Linares-Acevedo v. Acevedo
| Decision Date | 17 March 2014 |
| Docket Number | Civil No. 12–1906 BJM. |
| Citation | 38 F.Supp.3d 222 |
| Parties | Juan C. LINARES–ACEVEDO, et al., Plaintiffs, v. Donald ACEVEDO, et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Ruben Morales, Ruben Morales Oliveras Law Office, Bayamon, PR, for Plaintiffs.
Pablo E. Garcia–Perez, Pablo E. Garcia Perez Law Office, Carolina, PR, for Defendants.
In an amended complaint, Juan C. Linares–Acevedo (“Linares”), and his wife, Miriam Bianco–Rodriguez, bring this diversity action against Donald Acevedo, Rich Port Development, LLC, and others alleging fraud, breach of contract, and damages under Article 1802 of the Puerto Rico Civil Code. Docket No. 30 (“Compl.”).1 Defendants answered and asserted a counterclaim. Docket No. 36. Following the close of discovery, defendants moved to dismiss for lack of subject matter jurisdiction, or alternatively, for summary judgment. Docket No. 26. Plaintiffs opposed. Docket No. 32. The parties consented to proceed before a magistrate judge. Docket No. 19.
For the reasons set forth below, defendants' motion is GRANTED IN PART and DENIED IN PART.
Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”Fed.R.Civ.P. 56(a). A fact is material only if it “might affect the outcome of the suit under the governing law,” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), and “[a] ‘genuine’ issue is one that could be resolved in favor of either party.” Calero–Cerezo v. U.S. Dep't of Justice, 355 F.3d 6, 19 (1st Cir.2004). The court does not weigh facts, but instead ascertains whether the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Leary v. Dalton, 58 F.3d 748, 751 (1st Cir.1995).
The movant must first “inform[ ] the district court of the basis for its motion,” and identify the record materials “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; R. 56(c)(1). If this threshold is met, the opponent “must do more than simply show that there is some metaphysical doubt as to the material facts” to avoid summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The nonmoving party may not prevail with mere “conclusory allegations, improbable inferences, and unsupported speculation” for any element of the claim. Medina–Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990). Still, the court draws inferences and evaluates facts “in the light most favorable to the nonmoving party,” Leary, 58 F.3d at 751, and the court must not “superimpose [its] own ideas of probability and likelihood (no matter how reasonable those ideas may be) upon the facts of the record.” Greenburg v. P.R. Maritime Shipping Auth., 835 F.2d 932, 936 (1st Cir.1987).
The facts set forth below are based on plaintiffs' opposing statement of material facts (Docket No. 32–1, “OSMF”), and the court's independent review of the exhibits supporting defendants' motion.2
Plaintiffs Juan C. Linares–Acevedo and his wife, Miriam Bianco–Rodriguez are residents of Ponce, Puerto Rico. Compl. ¶¶ 3.1–3.2. Donald Acevedo, a resident of South Carolina, is a builder and owns a 50% stake in Rich Port Development, LLC, a South Carolina Corporation. Compl. ¶¶ 3.3, 3.5. Linares and Acevedo are cousins. Acevedo travelled to Puerto Rico to attend Linares' wedding. At that time, the two began discussing the possibility of Linares purchasing real estate in South Carolina from Acevedo. OSMF ¶ 3. After various discussions, Acevedo offered to sell to Linares lots 21 and 22 on Aycock Drive in Anderson County, South Carolina. OSMF ¶ 4. Acevedo allegedly stated that the two lots were prime real estate worth $68,000, and that they were quickly appreciating in value such that they could be re-sold for $100,000 within a year. OSMF ¶ 14. The two lots, however, are actually in a 100–year flooding zone, a fact that Acevedo knew of but failed to disclose to plaintiffs. OSMF ¶ 8. Linares claims he trusted Acevedo because he was family, and they were close enough that Acevedo attended his wedding. OSMF ¶ 10.
On February 10, 2005, Linares and Rich Port Development entered into an agreement for the purchase and sale of lots 21 and 22 on Aycock Drive in South Carolina. Docket No. 26–1. The purchase price was $68,000, with a $6,800 down payment and the remaining balance to be paid in monthly installments of $673.86 at an interest rate of 12% per annum. Plaintiffs paid a total of $68,000 to defendants under the contract. OSMF ¶¶ 1, 6. The contract states that the seller “will convey good, fee simple marketable title, to the Property to the Purchaser by general warranty deed,” and the transfer is to occur “on or before 60 days from date.” Docket No. 26–1, at 1–2. Title to the two lots was never transferred to plaintiffs. OSMF ¶ 12.
