." LaChapelle v. Berkshire Life Ins., 142 F.3d 507, 508 (quoting A u ls o n v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996)); Buck v. American Airlines, Inc., 476 F. 3d 2 9 , 33 (1st Cir. 2007); see also Rogan v. Menino, 175 F.3d 75, 77 (1 st Cir. 1999). Thus Plaintiffs m u s t rely on more than unsupported conclusions or interpretations of law, as these will be re je c te d . Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir. 1997) (citing Gooley v. Mobil Oil Corp., 8 5 1 F.2d 513, 515 (1st Cir. 1988)). T h e re f o re , "even under the liberal pleading standards of Federal Rule of Civil Procedure 8 , the Supreme Court has recently held that to survive a motion to dismiss, a complaint must a lle g e `a plausible entitlement to relief.'" Rodríguez-Ortíz v. Margo Caribe, Inc., 490 F.3d 92 (1st Cir. 2007) (citing Twombly, 127 S. Ct. at 1965). Although complaints do not need detailed f a c tu a l allegations, the "plausibility standard is not akin to a `probability requirement,'but it a sk s for more than a sheer possibility that a defendant has acted unlawfully." Twombly, 127 S . Ct. At 1965; see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). A plaintiff's obligation to "provide the `grounds' of his `entitle[ment] to relief' requires more than labels and c o n c lu s io n s , and a formulaic recitation of the elements of a cause of action will not do." T w o m b ly, 127 S. Ct. At 1965. That is, "factual allegations must be enough to raise a right to re lie f above the speculative level, on the assumption that all allegations in the complaint are tru e ." Parker v. Hurley, 514 F. 3d 87, 95 (1 st Cir. 2008).

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T h e Court "may augment the facts in the complaint by reference to documents annexed to the complaint or fairly incorporated into it, and matters susceptible to judicial notice." G a g lia rd i v. Sullivan, 513 F. 3d 301, 305-06 (1 st Cir. 2008). A p p lic a b le Law and Analysis In their motion, Defendants argue that judgment on the pleadings is proper because the le a s e agreement signed by the parties on January 8, 2008 expired on December 31, 2009. A c c o rd in g to Defendants, although the first page of the agreement has a typographical error w h ic h provides that the lease ends on "12/31/2010," the "actual terms of the document clearly s h o w s that the contract expires on December 31, 2009, including the schedule of payments, w h ic h unequivocally shows that it ends on 12/31/2009." Docket # 10, p. 2. They argue that n o tw ith s ta n d in g the agreement's clear language, Plaintiff failed to vacate the premises by D e c e m b e r 31, 2009. As such, Defendants sent a letter on January 2, 2010, informing Plaintiff th a t the lease was terminated effective February 6, 2010, and to vacate the premises by said d a te . See Docket # 4-3. They argue that Plaintiff failed to vacate the premises, and continues to occupy the same despite the agreement's termination. In opposition, Plaintiff posits that there are material issues of fact that preclude a ju d g m e n t on the pleadings, such as the parties' intentions in determining whether the end date is a typographical error. Plaintiff further notes that in the January 4, 2010 letter, Defendants did n o t cite a typographical error in the lease agreement's expiration date, and instead terminated th e same under the early termination clause. D e f e n d a n ts replied, arguing that even if the lease agreement expired on December 31, 2 0 1 0 , paragraph 3 recognizes the landlord's right to early termination upon thirty days written n o tic e to tenant. They contend that insofar as the letter sent on January 4, 2010 served as a

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w ri t t e n notice under paragraph 3 of the lease agreement, Plaintiff should have vacated the p re m is e s by February 6, 2010. In analyzing the present motion, this Court accepts as true all of the complaint's wellp le a d e d facts, and draws all reasonable inferences in Plaintiff's favor. According to the c o m p la in t, the parties executed a lease agreement on January 8, 2008, for a total of $90,000. P la in tif f avers that said agreement was set to expire on December 31, 2010, notwithstanding, D e f e n d a n ts unilaterally terminated the same prior to the end date. Upon reviewing the lease agreement, this Court notes that paragraph 3 expressly provides that "...the Landlord may, at any time during the term of this Lease, in its sole discretion and w ith or without cause, elect to terminate this Lease upon thirty (30) days advance written notice to Tenant...Tenant understands and agrees that it is receiving terms and conditions which have b e e n requested by and are advantageous to Tenant in return for granting Landlord flexibility w ith regard to the Space on account of the short term of this Lease, the Landlord's right to te rm in a te the Lease on short notice provided herein..." Docket # 4-2, p. 3. It further states that th e tenant acknowledges that no one has made any representations or promises regarding re n e w a l or extension of the lease, "or limiting or eliminating the Landlord's right to terminate o n short notice..." Id. In the letter dated January 4, 2010, Defendants notified Plaintiff that "[i]n a c c o rd a n c e to [the lease agreement] under paragraph 3, Landlord's Right to Early Termination, L a n d lo rd hereby notified tenant that it has elected to terminate the lease effective 02/06/10 and d e m a n d s possession of the demised Space by no later than the Termination Date." Docket # 4-3. A s Defendants correctly point out, paragraph 3 of the lease agreement unambiguously a llo w s for the early termination of the lease with thirty days' written notice to tenant. A d d itio n a lly, said clause is not conditioned upon cause for the termination other than the la n d lo rd 's will. Plaintiff does not contest the early termination clause's validity, nor does it

