Dopp v. HTP Corp., Civ. No. 88-1420 (JP)

• Decision Date: 09 September 1993
• Docket Number: 92-2825 (JP).,Civ. No. 88-1420 (JP)
• Citation: 831 F. Supp. 939
• Court: U.S. District Court — District of Puerto Rico
• Parties: Paul S. DOPP, Plaintiff, v. HTP CORPORATION; New Horizons, Inc.; Dorado Rockwood Corp.; Island Resorts Holdings, S.A.; Jay A. Pritzker; Richard L. Schulze, Defendants. Jay A. PRITZKER, Plaintiff, v. Bob YARI; Paul S. Yari; Paul S. Dopp; Baird, Patrick & Company, Inc.; Lincoln Realty, Inc., Defendants.

831 F. Supp. 939

Paul S. DOPP, Plaintiff, v. HTP CORPORATION; New Horizons, Inc.; Dorado Rockwood Corp.; Island Resorts Holdings, S.A.; Jay A. Pritzker; Richard L. Schulze, Defendants.

Jay A. PRITZKER, Plaintiff, v. Bob YARI; Paul S. Yari; Paul S. Dopp; Baird, Patrick & Company, Inc.; Lincoln Realty, Inc., Defendants.

Civ. Nos. 88-1420 (JP), 92-2825 (JP).

United States District Court, D. Puerto Rico.

September 9, 1993.

Rubén T. Nigaglioni, Ledesma, Palou & Miranda, Hato Rey, P.R., for plaintiff in Civ. No. 88-1420(JP).

Salvador Antonetti Zequeira, Fiddler, González & Rodríguez, Héctor Meléndez Cano, Trías, Acevedo & Otero, San Juan, PR, for defendant in Civ. No. 88-1420(JP).

Salvador Antonetti, Zequeira, Fiddler, González & Rodríguez, San Juan, PR, for plaintiff in Civ. No. 92-2825(JP).

Rubén T. Nigaglioni, Ledesma, Palou & Miranda, Jorge Bermúdez Torregrosa, Cuevas Kuinlam & Bermúdez, Roberto Boneta, Muñoz, Boneta, González, Arbona, Benítez & Peral, Hato Rey, PR, for defendant in Civ. No. 92-2825(JP).

OPINION & ORDER

PIERAS, District Judge.

The Court has before it several waves of briefs in these two related actions which address a host of issues — but this litigation is no stranger to difficult and protracted legal battles. In reviewing the appeals that arose out of its first jury trial, Judge Selya, writing for a panel of the First Circuit, characterized the task they faced as an "odyssey." Dopp v. HTP Corp., 947 F.2d 506, 509 (1st Cir.1991). Since that time, the litigation has become even more complicated, primarily because of the filing of the second action, which addresses the propriety and effect of a series of sales of financial interests in the plaintiff's potential recovery. As a result, the Court now finds itself poised like Homer's mariner at the mouth of the straits guarded by Scylla and Charybdis, hoping to emerge with considerably less damage to its crew.¹

I. Background

On May 9, 1984, Code Hospitality, a corporation wholly owned by Paul S. Dopp, entered into a Purchase Agreement to acquire all the stock or assets of a corporation called the Dorado Beach Hotel Corporation (hereinafter "DBHC"). When this Agreement was signed, DBHC owned approximately 1,000 acres of ocean front property on the north coast of Puerto Rico, in Dorado, including two resort hotels — the Dorado Beach and the Cerromar — and four golf courses. The Purchase Agreement provided Code with the option to acquire all the stock or assets of DBHC for $40.5 million by December 3, 1984. To secure performance under the Purchase Agreement, Dopp pledged a $2 million letter of credit.

In November 1984, after fruitless discussions with a host of financial institutions and prospective investors, Dopp approached Jay Pritzker, the chairman of Hyatt Corporation. By telephone, they entered into an Oral Contract pursuant to which Pritzker agreed to provide all the funds needed to exercise Code's obligations under the Purchase Agreement. In exchange, Pritzker was to receive an 80 percent interest in a corporation — later called HTP Corporation — that would be formed to acquire DBHC's stock. In addition, the Oral Contract provided that a Hyatt affiliate would be awarded a long-term contract to manage the hotels. Dopp and a partner, in turn, were to receive the remaining 20 percent of the shares of HTP and would be repaid all monies that they had expended in anticipation of the closing. Several days later, and on the eve of the date the option to purchase the Hotels was to expire, Dopp, Pritzker (represented by Richard Schulze) and Dopp's partner met to draft the necessary agreements to implement the Oral Contract. At this time, as determined by a jury, Pritzker breached the Oral Contract by conditioning his funding of the deal, and the execution of the same, upon the inclusion of a clause which granted him the option to buy out Dopp and his partner for $1 million dollars at any time during the next 10 years.² The jury found that these actions by Pritzker constituted serious deceit or duress.

