TRIANGLE CAYMAN ASSET COMPANY, Plaintiff-Appellee, Cross-Appellant, v. LG AND AC, CORP.; LEONARDO GOMEZ-VELEZ; LIVIAM MARGARITA CASILLAS COLON; CONJUGAL PARTNERSHIP GOMEZ-CASILLAS, Defendants, Third-Party Plaintiffs, Appellants, Cross-Appellees. ANIBAL COLON-SANTIAGO, Defendant. ORIENTAL BANK, Third-Party Defendant-Appellee.
Nos. 19-1251, 19-1786, 20-1284
United States Court of Appeals For the First Circuit
October 24, 2022
Hon. Francisco A. Besosa, U.S. District
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
Bamily Lopez-Ortiz, with whom Lizabel M. Negron-Vargas was on brief, for appellants/cross-appellees.
Carolina Velaz-Rivero, with whom Luis C. Marini-Biaggi, Ignacio J. Labarca-Morales, and Marini Pietrantoni Muniz, LLC were on brief, for appellee/cross-appellant.
Carlos R. Baralt Suarez, with whom Alfredo Fernandez Martinez was on brief, for third-party defendant/appellee.
October 24, 2022
GELPI, Circuit Judge. These appeals arise from the district court‘s grant of summary judgment in favor of Triangle Cayman Asset Company (“Triangle“) and Oriental Bank (“Oriental“) in a foreclosure action filed by Triangle against Liviam Margarita Casillas-Colon, Leonardo Gomez-Velez, their conjugal partnership, and LG and AC Corporation (collectively, “Appellants“), who in turn filed counterclaims against Triangle and brought Oriental in as a third-party defendant. During the pendency of the appeals, additional events have made the procedural history of the case lengthy and convoluted.1 Ultimately, we conclude that several aspects of the appeals as to Triangle are now moot and dismiss the same without reaching their merits. We further affirm the district court‘s dismissal of the breach of contract and fraud counterclaims against Triangle and the entry of summary judgment in favor of Oriental.
I. Background2
A. The Loan Agreement
In 2006, Appellants obtained a three-year loan with the now-defunct Eurobank for the purchase of real estate in Canovanas, Puerto Rico, including a gasoline station. On December 23, 2009, the parties refinanced the loan for an additional three-year term, in the amount of $1,240,188, amortized over twenty years (the “Financing Agreement“). Pursuant to said agreement, the loan was set to mature in December 2012. Upon said date, all obligations under the agreement were due and payable without notice or demand. Appellants secured the Financing Agreement with collateral that included mortgages on four properties. They further agreed, in the event of default, to assign any rents, income, and revenues from their lease agreements on the four properties covered by the mortgages to Eurobank.
On April 30, 2010, the Puerto Rico Office of the Commissioner of Financial Institutions closed Eurobank, appointing the Federal Deposit Insurance Corporation (“FDIC“) as receiver. Subsequently, the FDIC and Oriental agreed for the latter to acquire Eurobank‘s Financing Agreement with Appellants.3
In 2011, Appellants and Oriental initiated preliminary conversations for the refinancing of the loan. In December 2012, Appellants failed to make the outstanding balloon payment due under the Financing Agreement. However, Oriental granted them two administrative extensions until May 2013.
On March 13, 2013, Oriental sent Appellants a draft proposal for the refinancing of the Financing Agreement, but it was never finalized. Appellants continued making monthly payments under the Financing Agreement until May or June 2013, when Oriental refused to accept the payments, on the ground that Appellants had to pay off the loan or refinance it as the entire payment was due. As a result, Oriental appraised Appellants’ properties during February 2014 through March 2015 to
On September 28, 2015, Oriental entered into an Assignment and Assumption Agreement with Triangle, transferring Eurobank‘s prior credit relationship with Appellants from Oriental to Triangle.
B. District Court Proceedings
On October 20, 2016, Triangle filed its complaint for collection of monies and foreclosure of the mortgages and other collateral based on Appellants’ default on the loan. On March 13, 2017, Triangle filed an ex parte motion requesting an order for attachment of rents. On March 22, 2017, the district court granted Triangle‘s motion and issued an order to Appellants’ tenants to directly remit to Triangle all payments that they owed Appellants in connection with the mortgaged properties.
Appellants, in turn, filed counterclaims against Triangle for breach of contract, fraud, invasion of privacy, defamation, violations of the Fair Debt Collection Practices Act (“FDCPA“), and tortious interference with contractual agreements. Appellants also filed third-party claims against Triangle‘s predecessor, Oriental, for breach of contract, fraud, defamation, and violations of the FDCPA based on the assignment of the loan agreement.
