CH Properties, Inc. v. First American Title Insurance Company

Filing 92

OPINION AND ORDER re 54 Motion for Summary Judgment; and re 58 Motion for Summary Judgment: GRANTED IN PART and DENIED IN PART. A Status Conference will be held on 9/19/2014 at 9:00 a.m. in Courtroom 2 before Judge Francisco A. Besosa. Signed by Judge Francisco A. Besosa on 09/09/2014. (brc) Modified on 9/9/2014 re Courtroom Number. (re).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
CH PROPERTIES, INC.,
Plaintiff,
v.

CIVIL NO. 13-1354 (FAB)

FIRST AMERICAN TITLE INSURANCE
COMPANY,
Defendants.

OPINION AND ORDER
BESOSA, District Judge.
Before the Court are the cross motions for summary judgment
filed by First American Title Insurance Company (“FATIC”), (Docket
No.

54),

No. 58).

and

CH

Properties,

Inc.

(“CH

Properties”),

(Docket

Having reviewed the motions as well as the corresponding

oppositions and replies, the Court GRANTS in part and DENIES in
part FATIC’s motion for summary judgment and GRANTS in part and
DENIES in part CH Properties’s motion for summary judgment.
I.

Standard
Summary judgment serves to assess the evidence and determine

if there is a genuine need for trial.
895 F.2d 46, 50 (1st Cir. 1990).

Garside v. Osco Drug, Inc.,
The Court may enter summary

judgment “if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a
matter of law.”

Fed. R. Civ. P. 56(a).

A fact is “material” if it

has the potential to “affect the suit’s outcome.”

Cortes-Irizarry

Civil No. 13-1354 (FAB)

2

v. Corporacion Insular de Seguros, 111 F.3d 184, 187 (1st Cir.
1997).

A dispute is “genuine” when it “could be resolved in favor

of either party.”

Calero–Cerezo v. U.S. Dep’t. of Justice, 355

F.3d 6, 19 (1st Cir. 2004).

The party moving for summary judgment

has the initial burden of “demonstrat[ing] the absence of a genuine
issue of material fact” with definite and competent evidence.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Maldonado-Denis
v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994).

It must

identify “portions of ‘the pleadings, depositions, answers to
interrogatories,

and

admissions

on

file,

affidavits, if any’” which support its motion.
at 323 (citing Fed. R. Civ. P. 56(c)).

together

with

the

Celotex, 477 U.S.

Once a properly supported

motion has been presented, the burden shifts to the non-moving
party “to demonstrate that a trier of fact reasonably could find in
[its] favor.”

Santiago-Ramos v. Centennial P.R. Wireless Corp.,

217 F.3d 46, 52 (1st Cir. 2000) (internal citation omitted).

In

making this assessment, the Court must take the entire record in
the light most favorable to the non-moving party and draw all
reasonable inferences in its favor.

Farmers Ins. Exch. v. RNK,

Inc., 632 F.3d 777, 779-80 (1st Cir. 2011).
Cross-motions for summary judgment do not alter the summary
judgment standard, but rather require the trial court to determine
whether either of the parties deserves judgment as a matter of law
on facts that are not disputed.

See Adria Int’l. Grp. Inc. v.

Civil No. 13-1354 (FAB)

3

Ferre Dev., Inc., 241 F.3d 103, 107 (1st Cir. 2001); Wightman v.
Springfield Terminal Ry. Co., 100 F.3d 228, 230 (1st Cir. 1996).
When deciding cross-motions for summary judgment, the Court must
consider each motion separately, drawing inferences against each
movant in turn.

Reich v. John Alden Life Ins. Co., 126 F.3d 1, 6

(1st Cir. 1997).
II.

Material Facts
A.

Issuance of Agreements Over the 5-Cuerda Tract of Land
FATIC is a California corporation, with its principal

place of business in Santa Fe, Orange County, California, and is
duly authorized by the Puerto Rico Insurance Commissioner’s Office
to sell title insurance in Puerto Rico.

(Docket No. 71-1 at p. 1.)

Title Security Group, Inc. (“TSG”) is a Puerto Rico corporation
that, at all times relevant to the Complaint, functioned as FATIC’s
general agent in Puerto Rico.1

Id.

CH Properties is a Puerto Rico

corporation and a wholly-owned subsidiary of HR Properties, Inc.
(“HR Properties”).

(Docket No. 71-1 at p. 3; Docket No. 672 at

¶ 1.)

1

In 2002, TSG was FATIC’s General Agent, and FATIC had a
twenty percent (20%) interest in TSG. Since 2003, TSG has been a
wholly-owned corporation of FATIC. (Docket No. 55-2 at pp. 9–10.)
2

The Court notes that unlike CH Properties, FATIC did not
include the text that it admits or denies in its opposition to
plaintiff’s statement of uncontested facts. (See Docket No. 67.)
In the interest of avoiding unnecessary duplication, the Court
cites FATIC’s answers to plaintiff’s statement of uncontested
facts, (Docket No. 67), without also citing to the corresponding
facts set forth in CH Properties’ brief, (Docket No. 58-1).

Civil No. 13-1354 (FAB)
On

March

11,

4
1996,

the

Puerto

Rico

Recreational

Development Company (predecessor of the Puerto Rico National Parks
Company), the Muncipality of Carolina, and an entity by the name of
Desarrollos Hoteleros de Carolina, Inc. (“Desarrollos Hoteleros”)
entered into an “Agreement of Lease” over a 5.0 cuerda tract of
land located in Isla Verde, Puerto Rico (“the Property”), by which
Desarrollos Hoteleros acquired title over the leasehold interest in
the Property.

(Docket No. 71-1 at p. 2.)

Three years later, on

August 9, 1999, Desarrollos Hoteleros transferred its title rights
and privileges under the Agreement of Lease to an entity by the
name of Sunshine Isle Inn, LLC (“Sunshine”).

Id.

Then, on

August 21, 2001, Sunshine entered into a “Sale-Purchase Agreement”
with HR Properties, by which it granted HR Properties, inter alia,
the

option

Property.

to

acquire

Sunshine’s

leasehold

rights

over

the

Id.
On August 5, 2002, HR Properties and CH Properties, the

plaintiff in this case, signed an “Assignment of Rights,” by which
HR Properties assigned to CH Properties all of its rights under the
Sale-Purchase Agreement with Sunshine regarding the acquisition of
title over the leasehold in the Property.

Id. at p. 3.

Also on

that date, Sunshine and CH Properties entered into a “Deed of
Assignment of Lease,” also described as Deed No. 72 or “Lease
Agreement”,

by

which

Sunshine

“absolutely

and

irrevocably

assign[ed], transfer[red] and convey[ed] to [CH Properties] all of

Civil No. 13-1354 (FAB)

5

the rights, title and interest of [Sunshine] in and to the Lease
Agreement.”

(Id.; Docket No. 55-6 at p. 4; Docket No. 67 at ¶ 2.)

In order to purchase the Lease Agreement, CH Properties secured a
loan from FirstBank Puerto Rico (“FirstBank”) in the amount of
$6,750,000.

(Docket No. 67 at ¶ 3.)

CH Properties also subscribed

and issued a mortgage note in favor of FirstBank in the principal
sum of $7,425,000 on August 5, 2002, which in turn was secured by
a first mortgage lien over the leasehold estate.

(Docket No. 71-1

at pp. 3–4; Docket No. 67 at ¶ 4.)3
As

part

of

the

financing

transaction

between

CH

Properties and FirstBank for acquisition of the leasehold, FATIC
issued two separate title insurance policies on August 5, 2002:
(1) a loan or lender’s policy in favor of FirstBank as the

3

The “Loan Agreement” with FirstBank was secured by CH
Properties and seven other co-borrowers, who “assume[d], jointly
and severally, all of the obligations of Borrower towards
FirstBank” under the Loan Agreement. (Docket No. 71-1 at p. 4.)
The transition that led to CH Properties’ acquisition of title over
the leasehold rights in the Property included a related deal or
transaction by its parent company, HR Properties, for the purchase
of what used to be known as the Crowne Plaza Hotel (now known as
the Marriot Courtyard), which is located adjacent to the Property.
That transaction was financed by Scotiabank de Puerto Rico
(“Scotiabank”) and closed on the same date, August 5, 2002. Id.

Civil No. 13-1354 (FAB)

6

insured,4 and (2) an owner’s policy in favor of CH Properties as
the insured.5

(Docket No. 71-1 at p. 4; Docket No. 67 at ¶ 5.)

CH

Properties paid premiums to FATIC for both policies, amounting to
$16,453.00, which includes amounts for other policies issued on the
same date as part of the overall transaction.

(Docket No. 67 at

¶ 6; Docket No. 58-1 at p. 148.)
As FATIC’s general agent in Puerto Rico, TSG oversaw the
underwriting and issuance of the Owner’s Policy.
at pp. 11–12.)

(Docket No. 71-1

Jose Chipi-Millares is currently TSG’s President,

and at the time of the issuance of the Owner’s Policy in 2002, he
was the Executive Vice President with principal duties in sales and
marketing as well as mortgage residential banking. (Docket No. 552

at

p.

12.)

Chipi-Millares

attended

the

closing

of

the

transactions that took place on August 5, 2002, and he claims to
have delivered the Owner’s Policy.

Id. at pp. 17–20.

