In re Unanue-Casal
| Decision Date | 03 August 1993 |
| Docket Number | Adv. No. 91-0099.,Bankruptcy No. 90-04490 (SEK),Civ. No. 92-1796 GG |
| Parties | In re Ulpiano UNANUE-CASAL a/k/a Charles Unanue, Debtor. GOYA FOODS, INC.; Goya De Puerto Rico, Inc.; Zolmar Realty Corp.; Inter-americas Advertising; Island Can Corporation; Tradewinds Foods, Inc.; Inter-Americas Advertising Corp.; CPR International, Inc.; CPR International Limited; Condimentos De Puerto Rico, Inc.; Industrial Enterprises, Inc.; Joseph A. Unanue; Frank Unanue, Appellants, v. Ulpiano UNANUE-CASAL, a/k/a Charles Unanue, Debtor, and Gerardo Quiros-Lopez, Chapter 7 Trustee, Respondents. |
| Court | U.S. District Court — District of Puerto Rico |
Michael R. Griffinger, Newark, NJ, Guillermo A. Nigaglioni, Hato Rey, PR, for appellants (Beneficiaries).
Jose Gonzalez-Irizarry, Samuel Cespedes, Arturo Garcia-Sola, Dora Penagaricano, San Juan, PR, for Goya Foods, Inc.
Jan Brody, Roseland, NJ, Antonio Hernandez, William Vidal, San Juan, PR, Alejandro Oliveras, U.S. Trustee's Office, Hato Rey, PR, Gerardo A. Quiros, Trustee, Santurce, PR, for debtor.
The Appellants' petition this court to reverse the bankruptcy court's refusal to lift the automatic stay of proceedings in the New Jersey Superior Court. The Appellee (Debtor) filed a bankruptcy petition under Chapter 7 on August 29, 1990, after litigating for almost three years in the New Jersey Superior Court. In its May 15, 1992, Opinion and Order the bankruptcy court denied relief from stay; it found the Appellant had not presented evidence of "cause" to lift the stay. We hold that the bankruptcy court erred when it found that the Appellant had not presented evidence of "cause", and thus abused its discretion when it denied relief from the stay. We, therefore, reverse the bankruptcy court's order and relief from the stay is granted.
In 1908, an ambitious and young Prudencio Unanue, like Juan el Indiano in the Zarzuela "Los Gavilanes"1, came to this country from Spain with the intention of making himself rich. In this quest he eventually founded and organized the largest manufacturer of Hispanic foods — GOYA. Don Prudencio could not have anticipated the struggle that would ensue for the wealth he created, this conflict set brother against brother and launched a historic series of litigations between them, lasting more than twenty years. After two decades of this legal warfare, with numerous cases filed by them in different jurisdictions, and after an abundance of heavy submissions, all supported by deep pockets on both sides of the controversies, we believe that if left to their natural proclivities the brothers' private war may surpass the record attained by the 100 Years War (actually 116).2 It is through this odyssey of trials that we are introduced into the lives of the Unanue's and their warring sons.
Don Prudencio and his wife, doña Carolina, were married in Puerto Rico on November 4, 1921; don Prudencio was domiciled in New York and doña Carolina was domiciled in San Lorenzo, Puerto Rico. They had four sons: Charles (or Ulpiano, the Debtor, and first born), Joseph, Anthony (deceased) and Frank Unanue. Soon after their marriage, don Prudencio returned to New York where doña Carolina joined him in 1923. By 1929, the Unanue's had moved to New Jersey where they would live and work until 1970.
On November 16, 1970, don Prudencio executed his last will and testament and a revocable inter vivos trust in New York. The trust held don Prudencio's 53 shares of voting stock for the grandchildren, who would receive their share of the corpus at a specified age.
Don Prudencio left for Puerto Rico in November, 1970, as he did habitually to avoid the effect of the winters on his arthritic body. He was never to return to New Jersey again because he suffered a stroke and was beset with a series of maladies, which sapped his vitality, until he died in 1976. Doña Carolina died in 1984, and her sister Ana Maria in 1985.
After don Prudencio's death, the Trustees (Joseph and Frank Unanue) probated, administered and distributed his will. In 1986, the Superior Court in New Jersey approved a First Accounting filed by the trustees, and contested by C. Jeffrey Unanue, one of Charles' sons. At that time, several of the Beneficiaries received their share of the trust, in accordance with the trust's provisions. See Unanue Casal v. Unanue Casal, 132 F.R.D. 146, 148 (D.N.J. 1989).
In 1969, prior to don Prudencio's death, a dispute arose between Charles (Debtor), and his brothers (Appellants). As a result of this confrontation Charles held a press conference in New York to expose and distance himself from an alleged tax evasion scheme his brothers had involved the companies in. Don Prudencio felt betrayed by Charles' actions, which humiliated the family and exposed their enterprises to tax penalties. Don Prudencio subsequently allied himself with his other sons against Charles.