On January 25, 2018, Triangle moved to dismiss Appellants’ counterclaims. In turn, on August 3, 2018, the district court adopted the magistrate judge‘s report and recommendation, dismissing all such counterclaims, except that of invasion of privacy.
On July 9, 2018, Triangle moved for summary judgment, seeking immediate payment of amounts due or, alternatively, foreclosure of the mortgaged properties. Oriental also moved for summary judgment. On January 22, 2019, the district court adopted the magistrate judge‘s reports and recommendations and entered an order granting Triangle‘s and Oriental‘s motions for summary judgment. Said order also incorporated the August 3, 2018 dismissal of counterclaims against Triangle (minus that for invasion of privacy). On January 28, 2019, the district court entered judgment in the third-party complaint against Oriental, reflecting its dismissal with prejudice. On February 26, 2019, Appellants filed a notice of appeal as to the January 22, 2019 order granting summary judgment in favor of Triangle and Oriental and the January 28, 2019 judgment, which dismissed the third-party claims against Oriental. This notice of appeal led to the docketing of appeal number 19-1251 in this court (“Appeal No. 1“).
C. Post-Notice of Appeal Proceedings
On April 23, 2019, this court entered an order directing Appellants to show cause as to why Appeal No. 1 should not be dismissed for lack of jurisdiction. In response, Appellants (1) suggested that they only intended to appeal from the district court‘s order and judgment dismissing their third-party complaint against Oriental and (2) informed this court that they had filed two motions before the district court to establish finality -- one seeking certification under
electronic amended order entered on May 14, 2019, the district court granted the second motion, dismissing Appellants’ invasion of privacy counterclaim against Triangle with prejudice. That same day via a separate electronic order, the district court denied as moot Appellants’ motion for Rule 54(b) certification due to their voluntary dismissal of the sole remaining counterclaim against Triangle.5
On May 16, 2019, the district court entered a judgment (the “May 16 Judgment“) which stated: “In accordance with the Judgment entered on January 28, 2019 [dismissing third-party claims against Oriental] and the Amended Order entered on May 14, 2019 [dismissing with prejudice the invasion of privacy counterclaim against Triangle], this case is DISMISSED with prejudice.” Concerned by the wording of the May 16 Judgment, Triangle sought reconsideration, asking the district court to dismiss only the invasion of privacy counterclaim with prejudice and to enter judgment in Triangle‘s favor on the amended complaint, as set out in the January 22, 2019 order. The district court directed the parties to submit proposed orders and judgments. In response, Triangle filed a motion in compliance, which included two proposed judgments. However, the district court entered an electronic order on June 20, 2019, denying Triangle‘s motion in compliance as “unnecessary” and stated: “The judgment entered May 16, 2019 is sufficient.” On July 22, 2019, Triangle filed a notice of appeal challenging the effective denial of the motion in compliance, the May 16 Judgment, and the denial of Triangle‘s motion to alter or amend. This appeal was docketed as 19-1786 (“Appeal No. 2“).
Meanwhile, while this court‘s show cause order was pending in Appeal No. 1 (and Appeal No. 2 had been filed), Appellants petitioned for bankruptcy. This court entered a stay of appeal pending Appellants’ bankruptcy proceedings on October 16, 2019.
On January 3, 2020, while both appeals were stayed, the district court sua sponte entered two judgments. First, the district court entered a partial judgment ordering Appellants to pay Triangle $1.4 million (to satisfy the remaining balance on the loan). Second, it entered a final judgment which incorporated (1) the partial judgment entered that same day, (2) the judgments entered on January 28, 2019 (dismissing Appellants’ third-party complaint against Oriental), and (3) the judgment entered on May 14, 2019 (dismissing Appellants’ invasion of privacy counterclaim against Triangle) -- thereby dismissing the entire case with prejudice (the “January 3 Judgments“).
On January 14, 2020, Appellants filed a motion to alter and amend, asking the district court to set aside its January 3 Judgments on the ground that it lacked jurisdiction because of the automatic bankruptcy stay. That same day, the district court noted the pendency of the stay, yet did not vacate the January 3 Judgments. Appellants hence filed a second notice of
II. Appellate Jurisdiction: Finality
Prior to addressing the merits of the claims on appeal, we must first examine the jurisdictional issues these consolidated appeals present. As previously noted, this court issued a show cause order on April 23, 2019 flagging the issue of finality, observing that the judgment being appealed was not final or appealable on an interlocutory basis given that at the time one claim remained pending before the district court. Furthermore, said order signaled a timeliness issue regarding the January 22, 2019 order.