Attorney

Eduardo Ferrer-Ramirez de Arellano has been Corporate Director and

4

FirstBank was issued Policy No. FA-31-626399, with a policy
jacket for an American Land Title Association (“ALTA”) 1992
standard form Loan Policy (10/17/92), and corresponding schedules
A and B (hereinafter, the “Lender’s Policy”). (Docket No. 71-1 at
pp. 4–5.) The Lender’s Policy specifies in its Schedule A that
“[t]he estate or interest in the land which is encumbered by the
insured mortgage is: LEASEHOLD,” and that “[t]itle to the estate
or interest in the land is vested in: CH PROPERTIES, INC.” Id. at
p. 5.
5

CH Properties was issued Policy No. FA-33-447620, with a
policy jacket for an ALTA 1992 standard form Owner’s Policy
(10/17/92), and corresponding schedules A and B (hereinafter, the
“Owner’s Policy”). (Docket No. 71-1 at p. 5.)

Civil No. 13-1354 (FAB)

7

Secretary of the Board of CH Properties since its incorporation,
and he participates in all legal and operational matters having to
do with the company.

(Docket No. 71-1 at p. 12.)

Ferrer-Ramirez

was in charge of the acquisition and financing of the leasehold
interest in the Property insured by the Owner’s Policy, and he
appeared at the closing that took place on August 5, 2002, as the
representative of CH Properties.

Id. at pp. 12–13.

He was the

person at CH Properties who would submit documentation to FATIC’s
general agent for the underwriting of the risk behind the title
policy. (Docket No. 55-3 at pp. 31 & 51.) Although Ferrer-Ramirez
accepts that CH Properties bought the Owner’s Policy, he cannot
recall who at CH Properties placed the order for the insurance
policy, the reasons that the company may have had to buy such a
policy, or having received the policy on the date of closing.
(Docket No. 71-1 at p. 13.)

The “closing document” dated August 5,

2002 does not list the Owner’s Policy among the “copies” of
documents maintained by FirstBank in its files.
at pp. 176–77.)

(Docket No. 58-1

Ferrer-Ramirez also testified that he learned

about the existence of the Owner’s Title Policy issued by FATIC
during a deposition taken as part of the federal action in October
2008.

(Docket No. 55-3 at pp. 34–36, 65.)

Attorney Francisco

Pujols was a person with authority to order a title insurance
policy on CH Properties’s behalf; he testified that he remembers
asking for an owner’s policy, that he knew that the policy existed,

Civil No. 13-1354 (FAB)

8

and that he must have seen it on the date of closing because he was
present at the meeting.

Id. at pp. 13–14.

Attorney Pujols had

been hired to help negotiate the Sale-Purchase Agreement between HR
Properties

and

transactions.
initiated

the

Sunshine,

Id. at p. 14.
process

to

and

assist

with

the

financing

After the closing, CH Properties
obtain

governmental

permits

and

endorsements needed to develop the condo-hotel intended for the
5.0-cuerda tract of land.
B.

(Docket No. 67 at ¶ 10.)

State and Federal Lawsuits Regarding the Property
On April 1, 2005, the Municipality of Carolina filed a

complaint before the Puerto Rico Court of First Instance, Carolina
Superior

Division,

against

HR

Properties

and

several

local

government agencies, challenging the validity of the permitting
process followed by HR Properties for the development of a hotel on
the Property.6

(Docket No. 71-1 at p. 16; Docket No. 67 at ¶ 12.)

Five days later, an organization called Comite de Vecinos de Isla
Verde (“Isla Verde Residents Committee,” or “IVRC” for its English
acronym) filed a complaint before the same Commonwealth Court
against CH Properties, FirstBank, and other entities, alleging
defects in the permitting process for the proposed development of
a hotel on the Property, and the nullity of the Lease Agreement as

6

That case is Municipio de Carolina v. HR Properties et al.,
FPE 2005-0226.

Civil No. 13-1354 (FAB)

9

an improper alienation of property in the public domain.7
No. 71-1 at p. 16; Docket No. 67 at ¶ 13.)

(Docket

Shortly before April 6,

2005, representative members of the IVRC trespassed upon the
Property and invaded a portion of the 5-cuerda tract of land,
claiming that the property belongs to the public. (Docket No. 71-1
at p. 16; Docket No. 67.)
Commonwealth

Court

on

A third lawsuit was filed before the

April

7,

2005,

against

CH

Properties,

FirstBank, and other entities in which the Puerto Rico National
Parks Company also alleged the invalidity of the Lease Agreement as
an improper alienation of property in the public domain.8
No. 71-1 at p. 17; Docket No. 67 at ¶ 19.)

(Docket

Shortly thereafter, the

Commonwealth Court consolidated the three cases into one action,
hereinafter “the State Court Actions.” (Docket No. 71-1 at p. 17;
Docket No. 67 at ¶ 20.)

From the beginning of the suits, CH

Properties retained the Andreu & Sagardia Law Firm as its legal
counsel in the State Court Actions.

(Docket No. 67 at ¶ 21.)

On June 9, 2005, the Commonwealth Court issued an order
in the State Court Actions approving a stipulated agreement between
HR Properties and IVRC as a means of “fostering peace and civil
coexistence” during the pendency of litigation; IVRC members were
temporarily allowed to remain on a portion of the premises while HR

7

That case is Comite de Vecinos de Isla Verde et al. v. HR
Properties et al., FPE 2005-0268.
8

That case is Compañia de
Properties, et al., FAC 2005-0513.

Parques

Nacionales

v.

HR

Civil No. 13-1354 (FAB)

10

Properties continued to use a portion for a parking lot.9
No. 71-1 at p. 18.)

(Docket

The next day, FirstBank submitted to TSG a

notice of claim and request for legal representation under its
Lender’s Policy in connection with the State Court Actions.
FATIC

ultimately

approved

FirstBank’s

request

for

Id.
legal

representation in the State Court Actions on August 30, 2005,
subject to an express reservation of rights and thereafter retained
counsel for FirstBank.

Id.; Docket No. 67 at ¶ 23.

Subsequently,

on March 5, 2007, Chicago Title Insurance Company filed a complaint
in this Court (hereinafter “the Federal Court Action”) against
Sunshine.10

(Docket No. 71-1 at p. 18; Docket No. 67 at ¶ 26.)

FirstBank was not a party to, and did not participate as such in,
the Federal Court Action.
C.

(Docket No. 71-1 at p. 20.)

CH Properties’s Request for Coverage
It was not until March 4, 2009, that CH Properties

tendered its notice of claim to FATIC under the Owner’s Policy in
relation

to

the

State

and

Federal

Court

Actions

via

letter

addressed to FATIC’s outside local counsel, Jose A. FernandezJaquete.

(Docket No. 71-1 at p. 20; Docket No. 67 at ¶ 29.)

9

To this day, members or representatives of IVRC and other
squatters continue to occupy the leased property. (Docket No. 67
at ¶ 17.)
10

Because the subject of Chicago Title’s lawsuit is a matter
relevant to whether CH Properties may recover reimbursement for
fees in the Federal Court Action, the Court does not discuss the
factual background of the case here.

Civil No. 13-1354 (FAB)

11

Specifically, CH Properties requested coverage and legal defense,
as well as reimbursement of the attorneys’ fees and expenses it had
incurred up to that date in both the State and Federal Court
Actions.

(Docket No. 71-1 at pp. 20–21.)

It also claimed in its

letter that it had not received a copy of the Owner’s Policy and
had only “recently” become aware of the existence of the Owner’s
Policy during a deposition taken in the Federal Court Action in
October 2008.
On

Id. at p. 21.
March

16,

2009,

FATIC

confirmed

receipt

of

CH

Properties’s letter, and on May 22, 2009, sent a letter to CH
Properties’s

counsel

indicating

that

FATIC

would

provide

CH

Properties with legal defense in the State Court Actions, with an
express reservation of rights under the terms of the Owner’s
Policy, including its Exclusions from Coverage and the exceptions
set forth in the policy’s Schedule B.
Docket No. 67 at ¶ 30.)

(Docket No. 71-1 at p. 21;

FATIC indicated that it had contacted the

law firm of Cancio Nadal Rivera & Diaz to inquire about their
availability to assume CH Properties’s legal representation in the
State

Court

Action,

because

they

were

currently

representing

FirstBank in the same litigation. (Docket No. 55-29 at pp. 11-12.)
FATIC clarified that it would tender legal defense in the State
Court Action on a prospective basis only, and for the purpose of
defending CH Properties’s leasehold right over the property, but
only to the extent justified by the Policy.

Id. at pp. 12.

FATIC

Civil No. 13-1354 (FAB)

12

also directed CH Properties to Section 3 of the Policy, which
required the insured to notify FATIC in a “timely manner and in
writing” of the State Court Action.

Id. at p. 13.

It claimed that

“Insured’s failure to comply with said notice requirement has
prejudiced [FATIC] as otherwise it would have retained single
counsel to represent both the Insured and FirstBank at a much
earlier stage of the proceedings.”

Id.

It also noted, “[H]owever

plausible it may be that the Insured had forgotten it had purchased
title insurance, as implied in your first letter, such memory lapse
or oversight does not relieve [CH Properties] of its contractual
obligation to serve notice to [FATIC] in a timely manner, much less
relieve it of the repercussions of its delayed notice.”

Id.

Consequently, it denied CH Properties’s request for reimbursement
of attorney’s fees and expenses incurred in the State Court Actions
up to that date.

Id.

Regarding the Federal Court Action, however,

FATIC declined CH Properties’s request for legal defense, stating
that CH Properties’s “title is not being disputed or somehow
questioned in those proceedings.

