Bautista Cayman Asset Company v. Reliance Manufacturing, Inc. et al

Filing 44

MEMORANDUM AND ORDER re 37 Motion to Dismiss. Bautista Cayman Asset Company's motion to dismiss the counterclaim pursuant to Rule 12(b)(6) is GRANTED. Reliance Manufacturing, Inc.'s counterclaim is DISMISSED WITHOUT PREJUDICE. Any amended counterclaim must be filed no later than January 31, 2017. Signed by Judge Francisco A. Besosa on 01/20/2017. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
BAUTISTA CAYMAN ASSET COMPANY,
Plaintiff,
Civil No. 16-1418 (FAB)

v.
RELIANCE MANUFACTURING, INC., et
al.,
Defendants.

MEMORANDUM AND ORDER
BESOSA, District Judge
Before the Court is plaintiff Bautista Cayman Asset Company
(“Bautista”)’s

motion to

dismiss

Reliance

Manufacturing,

Inc.

(“Reliance”)’s counterclaim pursuant to Federal Rule of Civil
Procedure 12(b)(6).

(Docket No. 37.)

For the reasons set forth

below, Bautista’s motion is GRANTED, and Reliance’s counterclaim is
DISMISSED WITHOUT PREJUDICE.
I.

BACKGROUND
The

contested

counterclaim

stems

from

a

2004

mortgage

agreement between Doral Mortgage, a subsidiary of Doral Bank, and
defendants Reliance, Gilberto Medina-Safon, and Iris Margarita
Rodriguez-de

Leon

(“defendants”)

for

the

principal

$600,000.00 plus interest at an annual rate of 6.95%.
Nos. 41 at p. 3.; 34 at p. 7.)

of

(Docket

The mortgage note is secured by two

properties located in Guaynabo, Puerto Rico.
pp. 5-6.)

sum

Defendants own these properties.

(Docket No. 41 at

Id. at p. 6.

Pursuant

Civil No. 16-1418 (FAB)

2

to the mortgage note, defendants agreed to make monthly payments of
$3,475.00 on the first of each month from June 1, 2004 until May 1,
2006, on which date defendants would pay $603,475.00.

Id. at p. 3.

On the 2006 maturity date, Doral Mortgage failed to demand payment
of the principal amount.

(Docket No. 34 at p. 8.)

Instead, Doral

Mortgage and its successors continued to accept monthly payments of
$3,475.00

without

first

agreeing

credited to the principal.

Id.

that

the

payments

would

be

In 2015, Bautista became the

holder of the mortgage note after the Puerto Rico Commisioner of
Financial Institutions closed Doral Bank. (Docket No. 41 at p. 2.)
Bautista

alleges

that

defendants

breached

their

obligations

pursuant to the mortgage note by failing to make the agreed-upon
payments.

Id. at p. 7.

On March 9, 2016, Bautista filed a complaint bringing claims
for (1) collection of monies and (2) foreclosure of collateral
against defendants.

(Docket No. 1.)

All defendants filed an

answer and Reliance asserted a counterclaim seeking:

(1) an

adjustment of the principal amount to account for payments made
after the maturity date; (2) a declaration that Bautista has no
right to accelerate the mortgage debt; and (3) a declaration that
the “mortgage loan became extinguished and no new mortgage deed was

Civil No. 16-1418 (FAB)

3

signed or entered into by the parties.”

(Docket No. 12 at p. 9.)1

Bautista then moved to dismiss Reliance’s counterclaim.

(Docket

No. 18.) Reliance filed several oppositions and an amended answer.
(Docket Nos. 19 & 20.)
In sum, Reliance’s counterclaim argues that Bautista somehow
acquiesced
agreement.”

to

the

“tacit

modification

(Docket No. 34 at p. 9.)

of

the

loan

repayment

Bautista rejects this

allegation and relies upon the 2004 mortgage agreement in claiming
that defendants owe a principal amount of $585,377.83; interest in
the amount of $49,724.60 which continues to accrue at a rate of
$113.01 per diem; accrued late charges in the amount of $9,158.08;
and costs and fees in excess of $60,000.00.

