Martinez Colon v. Santander Nat. Bank

• Decision Date: 01 April 1998
• Docket Number: Civil No. 97-1894 (JP).
• Citation: 4 F.Supp.2d 53
• Parties: Angel A. MARTINEZ COLON, et al., Plaintiffs, v. SANTANDER NATIONAL BANK, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

4 F.Supp.2d 53

Angel A. MARTINEZ COLON, et al., Plaintiffs, v. SANTANDER NATIONAL BANK, et al., Defendants.

Civil No. 97-1894 (JP).

United States District Court, D. Puerto Rico.

April 1, 1998.

COPYRIGHT MATERIAL OMITTED

Luz Conchita Toro Rivera, Mayaguez, P.R., for plaintiff.

Lisa E. Bhatia Gautier, Asst. U.S. Atty., Hato Rey, P.R., for defendant.

OPINION & ORDER

PIERAS, District Judge.

I. INTRODUCTION & BACKGROUND

The Court has before it Defendants' Motion to Dismiss¹ (dockets No. 37 and 42) and Plaintiffs' Reply to Motion to Dismiss (docket No. 43). Plaintiffs, Angel Martínez-Colón ("Martínez"), his wife Violeta Colón-Rivera ("Colón"), and Triple A Auto, Inc., bring this action against Defendants, Banco Santander de Puerto Rico ("Banco Santander" or the "Bank"), Santander National Bank, Lourdes Morales ("Morales"), and Luz Anabelle López ("López"), alleging violations of the Bank Secrecy Act, 12 U.S.C. §§ 1951-59 and 31 U.S.C. §§ 5301-22, and the Right to Financial Privacy Act, 12 U.S.C. §§ 3401-22, and for breach of contract, defamation, and libel.

Specifically, Plaintiffs make the following allegations:²

1. Coplaintiff Martinez began banking with Defendant's predecessor³ in 1968 and maintained their banking relationship until the events underlying this action transpired.

2. Martinez entered his father's business of selling clothing and vegetables at a young age, eventually taking over the business at age twenty-three. In 1982, Martinez acquired a farm in Barranquitas, the profits from which provided most of his savings that he kept in the form of Certificates of Deposit with Banco Santander.

3. As a result of an accident, Martinez was forced to give up his personal involvement in his farming business. He continued with his agricultural contracts, however, even after he was no longer personally involved in farming. Because he was a close personal friend of Banco Santander officials, those officials knew of Martinez's condition and situation.

4. After an extended convalescence, Martinez moved to Bayamon where he started a used car business, Triple A Auto, Incorporated, in 1986.

5. In 1992, Plaintiffs had their commercial and personal accounts with Banco Santander. Having been a Banco Santander customer for nearly twenty-two years and maintaining considerable amounts of money in his accounts there, he was afforded preferential treatment consisting of, among other things, not having to wait in line to conduct transactions.

6. As part of Martinez's used auto sales operations, Plaintiffs occasionally purchased Manager's Checks from Santander. Sometimes, these checks exceeded $10,000.00; sometimes, however, they were for less than $10,00.00 but would total more than $10,000.00 in a single day.

7. This course of conduct established a contractual relationship whereby the parties agreed to comply with state and federal law. That agreement had force even if not express. That contractual relationship established an obligation for Banco Santander and its officials to strictly comply with the Bank Secrecy Act and Banking Regulations.

8. Defendants failed their obligation to comply with 31 C.F.R. § 103.22 by filing Currency Transaction Reports ("CTRs") required for transactions involving more than $10,000.00 (and/or lesser amounts that totaled more than $10,000.00 in a single banking day). This failure was known to Lopez at all times.

9. Lopez and Morales were trained in their duties under the federal banking laws. They knew how to identify illegal transactions and of their obligation to file Currency Transaction Reports for exchanges of more than $10,000.00 (or aggregating more than $10,000.00 in a single day). Notwithstanding their expertise, Lopez and Morales failed on several occasions to file CTRs regarding Plaintiffs' accounts and to inform Plaintiffs that their transactions could constitute a pattern of currency transactions and could appear suspicious to law enforcement agents.