From this time on, Charles has claimed that he was a victim of his brothers' conspiracy against him, but it was later determined from the testimony before Judge Kole of the New Jersey Superior Court that it was Charles' behavior that turned his brothers Joseph and Frank against him.3 This dispute was temporarily settled on June 9, 1972, with the execution of the 1972 Agreement. Under this agreement Charles' voting shares in GOYA and the other affiliated companies were bought back for $4.5 million.
In 1973, Charles claimed the other parties to the Agreement had breached the 1972 Agreement. This embroglio was temporarily resolved by the 1974 Amendment to the 1972 Agreement, signed July 31, 1974. The 1974 Amendment, which included additional parties not in the first Agreement, was aimed at excluding Charles from don Prudencio's will and trust, and effectively exiling Charles from the family enterprises. In turn, Charles secured and accelerated the transfer of $4,300,000. in compensation. He also "promised never to bring any claim or suit ..., contesting or objecting to don Prudencio's will or trust", and not to interfere with the disposition of assets of stock by don Prudencio, his estate, the beneficiaries or his brothers.4 The Amendment also specified that any signatory who loses a suit "concerning any matter" with another signatory has to pay the winner liquidated damages of double costs and attorney's fees.5
In July 1987, eleven years after his father's death, Charles demanded from Joseph and Frank Unanue his share of the estates of don Prudencio, doña Carolina and Ana Maria (Carolina's sister). On August 13, 1987, Joseph and Frank, as trustees of the 1970 trust, sued Charles, in the Superior Court of New Jersey — Probate part. They were seeking a declaratory judgment barring Charles from maintaining any claims against don Prudencio's estate and the inter vivos trust. Charles responded by filing an amended counterclaim on June 17, 1988, claiming the 1972 Agreement and the 1974 Amendment were invalid. In addition, he claimed a share of the trust, based upon his thesis that because his parents were married in Puerto Rico, then the trust was subjected to the conjugal partnership laws of this Commonwealth.
On August 30, 1988, Charles filed a claim in the Superior Court of Puerto Rico requesting that the 1972 Agreement and the 1974 Amendment be rescinded. This claim was consolidated with a previous 1987 action in the Superior Court of Puerto Rico seeking an inheritance from don Prudencio's, doña Carolina's and Ana Maria's estate. Finally, Charles filed a bankruptcy petition under Chapter 7 on August 29, 1990, in the District of Puerto Rico — nine days before the close of the trial in New Jersey. The New Jersey proceedings were stayed contemporaneously to the filing of this Bankruptcy petition.6
On February 6, 1991, the bankruptcy court held the first hearing on relief from the automatic stay. In its subsequent oral Opinion of February 8, 1991, the bankruptcy court modified the stay and denied Appellants complete relief from the stay. The modification was to allow the New Jersey court to continue with its determination of don Prudencio's domicile at the time he executed his trust agreement — November 16, 1970 — and at his death in Puerto Rico on March 17, 1976. When it modified the stay, the bankruptcy court explained that the Appellants may never have to come to this court if the New Jersey tribunal decides domicile was in New Jersey.7
Judge Kole of the New Jersey Superior Court decided on December 4, 1991, after 171 days of trial, that don Prudencio was domiciled in New Jersey on the dates in controversy. Appellants, then, filed a second motion for further relief from the stay of the New Jersey proceeding. The bankruptcy court in its May 15, 1992, Opinion again denied relief from the stay, this time because it found the appellant failed to present evidence of "cause" to do so. We heard the arguments on appeal, and requested supplementary briefing from the parties on the issue of "for cause".
We now address the standards of review that we must apply to the decision of the bankruptcy court. Findings of facts are reviewed under the clearly erroneous standard. In Re Kerns, 111 B.R. 777, 781 (S.D.Ind.1990), citing In Re Excalibur Auto Corp., 859 F.2d 454, 457, n. 3 (7th Cir.1988). "Clearly erroneous" is interpreted to mean that a reviewing court can upset a finding of fact, even if there is evidence to support the finding, only if the court is left with "the definite and firm conviction that a mistake has been committed." U.S. v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948); Graham v. Lennington, 74 B.R. 963, 965 (S.D.Ind.1987).
"Ultimate facts", or mixed questions of fact and law, are also tested in the First Circuit under the "clearly erroneous" standard. U.S. v. Cochrane, 896 F.2d 635, 639 (1st Cir.1990). The reviewing court may, however, "look carefully" to discover if the court...
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In re: KENNETH AMES, Case No. 11-40020-MSH
...(a) of this section, such as by terminating, annulling, modifying, or conditioning such stay (emphasis added). See In re Unanue-Casal, 159 B.R. 90, 94 (D.P.R. 1993) (bankruptcy courts have full discretion in "fashioning the grant of relief' from stay). I previously granted the Trust partial......