Jackie's Restaurant, LLC v. Plaza Carolina Mall, L.P.

Filing 60

OPINION AND ORDER: The Court GRANTS in part and DENIES in part the Motion for Summary Judgment at Docket No. 34 and GRANTS in part and DENIES in part the Motion for Summary Judgment at Docket No. 35 . Signed by Judge Raul M. Arias-Marxuach on 6/8/2020. (mrr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
Jackie’s Restaurant, LLC,
Plaintiff,
v.
Plaza Carolina Mall, L.P.,
Defendant,

CIVIL NO. 17-2376 (RAM)

Plaza Carolina Mall, L.P.,
Counter Claimant,
v.
Jackie’s Restaurant, LLC,
Counter Defendant.

OPINION AND ORDER
RAÚL M. ARIAS-MARXUACH, United States District Judge
Pending before the Court are Defendant Plaza Carolina Mall,
L.P.’s

Motion

for

Summary

Judgment

and

Plaintiff

Jackie’s

Restaurant, LLC’s Motion for Summary Judgment as well as the
parties’ submissions in support and opposition thereto. (Dockets
Nos. 34-36, 32 and 49). Having considered the parties’ submissions,
the Motion for Summary Judgment at Docket No. 34 is GRANTED in
part and DENIED in part, the Motion for Summary Judgment at Docket
No. 35 is GRANTED in part and DENIED in part.
I.
Plaintiff

PROCEDURAL BACKGROUND AND INTRODUCTION
Jackie’s

Restaurant,

LLC’s

(“Plaintiff”

or

“Jackie’s”) Complaint, filed on December 19, 2017, posits that
Jackie’s

could

resolve

the

Lease

Agreement

(“Lease”

or

“Agreement”) executed with Defendant Plaza Carolina Mall, L.P.
(“Defendant” or “PCM”) on September 4, 2012. (Docket Nos. 8-1 at

Civil No. 17-2376 (RAM)

2

8-12). It avers it is owed the return of its security deposit and
unused September 2017 rent. 1 Plaintiff also asks the Court to: (1)
declare Jackie’s the fee simple owner of the equipment inside the
leased premises 2 and PCM lacks a right to said equipment; and (2)
order PCM to pay fourteen thousand dollars ($14,000.00) if Jackie’s
loses potential offers to buy the same. Lastly, Jackie’s requests
that the Court order PCM to pay the lawsuit’s costs and ten
thousand dollars ($10,000.00) in attorney’s fees. Id. at 13-19.
On September 28, 2018, PCM filed a Motion for Summary Judgment
(“PCM’s MSJ”) and its statement of uncontested material facts
(“PCM’s SUMF”). (Docket Nos. 34 and 34-2). PCM alleges that the
declaratory judgment requested by Jackie’s should be denied; that
Jackie’s cannot terminate the Lease under both its terms and
conditions and the Puerto Rico Civil Code; that Jackie’s cannot
justify the application of the Rebus Sic Stantibus doctrine; and
that PCM has a right to the equipment Jackie’s left behind when it
abandoned

the

Premises.

(Docket

No.

34

at

14-28).

Plaintiff

subsequently filed Jackie’s Opposition to Plaza Carolina’s Motion
for Summary Judgment (Docket No. 36) countered by Defendant’s Reply

1 PCM removed this case to federal court on December 22, 2017. (Docket No. 1;
certified English translation at Docket No. 8-1).
2

See Fee Simple, Black's Law Dictionary (11th ed. 2019) (“An interest in land
[or property] that, being the broadest property interest allowed by law, endures
until the current holder dies without heirs.”)

Civil No. 17-2376 (RAM)

3

to Jackie’s Opposition for Motion for Summary Judgment. (Docket
No. 42).
On October 15, 2018, Jackie’s filed a Motion for Summary
Judgment (“Plaintiff’s MSJ”) and its statement of uncontested
material facts (“Plaintiff’s SUMF”). (Docket Nos. 35 and 35-28).
Jackie’s alleges that it could terminate the Agreement pursuant to
Article 1077 of Puerto Rico’s Civil Code because PCM failed to
fulfill its essential duty of maintaining the mall and common areas
open

to

the

public

after

the

passing

of

Hurricane

María

in

September 2017. (Docket No. 35 at 12-13). Thus, Jackie’s contends
it is entitled to the security deposit, the unused September 2017
rent and fourteen thousand dollars ($14,000) for the equipment PCM
allegedly seized from Plaintiff. Id. at 20-23. Jackie’s also avers
that the Court should impose attorney’s fees upon PCM for its
obstinate behavior. Id. at 23-24. PCM then filed Defendant’s
Memorandum

in

Opposition

to

Plaintiff’s

Motion

for

Summary

Judgment. (Docket No. 39). Lastly, on November 15, 2018, PCM filed
a Motion to Strike Hui Yu Ye’s Declaration at 35-24 (“Motion to
Strike”). (Docket No. 38). The Motion to Strike was addressed in
a separate Opinion and Order at Docket No. 59.
For

reasons

set

forth

below,

the

Court

determines

that

Jackie’s did not have legally sufficient cause to terminate the
Lease Agreement with PCM prior to its expiration date. However,
while PCM prevails herein on its breach of contract claims, it

Civil No. 17-2376 (RAM)

4

cannot keep Jackie’s Restaurant LLC’s equipment because it lacks
a perfected security interest.
The case will proceed to trial on the remaining issues which
are: (a) the amount of damages, if any, that PCM can recover due
to Jackie’s breach of contract; (b) the amount of damages Jackie’s
can recover, if any, due to PCM’s retention of the equipment
without a perfected security interest; and (c) any credits due to
Jackie’s which may offset any damages awarded to PCM.
II.

LEGAL STANDARD

Summary judgment is proper under Fed. R. Civ. P. 56(a) if a
movant shows “no genuine dispute as to any material fact” and that
they are “entitled to judgment as a matter of law.” A genuine
dispute exists “if the evidence about the fact is such that a
reasonable jury could resolve the point in favor of the non-moving
party.” Alicea v. Wilkie, 2020 WL 1547064, at *2 (D.P.R. 2020)
(quotation omitted). A fact is material if “it is relevant to the
resolution of a controlling legal issue raised by the motion for
summary judgment.” Bautista Cayman Asset Co. v. Terra II MC & P,
Inc., 2020 WL 118592, at *6 (D.P.R. 2020) (quotation omitted).
The movant “bears the burden of showing the absence of a
genuine issue of material fact.” United States Dep't of Agric. v.
Morales-Quinones, 2020 WL 1126165, at *1 (D.P.R. 2020) (citation
omitted). The burden then shifts to non-movant to present at least
one genuine and material issue of fact. Id. (quotation omitted).

Civil No. 17-2376 (RAM)

5

Summary judgment is proper if non-movants only rely on improbable
inferences, conclusory allegations and unsupported speculation.
See Burke Rozzetti v. Ford Motor Co., 2020 WL 704860, at *3 (D.P.R.
2020) (quotation omitted).
Local Rule 56 also governs summary judgment. See L. Civ. R.
56. Subsection “b” imposes that a moving party submit its factual
assertions in “a separate, short, and concise statement of material
facts, set forth in numbered paragraphs.” L. CV. R. 56(b). Parties
cannot incorporate statements of facts within a motion. Also, per
local rule, “unless a fact is admitted, the reply shall support
each denial or qualification by a record citation.” Id. The First
Circuit has highlighted that “[p]roperly supported facts [...]
shall

be

deemed

admitted

unless

controverted

in

the

manner

prescribed by the local rule.” Advanced Flexible Circuits, Inc. v.
GE Sensing & Inspection Techs. GmbH, 781 F.3d 510, 520 (1st Cir.
2015) (quotation omitted).
III. FINDINGS OF FACT
After analyzing PCM’s SUMF (Docket No. 34-2), Jackie’s SUMF
(Docket No. 35-28) and their exhibits and Defendant’s additional
facts proposed at Docket No. 42, and only crediting material facts
which are supported by a record citation and uncontroverted, the
Court makes the following findings of fact: 3

3

Reference to a specific Finding of Fact shall be cited as “(Fact ¶ __).”

