Byrne-Veve et al v. OFG Bancorp.
Filing
25
OPINION AND ORDER, granting 15 MOTION to dismiss as to All Plaintiffs filed by OFG Bancorp. Signed by Judge Carmen C. Cerezo on 3/29/2016.(cm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
DENISE BYRNE VEVE; ROBERT
BYRNE VEVE
Plaintiffs
vs
OFG BANCORP.
Defendant
CIVIL 14-1601CCC
OPINION AND ORDER
This is a diversity action for damages arising from the alleged
mismanagement by defendant OFG Bancorp (OFG)1 of two separate
investment accounts belonging to each of the two plaintiffs’ parents. Before
the Court now is the Motion to Dismiss filed by defendant OFG on May 26,
2015 (D.E. 15) and plaintiffs’ response filed on June 13, 2015 (D.E. 18).
The core facts, taken from the complaint, follow. Robert Byrne (Byrne)
and his wife, María del Pilar Veve de Byrne, each had separate investment
accounts with Banco Bilbao Vizcaya Argentaria of Puerto Rico (BBVA) for
decades. The couple had three children: Denise Byrne-Veve (Denise), Robert
Byrne-Veve (Robert) and Mary Ann Byrne-Veve (Mary Ann). Only Denise, who
is a resident of Virginia and Robert, who resides in Florida, are plaintiffs in this
action; Mary Ann did not join her two siblings as a party.
defendant OFG acquired BBVA.
In 2013,
Both under BBVA and OFG, Rubén
Fernández-Masías (Fernández) served as broker for both investment
accounts.
1
Defendant has averred in both its Answer to Complaint (D.E. 11) and in the Motion to
Dismiss that its correct name is Oriental Financial Services, Corp. (OFS). For ease of reference,
however, we will refer to it with the acronym used in the Complaint, i.e. OFG.
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Ms. Veve de Byrne died in February of 2010. Plaintiffs allege that after
her death, Fernández requested Denise to bring him a certified copy of her
mother’s will, which she delivered to his assistant. Although Ms. Veve de
Byrne’s will purportedly provided that one third of her estate was bequeathed
to her husband and the other two thirds to her three children, OFG transferred
her investment account solely to her husband Byrne. It is further alleged that
Ms. Veve de Byrne’s account had a balance of approximately $80,000.00 at
the time it was transferred to Byrne’s, which were all invested in Oppenheimer
Funds mutual funds. Byrne’s separate personal account had a balance of
$17,000.00.
In April 2013, Fernández called Byrne at his residence and asked him to
come to his office to discuss his investments. Byrne was taken to Fernández’
office the following day by his gardener, Cheo. Once at the office, Fernández
convinced Byrne to sell the positions formerly in his wife’s account and which
were invested in the Oppenheimer Funds, as well as the positions in his own
account, in order to buy AAA Puerto Rico bonds. Fernández told Byrne that
this new investment would produce higher yields and more income, a
representation that the broker knew was false since by April 2013 Puerto Rico
government bonds had been downgraded to junk status. Fernández did not
seek the consent of any of Byrne’s children - Mary Ann and plaintiffs Denise
and Robert- before selling the positions in their mother’s former account which
were invested in the Oppenheimer Funds or the positions which Byrne had in
his
original
personal
account.
Fernández
allegedly made
these
recommendations to Byrne because another of his clients wanted to sell his
AAA Puerto Rico bonds.
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Mary Ann first learned of the transfer of the monies in her father’s
accounts to the Puerto Rico bond funds when she reviewed the accounts in
June 2013. Upon noticing that the balance in the accounts had dropped from
$97,553.00 to $58,896.00, she asked her father what he had done and he
responded that he had just signed documents that Fernández asked him to
sign after being told that it would be better for him.
Mary Ann visited
Fernández at his office to complain about the unsuitability of the transactions
made on her father’s accounts given his age and financial situation, but
Fernández responded that Byrne had reached a decision assisted by his
“financial advisor” Cheo (the gardener), who had accompanied him at the
meeting they had in April. Mary Ann reminded Fernández that Cheo was not
a financial adviser, and asked him to return her father’s investments to their
former state. Fernández refused, and told Mary Ann that she had no standing
to complain because her name was not on the accounts. After Fernández
rejected Mary Ann’s plead to revert the transactions, her husband César
Montilla (Montilla), who also works in the financial services industry, met with
officials from OFG in September 2013 and asked them to investigate the
situation. Although a couple of officials allegedly agreed to look into the matter,
no one from OFG ever responded to Montilla’s claim, which he later reasserted
in writing and followed-up with a complaint before Puerto Rico’s Commissioner
for Financial Institutions.
Plaintiffs Denise and Robert brought this action seeking that the portion
of the money in her mother’s account which they inherited upon her passing,
and which OFG transferred to their father, be returned to them. They also seek
damages for the emotional anguish both allegedly suffered as a result of
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seeing their father being humiliated by defendant when he was allegedly
deceived to invest into risky bonds.
OFG has moved for dismissal claiming that the Court lacks jurisdiction
to entertain plaintiff’s claim because the parties are bound to submit to
arbitration all of the controversies related to the investment accounts in
question. It also asserts that indispensable parties, namely Mary Ann and
Byrne, are missing from the action and their joinder would defeat diversity
jurisdiction. Finally, it avers that the claims are time barred. Because we find
that plaintiffs’ claims related to her mother’s investment account must be
arbitrated, and that their tort claims for the emotional anguish allegedly
suffered as a result of their father’s deceit by OFG are time barred, we now
GRANT defendant’s dismissal motion.
