Hamdallah v. CPC Carolina PR, LLCHamdallah v. CPC Carolina PR, LLC
Jeannette López de Victoria, with whom Oliveras & Ortiz, PSC was on brief, for appellants in 21-1805.
José L. Ramírez-Coll, with whom Carolina V. Cabrera Bou and Antonetti Montalvo & Ramirez Coll were on brief, for appellee CPC Carolina PR, LLC.
Jesus E. Cuza Abdala, with whom Holland & Knight LLP and Rebecca J. Canamero were on brief, for appellee Puerto Rico CVS Pharmacy, LLC.
PROLOGUE
These consolidated appeals tell the tale of a commercial real estate deal gone sideways. Certain that a few torts were committed along the way, the Sellers (and owners) of the relevant, individual pieces of land (“the Parcels“) sued the would-be purchaser and lessor of the Parcels, CPC Carolina PR, LLC (“CPC“), and the would-be lessee of the Parcels, Puerto Rico CVS Pharmacy, LLC (“CVS“). Unfortunately for the Sellers, they lost on summary judgment at the district court. Undeterred, they brought the case to our bench. We‘ll provide the remaining details as we go, but we won‘t bury the lede as to how this story ends: after thoughtful consideration of the parties’ arguments (or, at least, what we understand those arguments to be), we affirm the lower court‘s decision across the board.
SETTING THE (FACTUAL) SCENE1
Chapter 1: The Parcels
This story opens nearly sixty years ago in Carolina, Puerto Rico. There, on October 16, 1964, a developer encumbered a residential area known as Valle Arriba Heights with certain
Chapter 2: The Agreements Between the Sellers and CPC
The story picks back up several decades later. On October 3, 2013, the Sellers2 agreed to sell their respective Parcels to KRB Universal Investments, LLC (“KRB“) pursuant to four identical Purchase Agreements (“the Agreements“). Upon acquisition of all the Parcels, KRB would aggregate them into one larger plot of land that would then be developed for commercial use -- a fact to which all the Sellers were privy. KRB later
Several provisions of the Agreements are crucial to this tale‘s trajectory and are worth introducing now. First, Section 5 of the Agreements provided that the “Closing” “shall [occur] . . . within thirty (30) days after expiration of the Inspection Period.” Section 11, in turn, defined the “Inspection Period” as 365 days after the date the Agreements became effective (which was December 11, 2013), subject tо any extensions agreed upon by the parties.3
The second set of provisions that bears emphasizing relates to the possession, condition, and maintenance of the Parcels through Closing. Pursuant to Section 5, each Parcel was to be conveyed “[a]t Closing” and “[p]ossession of the [Parcel]” was to “be delivered to [CPC] upon Closing.” Section 7 provided, in relevant part, that “[c]ommencing upon the date of this Agreement and extending through Closing hereunder, the [Parcel] and title to the [Parcel] shall remain in the same condition as on the date hereof, except, however, for natural wear and tear.”
Third, the Agreements provided for an “Earnest Money” deposit of $5,000.00 that would function as liquidated damages:4
If the sale and purchase of the [Parcel] as contemplated by this Agreement is not consummated for any reason other than [CPC]‘s default, the Earnest Money and all interest earned thereon, except as herein expressly provided to the contrary, shall be refunded to [CPC] on demand. If the sale and purchase is not consummated because of [CPC]‘s default, then Seller shall have the right to retain the Earnest Money and all interest earned thereon, as full liquidated damages for such default of [CPC], the parties hereto acknowledging that it is impossible to more precisely estimate the damages to be suffered by Seller upon [CPC]‘s default. The parties expressly acknowledge that retention of the Earnest Money and all interest earned thereon, is intended not as a penalty, but as full liquidated damages. In the event the purchase and sale contemplated in this Agreement is not consummated because of [CPC]‘s default, [CPC] hereby waives and releases any right to (and hereby covenants that it shall not) sue Seller to recover the Earnest Money, and all interest earned thereon, or any part thereof on the grounds that it is unreasonable in amount or that its retention by Seller is a penalty and
not agreed upon and reasonable liquidated damages.
(emphases ours). In other words, in the event that CPC defaulted and failed to purchase the Parcels, the Sellers would each only be entitled to a maximum of $5,000.00 as damages and could not sue for more. Indeed, the Sellers explicitly agreed to this in the Agreements, which state that the “Seller hereby covenants and agrees not to sue [CPC] for specific performance of this Agreement or for damages other than the liquidated damages set forth above.”
