440 F.Supp.3d 130
D.P.R.2020Background
- Parties: Punta Lima, LLC and Punta Lima Wind Farm, LLC (plaintiffs) vs. Punta Lima Development Company, LLC (defendant). Several interlocking agreements governed a wind-power project: land leases (defendant → Wind Farm), a facility lease (Punta Lima → Wind Farm), a subordination agreement (defendant subordinated rights to Punta Lima), and an O&M agreement.
- Hurricane María (Sept. 20, 2017) destroyed the project; parties negotiated reconstruction and entered extension agreements delaying Wind Farm’s election to rebuild or terminate.
- Disputes over defaults followed: notices of default were sent in May–June 2019; Punta Lima acquired Wind Farm membership interests via a foreclosure sale agreement on July 15, 2019 (later amended).
- Defendant thereafter terminated the land leases and alleges plaintiffs (Punta Lima/Wind Farm) acted in bad faith—reviving debts, blocking defendant’s rent collection under the subordination agreement, retaining equipment/access, and unlawfully terminating related contracts.
- Procedural posture: plaintiffs moved to dismiss several amended counterclaims by defendant; the Court resolves those motions (granting, denying, or bifurcating claims) and sets which counterclaims will proceed at the upcoming consolidated hearing/trial.
Issues
| Issue | Plaintiffs' Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether amended first counterclaim (contract prejudicing third party under Dennis) states a claim | Dennis claim inadequately pleaded; defendant consented to subordination so lacks protected interest | Amended foreclosure sale revived debt and, via subordination, injured defendant’s right to collect land-rent | Dismissed with prejudice — failed to allege a specially protected right; defendant’s prior subordination defeats claim |
| Whether amended fifth counterclaims (O&M agreement: injunction / arbitration) should proceed | Move to dismiss based on mandatory arbitration clause | Seeks permanent injunction alleging unlawful termination of the related contract; amended to address prior dismissal | Bifurcated from the upcoming trial; resolution of dismissal/arbitrability deferred and will be decided later |
| Whether amended sixth counterclaim (unjust enrichment) is viable | Unjust enrichment barred where contracts (extension, land leases, facility lease) govern the dispute | Plaintiffs were unjustly enriched by denying defendant land-rent while enjoying access and equipment; plaintiffs still occupy/benefit after alleged termination | Granted in part and denied in part — unjust enrichment claims barred to the extent contracts govern; surviving claim limited to alleged enrichment from plaintiffs’ continued access/retention of equipment after defendant’s alleged valid termination |
| Whether amended seventh counterclaim (breach of implied covenant / dolo) states a claim | Dolo/bad-faith not plausibly pleaded; many contested acts were contractually authorized; lack standing/laches for price challenge | Plaintiffs acted with intentional bad faith (manufactured defaults, revived debts, improper foreclosure pricing) causing harm to defendant | Grant in part / deny in part — claim against Punta Lima dismissed with prejudice (no contractual duty owed to defendant); claim against Wind Farm survives as plausibly alleging dolo re subordination and land leases |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim; legal conclusions insufficient)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Zenón v. Guzmán, 924 F.3d 611 (1st Cir. 2019) (First Circuit two-step framing for pleadings: ignore conclusions, accept well-pled facts)
- Triangle Cayman Asset Co. 2 v. Prop. Rental & Inv., Corp., 278 F. Supp. 3d 508 (D.P.R. 2017) (application of Dennis test to pleadings)
- P.R. Tel. Co. v. SprintCom, Inc., 662 F.3d 74 (1st Cir. 2011) (unjust enrichment unavailable where contractual or legal precept governs)
- Dennis v. City Federal Savings & Loan Ass'n, 21 P.R. Offic. Trans. 186 (P.R. 1988) (doctrine of contract prejudicing a third party; four-element test)
- Dolphin Int'l of P.R., Inc. v. Ryder Truck Lines, Inc., 127 D.P.R. 869 (P.R. 1991) (limits on Dennis: third party must show infringement of a specially protected right)
- Servicios Comerciales Andinos v. Gen. Elec. Del Caribe, 145 F.3d 463 (1st Cir. 1998) (standard for dolo: willful, intentional breach; subjective intent relevant)