Said litigation does not involve

an alleged defect, lien, encumbrance, or other matter insured
against

by

the

Policy,

but

rather

revolves

around

the

interpretation of a contract clause that, regardless of how it is
interpreted, has no impact or effect whatsoever on the validity of
[CH Properties]’s title as insured under the Policy.”
No. 55-29 at p. 12.)

(Docket

Civil No. 13-1354 (FAB)

13

On June 5, 2009, CH Properties responded to FATIC, again
claiming that it had never received an original or copy of the
Owner’s Policy from FATIC; objecting to the representation of
Cancio Nadal Rivera & Diaz in the State Court Action due to
potential conflicts of interest in the law firm’s representation of
FirstBank; and arguing that even if the Federal Court Action would
not affect the title, its intent is to limit CH Properties’
“ability to claim against Seller for Warranty of Title, and thus
could limit FATIC’s right of subrogation to claim such damages if
it pays the Insured or Bank under the policy.”
at pp. 15–17.)

(Docket No. 55-29

FATIC responded in a letter dated July 21, 2009, to

CH Properties, allowing the insured to use its independent counsel
instead of retaining Cancio Nadal Rivera & Diaz, and detailing the
terms of engagement for proceeding with the legal actions.
pp. 20–24.

Id. at

CH Properties returned the executed engagement letter

to FATIC on August 7, 2009, id. at pp. 25–26, and FATIC paid all of
the subsequent bills for legal fees and costs incurred by the law
firm of Andreu & Sagardia who had been retained to defend CH
Properties in the State Court Action.
D.

(Docket No. 67 at ¶ 33.)

Progress of the State and Federal Court Actions
On June 29, 2011, the Commonwealth Court approved a

stipulation by the parties and dismissed State Court Action FAC
2005-0513 with prejudice.
at ¶ 41.)

(Docket No. 71-1 at p. 24; Docket No. 67

FPR 2005-0226 was also dismissed when the Municipality

Civil No. 13-1354 (FAB)

14

of Carolina voluntarily dismissed its claims in December 2009,
after HR Properties withdrew its permitting application before the
Puerto Rico Planning Board.
No. 67 at ¶ 41.)

(Docket No. 71-1 at p. 24; Docket

The third State Court Action, FAC 2005-0268,

progressed to partial summary judgment, in which the Commonwealth
Court dismissed the complaint and ratified the validity of the
Lease Agreement.
¶ 42.)

(Docket No. 71-1 at p. 25; Docket No. 67 at

On February 17, 2012, however, the Puerto Rico Court of

Appeals set aside the Commonwealth Court’s judgment “based on the
fact that, regardless of the grounds on the merits stated by TPI
[the Court of First Instance], the plaintiffs-appellants [IVRC]
lack standing to file their claims in the Puerto Rico General Court
of Justice.

When a court of law considers a matter that is not

subject to adjudication by the courts, all orders or decisions on
the merits are unenforceable.”11

(Docket No. 55-22 at pp. 2, 39.)

In the Federal Court Action, the parties reached a settlement
agreement, and the Commonwealth dismissed the case with prejudice
on March 29, 2011.

(Docket No. 71-1 at p. 25.)

CH Properties has not assigned, sold, transferred, or
conveyed its leasehold interest over the Property and remains to

11

The Court of Appeals abstained from adjudging the validity
of the Lease Agreement because any such determination would be an
advisory opinion. (Docket No. 55-22 at p. 2.) That judgment is
the highest court determination regarding that matter, because IVRC
opted not to appeal to the Supreme Court of Puerto Rico. (Docket
No. 67 at ¶ 45.)

Civil No. 13-1354 (FAB)

15

this day the Property’s lessee.

(Docket No. 71-1 at p. 26.)

It

has been unable to use and enjoy the Property fully, however,
pursuant to its leasehold rights.

Id. at p. 27.

Instead, it has

only used approximately one acre of land as a parking lot for
employees of the Mariott Courtyard hotel.

(Docket No. 67 at ¶ 46.)

CH Properties claims that it is unable to develop the Property as
originally intended or for any other commercial purpose, and claims
damages from its continued inability to use its land.
No. 58-1 at pp. 9–10.)

(Docket

Nonetheless, by virtue of the Loan

Agreement and Mortgage Note, CH Properties is legally liable for
the

loan

amount

that

it

obtained

from

FirstBank,

and

this

obligation includes the payment of interest at 12% annually over
the principal amount of the loan.12

(Docket No. 71-1 at p. 30.)

On May 31, 2013, the Municipality of Carolina filed a
complaint against CH Properties in the Commonwealth Court for the

12

Beginning in September 2010, CH Properties stopped its
payments under the Loan Agreement and Mortgage Note, and has
remained in default ever since. Id. at p. 31. On February 16,
2011, FirstBank sold to CPG/GS PR NPL, LLC (“CPG/GS”) various
credit facilities, including CH Properties’s Loan Agreement secured
by the Mortgage, thus assigning to CPG/GS all of its rights, title,
and interest under the Loan Agreement. Id. Subsequently, CPG/GS
initiated litigation against CH Properties to collect on the
Mortgage Note. CPG/GS and CH Properties signed a Workout Agreement
in which CH Properties exercised its option under “Section 3(C)” to
pay the balance of CH Properties’s Transfer Amount of $175,000
($275,000 minus the two $50,000 deposits already paid) to CPG/GS
through another entity, EFCO Management, Inc. (Docket Nos. 55-40;
55-41; 55-7 at p. 5; 55-39 at p. 19.) Mr. Eduardo Ferrer-Bolivar,
who is president of CH Properties and also Ferrer-Ramirez’s father,
was the personal guarantor of that loan. (Docket No. 55-3 at pp.
79–80; Docket No. 55-9 at pp. 5 & 15.)

Civil No. 13-1354 (FAB)

16

collection of $1,307,776.14 in rents owed under the Assignment of
Lease through the month of October 2012.

Id.

CH Properties filed

a counterclaim in that action, alleging that the Municipality
violated obligations undertaken in the Endorsement Agreement and
also supported and allowed the disturbance of CH Properties’s use
and

enjoyment

of

the

Property,

Properties economic harm.

all

of

which

have

caused

CH

(Docket No. 55-32 at pp. 3–8.)

III. Motions for Summary Judgment
CH Properties asserts two causes of action against FATIC.
First, it claims that FATIC breached the Owner’s Policy when it
denied reimbursement of legal fees incurred by CH Properties prior
to tendering CH Properties’s March 2009 request for legal defense
in the State and Federal Court Actions.
5–6.)

(Docket No. 1-1 at pp.

Second, it claims damages resulting from the continued

disruption of its possession of the Property.

Id. at p. 7.

Both

parties seek summary judgment on each of those claims, which the
Court addresses in turn.
A.

Denial of CH Properties’s Request for Legal Expenses in
the State Court Actions
1.

The Parties’ Contentions and Insurance Contract
Provisions
Each party argues that the Court should rule in its

favor regarding whether FATIC’s denial of reimbursement for legal
fees that CH Properties incurred in the State Court Actions prior
to CH Properties’ March 4, 2009 tender was proper.

(Docket Nos. 54

Civil No. 13-1354 (FAB)
at p. 5 & 58 at p. 10.)

17
FATIC argues that it properly provided

“prospective” legal defense in the State Court Actions once it
received CH Properties’s written request, and that the Owner’s
Policy’s plain language in no way required FATIC to reimburse CH
Properties for fees incurred before written notice was given.13

CH

Properties, on the other hand, contends that FATIC’s implicit
knowledge of the State Court Actions trumps any argument pursuant
to Sections 3 and 4(a).

Because FATIC provided a defense to

FirstBank under the Lender’s Policy, actively monitored the State
Court Actions, and therefore knew that CH Properties was named as
a co-defendant, CH Properties argues that it was entitled to legal
defense and fees even before it officially requested those services
in writing.
The main coverage provision of the Owner’s Policy states:

13

As discussed earlier, in its May 22, 2009 letter to CH
Properties, FATIC denied CH Properties’s request for reimbursement
because Section 3 of the Policy required CH Properties to give
timely notice of the State Court Actions. (Docket No. 55-29 at
p. 13.) It claims that late notice prejudiced FATIC by causing
“the engagement of multiple counsel to defend non-conflictive
interests, thus unnecessarily and exponentially increasing
litigation costs . . . .” Id.
In its briefs, FATIC claims that it had a legal basis to deny
reimbursement for pre-tender defense costs based on “the clear
terms of Section 4(a) of the Owner’s Policy.” (Docket No. 84 at
p. 3 (emphasis added).
By agreeing to provide defense
prospectively, FATIC argues that it chose “not to activate the
nullification or forfeiture clause of Section 3 of the Owner’s
Policy based on its perceived prejudice.” Id. Rather, it invokes
Section 4(a) to claim that “FATIC’s duty to defend [was] expressly
subject to the insured’s tender of a written request.” (Docket
No. 66 at p. 2.)

Civil No. 13-1354 (FAB)

18

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS
FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS
AND STIPULATIONS, FIRST AMERICAN TITLE INSURANCE COMPANY,
a California corporation, herein called the Company,
insures, as of Date of Policy shown in Schedule A,
against loss or damage, not exceeding the Amount of
Insurance stated in Schedule A, sustained or incurred by
the insured by reason of:
1.

Title to the estate or
Schedule A being vested
therein;

interest described in
other than as stated

2.

Any defect in or lien or encumbrance on the title;

3.