Civil No. 17-2376 (RAM)
1. Plaintiff

Jackie’s

6

Restaurant,

LLC

(“Jackie’s”)

is

a

limited

liability company organized under the laws of the Commonwealth of
Puerto Rico on July 18, 2012. (Docket No. 35-28 ¶ 1).
2. The owners of Jackie's at that time of the signing of the Lease
Agreement (the “Agreement”) were Hui Yu Ye and Zu Fu Zhang. (Docket
No. 34-2 ¶ 4).
3. Defendant

Plaza

Carolina

Mall

L.P.

(“PCM”)

is

the

owner

and

operator of the shopping center Plaza Carolina Mall (the “Mall”),
located in the Municipality of Carolina, Puerto Rico. (Docket No.
34-2 ¶ 1).
4. Defendant is a limited partnership organized under the laws of the
state of Delaware,

United States of America, and is the owner of

the Mall. (Docket No. 35-28 ¶ 2).
5. As the Mall’s owner, it leases commercial space within its premises
to a variety of businesses. (Docket No. 34-2 ¶ 2).
Lease Agreement
6. On September 4, 2012, PCM, as the lessor and landlord, leased to
Jackie's Restaurant Inc. a commercial space of 808 square feet,
located at the Mall Food Court, which is identified for purposes
of the Agreement as Commercial Space No. VC21A. (Docket Nos. 34-2
¶ 3; 35-28 ¶ 3).
7. The Agreement signed by Jackie's on September 4, 2012, has a term
of ten (10) years, ending on September 30, 2022. (Docket Nos. 342 ¶¶ 7, 10; 35-28 ¶ 6).

Civil No. 17-2376 (RAM)

7

8. Neither owner of Jackie's read the Agreement. (Docket No. 34-2 ¶
5).
9. Neither owner consulted an attorney regarding the Agreement before
they signed it. Id. ¶ 6.
10. After 2013 until the present day, the sole member of Jackie’s was
Hui Yu Ye. Id. ¶ 12.
11. Jackie's

sole

Member

agrees

that

Jackie's

is

bound

by

the

Agreement’s terms and conditions. Id. ¶ 13.
12. In the Agreement, PCM agreed to provide Jackie’s: (a) the enjoyment
and the use of the leased area of 808 square feet in the Food Court
(Room VC21A); and, (b) the non-exclusive right to Jackie’s and its
customers to use the Common Areas, which are defined as:
“[a]ll parking areas, access roads and facilities
furnished, made available or maintained by Landlord in
or near the Center, including employee parking areas,
truck ways, driveways, loading docks and areas, delivery
areas, multi-story parking facilities (if any), package
pickup
stations,
elevators,
escalators,
pedestrian
sidewalks, malls, including the enclosed mall and Food
Court, if any, courts and ramps, landscaped areas,
retaining walls, stairways, bus stops, first-aid and
comfort stations, lighting facilities, sanitary systems,
utility lines, water filtration and treatment facilities
and other areas and improvements provided by Landlord
for the general use in common of tenants and their
customers and Major Tenants in the Center[.]” (Docket
No. 35-28 ¶ 4).
13.

Section 1.1 of the Agreement, which establishes the basic lease
information including the Center, Premise, Store Floor Area and
Lease Term, reads as follows:

Civil No. 17-2376 (RAM)
a. Center: Plaza Carolina, situated in
Carolina, Commonwealth of Puerto Rico

8
the

City

of

b. Premises: Room VC21A. Landlord shall have the right to
change the room designation upon written notice to
Tenant.
c. Store Floor Area: 808 square feet
d. Lease Term: Commencing on the Commencement Date and
continuing until the last day of the tenth (10th) Lease
Year. (Docket No. 35-2 at 1).
14. Section 2.1 of the Agreement titled “Leased Premises,” reads as
follows:
Landlord [PCM] hereby leases to Tenant [Jackie’s] and
Tenant hereby rents from Landlord the Premises as
depicted on ‘Exhibit A. The Store Floor shall be measured
to the center line of all party off adjacent tenant
walls, to the exterior faces of all other walls and to
the building line where there is no wall. The parties
agree that Landlord’s determination of Store Floor Area
shall be final, binding and conclusive. Id. at 3.

15. Section 5.1 of the Agreement titled “Common Areas,” and which
addresses control over and changes to the common areas, explains
that common areas:
[S]hall at all times be subject to the exclusive control
and management of the Landlord, and Landlord shall the
right, from time to time, to establish, modify and
enforce reasonable rules and regulations with respect to
all Common Areas.
[…]
Landlord shall have the right from time to time: to
change or modify and add to or subtract from the sizes,
locations, shapes and arrangements of parking areas,
entrances, exits, parking aisle alignments and other
Common Areas […] add to or subtract from the buildings
in the Center; and do and perform such other acts in and

Civil No. 17-2376 (RAM)

9

to said Common Areas as Landlord in its sole discretion,
reasonably applied, deems advisable for the use thereof
by tenants and their customers. Id. at 7.

16. Section 5.2 of the Agreement, titled “Use of Common Area” and which
addresses

the

temporary

closure

of

common

areas

states

the

following:
Tenant and its business invitees, employees and
customers shall have the nonexclusive right, in common
with Landlord and all others to whom Landlord has granted
or may hereafter grant rights, to use the Common Areas
subject to such reasonable regulations as Landlord may
from time to time impose and the rights of Landlord set
forth above. […] Landlord may at any time close
temporarily any Common Areas to make repairs or changes.
Id.

17. As part of the Agreement, PCM requires that its tenants, among
other

things, open their businesses during the Mall’s hours of

operation or when any Major Tenant

in the Center is open for

business and such other days, nights and hours as Landlord shall
approve in writing; pay a proportional share

of the operating

expenses, taxes, and marketing services; and pay a share of its
gross profit. Id. ¶ 54.
18. The basic rental payments agreed to by Jackie's for the 808-square
feet leased area, as stated in the Agreement, are as follows:
a. Annual rent of $75,000.00, for the first year of the
Agreement, payable in equal monthly installments;
b. Annual rent of $77,250.00, for the second year of the
Agreement, payable in equal monthly installments;
c. Annual rent of $79,567.50, for the third year of the

Civil No. 17-2376 (RAM)
Agreement, payable in equal monthly installments;
d. Annual rent of $81,954.52, for the fourth year of the
Agreement, payable in equal monthly installments;
e. Annual rent of $84,413.16, for the fifth year of the
Agreement, payable in equal monthly installments;
f. Annual rent of $86,945.56, for the sixth year of the
Agreement, payable in equal monthly installments;
g. Annual rent of $89,553.92, for the seventh year of the
Agreement, payable in equal monthly installments;
h. Annual rent of $92,240.54, for the eighth year of the
Agreement, payable in equal monthly installments;
i. Annual rent of $95,007.76, for the ninth year of the
Agreement, payable in equal monthly installments; and
j. Annual rent of $97,857.99, for the tenth year of the
Agreement, payable in equal monthly installments;
(Docket Nos. 34-2 ¶ 8; 35-28 ¶6).

19. Section 15.1 of the Agreement establishes in part:
“Amount of Deposit. Tenant shall deposit with Landlord
upon Tenant’s execution of the Lease, the Security
Deposit set forth in Article I, which shall be held by
Landlord and, at Landlord’s option, commingled with other
funds, without liability for interest, as security for
the faithful performance by Tenant of all the terms,
covenants and conditions of this Lease.
If Tenant commits a default hereunder, Landlord at its
option may apply said deposit, or any part thereof,
to compensate Landlord for loss, cost, damage or
expense sustained due to such default. Upon Landlord’s
request, Tenant shall forthwith remit to Landlord cash
sufficient to restore said sum to the original sum
deposited; Tenant’s failure to do so within five (5)
days after receipt of demand therefor (sic) shall be a
default under this Lease. If at the end of the Lease
Term Tenant is not in default hereunder, the balance of
such security deposit shall be returned to Tenant.
(Docket No. 35-28 ¶74).

10

Civil No. 17-2376 (RAM)

11

20. Jackie's Members not only signed the Agreement, but also initialed
the pages w i t h

the above paragraph. (Docket No. 34-2 ¶ 48).

21. On October 9, 2012, there was an Assignment of Lease to correct
the name of Plaintiff in the Agreement, which was incorrectly
stated

as

Jackie´s

Restaurant,

Inc.,

instead

of

Jackie’s

Restaurant, LLC. (Docket Nos. 34-2 ¶ 11; 35-28 ¶ 5).
22. The Agreement between the parties began to run in March 2013.
(Docket No. 34-2 ¶ 9).
23. On February 20, 2017, Jackie's, through Hui Yu Ye, in a First
Amendment to the Lease Agreement, requested a reduction in rent,
corresponding to the period from January 1 to December 31, 2017,
would be $96,137.76, plus 12%
$550,000.00

in

that

period

of the gross annual sales over

while in the

Agreement,

the

rent

stipulated for said period was $84,413.16 per year and 8% of the
sales over $1,055.164.51. (Docket Nos. 34-2 ¶ 14; 35-28 ¶ 9).
24. The Agreement, Assignment of Lease and First Amendment to Lease
were drafted by Defendant. (Docket No. 35-28 ¶ 10).
25. Plaintiff complied with its obligations to pay the security deposit
of $43,160.00 and the monthly rent for five (5) years (including
the payment of September 2017) until Hurricane María. In addition,
during that period, Plaintiff paid to PCM: (a) an amount equivalent
to 8% of the gross annual sales over the amounts established in
Section 1.1 (i) of the Agreement; (b) taxes as calculated in Section

Civil No. 17-2376 (RAM)
5.4; (c) its share of

12
the

operating costs

(Section 6.2) and

operating expense fees (Section 1.1 (k); and (d) a marketing service
contribution (Section 1.1 (n)). Id. ¶¶ 7 and 11.
PCM and Hurricanes Irma and María
26. Plaintiff paid its September 2017 monthly rent on time, but it was
only able to operate its restaurant for 18 days because the Mall
was closed to the public due to Hurricanes Irma and María. Id. ¶
12.
27. Since 2012, the year that the Agreement was signed, 39 hurricanes
have passed through the Caribbean area, some going through Puerto
Rico. (Docket No. 34-2 ¶ 18). 4
28. Hurricane Irma passed through Puerto Rico on September 6, 2017.
Id. ¶ 19. 5
29. Hurricane Maria passed through Puerto Rico on September 18, 2017.
Id. ¶ 20. 6
30. After Hurricane María, there was no water or electric power in
the Mall until around November 2017. (Docket No. 35-28 ¶ 13).

4

PCM cited Exhibit “F” (Docket No. 34-9) instead of Exhibit “E.” (Docket No.
34-8). Even so, Exhibit “E”, which are statements from the National Hurricane
Center’s 2012-2017 Tropical Cyclone Reports, is subject to judicial notice. See
Are-east River Sci. Park, LLC v. Lexington Ins. Co., 2014 WL 12587051, at *5
(C.D. Cal. 2014) (quotation omitted) (“The National Hurricane Center […] is a
source ‘whose accuracy cannot be reasonably questioned’ of weather and
meteorological facts concerning tropical cyclones.”).
5

6

Id.

Id.; PCM stated the incorrect date for when Hurricane Maria passed through
Puerto Rico. The Court takes judicial notice of the correct date, September 20,
2017. See Fed. R. Evid. 201(b). Plaintiff’s Exhibit “A”, of which the Court
also takes judicial notice, shows the National Oceanic and Atmospheric
Administration’s map of the Hurricane’s path and said date. (Docket No. 37-1).

Civil No. 17-2376 (RAM)

13

31. The space where Jackie's is located did not suffer any damages.
(Docket No. 34-2 ¶ 42).
PCM Tenants Post-Hurricane Maria
32. The space leased by Jackie's was physically available for Tenant
to re-open on or before December l, 2017. (Docket No. 34-2 ¶ 38).
33. Other food court tenants have reopened for business. Id. ¶ 39.
34. After

Hurricane

María,

Ms.

Hui

Yu

Ye,

Plaintiff’s

managing

member, went to the Mall a couple of times to ask when it would
be open to the public again but she never got an answer. (Docket
No. 35-28 ¶ 14).
35. Around November 8, 2017, PCM informed the tenants with restaurants
in the Food Court that they had to resume operations the following
week, while only a few stores were open, and the rest of the Mall
would remain closed to the public while major repairs were made.
Id. ¶ 15.
36. On Wednesday, November 15, 2017, PCM, through Mr. Drew Price, Esq.,
emailed J a c k i e ’ s that “Landlord and the shopping center tenants
are working in earnest to reopen the shopping center and tenant
spaces. […] [T]he food court will be opening

this week.” Id. ¶¶

22, 37.
37. At the filing of the Complaint before the state court on December
19, 2017, only some tenants with restaurants in the Food Court had
reopened. (Docket 35-28 ¶ 30).
38. At the filing of the Complaint before the state court, the public

Civil No. 17-2376 (RAM)

14

did not have access to the Mall’s interior corridors and common
areas. The goal was to have the common areas open by February 2018.
Id. ¶ 32.
39. At the filing of the Complaint before state court, Sears, Capri and
TJMax stores were open. These stores do not need to be accessed by
the Mall’s interior corridors and common areas; they can be accessed
from outside the Mall. Id. ¶ 33.
40. At the filing of the Complaint before state court, Walgreens and
Econo Supermarket were open. Their buildings are totally separate
from the Mall’s main building. Id. ¶ 34.
41. In November 2017, when Plaintiff inquired with the Mall’s personnel
about the date it was planning on resuming operations, the Mall did
not have a date. Id. ¶ 36.
42. On December 7, 2017, Plaintiff’s managing member visited the Mall
and took several photos. Id. ¶ 38.
43. By December 7, 2017, the Mall had containers outside for the removal
of the debris and cleaning. Id. ¶ 39.
44. By December 7, 2017, the Mall was almost deserted with only a few
stores open, the first and third floor of the Mall were closed,
and the public did not have access to the corridors inside the
Mall, which were closed in on all sides. Id. ¶ 40.
45. By December 2017, the common areas of the mall had begun to reopen.
(Docket No. 42 at 2).
46. By December 7, 2017, approximately 22 tenants had reopened as

Civil No. 17-2376 (RAM)

15

required by their leases. Id. at 3.
47. As of April 17, 2018, the Mall’s internet portal shows 12 restaurants
open and

8 closed in the Food Court and 13 food stores were open

and 13 closed in the Mall in general. (Docket No. 35-28 ¶ 42-43).7
48. Last time managing member visited t h e M a l l was May 2018,

when

she took some photos and did a tour of the first, second and third
floor, up to the food court.

At the time, most of the shops were

still under construction or closed, while a couple were open. Id.
¶¶ 44, 47.
49. On May 8, 2018, there were only around 7-8 stores open in the food
court. Id. ¶ 49.
50. As of October 15, 2018, when Plaintiff filed its Motion for Summary
Judgment, the Mall had not resumed its regular operations for the
public. Id. ¶ 59.
51. By June 1, 2018, approximately 94 tenants had reopened as required
by their leases. Id. at 3.
52. While construction by Tenants was still on going, over 120 Tenants
had reopened by October 1, 2018. Id. at 3.
Plaintiff’s Notice of Termination and Defendant’s Response
53. On November 8, 2017, Plaintiff gave notice purporting to terminate
the Agreement, and left the premises object of the Agreement. Id.
¶ 21.

7

Plaintiff’s “Exhibit 17B – Plaza Carolinas Stores Directory April 2018” shows
that seven (7) restaurants were closed instead of eight (8). (Docket No. 19).

Civil No. 17-2376 (RAM)

16

54. On November 8, 2017, Plaintiff’s counsel emailed a letter to PCM
terminating the Agreement and explaining some of the main reasons
for the decision. (Docket No. 35-28 ¶ 16).
55. In th e

letter, Plaintiff’s counsel asked PCM to reimburse the

security deposit plus the unused rent of September 2017, which had
been paid in advance. The reimbursement amount totals to $46,364.60,
calculated as follows:

Security Deposit

$43,160.00

Unused portion of the rent $8,011.48 – 4,806.88* $3,204.60
*$8,011.48 ÷ 30 days =
$267.049 x 18 days of
Total

$46,364.60

Id. ¶ 17.
56. Plaintiff’s counsel therein invited PCM to a negotiation regarding
a possible settlement. Id. ¶ 18
Attempts to Remove Plaintiff’s Restaurant Equipment
57. On November 15, 2017, Plaintiff sent an email to Mr. Drew Price,
Esq., asking him to instruct the Mall personnel to allow Plaintiff
to remove the equipment

in the restaurant, which is Plaintiff’s

personal property, and informing him that retaining and prohibiting
the

removal

of

the

equipment

constituted

an

illegal

seizure.

Plaintiff again invited Defendant to a negotiation regarding the

Civil No. 17-2376 (RAM)

17

possibility of a settlement. Id. ¶ 23.
58. On Friday, November 17, 2017, PCM, through Mr. Wade J. Hornbacher,
Esq., sent an email to Plaintiff asking it to specify the equipment
it wanted to remove. Id. ¶ 24.
59. On Monday, November 20, 2017, PCM sent an email to

Jackie’s

reiterating its prohibition against the removal of equipment from
the restaurant. It based its position on its construction of Section
10.2 of the Agreement, which states:
Section 10.2. Removal and Restoration by Tenant.
All
alterations,
changes
and
additions
and
all
improvements, including leasehold improvements, made by
Tenant whether part of Tenant’s Work or not, shall
immediately upon installation attached to the fee and
become Landlord’s property and shall not be removed
unless replaced by like property. If Tenant fails to
remove any
shelving, decorations, equipment, trade
fixtures or personal property form the Premises prior to
the end of the Lease Term, they shall become Landlord’s
property and Tenant shall repair or pay for the repair
of any damage done to the Premises resulting from
removing same but not for painting or redecorating the
Premises. Id. ¶ 25.
60. On Wednesday, November 14, 2017, Ms. Hui Yu Ye, as Plaintiff’s
managing partner, went to the Mall to coordinate the pickup of the
equipment. That day, the Mall’s managerial personnel informed her
that she could not remove the equipment and that the security staff
had instructions not to allow the removal thereof. They also told
her that PCM was planning on reopening the Food Court at the end
of the

following week and

required that Plaintiff

reopen the

restaurant that week, even though the rest of the shopping center

Civil No. 17-2376 (RAM)

18

would remain closed to the public. Id. ¶ 21.
61. In compliance with PCM’s request, on November 20, 2017, Plaintiff
sent an email to Mr. Hornbacher detailing the equipment it wanted
to remove. Id. ¶ 26.
62. On November 27, 2017, Plaintiff sent an email to Mr. Hornbacher
reiterating that it needed to remove the equipment urgently because
it had interested buyers. It once again invited Defendant to a
negotiation regarding the possibility of a settlement. Id. ¶ 27.
63. On November 28, 2017, PCM sent an email to Plaintiff forbidding it
from removing the equipment. It again based its position on its
construction of Section 10.2 of the Agreement. Defendant did not
make any counteroffer to negotiate. Id. ¶ 28.
64. Plaintiff had several offers to purchase the equipment for an
approximate price of $14,000.00 but could accept the offers due to
PCM’s refusal to allow the removal of the equipment or f a i l u r e
to deliver the equipment to Plaintiff. Id. ¶ 66.
65. Even though Plaintiff informed PCM that it had several offers to
purchase the equipment, PCM did not allow Plaintiff to remove or
deliver said equipment. Id. ¶¶ 64-65.
Defendant’s Security Interest Over Equipment
66. In

its

Counterclaim,

PCM

claims

a

proprietary

interest

in

Plaintiff’s personal property and equipment, by citing Section 18.1
of the Agreement. Id. ¶ 68.
67. In its Counterclaim, PCM avers to be “…entitled to enforce its

Civil No. 17-2376 (RAM)
security

19

interest as provided by tenant in paragraph 20.2 of the

Lease....” Id. ¶ 70.
68. Said Section 20.2 of the Agreement states:
Section 20.2. Assets of Tenant.
To secure the performance of Tenant's obligations under
this Lease, Tenant hereby grants to Landlord a security
interest in and an express contractual lien upon all of
Tenant's equipment, furniture, furnishings, appliances,
goods, trade fixtures, inventory, chattels and personal
property which will be brought upon the Premises by
Tenant, and all after-acquired property, replacements and
proceeds. Landlord is authorized to prepare and file
financing statements signed only by Landlord (as secured
party) covering the security described above (but Tenant
hereby agrees to sign the same upon request). Upon any
default under this Lease by Tenant as defined in Section
18.1 hereof, any or all of Tenant's obligations to
Landlord secured hereby shall, at Landlord's option, be
immediately due and payable without notice or demand.
In addition to all rights or remedies of Landlord under
this Lease and the law, including the right to a judicial
foreclosure, Landlord shall have all the rights and
remedies of a secured party under the Uniform Commercial
Code of the State where the Center is located. […] This
security agreement and the security interest hereby
created shall survive the termination of this Lease if
such termination results from Tenant's default. The
above-described security interest
and lien are in
addition to and cumulative of the Landlord's lien provided
by the laws of the State where the Center is located. Id.
¶ 71.
69. In its Answer to Counterclaim, Plaintiff denied that PCM has a
security interest in its equipment and property, because it did
not file a financing statement, as required by Section 9-312 (a)
of Chapter 9-Secured Transactions, 19 L.P.R.A. § 2321 (a) (3) and
§ 2262 (a). Id. ¶ 72.
70. PCM did not perfect a security interest over Jackie’s equipment

Civil No. 17-2376 (RAM)

20

and inventory, because a financing statement was not recorded in
Puerto Rico’s Department of State. Id. ¶ 73.
Plaintiff’s Overdue Rent and Abandonment of Premises
71. PCM abated Jackie's rent from the date of Hurricane María though
December 1, 2017. (Docket No. 34-2 ¶ 22).
72. Jackie's owes rent from December 1, 2017 through November 30, 2022,
the date when the Agreement expires. Id. ¶ 23.
73. PCM has not collected any rent from Jackie's since the passage of
Hurricane María to the present day. Id. ¶ 43.
74. According to the Agreement, Jackie's agreed and obligated itself
to pay rents for the remainder of the term of the Agreement (plus
interest, costs and penalties), even if it had to leave the
property before the expiration of the term of the Agreement. Id.
¶ 24.
75. Section 18.1 of the Agreement states:
Section 18.1. Right to Re-Enter.
The following shall be considered for all purposes to
be defaults under and breaches of this Lease: (a) any
failure of Tenant to pay any rent or other amount when
due hereunder, (b) any failure by Tenant to perform or
observe any other of the terms, provisions, conditions
and covenants of this Lease for more than ten (10) days
after written notice of such failure […] (f) if Tenant
abandons or vacates or does not do business in the
Premises[.]
[…]
In any such event, and without grace period, demand or
notice (the same being hereby waived by Tenant),
Landlord, in addition to all other rights or remedies
it may have, shall have the right thereupon or at any

Civil No. 17-2376 (RAM)
time thereafter to terminate this Lease by giving notice
to Tenant stating the date upon which such termination
shall be effective, and shall have the right, either
before or after any such termination, to re-enter and
take possession of the Premises, remove all persons and
property from the Premises, store such property at
Tenant's expense, and sell such property if necessary to
satisfy any deficiency in payments by Tenant as required
hereunder, all without notice or resort to legal process
and without being deemed guilty of trespass or becoming
liable for any loss or damage occasioned thereby. Nothing
herein shall be construed to require Landlord to give
any notice before exercising any of its rights and
remedies provided for in Section 3.3 of this Lease.
( Docket Nos. 34-2 ¶25; 35-28 ¶ 69).

76. Section 18.2 of the Agreement states in part:
Section 18.2. Right to Relet.
If Landlord re-enters the Premises as above provided,
or if it takes possession pursuant to legal proceedings
or otherwise, it may either terminate this Lease, but
Tenant shall remain liable for all obligations arising
during the balance of the original stated term as
hereafter provided as if this Lease had remained in full
force and effect, or it may, from time to time, without
terminating this Lease, make such alterations and
repairs as it deems advisable to relet the Premises[.]
[…]
Notwithstanding
any
such
reletting
without
termination,
Landlord may at any time thereafter
terminate this Lease for any prior breach or default. If
Landlord terminates this Lease for any breach, or
otherwise takes any action on account of Tenant's breach
or default hereunder, in addition to any other remedies
it may have, it may recover from Tenant all damages
incurred by reason of such breach or default, including
the cost of recovering the Premises, brokerage fees and
expenses of placing the Premises in rentable condition,
attorneys' fees, and an amount equal to the difference
between the Minimum Rent and all items of additional
rents reserved hereunder for the period which otherwise
would have constituted the balance of the Lease Term
and the then present rental value of the Premises for such

21

Civil No. 17-2376 (RAM)

22

period.
[…]
Tenant's obligation to reimburse Landlord for
attorneys' fees as referred to in this Lease shall
include all legal costs, fees and expenses arising out
of (i) Tenant’s default in the performance or observance
of any of the terms, covenants, conditions contained in
this Lease and Landlord place (sic) the enforcement of
all or any part of this Lease, the collection of any
rent due or to become due or the recovery of possession
of the Premises in the hands of an attorney or Landlord's
incurring any fees or out of pocket costs in any
litigation, negotiation or transaction in which Tenant
causes Landlord to be involved or concerned, in either
event regardless of whether or not suit is actually
filed. (Docket No. 34-2 ¶ 26).

77. Section 24.3 of the Agreement is the integration clause and it
states in relevant part as follows:
Section 24.3. Entire Agreement.
There
are
no
representations,
covenants,
warranties,
promises,
agreements,
conditions
or
undertakings, oral or written, between Landlord and
Tenant other than herein set forth. Except as herein
otherwise provided, no subsequent alteration, amendment,
change or addition to this Lease shall be binding upon
Landlord or Tenant unless in writing and signed by them.
Tenant
acknowledges
that
it
has
independently
investigated the potential for the success of its
operations in the Center and has not relied upon any
inducements or representations on the part of Landlord
or
Landlord's
representatives,
other
than
those
contained in the Lease. Tenant also acknowledges and
agrees that, to the extent any projections, materials or
discussions have related to Tenant's projected or likely
sales volume, customer traffic or profitability, Tenant
understands that any and all such projections, materials
and discussions are based solely upon Landlord's
experiences at other properties or upon standardized
marketing studies, and that such projections, materials
and discussions shall not be construed as a promise or

Civil No. 17-2376 (RAM)

23

guarantee that Tenant will realize the same or similar
results. Id. ¶ 35.
78. Jackie's ceased operations on the property that is the subject of
the Agreement on September 18, 2017, before the Agreement expired.
Id. ¶¶ 27, 29 and 41.
79. Jackie's never notified PCM any change of address after Hurricane
María. Id. ¶ 28.
80. Ms. Yu Ye’s Deposition supports a finding that Jackie’s abandoned
the Premises. The relevant part of the Deposition states:
Q. Okay. In your response to Request for Admissions
13 you deny that Jackie’s abandoned the property
subject of the lease agreement, right?
THE INTERPRETER: 8 She denied that-Q. That Jackie’s Restaurant abandoned the property
subject of the lease agreement.
THE INTERPRETER: Yes. She doesn’t want to do it
anymore.
[…]
THE INTERPRETER: She doesn’t want to work anymore.
She doesn’t want to go with the lease.
[…]
THE INTERPRETER: That they’re taking too long to
get notified and that she doesn’t have the money to
be constantly paying.
Mr. SURIA: So she left? I mean, “she,” meaning
Jackie’s Restaurant.”
8

During the Deposition, Plaintiff’s answers were translated via an interpreter
as Plaintiff’s first language is Chinese and she only speaks a little bit of
English and Spanish. (Docket No. 35-24 at 10-11). Hence, this Court will
consider the Interpreter’s answers to PCM’s legal counsel’s questions as
Plaintiff’s own answers.

Civil No. 17-2376 (RAM)

24

THE INTERPRETER: Yeah. (Docket No. 35-24 at 107-109).
III. ANALYSIS
Both

parties

move

for

summary

judgment,

addressing

essentially similar issues regarding the circumstances surrounding
the Lease's termination, and whether either party has a right to
the restaurant equipment inside the leased premises. (Docket Nos.
34 and 35). Rather than approach each motion separately, the Court
will evaluate two issues: (a) whether Jackie’s could resolve its
contract with PCM or if instead it breached it; (b) whether PCM
had a security interest over the restaurant equipment in the
Premises. The Court finds that Plaintiff breached the parties'
contract and it is not entitled to damages other than those caused
by PCM’s retention of the restaurant equipment. Moreover, as
Defendant did not acquire a security interest over the equipment
in the Premises, the equipment belongs to Jackie’s.
Before addressing these two issues, the Court observes that
in its MSJ, PCM also alleges that Plaintiff’s declaratory judgment
request regarding the delivery of the restaurant equipment should
be denied, and that Plaintiff fails to establish the elements of
the

Rebus

Sic

Stantibus

Doctrine.

(Docket

No.

34).

In

its

opposition, Jackie’s alleges that the denial of the request for
declaratory judgment became moot because Jackie’s “did not pursue
it once the case was removed to the Federal Court, and instead

Civil No. 17-2376 (RAM)

25

filed a motion for summary judgment.” (Docket No. 36 at 24).
Jackie’s avers that PCM’s argument regarding the use of Rebus Sic
Stantibus also fails since Jackie’s never asserted said defense.
Id. at 10-12. Instead, it has always stated that it could rescind
the Lease per Article 1077 of Puerto Rico’s Civil Code. Id.
Notably, PCM did not challenge Plaintiff’s clarifications in its
reply to the opposition. (Docket No. 42).
The Court finds that the Rebus Sic Stantibus doctrine is
inapplicable.

The

doctrine

“is

a

clause

deemed

implicit

in

contracts and serves to adjust a debtor's obligation or rescind
the

contract

when

unforeseeable

circumstances

render

strict

compliance with the contract unfair.” In re Chase Monarch Int'l
Inc., 581 B.R. 715, 721 (Bankr. D.P.R. 2018), aff'd, 2019 WL
8375999 (D.P.R. 2019). More importantly, “the Puerto Rico Supreme
Court has stated that the rebus sic stantibus doctrine may apply
as an exceptional remedy to extraordinary circumstances.” Id. at
722 (citation omitted) (emphasis added). There are seven elements
which must be present for the doctrine to apply, the first one of
which is that the doctrine is only applicable if an “unforeseeable
event has arisen.” Bautista Cayman Asset Co. v. Asociacion de
Miembros de la Policia de Puerto Rico, 2020 WL 119688, at *2
(D.P.R. 2020) (citation omitted). Here, the first element of the
doctrine is not met as the District Court of Puerto Rico, in
affirming the Bankruptcy Court, has held that a hurricane is not

Civil No. 17-2376 (RAM)

26

an unforeseen circumstance for purposes of the Rebus Sic Stantibus
doctrine. In the case of In Re Chase Monarch Int’l Inc., the
Bankrupcty

Court

for

the

District

of

Puerto

Rico

held

that

“[a]lthough the events of Hurricane Maria were devastating and
unfortunate [. . .] a natural disaster such as this one is not
unforeseeable.” In re Chase Monarch Int'l Inc., 2019 WL 8375999,
at

*4

(D.P.R.

2019), reconsideration

denied, 2020

WL

1746030

(D.P.R. 2020). Since Plaintiff fails to surpass the first element,
the Court need not discuss herein the rest of the doctrine’s
elements.
A. Rescission or Resolution 9
PCM posits in its MSJ that Jackie’s cannot terminate the
current leasehold under the Agreement’s terms and conditions nor
under the Puerto Rico Civil Code. (Docket No. 34 at 16-18). In
doing so, PCM relies on Article 1044 of the Civil Code which states
that

“[o]bligations

between

9

the

arising

contracting

from

parties,

contracts
and

must

have
be

legal

force

fulfilled

in

The First Circuit has explained that “rescission” and “rescind” are not
synonymous with the 1930 Puerto Rico Civil Code’s Article 1077’s original
Spanish terms (“resolución” and “resolver”). See Dopp v. HTP Corp., 947 F.2d
506, 510 n.4 (1st Cir. 1991) (citations omitted). It therefore has used the
terms “resolution,” “resolve,” and “resolutory” when referring to actions under
Article 1077, while noting that nothing turns on the use of one term or the
other. Id.; see also Castillo-Perez v. Bosques-Cordero, 2011 WL 13233491, at *8
(D.P.R. 2011), report and recommendation adopted, 2011 WL 13233446 (D.P.R.
2011). Hence “[t]o avoid confusion, as well as to be consistent with the
principle that in instances of a statute of Spanish origin the Spanish text
prevails” this Court “shall use the words ‘resolution’ and ‘resolve’ when
referring to article 1077.” Brisamar, Inc. v. Enright House, Ltd., 2005 WL
1215796, at *6 (D.P.R. 2005) (quoting Dopp, 947 F.2d at 510 n.4).

Civil No. 17-2376 (RAM)

27

accordance with their stipulations.” Id. at 16 (citing P.R. Laws
Ann. tit. 31, § 2994). Moreover, Article 1210 and the principle of
pacta sunt servanda establish that “[c]ontracts are perfected by
mere consent, and from the time they are binding, not only with
regard to the fulfillment of what has been expressly stipulated,
but also with regard to all the consequences which, according to
their character, are in accordance with good faith, use and law.”
Id. (citing P.R. Laws Ann. tit. 31, § 3375). PCM asserts that
Jackie’s signed the Lease and that as part of its obligations, it
agreed to pay the lease term balance and damages if it defaulted.
Id. at 17.
Plaintiff

states

throughout

its

own

MSJ

that

it

could

terminate or resolve the Lease because PCM failed to fulfill an
essential obligation of the contract, namely “to keep the mall and
its common areas open, so that the general public could go shopping
and eat in the Food Court where Plaintiff’s rented space is
located.” (Docket No. 35 at 12). Jackie’s seeks redress pursuant
to Article 1077 of the Puerto Rico Civil Code. Id. at 7-13. Said
Article codifies the right “to rescind the [mutual and reciprocal]
obligations” when “one of the obligated persons does not comply
with what is incumbent upon him.” P.R. Laws Ann. tit. 31, § 3052.
Further, the prejudiced person may “choose between exacting the
fulfillment of the obligation or its rescission [resolution], with
indemnity for damages and payment of interest in either case.” Id.

Civil No. 17-2376 (RAM)

28

Not every breach of a contractual obligation leads to a right
to resolve a contract under Article 1077. See Rojas-Buscaglia v.
Taburno-Vasarhelyi,

113

F.

Supp.

3d

534,

543

(D.P.R.

2015)

(citation omitted). Instead, the “the unmet obligation must be an
essential

obligation

or

fulfillment

of

the

obligation

must

constitute the motive that induced the other party to enter into
the contract.” Dopp v. Pritzker, 38 F.3d 1239, 1243–44 (1st Cir.
1994) (citing Ramirez v. Club Cala de Palmas, 123 P.R. Dec. 339,
347-48 (1989), 23 P.R. Offic. Trans. 311) (emphasis added). The
contract’s resolution cannot be based on the nonfulfillment of an
“accessory”

or

“complementary”

obligation

which

was

only

“incorporated into the same [the contract] to complete or clarify
the contracting parties’ stipulations.” Id. at 1246 (quotation
omitted).
unfulfilled

This

occurs

obligation

because
be

the

“[t]he
principal

requirement
one

serves

that
a

the

higher

interest” which is to encourage “the fulfillment of contracts, and
that prevents that, by a lesser breach of contract, one of the
parties may release himself from the obligation, either because he
is no longer interested or because the contract does not suit him
anymore.” Id. (quotation omitted). Therefore, “Article 1077 is a
remedy of last resort, reserved for situations in which a party's
breach dissipates the very essence of a contract.” Castillo-Perez
v.

Bosques-Cordero,

2011

WL

13233491,

at

*8–9

(D.P.R.

2011), report and recommendation adopted, 2011 WL 13233446 (D.P.R.

Civil No. 17-2376 (RAM)

29

2011) (quotation omitted). Plaintiff hence contends that “having
a restaurant in a mall with its common areas open to the public,
was Plaintiff’s contract’s ‘raison d’etre,’” and in its absence
“the contract would never have come into being, and thus, should
cease to exist.” (Docket No. 35 at 13) (quotation omitted).
PCM argues that Jackie’s is unable to resolve the contract
under Article 1077 because obtaining a non-exclusive right to use
the common areas was not Plaintiff’s principal motivation in
entering into a lease agreement. (Docket Nos. 39 at 12-13; 42 at
4). Instead, the principal motivation was to the lease the 808
square feet space where the restaurant was located. Id. As a
result, the nonexclusive right to use the common areas is merely
an accessory disposition of the contract. (Docket No. 39 at 13).
Defendant

centers

its

argument

on

the

fact

that

the

Lease

explicitly grants PCM control and management of the common areas
states that common areas. (Docket Nos. 39 at 13; 42 at 6). Lastly,
PCM alleges it complied with the Agreement by making all premises
available “as soon as it could” after the passing of Hurricanes
Irma and María. (Docket No. 39 at 14). Because Defendant never
limited Plaintiff’s access to the leased area, in fact the space
was physically available to reopen on December 1, 2017 (Fact ¶
32), Jackie’s could not resolve the Lease.
The Court finds that the uncontroverted material facts and
the controlling law support PCM’s position: Jackie’s could not

Civil No. 17-2376 (RAM)

30

terminate the Lease or resolve it under Article 1077. The Court
reaches this conclusion for three main reasons: (1) the Lease
defines the Premises solely as the 808 square foot space where the
restaurant

was

located;

(2)

PCM

did

not

breach

an

essential

obligation of the Agreement as it was within its rights to alter
the common areas during the Mall’s renovation after Hurricanes
Irma and María; and (3) Jackie’s abandoned the Premises before the
expiration of the Lease thereby breaching it.
First, as explained by the First Circuit “[i]f the terms of
the lease are unambiguous, we interpret it according to its plain
terms, and ‘[s]ummary judgment is appropriate when those plain
terms unambiguously favor either side.’” Fernandes v. AGAR Supply
Co., 687 F.3d 39, 43 (1st Cir. 2012) (quotation omitted)). A look
at Sections 1.1(b), 1.1(c) and 1.1(d) of the Agreement reveals
that its main objective was to lease the space titled “Room VC21A”
with an area of 808 square feet (“Premises” or “Room VC21A”) for
a period of ten (10) years. (Fact ¶¶ 6-7 and 13). 10 Moreover,
Section 2.1 titled “Leased Premises,” reads “Landlord [PCM] hereby
leases to Tenant [Jackie’s] and Tenant hereby rents from Landlord
the Premises as depicted on ‘Exhibit A.’ […] The parties agree
that Landlord’s determinations of the Store Floor Area shall be
final, binding and conclusive.” (Fact ¶ 14) (emphasis added). The

10

Both Jackie’s and PCM filed as exhibit to their MSJs identical copies of the
Agreement executed on September 4, 2012. (Docket Nos. 34-4; 35-2). Subsequent
references to the same will only cite Docket No. 35-2.

Civil No. 17-2376 (RAM)

31

Exhibit “A” in turn only includes: 1) a map showing the Premises’
location in relation to the Mall’s Second Floor and its Food Court,
and 2) a drawing of the Premises, including its measurements, and
an adjoining space identified as “VC20.” (Docket No. 35-2 at 28).
The

October

9,

2012

Assignment

of

Lease

(“Assignment”)

also

supports this finding. (Docket Nos. 34-6 at 1; 35-4 at 1). The
Assignment states “by a Lease dated September 4, 2012 (the “Lease”)
[…] Landlord leased to Assignor [Jackie’s] certain premises being
identified in the Lease as Room V21A (the “Premises”).” Id. at 1.
Lastly, the First Amendment to the Lease executed on February 20,
2017 also had similar language. (Docket Nos. 34-7; 35-5).
The

plain

language

of

the

Lease,

its

Exhibit

A,

the

Assignment, and the Amendment to the Lease, all of which Plaintiff
consented

to

and

signed,

show

that

the

leased

Premises

only

includes Plaintiff's internal operating space and not its right to
use the common areas. See Liberty Mut. Ins. Co. v. Selective Ins.
Co. of Am., 346 F. Supp. 3d 753, 759–60 (E.D. Pa. 2018) (holding
that lease agreement intended “premises” to only include the
internal space where tenant carried on its operations and not the
common areas which it only had a non-exclusive right to use); see
also Doe v. Cloverleaf Mall, 829 F. Supp. 866, 871 (S.D. Miss.
1993).
Second, multiple courts have held that if a Lease authorizes
the temporary closure for repairs of common areas to which tenants

Civil No. 17-2376 (RAM)

32

only have a nonexclusive right to use, landlords do not breach any
essential obligation if they temporarily close common areas. See
Pharmacy 101 Ltd. v. AMB Prop., LP, 2006 WL 1663821, at *4 (E.D.
La. 2006) (holding that Plaintiff’s non-exclusive use of common
areas “does not trump the lease provisions that allow Defendant to
impose the parking restrictions” and even with restrictions, it
still maintained its non-exclusive use). The Fourth Circuit’s E.
Shore

Markets,

Inc.

v.

J.D.

Assocs.

Ltd.

P'ship

is

also

instructive. See E. Shore Markets, Inc. v. J.D. Assocs. Ltd.
P'ship, 213 F.3d 175 (4th Cir. 2000). Tenant Eastern Shore Markets,
Inc. alleged that its lease with J.D. Associates, the shopping
center landlord, promised that the landlord would manage the common
parking lot as to benefit the store, and which would not deny their
customers reasonable access to the store. Id. at 180. The tenant
alleged that J.D. Associates breached this promise by: (1) allowing
the east entrance of the shopping center's parking lot be blocked
by

another

tenant’s

construction;

(2)

allowing

construction

vehicles to park in front of its store during the construction of
a new tenant; and (3) reconfiguring the parking lot to benefit the
new tenant. Id. at 181. In upholding the lower court, the Fourth
Circuit stated that the lease gave the landlord “broad discretion
over the management and control of the parking lot and that J.D.
Associates' actions in temporarily blocking access to the store
and blocking customers' view of Eastern Shore's store fall within

Civil No. 17-2376 (RAM)

33

this conferred discretion.” Id.; See also Hess's Dep't Stores,
Inc. v. Ernest W. Hahn, Inc., 901 F.2d 552, 554 (6th Cir. 1990).
The instant case is almost identical. Under the Agreement,
specifically under Sections 5.1 and 5.2, PCM could alter the common
areas without affecting any essential obligation of the Agreement.
(Docket No. 35-2 at 7). Section 5.1 of the Agreement explicitly
states that common areas “shall at all times be subject to the
exclusive

control

and

management

of

the

landlord”

and

that

“Landlord shall have the right from time to time to: change or
modify and add to or subtract from the sizes, locations, shapes
and arrangements of parking areas, entrances, exits, parking aisle
alignments and other Common Areas.” (Fact ¶ 15). Likewise, Section
5.2, which is also uncontroverted, provides that the “Landlord may
at any time close temporarily any common areas to make repairs or
changes.” (Fact ¶ 16). Further, there is no evidence on record
that Jackie’s was prevented from using or accessing the leased
Premises.

Instead,

the

only

reason

Jackie’s

gave

to

justify

resolution of the Agreement was Ms. Yu Ye’s assertion that the
mall was taking too long in notifying her when the Mall would be
open to the public. (Docket No. 35-24 at 76-77). She further
averred that “if the mall doesn’t restore back to normal, with
like the amount of people back to open to the public, she can’t do
business or she can’t open up.” Id. at 77.

Civil No. 17-2376 (RAM)

34

Notably, while PCM did undertake renovations to the common
areas after the passing of Hurricanes Irma and María, the leased
Premises occupied by Jackie’s suffered no physical damages, a fact
which Plaintiff’s manager admitted during her Deposition. (Fact ¶
31;

Docket

No.

35-24

at

78). 11

Moreover,

there

were

other

restaurants open in the Food Court by the time Jackie’s was
available to physically open on December 1, 2017 and while the
Mall

was

undergoing

repairs.

(Facts

¶¶

33

and

37).

Jackie’s

managing member even admitted during the Deposition that she was
unaware as to how her situation differed from that of other
businesses in the Mall’s Food Court which were open by early
December.

(Docket

No.

35-24

at

77-78).

Moreover,

PCM

abated

Jackie's rent from the date of Hurricane María though December 1,
2017. (Fact ¶ 71).
Third, the Court understands that Jackie’s abandoned the
Premises

and

therefore

breached

its

agreement

with

PCM.

As

expected, there is a significant back and forth in the record
concerning whether Jackie’s abandoned the Premises. For example,
PCM’s Facts Nos. 27, 29 and 41 (collected herein under Fact ¶ 78)
reference how Plaintiff abandoned or vacated the leased premises
or ceased operations within it. (Docket No. 34-2 ¶¶ 27, 29 and
41). Plaintiff’s responses to those facts deny the same. Id. All
11

Both Jackie’s and PCM filed as exhibits to their MSJs identical copies of Ms.
Yu Ye’s June 27, 2018 Deposition. (Docket Nos. 34-11; 35-24). Subsequent
references to the same will only cite Docket No. 35-24.

Civil No. 17-2376 (RAM)

35

three responses explain that Jackie’s was only executing its right
“to

rescind

[resolve]

the

Lease

Agreement,

by

providing

termination notice […] due to Plaza Carolina’s nonperformance of
its

essential

duties

under

the

Agreement”

because

of

“the

supervening impossibility caused by the damages sustained as a
result of Hurricane Maria.” Id.
However, Plaintiff’s response to Fact ¶ 78 (PCM’s SMUF Fact
No. 41) regarding its ceased operations includes the admission
that “the last day it did business was September 18, 2017.” (Docket
No. 36-1 at 26). Further, Ms. Yu Ye’s Deposition supports a finding
that Jackie’s abandoned the Premises. (Fact ¶ 80). The Court notes
that Plaintiff, thorough its General Manager Ms. Yu Ye, answered
therein

the

affirmative

“yeah”

to

questions

from

Defendant’s

counsel during the Deposition regarding if Plaintiff had left the
Premises.

Id.

Moreover,

this

occurred

after

Plaintiff

stated

during its Deposition that “[s]he [Jackie’s] doesn’t want to do it
anymore. […] She doesn’t want to work anymore. She doesn’t want to
go with the lease.” Id. (emphasis added).
The Court thus finds that Plaintiff intended to abandon the
Premises when it failed reopen for business on December 1, 2017
and failed to pay rent thereafter. “[A]bandonment of a leasehold
in Puerto Rico, as elsewhere, requires both the act and intention
of relinquishing the premises absolutely.” Cruz v. Molina, 788 F.
Supp.

122,

127

(D.P.R.

1992);

see

also

ABANDON,

Black's

Law

Civil No. 17-2376 (RAM)

36

Dictionary (11th ed. 2019) (defining “abandon” as “[t]o relinquish
or give up with the intention of never again reclaiming one's
rights

or

interest

in”

or

“[t]o

desert

or

go

away

from

permanently”). As Ms. Yu Ye’s Deposition testimony shows, Jackie’s
failure to reopen in December 2017, was with the intention of
permanently relinquishing the Premises, even if it was in the
process of removing the equipment left in the same. 12 Cf. Cruz, 788
F. Supp. at 127 (“Plaintiff's and David Loperena's testimony and
the presence of a significant quantity of Plaintiff's belongings
in the house make clear that on January 27 Plaintiff had not
abandoned the leased premises, for he had not intended at that
point to relinquish the premises absolutely”).
It

is

evident

from

Ms.

Yu

Ye’s

testimony

that

Jackie’s

abandoned the Premises because it was no “longer interested or
because the contract [did] not suit [it] anymore.” Dopp, 38 F.3d
at 1246. Given that it stopped paying monthly rent after September
2017, Jackie’s defaulted under the Lease per Section 18.1. This
Section reads: “The following shall be considered for all purposes
to be defaults under and breaches of this Lease: (a) any failure
of Tenant to pay any rent or other amount when due hereunder, […]
(f) if Tenant abandons or vacates or does not do business

12

Ms. Yu
York and
35-24 at
that she

in the

Ye’s Deposition also stated that after the Hurricanes she moved to New
at the time of the Deposition, she was living in Brooklyn. (Docket No.
10, 13-14). In the Opposition to Motion to Strike, Plaintiff clarified
moved back to Puerto Rico on October 15, 2018. (Docket No. 45 at 5).

Civil No. 17-2376 (RAM)

37

Premises.” (Fact ¶ 75). Further, because of Plaintiff’s breach and
due to Defendant taking action against it because of said breach,
Section 18.2 allows Defendant to recover all damages including “the
cost of recovering the Premises, brokerage fees

and expenses of

placing the Premises in rentable condition, [and] attorneys' fees.”
(Fact ¶¶ 76). It may also recover “the difference between the
Minimum Rent and all items of additional rents reserved hereunder
for the period which otherwise would have constituted the balance
of

the

Lease Term and the then present rental value of the

Premises.” Id. Moreover, Jackie’s is not entitled to the return of
its security deposit of $43,160 pursuant to Section 15.1 of the
Lease.

(Facts

¶¶

19

and

25).

Jackie’s

must

pay

the

damages

mentioned above and the portion of rent owed from December 2017
until November 22, 2022 when the Agreement was supposed to expire. 13
The Court finds that the non-exclusive right to use the common
areas was not an essential obligation agreed upon by the parties
under the September 4, 2012 Agreement. Further, Plaintiff failed
to allege that Defendant limited its access to the Premises,
therefore Article 1077 is inapplicable to the present case. As
Article 1077 does not justify resolving the September 4, 2012

13

The Court notes that Jackie’s paid the full September 2017 rent (Fact ¶¶ 2526) and that PCM abated tenants’ rents from the passing of Hurricane María until
December 2017. (Fact ¶ 71). The unused $3,204.60 rent that Jackie’s paid in full
for September 2017 (Fact ¶ 55) and the $43,160 security deposit (Fact ¶ 25)
shall be credited to the amount owed to PCM.

Civil No. 17-2376 (RAM)

38

Agreement, Defendant is not liable for any resulting damages
claimed

by

Jackie’s. See

P.R.

Laws

Ann.

tit.

31,

§

3052.

Defendant’s breach of contract claim in its Motion for Summary
Judgment (Docket No. 34) is GRANTED whereas Plaintiff’s contract
resolution claim in its Motion for Summary Judgment (Docket No.
35) is DENIED.
B. Contractual Right to Restaurant Equipment
As

evidenced

by

the

record,

the

parties

communicated

regarding the retrieval of the equipment Plaintiff claims is its
personal property and how PCM forbade its removal from the leased
Premises. (Facts ¶¶ 57-65). In November 2017, PCM’s attorney Mr.
Wade J. Hornbacher, Esq. sent an email to Jackie’s reiterating
the prohibition of the removal of the restaurant equipment per
Section 10.2 of the Agreement. (Facts ¶¶ 59 and 63). This section
states in part that “all alterations, changes and additions and
all

improvements […] made by Tenant […] shall immediately upon

installation attached to the fee and become

Landlord’s property

and shall not be removed unless replaced by like property.” (Fact
¶

59).

Further,

“[i]f

Tenant

fails

to

remove

any

shelving,

decorations, equipment, trade fixtures or personal property from
the Premises prior to the end of the Lease Term, they shall become
Landlord’s property.” Id.
Further, in its Counterclaim and in its MSJ, PCM claims that
it has a proprietary interest in the restaurant equipment left

Civil No. 17-2376 (RAM)

39

behind when Jackie’s abandoned the Premises. (Docket No. 34-1 at
27-28). PCM avers that Jackie’s is bound to the agreement even if
its owners did not read the agreement and instead had it summarized
by a third-party. Id. at 27. PCM also alleges that Section 20.2 of
the Lease (Fact ¶ 68) grants it a contractual lien over the
equipment and any assets that remain in the Premises if Plaintiff
defaults on the Lease. Id. at 28. PCM echoed this in its reply to
Plaintiff’s

opposition

to

its

MSJ

and

in

its

opposition

to

Plaintiff’s MSJ. (Docket Nos. 39 at 20-21; 42 at 9).
On the other hand, Jackie’s argues that Section 10.2 does not
include the restaurant equipment or any of its personal property
because it only applies to assets which were “attached” to the real
property, which its equipment was not. (Docket No. 35 at 21). It
also posits that the requirement that the equipment be removed
“‘prior to end of the Lease Term’ is not met because the 10-year
term of the Lease had not expired yet.” Id. Therefore, PCM’s
construction of Section 10.2 is unreasonable. Id.
Jackie’s also alleges that PCM cannot use Section 20.2 to
enforce its supposed security interest over the equipment because
the security interest was never perfected given that PCM failed to
file a financing statement as required by Section 9-312(a) of the
Chapter

9-Secured

Transactions,

P.R.

Laws

Ann.

tit.

19,

§

2321(a)(3) and § 2262(a). Id. at 22. Section 20.2 had authorized
PCM to prepare and file financing

statements signed “only

by

Civil No. 17-2376 (RAM)

40

Landlord (as secured party) covering the security described above.”
(Fact ¶ 68). Said Section also explained that “[u]pon any default
under this Lease […] any or all of Tenant's obligations to Landlord
secured hereby shall, […] be immediately due and payable without
notice or demand.” Id. Lastly, Jackie’s contends that in not letting
it remove its equipment, PCM illegally seized the same. (Docket No.
35 at 22-23). This resulted in a loss of income, valued at $14,000,
for the sale of the equipment. Id. at 23. See Docket No. 45-2 at
33-36 for offers to buy equipment. Plaintiff reiterated this in its
opposition to PCM’s MSJ. (Docket No. 36).
The Court agrees with Jackie’s that it did not lose its right
to the equipment when it left the Premises. While the Court herein
concluded that Jackie’s abandoned the Premises and breached the
lease, the Court also notes that PCM never perfected its security
interest over Plaintiff’s property. As Jackie’s highlighted in its
MSJ, PCM admitted that it did not file a financing statement securing
its interest over the property. (Facts ¶¶ 68-70).
Section 9–203 of the Puerto Rico Commercial Transactions Act
(UCC-PR)

states

that

“a

security

interest

attaches

to

the

collateral when it becomes enforceable against the debtor with
respect to the collateral.” P.R. LAWS ANN. tit. 19, § 2233(a).
Moreover, a creditor's security interest attaches to the debtor's
collateral only if “(1) value has been given [to the collateral];
[and] (2) the debtor has rights in the collateral or the power to

Civil No. 17-2376 (RAM)

41

transfer rights in the collateral to a secured party.” Id. §
2233(b). Also, at least one of the following conditions must be
met: (1) “The debtor has authenticated a security agreement that
provides a description of the collateral”; (2) “the collateral is
not a certificated security and is in the possession of the secured
party”;

(3)

“the

collateral

is

a

certificated

security

in

registered form and the security certificate has been delivered to
the secured party;” or (4) “the collateral is deposit accounts,
electronic chattel paper, investment property, or letter-of-credit
rights, or a life insurance policy, and the secured party has
control [over it].” Notably, “if the secured party wishes to
perfect

his

interest

in

a financing statement with

the
the

collateral,
Puerto

Rico

it

must

Secretary

file
of

State.” Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc.,
2011 WL 4899968, at *5 (D.P.R. 2011) (citation omitted).
Here, PCM did not file a financing statement with the Puerto
Rico Secretary of State. Nor did it provide any evidence that its
security interest attached to the collateral or that it perfected
that interest over the equipment in a manner permitted by the UCCPR. See P.R. LAWS ANN. tit. 19, §§ 2233, 2262. The Court notes
that PCM failed to reply to Jackie’s argument that it did not file
a financing statement over the equipment. As such, PCM lost any
potential
restaurant

security

interest

equipment.

or

Defendant

contractual
must

return

right
the

over

the

restaurant

Civil No. 17-2376 (RAM)

42

equipment to Jackie’s after the issuance of this Opinion and Order.
As a result, Plaintiff’s claim regarding the equipment in its
Motion for Summary Judgment (Docket No. 35) is GRANTED. Defendant’s
claim alleging a contractual right to the restaurant equipment in
its Motion for Summary Judgment (Docket No. 34) is DENIED.
IV.

CONCLUSION

Jackie’s Restaurant, LLC did not have legally sufficient
cause to terminate the Lease Agreement executed on September 4,
2012 with Plaza Carolina Mall, L.P. prior to its expiration date.
The Court GRANTS Defendant Plaza Carolina Mall L.P.’s breach of
contract claim in its Motion for Summary Judgment (Docket No. 34)
and DENIES the breach of contract claim in Plaintiff Jackie’s
Restaurant, LLC’s Motion for Summary Judgment (Docket No. 35).
Furthermore,

Defendant

Plaza

Carolina

Mall

L.P.

cannot

keep

Jackie’s equipment because it lacks a perfected security interest
over the same. Thus, the Court DENIES Defendant’s contractual claim
over the restaurant equipment in its Motion for Summary Judgment
(Docket No. 34) whereas it GRANTS Plaintiff’s claim over the
equipment in its Motion for Summary Judgment (Docket No. 35). For
the foregoing reasons, the Court GRANTS in part and DENIES in part
the Motion for Summary Judgment at Docket No. 34 and GRANTS in
part and DENIES in part the Motion for Summary Judgment at Docket
No. 35. Consequently, all of Plaintiff’s claims are DISMISSED WITH
PREJUDICE except for claims regarding damages arising from Plaza

Civil No. 17-2376 (RAM)
Carolina

Mall

L.P.’s

43
retention

of

the

restaurant

equipment.

Judgment shall be entered accordingly upon trial on the issues
identified above.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 8th day of June 2020.
S/ RAÚL M. ARIAS-MARXUACH
United States District Judge