(Docket No. 41 at

p. 7.)
II.

LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a complaint or

counterclaim must contain sufficient factual matter “to state a

1

Reliance filed an amended answer the same day to request
additional relief. (Docket No. 13.) Namely, Reliance requested an
appraisal of the mortgaged properties and assignment of attorney’s
fees to plaintiff. Id. Since the commencement of this action, the
parties have repeatedly filed amended pleadings. See answer and
counterclaim (Docket No. 12), amended answer and counterclaim
(Docket No. 13), defendant’s opposition to the motion to dismiss
the counterclaim (Docket No. 19), defendant’s renewed opposition to
the motion to dismiss the counterclaim (Docket No. 25), defendant’s
amended answer (Docket No. 34), plaintiff’s motion to dismiss the
amended counterclaims, (Docket No. 37.) and plaintiff’s amended
complaint (Docket No. 41.) The facts et forth in this Opinion are
based on the allegations found in the most recently filed
counterclaim, Docket No. 34, and in plaintiff’s second amended
complaint, Docket No. 41.

Civil No. 16-1418 (FAB)

4

claim to relief that is plausible on its face.”
Twombly, 550 U.S. 544, 570 (2007).
requires a two-step approach.

Bell Atl. Corp. v.

Resolving a motion to dismiss

First, the Court “isolate[s] and

ignore[s] statements in the complaint that simply offer legal
labels and conclusions or merely rehash cause-of-action elements.”
Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st
Cir. 2012).

Second, the Court “take[s] the complaint’s well-pled

(i.e., non-conclusory, non-speculative) facts as true, drawing all
reasonable inferences in the pleader’s favor, and see[s] if they
plausibly narrate a claim for relief.” Id. “The relevant question
for a district court in assessing plausibility is not whether the
complaint makes any particular factual allegations but, rather,
whether ‘the complaint warrant[s] dismissal because it failed in
toto to render plaintiffs’ entitlement to relief plausible.’”
Rodriguez-Reyes v. Molina-Rodriguez, 711 F.3d 49, 55 (1st Cir.
2013) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 n.14
(2007).
III. DISCUSSION
Bautista argues that the Court should dismiss Reliance’s
counterclaim because:

(1) the counterclaim fails to state a claim

for which relief can be granted, (2) the Financial Institutions
Reform, Recovery, and Enforcement Act (“FIRREA”) bars Reliance’s
counterclaim

because

Reliance

has

failed

to

exhaust

the

administrative claims process required by FIRREA, and (3) the

Civil No. 16-1418 (FAB)

5

counterclaim is an affirmative defense inappropriately labeled as
a counterclaim.

(Docket No. 37.)

As it is apparent to the Court that Reliance’s counterclaim
fails to state a claim for which relief may be granted, the Court
will dismiss the counterclaim solely on this basis.
A.

Dismissal is warranted under Rule 12(b)(6)
Reliance has failed to identify a cause of action in the

counterclaim.

While

Reliance

provides

numerous

factual

allegations, it has not made clear the legal theory supporting its
counterclaim.

Reliance sets forth the mortgage agreement’s terms,

details its payment history, and concludes without explanation that
the parties modified the mortgage agreement.
p. 7-9.)

(Docket No. 34 at

Because there is no identified statutory or common law

cause of action asserted in the counterclaim, it is impossible for
the Court to ascertain whether the counterclaim makes factual
allegations “respecting each material element [of the cause of
action] necessary to sustain recovery.” See U.S. ex rel. Hutcheson
v. Blackstone Med., Inc., 647 F.3d 377, 384 (1st Cir. 2011).
Without more from Reliance, the Court is left with “unadorned
factual allegations as to the elements of the cause of action.”
Gonzalez

v.