Duress, which is known in the Civil Code as intimidation, exists when one of the contracting parties is inspired with a reasonable and well-grounded fear of suffering an imminent and serious injury to his property. 31 L.P.R.A. § 3406. Deceit, which is roughly translated as "dolo" in the Spanish language, may be found when by words or insidious machinations on the part of one of the contracting parties the other is induced to execute a contract which he would not otherwise have made. 31 L.P.R.A. § 3408. These doctrines have their counterparts in the common law. For example, under the common law "deceit" is defined as "a fraudulent and cheating misrepresentation, artifice, or device used by one or more persons to deceive and trick another, who is ignorant of the true facts, to the prejudice and damage of the party imposed upon." Black's Law Dictionary (Rev'd 4th ed. 1968) at 493. The similarity in the causes of action is commensurate with their common roots in Roman law. Both require a showing of an act or omission which is something more than simple negligence but also something less than fraud. This cause of action lies right between a tort and a criminal fraud. In finding that Pritzker had committed deceit ("dolo") under the facts of this case, the jury in effect determined that Pritzker had abused his superior economic position to procure illegally Dopp's concessions regarding the buyout option; Pritzker also drove Dopp to a point of no return that left him no other alternative but to accept Pritzker's proposition in breach of his previous oral promise. In short, that he had breached accepted standards of business ethics codified into the law of the land.³

The Court entered judgment based on the jury's verdict and a later determination that Dopp was entitled to an order annulling the buyout option. Ten appeals were filed. The First Circuit remanded the case, Civil Case No. 88-1420 (JP) (hereinafter "the Main Case"), with its liability verdict intact but stripped of its remedies.⁴ The circuit court directed that a second jury trial be held to determine the amount of Dopp's damages under three alternative legal theories and that he then be afforded the opportunity to make an election from among these remedies. The second trial commenced on March 8, 1993, with the jury rendering its verdict on March 27, 1993.⁵ After the trial, Dopp elected as his remedy the resolution of the Oral Contract. The Court now has before it post-trial motions filed by both sides attacking various aspects of the jury's verdict. In addition, the Court has before it memoranda of law filed by both sides regarding Dopp's election of remedies.

Meanwhile, swirling below this rocky terrain is Civil Case No. 92-2825 (JP) ("the Litigated Credits Case"), in which Pritzker has sought to extinguish some or all of the recovery to be obtained by Dopp on grounds that Dopp sold stakes in his recovery in the Main Case which may be redeemed by Pritzker under Article 1425 of the Puerto Rico Civil Code. The Court entered partial summary judgment in the Litigated Credits Case on April 19, 1993, declaring that Article 1425 applies to the agreements through which Dopp sold stakes in his recovery. The Court now has before it several motions attacking the Court's entry of partial summary judgment. Also before the Court are issues addressed during a Non-Jury Trial held on June 10, 1993, to determine the rights of the various parties pursuant to Article 1425.

II. Pritzker's Motion to Consolidate

Before sailing through these choppy waters, the Court must first address briefly a Motion to Consolidate filed by Pritzker in the Main Case on April 16, 1993 (docket No. 545). For the reasons set forth below, the motion is hereby GRANTED.

Rule 42(a) of the Federal Rules of Civil Procedure provides a trial court with broad discretion to order actions consolidated where they involve a common question of law or fact. Although these two cases are very different, involving distinct questions of law and several different parties, most of the difficult issues presented by both cases have been resolved. All that remains is to determine the amount of the Dopp's recovery in the Main Case and the extent of Pritzker's right to extinguish portions of that recovery through the Litigated Credits Case. These tasks are completed in this Opinion & Order. The two cases are intimately related. The Court finds that the interests of judicial economy weigh in favor of consolidation.

III. Pritzker's Motion for Relief From Judgment Pursuant to Rule 60(b) of the Federal Rules of Civil Procedure (Docket No. 537)

Pritzker seeks relief from the Judgment entered in the Main Case on March 29, 1993 (docket No. 514), on two grounds: first, that a mistake was made in the jury's verdict regarding the monetary equivalent of resolution which has the effect of providing a double recovery to Dopp; and second, that the Judgment as a whole cannot be deemed "final" because of issues which remain open in both the Main Case and the Litigated Credits Case. The motion is hereby GRANTED in part.

The first error alleged by Pritzker is rendered moot by the Court's holding, see infra at Part VI, that the plaintiff is not entitled to resolution as a matter of law. As to the second error alleged, the defendant is correct that for many reasons the Judgment entered by the Court on March 29 is a partial judgment which does not conclude the proceedings in this case. The Court therefore GRANTS the defendant's request for relief to clarify that the Judgment entered was not, and was never intended to be, final.

IV. Pritzker's Motion for Judgment Notwithstanding the Verdict or in the Alternative for a New Trial (Docket No. 538)

In this motion, Pritzker offers no fewer than 14 errors which he believes were made during the second trial in the Main Case. Several of these alleged errors overlap, however, so that in truth he advances only seven grounds...