Fourth, the Agreements set forth several conditions precedent5 before CPC‘s obligation to close on the Parcels came into effect. Thеse conditions precedent included (among other things):
(b) [CPC] obtaining all necessary and final zoning and governmental permits, Anteproyecto, ARPE Approvals, site plan approvals, tenant approval, access curb cuts, traffic controls, licenses, and approvals, for the site construction and operation of the proposed improvements on the [Parcel] along with any other required and non-appealable government requirements.
. . .
(e) Prime User and Financing Commitments have been received by [CPC].
. . .
(f) No casualty, natural event or condemnation has occurred.6
(emphases ours).
And last, but certainly not least, the Agreements also established that CPC could “deliver[] written notice to the Seller on or before [the expiration of the Inspection Period] that [CPC] has determined that the . . . conditions [precedent] are not met, to [CPC‘s] sole satisfaction . . . in [CPC]‘s sole discretion.” If CPC delivered such notice, it was “not . . . obligated to close.”
Chapter 3: The Ground Lease Between CPC and CVS
At the time the Sellers entered into the Agreements in 2013, CVS had not yet entered the picture. Rather, it joins this tale approximately one month after KRB assigned its rights to CPC under the Agreements. On March 30, 2015, CPC and CVS executed a lease (“the Ground Lease“), which would allow CVS to lease the aggregated Parcels and construct and operate a CVS pharmacy.7
Several provisions of the Ground Lеase, however, gave CVS outs if, in its sole discretion, it was not satisfied with any
The Ground Lease‘s Evaluation Period ended on August 26, 2015. At some point prior to the Evaluation Period‘s expiration, both CPC and CVS became aware of the restrictive covenants prohibiting non-residential use of the Parcels.
Chapter 4: The May/June 2017 Closing Falls Through
Over the ensuing years, the Sellers and CPC agreed to several extensions of the Agreements’ Inspection Period -- thereby also extending the Closing date. That all seemed to change on April 17, 2017, when CPC‘s attorney, Loyda Rivera (“Rivera“), informed the Sellers by letter that the Closing had been set for May 19, 2017. This letter requested that each Seller make arrangements to terminate any operations on or leases of their
Rivera followed up via letter dated May 16, 2017, informing the Sellers that the Closing had been moved and would now occur sometime between May 31 and June 5, 2017. This letter, like the first one, requested that the Sellers vacate the Parcels (this time though) “by or before May 31st.”9 May 31, however, came and went with no Closing. In the end, the Closing did not take place in May or June 2017 because a seller (not one of the Sellers in these consolidated appeals) failed to disclose that a member of that seller‘s estate was a minor, therefore requiring court approval of the transaction (“Minor‘s Title Issue“).10
In response to this blip -- one which all the Sellers were aware of -- the Sellers agreed to a final extension of the
Chapter 5: Cancellation of the Closing
In the wake of the failed May/June Closing, a flurry of events brings this tale to its climax: the cancellation of the Closing altogether.
After vacating her Parcel in response to Rivera‘s letters, the Hamdallah Seller returned to it several times between June and August 2017 to check on the premises -- only to find that her Parcel had been vandalized. Troubled by her discovery and conсerned about further vandalism, the Hamdallah Seller contacted Rivera in June to request that a security guard be placed at the Parcel, to which Rivera responded that there was no need for a security guard because the Parcels would be demolished.
Also in June 2017, an electrical transformer that provided power to the Parcels was removed. There‘s disagreement among the Sellers and CVS as to the circumstances surrounding the removal of the transformer, with the Sellers stating that it was removed upon CVS‘s request to the Autoridad de Energía Eléctrica de Puerto Rico (“AEE“) and CVS stating it made no such request and had no involvement whatsoever in its removal. Regardless, everyone
At some point prior to August 2017, CVS‘s outside engineer, Carlos Sanchez (“Sanchez“), posted signage on the Parcels that stated (among other things) CVS was the owner of the Parcels. These signs were posted in accordance with and as required by local municipal regulations.
With these (what will later prove to be) important plot points squared away, this story reaches the pivotal month of August 2017. On August 4, Rivera informed the Sellers by letter that the Closing had been scheduled for August 14, 2017 at her office. This letter noted that an inspection would occur on August 13 and, like all the letters before it, requested that the Sellers completely vacate the Parcels by that date. The Closing was moved shortly thereafter to August 16, 2017.
On August 9, Arnaldo Villamil (“Villamil“), CVS‘s attorney for this transaction, received from Popular Insurance, a title insurance company, a draft insurance policy that excluded from coverage claims relating to the enforcement of the restrictive
Two days later, the long-awaited August 16 Closing finally arrived. That morning, though, CVS informed CPC that it was backing out of the transaction because of the non-satisfactory insurance policy and the restrictive covenants. In the dark about these goings-on between CVS and CPC, the Sellers arrived, as instructed, to Rivera‘s office for the Closing, where she ultimately informed the Sellers that the Closing would not take place due to an issue betweеn CVS and CPC.
