Futura Devel. Puerto Rico v. Estado Libre Asociado

• Decision Date: 18 March 1997
• Docket Number: Civil No. 92-2534(SEC).
• Parties: FUTURA DEVELOPMENT OF PUERTO RICO, INC., Plaintiff, v. ESTADO LIBRE ASOCIADO DE PUERTO RICO, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

962 F.Supp. 248

FUTURA DEVELOPMENT OF PUERTO RICO, INC., Plaintiff, v. ESTADO LIBRE ASOCIADO DE PUERTO RICO, et al., Defendants.

Civil No. 92-2534(SEC).

United States District Court, D. Puerto Rico.

March 18, 1997.

Harry E. Woods, Woods & Woods, Hato Rey, PR, for plaintiff.

Mayra Maldonado-Colon, Dept. of Justice, Federal Litigation Div., San Juan, PR, Carlos Del-Valle-Cruz, San Juan, PR, for Estado Libre Asociado de Puerto Rico, Administracion de Fomento Cooperativo, Compania de Desarrollo Cooperativo, Rafael Hernandez-Colon, Lila Mayoral-de-Hernandez, Conj. Part. Hernandez-Mayoral, Hector Rivera-Cruz, Sonia I. Rosario, Conjugal Partnership Rivera-Rosario, Jesus I. Feliciano-Oliveras, Jose M. Berrocal.

Mayra Maldonado-Colon, Dept. of Justice, Federal Litigation Div., San Juan, PR, for "Janet" Feliciano, Conjugal Partnership Feliciano-Feliciano, "Judith" Berrocal, Conjugal Partnership Berrocal-Berrocal.

OPINION AND ORDER

CASELLAS, District Judge.

This case is before the Court on plaintiff's request for reconsideration of our denial of a motion for partial summary judgment (Dockets # 18,99). Plaintiff contends that the Commonwealth of Puerto Rico ("the Commonwealth") should be held accountable for the payment of a prior judgment by this Court, which declared the Cooperative Development Company ("CDC") liable to plaintiffs in the amount of $12.3 million, plus interest, and which CDC has been unable to pay because of insufficient assets.¹

Upon careful examination of the parties' arguments as well as the relevant facts and the applicable law, this Court finds that plaintiff's motion should be GRANTED. In doing so, we heed Justice Burger's dissenting opinion in Complete Auto Transit. Inc. v. Reis, 451 U.S. 401, 101 S.Ct. 1836, 68 L.Ed.2d 248 (1981), in which he stated that "we have moved away.from `The King can do no wrong.' Th[e] principle of individual accountability is fundamental if the structure of an organized society is not to be eroded to anarchy and impotence, and it remains essential in civil as well as criminal justice." Id. at 429, 101 S.Ct. at 1851.

Jurisdiction

Federal Courts have jurisdiction to entertain supplemental actions "in aid of and to effectuate [their] prior decree[s] to the end either that [they] may be carried fully into execution or that [they] may be given fuller effect ..." Dugas v. American Surety Co. of New York, 300 U.S. 414, 428, 57 S.Ct. 515, 521, 81 L.Ed. 720 (1937). Such bills are "ancillary and dependent, and therefore the jurisdiction follows that of the original suit, regardless of the citizenship of the parties to the bill[s] or the amount in controversy." Id. See also Crosby v. Mills. 413 F.2d 1273 (10th Cir.1969). Were that not the case, "[t]he judicial power would be incomplete, and entirely inadequate to the purposes for which it was intended." Sandlin v. Corporate Interiors. Inc., 972 F.2d 1212, 1216 (10th Cir. 1992) (referring to Bank of the United States v. Halstead, 10 Wheat. 51, 23 U.S. 51, 53, 6 L.Ed. 264 (1825)).

Notwithstanding the forgoing, a party who asserts a post-judgment claim against a non-party which does not arise out of the operative facts that produced the original judgment must demonstrate an independent basis for federal jurisdiction. Sandlin, 972 F.2d at 1216. "When post-judgment proceedings seek to hold non-parties liable for a judgment on a theory that requires proof on facts and theories significantly different from those underlying the judgment, an independent basis for federal jurisdiction must exist." Id. at 1217.

Given that plaintiff in the above-captioned matter asserts that the CDC — the judgment debtor — is the alter ego of the Commonwealth, who was not a named party to the previous action, this Court's jurisdiction over the instant action is contingent upon our determination that CDC is the alter ego of the Commonwealth, and that we are therefore, dealing with one and the same defendant. For the reasons stated below, this Court holds that CDC is an alter ego of the Commonwealth and that therefore, the latter was a de facto party to the original action. Supplemental jurisdiction does exist.

