Federal Deposit Ins. Corp. v. Martinez Almodovar
| Decision Date | 24 August 1987 |
| Docket Number | Civ. No. 80-1551(PG),81-1322(PG). |
| Parties | FEDERAL DEPOSIT INSURANCE CORPORATION, in its corporate capacity, Plaintiff v. Luis MARTINEZ ALMODOVAR, et al, Defendants |
| Court | U.S. District Court — District of Puerto Rico |
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Stanley Feldstein, San Juan, P.R. Frank L. Skillern, Jr., Gen. Counsel, FDIC, Washington, D.C., for plaintiff.
Roberto J. Matos, Hato Rey, P.R., for defendants.
The present action was brought by the Federal Deposit Insurance Corporation in its corporate capacity ("FDIC") seeking to collect certain assets acquired from the receiver of a closed bank. This opinion and order comes at the tail end of an actively litigated dispute that culminated in a seven-day trial.1
The consolidated actions now pending before the Court commenced on July 3, 1980, with the filing by the FDIC of the complaint in case number 80-1551 seeking judgment against Luis Martínez Almodóvar ("Martínez") and his former wife, Isabel Amieiro Ortiz ("Amieiro"), for amounts due and owing on certain notes executed and delivered by Martínez to the former Banco Crédito y Ahorro Ponceño ("the Bank"). Martínez failed to respond to the complaint and partial judgment in default against him was entered on November 17, 1980, in the amount of $350,000.00, plus accrued interest.
On July 17, 1981, the FDIC filed a separate action bearing number 81-1322 against Martínez and Amieiro naming also as defendants the daughter of the latter two, Vilma Martínez Amieiro, her husband, Jorge Sesto, and Inversiones Vilmasor, Inc. ("Vilmasor"), alleging that it had not been able to collect the judgment against Martínez in case number 80-1551 due to certain alleged wrongful acts of the defendants involving the transfer of properties for the purpose of hindering, delaying and defrauding the creditors of Martínez. The complaint was subsequently amended on two occasions to include additional defendants. The defendants so joined were Lumaral Corp. ("Lumaral")2 and the minor children of Vilma Martínez Amieiro and Jorge Sesto named Vilma and Soraya Sesto Martínez.
The second amended complaint, succinctly stated, alleged that as part of a scheme or plan to defeat, hinder or delay the creditors of Martínez, (1) in 1976 while married to one another and while indebted to the Bank, Martínez and Amieiro had transferred all their rights, title and interest in certain parcels of real property to Vilmasor; (2) Vilmasor had subsequently transferred some of said properties to others; (3) the transfer by Vilmasor had been effected for considerations less than the true values of the properties; (4) in furtherance of the same plan, the defendants had caused Lumaral to acquire certain promissory notes, the transfer of which notes was a sham; (5) Vilmasor and Lumaral were operating as the alter ego of the defendants; and (6) as a result of the acts of the defendants, the FDIC had been unable to collect the judgment against Martínez entered in case number 80-1551.
In their answer to the second amended complant, defendants denied all liability and raised the following affirmative defenses: the second amended complaint "fails to state facts upon which a relief could be granted for plaintiff", the FDIC lacks standing to bring this action, the action is time barred, the Bank "waived the present cause of action" and the Bank had charged an usurious commission and breached the Truth-in-Lending Act, the loan on which claim is made was paid thus releasing Amieiro from all liability, and the original obligation was the subject of novation.
Upon timely motion by the FDIC, both cases were subsequently consolidated.3
1. Luis Martínez Almodóvar and Isabel Amieiro Ortriz were married to each other in Puerto Rico on June 26, 1938. They remained married until January 19, 1977, when they were divorced by judgment entered by the Superior Court of Puerto Rico, San Juan Part. (Admitted fact number 1; Exhibit C).4
2. Vilma Martínez Amieiro ("Vilma") is the only child of Martínez and Amieiro and is married to defendant Jorge Sesto ("Sesto"). (Ad. 3-4).
3. Vilma Sesto Martínez and Soraya Sesto Martínez are the minor children of Vilma and Sesto. (Ad. 5).
4. The FDIC is a corporation organized under the laws of the United States of America, to wit: 12 U.S.C. § 1811, and brought the present action in its corporate capacity. (Ad. 6).
5. Banco Crédito y Ahorro Ponceño ("the Bank") was a banking institution organized and existing under the laws of the Commonwealth of Puerto Rico prior to March 31, 1978. (Ad. 7).
6. On April 27, 1967, Martínez requested a $200,000 loan from the Bank, which loan was approved by the Board of Directors of the Bank on May 4, 1967. (Ad. 12-13).
