BPP Retail Properties LLC v. North American Roofing Services, Inc. et al

Filing 69

ORDER re 12 Motion to Dismiss: DENIED. Signed by Judge Francisco A. Besosa on 03/31/2014. (EM)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
BPP RETAIL PROPERTIES, LLC,
Plaintiff,
Civil No. 13-1259 (FAB)

v.
NORTH AMERICAN ROOFING
SERVICES, INC., et al.,
Defendants.

MEMORANDUM & ORDER
BESOSA, District Judge.
Before the Court is a motion to dismiss filed by defendants
North

American

Construction

Roofing

Materials,

Services,
Inc.

Inc.

(“Carlisle

(“NAR”),

Carlisle

Construction”),

and

Carlisle Syntec Inc. (“Carlisle Syntec”). (Docket No. 12.) After
considering

the

defendants’

motion,

as

well

as

all

relevant

responses, replies and sur-replies (Docket Nos. 21, 22, 31, & 35),
the Court DENIES defendants’ motion to dismiss.
I.

Procedural Background
On March 28, 2013, BPP Retail Properties, LLC (“BPP”) filed a

complaint alleging negligence and breach of contract claims against
NAR,

and

a

products

liability

claim

against

NAR,

Carlisle

Construction, and Carlisle Syntec. (Docket Nos. 1 & 6.) One day

Civil No. 13-1259 (FAB)

2

earlier, on March 27, 2013, NAR and Carlisle Construction1 filed a
declaratory judgment action in Buncombe County Superior Court in
North Carolina; BPP subsequently removed the action to the District
Court

for

the

Western

District

of

North

Carolina

based

on

diversity. (Docket No. 12-4.) NAR and Carlisle Construction sought
a declaration that six warranties into which the parties allegedly
entered limited BPP’s recourse and provided the sole legal remedy
for any dispute regarding the roofs. (Docket No. 12-2.)
On May 8, 2013, defendants moved to dismiss the complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket No.
12.) On March 18, 2014, the District Court for the Western District
of

North

Carolina

dismissed

NAR

and

Carlisle

Construction’s

declaratory judgment action without prejudice, finding that the
District

of

Puerto

Rico

was

the

appropriate

forum

for

the

litigation of the dispute. (Docket No. 65.)
II.

Motion to Dismiss Standard
“The question confronting a court on a motion to dismiss is

whether all the facts alleged, when viewed in the light most
favorable to the plaintiffs, render the plaintiff’s entitlement to
relief plausible.” Ocasio-Hernandez v. Fortuño-Burset, 640 F.3d 1,
14

(1st

original).

1

Cir.

2011)(internal

Plaintiffs

faced

citations

with

a

omitted)(emphasis

motion

to

dismiss

in

cannot

Carlisle Syntec was not a party to the declaratory judgment
action.

Civil No. 13-1259 (FAB)

3

“‘proceed perforce’ by virtue of allegations that merely parrot the
elements of the cause of action.”

Id. at 12.

A court must treat

any non-conclusory factual allegations in the complaint as true,
“even if seemingly incredible.”

Id.

While a court’s review on a

motion to dismiss is limited to the allegations contained in the
complaint itself, Glaros v. Perse, 628 F.2d 679, 681 (1st Cir.
1980), the

First

Circuit Court

of

Appeals has

recognized an

exception permitting courts to consider “documents the authenticity
of which are not disputed by the parties,” Rivera v. Centro Medico
de Turabo, Inc., 575 F.3d 10, 15 (1st Cir. 2009), containing “(a)
‘implications from documents’ attached to or fairly ‘incorporated
into the complaint,’ (b) ‘facts’ susceptible to ‘judicial notice,’
and (c) ‘concessions’ in plaintiff’s ‘response to the motion to
dismiss.’”

Schatz v. Republican State Leadership Comm., 669 F.3d

50, 55-6 (1st Cir. 2012)(citing Arturet-Velez v. R.J. Reynolds
Tobacco Co., 429 F.3d 10, 13 n.2 (1st Cir. 2005)). See also Pension
Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192,
1196 (3d Cir. 1993)(considering documents that were annexed to
defendants’

motion

to

dismiss

and

integral

to

plaintiff’s

claims)(internal citations omitted); Field v. Trump, 850 F.2d 938,
949 (2d Cir. 1988)(same).
III. Factual Allegations
In 2007, BPP purchased six shopping centers from the Puerto
Rico affiliates of Commercial Properties Development Company

Civil No. 13-1259 (FAB)

4

(collectively “Commercial Properties”).2 Prior to the sale,
Commercial Properties hired NAR to replace the properties’
roofing and entered into seven construction contracts
(“Construction Contracts”) with NAR for the work. The contracts
required NAR to install waterproof roof membranes — specifically,
Reinforced Mechanically Attached Thermoplastic Polyolefin Laser
Weld Roofing Systems (“TPO Membranes”) — that were the “best of
their respective kinds.” Some of the TPO Membranes were
manufactured and supplied by Carlisle Construction and Carlisle
Syntec. The roof installations were completed prior to BPP’s
purchase of the properties. After BPP purchased the properties,
the TPO Membranes began to break down prematurely, resulting in
leaking and damage to the buildings. On March 28, 2013,
Commercial Properties assigned all of its rights arising from or
related to the Construction Contracts to BPP. (Docket No. 6-1.)
III. Discussion
Defendants move for dismissal on three grounds. First, they
contend that because they filed a “mirror-image lawsuit” in North
Carolina prior to the filing of this action, the complaint should
be dismissed pursuant to the first-filed doctrine. Second,
defendants contend that a forum-selection clause contained in
NAR’s Standard Limited Warranty (“NARCO Warranties”) purchased by