Everything came to a head on August 25, 2017, when Rivera sent a letter (“the August 25, 2017 Letter“), the full contents of
Many of you have contacted me asking about the status of the [C]losing on the [Parcels] in question. As you all know, on August 16, 2017 we had to stop the [C]losing because CVS informed us that it was not ready to sign the deed instrument containing the lease contract at that time nor to accept delivery of the [Parcels]. Since it was crucial to my client‘s purchase that the lease contract be signed and the [Parcels] be transferred, the [C]losing was stopped.
As you know, from the time negotiations with you began, this transaction was structured so that the purchase of all nine [Parcels], consolidation of the [Parcels], signing of the lease contract and delivery of the [Parcels] would occur simultaneously. This process was explained to you from the start, as negotiated with CVS.
Around the end of April this year, and then formally in mid-May, my client notified all of you of his intention to close at the end of that month. However, after the [C]losing notice was issued, we learned that one of you had concealed a succession involving minor children as heirs. The discovery of that information required us to suspend the [C]losing scheduled for late May in order to obtain judicial authorization to purchase the affected [Parcel], as required by law. As my client was unable to fulfill its obligation to close and transfer the [Parcels] as agreed in the contract with CVS, CVS notified my client of its refusal to extend delivery of the [Parcels], and the contract was terminated on July 5, 2017.
After several negotiations with CVS we (i) helped the seller obtain proper judicial authorization and (ii) convinced CVS to extend the [Parcel] delivery date until August 17 this year. Once the sale was authorized by the Court, we prepared for the [C]losing, notifying you of a new [C]losing date.
On Thursday August 10, just two (2) working days before the scheduled [C]losing date of August 14, CVS informed us that it needed time to review an issue related to restrictive conditions affecting the [Parcels] in the Registry. They knew that these conditions had affected the [Parcels] since it was developed in 1964 and that all the title searches reviewed and approved by CVS reflected the same. These restrictive conditions were never a matter of concern for CVS, which had plenty of time to inform us since signing the [Ground Lease] in 2015 if they had been concerned about them. In good faith, and to give them time to evaluate this issue, we postponed the original [C]losing date of August 14 to Wednesday August 16, one day before the deadline given by CVS for delivery of the [Parcels]. It should be noted that CVS inspected the [Parcels] on Sunday August 13 and found [them] in satisfactory condition for delivery.
On Wednesday August 16, at approximately 11:30 am, I was instructed to halt the [C]losing. The reason for this was that CVS notified that it would not be issuing the lease agreement, nor accepting delivery of the [Parcels], because it was not satisfied with the lease insurance policy that it would receive from its insurer at [C]losing, which had excluded the restrictive conditions from the coverage. The deadline for our client to deliver the [Parcels] was the next day, Thursday August 17. Therefore, on August 16 and also on August 17, we requested in good faith that the date for [C]losing on and delivering the [Parcels] be extended to give CVS time to review the matter, a request they
refused. We had no other option than to notify CVS of its breach of contract on August 17.
On August 22, 2017, CVS replied that it was my client and not CVS that had breached the [Ground Lease] by not “purchasing and trying to deliver” the [Parcels]. However, the agreement was always to purchase, consolidate, sign the lease contract, and deliver and receive the letter of transfer at [C]losing.
My client is exploring all options at this time, including hiring litigation attorneys to handle the matter from now on. As soon as we have more news, we will inform you.
(emphases ours).
Chapter 6: The Aftermath
Following receipt of the August 25, 2017 Letter, the Sellers, expecting the transaction to eventually take place, called Rivera “all the time” to inquire about the status of the Closing. There is сonflicting evidence on the Sellers’ expectation that the Closing would still occur. For example, Rivera testified during her deposition to the following:
Uff! [The Sellers] used to call me all the time, even after this [August 25, 2017 Letter]. “Do you have any notice? Do you know what‘s going on?“, and I said, “Well, you know, as I told you in the . . . [August 25, 2017 Letter] the deal fell through. CVS didn‘t want to sign the lease. I know that CPC is trying to, you know, w[eigh] [its] options.” You know, they still want to close. And that was it.
