Cmi Capital Market v. Gonzalez-Toro

• Decision Date: 18 March 2008
• Docket Number: No. 06-2623.,06-2623.
• Citation: 520 F.3d 58
• Parties: CMI CAPITAL MARKET INVESTMENT, LLC; Wilmington Trust Company, as Trustee of the PR Tax-Exempt Lease Certificate Trust; Richard J. Schmeelk; William B. Finnerman; Jira Associates, LP, Plaintiffs, Appellees, Strong Capital Management, Inc.; Lehigh Municipal Leasing, Inc., Plaintiffs, v. Marylin GONZÁLEZ-TORO; Conjugal Partnership Aguirre-González, Defendants, Appellants, AA Public Finance Co., Inc.; Cross-Border Leasing Co., Inc.; Limited Funding Services, Inc.; Alvin F. Aguirre, in his Individual and Representative Capacities; John Doe, 03cv1770; Advance Office Electronics Center, Inc. and Royal International Electronics and Furniture, Inc.; Inmobiliaria AA, Inc.; A-Z Insurance Co., Defendants.
• Court: U.S. Court of Appeals — First Circuit

520 F.3d 58

CMI CAPITAL MARKET INVESTMENT, LLC; Wilmington Trust Company, as Trustee of the PR Tax-Exempt Lease Certificate Trust; Richard J. Schmeelk; William B. Finnerman; Jira Associates, LP, Plaintiffs, Appellees, Strong Capital Management, Inc.; Lehigh Municipal Leasing, Inc., Plaintiffs, v. Marylin GONZÁLEZ-TORO; Conjugal Partnership Aguirre-González, Defendants, Appellants, AA Public Finance Co., Inc.; Cross-Border Leasing Co., Inc.; Limited Funding Services, Inc.; Alvin F. Aguirre, in his Individual and Representative Capacities; John Doe, 03cv1770; Advance Office Electronics Center, Inc. and Royal International Electronics and Furniture, Inc.; Inmobiliaria AA, Inc.; A-Z Insurance Co., Defendants.

No. 06-2623.

United States Court of Appeals, First Circuit.

Heard November 6, 2007.

Decided March 18, 2008.

Rubén T. Nigaglioni, with whom Nigaglioni & Ferraiuoli Law Offices, P.S.C. was on brief, for appellants.

Manuel A. Pietrantoni, with whom Casellas Alcover & Burgos, P.S.C. was on brief, for appellees.

Before LIPEZ and HOWARD, Circuit Judges, and SMITH,^* District Judge.

HOWARD, Circuit Judge.

In this tort and breach of contract suit, Marilyn González-Toro ("González") and the Conjugal Partnership Aguirre-González (together, "appellants") failed to challenge plaintiffs' statement of material facts in support of a motion for summary judgment. Because the appellants did not counter the statement of material facts, the district court deemed the facts admitted, granted summary judgment, and imposed joint and several liability on the appellants for fraudulent acts committed by Alvin Aguirre-González ("Aguirre") and several corporations. We approve of the district court's decision to deem the uncontested facts admitted under Local Rule 56(e), and against that backdrop we affirm.

1. Facts

On review of a motion for summary judgment, we take the facts in the light most favorable to the non-moving party, in this case the appellants. Cash v. Cycle Craft Co., 508 F.3d 680, 682 (1st Cir.2007). We likewise draw whatever reasonable inferences favor the non-moving party. Id. In this case, the familiar standard is qualified somewhat because the district court deemed admitted the facts contained in the movant's statement of material facts. We analyze that decision below, and as we find it within the district court's discretion we will not upset it here. Consequently, we review the facts as set out in the statement of material facts accompanying the summary judgment motion. To the extent that other facts might cast doubt on them, those other facts are disregarded. This is because, on appeal from summary judgment, we consider the same record that was before the district court. Torres-Rosado v. Rotger-Sabat, 335 F.3d 1, 5 (1st Cir.2003).

The plaintiffs are various companies, trustees, and individuals who filed suit against Aguirre, González, their conjugal partnership, and several corporations controlled by Aguirre. The suit alleged fraud, breach of contract, and various tortious violations of the Puerto Rico civil code. González and Aguirre were married throughout conduct complained of and when the complaint was filed — the pair divorced only after the plaintiffs filed suit. Their conjugal legal partnership has never been settled. According to the complaint, Aguirre and other defendants committed torts regarding leases they held with various municipal and government entities in Puerto Rico. Some examples provide enough of the flavor of the complaint. The complaint alleged that Aguirre had assigned to more than one party, for value, the right to receive the same payments from some leases. And Aguirre allegedly concealed that some leases were in default and would likely remain in default, thereby selling the right to receive payments that would never come. Aguirre also allegedly misrepresented the amounts due under some leases, leading purchasers to pay more than they could ever receive.