2

Commercial Properties
distinct from BPP.

is

an

entity

wholly

separate

and

Civil No. 13-1259 (FAB)

5

BPP mandates dismissal. Last, defendants claim that Commercial
Properties’ assignment of its contractual rights to BPP is null
ab initio, requiring dismissal of the complaint. The Court
addresses each ground for dismissal in turn.
A.

The First-Filed Doctrine
Defendants contend that the first-filed doctrine

mandates dismissal of BPP’s lawsuit in Puerto Rico in favor of
NAR and Carlisle Construction’s declaratory judgment action
previously filed in North Carolina. The first-filed doctrine is
an equitable doctrine of forum selection applied where “identical
actions are proceeding concurrently in two federal courts.”
Cianbro Corp. v. Curran-Lavole, Inc., 814 F.2d 7, 11 (1st Cir.
1987); Feinstein v. Brown, 304 F. Supp. 2d 279, 280-81 (D.R.I.
2004).

Because the District Court for the Western District of

North Carolina has since dismissed that action, however, there is
no longer a concurrent proceeding, rendering this ground for
dismissal moot. In any event, the two proceedings were not
identical. The North Carolina proceeding was a suit brought
pursuant to the North Carolina Declaratory Judgment Act by NAR
and Carlisle Construction. (Docket No. 12-2.) This proceeding, in
contrast, is a negligence, breach of contract, and products
liability action brought pursuant to Puerto Rico law against NAR,
Carlisle Construction, and Carlisle Syntec. Accordingly,
defendants NAR and Carlisle Construction’s motion to dismiss

Civil No. 13-1259 (FAB)

6

based on the first-filed doctrine is DENIED. Carlisle Syntec was
not a party to the North Carolina declaratory judgment action and
accordingly had no standing to move for dismissal based on the
first-filed doctrine; its motion to dismiss based on the firstfiled doctrine is also DENIED.
B.

The Forum-Selection Clause
Defendants also move for dismissal pursuant to a forum-

selection clause contained in a document appended to defendants’
motion — the NARCO Warranties. (Docket No. 12-1.) In the First
Circuit, a motion to dismiss based on a forum-selection clause is
treated as a motion to dismiss for failure to state a claim
pursuant to Federal Rule of Civil Procedure 12(b)(6). See, e.g.,
Silva v. Encyclopedia Britannica Inc., 239 F.3d 385, 387-88 (1st
Cir. 2001)(internal citations omitted). Because the Court does
not find an adequate basis to conclude that these documents are
undisputably authentic, see Rivera, 575 F.3d at 15, the Court
declines to consider them for the purposes of this motion to
dismiss,3 and is left with no forum-selection clause to address
at this time. Accordingly, defendants’ motion to dismiss based on
the forum-selection clause is DENIED.

3

Those documents and arguments would be more appropriately
considered in support of a motion for summary judgment.

Civil No. 13-1259 (FAB)
C.

7

The Assignment
Lastly, defendants claim that BPP’s claims against NAR4

must be dismissed because they are based on an invalid assignment
of contract rights by Commercial Properties to BPP. (Docket No.
12 at pp. 22-28.) Defendants claim that the assignment was
invalid because (1) NAR did not consent to the assignment, in
violation of Puerto Rico law; (2) the Construction Contracts
prohibit the attempted assignment; (3) the assignment otherwise
violates NAR’s legal rights; and (4) the Construction Contracts
expired well before the attempted assignment occurred. The Court
addresses each argument in turn.
1.

The Assignment Is Void Pursuant to Puerto Rico Law
NAR contends that because NAR did not consent to

the assignment from Commercial Properties to BPP, the assignment
is invalid. Puerto Rico law permits the assignment of rights
acquired pursuant to a contract, so long as the rights are not
purely personal and the contract does not prohibit it. Laws of
P.R. Ann. tit. 31, § 3029; Robles v. Superior Court, 85 P.R.R.
640, 647-48 (1962). The right to damages for a breach of contract
is assignable. See Carlo v. Vargas, 66 P.R.R. 387, 389
(1946)(holding that contract rights were not purely personal and

4

The Court addresses this argument as it applies to NAR only
because BPP’s claims against Carlisle Construction and Carlisle
Syntec sound in products liability and are not contingent on any
assigned contract rights.