Jumping ahead several months to May 2018: the Hamdallah/Nieves-Roman/Nieves-Acevedo Sellers sent CPC an extrajudicial claim letter on May 18, requesting damages for CPC‘s alleged negligent and tortious behavior during the transaction, up through the failed Closing.15 Three days later, on May 21, 2018, the Municipality of Carolina (“the Municipality“), owner of a road that was also to be acquired as part of this transaction, wrote to Rivera to inquire about “the status of the” Closing, because it had “not received any communication whatsoever from [CPC]” and it had “received information that the” Closing would not occur. CPC responded to both the Hamdallah/Nieves-Roman/Nieves-Acevedo
SETTING THE (PROCEDURAL) SCENE
Chapter 7: The Lawsuits
Needless to say, with CVS‘s eleventh-hour back-out, neither CPC nor the Sellers left this failed transaction particularly content with its outcome. Accordingly, both CPC and the Sellers decided to take legal action, but the first to make a move was CPC. On August 8, 2018, CPC filed a complaint against CVS (“the Lead Case“).17 Many months later, on April 1, 2019,
Chapter 8: The Lead Case Settles
Convinced of the other‘s fault for the failed Closing, CPC and CVS filed cross-motions for summary judgment against each other on June 8, 2020. On this date as well, both CPC and CVS filed motions for summary judgment against each of the Sellers. After giving everyone an opportunity to respond (both in writing and at oral argument), the district court, on September 30, 2020, issued a decision only in the Lead Case, choosing to put on hold CPC‘s and CVS‘s motions for summary judgment against the Sellers until the Lead Case was fully resolved. CPC Carolina PR, LLC v. P.R. CVS Pharmacy, LLC, 494 F. Supp. 3d 144, 157 (D.P.R. 2020). In short, the district court denied summary judgment as to the vast majority of claims CPC and CVS raised against each other, concluding that there were genuinely disputed issues of material
After several scheduling hiccups, the Lead Case was set for a bench trial on January 25, 2021. But on the eve of trial, CPC and CVS reached a settlement agreement, and the Lead Case was dismissed by March 5, 2021.
Chapter 9: The Sellers’ Summary-Judgment Loss and Appeal
With the Lead Case now resolved, the district court turned its attention back to the pending motions for summary judgment against the Sellers. After hearing additional oral argument and receiving additional briefing, the district court issued a decision on August 20, 2021, granting CPC‘s and CVS‘s respective motions for summary judgment against all the Sellers
The Sellers (as the reader might have guessed by now) timely appealed their summary-judgment loss.
THE MAIN ACT
Up top we gave a sneak peek as to this story‘s end -- namely, with an affirmance of the district court‘s judgment in favor of CPC and CVS. Our resolution of the issues on appeal follows and explains how our story reaches that particular end. We first, however, make a brief pitstop to explain our standard of review.
Chapter 10: Standard of Review
We review the district court‘s summary-judgment decision de novo, which, for those unfamiliar with Latin, simply means that we give the decision a completely fresh look. Delgado-Caraballo v. Hosp. Pavia Hato Rey, Inc., 889 F.3d 30, 34 (1st Cir. 2018). In doing so, we “ask[] whether the summary-judgment winners (here, [CPC and CVS]) are entitled to judgment as a matter of law because
Chapter 11: CPC‘s Motions for Summary Judgment Against the Sellers
With this standard of review at top of mind, we turn first to CPC‘s motions for summary judgment against the Sellers.
No matter, say the Sellers, because they have the Puerto Rico Supreme Court‘s decision in Ramos Lozada v. Orientalist Rattan Furniture Inc., 130 D.P.R. 712, 1992 WL 755597 (P.R. 1992), in their back pocket, which they argue controls here. There, a lessee‘s negligence resulted in a fire, which destroyed the leased property. In an attempt to sidestep the one-year statute of limitations under Article 1802, “[t]he lessor sued under a theory of breach of contract (the lease agreement), which had a longer
The Puerto Rico Supreme Court was unconvinced, as it held “that a claim for noncontractual damages resulting from the breach of a contract lies if the act that caused the damage constitutes a breach of the general duty not to injure anyone and, at the same time, a breach of contract.” Ramos Lozada, 130 D.P.R. 712, 1992 WL 755597. According to the Puerto Rico Supreme Court, a plaintiff can choose whether to bring a contract-based or torts-based lawsuit (but not both) if certain conditions were met:
- The event that caused the damage must be, at the same time, a breach of a contractual obligation and a violation of the general duty not to cause harm to another; that is, the breach of a duty, abstractedly from the contractual obligation that would arise even if it had not existed.
- The person aggrieved as a result of the double (contractual and delictual) violation must be the same person, that is, the contractual creditor.
[. . .]
- Finally, the double violation must also have been committed by the same person, the contractual debtor [. . . .] It is not a matter of claiming two liabilities in any case, but of choosing between actions that pursue the same end.
