602 F.3d 34 (1st Cir. 2010), 09-1096, Estate of Hevia v. Portrio Corp.

Docket Nº:09-1096, 09-1097.
Citation:602 F.3d 34
Opinion Judge:SELYA, Circuit Judge.
Party Name:ESTATE OF Roberto HEVIA et al., Plaintiffs, Appellants, v. PORTRIO CORPORATION et al., Defendants, Appellees. Estate of Roberto Hevia et al., Plaintiffs, Appellees, v. Heriberto Figueroa-Marrero et al., Defendants, Appellants.
Attorney:Laura Bel
Judge Panel:Before LYNCH, Chief Judge, TORRUELLA and SELYA, Circuit Judges.
Case Date:April 20, 2010
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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602 F.3d 34 (1st Cir. 2010)

ESTATE OF Roberto HEVIA et al., Plaintiffs, Appellants,


PORTRIO CORPORATION et al., Defendants, Appellees.

Estate of Roberto Hevia et al., Plaintiffs, Appellees,


Heriberto Figueroa-Marrero et al., Defendants, Appellants.

Nos. 09-1096, 09-1097.

United States Court of Appeals, First Circuit

April 20, 2010

Heard March 1, 2010.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Laura Beléndez-Ferrero, with whom Cristina Arenas-Solís and Ferraiuoli Torres Marchand & Rovira, PSC were on brief, for plaintiffs.

Adaljisa Pérez Andreu, with whom Adaljisa Pérez Andreu Law Office PSC was on brief, for defendants Valcarce, Sotelo, and their conjugal partnership.

Roberto O. Maldonado Nieves for defendants Figueroa-Marrero, his wife, and their conjugal partnership.

Fernando Van Derdys, with whom Law Offices of F. Van Derdys was on brief, for remaining defendants.

Before LYNCH, Chief Judge, TORRUELLA and SELYA, Circuit Judges.

SELYA, Circuit Judge.

The late Roberto Hevia-Acosta (RHA) had a flair for architectural design. The fruits of his labors survived him and led to a pitched legal battle that pitted his estate and heirs against his long-time business partner. These appeals together comprise a chapter in the anthology of that litigation. They require us to examine an arcane corner of the law: implied licenses to use copyrighted works.

The particular case at issue here began when RHA's estate (the Estate) and various members of his family-namely, his three children, Raúl Hevia-Macía, Roberto Hevia-Macía, and Vivian Hevia-Macía, and his widow, Florinda Macía-sued an array of defendants. The operative pleading is the second amended complaint. In it, the plaintiffs alleged that the defendants infringed a copyright on architectural plans created by RHA.1 The defendants denied the plaintiffs' material allegations and counterclaimed.

The district court rejected both the copyright claim and the counterclaims, and it entered judgment without the imposition of any attorneys' fees or costs. Following the court's supplementary order on a motion for reconsideration, both sides appealed. Discerning no error or abuse of discretion, we affirm.

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Because the absence of liability on the copyright claim was determined at the summary judgment stage, we rehearse the relevant facts in the light most favorable to the plaintiffs. See, e.g., Conward v. Cambridge Sch. Comm., 171 F.3d 12, 17 (1st Cir.1999).

The main protagonists in this saga are RHA and his quondam business partner, Francisco Valcarce (FV). Over the course of roughly seven years, the men jointly participated in a host of real estate ventures. To bring structure to this sprawling enterprise, they formed three companies: Río Grande Development Corporation (RG Development), H.V. Development Corporation, and Jardines Mediterráneos Corporation. The partners owned equal equity interests in each of these companies.

The two men also worked out a division of corporate responsibilities. Under this arrangement, FV ran the business side of the enterprise and RHA took charge of design. As a part of RHA's duties, he devised the architectural concepts and created the plans used in the partners' development activities.

RHA and FV also shared the financial burden of the enterprise. As business partners, they would contribute equally to the capital needed to fund the acquisition of developable land. In addition, each man would personally guarantee loans made to finance their projects.