Oriental posits that we have no jurisdiction over Appeal No. 1 because Appellants filed their notice of appeal as to a non-final judgment on February 26, 2019 and failed to subsequently file a notice of appeal after the May 16 Judgment.6
Generally, this court only has jurisdiction over appeals from final decisions from district courts,
filed notice of appeal ripened with the entry of any of these subsequent judgments.
Oriental argues that the entry of the May 16 Judgment had no effect on the prematurely filed notice of appeal because said judgment dismissed the case entirely as to all parties. Additionally, Oriental asserts that Appellants should have filed a second notice of appeal after the May 16 Judgment. Appellants, on the other hand, claim that, if the May 16 Judgment was the final judgment, then pursuant to
The
As the Supreme Court in FirsTier explained,
III. Article III Jurisdiction: Mootness
Here, Appellants have satisfied the amounts due under the Financing Agreement, after reaching an agreement for the sale of real estate collateral to third-party VPP Holdings LLC. The sale of the collateral took place on July 7, 2020, and the proceeds were delivered to Triangle to pay off the amounts owed. As a result, Triangle filed a motion before the district court informing the court of the satisfaction of judgment, which Appellants did not oppose. Triangle also filed a similar motion before this court on October 13, 2020, requesting dismissal of the appeals. Subsequently, the district court entered an order noting the satisfaction of the monies owed and a judgment dismissing the case -- the fifth in this case. Consequently, many of Appellants’ challenges to the district court‘s decisions regarding Triangle -- the denial of Appellants’ motion to dismiss Triangle‘s claims (including Appellants’ argument that Triangle‘s complaint was time-barred); the denial of Appellants’ motion to set aside the district court‘s ex parte attachment order; the denial of Appellants’ motion to strike an affidavit submitted by Triangle; and the grant of summary judgment to Triangle -- are now moot.8
Our inquiry as to said matters ends here. Additionally, Appeal No. 2 (Triangle‘s challenge to the district court‘s wording in the May 16 Judgment) is also moot. With the jurisdictional
IV. The Merits
We review a district court‘s grant of summary judgment de novo, resolving it is appropriate only if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
A. Appellants’ Counterclaims Against Triangle and Third-Party Claims Against Oriental (Appeal No. 1)
1. Breach of Contract
Appellants seek review of the district court‘s grant of summary judgment in favor of Oriental and the dismissal of the breach of contract and fraud counterclaims against Triangle. Because Appellants seek review of closely related claims as to both Oriental and Triangle, we address them simultaneously. Appellants assert that the district court‘s judgment in Oriental‘s favor constitutes error because there was, in fact, a binding loan proposal between the parties that was breached by Oriental; Oriental committed fraud by selling the loan to Triangle after promising to refinance it; and Oriental violated the FDCPA. As to Triangle, Appellants contend that the district court failed to review the Financing Agreement in its entirety and misconstrued Puerto Rico contractual principles by failing to consider extrinsic evidence.
Neither party disputes that Puerto Rico contract principles apply to the instant diversity action. Almeida-Leon v. WM Cap. Mgmt., Inc., 993 F.3d 1, 7 (1st Cir. 2021). A cognizable claim for breach of contract under “Puerto Rico law requires sufficient allegations of a breach of the contractual terms and that the breach caused an identifiable harm.” Almeida-Leon, 993 F.3d at 13; Soc. de Gananciales v. Velez & Asoc., 145 P.R. Dec. 508 (1998).
When disputes arise as to contract interpretation, the 1930 Civil Code of Puerto Rico (applicable at the time of the proceedings below) explicitly calls for construing “the meaning of [the contract‘s] terms.” Borschow Hosp. & Med. Supplies, Inc. v. Cesar Castillo Inc., 96 F.3d 10, 15 (1st Cir. 1996) (quoting Hopgood v. Merrill Lynch, Pierce, Fenner & Smith, 839 F. Supp. 98, 104 (D.P.R. 1993), aff‘d, 36 F.3d 1089 (1st Cir. 1994)). Thus, Article 1233 provides that “[i]f the terms of a contract are clear and leave no doubt as to the intentions of the contracting parties, the literal sense of its stipulations shall be observed. If the words should appear contrary to the evident intention of the contracting parties, the intention shall prevail.”
In support of their breach of contract claims, Appellants posit two factual
As if the aforementioned were not sufficient, Appellant Leonardo Gomez admitted in his deposition that the Financing Agreement‘s balloon payment was set to expire in 2012 and the balance due in December 2012 was not paid off. Additionally, he testified that the loan proposal “was never signed[] because the people that we were in communication with never contacted us, for us to be able to refinance.” Lastly, when questioned on whether the loan proposal was signed, he replied “[n]o, it was never signed.”