7. In April of 1968 the unpaid balance of the loan was $83,000 and Martínez applied to the Bank for a loan of $200,000, payable on demand. (Ad. 14).
8. On May 23, 1968, the Board of Directors of the Bank approved the loan "with the signature of his Martínez wife." (Ad. 15).
9. On July 3, 1968, Amieiro executed a guaranty for the amount of $200,000. (Ad. 16; Exh. 10).
10. The credit facility established by the parties operated as a line of credit in which the borrowers made payments and obtained additional advances from time to time. (Exh. 10).
11. As of November 12, 1969, Martínez owed the Bank a balance of $138,000 in principal on his $200,000 line of credit after crediting all payments made. (Exh. 11).
12. On April 30, 1970, Martínez applied to the Bank for renewal of the $200,000 line of credit, and the application was approved by the Board of Directors of the Bank on May 14, 1970. (Ad. 17).
13. On July 7, 1970, Martínez applied to the Bank for an additional loan in the amount of $150,000, payable on demand, payment of which would be secured by the pledge of certain shares of capital stock of Banco de Economias, of which Martínez was the holder of record. The application was approved by the Board of Directors of the Bank on July 9, 1970, and this credit facility was operated as a line of credit (Ad. 18; Exh. PPP).
14. Between November 12, 1969, and March 14, 1972, partial disbursements to Martínez under the two lines of credit totalled $380,000, and the amounts advanced were credited to Martínez's personal checking account with the Bank. (Exh. 11).
15. During that same period of time Martínez drew checks against his same personal account in the aggregate amount of $549,373.71, of which amount $379,613.71 were used by Martínez to purchase 7,339 shares of stock of Banco de Economias and shares of stock of another corporate entity named Commonwealth Loan Corp., $55,000 were given as a loan to a corporation of which he was a shareholder, $24,760 to repay personal loans and to pay legal fees related to his personal investment transactions, and $90,000 was given as a loan to two other corporations. (Exhs. 12 to 15, 21; testimony of W. de la Cruz, M. Carlo, L. Nazario, R. Durand).
16. By March 14, 1972, the total of all disbursements made under both lines of credit was $887,000. Of this amount, $537,000 in principal had been repaid, thus leaving an unpaid principal balance of $350,000 as of that date. (Exhs. 12, 13, 14, 21).
17. As of May 9, 1973, the total indebtedness of Martínez and Amieiro on both credit facilities continued to be the principal amount of $350,000. (Exh. 11). After that date, the bank did not make any additional disbursements nor did Martínez and Amieiro make any payments of the principal due and owing on said lines of credit. (Exhs. O, BB, TTT, UUU, VVV, DDDD, testimony of T. Niemczyk). Interest was paid in September 1975. ( number 18 below).
18. On or about September 11, 1975, the Bank issued two credit advices purporting to show two new loans in the amounts of $200,000 and $150,000, respectively, which represented the principal owed by Martínez and Amieiro on the outstanding lines of credit. The amounts in question were credited to Martínez's account with the Bank. On that same date the Bank debited Martínez's account in the amounts of $200,512.35 and $150,384.28. As a result of these transactions the Bank collected the interest accrued to that date on the amounts due. The Bank did not actually disburse any money to Martínez and the principal indebtedness remained the same. (Exhs. 16-20).
19. On the same date of this purported loan transaction, Martínez executed and delivered to the Bank two promissory notes in the amount of $200,000 and $150,000, respectively, payable on demand, with interest at 8½% per annum, payable monthly. Payment of the $150,000 note was secured by the pledge of 10,964 shares of capital stock of Banco de Economias. (Exhs. 8-9).
20. No payments of principal on account on said notes have ever been made by Martínez and Amieiro. (Exhs. TTT, BB, O, UUU, VVV, DDDD, testimony of T. Niemczyk).
21. By 1975, Banco de Economias was submerged in a precarious financial condition due to the losses suffered, its unprofitable operations and its deficit of capital. Martínez, who had been President of Banco de Economias, switched positions with the Chairman of the Board, Jorge Colón Nevárez, urged by supervisory authorities of the institution who suggested the change in an attempt to improve the condition of Banco de Economías. Martínez was fully aware of the situation of Banco de Economías that affected his major asset, the shares of capital stock of Banco de Economías owned by him and which had been pledged to secure payment of his obligation to the Bank. (Testimony of D. Kevane, J. Colón Nevárez, K. Hirschmann, Exh. 22). The examination of Banco de Economías by the examiners of the Secretary of Treasury of Puerto Rico and the FDIC disclosed a deficit in net capital and reserves of approximately $3.8 million at April 25, 1974. By July 7, 1975, the deficit had increased to approximately $22.3 million. (Exh. 22-1)...
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