Unmarketability of the title;

4.

Lack of a right of access to and from the land;

The Company will also pay the costs, attorneys’s fees and
expenses incurred in defense of the title, as insured,
but only to the extent provided in the Conditions and
Stipulations.
(Docket No. 8-1 at p. 1.)

Conditions and Stipulations Sections 3

and 4(a) provide relevant limits on FATIC’s payment of those
expenses.

Section 3, titled “NOTICE OF CLAIM TO BE GIVEN BY

INSURED CLAIMANT,” provides:
The insured shall notify the Company promptly in writing
(i) in case of any litigation as set forth in Section
4(a) below, (ii) in case knowledge shall come to an
insured hereunder of any claim of title or interest which
is adverse to the title to the estate or interest, as
insured, and which might cause loss or damage for which
the Company may be liable by virtue of this policy, or
(iii) if title to the estate or interest, as insured, is
rejected as unmarketable. If prompt notice shall not be
given to the Company, then as to the insured all
liability of the Company shall terminate with regard to
the matter or matters for which prompt notice is
required; provided, however, that failure to notify the
Company shall in no case prejudice the rights of any
insured under this policy unless the Company shall be

Civil No. 13-1354 (FAB)

19

prejudiced by the failure and then only to the extent of
the prejudice.
(Docket No. 8-1 at pp. 2–3.)

Section 4(a), titled DUTY AND

PROSECUTION OF ACTIONS; DUTY OF INSURED CLAIMANT TO COOPERATE,
provides, in relevant part:
(a) Upon written request by the insured and subject to
the options contained in Section 6 of these Conditions
and Stipulations, the Company, at its own cost and
without unreasonable delay, shall provide for the defense
of an insured in litigation in which any third party
asserts a claim adverse to the title or interest as
insured, but only as to those stated causes of action
alleging a defect, lien or encumbrance or other matter
insured against by this policy.
(Docket No. 8-1 at p. 3.)
2.

Legal Precedent and Analysis
The Court agrees with the parties that the law of

Puerto Rico applies to the dispute over the insurance policy.

See

U.S. Fire Ins. Co. v. Producciones Padosa, Inc., 835 F.2d 950, 953
(1st

Cir.

1987)

(taking

into

account

both

Erie

R.R.

Co.

v.

Tompkins, 304 U.S. 64, 78, 82 L. Ed. 1188, 58 S. Ct. 817 (1938) and
“the parties’s concession as to the applicable rules” in applying
Puerto Rico law to an insurance dispute).

The parties disagree,

however, over the extent to which the Puerto Rico courts have ruled
on the issue of reimbursement for pre-tender costs, fees, and
expenses.

Having reviewed the parties’ numerous submissions and

wide-ranging proffered case law, the Court articulates the issue
that

is

truly

reimbursement:

at

the

heart

of

CH

Properties’s

request

for

whether, under Puerto Rico law, an insurance

Civil No. 13-1354 (FAB)

20

company that learns of a lawsuit in which its insured is a codefendant and which potentially falls within policy coverage, has
an affirmative duty to offer that coverage to the insured despite
clear policy language directing the insured to provide a written
“request” for the same.

Only if that were so, would CH Properties

be entitled to pre-tender costs for its participation in the State
Court Actions, because its failure to request coverage pursuant to
Section 4(a) would be immaterial. Because there does not appear to
be conclusive Puerto Rico Supreme Court case law on that issue, the
Court surveys legal authority to determine how the Commonwealth
courts would likely rule.

See Fajardo Shopping Ctr., S.E. v. Sun

Alliance Ins. Co. of P.R., Inc., 167 F.3d 1, 7 (1st Cir. 1999)
(“[T]he Puerto Rico Supreme Court has recently established that
since most of the insurance contracts sold in Puerto Rico are
modeled after contracts drafted in the United States, both federal
and state law principles are useful and persuasive.”).
The Court begins with CH Properties’s argument that
FATIC must provide reimbursement “unless it can prove that: (a) it
was not timely notified of the claims against the insured Lease
Agreement, and (b) the insurer was prejudiced by said late notice.”
(Docket No. 71 at p. 3.)
direction,

that

argument

While a first step in the right
is

not

conclusive

on

the

issue

of

reimbursement for pre-tender expenses because it only addresses the
notice-prejudice rule. The cases CH Properties relies upon address

Civil No. 13-1354 (FAB)

21

the concept of prejudice and whether failure to promptly notify an
insurance company of a claim exonerates the insurer of its duty to
defend.14

Those cases support the conclusions (1) that FATIC had

timely notice of the Commonwealth claims against CH Properties
through its independent representation of FirstBank in the State
Court Actions, and (2) that its knowledge forecloses any prejudice

14

In Municipality of San Juan v. Great Am. Ins., 813 F.2d 520,
521 (1st Cir. 1987), the insured notified its insurance carrier,
Great American, of an impending claim and requested that Great
American assume its legal representation in the case. 813 F.2d
at 521.
Great American did not respond, so the insured hired
outside counsel and subsequently did not notify Great American once
the claim was officially filed.
Id.
Like FATIC in this case,
Great American received notice of the claim “since the insurer
represented a codefendant in the same litigation,” but it was not
until years later that the insurer agreed to provide coverage and
legal representation to the insured.
Id.
Granting legal
representation only prospectively, the insurance company declined
to reimburse the insured for fees incurred since the lawsuit’s
inception, arguing that the insured had failed to promptly notify
Great American of the lawsuit. Id.
The Puerto Rico Supreme Court’s analysis — and the First
Circuit Court of Appeals’s subsequent application — of the
certified questions in Great American Insurance focused on the
insurance company’s duty to defend its insured, which arose from an
initial request for representation made even before litigation
initiated. See generally, 813 F.2d 520. Even though the insured
failed to promptly notify Great American of the lawsuit once it
commenced,
no
prejudice
resulted
because
Great
American
independently
knew
of
the
litigation
by
virtue
of
its
representation of a codefendant. Id. at 521, 523–24. Because it
had suffered no prejudice, Great American was not relieved of its
duty to defend. Id. Great American’s failure to notify the insured
of its willingness to defend thus constituted a breach of that
duty, and the Puerto Rico Supreme Court determined that an
appropriate remedy was reimbursement for the litigation expenses
incurred.
Id. at 524.
Thus, the ultimate conclusion that the
insured was entitled to reimbursement rested upon an analysis of
the breach of a duty to defend, given the insured’s original
request and the absence of prejudice.

Civil No. 13-1354 (FAB)

22

argument FATIC may have advanced in order to shirk its duty to
defend CH Properties in the State Court Actions. The cases do not,
however,

conclusively

establish

that

an

insurer,

even

with

knowledge of litigation and no resulting prejudice, must reimburse
an insured’s expenses from a time period, unlike the facts in Great
American, in which no prior request for representation was made.
A leading treatise on insurance law explains that
“[e]ven if a delay does not operate to relieve an insurer of its
obligation to defend altogether, an insurer is not liable for the
pre-tender costs of defense incurred by the insured irrespective of
the existence of prejudice.”

14 Couch on Ins. § 200:34 (2014).

As

FATIC points out, (Docket No. 54 at p. 7) (citing cases), that is
the majority view.

Liberty Mut. Ins. Co. v. Black & Decker Corp.,

383 F. Supp. 2d 200, 207 n.5 (D. Mass. 2004) (“Liberty Mutual
rightly notes that the principle stated in [Hoppy’s Oil Serv., Inc.
v. Ins. Co. of N. Am., 783 F. Supp. 1505, 1509 (D. Mass. 1992)] is
the majority rule, and cites two treatises to that effect.”). Many
courts thus hold that even despite an insurer’s knowledge of
litigation against its insured, no duty to defend attaches unless
and until the insurer receives an indication that its participation
is desired.

See, e.g., Hartford Accident & Indem. Co. v. Gulf Ins.

Co., 776 F.2d 1380, 1383 (7th Cir. 1985) (“Mere knowledge that an
insured is sued does not constitute tender of a claim.

What is

required is knowledge that the suit is potentially within the

Civil No. 13-1354 (FAB)
policy’s

coverage

coupled

23
with

knowledge

that

the

insurer’s

assistance is desired.”) (citations omitted); id. (“An insurance
company is not required to intermeddle officiously where its
services have not been requested.”) (citation omitted); Ingalls
Shipbuilding v. Fed. Ins. Co., 410 F.3d 214, 227 (5th Cir. 2005)
(“Transocean is a sophisticated party and, as such, could have been
expected to request a defense under the policy if it had desired
one.

And, it would be absurd to require an insurance company to

force itself on such a sophisticated party if its services have not
been requested.”); Aetna Casualty & Sur. Co. v. Chicago Ins. Co.,
994 F.2d 1254, 1261 (7th Cir. 1993) (citing Hartford and concluding
that “[b]ecause Celer failed to take the crucial, preliminary step
of tendering his defense to Chicago, [] Chicago’s policy coverage
was never triggered.”); Erie Ins. Exch. v. V.I. Enters., 264 F.
Supp. 2d 261, 264–65 (D.V.I. 2003) (citing Aetna and Hartford for
the same proposition and concluding that the insurer “had the right
to wait for a tender before taking action.”).

