CAMILO v. Nieves
2011 U.S. Dist. LEXIS 65412
D.P.R.2011Background
- Plaintiffs Camilo and Ubiñas filed Verified Complaint and moved for TRO/injunction on Nov 24, 2010; Court held Show Cause on Dec 6, 2010 and ordered simultaneous proposed orders; Link Distributors Corp. (Nieves) is a Puerto Rico for-profit corporation incorporated Sept 27, 2006; plaintiffs claim pre-incorporation verbal stock agreement and later stock ownership; defendants contend plaintiffs loaned money and had no stock ownership; plaintiffs seek access to corporate records and injunction against asset transfers; court must determine stockholder status to assess jurisdiction and injunctive relief; court applies Puerto Rico General Corporations Law of 1995 relevant provisions; court denies injunction as plaintiffs failed to show enforceable stock subscription in writing; laches noted due to long delay; court declines federal jurisdiction under the Securities Exchange Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Stock ownership by plaintiffs | Plaintiffs claim a pre-incorporation verbal stock agreement granting majority stock. | No stock ownership; plaintiffs lent money, not exchanged for shares; no written subscription. | Plaintiffs not stockholders; subscription must be in writing under Puerto Rico law. |
| Federal jurisdiction under the Securities Exchange Act | If stockholders exist, likely federal jurisdiction under Exchange Act. | No stock ownership, no federal jurisdiction. | No federal jurisdiction because plaintiffs fail to prove stock ownership. |
Key Cases Cited
- Progresso Financiero v. Gómez, 55 P.R.R. 819 (Puerto Rico Supreme Court, 1940) (subscription contracts may be enforceable if valid, but writing required by law)
- Weaver v. Henderson, 984 F.2d 11 (1st Cir. 1993) (probability of success on the merits is central to preliminary relief)
- Narragansett Indian Tribe v. Guilbert, 934 F.2d 4 (1st Cir. 1991) (standard for preliminary injunctions: likelihood of success, irreparable harm, balance of equities, public interest)
- Braintree Laboratories, Inc. v. Citigroup Global Markets Inc., 622 F.3d 36 (1st Cir. 2010) (irrep harm on sliding scale with likelihood of success; standard for injunctive relief)
- Vaquería Tres Monjitas, Inc.; Suiza Dairy, Inc. v. Irizarry, et al., 587 F.3d 464 (1st Cir. 2009) (preliminary injunction factors and irreparable harm considerations)
- Sulzberger v. Negrón Portillo, — (—) ((cited conceptually regarding Puerto Rico corporate law and subscription writings))