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a lle g e error, violence, intimidation or deceit that would invalidate its consent. Instead, Plaintiff f o c u se s on the alleged termination date of the lease agreement, which Defendants contest is a typ o g ra p h ic a l error. A rtic le 1233 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, § 1233, "determines th e manner in which courts should interpret contracts under dispute as to the meaning of their te rm s ." Borschow Hosp. & Medical Supplies v. Cesar Castillo Inc., 96 F.3d 10, 15 (1st Cir. P.R. 1 9 9 6 ) (citing Hopgood v. Merrill Lynch, Pierce, Fenner & Smith, 839 F. Supp. 98, 104 (D.P.R. 1 9 9 3 )). Said article provides that "[i]f the terms of a contract are clear and leave no doubt as to th e intentions of the contracting parties, the literal sense of its stipulations shall be observed." " U n d e r Puerto Rico law, an agreement is `clear' when it can `be understood in one sense alone, w i t h o u t leaving any room for doubt, controversies or difference of interpretation . . .'" E x e c u tiv e Leasing Corp. v. Banco Popular de P.R., 48 F.3d 66, 69 (1st Cir. P.R. 1995) (citing C a tu llo v. Metzner, 834 F.2d 1075, 1079 (1st Cir. 1987)). In analyzing Article 1233's scope, the First Circuit has held that the "Puerto Rico Civil C o d e and parol evidence rule2 both preclude reference to extrinsic evidence where contract te rm s are clear." Graphics Supply v. Polychrome Corp., No. 96-1888, slip. op. at 8 (1st Cir. P.R. J u n e 23, 1997) (citing Borschow Hosp., 96 F.3d at 15-16; see also Executive Leasing, 48 F.3d

Puerto Rico's parol evidence rule, P.R. Laws Ann. tit. 32, App. IV, R. 69(B) (1983) provides that "[w]hen in an oral or written agreement, either public or private, all the terms and conditions constituting the true and final intention of the parties have been included, such agreement shall be deemed as complete, and therefore, there can be between the parties, or successors in interest, no evidence extrinsic to the contents of the same, except in the following cases: (1) Where a mistake or imperfection of the agreement is put in issue by the pleadings; (2) Where the validity of the agreement is the fact in dispute. This rule does not exclude other evidence of the circumstances under which the agreement was made or to which it is related such as the situation of the subject matter of the instrument or that of the parties, or to establish illegality or fraud.

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a t 69 (finding that the admissibility of "other evidence" under Puerto Rico law depends in the f irs t instance on the clarity of the written contract); Mercado-Garcia v. Ponce Fed. Bank, 979 F .2 d 890, 894 (1st Cir. 1992) (holding that even where both parties offered extrinsic evidence c o n tra d i c tin g the clear terms of a promissory note, court is nonetheless "bound to look no f u rth e r than the note itself"). Thus Article 1233 "obliges us to abide by the literal meaning of th e terms of the contract when, as in the present case, they leave no doubt as to the intention of th e contracting parties." Borschow Hosp., 96 F.3d at 16 (citing Marina Ind. Inc. v. Brown B o v e ri Corp., 114 P.R. Dec. 64 (1983) (official translation)); see also Hopgood, 839 F. Supp. A t 106 (under Article 1233 the clear terms of the contract are the "embodiment of the in d is p u ta b le intent of the parties as they entered into the contract"). In s o f a r as the lease agreement clearly and unambiguously allows for the early te rm in a tio n of the lease upon landlord's request, without more, Plaintiff's arguments regarding th e alleged end date are irrelevant. More so considering that the Supreme Court of Puerto Rico h a s long-recognized the validity of these types of clauses, where one party unilaterally ends the c o n tra c tu a l relationship. Flores v. Mun. de Caguas, 14 P.R. Offic. Trans. 674 (1983); Casanova v . P.R. Amer. Ins. Co., 6 P.R. Offic. Trans. 960 (1978). Therefore, this Court need not delve in to whether the expiration date was December 31, 2009 or December 31, 2010. Because the lease agreement's early termination clause granted the landlord the right to e n d the contractual relationship without cause as a matter of law, judgment on the pleadings is p ro p e r in this case. In light of the foregoing, Plaintiff is ordered to vacate the premises, and shall p a y Defendants holdover tenancy rent calculated at one thirtieth of 250% of the minimum rent d u rin g the last full calendar month of the lease agreement.

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B a s e d on the above, Defendants' motion for judgment on the pleadings is GRANTED, a n d the instant case is DISMISSED with prejudice. I T IS SO ORDERED. In San Juan, Puerto Rico, this 20 th day of April, 2010. S / Salvador E. Casellas S A L V A D O R E. CASELLAS U.S. Senior District Judge