A majority of

precedent thus suggests that even with timely notice and a lack of
prejudice, FATIC did not have an obligation to provide legal
services in the State Court Actions — and thus reimburse costs for
those services — unless and until its insured requested them.
Clear and unambiguous terms in the insurance contract indeed
support that interpretation, as FATIC explicitly predicated its
agreement to provide legal representation “upon written request by

Civil No. 13-1354 (FAB)

24

the insured,” (Docket No. 8-1 at p. 3), and CH Properties did not
request coverage until 2009.
Cognizant

that

“where

a

contract’s

wording

is

explicit and its language unambiguous, the parties are bound by its
clearly stated terms and conditions, with no room for further
debate,” Lopez & Medina Corp. v. Marsh USA, Inc., 667 F.3d 58, 64
(1st Cir. 2012), the Court is, however, swayed by an opposing trend
favoring reimbursement for the insured that has emerged even
despite policy language requiring written requests for coverage.15
In

Black

&

Decker,

District

Judge

Douglas

P.

Woodlock

comprehensively reviewed cases extending the prejudice analysis
applicable in duty to defend cases to pre-notice cost cases.
F. Supp. 2d 200 at 207.

383

Judge Woodlock found the following

analysis to be “especially insightful” on that matter:

“The duty

to defend pre-exists any obligation on the part of the insured as
to notice or compliance with the voluntary payment provision of an
insurance contract . . . . The duty arises when the underlying
claim is brought and thus pre-exists the insured’s obligation to
notify its insurer of that suit.”

Id. at 205 (citing Aetna Cas. &

Surety Co. v. Dow Chem. Co., 44 F. Supp. 2d 847 (E.D. Mich. 1997)).

15

By delving into the policy behind title insurance, courts
have held that strict provisions requiring written notice or
requests for coverage “confuse events with give rise to the duty to
defend . . . and events which give rise to an insurer’s breach of
that duty.”
Black & Decker, 383 F. Supp. 2d at 205 (citation
omitted).

Civil No. 13-1354 (FAB)

25

Judge Woodlock then cited a Maryland state court of appeals case at
length, to advance the proposition that “the duty to defend,
rationally, should attach at the same moment the correlative right
to control attaches, i.e., when an insured occurrence happens.

If

that is when the insurer has a right to exercise control, that is
also when its duty to do so should arise.”

Black & Decker, 383 F.

Supp. 2d at 206 (citing Sherwood Brands, Inc. v. Hartford Accident
& Indem. Co., 347 Md. 32, 698 A.2d 1078 (Md. 1997)).
The Maryland court acknowledged that many courts had held
that the duty to defend does not arise until notice is
given, and agreed that “[in states] where the duty of
notification is regarded as a condition precedent to the
insurer’s duty to defend, a holding that the duty to
defend does not arise until the notice is given is
logical.”
But it concluded that such a rule made no
sense in a state (like, I note, Massachusetts) that
requires prejudice for a late notice defense:
Where, as in Maryland, however, the duty to notify is
merely a covenant that, absent a showing of prejudice,
does not excuse the insurer from complying with its duty
to defend, the logic of such a holding becomes
significantly attenuated, for it creates a time gap
between the insurer’s right to control the defense and
its duty to provide one that has no legal underpinning.
Black & Decker, 383 F. Supp. 2d. at 206 (citations omitted).
Just as Judge Woodlock compared Massachusetts to
Maryland to reach his conclusion that pre-notice defense costs are
recoverable absent prejudice, the Court turns to Puerto Rico’s
stance on prejudice and notice.

CH Properties’s reliance on Great

American is particularly pertinent here, because it includes the
Supreme Court of Puerto Rico’s answers to certified relevant

Civil No. 13-1354 (FAB)
questions.

In

that

26

case,

the

Supreme

Court

of

Puerto

Rico

indicated that prejudice is necessary “to relieve an insurer from
its contractual duty to defend an insured when the latter has
breached a condition precedent requiring the prompt forwarding of
summons to the insurer,” and that “an insurer’s knowledge that a
complaint has been filed against the insured preclude[s] a finding
of prejudice.”

Great Am. Ins., 813 F.2d at 522.

Puerto Rico thus

joins states like Massachusetts and Maryland in requiring prejudice
for the late notice defense, and in those jurisdictions “notice is
deemed an independent obligation of the insured, not a condition
precedent to coverage.”

Black & Decker, 383 F. Supp. 2d at 207.

Applying Judge Woodlock’s reflections, “[t]he widely-followed late
notice doctrine under which post-notice costs are recoverable
absent prejudice, but pre-notice costs are per se excluded, is in
tension with the underpinnings of [Puerto Rico’s] analysis of the
notice clause.”

Id.

Insurance contracts in Puerto Rico require

“liberal construction in favor of the insured,”16 Lopez & Medina
Corp., 667 F.3d at 65 (citations omitted), and “when in doubt about
the interpretation of a policy, it should be resolved taking into
consideration the purpose of the policy:

to provide protection to

the insured,” Quiñones-Lopez, 1996 P.R.-Eng. 499,244.

16

The Court

The Supreme Court of Puerto Rico has indicated that, “[t]his
rule, however, does not compel constructions in favor of the
insured when a clause favors the insurer, and its meaning and scope
is clear and unambiguous.” Quiñones-Lopez v. Manzano-Pozas, 1996
P.R.-Eng. 499,244, 1996 WL 499244 (P.R. June 25, 1996).

Civil No. 13-1354 (FAB)

27

thus believes that the Supreme Court of Puerto Rico “would find
that pre-notice defense costs are recoverable absent prejudice.”
Black & Decker, 383 F. Supp. 2d at 207.
Regardless

of

CH

Properties’s

incredulous

allegations that it was unaware of the title insurance policy until

Civil No. 13-1354 (FAB)

28

2008,17 it had consistently been paying premiums to FATIC for the
Owner’s Policy, which was issued in 2002.

As discussed above, the

Court believes that the Puerto Rico Supreme Court would find that
FATIC’s duty was triggered as soon as the State Court Actions
against CH Properties were filed in April 2005.

FATIC learned of

17

The parties vehemently dispute who, if anyone, received the
Owner’s Policy on the date of closing. Ferrer-Rarmirez’s testimony
has been that the Owner’s Policy was not delivered on the date of
closing, and that the Loan Settlement Statement prepared by
FirstBank did not signify the financing of the Owner’s Policy.
(Docket No. 55-16, Docket No. 55-3 at pp. 34–36, 55–58, 65.) It
relies on the invoices for the Owner’s Policy issued by FATIC to
argue that all of the invoices were sent directly to FirstBank and
not CH Properties. (Docket No. 58-1 at pp. 2 & 148.) Moreover,
the closing document dated August 5, 2002, does not list the
Owner’s Policy among the “copies” of documents maintained by
FirstBank in its files. (Docket No. 58-1 at pp. 176–77.) As noted
above, CH Properties claimed in its March 4, 2009, letter to
FATIC’s outside counsel, Fernandez-Jaquete, that it had not
received a copy of the Owner’s Policy and had only “recently”
become aware of the existence of the Owner’s Policy during a
deposition taken in the Federal Court Action in October 2008.
(Docket No. 71-1 at p. 21.)
FATIC, on the other hand, argues that as part of the
transaction for purchase of the leasehold by CH Properties,
FirstBank financed the payment of the premium and insurance charges
in connection with both the Lender’s and Owner’s Policies. (Docket
No. 55-3 at pp. 32–33, 55-58; Docket No. 55-15 at pp. 38–44.) It
submits that Ferrer-Ramirez signed a Loan Settlement Statement on
August 2, 2002, which reflects amounts for “Title Insurance”
($9,674.25) and “Title Charges” ($6,778.75) that correspond with
the amounts itemized in a Mortgage Loan Check issued by FirstBank
on the same date in favor of TSG for a total of $16,453. (Docket
No. 55 at p. 11) (citing Docket Nos. 55-16, 55-17, 55-3 at
pp. 55–58, & 55-15 at pp. 38–44). Furthermore, it claims that TSG
invoices dated August 2, 5, and 6, 2002, prepared to the attention
of Ferrer-Ramirez, also reflect charges that add up to and
correspond with the amount indicated in the Loan Settlement
Statement and that was paid to TSG on August 5, 2002 through
Mortgage Loan Check No. 177047. (Docket No. 55 at p. 11) (citing
Docket Nos. 55-18, 55-19, 55-20, 55-16, & 55-17).

Civil No. 13-1354 (FAB)

29

CH Properties’s involvement as a co-defendant in the State Court
Actions as early as June 2005, when FirstBank submitted a request
for legal representation in the suit.

Indeed, FATIC’s outside

legal counsel admitted that the insurance company not only knew
about the State Court Actions, but had been actively “monitoring
all three” by the date of CH Properties’s March 2009 tender letter.
(Docket No. 58-1 at p. 41.)

FATIC’s reliance on the Policy’s

written notice language is nothing more than an invocation of a
semantic loophole that would allow the insurance company to shirk
its duty and side-step the bargain originally struck between the
parties in the Policy. “The insured paid for the insurer’s promise
to

defend

the

insured

for

covered

claims,”

and

“[o]nce

the

insurer’s duty to defend is triggered, it must begin defending the
suit or bring a declaratory action if it believes the policy does
not cover the claim.”

Home Ins. Co. v. Nat’l. Union Fire Ins., 658

N.W.2d 522, 533 (Minn. 2003).

It follows from Great American that

FATIC was not prejudiced by CH Properties’s late notice, and the
same

can

be

representation.

concluded
Indeed,

regarding
once

the
CH

late

request

Properties

for

requested

representation in 2009 and FATIC suggested FirstBank’s counsel, CH
Properties objected on conflict grounds, and FATIC ultimately
approved the continued representation by Andreu & Sagardia Law Firm
as CH Properties’s legal counsel in the State Court Actions.