Procedural Background

This is the aftermath of the well publicized controversy over the "Ciudad Cristiana" housing project, which culminated in a trial that lasted five and a half weeks and resulted in a $12.3 million verdict for plaintiff, U.S.I. Properties Corporation, and co-defendant, MD Construction Company.² See U.S.I. Properties Corp. v. M.D. Construction Co., 83-2647(JAF). Defendant CDC appealed from that judgment, which was affirmed in U.S.I. Properties Corp. v. M.D. Construction Company. Inc., 860 F.2d 1 (1st Cir.1988). The United States Supreme Court denied CDC's petition for certiorari. See Compania de Desarrollo Cooperativo v. U.S.I. Properties Corp., 490 U.S. 1065, 109 S.Ct. 2064, 104 L.Ed.2d 629 (1989).

Ten long years have already gone by since the original judgment was entered. In this, the latest chapter of the Ciudad Cristiana saga, Futura claims that it has been unable to collect any money at all because of CDC's insolvency. According to plaintiff, it is the Commonwealth who should be held accountable for the judgment because (a) the Cooperative Development Company ("CDC"), technically a public corporation under Puerto Rico law, is actually the alter ego of the Cooperative Development Administration ("AFC"), an agency which is an integral part of the Commonwealth government; (b) through its conduct before, during and especially after the U.S.I. Properties trial, the Commonwealth demonstrated that it had absolute control over CDC and the entire Ciudad Cristiana litigation, to the point that it milked CDC of all its assets to preclude payment of the judgment; and (c) through such behavior, the Commonwealth voluntarily submitted itself to the jurisdiction of this Court and thus waived its Eleventh Amendment immunity.³ We will analyze plaintiff's contentions in the order in which they have been alleged.

Summary Judgment Standard

As noted by the First Circuit [s]ummary judgment has a special niche in civil litigation. Its "role is `to pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required." Wynne v. Tufts University School of Medicine, 976 F.2d 791, 794 (1st Cir.1992), cert. denied, 507 U.S. 1030, 113 S.Ct. 1845, 123 L.Ed.2d 470 (1993). The device allows courts and litigants to avoid full-blown trials in unwinnable cases, thus conserving the parties' time and money and permitting courts to husband scarce judicial resources.

McCarthy v. Northwest Airlines. Inc., 56 F.3d 313, 315 (1st Cir.1995).

According to Fed.R.Civ.P. 56(c), a summary judgment motion should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving pain, is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See also NASCO, Inc. v. Public Storage, Inc., 29 F.3d 28 (1st Cir.1994). It is not enough to conjure up an alleged factual dispute between the parties; to defeat summary judgment, there must exist a genuine issue of material fact. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

For a dispute to be "genuine," there must be sufficient evidence to permit a reasonable trier of fact to resolve the issue in favor of the non-moving party. U.S. v. One Parcel of Real Property, 960 F.2d 200, 204 (1st Cir. 1992). See also, Boston Athletic Assn. v. Sullivan, 867 F.2d 22, 24 (1st Cir.1989). By like token, "material" means that the fact is one that might affect the outcome of the suit under the governing law. Morris v. Government Development Bank of Puerto Rico, 27 F.3d 746, 748 (1st Cir.1994).

Recent case law has also established that "summary judgment may be appropriate `[e]ven in cases where elusive concepts such as motive or intent are at issue ... if the non-moving party rests merely upon conclusory allegations, improbable inferences and unsupported speculation'." Woods v. Friction Materials, Inc., 30 F.3d 255, 259 (1st Cir.1994) (quoting Medina-Muñoz v. R.J. Reynolds Tobacco, Co., 896 F.2d 5, 8 (1st Cir.1990)).

In determining whether to grant summary judgment, the Court may not, however, weigh the evidence. Casas Office Machines, Inc. v. Mita Copystar America, Inc., 42 F.3d 668 (1st Cir.1994). Summary judgment "admits of no room for credibility determinations, no room for the measured weighing of conflicting evidence such as the trial process entails." Id. at 684 (citing Greenburg v. Puerto Rico Maritime Shipping Authority, 835 F.2d 932, 936 (1st Cir.1987)). Accordingly, if the facts permit more than one reasonable inference, the court on summary judgment may not adopt the inference least favorable to the non-moving party. Casas Office Machines, 42 F.3d at 684.

In his second motion for reconsideration, plaintiff asserts that this Court should consider its summary judgment motion unopposed because defendants never submitted a statement of disputed material facts to counter plaintiff's more than 117 exhibits or its statement of uncontested material facts, even though Magistrate Justo Arenas ordered them to do so on August 8, 1995.⁴

This Court has expressed that a non-moving party's failure to comply with Local Rule 311.12 will result in the admission of the moving party's list of uncontroverted facts.⁵ Tavarez v. Champion Products. Inc., 903 F.Supp. 268, 270 (D.P.R.1995). "Although this omission does not signify an automatic defeat, it launches the non-movant's case down the road towards an easy dismissal." Id. Such is the scenario in the present case.

We further note that Local Rule 311.12 has the force of law. See Fed.R.Civ.P. 83; 12 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 3153 at 224 (1st ed.1973) ("[b]ecause local rules do have...