The project that lies at the epicenter of this case is Río Grande Village, a planned residential community in Río Grande, Puerto Rico. One of the partners' companies, RG Development, owned Río Grande Village. RHA worked on the architectural plans for the complex (the Hevia Plans). FV acknowledges that RG Development owed RHA approximately $150,000 for his work on the plans.2

RHA created the Hevia Plans in or around 1999. At some point thereafter, the Hevia Plans were sufficiently far advanced for RHA to authorize JoséMeléndez, an engineer, to incorporate them into his (Meléndez's) more advanced plans for the project.

In September of 2000, Meléndez signed and sealed the proposed plans for Río Grande Village.3 They were then submitted to a governmental agency.

RHA and his wife, Florinda Macía, were the grantors of Fideicomiso Hevia-Macía (the Trust), a trust established under Puerto Rico law. Their children, Raúl, Roberto, and Vivian, were the principal beneficiaries. On January 11, 2003, RHA donated to the Trust all his shares and interests in the three companies that he and FV had formed. Two days later, RHA died.

On December 31, 2003, the Trust sold the stock to FV for $4,000,000. FV became, with this purchase, the sole shareholder of all three companies, including RG Development. The purchase-and-sale agreement (the Agreement) between the Trust and FV does not mention the Hevia Plans. It does, however, purpose to convey to FV " every interest" that the Trust may have in each of the companies.

After the consummation of this transaction, RG Development sold the land that had been earmarked for the Río Grande Village project to two entities, Portrio Corporation and MDY Corporation. These

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entities were sister corporations: FV and three of his offspring, including JoséValcarce, were the shareholders of each.

To assist in developing the project, Portrio and MDY retained specialists to prepare plans, obtain permits, and manage construction. In this regard, they contracted with Diseñadores Asociados, Corp., whose president, Carlos Iván de León, hired Heriberto Figueroa-Marrero (Figueroa) to work on the plans for Río Grande Village. Portrio, MDY, and their agents ultimately used the Hevia Plans for the development of two residential complexes on the Río Grande Village site.

During the period between RHA's death and the Trust's sale of the stock, some communications took place among RHA's heirs, on the one hand, and JoséValcarce and De León, on the other hand. Between February and June of 2003, De León requested permission from Raúl Hevia-Macía to use the Hevia Plans. On June 17, Raúl signed a document granting De León authority to make use of plans prepared by RHA for any commercial or business purpose. In October, however, Roberto Hevia-Macía wrote separate letters to De León and JoséValcarce, in which he stated that he owned the architectural plans being used in the construction of certain residential projects. In the same time frame, he wrote a letter making similar claims to the Administration of Regulations and Permits of Puerto Rico.

Later that month, Raúl sent a letter to De León in which he referred to his brother's withdrawal of permission to use the plans and stated that such permission would pertain only to projects authorized by the Estate. Raúl's earlier letter had been sent without that imprimatur.

On February 20, 2004, the plaintiffs filed three separate actions in the Puerto Rico Superior Court against the three companies that RHA and FV formed and some of the instant defendants. They alleged that these companies owed RHA money for loans extended and services rendered. There is no information in the record as to the outcome of these three cases.

We fast-forward to March 30, 2007, when the plaintiffs submitted a copyright application for the Hevia Plans. See 17 U.S.C. § 409. In their application, they claimed that the Hevia Plans were created by RHA in 2001, as an original work.

Two other facts are worth noting. First, the plaintiffs acknowledge that the plans were intended by their creator for the construction of Río Grande Village. Second, it is undisputed that the plans, with De León's modifications, were devoted to construction at the location that had been intended all along as the site of Río Grande Village.


On May 1, 2007, the plaintiffs commenced this federal court suit, alleging copyright infringement. 17 U.S.C. § 501. In their second amended complaint, filed on July 18, 2007, they named as defendants (excluding persons and firms either not served or voluntarily dismissed): FV, his wife, their conjugal partnership, Portrio, MDY, JoséValcarce, his wife, their conjugal partnership, Figueroa, his wife, and their conjugal partnership. The defendants answered and counterclaimed for damages, alleging that the plaintiffs' action was both frivolous and maliciously prosecuted.

In due season, the plaintiffs and defendants filed cross-motions for summary judgment with respect to the copyright claim. The district court denied the plaintiffs' motion and granted the motions of some defendants. Estate of Hevia-Acosta v. Portrio Corp., No. 07-1363, slip op. at 27 (D.P.R. July 29, 2008). In its rescript, the

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court opined that the plaintiffs' claim lacked...

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