The

fact that FATIC had been “monitoring” and even provided coverage

Civil No. 13-1354 (FAB)

30

for FirstBank in the State Court Actions weighs against a finding
of prejudice.

The Court declines to construe the written notice

clause as dispositive in this case that CH Properties’s pre-notice
defense costs are unrecoverable.

Quiñones-Lopez, 1996 P.R.-Eng.

499,244 (“[N]ice constructions that would allow insurers to dodge
liability are not favored.”).
Finally, the Court echoes the sentiments that:
Forcing the insurer to [begin defending the suit or bring
a declaratory action] as soon as it receives notice of a
claim helps the parties move on with the underlying suit.
Once an insurer receives notice of a suit, it is
responsible for defending the insured unless the insured
explicitly refuses the insurer an opportunity to defend.
The relationship of an insured to its insurer is not one
of equals, and a rule defining tender as notice and
opportunity to defend reflects that disparity . . . . We
will not create a legal rule that presumes an insured,
whether a company or an individual, is equally
sophisticated, knowing its contractual right to coverage
and when and how to invoke it. Nor will we create a rule
that interprets an insured’s silence as a statement of
intent to forgo the insurer’s assistance.
Indeed,
insurers
are
better
able
to
facilitate
clear
communication between the parties.
Home

Ins.

omitted).

Co.,

658

N.W.2d

at

533

(quotations

and

citations

Thus, the Court follows several states’ leads in ruling

that in Puerto Rico, once an insurer receives notice that its
insured has been sued in a suit that potentially falls within
policy coverage, “even without an express request for a defense, it
should be the responsibility of the insurer to contact the insured
to determine whether the insurer’s assistance in the suit is

Civil No. 13-1354 (FAB)

31

Id. (quotations and citations omitted).18

required.”

Because the

filing of the State Court Actions in 2005 triggered FATIC’s duty,
and it suffered no prejudice due to CH Properties’s late notice or
request

for

representation,

FATIC

is

liable

to

reimburse

CH

Properties’s pre-tender defense costs incurred in the State Court
Actions.

Accordingly, CH Properties’s motion for summary judgment

on the issue of reimbursement for State Court Actions expenses is
GRANTED IN PART.19
B.

Denial of CH Properties’s Request for Legal Expenses in
the Federal Court Action
The parties next dispute whether FATIC properly denied CH

Properties’s request for legal defense in the Federal Court Action.
Title insurance contracts impute a duty on the insurer to defend
its insured against “claims that are adverse to the insured title
or interest, at least to the extent that the claims allege defects,
liens, encumbrances, or other matters that are within the policy’s
coverage.”
ed.).

1 Joyce D. Palomar, Title Ins. Law § 11:2 (2013–14

That duty to defend “is measured by the allegations in a

18

“The burden we are placing on the insurer with this rule is
not onerous . . . . When notified of the insured’s potential
liability under the suit, the insurer can simply ask the insured if
the insurer’s involvement is desired, thus eliminating any
uncertainty on the question.” Home Ins. Co., 658 N.W.2d at 533.
19

Genuine issues of fact remain regarding the appropriateness
of CH Properties’s hiring of Attorney Pedro Rosario Urdaz and the
reasonableness of the fees paid to Andreu & Sagardia. (See, e.g.,
Docket Nos. 84 at pp. 7–8). The Court thus reserves judgment on
the amount of reimbursement to be provided by FATIC until a hearing
can be held on those issues.

Civil No. 13-1354 (FAB)
plaintiff’s

complaint

32
—

if

any

of

these

allegations,

read

liberally, state facts that would be covered by a [] policy if
proven true, then the insurer must provide a defense for the
insured defendant.”

Jewelers Mut. Ins. Co. v. N. Barquet, Inc.,

410 F.3d 2, 15–16 (1st Cir. 2005) (construing Puerto Rico law).

A

court “should examine all the allegations made by the plaintiff
and, based on a joint interpretation of the same, determine whether
there is a possibility that the insured is protected by the policy
issued in his [or her] favor.”

Pagan Caraballo v. Silva, Ortiz, 22

P.R. Offic. Trans. 96, 102, 1988 WL 580770 (1988) (collecting case
law on that point).

“Any doubt about the insurer’s duty to defend

a specific case must be resolved in favor of the insured.

This

type of obligation subsists even if the suit is groundless, false
or fraudulent.”

PFZ Props. v. Gen. Accident Ins. Co., 136 D.P.R.

881, P.R. Offic. Trans. (1994) (citations omitted).

To determine

whether CH Properties was entitled to a defense in the Federal
Court Action, the Court invokes the “eight corners rule,” comparing
the

Policy’s

“four

corners”

complaint’s “four corners.”

with

the

Federal

Court

Action

1 Palomar, § 11:2.

On March 5, 2007, Chicago Title filed a complaint20 in
this Court seeking declaratory relief “to declare the rights,
status and legal relations of Chicago Title and Sunshine” pursuant

20

The complaint was later amended, on July 13, 2007, to
include HR Properties and CH Properties. The case is Chicago Title
Ins. Co. v. Sunshine Isle Inn, LLC, et al., Civil No. 07-1190.

Civil No. 13-1354 (FAB)

33

to a leasehold owner’s policy Chicago Title had issued to Sunshine.
(Docket No. 55-26 at p. 3.)

Chicago Title issued its owner’s

policy to Sunshine “to insure Sunshine’s acquisition of a certain
leasehold interest by way of an Assignment of Lease dated August 9,
1999 from Desarrollos Hoteleros de Carolina (hereinafter referred
to

as

‘the

Leasehold’).”

Id.

Sunshine

subsequently

“sold,

assigned and transferred its leasehold interest” to CH Properties,
and HR Properties “assigned its right to acquire the Leasehold from
Sunshine.”

Id. at pp. 3–4.

As alleged in Chicago Title’s Second

Amended Complaint, Sunshine was sued in one of the consolidated
State Court Actions, and CH and HR Properties filed a cross-claim
against Sunshine, based on a warranty of title provision included
in the 2001 Sale-Purchase Agreement.21

Id. at p. 6.

Chicago Title

ultimately claimed that a controversy existed between Chicago Title
and

Sunshine

“concerning

the

existence

and

extent

of

the

contractual duty to defend or indemnify, if any, of Chicago Title
to Sunshine.”

Id. at p. 7.

It further stated:

HR and CH are made parties to this action as their
contract they have with Sunshine to acquire the leasehold
premises object of this action, may determine Sunshine’s
rights under the title insurance contract. Such rights
largely on [sic] this Honorable Court’s determination of

21

By FATIC’s own admission, “the warranty of title provision
in the Sale-Purchase Agreement was arguably a covenant of warranty
that continued Sunshine’s insurable estate or interest under the
Chicago Title policy, despite Sunshine’s assignment of the lease to
CH Properties in 2002.” (Docket No. 54 at p. 14.) There is no
indication, however, that the covenant of warranty was the subject
of the Owner’s Policy that FATIC provided to CH Properties.

Civil No. 13-1354 (FAB)

34

the rights between Sunshine and HR/CH pursuant to the
Leasehold contract . . . . The issuance of declaratory
relief by this Court will terminate all or most of the
existing controversy between the parties as it pertains
to the [title insurance] Policy.
Id. at p. 8.

In its prayer for relief, Chicago Title sought a

declaration that “Sunshine sold the leasehold interest on August 5,
2002, and that it did not retain an estate or interest in the
insured leasehold”;

that

“if

there

is

a

continuation

of

the

insurance, and the warranty of title in the Leasehold expired 90
days after the sale by the express terms of the Sale-Purchase
Agreement [between Sunshine and HR/CH Properties] . . . the Policy
has expired because Sunshine no longer has liability by reason of
covenants

of

warranty”;

that

“if

the

90

day

clause

is

not

applicable to this action, and there is a continuation of insurance
after the conveyance of title, the maximum indemnity obligation of
Chicago Title in favor of Sunshine is $250,000.00”; and that
“Chicago Title has no duty to defend the action filed against
Sunshine.”

Id. at pp. 8–9.
A review of the “four corners” of the Owner’s Policy

between FATIC and CH Properties reveals that FATIC promised to
provide

CH

Properties

with

insurance

against

loss

or

damage

“sustained or incurred by the insured by reason of: title to the
estate or interest described in Schedule A being vested other than
as stated therein; any defect in or lien or encumbrance on the
title; unmarketability of the title; and lack of a right of access

Civil No. 13-1354 (FAB)
to and from the land.”

35
(Docket No. 8-1 at p. 1.)

It also declared

that it would “pay the costs, attorneys’ fees and expenses incurred
in defense of the title, as insured, but only to the extent
provided in the Conditions and Stipulations.” Id. Section 4(a) of
the Policy’s Conditions and Stipulations further provided that the
duty to defend covers “the insured in litigation in which any third
party asserts a claim adverse to the title or interest as insured,
but only as to those stated causes of action alleging a defect,
lien or
policy.”

encumbrance

or

other

matter

insured

against

by

this

Id. at p. 3.
The Court notes both parties’ lack of development in

their arguments regarding whether Chicago Title’s allegations even
possibly fall within the scope of FATIC’s title insurance policy
for CH Properties.

CH Properties contends that Chicago Title’s

allegations “fall squarely within the four corners of the Owner’s
Policy” because they are so “intertwined to the Lease Agreement, to
the point that it amounted to a claim adverse to the title.”
(Docket No. 71 at p. 9.)

