Bautista Cayman Asset Company v. F&A Investment, Inc. et al
Filing
42
OPINION AND ORDER granted 30 Motion for Summary Judgment; finding as moot 31 41 Motions Requesting Order. Signed by Judge Carmen C. Cerezo on 8/16/2017. (mld)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
BAUTISTA CAYMAN ASSET
COMPANY
Plaintiff
vs
F&A INVESTMENT, INC.; P. GIANT
OUTLET & LIQUIDATION CENTER,
CORPORATION; FURNITURE &
CARPET WORLD CORP.;
FERNANDO JESUS
PAONESSA-LOPEZ; ANNETTE
MARIE BRAFETTE MULINELLI
Defendants
CIVIL 15-2798CCC
OPINION AND ORDER
On November 10, 2015, Bautista Cayman Asset Company (“Bautista” or
“Plaintiffs”) filed a Complaint against F&A Investment, Inc. (“F&A Investment”),
P Giant Outlet & Liquidation Center, Corporation (“P Giant Outlet”), Furniture
& Carpet World Corp. (“Furniture & Carpet”), Fernando Jesús Paonessa-López
(“Paonessa-López”), and Annette Marie Brafette Mulinelli (“Brafette”)
(collectively “Defendants”), for collection of monies and the foreclosure of
mortgages and other collateral. Under certain loan and financing agreements
(as defined below), Bautista requested the payment of a total amount of
$5,615,473.54, which is composed of $4,852,861.15 in principal, $749,430.04
in accrued interests and $13,182.35 for late fees as of August 31, 2015, plus
the amount of $1,280.62 per diem for interest and any additional amount
incurred in costs and fees for each day from August 31, 2015 through the date
of the payment in full of all amounts due under the loans. In the absence of
payment in full by Defendants, Bautista requested that the Court order the
CIVIL 15-2798CCC
2
foreclosure of all of the non-real estate collateral under the loan and collateral
documents (as defined below).
On March 29, 2016, the Clerk of this Court entered default against
defendants P Giant Outlet, Furniture & Carpet and Brafette, and on May 3,
2016 against defendant F&A Investment, for their failure to plead or otherwise
answer the Complaint. On April 27, 2016, Paonessa-López filed an answer to
the Complaint.
The Court entered Partial Judgment against defendants
F&A Investment, P Giant Outlet, Furniture & Carpet and Brafette on
February 28, 2017.
Before the Court is Bautista’s Motion for Summary Judgment (d.e. 30)
filed on October 31, 2016. On March 11, 2017, Paonessa-López filed a Motion
to Consent Entry of Summary Judgement (d.e. 35) wherein he “consents that
judgment be entered against him.” Plaintiff has met and complied with all its
obligations in enforcing its contractual remedies, and is entitled to collect on
the amounts owed on the Financing Agreements as of right and defendant
Paonessa-López has consented to entry of summary judgment. For the
reasons discussed below, the Motion for Summary Judgment (d.e. 30) is
GRANTED.
I.
UNCONTESTED MATERIAL FACTS
Plaintiff supported its motion with a statement of material facts. The
relevant facts are set forth below:
1.
F&A Investment executed a loan agreement (“Initial Loan
Agreement”) with Doral Recovery II, LLC (“Doral”) on February 26, 2010, in the
principal amount of $4,203,388.72, identified under loan number 3002003356.
CIVIL 15-2798CCC
2.
3
On October 31, 2013, F&A Investment, P Giant Outlet, Corporation,
Furniture & Carpet, and Paonessa-López executed an Amended, Consolidated
and Restated Loan Agreement (the “Financing Agreements”) with Doral.
3.
was
Pursuant to the Financing Agreements, the Initial Loan Agreement
amended
to
reflect
the
bifurcation
of
the
existing
loan,
number 300020003356, into two separate loans: (1) a senior loan for the
principal amount of $4,203,888.72 (“Loan A”); and (2) a junior loan for the
principal amount of $674,339.63 (“Loan B”) (collectively referred to as the
“Loans”).
4.
In the event of any default with the terms, obligations or covenants
of the Financing Agreements, Doral may terminate its obligations under the
Financing Agreements and accelerate in full or in part any and all of
F&A Investment, P Giant Outlet, Furniture & Carpet, and Paonessa-López’s
obligations or indebtedness under the Financing Agreements and the Loans
would become immediately due, owing, and payable.
5.
The principal amounts due under the Loans, which were duly
endorsed to Bautista, are further evidenced by two promissory notes issued by
F&A Investment to the order of Doral: (a) a note in the amount of
$4,203,888.72; and (b) a note in the amount of $674,339.63.
