Future Dev. Of Pr v. Estado Libre Asociado De Pr, No. CIV. 92-2534(SEC).

• Decision Date: 26 June 2003
• Docket Number: No. CIV. 92-2534(SEC).
• Citation: 276 F.Supp.2d 228
• Parties: FUTURA DEVELOPMENT OF PUERTO RICO, INC., formerly M.D. Construction Company, Inc., Plaintiff, v. ESTADO LIBRE ASOCIADO DE PUERTO RICO, et al., Defendant.
• Court: U.S. District Court — District of Puerto Rico

276 F.Supp.2d 228

FUTURA DEVELOPMENT OF PUERTO RICO, INC., formerly M.D. Construction Company, Inc., Plaintiff, v. ESTADO LIBRE ASOCIADO DE PUERTO RICO, et al., Defendant.

No. CIV. 92-2534(SEC).

United States District Court, D. Puerto Rico.

June 26, 2003.

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Harry E. Woods, Esq., Woods & Woods, San Juan, for Plaintiffs.

Benjamin Acosta-González, Esq., Old San Juan, Carlos E. López-López, Esq., Llovet-Zurinaga & Lopez, P.S.C., Mayra Maldonado-Colón, Esq., John F. Nevarez, Esq., Ivonne Palerm-Cruz, Esq., Commonwealth Department of Justice, Federal Litigation Division, San Juan, for Defendants.

OPINION AND ORDER

CASELLAS, District Judge.

The Saga Continues... Pending before the Court is Defendants Hernandez Colon, Rivera Cruz and Feliciano Oliveras' Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted (Docket # 205). Plaintiff timely filed its opposition to Defendants' motion (Docket # 216). On October 28, 2002, Magistrate Judge Justo Arenas issued a Report and Recommendation regarding Defendants' motion (Docket # 223). Magistrate Arenas recommended that Defendants' motion to dismiss be granted as to Plaintiff's fifth and sixth causes of action and denied as to the second, third and seventh causes of action. Both parties objected to the Magistrate's Report and Recommendation (Docket ## 225 and 226) and, although Plaintiff has filed a motion alleging that Defendants' objections were not filed in a timely fashion (Docket # 227), due to the complexity and magnitude of this case the Court will allow said objections. However, the Court would like to point out that many, if not all, of the objections submitted by Defendants allege that the Magistrate Judge issued a report and recommendation that is inconsistent with his previous one and that the previous judgment issued by this Court dismissed Plaintiff's claims against the individual Co-defendants. But, Defendants fail to comprehend that the previous report and recommendation was issued without the benefit of examining the amended verified compliant, and that the previous judgment dismissing the claims against the individual Co-defendants was reversed by the Court of Appeals. Therefore, after carefully reviewing the Magistrate Judge's Report and Recommendation, and taking into consideration the parties' objections, we conclude that the Magistrate's assessment is accurate and, thus, hereby APPROVE and ADOPT it as our own. Therefore, for the reasons set forth herein, Defendants' motion to dismiss will be GRANTED as to Plaintiff's fifth and sixth causes of action and DENIED as to the second, third and seventh causes of action.

Factual Background

In 1988, M.D. Construction Company, Inc., the predecessor of plaintiff Futura Development of Puerto Rico, Inc. (hereinafter "Futura"), obtained a verdict in its favor against the now insolvent Compañía de Desarrollo Cooperativo (hereinafter "CDC") in the amount of $12,266,000.00 (hereinafter "MD judgment"). See U.S.I. Prop. Corp. v. M.D. Constr. Co., 860 F.2d 1 (1st Cir.1988), cert denied, 490 U.S. 1065, 109 S.Ct. 2064, 104 L.Ed.2d 629 (1989). Unable to collect the judgment, Plaintiff filed a complaint on October 28, 1992 against defendant Estado Libre Asociado de Puerto Rico (hereinafter "ELA"), and various government officials, including former Governor Rafael Hernández Colón, former Secretary of Justice Héctor Rivera Cruz, and Jesús I. Feliciano Oliveras. The complaint alleged in its first count that the Commonwealth of Puerto Rico was the "alter ego" of CDC and as such was responsible for the judgment. Counts two through five alleged federal and state claims against the individual defendants based on the Equal Protection and Due Process Clauses of the United States Constitution, the Civil Rights Act codified in 42 U.S.C. § 1983, 1985(3), and 1988, as well as a claim for tortious interference with a business relationship under Puerto Rico law.

Procedural Background

Plaintiff's original complaint was dismissed without prejudice for failure to state a claim upon which relief could be granted on all but the first count, namely the "alter ego" claim. Afterwards, the court allowed Plaintiff to file an amended complaint in order to cure the defects that caused the original complaint to be dismissed. On February 13, 1996, Plaintiff filed a "Verified Amended Complaint," in which among other things, Plaintiff added two additional causes of action against the individual Defendants. One was based on the Contracts Clause of the United States Constitution, U.S. Const. art. I, § 10, and the other one was based on state tort law under article 1802 of the Puerto Rico Civil Code, 31 P.R. Laws Ann. § 5141.