The only support for CH Properties’s

argument, however, is the following sentence:
In that sense, any determination in the Federal Action
either eliminating or restricting Sunshine Isle’s
potential liability in the event of the Lease Agreement’s
annulment would have adversely impacted both CH
Properties and FATIC, as their rights and prerogatives to
demand compensation from Sunshine Isle as seller of the
Lease Agreement would have been completely diminished.

Civil No. 13-1354 (FAB)
Id.

36

FATIC merely offers a blanket denial that it owed any duty to

defend the Federal Court Action, arguing only that none of Chicago
Title’s allegations “touched upon or challenged the validity or
enforceability of CH Properties’[s] leasehold title, much less that
it was subject to any liens, encumbrances or defects of the kind
insured against under the Owner’s Policy.”

(Docket No. 54 at

p. 15.)22 FATIC does nothing to counter CH Properties’s proposition
that Chicago Title’s allegations amount to a claim adverse to the
title or interest insured.
An insurer’s duty to defend in Puerto Rico is broader
than its duty to indemnify, and that “any doubt” regarding whether
a duty to defend exists must be decided in the insured’s favor.
Pagan Caraballo, 22 P.R. Offic. Trans. 96.

After a review of

Chicago Title’s pleadings, however, the Court cannot deduce how any
allegation, even read liberally, states facts that would be covered
by

FATIC’s

Owner’s

Policy.

The

Owner’s

Policy

insures

CH

Properties’s leasehold interest in the 5-cuerda tract of land in
Isla Verde.
Investors,

22

See Docket No. 8-1;
Inc.,

130

D.P.R.

Perez-Sanchez v. Advisors Mortg.
530,

P.R.

Offic.

Trans.

(1992)

FATIC explains its reasoning in one sentence in its
communication with CH Properties in which it denied the latter’s
claim for representation: “Said litigation does not involve an
alleged defect, lien, encumbrance, or other matter insured against
by the Policy, but rather revolves around the interpretation of a
contract clause that, regardless of how it is interpreted, has no
impact or effect whatsoever on the validity of [CH Properties]’s
title as insured under the Policy.” (Docket No. 55-29 at p. 12.)

Civil No. 13-1354 (FAB)

37

(defining title insurance as “contracts whereby the insurer, for a
valuable consideration, agrees to indemnify the insured in a
specified amount against loss through defects of title to, or liens
or encumbrances upon realty in which the insured has an interest as
purchaser or otherwise”); see also P.R. Laws Ann. tit. 26, § 410
(2011) (Title insurance insures risks “against loss by encumbrance
or defective titles or invalidity or claims adverse to title and
services connected therewith.”).

Nowhere does Chicago Title’s

complaint allege a defect in CH Properties’s leasehold, liens, or
encumbrances upon the leasehold, or otherwise threaten the validity
of the leasehold.

To the contrary, Chicago Title sought to define

the scope of its own title insurance policy with Sunshine and to
limit its own liability due to the already filed State Court
Actions against CH Properties and Sunshine.

As CH Properties

argues, an outcome in the Federal Court Action limiting Chicago
Title’s obligations to insure Sunshine surely would have adversely
impacted CH Properties and FATIC’s ability to receive compensation
from Sunshine in the event that the Commonwealth court nullified
the Lease Agreement.

Because Chicago Title’s allegations do not

directly contest or otherwise affect the validity of the leasehold
themselves, there is simply no basis for concluding that the facts
in the complaint amount to a “claim adverse to the title or
interest insured.”
a

duty

to

defend

Thus, the “eight corners rule” does not impute
onto

FATIC

for

the

Federal

Court

Action.

Civil No. 13-1354 (FAB)

38

Accordingly, FATIC’s motion for summary judgment on that ground is
GRANTED, and CH Properties’s request for reimbursement for the
Federal Court Action costs is DENIED.
Although not a clear-cut case where the facts easily fit
into one of the Policy’s exclusionary provisions, even “taking into
consideration all the allegations in the original complaint and
liberally construing the insurance policy in favor of the insured,”
the Court does not find that Chicago Title’s allegations amount to
a “claim adverse to the title.” Accordingly, FATIC properly denied
CH Properties legal representation in the Federal Court Action and
is entitled to summary judgment on that ground.
C.

FATIC Liability for CH Properties’s Lack of Possession
Pursuant to the Owner’s Policy, FATIC also agrees to

indemnify CH Properties for loss or damage sustained by reason of:
(1) title being vested other than as stated in the Policy; (2) any
defect in or lien or encumbrance on the title; (3) unmarketability
of the title; or (4) lack of a right of access to and from the
land.

(Docket No. 8-1 at p. 1.)

Due to the various trespassers

who continue to occupy the Property, CH Properties claims that it
has been both “deprived of its possession” of the Property and
“unable to develop the condo-hotel intended for the parcel or to
use the same in any other commercial manner” since 2005.
No. 58 at p. 21.)

(Docket

Despite that alleged inability to enjoy its

interest over the leasehold, CH Properties has paid approximately

Civil No. 13-1354 (FAB)

39

$692,849.50 for rent, and $3,408,220.28 in mortgage interests.
(Docket No. 58-1 at p. 10; Docket No. 67 at p. 13.)

It seeks to

recover those amounts from FATIC, arguing that the trespassers’
presence
Policy.

triggers

each

indemnification

coverage

under

the

Owner’s

of

The Court finds CH Properties’s contentions meritless in
the

four

coverage

areas

for

a

simple

reason:

the

trespassers’ presence does not affect title to the leasehold
interest.
1.

Title Being Vested Other than as Stated
The first provision, title vested other than as

stated in Schedule A — “entitles the insured to compensation for
either a complete failure of title or a diminished title.”
D. Palomar, Title Ins. Law § 5:4 (2013–14 ed.).

1 Joyce

Where Schedule A

describes the title, “the insured purchaser has a claim if it is
found either that the seller had no interest in the property or an
interest less
generally

than

construe

[the
this

interest

described.]”

insuring

clause

in

a

Id.

“Courts

straightforward

manner, holding the insurer responsible to indemnify the insured if
title is not vested as stated in the policy.”

1 Palomar § 5:4.

Schedule A of the Owner’s Policy in this case
specifies that “[t]he estate or interest in the land which is
covered by th[e] policy is: LEASEHOLD” and identifies the “Date of
Policy” as August 5, 2002.

(Docket No. 8-1 at p. 4.)

Because

neither party has put forth evidence that Sunshine entirely lacked

Civil No. 13-1354 (FAB)

40

title to the land, or that it possessed anything less than a
leasehold, the Court finds no basis for granting CH Properties’s
claim for coverage under the first provision.
By virtue of the trespassers’ presence and the
various challenges to the Lease Agreement, however, CH Properties
argues that its “interest and rights under the [L]ease [A]greement,
including its right to enjoy and use the parcel,” have been
“diminished”

and

claims

provision is warranted.

that

coverage

pursuant

to

the

first

(Docket No. 58 at p. 8); (Docket No. 81 at

p. 7) (stating that CH Properties is “unequivocally entitled to
indemnity

for

the

damages

suffered

as

a

consequence

of

its

continued inability to peacefully use and enjoy its rights under
the insured Lease Agreement.”).

To support that argument, CH

Properties cites the Puerto Rico Insurance Code’s definition of
“title insurance” as insurance against loss by “claim adverse to
title and services connected therewith,” P.R. Laws Ann. tit. 26,
§ 410; the Civil Code’s provision that “[i]n a lease of things, one
of the parties thereto binds himself to give to the other the
enjoyment or use of a thing for a specified time and a fixed
price,” P.R. Laws Ann. tit. 31, § 4012 (2011); and the Puerto Rico
Supreme Court’s indication that owner’s title policies indemnify
“in case the titleholder sustains a loss or impairment of his or
her right,” Perez-Sanchez, 130 D.P.R. 530.
pp. 7–8.)

(Docket No. 81 at

Civil No. 13-1354 (FAB)

41

The Court does not find support in the law for CH
Properties’s interpretation of “diminished” title.

In the spirit

of straightforwardness, title to the Property has not been deemed
to be vested as anything but a full leasehold in anyone other than
CH Properties.

Moreover, case law suggests that diminished title

results when a third party possesses a cognizable interest in the
property, thus reducing the interest originally sought to be
transferred between the original parties.

See 1 Palomar § 5:4

(citing Fohn v. Title Ins. Corp. of St. Louis, 529 S.W.2d 1 (Mo.
1975) (providing coverage to purchaser of a tract of land, when a
third party relayed to the new owners that they too had a deed to
the land); Scott v. Chicago Title Ins. Co., 2010 WL 3823452 (Colo.
Dist. Ct. 2010) (policy expressly covered risk of someone else
owning an interest in the insured’s title); Moe v. Transamerica
Title Ins. Co., 21 Cal. App. 3d 289, 98 Cal. Rptr. 547 (1st Dist.
1971)

(finding

appropriate

recovery

because

under

bankruptcy

“totally valueless”)).

a

title

rendered

insurance

contract

respondents’

security

That has not proven to be the case here,

insofar as the Puerto Rico courts dismissed the State Court Actions
that challenged the Lease Agreement’s validity, and therefore the
Lease Agreement remains valid and enforceable.