Put plainly, under Puerto Rico law, “[a] plaintiff may bring a negligence claim based on a contractual relationship when there is both an alleged breach of contract and an alleged breach of the general duty not to negligently cause injury.”19 Nieves Domenech v. Dymax Corp., 952 F. Supp. 57, 65-66 (D.P.R. 1996) (citing Ramos Lozada, 130 D.P.R. 712, 1992 WL 755597). Heeding the Puerto Rico Supreme Court‘s warning, though, the general duty not to negligently cause injury “must arise out of conditions separate from the parties’ contract,” because “[i]f a plaintiff‘s damages arise exclusively from a defendant‘s alleged breach of contract, the plaintiff does not have a separate cаuse of action for negligence.” Id. at 66 (citing Ramos Lozada, 130 D.P.R. 712, 1992 WL 755597).
Applying Ramos Lozada here means that, to avoid a summary-judgment loss, the Sellers must demonstrate that at least one of CPC‘s alleged negligent actions here was (among other things, but most relevant to our purposes today) a breach of the general duty not to negligently cause harm or injury, and that any such duty would have arisen even if the Agreements did not exist. As we understand it, the Sellers argue CPC committed four negligent
We‘ll address each alleged act in turn.
Chapter 11.A: Inducing the Sellers into an Impossible Contract
In the minds of the Hamdallah/Nieves-Roman/Nieves-Acevedo Sellers, they were induced by CPC into the Agreements, which could never have come to fruition because of the restrictive covenants (but nowhere do they explain how exactly CPC induced them into the Agreements). This act of inducing them into the Agreements -- the argument goes -- satisfies Ramos Lozada‘s requirements and, therefore, summary judgment against them was inаppropriate.21 We can give this argument short shrift because the record does not support the idea that CPC induced any of the
Chapter 11.B: Failing to Cancel the Restrictive Covenants and/or the Agreements
The second alleged negligent act requires a bit more analysis. The Hamdallah/Nieves-Roman/Nieves-Acevedo Sellers seem to argue that CPC failed to timely address the restrictive covenants, either by having them fully cancelled or by cancelling the Agreements altogether. Despite knowing about the existence of these restrictive covenants and their potential effect on CVS‘s planned use of the land, CPC did nothing to address the deed restrictions and induced the Hamdallah/Nieves-Roman/Nieves-Acevedo Sellers into believing that the Closing would (and indeed could) occur, in spite of them. According to them, CPC‘s failure “to cancel the covenants, or, if not possible or practicable,
Even were we to assume that CPC‘s failure to timely cancel the restrictive covenants and/or the Agreements constituted a breach of duty, we are left puzzled аs to how this duty and its breach “would [have] arise[n] even if [the Agreements] had not existed.” Ramos Lozada, 130 D.P.R. 712, 1992 WL 755597. Indeed, without the Agreements, CPC would have had no connection or obligations whatsoever to the Parcels or the Sellers. In the same vein, we are left equally puzzled as to how the Hamdallah/Nieves-Roman/Nieves-Acevedo Sellers would have suffered damages based on the title defects without the Agreements. See Isla Nena Air Servs., 449 F.3d at 90-91 (concluding Ramos Lozada did not apply because “the damages would not have occurred without the existence of a contract“); Nieves Domenech, 952 F. Supp. at 66 (“If a plaintiff‘s damages arise exclusively from a defendant‘s alleged breach of contract, the plaintiff does not have a separate cause of action for negligence.“). And without any argumentation from the Hamdallah/Nieves-Roman/Nieves-Acevedo Sellers on this point,24
Chapter 11.C: Requiring the Sellers to Vacate the Parcels Prematurely
Third in line for our review is the Sellers’ contention that CPC allegedly forced them to prematurely vacate the Parcels, leaving them at a heightened risk for vandalism. And here‘s the rundown of that argument from the Sellers’ point-of-view: Rivera required that the Sellers vacate the Parcels in April 2017 for a May 2017 Closing that would nevеr occur; this request to prematurely vacate the Parcels violated Section 5 of the Agreements, which required that possession of the Parcels be delivered at Closing free of occupants and equipment; and by complying with CPC‘s request to vacate and leave the Parcels vacant, they became prone to vandalism. We find, though, that the Sellers’ view of these events and their theory of CPC‘s negligence are completely belied by the record.
To start off, there is no support in the record for the proposition that Rivera “require[d] that the [S]ellers physically vacate the property together with their furnishings and belongings, [two months] in advance of the [C]losing.” While it
The Sellers also say that Rivera‘s request to prematurely vacate the Parcels resulted in “the entire block bec[oming] vacant at thе same time” and becoming “besieged by vandalism, squatters, and theft of fixtures, among others.” As we noted above, however, the block did not become vacant at the same time because the Nieves-Roman/Nieves-Acevedo Sellers did not end up vacating their Parcels until mid-August 2017.