An appraiser appraised the value of the two lots on February 22, 2012, and found each lot worth $1,000. Docket Nos. 32–5; 32–6. The same appraiser concluded that the two lots were each worth $1,400 in January 2005. Docket Nos. 32–7; 32–8. Upon realizing that the two lots were not worth nearly as much as what they paid for them, plaintiffs filed this action in October 2012. The complaint asserts four causes of action: (1) damages under Article 1802 of the Puerto Rico Civil Code, 31 L.P.R.A. § 5141 ; (2) fraud; (3) misrepresentation; and (4) breach of contract. Compl. ¶¶ 5–8. Defendants counterclaimed for $112,560, the amount Linares allegedly still owes on the loan he obtained to purchase the properties at issue. Docket No. 36, at 4–5.
Defendants argue that the court lacks subject matter jurisdiction over the case because the amount in controversy is below $75,000.00.3 Alternatively, defendants argue that the evidence submitted demonstrates that there is no genuine issue of material fact and that they are entitled to summary judgment as a matter of law.
Federal courts are courts of limited jurisdiction, and “federal jurisdiction is never presumed.” Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir.1998). Rather, “the party invoking the jurisdiction of a federal court carries the burden of proving its existence.” P.R Tel. Co. v. Telecomm's Reg. Bd. of P.R., 189 F.3d 1, 7 (1st Cir.1999). 28 U.S.C. § 1332 provides federal courts with diversity jurisdiction—jurisdiction over “controversies arising between citizens of different states, provided that the amount in controversy exceeds $75,000.” García Pérez v. Santaella, 364 F.3d 348, 350 (1st Cir.2004) (internal quotations omitted). A plaintiff's claim that damages meet the jurisdictional amount requirement generally suffices unless questioned by the opposing party or the court. Spielman v. Genzyme Corp., 251 F.3d 1, 5 (1st Cir.2001). However, if challenged, the plaintiff must show “ ‘that it is not a legal certainty that the claim involves less than the jurisdictional amount.’ ” Id. ().
Before examining plaintiffs' claim that the amount in controversy exceeds $75,000, the court must determine which jurisdiction's substantive law controls this diversity suit. A federal court sitting in diversity applies state substantive law to state law claims. Hoyos v. Telecorp Comm'ns, Inc., 488 F.3d 1, 5 (1st Cir.2007). This includes the forum state's choice of law principles. See Hartford Fire Ins. Co. v. CNA Ins. Co. (Europe), 633 F.3d 50, 54 n. 7 (1st Cir.2011). Puerto Rico generally follows the Restatement (Second) of Conflict of Laws and applies the “dominant or significant contacts test,” in which the laws of the jurisdiction with the most significant contacts to the dispute apply. Allstate Ins. Co. v. Occidental Int'l, Inc., 140 F.3d 1, 3 (1st Cir.1998). Specifically, in disputes involving real property, the law of the jurisdiction in which the property is located applies. Weston v. Stuckert, 329 F.2d 681 (1st Cir.1964) ; 31 L.RR.A. § 10. Because the lots at issue in this case are located in South Carolina, its laws should govern plaintiffs' breach of contract, fraud, and misrepresentation claims.
Damages awards in breach of contract claims are meant to compensate the injured party, “that is, to put the plaintiff in as good a position as he would have been in had the contract been performed.” Drews Co., Inc. v. Ledwith–Wolfe Assocs., Inc., 296 S.C. 207, 209, 371 S.E.2d 532 (1988). Under South Carolina law, actual damages in a fraud case are determined under “the benefit of the bargain approach, according to which the plaintiff is entitled to the difference between the value he would have received if the defendant's representations had been true and the value he actually received, together with any proximately caused consequential or special damages.” Schnellmann v. Roettger, 373 S.C. 379, 383, 645 S.E.2d 239 (2007). Moreover, punitive damages may be awarded if the misrepresentation was made knowingly or with reckless disregard for its truth. Carter v. Boyd Const. Co., 255 S.C. 274, 283, 178 S.E.2d 536 (1971).
In this case, Linares argues that he could recover at least $100,000, the amount needed to put him in the position he would have been in had Acevedo's representations been truthful. Opp. 13–14. Whether Linares can recover $100,000 is unclear, but the court agrees that his damages may exceed $75,000. Because defendants never transferred title of the land over to Linares, he may be able to recover the $68,000 allegedly paid to defendants, in addition to any actual and punitive damages caused by Acevedo's alleged misrepresentation of the property's value. A jury may...
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