González was a director, officer, incorporator, or resident agent for all of the defendant corporations. She signed checks on their behalf and drew a monthly salary from one. After the divorce, González continued to derive all her support from her husband, taking cash advances on a credit card he paid and receiving wire transfers totaling hundreds of thousands of dollars from corporations he controlled. She understood this money to be an advance on the settlement of their conjugal legal partnership.

Aguirre never answered the complaint; he had decamped to the Dominican Republic or perhaps Panama.¹ Neither did the defendant corporations answer. González answered on her own behalf and for the conjugal legal partnership.

The district court issued an attachment order against those defendants who had not answered the complaint. The appellants were directed to show cause why the order should not apply to them, and they did so to the district court's satisfaction. The district court declared Aguirre and the defendant corporations (the "other defendants") in default and issued partial judgment against them.

The plaintiffs moved to expand the scope of the attachment order so that it would apply to the appellants. González testified at a hearing on the motion and was cross-examined by her own counsel. On the basis of that hearing and evidence received into the record, the district court expanded the attachment order as requested.

The plaintiffs then moved for summary judgment against the appellants, citing the facts adduced at the attachment hearing. The plaintiffs, in conformance with Local Rule 56(b), submitted a statement of material facts to support their motion for summary judgment. The appellants submitted an opposition to the summary judgment motion, but failed to include an opposing statement of material facts as required by Local Rule 56(c). The district court noted the procedural failure, deemed the facts in the plaintiffs' statement to be admitted by the appellants, and on the basis of those facts granted summary judgment against the appellants.

2. Discussion

The appellants claimed in their opposition to summary judgment, and claim again on appeal, that there is a genuine dispute about a material fact. But given their failure to challenge the plaintiffs' facts, in reality their argument is that the plaintiffs have failed to prove that they are entitled to judgment as a matter of law. Neither formulation of the argument avails.

a. The Anti-Ferret Rule

District of Puerto Rico Local Rule 56(c) is clear about the obligation of a party opposing summary judgment:

A party opposing a motion for summary judgment shall submit with its opposition a separate, short, and concise statement of material facts. The opposing statement shall admit, deny or qualify the facts by reference to each numbered paragraph of the moving party's statement of material facts and unless a fact is admitted, shall support each denial or qualification by a record citation as required by this rule.

Local Rule 56(c). Rule 56(e) sets forth in mandatory terms the result of failure to follow Rule 56(c): "Facts contained in a supporting or opposing statement of material facts, if supported by record citations as required by this rule, shall be deemed admitted unless properly controverted." Local Rule 56(e) (emphasis added).

The purpose of this rule is to relieve the district court of any responsibility to ferret through the record to discern whether any material fact is genuinely in dispute.² We have upheld the application of the rule. Mariani-Colon v. Dep't of Homeland Sec., 511 F.3d 216, 219 (1st Cir.2007). We review the "deeming order" for an abuse of discretion. Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 7 (1st Cir.2007).

Here, the appellants failed to submit a separate statement of material facts. Nor did they anywhere in their opposition undertake to "admit, deny or qualify the facts by reference to each numbered paragraph of the moving party's statement of material facts." The appellants did include five facts in their opposition to the motion, but those facts are not explicitly directed at qualifying or contradicting specific facts in the plaintiffs' statement, nor are they presented in an "opposing statement" "separate" from the opposition itself.³ The language of the rule is plain, and the appellants' conduct obviously falls within its scope. The district court therefore was within its discretion to deem the facts in the statement of material facts admitted.

When summary judgment is granted after a deeming order, we are bound by the order as well, provided it was not an abuse of the district court's discretion. If it were otherwise, then the task of sifting through the record for genuine issues of material fact would merely have been transferred from the district court, at summary judgment, to the appellate court, on appeal of that summary judgment. The anti-ferret rule would thus be rendered toothless. The appellants do not contest the district court's deeming order. Nor do they seek to controvert any of the facts in plaintiffs' statement. Rather, they claim that the facts therein and in the remainder of the record are insufficient as a matter of law to hold them liable for Aguirre's actions. Although they couch the issue in terms of genuine issues of material fact, their real arguments are these: first, that the conjugal legal partnership should not have liability imposed on it because there is insufficient evidence in the record that it received the benefit of Aguirre's actions; and second, that the plaintiffs have failed to introduce evidence establishing that González is liable under Puerto Rico law for her husband's commission of these torts. We examine each in turn.

b. The Conjugal Legal Partnership

Under Puerto Rico law, the conjugal legal partnership can be held responsible for torts committed by one spouse as long as the action that gave rise to the tort was for the benefit of the conjugal legal partnership. "The generally...