Neither does the record support the Sellers’ theory that CPC acted tortiously when it directed them to vacate their Parcels for a Closing that never happened. As the Sellers tell it, CPC knew or should have known that an eventual Closing would be impossible given the existence of the restrictive covenants. By failing to communicate this detail to the Sellers and requiring them to vacate their Parcels regardless, CPC negligently
But regardless of whether this theory of harm satisfies the Ramos Lozada requirements, there are several, record-related problems in the Sellers’ theory, to which they seem to be turning a blind eye. While the evidence shows that CPC knew CVS may not be able to obtain satisfactory title insurance because of the restrictive covenants, it does not indicate that CPC knew with absolute certainty that a Closing would not take place, when it requested that the Sellers vacate their Parcels. Rivera, for example, testified that even after the August 25, 2017 Letter explaining to the Sellers that CVS was definitively out of the deal, CPC “[was] trying to, you know, w[eigh] [its] options. You know, they still want to close.” Similarly, when CPC filed the Lead Case a year later, one of the remedies it sought was specific performance of the Ground Lease, which also would have resulted in a successful Closing.
This all means that the Sellers cannot demonstrate that CPC misrepresented any relevant information to them when it directed them at various points throughout the summer of 2017 to vacate their Parcels in anticipation of the Closing that CPC always thought would occur. As far as the record shows, CPC was still hopeful that the Closing would take place. It therefore did not violate any duty of care owed to the Sellers when it, in accordance
Chapter 11.D: Telling the Sellers Security Was Unnecessary
Not to be outdone, the Cruz Marrero Sellers have one more argument. They argue that, under Ramos Lozada, they have a valid negligence claim because, in June 2017, CPC “induced [the Cruz Marrero Sellers] [in]to believ[ing] that they had no need to physically safeguard [their Parcel],” when Rivera told the Hamdallah Seller that there was no need to safeguard the Parcels because all the structures were to be razed.25 Color us unpersuaded for several reasons.
First, the record does not support the proposition that Rivera induced the Cruz Marrеro Sellers into deciding not to physically safeguard their Parcel. As an initial matter, the Hamdallah Seller (not the Cruz Marrero Sellers) made the request in June 2017 to Rivera for the security guard. Nothing in the record suggests that the Cruz Marrero Sellers also made a similar request, that they were present when the Hamdallah Seller made her
Second, even if there was adequate record support for the Cruz Marrero Sellers’ version of events, their argument fails on the merits. Nowhere in their opening brief do they explain in any way how Rivera‘s actions here satisfy Ramos Lozada‘s requirement that the duty not to cause harm would have arisen even if the Agreements had not existed. At this stage in litigation, we cannot simply rely on the Cruz Marrero Sellers’ nebulous say-so and the lack of actual evidence means that thеir negligence claim cannot proceed.
To sum up, the Sellers collectively proffer several alleged negligent acts on CPC‘s part, but they either lack record support, do not meet Ramos Lozada‘s requirements, or both.
Chapter 12: CVS‘s Motions for Summary Judgment Against the Sellers
And with that, this story reaches its final chapter, where we address CVS‘s motions for summary judgment against the Sellers.
As they did with CPC, the Sellers raise Article-1802 negligence claims against CVS, but their theories of negligence differ somewhat from those they proposed against CPC. While not a beacon of clarity, the Sellers appear to renew the two theories of CVS‘s negligence that they raised below: (1) CVS acted negligently when it removed the transformer and placed signage at the Parcels, leaving the Parcels particularly vulnerable to vandalism; and (2) CVS acted negligently by failing to terminate the Ground Lease upon learning of the restrictive covenants and by
Let‘s start by laying out the appropriate framework for this statute-of-limitations analysis. Under Puerto Rico law, this one-year clock starts ticking when the injured party has knowledge “of the injury and of the likely identity of the tortfeasor.” Id. And two types of knowledge can trigger the ticking of the clock: actual knowledge and deemed knowledge. Alejandro-Ortiz v. P.R. Elec. Power Auth., 756 F.3d 23, 27 (1st Cir. 2014). Actual knowledge is rather self-explanatory. It “occurs when a plaintiff is aware of all the necessary facts and the existence of a likelihood of a legal cause of action.” Id. (citation and internal quotation marks omitted).