6.
To secure the obligations under the Financing Agreements, on
October 31, 2013, F&A Investment executed an Amended and Restated
Mortgage Notes Pledge and Security Agreement (the “Mortgage Notes Pledge
and Security Agreement”) with Doral and granted and pledged to Doral first
priority liens over the real property (the “Real Property 28,146”) with the
following legal description:
CIVIL 15-2798CCC
4
URBAN: Tract of land located in the Sabana Abajo Ward of the
Municipality of Carolina, Puerto Rico, identified as lots number
two (#2) and two-A (#2-A) on the inscription plan of Castellana
Gardens Development, now known as Sabana Industrial Park, with
an area of TEN THOUSAND ONE HUNDRED NINETY SIX POINT
TWO THOUSAND EIGHT
HUNDRED FORTY TWO
(10,196.2842) SQUARE METERS, with the following geometric
description: starting at the Southwestern corner of the lot, proceed
along with the boundary with Sabana Llana Main Street with a
bearing of North fifty six (56) degrees sin (6) minutes twenty
one (21) seconds for a distance of one hundred eight point three
hundred forty six (108.346) meters, thence along the boundary with
lots number three (#3) and three-A (#3-A) of the same
development with a bearing of North twenty eight (28) degrees
thirty (30) minutes twenty seven (27) seconds for a distance of
eighty five point four hundred ninety seven (88.897) meters and
with a bearing of South sixty six (66) degrees fifty eight (58)
minutes seven (7) seconds West for a distance of nineteen point
four hundred forty three (19.443) meters, thence along the
boundary with lots number one (#1) and one-A (#1-A) of the same
development with a bearing of South twenty eight (28) degrees
twenty nine (29) minutes twenty six (26) seconds East for a
distance of one hundred three point four hundred thirty
four (103.434) meters to the starting point of this description. Upon
the above described land has been constructed a one story steel
and masonry multipurpose industrial building.
BUILDING: With a value of $459,370.00, as is evident from deed
number 3, execute din San Juan, on June 19, 1979, before
Charles P. Adams, recorded at page 102 of tome 807 of Carolina,
property number 28146, 10th recordation.
The property number 28,146 is recorded at page 222 of
volume 807 of Carolina, First Section of Carolina, Registry of the
Property of Puerto Rico.
7.
The first priority and perfected mortgage notes and mortgages deeds
pledged to Doral over Real Property 28,146, which were duly endorsed to
Bautista, are the following:
(a)
First priority and perfected mortgage note and mortgage deed
in the amount of $3,825,000.00 over Real Property 28,146, each dated
September 17, 2002.
CIVIL 15-2798CCC
(b)
5
Second priority mortgage note and mortgage deed in the
amount of $875,000.00 over Real Property 28,146, each date August 30,
2006.
8.
Pursuant to the Mortgage Notes Pledge and Security Agreement,
F&A Investment granted to Doral a collateral assignment of all of the rents,
income, and revenues derived from any and all of the lease agreements from
Real Property 28,146.
9.
On October 31, 2013, F&A Investment and P Giant Outlet
subscribed a “Notice of Assignment.” Through the Notice of Assignment,
F&A Investment assigned and pledged all of its rights to Doral under a certain
lease agreement between F&A Investment and P Giant Outlet, dated August 9,
2013. That same date, P Giant Outlet also executed a “Tenant Estoppel
Certificate” in favor of Doral and F&A Investment.
10. On November 5, 2013, F&A Investment filed a UCC Financing
Statement, Form UCC1, with the Department of State of Puerto Rico through
which it pledged to Doral the personal property described therein.
11. Paonessa-López and Braffette Mulinelli executed a Guarantee on
February 26, 2010 to jointly and severally guarantee to Doral the payment of
all of the obligations under the Financing Agreements.
12. On October 31, 2013, defendants P Giant Outlet, Paonessa-López,
Furniture & Carpet, all executed Continuing and Unlimited Guarantees to jointly
and severally guarantee to Doral the payment of all of the obligations under the
Financing Agreements.
13. The Mortgage Notes Pledge and Security Agreement, the Mortgage
Notes and Deeds, the Notices of Assignment, the Tenant Estoppel Certificates
CIVIL 15-2798CCC
6
and the UCC Financing Statement are collectively referred to as the “Collateral
Documents”
and
the
collateral
pledged
therein,
along
with
Real
Property 28,146, and the Continuing and Unlimited Guarantees, collectively,
the “Collateral”.