The clause in the Financing Agreement that points to a revision of the commercial credit on May 5, 2010 in no way implies or creates an obligation to refinance. Appellants attempt to evade the effect of the Financing Agreement provisions by arguing that they engaged in preliminary negotiations for refinancing with representatives of Oriental and Bayview. Additionally, Appellants argue that Oriental dealt in bad faith when it failed to notify them of the alleged approval of the loan proposal.9 Once again, Appellants rely upon the misconception that their loan proposal was approved and in effect, despite the fact that the record does not so evidence.
Nonetheless, Appellants posit that “if there is no mention in the Financing Agreement of an obligation to refinance, then the proper inquiry was to ascertain the intention of the parties at the time of entering into the contract.” Specifically, Appellants claim that the district court erred in failing to consider the parties’ shared intentions to refinance, and the fact that Appellants stopped making payments to Oriental “to force a reaction from Bayview,” the loan servicer. But, again, when contracts are unambiguous, as this one is, we need not consider extrinsic evidence. See
2. Fraud
In federal diversity cases involving claims of fraud, state law governs all issues related to the elements of fraud. See Borschow Hosp., 96 F.3d at 15. Under Puerto Rico law, fraud arising out of a contractual relationship “is a type of contractual deceit” that occurs at the formation of a contract or during the performance of said contract. Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 378 (1st Cir. 2011); see also Colón v. Promo Motor Imps., Inc., 144 P.R. Dec. 659, 668 (1997) (official translation). If the contractual deceit, known in Spanish as “dolo,” takes place during the performance of the contractual obligation, “a plaintiff must establish ‘(1) the intent to defraud; (2) reliance on the fraudulent acts; (3) the false representations used to consummate the fraud; and (4) that the fraud was consummated by virtue of such representations.‘” Est. of Berganzo-Colon v. Ambush, 704 F.3d 33, 39 (1st Cir. 2013) (quoting P.R. Elec. Power Auth. v. Action Refund, 472 F. Supp. 2d 133, 138-39 (D.P.R. 2006)); see also
Appellants contend that Oriental and Triangle engaged in fraud because Oriental promised them it would refinance the Financing Agreement but instead sold the loan to Triangle, who allegedly had acquired the same duties as Oriental and had to complete the process for the refinancing. In order to establish fraud, Appellants must prove that Oriental and Triangle made false representations, that Appellants reasonably relied on said representations, that they suffered an injury as a result of that reliance, and that Oriental and Triangle had the intent to defraud. P.R. Elec. Power Auth. v. Action Refund, 515 F.3d 57, 66 (1st Cir. 2008). Nothing in the record supports a finding that either Oriental or Triangle made false representations with the intent to defraud Appellants. As Oriental correctly states, it could not have committed fraud by failing to honor the loan proposal as a new contract. Consequently, Triangle had no refinancing obligation to note. This is so because, as discussed supra, the provisions of the Financing Agreement are clear and unambiguous in stating that any amendment to said loan agreement must be in writing and signed by both parties.
3. FDCPA Claim
Appellants contended in their third-party complaint against Oriental that the bank violated the FDCPA by using “false, deceptive, or misleading representation[s]
B. Appellants’ Challenge to the January 3 Judgments (Appeal No.3)
Before we discuss this issue, we succinctly recap the procedural history. While Appeal No. 1 and Appeal No. 2 were pending before this court and stayed due to the bankruptcy proceedings, the district court issued a new partial judgment on January 3, 2020. Said partial judgment laid down the specific amounts Appellants were to pay to Triangle and ordered the foreclosure of the properties if payment was not made within 14 days. Additionally, the district court entered a new final judgment incorporating the partial judgment with the judgments entered on January 28, 2019 and May 14, 2019 --dismissing the case with prejudice. Appellants filed a timely motion for reconsideration before the district court, arguing it lacked jurisdiction to issue the January 3 Judgments. The district court noted the motion and indicated that “[t]he judgments have been issued and the court of appeals has stayed the appeals.” Subsequently, Appellants filed Appeal No. 3. Triangle opposes and posits this appeal should be dismissed because the district court had no jurisdiction to enter the January 3 Judgments. In turn, Appellants oppose Triangle‘s assertion, stating that even if the judgments were ineffective when entered, they became effective once the bankruptcy automatic stay was lifted on May 12, 2020. We agree with Triangle that there was, in fact, a bankruptcy automatic stay in place that renders void the January 3 Judgments.