Subsequently, Plaintiff moved for partial summary judgment on the first count, the "alter ego" claim. The court granted said motion on March 18, 1997. Futura Dev. of Puerto Rico. Inc. v. Estado Libre Asociado de Puerto Rico, 962 F.Supp. 248 (D.P.R.1997), rev'd in part. vacated in part, 144 F.3d 7 (1st Cir.), cert. denied, 525 U.S. 930, 119 S.Ct. 338, 142 L.Ed.2d 278 (1998). In the same Opinion and Order, the Court sua sponte dismissed Plaintiff's second through seventh causes of action holding that like the original, the amended complaint failed to draw a nexus between the individual Defendants and the alleged governmental scheme to preclude payment of the judgment in Plaintiff's favor. Futura, 962 F.Supp. at 258. Both parties cross-appealed.

The Court of Appeals for the First Circuit vacated the district court's Opinion granting partial summary judgment to Plaintiff and dismissed the "alter ego" claim on jurisdictional grounds. Futura Dev. of Puerto Rico. Inc. v. Estado Libre Asociado de Puerto Rico, 144 F.3d at 9. The Court of Appeals also reversed the district court's sua sponte dismissal of counts two through seven of the amended complaint holding that the Court erred in not providing the parties "with notice and an opportunity to respond." Futura, 144 F.3d at 14. Thereafter, the case was remanded to this Court for further proceedings.

The case is now before the court on Defendants Hernández Colón, Rivera Cruz, and Feliciano Oliveras' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.

Standard of Review

In assessing whether dismissal for failure to state a claim is appropriate, "the trial court, must accept as true the well-pleaded factual allegations of the complaint, draw all reasonable inferences therefrom in the plaintiff's favor, and determine whether the complaint, so read, limns facts sufficient to justify recovery on any cognizable theory." LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507, 508 (1st Cir.1998) (citations omitted). "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), quoted in Davis v. Monroe County Bd. of Education, 526 U.S. 629, 119 S.Ct. 1661, 1676, 143 L.Ed.2d 839 (1999). See also Correa-Martínez v. Arrillaga-Beléndez, 903 F.2d 49, 52 (1st Cir.1990) (dismissal for failure to state a claim is warranted "only if it clearly appears, according to the facts alleged, that the plaintiff cannot recover on any viable theory").

But "[a]lthough this standard is diaphanous, it is not a virtual mirage." Berner v. Delahanty, 129 F.3d 20, 25 (1st Cir.1997) citing Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988). In order to survive a motion to dismiss, "a complaint must set forth `factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory.'" Id. In judging the sufficiency of a complaint, courts must "differentiate between well-pleaded facts, on the one hand, and `bald assertions, unsupportable conclusions, periphrastic circumlocution, and the like,' on the other hand; the former must be credited, but the latter can safely be ignored." LaChapelle, 142 F.3d at 508 (quoting Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996)). See also Rogan v. Menino, 175 F.3d 75, 77 (1st Cir.1999). Courts, moreover, "will not accept a complainant's unsupported conclusions or interpretations of law." Washington Legal Foundation v. Massachusetts Bar Foundation, 993 F.2d 962, 971 (1st Cir.1993). Yet courts must bear in mind that apart from allegations of civil rights or RICO violations, fraud, mistake or standing "it is enough for a plaintiff to sketch an actionable claim by means of a generalized statement of facts from which the defendant will be able to frame a responsive pleading." Langadinos v. American Airlines, Inc., 199 F.3d 68, 73 (1st Cir.2000) quoting Garita Hotel Ltd. Partnership v. Ponce Fed. Bank, 958 F.2d 15, 17 (1st Cir.1992) (internal quotation marks omitted).

Furthermore, in ruling upon a motion to dismiss the court must ordinarily ignore matters outside the pleadings. See, e.g., Maldonado v. Domínguez, 137 F.3d 1, 6 (1st Cir.1998) (in order to avoid conversion of a Rule 12(b)(6) motion into a Rule 56 motion, district court must ignore matters outside the pleadings); Rodríguez v. Fullerton Tires Corp., 115 F.3d 81, 83 (1st Cir.1997); Vega-Rodríguez v. Puerto Rico Telephone Co., 110 F.3d 174, 177 (1st Cir. 1997). Thus, in light of the aforementioned standard, we will proceed to analyze each cause of action alleged in Plaintiff's amended complaint individually to determine if sufficient facts have been pled to survive Defendants' motion to dismiss.

Applicable Law and Analysis

The court is presented with the question of whether the amended verified complaint filed by Futura in the instant case, cured the defects that caused it to be originally dismissed. Defendants' arguments in support of...