Arbitration:
It is clearly established that “when it is apparent, based on the face of a
complaint, and documents relied upon in the complaint, that certain of a party's
claims are subject to an enforceable arbitration clause, a motion to compel
arbitration should be considered under a Rule 12(b)(6) standard without
discovery's delay.”
Guidotti v. Legal Helpers Debt Resolution, L.L.C.,
716 F.3d 764, 776 (3rd Cir. 2013). Here, plaintiffs claim for the return of the
money invested in her mother’s OFG brokerage account is squarely anchored
on the contractual terms and conditions under which said account was
established, which as defendant has emphasized included an arbitration
agreement. A review of said arbitration provisions contained in the New
Account Form signed by Ms. Veve de Byrne on February 3, 2010 and which is
Exhibit I to defendant’s motion (D.E. 15-1) shows that Ms. Veve de Byrne
agreed that all controversies related to her account “be submitted to arbitration
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before the New York Stock Exchange, Inc., any other national securities
exchange on which a transaction giving rise to the claim took place (and only
before such exchange), or the financial industry regulatory authority.” ¶ 14.
Ms. Veve de Byrne further acknowledged that by signing the arbitration
agreement “all parties to this agreement are giving up the right to sue each
other in court . . .” ¶ 13. She further contracted that the agreement and its
provisions “shall be continuous, and shall . . . be binding upon me and/or the
estate, executors, administrators, and assigns of my account.” ¶ 4 (emphasis
ours). Hence, plaintiffs’ claims that the title of her mother’s account should
have been transferred to them and their sister as legitimate heirs of Ms. Veve
de Byrne, instead of to their father, and that the monies invested therein at the
time of the improper transfer be now returned to them, are directly related to
the management of said investment account and subject to its arbitration
provisions.
The Supreme Court has explained that the Federal Arbitration Act (FAA)
“not only declared a national policy favoring arbitration, but actually withdrew
the power of the states to require a judicial forum for the resolution of claims
which the contracting parties agreed to resolve by arbitration. ” Mastrobuono
v. Shearson Lehman Hutton, Inc., 115 S.Ct. 1212, 1215–16 (1995). Puerto
Rico law and its jurisprudence are in sync with this national policy, as they also
strongly favor arbitration. See Puerto Rico Arbitration Act, 32 L.P.R.A. § 3201
et. seq.; S.L.G. Méndez-Acevedo v. Nieves-Rivera, 179 D.P.R. 359, 368 (010);
U.C.P.R. v. Triangle Engineering Corp., Inc., 136 D.P.R. 133, 141–143 (1994),
Quiñones v. Asociación, 161 D.P.R. 668, 673 (2004); PaineWebber, Inc. v.
Soc. de Gananciales, 151 D.P.R. 307, 312–313 (2000); McGregor-Doniger v.
Tribunal Superior, 98 D.P.R. 864, 869 (1970).
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Given the arbitration clause contained in Ms. Veve de Byrne’s brokerage
account agreement, which binds her children as members of her estate,
plaintiffs’ claim seeking the return of the money invested in her account at the
time of her death is DISMISSED, without prejudice.
Prescription:
Plaintiffs’ remaining claim is brought under Puerto Rico’s tort statute,
Article 1802 of the Civil Code, and is based on the emotional anguish they both
aver to have suffered upon seeing their father’s humiliation when OFG
allegedly deceived Byrne to transfer his investments from safe mutual funds to
risky Puerto Rico bonds. The complaint’s allegations in this regard are rather
sketchy, but do state that Mary Ann first learned of this transfer in June 2013,
when she was reviewing her father’s accounts, and then asked Byrne what he
had done. That triggered an attempt by Mary Ann, her husband and the two
plaintiffs to correct the situation, which was ultimately rejected by OFG. While
no exact date is provided in the complaint of when plaintiffs started to endure
the anguish provoked by their father’s plight upon his realization that he was
deceived to invest in failed funds, it may be reasonably inferred that Byrne’s
tribulations started when he was confronted by Mary Ann in June 2013 with the
transfers in his account which allegedly were deceitfully induced by his broker.
The complaint seeking damages for plaintiff’s emotional anguish was not filed
until August 4, 2014, however. Claims under Article 1802 have a one-year
limitations period (see 31 L.P.R.A. § 5298(2)), which begins to run from the
time the victim knew or should have known of the claimed injury. Colón–Prieto
v. Geigel, 115 D.P.R. 232 (1984). Whether plaintiffs continued to suffer the
harmful effects of their father’s humiliation, which took place outside the
limitations period, within the limitations period, does not serve to toll the statute
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of limitations. See Lazarini v. United States, 898 F.Supp. 40, 45 (D.P.R. 1995)
(stating that “in order to establish a continuing tort violation, a plaintiff
necessarily must prove a series of events, not that the injury from the first
events has not been cured.”).
We need go no further. For the reasons stated, OFG’s Motion to Dismiss
(D.E. 15) is GRANTED and both of plaintiffs’ claims are ORDERED
DISMISSED. Judgment shall be entered accordingly.
SO ORDERED.
At San Juan, Puerto Rico, on March 29, 2016.
S/CARMEN CONSUELO CEREZO
United States District Judge
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