Section 362(a)(1) of the Bankruptcy Code,
C. Waived Claims
Appellants also advance that the district court erred in dismissing the tortious interference with contractual relations and defamation claims against Triangle. However, they have failed to develop any argument as to those counterclaims. Therefore, we need not address them here. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (“[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived.“)
V. Conclusion
For the foregoing reasons, we affirm the dismissal of the breach of contract and fraud counterclaims against Triangle and the granting of summary judgment in favor of Oriental. We determine that Appeal No. 1 is moot in all other aspects as well as Appeal No. 2. Lastly, we vacate the district court‘s January 3 Judgments that form the basis of Appeal No. 3, and remand for further proceedings, as needed. Costs are awarded to Triangle and Oriental.
Chronology of Procedural Events
Table 1
| October 20, 2016* | Triangle files its complaint in the district court for collection of monies due under the loan agreement. *Triangle files an amended complaint on August 14, 2017. |
| May 2, 2017 | Appellants file their answer to the complaint and assert counterclaims against Triangle and third-party claims as to Oriental. |
| August 3, 2018 | The district court enters an order adopting the magistrate judge‘s report and recommendation dismissing Appellants’ counterclaims, except for the invasion of privacy counterclaim. |
| January 22, 2019 | The district court enters an order adopting the magistrate judge‘s report and recommendation granting Triangle‘s and Oriental‘s respective summary judgment motions. The sole remaining cause of action is Appellants’ invasion of privacy counterclaim against Triangle. |
| | The district court enters judgment on Appellants’ third-party complaint against Oriental, dismissing it with prejudice. |
| February 26, 2019 | Appellants file a notice of appeal, challenging the district court‘s order granting summary judgment in favor of Oriental. That appeal is No. 19-1251. |
| April 23, 2019 | This court enters an order directing Appellants to show cause why Appeal No. 19-1251 should not be dismissed for lack of jurisdiction. |
| May 7, 2019 | Appellants file in the district court a motion to voluntarily dismiss their invasion of privacy counterclaim against Triangle. |
| May 14, 2019 | The district court enters an amended order dismissing Appellants’ invasion of privacy counterclaim against Triangle with prejudice. The district court also denies as moot Appellants’ motion for Rule 54(b) certification. |
| May 16, 2019 | The district court enters a final judgment (in accordance |
| June 5, 2019 | Triangle files in the district court a motion to alter judgment. |
| June 7, 2019 | The district court orders parties to submit proposed orders and judgments. |
| June 20, 2019 | The district court denies Triangle‘s motion in compliance as unnecessary and states: “The judgment entered on May 16, 2019 is sufficient.” |
| July 22, 2019 | Triangle files a Notice of Appeal challenging the district court‘s denial of the motion in compliance as unnecessary. That appeal is No. 19-1786. |
| August 15, 2019 | Appellants file a chapter 13 bankruptcy petition in the United States Bankruptcy Court for the District of Puerto Rico. |
| September 11, 2019 | Appellants file a motion informing this court of their bankruptcy in both 19-1251 and 19-1786. |
| October 8, 2019 | Oriental files a motion to dismiss in 19-1251, asserting |
| October 16, 2019 | This court stays appeals 19-1251 and 19-1786 pursuant to |
| January 3, 2020 | While both appeals were stayed, the district court sua sponte enters (1) a partial judgment memorializing its previous order granting summary judgment to Triangle and (2) a final judgment, which incorporated the partial judgment and the judgments entered January 28, 2019 and May 14, 2019. |
| January 14, 2020 | Appellants file in the district court a motion to alter judgment, asking it to set aside the January 3, 2020 judgments because of the bankruptcy automatic stay. |
| January 24, 2020 | The district court “notes” the motion to alter judgment and acknowledges that there is a stay in place. |
| February 21, 2020 | Appellants file a second notice of appeal challenging the January 3, 2020 judgments. That appeal is No. 20-1284. |
| May 12, 2020 | This court enters an order vacating the bankruptcy stay |
| October 13, 2020 | Triangle files before the district court an informative motion regarding the satisfaction of the monies due to it as per the district court‘s judgment. The district court dismisses the case with prejudice after noting the judgment had been satisfied. |
| October 13, 2020 | Triangle files a motion for dismissal of appeals based on satisfaction of judgment. Appellants oppose the dismissal. |
| April 14, 2021 | This court denies without prejudice Triangle‘s motion to dismiss. |
Notes
Rule 54(b) states:
When an action presents more than one claim for relief-whether as a claim, counterclaim, crossclaim, or third-party claim-or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.