Otero,

172

F.

Supp.

3d

477,

501

(D.P.R.

2016)

(Dominguez, J.), citing Aulson v. Blanchard, 83 F.3d 1, 3 (1st.
Cir. 1996), (dismissing a complaint “based on general conclusory
allegations,” and “speculative in nature” on 12(b)(6) grounds).

Civil No. 16-1418 (FAB)

6

As a result of Reliance’s failure to identify a cause of action,
the counterclaim must be dismissed.

See Halsey v. Litton Loan

Servicing, L.P., 2013 U.S. Dist. LEXIS 98365, at *9-10 (D.N.H.
June 19, 2013) (dismissing complaint in light of plaintiff’s
failure “to identify either a cause of action or its requisite
elements”); See also Lucas v. Ocwen Home Loan Servicing, No. 3:13CV-1057-G (BH), 2014 U.S. Dist. LEXIS 172531, at *2 (N.D. Tex.
Dec. 12, 2014) (“It logically follows that failing even to identify
a specific cause of action justifies dismissal.”).
Aside

from

failing

to

identify

a

cause

of

action,

Reliance also has failed to allege facts showing a plausible nexus
between Bautista’s acts and Reliance’s resulting harm.

To state a

viable counterclaim, Reliance must not only identify a cause of
action and allege facts with respect to each of its elements, but
it must also allege facts to support the inference that Bautista is
liable pursuant to the asserted causes of action.

See Iqbal, 556

U.S. at 663 (observing that “[a] claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw
the

reasonable

inference

that

the

defendant

[or

counterclaim

defendant] is liable for the misconduct alleged.”).
In essence, Reliance’s counterclaim alleges that it is
entitled to the relief requested because:
its

successors

continued

to

accept

(1) Doral Mortgage and
monthly

payments

from

defendants, and (2) Bautista allowed for the “tacit modification of

Civil No. 16-1418 (FAB)

7

the loan repayment agreement.”

(Docket No. 34 at pp. 8-9.)

Notably, there is no allegation that Bautista received payments
from defendants, nor are there alleged facts to suggest that
Bautista agreed to modify the mortgage agreement.

Reliance’s

failure to show a plausible nexus linking Bautista’s acts to
Reliance’s harm further supports dismissal of the counterclaim.
B.

Federal Institutions Reform, Recovery, and Enforcement
Act
Aside from moving to dismiss the counterclaim pursuant to

Rule 12(b)(6), Bautista argues that dismissal is warranted because
Reliance has not exhausted the mandatory administrative claims
process required by FIRREA.

(Docket No. 37 at pp. 8-13.)

As the

Court has previously observed, FIRREA “establishes a mandatory
administrative claims process, which must be exhausted by every
claimant

seeking

payment

from

assets

of”

a

failed

financial

institution of which the Federal Deposit Insurance Corporation “is
acting as a conservator or receiver.”

Maldonado-Torres v. FDIC,

839 F. Supp. 2d 511, 515 (D.P.R. 2012) (Besosa, J.).

Reliance

argues that FIRREA is inapplicable because its “counterclaim does
not seek payment from the bank.”

(Docket No. 25 at p. 7.)

light

identify

of

Reliance’s

failure

to

a

cause

of

In

action

specifically, the Court is not in a position to address the
applicability of FIRREA to the counterclaim.

Civil No. 16-1418 (FAB)
IV.

8

Conclusion
For the reasons discussed above, Bautista’s motion to dismiss

the counterclaim pursuant to Rule 12(b)(6), Docket No. 37, is
hereby GRANTED.

Reliance’s counterclaim is DISMISSED WITHOUT

PREJUDICE.
Any

amended

counterclaim

must

be

filed

no

later

than

January 31, 2017.
IT IS SO ORDERED.
San Juan, Puerto Rico, January 20, 2017.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE