993 F.3d 1
1st Cir.2021Background
- Francisco and Juan Almeida obtained and then foreclosed on three mortgage notes (the "Kennedy Notes") securing property owned by Emérito Estrada‑Rivera; a separate senior GMAC Note later came under the control of Tenerife (an entity controlled by the Almeidas).
- After R‑G Premier Bank failed, the FDIC as receiver (FDIC‑R) sued to recover the bank loan and obtained a judgment and a temporary restraining order preventing liquidation of the Kennedy property.
- In July 2014 the Almeidas and FDIC‑R executed an "Agreement to Satisfy Judgment and Assignment of Mortgage Notes" (the 2014 Agreement) assigning FDIC‑R an undivided one‑half interest in the Kennedy Notes and the GMAC Note as an "assignment for payment" (pago por cesión de bienes), with liquidation proceeds to satisfy the judgment first.
- FDIC‑R sold its interest under the 2014 Agreement to WM Capital in December 2015; the Almeidas sued WM in Puerto Rico state court for breach and redemption; WM removed to federal court, counterclaimed for specific performance, and Tenerife was later joined.
- The district court dismissed the Almeidas' redemption claim (Rule 12(b)(6)), granted summary judgment for WM on the breach claim, joined Tenerife under Rule 20, and granted WM summary judgment ordering specific performance (liquidation of the Kennedy Notes and the GMAC Note, with proceeds first to WM). The First Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Almeidas plausibly pleaded a right of redemption under Puerto Rico law | The 2014 Agreement transferred an ownership interest subject to co‑owner redemption; Almeidas could buy WM’s interest for the FDIC‑R purchase price | The 2014 Agreement is a pago por cesión de bienes (assignment for payment) that transfers only an interest in proceeds, not ownership triggering redemption | Affirmed dismissal: assignment for payment does not effect an ownership transfer subject to redemption; trust theory rejected because the Agreement did not satisfy Trust Act requirements |
| Whether joinder of Tenerife under Fed. R. Civ. P. 20 was improper (and deprived Tenerife of due process) | Joinder was improper and created a "fictitious" controversy; late joinder deprived Tenerife of fair process | Joinder under Rule 20 was permissible; Tenerife actively disputed WM’s counterclaim and was on notice; no prejudice shown | Affirmed joinder: appellants’ jurisdictional and due‑process arguments were undeveloped/unsupported and failed to show prejudice |
| Whether the Almeidas’ breach‑of‑contract claim survived summary judgment | FDIC‑R breached the 2014 Agreement (delayed environmental study) causing delay in liquidation and damages | The Agreement contained conditions precedent (state‑court amendment and environmental assessment); alleged delay ended before those conditions were satisfied so no causal harm alleged | Affirmed summary judgment for WM on breach: complaint did not allege breach caused harm after the state‑court amendment date, so no plausible causal theory |
| Whether WM was entitled to specific performance (including liquidation of the GMAC Note) | Appellants disputed that the GMAC Note was governed by the 2014 Agreement and argued ambiguity requiring trial | WM argued the Agreement unambiguously assigned a one‑half interest in the Kennedy Notes and the GMAC Note and required liquidation with proceeds paid first to WM | Affirmed specific performance and final judgment: Agreement unambiguous as to GMAC Note and liquidation priority; court enforced plain terms at summary judgment |
Key Cases Cited
- Kader v. Sarepta Therapeutics, 887 F.3d 48 (1st Cir. 2018) (standards for de novo review of Rule 12(b)(6) dismissal)
- Baetjer v. Garzot, 124 F.2d 920 (1st Cir. 1942) (explaining right of redemption)
- Markel Am. Ins. Co. v. Díaz‑Santiago, 674 F.3d 21 (1st Cir. 2012) (contract interpretation under Puerto Rico law; enforce plain terms)
- Torres Vargas v. Santiago Cummings, 149 F.3d 29 (1st Cir. 1998) (courts should not look beyond literal contract when unambiguous)
- Shelby v. Superformance Int'l, Inc., 435 F.3d 42 (1st Cir. 2006) (federal courts assess whether a live controversy exists for jurisdiction)
- Picciotto v. Cont'l Cas. Co., 512 F.3d 9 (1st Cir. 2008) (district‑court joinder decisions reviewed for abuse of discretion)
- Zannino v. Ford Motor Co., 895 F.2d 1 (1st Cir. 1990) (appellate waiver for undeveloped arguments)
- RSA Media, Inc. v. AK Media Grp., Inc., 260 F.3d 10 (1st Cir. 2001) (summary judgment requires a plausible theory of causation)
- Citibank Glob. Mkts., Inc. v. Rodríguez Santana, 573 F.3d 17 (1st Cir. 2009) (presumption of good faith in contracting and burden to prove deceit)
- Rockwood v. SKF USA Inc., 687 F.3d 1 (1st Cir. 2012) (arguments not raised below generally cannot be raised first on appeal)