(Docket No. 55-22

at pp. 18–23) (finding that neither the natural plaintiffs nor IVRC
or Amigos del Mar plaintiffs had standing to challenge the validity
of the Lease Agreement because they did not suffer a “clear,

Civil No. 13-1354 (FAB)
palpable,

real,

demonstrates

42

immediate

that

the

and

precise”

trespassers

enjoy

injury).

Nothing

legally

cognizable

a

interest in the Property affecting CH Properties’s title, and
therefore CH Properties is not entitled to coverage under the first
indemnity provision.
2.

Defect in Lien or Encumbrance on the Title
The second indemnification risk FATIC undertook is

the risk of

loss by

reason

encumbrance on the title.”
terms

“defect,”

“lien,”

of

“[a]ny

defect

in

(Docket No. 8-1 at p. 1.)
and

“encumbrance”

are

not

or

lien

or

Because the
explicitly

defined in standard title insurance policies, courts interpret the
terms

“loosely

and

interchangeably.”

1

Palomar

§

5:5.

“Technically, a ‘defect’ exists in the insured title when a third
party claims an interest which interferes with the insured’s use of
the property according to the estate or interest insured.”

Id.

“A

lien is a claim or charge on property as security for the payment
of

a

debt

or

the fulfillment

of an

obligation.”

Id.

“An

encumbrance is any right of a third person in real property that
diminishes the value of the insured’s title but does not prevent
the passing of the insured interest.”

Id.

Resolution of the

defect, lien, or encumbrance issue “depends on whether a given
claim or state of facts can be considered to create a cloud on the
title or to legally affect the ownership of the parcel.”
on Ins. § 159:30 (2014).

11 Couch

Civil No. 13-1354 (FAB)

43

CH Properties advances the same arguments as before to
seek coverage under the second coverage provision — that its rights
and interests as the lessee in the Property have been “constantly
diminished” due to the trespassers’ presence and the litigation
surrounding

the

Lease

Agreement.

(Docket

No.

81

at

p.

8.)

Confounding the first two insured risks, CH Properties claims that
its:
expectations as to its right to indemnification are
entirely
compatible
with
what
commentators
have
recognized in terms of the coverage provided by this type
of insurance. See, e.g., Palomar, Title Ins. Law, § 5:5
(2013–2014 ed.) (A defect exists in the insured’s title
when a third party claims an interest which interferes
with the insured’s use of the property according to the
estate or interest insured.)
This type of insurance
policies [sic] entitles the insured to compensation for
either a complete failure of title or a diminished title.
1 Palomar, § 5:4.
Id. at p. 7 (emphasis in original).
CH Properties cites no case law or support for its
layman’s interpretation of the treatise language, and a review of
the case law underlying the treatise’s discussion does not support
CH Properties’s argument. See generally 1 Palomar § 5:5 (providing
examples

of

defects,

liens,

and

encumbrances,

none

of

which

demonstrates how trespassers’ presence clouds title). The focus of
the second policy provision is on the insured’s title, and, as
discussed

above,

no

facts

suggest

that

the

validity

of

CH

Properties’s title to the Property is in jeopardy, much less
affected by any defect, lien, and encumbrance.

The trespassers’

Civil No. 13-1354 (FAB)

44

ongoing presence does not constitute an encumbrance on title,
because “the mere presence of a matter that appears to affect title
will not be cognizable under the policy if, in fact, the defect is
without legal consequence.”

1 Palomar § 5:5.

The trespassers in

this case entered the land to amplify their lawsuit challenging the
Lease Agreement’s validity in the name of public domain.

Their

continued presence was approved by court order as part of a State
Court Action’s settlement; thus, it cannot be seriously argued that
they possess a legally cognizable interest amounting to a defect,
lien, or encumbrance on the leasehold title.

Furthermore, a title

insurance policy indemnifies an insured “against claims that are
asserted after the policy’s effective date but, for the most part,
only to the extent that they were caused by liens, encumbrance, or
other title defects that existed prior to that date.”
§ 4:3 (emphasis in original).

1 Palomar

Only if a policy expressly assumes

the risk of defects first created after the date in Schedule A,
therefore, will the title insurer be liable on the policy.

Id.

Here,

the

the

alleged

defects

or

encumbrances

began

when

trespassers entered the land in 2005 — nearly three years after the
Lease

Agreement

vesting

title

in

CH

Properties

was

signed.

Accordingly, CH Properties is not entitled to relief pursuant to
the second indemnification provision.

Civil No. 13-1354 (FAB)
3.

45

Unmarketability of Title
FATIC also insured against CH Properties’s loss by

reason of unmarketable title.

Pursuant to the Owner’s Policy,

unmarketable title is “an alleged or apparent matter affecting the
title to the land . . . which would entitle a purchaser of the
estate or interest described in Schedule A to be released from the
obligation

to

purchase

by

virtue

of

a

contractual

requiring the delivery of marketable title.”
p. 2.)

condition

(Docket No. 8-1 at

CH Properties repeats its contention under this provision

that its insured Lease Agreement “has in fact turned unmarketable.”
(Docket No. 81 at p. 8.)

It provides no legal analysis of how its

limited use falls under the language of the policy, however, and
merely claims that “the mere risk of enforcement of an encumbrance
or of a challenge to the title is sufficient to trigger coverage.”
Id. at p. 9.

That argument, which completely ignores the explicit

policy language provided, does not lead to the finding that the
trespassers’ presence renders title unmarketable.

See United Bank

v. Chicago Title Ins. Co., 168 F.3d 37, 40 (1st Cir. 1999)
(“Although

courts

marketability,

vary

compare

in

Chicago

their
Title

understanding
Ins.

Co.

v.

of

title

Kumar,

24

Mass.App.Ct. 53, 506 N.E.2d 154 (1987), with Myerberg, Sawyer &
Rue, P.A. v. Agee, 51 Md.App. 711, 446 A.2d 69 (1982), here the
policy has a specific definition, and United Bank makes no effort
to show that its concerns fell within this definition.”).

In the

Civil No. 13-1354 (FAB)

46

unmarketability provision context, moreover, “the insured will be
indemnified

for

unmarketable

loss

because

due
of

policy’s effective date.

to

a

a

finding

defect

the

title

which existed prior

to

is
the

It does not insure that the title will

remain marketable in the future.”
original).

that

1 Palomar § 5:7 (emphasis in

Just as the Court reasoned above, no basis exists for

concluding that the title was unmarketable before CH Properties
acquired title to the leasehold interest in August 2002, because
the trespassers and litigation occurred nearly three years later.
CH

Properties’s

argument

that

its

title

“has

in

fact

turned

unmarketable,” therefore, is inapposite.
4.

Lack of a Right of Access
Finally, FATIC agreed to indemnify CH Properties by

assuming a risk of loss from “lack of a right of access to and from
the land.”

(Docket No. 8-1 at p. 1.)

Pursuant to that fourth

coverage provision, the loss insured against is inadequate or
unreasonable “legal access” to property, in light of the insured’s
expectations.

1 Palomar § 5:8.

Courts construing that provision

focus on whether an insured has the legal right to physically
access his or her land.

Id. (compiling cases); id. (“The title

insurer’s

to

obligation

as

access

is

not

satisfied

by

mere

pedestrian access or by access to the insured land via only boat or
seaplane.

Surely, insureds reasonably expect that insurance of a

Civil No. 13-1354 (FAB)

47

right of access means they will have access to the insured property
over land by car or truck.”).
Curiously, CH Properties argues that it is entitled
to coverage under the fourth provision because the Owner’s Policy
insures CH Properties’s right to peaceful use and enjoyment of the
leased land, which in Puerto Rico includes “not being dispossessed
through violence and force by third persons.”
p. 9.)

(Docket No. 81 at

That argument is severely undeveloped and unpersuasive.

Simply because the trespassers have been squatting on the Property
—

and

in

fact

enjoyed

court

approval

to

remain

there

while

litigation progressed — does not mean that CH Properties’s legal
access to its leased land is entirely foreclosed.

Moreover, no

evidence supports the conclusion that the 5-cuerda tract of land is
physically inaccessible to the insured.

Accordingly, the Court

denies CH Properties’s request for indemnity coverage under that
provision.
In
indemnification

sum,
pursuant

all
to

four
the

insuring
Owner’s

provisions

Policy

require

for
the

existence of a title defect or a legally recognized claim against
the title as insured.

Because the trespassers’ presence neither

creates a defect in CH Properties’s leasehold title nor arises from
a legally cognizable claim against the title as insured, there is
no basis for finding that the indemnification provisions have been

Civil No. 13-1354 (FAB)
triggered.

48

Accordingly,

CH

Properties’s

request

for

indemnification of its rent and mortgage payments is DENIED.
IV.

Conclusion
Plaintiff CH Properties’s motion for summary judgment, (Docket

No. 58), and FATIC’s motion for summary judgment, (Docket No. 54),
are GRANTED IN PART and DENIED IN PART.

CH Properties’s request

for reimbursement for fees and costs incurred in the State Court
Actions is GRANTED.
Court

Action

Its request for reimbursement for the Federal
DENIED.

is

Because

it

is

not

entitled

to

indemnification, its request for damages for rent and mortgage
payments is DENIED.
The pretrial conference scheduled to be held on September 19,
2014 is VACATED.

In its stead, a status conference will be held on

that date at 9:00 a.m. to discuss the appropriateness of CH
Properties’

hiring

of

Attorney

Pedro

Rosario-Urdaz

and

the

reasonableness of the fees paid to Andreu & Sagardia.
IT IS SO ORDERED.
San Juan, Puerto Rico, September 9, 2014.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
United States District Judge