Fábrica De Muebles J.J. Álvarez, Incorporado v. Inversiones Mendoza, Inc.
682 F.3d 26
1st Cir.2012Background
- Álvarez sold a furniture business to Mendoza; Westernbank financed the deal and held a mortgage securing the debt.
- An escrow/consignment arrangement was created; goods valued at about $1.5 million were consigned with Mendoza for sale on plaintiff’s behalf.
- Westernbank allegedly controlled Mendoza’s accounts and daily funds, sweeping the escrow and transferring funds to satisfy Mendoza’s debts.
- Mendoza later defaulted; Álvarez filed a RICO and state-law suit in district court; Westernbank filed an interpleader in bankruptcy court.
- Settlement agreements: Mendoza transferred real estate to Westernbank (2008) and Álvarez forgiven debts (2008), with conditions to lift the stay and permit foreclosure efforts.
- FDIC replaced Westernbank and BPPR acquired Westernbank’s assets; plaintiff amended to name insurers and Westernbank employees, then settlement and dismissal events narrowed remaining claims to state-law mortgage foreclosure and recovery of funds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether dismissals post-settlement foreclose federal jurisdiction | Álvarez argues RICO claims against employees remained. | BPPR contends the settlement encompassed all federal claims. | Yes, district court properly treated settlements as dismissing federal claims. |
| Whether the district court abused its discretion denying reconsideration | Álvarez asserts newly identified RICO claims against employees. | BPPR argues issues were waived and raised late. | No, court did not abuse discretion; arguments raised too late and not properly pled. |
| Whether the case should be dismissed for lack of subject-matter jurisdiction | Álvarez contends there are federal claims beyond RICO. | Defendant maintained only state-law claims remained and no federal question or diversity existed. | Yes, dismissal for lack of federal jurisdiction was proper. |
Key Cases Cited
- Abdel-Aleem v. OPK Biotech LLC, 665 F.3d 38 (1st Cir. 2012) (review of jurisdiction under Iqbal standards; de novo)
- Citibank Glob. Mkts., Inc. v. Rodríguez Santana, 573 F.3d 17 (1st Cir. 2009) (interpretation of bankruptcy-related disputes within state contract analysis)
- Aybar v. Crispin-Reyes, 118 F.3d 10 (1st Cir. 1997) (motions for reconsideration cannot cure procedural failures)
- Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439 (1st Cir. 2000) (RICO claims against employees require separate pleading)
- Viqueira v. First Bank, 140 F.3d 12 (1st Cir. 1998) (federal jurisdiction not presumed; burden on party asserting jurisdiction)