Reasonable diligence “is usually a jury question . . . so long as the outcome is within the range where reasonable men and women can differ.” Villarini-Garcia v. Hosp. del Maestro, 8 F.3d 81, 86-87 (1st Cir. 1993) (internal citations and quotation marks omitted). That‘s not necessarily always the case, though,
Putting everything together, this all means that the one-year statute of limitations begins to run “when the injured party knew or should have known of the injury and of the likely identity of the tortfeasor.” Tokyo Marine & Fire Ins. Co., 142 F.3d at 3 (emphasis ours). And, normally, the burden of a statute-of-limitations defense lies with the defendant. Rivera-Carrasquillo, 812 F.3d at 216. But that normal burden allocation goes out the window and shifts to the plaintiff when they “sue[] more than one year after the date of injury.” Id. “If this burden is not met the statute of limitations will then start to run from the day of the injury regardless of whether or not there is actual knоwledge.” Fragoso de Conway v. Lopez, 794 F. Supp. 49, 51 (D.P.R. 1992), aff‘d, 991 F.2d 878 (1st Cir. 1993).
Applying this statute-of-limitations framework to the facts here, there are a few things that are clear right out of the gate. First, we know that the injuries caused by CVS‘s alleged negligence all occurred by the end of summer 2017: (1) the transformer was removed in June; (2) the signage was posted by
So, in light of all this, the operative question is whether the Sellers can shoulder their burden that they did not have the requisite knowledge of their injuries and CVS‘s identity prior to one year before they filed their lawsuits. CVS argues that the Sellers cannot meet their burden because they received actual or deemed knowledge of their injuries and CVS‘s identity through Rivera‘s August 25, 2017 Letter -- an argument which the district court accepted. Upon review of the record and the parties’ arguments, we agree with CVS and the district court.
A simple onceover of the August 25, 2017 Letter (which all the Sellers concede they received) explains why. That letter
CVS notified that it would not be issuing the lease agreement, nor accepting delivery of the [Parcels], because it was not satisfied with the lease insurance policy that it would receive from its insurer at [C]losing, which had excluded the restrictive conditions from the coverage. . . . [W]e requested in good faith that the date for [C]losing on and delivering the [Parcels] be extended to give CVS time to review the matter, a request they refused;
(2) CVS knew of the restrictive covenants for years and did nothing about them:
CVS informed us that it needed time to review an issue related to restrictive conditions affecting the [Parcels] in the Registry. They knew that these conditions had affected the [Parcels] since [they were] developed in 1964 and that all the title searches reviewed and approved by CVS reflected the same. These restrictive conditions were never a matter of concern for CVS, which had plenty of time to inform us since signing the [Ground Lease] in 2015 if they had been concerned about them;
and (3) CPC and CVS had accused each other of breaches of contract and CPC was contemplating initiating a lawsuit against CVS:
We had no other option than to notify CVS of its breach of contract on August 17. On August 22, 2017, CVS replied that it was my client and nоt CVS that had breached the [Ground Lease] by not “purchasing and trying to deliver” the [Parcels]. . . . My client is exploring all options at this time, including hiring litigation attorneys to handle the matter from now on.
This necessarily means that the Sellers had actual knowledge by August 25, 2017 of both their theories of CVS‘s alleged negligence. Take first the Sellers’ theory of negligence regarding the transformer and signage and their alleged contribution to the vandalism of the Parcels. The Sellers knew that the transformer was removed in June 2017; that Sanchez, CVS‘s outside engineer, posted the signage by August 2017; and that the Parcels had all been vandalized by late August 2017. Therefore, when CVS backed out of the deal, and the Sellers were informed of this on August 25, 2017, they were necessarily informed that they would now have to shoulder the responsibility for any damage to the Parcels and that CVS was the blame-worthy culprit.
The Sellers argue that they did not have actual knowledge that CVS was responsible for the transformer‘s removal until May 26, 2018, when the Nieves-Acevedo Sellers, through their electrician, contacted the AEE to reinstall the power to thе Parcels -- a fact with which the district court agreed. That‘s a fair point, and the record supports it. However, the Sellers at
Take second the Sellers’ theory of negligence regarding CVS‘s failure to terminate the Ground Lease upon learning of the restrictive covenants. The August 25, 2017 Letter explicitly gave the Sellers actual knowledge of this potential claim for negligence, as it stated that CVS “knew that these [restrictive covenants] had affected the [Parсels] since [they were] developed in 1964 and that all the title searches reviewed and approved by CVS reflected the same” and that “[t]hese restrictive conditions were never a matter of concern for CVS, which had plenty of time
Even assuming that the August 25, 2017 Letter did not give the Sellers actual knowledge of CVS‘s alleged negligence (though such an assumption is hard to square), the Letter gave them, at minimum, deemed knowledge. To explain, while the Sellers emphasize that the August 25, 2017 Letter stated at the very end that “[a]s soon as we have more news, we will inform you,” which the Sellers contend created doubt in their minds as to whether the deal was dead-dead, the August 25, 2017 Letter at least gave the clear and distinct impression that CVS had decided not to move forward and, therefore, “create[d] a reasonable basis for concern about negligence.” Id. (citation and internal quotation marks omitted). Saddled with these blaring doubts regarding CVS‘s decision, it was on the Sellers to make “reasonable, active efforts to seek answers and clarify doubts” from CVS, the alleged tortfeasor. Id. Yet, at no point did any of the Sellers make any attempt to contact CVS directly after receiving the August 25, 2017 Letter.28 Therefore, the Sellers had actual or deemed knowledge of CVS‘s allеged negligence by August 25, 2017.