Civil No. 13-1259 (FAB)

8

were accordingly assignable); Ojeda v. Fernandez, 32 P.R.R. 688,
692-93 (1924)(holding that the right to claim damages for breach
of contract is assignable).
NAR’s argument relies on a Puerto Rico Law 755
case, Goya de Puerto Rico, Inc. v. Rowland Coffee, 206 F. Supp.
2d 211 (D.P.R. 2002). In Goya, the district court addressed
whether Goya (the obligor) could bring a claim against Tetley
(the assignor) for transferring its contractual rights to Rowland
(the assignee). Id. at 217.

The Court stated that pursuant to

Puerto Rico contract law, a valid assignment occurs where “the
three interested parties . . . concur in the act of the
assignment.” Id. at 218 (citing J. Puig Brutau, Compendio de
Derecho Civil, Vol. II, pp.243-44 (3d ed. 1988)). See also
Unilever Home and Pers. Care USA v. P.R. Beauty Supply, 162 Fed.
Appx. 22, 26 (1st Cir. 2006).6 The court noted that such an
assignment releases the assignor from liability to the obligor.
Id. Finding that Goya had essentially consented to the assignment
through conduct, the court held that Goya’s claims against Tetley

5

Puerto Rico’s Law 75 governs the business relationship
between “principals” and local “distributors” appointed to market
their products in Puerto Rico. See Caribe Indus. Sys., Inc. v.
Nat’l Starch and Chem. Co., 212 F.3d 26, 29 (1st Cir. 2000).
6

The Court notes that both Goya and Unilever analyzed the
issue of assignment of rights in the context of Law 75, and are
thus distinguishable from the facts of this case.

Civil No. 13-1259 (FAB)

9

failed because Tetley had been liberated from liability through
its assignment of rights to Rowland. Id. at 219.
Goya does not control here, where the assignee
(BPP) seeks relief against the obligor (NAR), and the assignor
(Commercial Properties) — who is not a party to this case — seeks
no release from liability.7 The complaint’s allegations indicate
that Commercial Properties entered into a valid assignment
agreement with BPP, and that NAR was aware of BPP’s position as
the new owner of the properties.
2.

The Construction Contracts Prohibit the Assignment
NAR further contends that because the Construction

Contracts specifically permitted the assignment of rights to one
class of assignees — banks and lending institutions — they
prohibited any other type of assignment. (Docket No. 12 at p.
24.) Section 20.1 of the Construction Contracts states:
This contract and performance bond of the
Contractor may be assigned by Owner to any
bank or lending institution making
construction loans in connection with the
project without any other formality.
Contractor and the bonding company hereby
consent to such assignments and subordinate
their lien to the lien of the bank or lending
institution, it being understood that the
lien of the bank or lending institution is t
(sic) be paramount, regardless of date of
execution of this contract or commencement of
the work at the site.

7

To the contrary, the assignment agreement expressly states,
“Any and all of Assignor’s obligations under the contracts with NAR
will remain under Assignor’s responsibility.” (Docket No. 6-1.)

Civil No. 13-1259 (FAB)

10

(Docket No. 6-2.) NAR urges the Court to apply the contractual
interpretation maxim of expresio unius est exclusio alterius,
which instructs that “when parties list specific items in a
document, any item not so listed is typically thought to be
excluded.” Lohnes v. Level 3 Comm., Inc., 272 F.3d 49, 61 (1st
Cir. 2001)(internal quotation and citation omitted). BPP responds
that while the section intended to dispense with formalities for
a specific type of assignment, it cannot be construed as an antiassignment clause. The Court agrees; such a result is not
mandated by the language of the clause. Given that contract
rights are freely assignable pursuant to Puerto Rico law, see
Laws of P.R. Ann. tit. 31, § 3029, a clearer statement would be
required to prohibit all assignments. The clause cited by NAR,
without more, does not warrant dismissal of the complaint.
3.

The Assignment Otherwise Violates NAR’s Legal
Rights
NAR next argues that the assignment otherwise

violates its legal rights by materially increasing the burden or
risk imposed by the contracts on NAR. This argument relies on
language in the NARCO Warranties, which, as mentioned above, the
Court declines to consider at this stage. Accordingly, this
argument fails.

Civil No. 13-1259 (FAB)
4.

11

The Construction Contracts Expired Before the
Attempted Assignment
Last, NAR argues that because the Construction

Contracts expired before Commercial Properties assigned its
rights to BPP, there were no remaining rights to assign, and the
complaint must be dismissed. The Construction Contracts provided
for the installation of roofs using materials “the best of their
respective kinds.” (Docket No. 6-2 at p. 6.)

Because the Court

declines to consider the NARCO Warranties at this time, a
reasonable inference remains that NAR’s liability under the
contracts extended beyond the completion of the installation,
pursuant to those or other warranties. See Laws of P.R. Ann. tit.
31, § 4124 (imposing liability on building contractors for full
or partial destruction of a building for ten or fifteen years).
At this stage, this argument does not warrant a dismissal.
Accordingly, for the reasons stated above, NAR’s
motion to dismiss based on the invalidity of the assignment of
contract rights to BPP is DENIED.
IV.

Conclusion
For the reasons articulated above, defendants’ motion to

dismiss the complaint is DENIED.
IT IS SO ORDERED.
San Juan, Puerto Rico, March 31, 2013.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE