Resto-Montanez v. Chance et al
Filing
37
OPINION AND ORDER re 11 Motion to Dismiss for Lack of Jurisdiction. Defendants' motion to dismiss Resto's complaint is DENIED. Signed by Judge Francisco A. Besosa on 10/23/2018. (brc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
FRANCISCA RESTO-MONTAÑEZ,
Plaintiff,
v.
Civil No. 18-1205 (FAB)
ADAM CHANCE, et al.,
Defendants.
OPINION AND ORDER
BESOSA, District Judge.
Defendants Adam Chance, Curee Chance, and their conjugal
partnership (collectively “defendants”) move to dismiss plaintiff
Francisca Resto-Montañez (“Resto”)’s complaint pursuant to Federal
Rule of Civil of Procedure 12(b)(1) (“Rule 12(b)(1)”) and Federal
Rule Civil Procedure 12(b)(6) (“Rule 12(b)(6)”).
(Docket No. 11.)
For the reasons set forth below, the defendants’ motion to dismiss
is DENIED.
I.
Background
The Court construes the following facts from the complaint
“in the light most favorable to the plaintiff” and “resolve[s] any
ambiguities” in the plaintiff’s favor.
See Ocasio-Hernández v.
Fortuño-Burset, 640 F.3d 1, 17 (1st Cir. 2011) (discussing the
Rule 12(b)(6) standard of review); see Viqueira v. First Bank, 140
Civil No. 18-1205 (FAB)
2
F.3d 12, 15 (1st Cir. 1998) (discussing the Rule 12(b)(1) standard
of review).
On December 19, 2016, Resto and the defendants executed a
lease agreement (“agreement”).
(Docket No. 1 at p. 2.)
Pursuant
to the agreement, Resto would lease her residential property
(“property”) in Humacao, Puerto Rico to the defendants for a
monthly payment of $5,500 from February 2017 through January 2018.
Id.
The
defendants
would
pay
for
the
utilities’
services,
including water, electricity, internet, and cable television, and
would obtain an insurance policy “covering up to $150,000 in
potential damages to the Property, its furniture, appliances,
paintings, and art work.”
Id. at pp. 2-3.
On September 20, 2017, Hurricane María caused damages to the
property exceeding $150,000.
(Docket No. 1 at p. 3.)
According
to Resto, the defendants “obtained an insurance policy covering
potential
agreement.
damages
Id.
only
up
to
$50,000,”
in
violation
of
the
Resto claims that the defendants also “breached
their obligation to pay off their water utility bill” of $312.12
and submit “the required monthly payments from October 2017 through
January 31, which sum up to $22,000.”
Id.
On April 13, 2018, Resto commenced this action, “seeking to
collect monies owed by the defendants for breach of contract under
Puerto Rico law.”
(Docket No. 1 at p. 1.)
Resto requests
Civil No. 18-1205 (FAB)
3
approximately $122,312 in damages, plus the applicable interest,
for the defendants’ “breach in failing to pay rent from October
2017 through January 2018;” “breach in securing insurance coverage
only for $50,000, leaving uncovered the rest of the damages which
exceed $100,000;” and “breach in paying [their water bill].”
(Docket No. 1 at p. 4.)
Resto invokes this Court’s diversity
jurisdiction because she “is a born and raised citizen of the
Commonwealth of Puerto Rico,” and the defendants “are residents of
the state of Georgia.”
Id. at p. 2.
The defendants move to dismiss Resto’s claims.
11.)
(Docket No.
They argue that “this Court simply doesn’t have subject
matter jurisdiction to entertain this controversy” because the
defendants “were domiciled in Puerto Rico at the time the complaint
was filed.”
Id. at pp. 2 & 9.
The defendants also contend that
the agreement contains a “forum selection clause which prohibits
this [C]ourt to exercise its jurisdiction.”
II.
Id. at p. 2.
Standard of Review
Rule 12(b) permits a party to assert defenses against claims
for relief.
Fed. R. Civ. P. 12.
A court, nonetheless, “must
construe the complaint liberally,” Aversa v. United States, 99
F.3d 1200, 1210 (1st Cir. 1996), and a complaint that adequately
states a claim may still proceed even if “recovery is very remote
and
unlikely.”
Ocasio-Hernández,
640
F.3d
at
13
(internal
Civil No. 18-1205 (FAB)
4
quotation marks and citations omitted); see Katz v. Pershing, LLC,
672 F.3d 64, 70 (1st Cir. 2012) (“In considering the pre-discovery
grant of a motion to dismiss for lack of standing, [courts] accept
as
true
all
well-pleaded
factual
averments
in
the
plaintiff’s . . . complaint and indulge all reasonable inferences
therefrom in his favor.”) (internal citation omitted).
Rule 12(b)(1) allows a court to dismiss a complaint when a
plaintiff fails to establish subject-matter jurisdiction.
Civ. P. 12(b)(1).
Fed. R.
The party asserting jurisdiction has the burden
of demonstrating the existence of federal jurisdiction.
See Droz-
Serrano v. Caribbean Records Inc., 270 F. Supp. 2d 217, 217 (D.P.R.
2003) (García-Gregory, J.) (citing Murphy v. United States, 45
F.3d
520,
522
(1st
Cir.
1995)).
“As
courts
of
limited
jurisdiction, federal courts have the duty to construe their
jurisdictional grants narrowly.”
Fina Air, Inc. v. United States,
555 F. Supp. 2d 321, 323 (D.P.R. 2008) (Besosa, J.) (citing AliceaRivera v. SIMED, 12 F. Supp. 2d 243, 245 (D.P.R. 1998) (Fusté,
J.)).
A defendant may move to dismiss an action for failure to state
a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
To survive a Rule 12(b)(6) motion to dismiss, a complaint must
contain sufficient factual matter “to state a claim to relief that
is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550
Civil No. 18-1205 (FAB)
U.S. 544, 570 (2007).
5
A court must decide whether the complaint
alleges sufficient facts to “raise a right to relief above the
speculative level.”
Id. at 555.
III. Applicable Law
A.
Diversity Jurisdiction
Diversity jurisdiction requires an amount in controversy
that exceeds $75,000, excluding interest and costs, and complete
diversity of citizenship between all plaintiffs and defendants.
See 28 U.S.C. § 1332(a); Padilla-Mangual v. Pavía Hosp., 516
F.3d 29, 31 (1st Cir. 2008).
“[A] person is a citizen of the state
in which he is domiciled.”
Id. (citing Lundquist v. Precision
Valley Aviation, Inc., 946 F.2d 8, 10 (1st Cir. 1991)).
“A
person’s domicile is the place where he has his true, fixed home
and principal establishment, and to which, whenever he is absent,
he has the intention of returning.”
quotation marks omitted).
Id. (internal citation and
Moreover, there is a “presumption of
continuing domicile,” and a party can only prove a change in
domicile through objective evidence that establishes:
(1) that he
or she is physically present in the new state, and (2) that he or
she has an intent to remain there.
as of the time the suit is filed.”
Id.
“Domicile is determined
Id. (citations omitted).
Civil No. 18-1205 (FAB)
B.
6
Forum Selection Clauses
Courts have recognized two forms of forum selection
clauses: permissive and mandatory.
Permissive forum selection
clauses are “often described as ‘consent to jurisdiction’ clauses,
[and] authorize jurisdiction and venue in a designated forum, but
do not prohibit litigation elsewhere.”
Rivera v. Centro Médico de
Turabo, Inc., 575 F.3d 10, 17 (1st Cir. 2009) (citation omitted).
In contrast, mandatory forum selection clauses “contain clear
language indicating that jurisdiction and venue are appropriately
and exclusively in the designated forum.”
To
determine
whether
a
forum
Id.
selection
clause
is
permissive or mandatory, courts examine the relevant contract in
its entirety because “there is no general rule for forum-selection
clauses.”
Rivera, 575 F.3d at 17.
Preclusive language, such as
“shall” and “must,” suggests that a clause is mandatory.
Compare
Claudio de León v. Sistema Universitario Ana G. Méndez, 775 F.3d
41, 46 (1st Cir. 2014) (holding that contractual language stating
litigation “shall be submitted to the jurisdiction and competence
of the Court of First Instance of the Commonwealth of Puerto Rico,
San Juan Part” constitutes a mandatory forum selection clause),
with Triangle Cayman Asset Co. 2 v. Prop. Rental & Inv., Corp.,
278 F. Supp. 3d 508, 515-16 (D.P.R. 2017) (Besosa, J.) (finding
that the parties’ agreement to “submit” to the jurisdiction of one
Civil No. 18-1205 (FAB)
7
court without preclusive language “does not strip the jurisdiction
of another”).
IV.
Discussion
Resto adequately asserts diversity jurisdiction at this stage
in the litigation.
See Padilla-Mangual, 516 F.3d at 31.
First,
Resto seeks over $122,312 in damages, which satisfies the monetary
requirement.
(Docket No. 1 at p. 4.)
Second, Resto maintains
that she is domiciled in Puerto Rico and that the defendants are
domiciled in Georgia.
(Docket No. 1 at pp. 1-2.)
In her
opposition to the defendants’ request for dismissal, Resto states
the following facts in support of her position: (1) the defendants
own residential property in Georgia, and not in Puerto Rico;
(2) the defendants’ LinkedIn profiles state that they live in
Georgia and
run
various
companies
in
Georgia,
while
neither
profile mentions Puerto Rico or any corporation based in Puerto
Rico; (3)
Adam Chance appears on several websites as the owner
or officer of several real estate companies in Georgia; (4) Adam
Chance sold at least 14 properties in 2017, and at least 6
properties in 2018, through one or more of his companies in
Georgia; (5) Adam Chance is registered to vote in Georgia; (6) the
defendants’ Puerto Rico bank account lists their residence in
Georgia as their main address; and (7) the defendants were served
process in this case at their Georgia residence.
(Docket No. 15
Civil No. 18-1205 (FAB)
at pp. 5-7.)
8
Accordingly, the Court finds that Resto provides
adequate evidence for diversity jurisdiction at this phase.
The defendants’ argument regarding the forum selection clause
is unavailing.
The defendants argue that “[t]his Court should
dismiss the case as both parties contractually agreed to litigate
any issue arising from the contract in the Commonwealth of Puerto
Rico, Superior Court of Humacao.”
(Docket No. 11 at p. 13.)
The
agreement states:
For the interpretation of this contract and for any
action that might arise from it, the parties submit
themselves voluntarily to the jurisdiction of the
Superior Court of the Commonwealth of Puerto Rico,
Humacao Section.
(Docket No. 11, Ex. 3 at p. 3.)
The defendants suggest that
because Resto agreed to “submit” to state court jurisdiction, the
forum selection clause is mandatory.
18.)
(Docket No. 11 at pp. 17-
While the defendants identify correctly that “both parties
contractually agreed to litigate” in the Superior Court of Humacao,
Resto’s consent to “submit” to the Superior Court of Humacao,
however, does not establish the Superior Court of Humacao as the
exclusive forum in the event of litigation.
Ex. 3 at p. 3.
See Docket No. 11,
Absent from the forum selection clause are
preclusive words, such as “shall” and “must.”
See id.
After examining the agreement in its entirety, see Rivera,
575 F.3d at 17, the Court finds that the forum selection clause is
Civil No. 18-1205 (FAB)
9
permissive, not mandatory.
See Triangle Cayman, 278 F. Supp.
at 516 (“Mere consent to jurisdiction in one court does not strip
the jurisdiction of another.”).
In Bautista Cayman Asset Co. v.
Maeso-Enseñat, No. 16-2182, 2017 WL 1247879 (D.P.R. Mar. 30, 2017)
(Delgado-Colón, J.), the Court reviewed a forum selection clause
with language nearly identical to the forum selection clause at
issue in this case.
The forum selection clause in Bautista Cayman
stated:
In case of any litigation arising in relation to this
contract, to the Loan or the other documents related to
it, the parties submit themselves to the jurisdiction of
the General Court of Justice of Puerto Rico.
Id.
at
*2.
Consistent
with
First
Circuit
Court
of
Appeals
precedent, the Court held in Bautista Cayman that the clause was
“an affirmative conferral of personal jurisdiction by consent, and
not a negative exclusion of jurisdiction to other courts.”
Id.
(citing Autoridad de Energía Eléctrica de P.R. v. Ericsson, Inc.,
201 F.3d 15, 19 (1st Cir. 2000) (holding that a forum selection
clause
stating
that
“[t]his
contract
will
be
governed
and
interpreted pursuant to the Laws of the Commonwealth of Puerto
Rico and the parties agree to submit to the jurisdiction of the
courts
of
the
Commonwealth
of
Puerto
litigation in federal district court)).
Rico”
did
not
prohibit
The Court reached the
Civil No. 18-1205 (FAB)
10
same conclusion in Triangle Cayman, 278 F. Supp. at 515-16, where
the forum selection clause stated:
In the event of litigation, [Property Rental] agrees to
submit and it does hereby submit to the jurisdiction of
the General Court of Justice, Court of San Juan, Puerto
Rico, [Property Rental] expressly waiving the right it
may have to be sued in the Court of its domicile.
Id. at 514. 1
Because Resto asserts adequate diversity jurisdiction at this
stage and the agreement’s forum selection clause is permissive,
the defendants’ motion to dismiss is DENIED.
V.
Conclusion
For the reasons above, the defendants’ motion to dismiss
Resto’s complaint is DENIED.
(Docket No. 11.)
IT IS SO ORDERED.
San Juan, Puerto Rico, October 23, 2018.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE
1
In contrast, In re J.R. Insulation Sales & Serv., 482 B.R. 47 (Bankr. D.P.R.
2012) (Casellas, J.) illustrates a mandatory forum selection clause. The forum
selection clause in In re J.R. Insulation stated:
This contract shall be subject to, and interpreted by the state
laws of Puerto Rico.
Additionally, the contracting parties
expressly agree that the state courts of Puerto Rico, only, shall
be the courts with competent and exclusive jurisdiction to resolve
the controversies which arise between them in relation to this
Contract and which require for its elucidation the intervention of
the judicial authority.
Id. at 50 (affirming the bankruptcy court’s holding that the forum selection
clause is mandatory) (emphasis added).
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