14. All the obligations under the Financing Agreements were duly
endorsed to Bautista.
15. F&A Investment defaulted on its obligations under the Financing
Agreements, as it failed to pay the amounts due therein under its terms.
16. As a result of Defendants defaults, Bautista declared all of the
obligations under the Loans immediately and automatically due, owing, and
payable.
17. To date, the defendants in the present case have failed to cure the
existing and continuing defaults detailed above under the Financing
Agreements.
18. As of June 30, 2016, the Defendants owe still Bautista the following
amounts:
(a) Under senior loan (Loan A), $5,244,526.07; of which $4,178,521.52
corresponds to principal; $1,006,153.16 corresponds to accrued
interests as of June 30, 2016; $32,713.21 corresponds to late fees;
$27,138.18 correspond to legal expenses and valuation expenses,
as provided in the Financing Agreements and the Collateral
Documents; plus the amount of $1,102.67 per diem for interest and
any additional amount incurred in costs and fees under the
Financing Agreements for each day from June 30, 2016 through the
date of the payment in full of all amounts due under the Financing
Agreements.
(b) Under junior loan (Loan B), $847,485.70; of which $674,339.63
corresponds to principal and $173,146.07 corresponds to accrued
interests as of June 30, 2016; plus the amount of $177.95 per diem
for interest and any additional amount incurred in costs and fees
under the Financing Agreements for each day from June 30, 2016
through the date of the payment in full of all amounts due under the
Financing Agreements.
CIVIL 15-2798CCC
II.
7
RULE 56 STANDARD FOR SUMMARY JUDGMENT
The role of summary judgment in civil litigation is commonplace, “to
pierce the boilerplate of the pleadings and assay the parties’ proof to determine
whether trial is actually required.”
McCarthy v. Northwest Airlines,
56 F.3d 313, 314 (1st Cir 1985) (citing Wynne v. Tufts University School of
Medicine, 976 F.2d 791, 794 (1st 1992)). Thus, this “device allows courts and
litigants to avoid full blown trials in unwinnable cases, thus conserving parties’
time and money, and permitting the court to husband scarce judicial
resources.” Id. at 315.
Federal Rule of Civil Procedure 56(a) provides that: “[a] party seeking to
recover upon a claim . . . may, at any time, after the expiration of 20 days from
the commencement of the action . . . move with or without supporting affidavits
for a summary judgment in the party’s favor upon all or any part thereof.” The
Court may grant the movant’s motion for summary judgment when “the
pleadings, answers to interrogatories, and admissions on file together with the
affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.” Fed. R.
Civ. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
106 S.Ct. 2505, 91 L.Ed. 2d 202 (1986); NASCO, Inc. v. Pub. Storage, Inc.,
29 F.3d 28 (1st Cir. 1994). “[T]he principal judicial inquiry required by Rule 56
is whether a genuine dispute as to material fact exists.” Wright, Miller & Kane,
Federal Practice and Procedure § 2725 (4th Ed.) (2017).
The procedure authorized by Rule 56 “is a method for promptly disposing
of actions in which there is no genuine dispute as to any material fact or in
which only a question of law is involved.” Id. at § 2712. In order to grant
CIVIL 15-2798CCC
8
summary judgment, the trial court must determine if there are any “material”
factual issues which are identified depending on the substantive law that
should be resolved and also, whether such issues are also “genuine.”
Anderson, 477 U.S. at pp. 247-248.
A “material issue” is one that affects the outcome of the litigation;
therefore, if a factual issue is not relevant to the resolution of the controlling
legal issues, summary judgment should be granted.
Pignons S.A. de
Mecanigne v. Polaroid Corp., 657 F.2d 484 (1st Cir. 1981); Finn v.
Consolidated Rail Corp., 782 F.2d 13 (1st Cir. 1986); Molinos de Puerto Rico
v. Sheridan Towing Co., 62 F.R.D. 172 (D.P.R. 1973). As stated by the
Supreme Court, “. . . the materiality determination on a motion for summary
judgment rests on the substantive law, and it is the substantive law's
identification of which facts are critical and which facts are irrelevant that
governs.” Anderson, 477 U.S. at 248.
When, as here, the moving party asserts that the competent evidence
clearly demonstrates that it is entitled to judgment, the non-moving party bears
the burden of showing the existence of some factual disagreement sufficient
to defeat the motion.