Resisting this conclusion, the Sellers offer two primary counterarguments -- neither of which prove persuasive. First up,
And even if CPC‘s assurances were legally relevant (they‘re not), the Sellers’ reliance on those assurances must have been reasonable and there‘s good reason to believe that any such reliance stopped being reasonable by the end of 2017. Rodríguez-Surís, 123 F.3d at 17 (“The reliance [on assurances], however, must be reasonable.“). The Agreements, as we discussed above, required that the Closing occur within 30 days of the end of the Inspection Pеriod. Over the many years of the Sellers’ contractual relationship with CPC, the Inspection Period was extended several times either before its expiration or within a few days of its expiration, ostensibly in order for the parties to have more time to close on the Parcels in accordance with the Agreements’ terms. The final extension of the Inspection Period extended it to October 30, 2017, but that date (plus thirty days) passed with no further extension. As such, the Agreements’ own terms and the parties’ usual course of dealing should have made it apparent to the Sellers that the Closing was off (or at least that there was a high probability that the Closing was off), despite CPC‘s months-old assurances to the contrary.
There is, however, an exception to this rule, upon which the Sellers attempt to rely. If there is “perfect solidarity” between the joint tоrtfeasors, “tolling as to one co-tortfeasor [such as through an extrajudicial claim] will toll [the statute of limitations] as to the rest.” Calderón Amézquita v. Rivera-Cruz, 483 F. Supp. 3d 89, 106 (D.P.R. 2020) (citation omitted). Perfect solidarity sounds complicated, but it simply refers to circumstances where “several persons [are] joined by a common interest, [and] have frequent relations among themselves or know
As their final Hail Mary, the Sellers argue that perfect solidarity existed between CPC and CVS because they shared a common interest by virtue of the Ground Lease. Accordingly, the Sellers’ extrajudicial claim letters to CPC -- the argument goes -- tolled the one-year clock as to CVS. We don‘t buy this argument for a few reasons.
To start, there is no vicarious liability between CPC and CVS and they never agreed to be jointly liable as to any damages to the Sellers. This is important because, “pursuant to Puerto Rico law, the Court must generally assume that the relationship between the parties to an agreement is not of the joint and several type.” Tonge v. Drs.’ Ctr. Hosp., San Juan, Inc., 531 F. Supp. 3d 491, 500–01 (D.P.R. 2021) (citation omitted). What‘s more, even taking the Sellers’ shared-interest theory head on, it leaves a bit to be desired.
Other than the Ground Lease, the only evidence the Sellers rely upon to demonstrate CPC‘s and CVS‘s “frequent relations” is one sentence in a letter from Rivera to CVS, referring to “a prior CVS deal between affiliates of [CPC] and [CVS].” But this sentence doesn‘t even identify when this deal took place or what the nature of the deal was. Moreover, this prior deal was not еven between CPC and CVS, but rather between
Significantly, the Sellers’ only theory of perfect solidarity (as we understand it) is that CPC and CVS shared a common interest through the Ground Lease -- the argument being that they shared a common goal of wanting the real estate transaction to come to fruition. But this theory is belied by the Sellers’ briefing and remaining arguments. Elsewhere in the Sellers’ briefing, they urge us to remember that the district court, in adjudicating CPC‘s and CVS‘s cross-motions for summary judgment, made several factual findings that support their contention that CVS acted tortiously towards them. These facts relate to CVS‘s alleged behind-the-scenes efforts to extricate itself, as early as 2015, from contracts based in Puerto Rico, including the Ground Lease. Therefore, CPC and CVS did not even share a common interest by virtue of the Ground Lease, because, by the Sellers’ own arguments, CVS had no plans to carry out the contract. And with that, the Sellers have not met their burden of demonstrating perfect solidarity between CPC and CVS.
In sum, having found that the Sellers had actual or deemed knowledge of their injuries and CVS‘s identity by August 25, 2017, and having parried all of their counterarguments as to
EPILOGUE
At long last, our story has reached its end, resulting in a summary-judgment loss for the Sellers. We recognize that this is not the fairy-tale ending for which the Sellers yearned; their Parcels have been damaged and they have little recourse to make them whole. Nevertheless, because we conclude that the district court reached the right outcome, we must affirm, with the parties to bear their own costs.33