However, the burden is satisfied only if the cited
disagreement relates to a genuine issue of material fact. Id. at 247-248. “In
this context, ‘genuine issue’ means that the evidence about the fact is such
that a reasonable jury could resolve the point in favor of the non-moving party
[and] ‘material’ means that the fact is one that might affect the outcome of the
suit under the governing law.” See United States v. One Parcel of Real
Property, Etc., 960 F.2d 200, 204 (1st Cir. 1992). Therefore, a factual issue
is material if it is relevant to the resolution of a controlling legal issue raised by
CIVIL 15-2798CCC
9
the motion for summary judgment. U.S. Fire Ins. Co. v. Producciones Padosa,
Inc., 835 F.2d 950, 953 (1st Cir. 1987).
In order to defeat summary judgment, the opposing party may not rest on
conclusory allegations, improbable inferences, and unsupported speculation.
See Hadfield v. McDonough, 407 F.3d 11, 15 (1st Cir. 2005) (citing,
Medina–Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)).
Nor will “effusive rhetoric” and “optimistic surmise” suffice to establish a
genuine issue of material fact. Cadle Co. v. Hayes, 116 F.3d 957, 960
(1st Cir. 1997).
Once the party moving for summary judgement has
established an absence of material facts in dispute, and that he or she is
entitled to judgement as a matter of law, the “party opposing summary
judgment must present definite, competent evidence to rebut the motion.”
Méndez–Laboy v. Abbott Lab., 424 F.3d 35, 37 (1st Cir. 2005) (quoting,
Maldonado–Denis v. Castillo–Rodríguez, 23 F.3d 576, 581 (1st Cir. 1994)).
“The nonmovant must ‘produce specific facts, in suitable evidentiary form’
sufficient to limn a trial-worthy issue . . . . Failure to do so allows the summary
judgment engine to operate at full throttle.” Id.; see also Kelly v. United States,
924 F.2d 355, 358 (1st Cir. 1991) (warning that “the decision to sit idly by and
allow the summary judgment proponent to configure the record is likely to
prove fraught with consequence).
III.
DISCUSSION
A.
General Contract Law
Under Puerto Rico law, according to our Civil Code, there is a “contract
from the time one or more persons agree to bind themselves with respect to
CIVIL 15-2798CCC
10
other or others, to give something or render a service.” Laws of P.R. Ann.,
Tit. 31 § 3371 (translation ours). Article 1207 of the Civil Code prescribes the
principle of freedom to contract, which permits persons to establish the
contractual covenants, clauses, and conditions which they so desire, as long
as they do not contravene the laws, morality or the public order. Id.; De Jesús
González v. A.C., 148 D.P.R. 255, 263-64 (1999). As a result, within the
context of the aforementioned limitations, “the type of agreement that can be
reached by contracting parties is only limited by the parties’ imagination and
their will to contract is the supreme law between them.” Arthur Young & Co.
v. Vega, 136 D.P.R. 157, 169-70 (1997) (translation ours).
In general terms, a contract designates every covenant or voluntary
agreement by which proprietary legal relationships are created, modified or
extinguished. See José Puig Brutau, Compendio de Derecho Civil, Vol II,
at 171 (2nd ed. 1994). Specifically, however, a contract refers to a voluntary
agreement between two or more persons by which relationships pertaining to
the law of obligations are created, modified or extinguished. Id. Thus, when
the will of every one of the parties acts in consideration of an interest opposite
or different from the one that drives the other party, it may be stated that the
contract properly exists. José Puig Brutau, Fundamentos de Derecho Civil,
Tomo II, Vol. I, at 10 (3rd ed. 1984).
Article 1213 of the Civil Code lists the requirements of the contract and
establishes that “[t]here is no contract unless the following requirements
concur: (1) Consent of the contracting parties; (2) Object of the contract;
(3) Cause of the obligation that is established.” Laws of P.R. Ann., Tit. 31
§ 3391 (translation ours). See also Danosa Caribbean v. Santiago Metal,
CIVIL 15-2798CCC
11
179 D.P.R. 40, 45 (2010). In order to ascertain what constitutes the object of
a contract, we must respond the question “what is it that is owed?.” Anything
can be the object of a contract, including future things within the commerce
between persons, provided, however, that they are not impossible and are
determinable. Laws of P.R. Ann., Tit. 31 §§ 3421, 3422 and 3423; San Juan
Credit Inc. v. Ramírez Carrasquillo, 113 D.P.R. 181, 185 (1982). The cause
in a contract, on the other hand, points to the purpose or reason that underlies
the contractual relationship. Id. at 185-86.
Contracts, pursuant to the Civil Code, are perfected by mere consent,
and every party is bound from the time of consent not only to comply with what
is expressly agreed upon, but also with the consequences that, according to
their nature, are consistent with good faith, custom, and the law. Civil Code,
Article 1210, Laws of P.R. Ann., Tit. 31 § 3376; Unisys v. Ramallo Bros.
Printing Co., Inc., 128 D.P.R. 842, 852 (1991); Ramírez v. Club Cala de
Palmas, 123 D.P.R. 339, 345-46 (1989). In addition, it is a clearly established
legal axiom that the pact and agreements made by the parties to a contract
have legal force and should be fulfilled in accordance thereto. Civil Code,
Article 1044, Laws of P.R. Ann., Tit. 31 § 2994; see also García v. World Wide
Entmt. Co., 132 D.P.R. 378, 384 (1992).
Moreover, when the terms,
conditions, and exclusions of a contract are clear, specific, and give no margin
to ambiguities or different interpretations, they are the rule to apply. Civil Code,
Article 1233, Laws of P.R. Ann., Tit. 31 § 3471; see also Curbelo v. A.F.F.,
127 D.P.R. 747, 760 (1991). The courts of justice, thus, cannot free a party
from fulfilling what it contractually agreed to, when said contract is legal and
CIVIL 15-2798CCC
12
valid, and does not have any defects. Constructora Bauzá v. García López,
129 D.P.R. 579, 593 (1991).
B.
Statutory Mortgage Provisions
One of the most common contracts in our jurisdictions is the loan
agreement, whereby “one of the parties provides to the other, . . . money or
some other fungible object, with the condition of returning another of the same
type and amount . . . .” Civil Code, Article 1631, Laws of P.R. Ann., Tit. 31
§ 4511 (translation ours). A loan agreement is a unilateral obligation which
must specify the amount of money loaned and received, as well as the terms
of repayment to the creditor. José R. Vélez Torres, Curso de Derecho Civil.
Derecho de Contratos, Tome IV, Vol. II, Inter American University of Puerto
Rico, Law School, at 451-55 (1997). The person who receives the money
loaned becomes the owner of such money, but at the same time is obligated
to repay such amount, plus the agreed-upon interest.
Civil Code,
Articles 1644-1646, Laws of P.R. Ann., Tit. 31 §§ 4571-4573.
A loan
agreement should contain, among other things, a provision as to how and
when the debt shall be considered “paid”. That way, the debtor is obliged to
return the loaned item, as agreed-upon, and the creditor is limited to wait for
the expiration of the term in order to receive the loaned item. See Vélez
Torres, supra, at 453 and 455.
As far as payment of the obligations are concerned, a creditor has the
right to demand full payment and cannot be forced to accept partial payments.
Civil Code, Article 1123, Laws of P.R. Ann., Tit. 31 § 3171.
This right
preserves the integrity of the debt, which, in turn, highlights the fact that an
CIVIL 15-2798CCC
13
obligation will not be deemed extinguished until the totality of the debt has
been repaid. Civil Code, Article 1111, Laws of P.R. Ann., Tit. 31 § 3161.
According to the uncontested facts in the case at bar, the Defendants,
including Paonessa-López, are obliged under the Financing Agreements,
under which certain credit facilities were provided to the Defendants, which are
duly endorsed to Bautista. The principal amounts due under the Financing
Agreements are further evidenced by two promissory notes issued by
F&A Investment duly endorsed to Bautista: (a) Note A in the amount of
$4,203,888.72; and (b) Note B in the amount of $674,339.63. The Financing
Agreements are secured by, among other things, first priority and perfected
mortgage notes and mortgages deeds Real Property 28,146, as earlier
described. Additionally, Paonessa-López executed a Continuing and Unlimited
Guarantee, and obliged himself to jointly and severally guarantee the payment
of all the obligations of F&A Investment under the Financing Agreements.
Defendants have defaulted on its obligations under the Financing
Agreements, failing to pay the amounts due therein under its terms, and have
failed to cure the existing and continuing defaults on the same. To the extent
amounts owed are due and payable, the Court orders its payment to the
Plaintiff.
IV.
CONCLUSION
Because there is no real controversy regarding the material facts of the
case, and having reviewed the dispositive motion filed by Bautista and the
CIVIL 15-2798CCC
14
accompanying documents, Bautista’s Motion for Summary Judgment (d.e. 30)
is GRANTED.1 Judgment shall be entered accordingly.
SO ORDERED.
At San Juan, Puerto Rico, on August 16, 2017.
S/CARMEN CONSUELO CEREZO
United States District Judge
1
Bautista’s Motions Reiterating Request for Entry of Judgment (d.e. 31
and d.e. 41) are MOOT.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?