10. Morales, acting in bad faith, falsely accused Plaintiffs of structuring transactions to avoid the Bank Secrecy Act reporting requirements and/or to conduct money laundering and drug trafficking schemes, with the purpose of ruining Plaintiffs reputation.

In the Claims for Relief section of their Complaint, Plaintiffs assert that "the actions and/or omissions of [Defendants require] an award of damages for libel and breach of the contractual relationship maintained with plaintiffs." Nowhere in that section do Plaintiffs invoke any federal statutes. Nonetheless, other sections of Plaintiffs' Complaint do invoke federal law, stating Defendants' actions "constitute a serious violation to Federal Banking Law to Right of Financial Privacy Act [sic]." Piecing together the fragments of Plaintiffs' scattered Complaint, the Court is able to surmise four potential causes of action — for breach of contract, libel/defamation, violation of the Bank Secrecy Act, and violation of the Right to Financial Privacy Act.

Defendants now move the Court to dismiss on the following grounds: First, Plaintiffs' claims under Article 1802 of Puerto Rico's Civil Code are time-barred. P.R.Laws Ann. tit. 31 § 5298. Next, Plaintiffs' Complaint fails, as a matter of law, to state or imply a claim for malicious prosecution and/or Plaintiffs cannot adduce sufficient evidence from which a reasonable jury could find Defendants liable for malicious prosecution.⁴ Finally, Defendants assert that Plaintiffs have no standing to sue under either of the two federal statutes Plaintiffs have invoked. Specifically, Defendants argue that the Bank Secrecy Act provides no private right of action and that they are protected from liability under the Right to Financial Privacy Act. The Court will address each of Plaintiffs' claims in turn.

II. ANALYSIS

A. Bank Secrecy Act

The Bank Secrecy Act requires domestic banks to report any transactions of more than $10,000.00, as well as any transactions that appear to have been structured to avoid the $10,000.00 reporting requirement. 31 U.S.C. §§ 5313, 5324; 31 C.F.R. § 103. Banks must submit these Currency Transaction Reports ("CTRs") to the Internal Revenue Service within 15 days of the transaction in question. Id. Because "structuring"⁵ is a crime under 31 U.S.C. § 5324(a), any bank that knows of or suspects such activity must also file Criminal Referral Forms (CRFs) with the government. 12 C.F.R. § 21.11(a).

Defendants assert that the Bank Secrecy Act does not provide for a private or independent cause of action for the clients of financial institutions. The parties have not provided, and the Court has not found, any cases in which a court has decided whether or not a private cause of action exists under the Bank Secrecy Act. Legislative intent determines whether a federal statute allows for a private cause of action. Sterling Suffolk Racecourse Ltd. Partnership v. Burrillville Racing Assoc. Inc., 989 F.2d 1266, 1268-69 (1st Cir.1993); see Touche Ross & Co. v. Redington, 442 U.S. 560, 575, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). In addition, "there is a presumption against implied rights of action — a presumption that will endure unless the plaintiff proffers adequate evidence of a contrary congressional intent." Stowell v. Ives, 976 F.2d 65, 70 n. 5 (1st Cir.1992). The Bank Secrecy Act provides for civil and criminal penalties, but a defendant's only liability is to the government, and, in particular, to the Secretary of the Treasury. 31 U.S.C. §§ 5321-22. Congress' purpose in enacting the statute was to ensure that certain business records assist government agencies in conducting criminal, tax, or regulatory investigations. 12 U.S.C. § 1951. The Court finds no reason, and Plaintiffs have failed to point to one, for rebutting the presumption against implied rights of action. Therefore, the Court holds that Plaintiffs have no cause of action under the Bank Secrecy Act.

B. Puerto Rico Law Claims for Libel and Defamation

Plaintiffs have asserted that Defendants conduct was libelous and defamatory. They have invoked the Court's supplemental jurisdiction and now claim damages for the alleged libel and defamation under Article 1802 of the Puerto Rico Civil Code, P.R.Laws Ann. tit. 31 § 5141. Article 1868 of the Civil Code, P.R.Laws Ann. tit. 31 § 5298, provides that actions under Article 1802 shall be subject to a one-year period of limitations. Defendants assert that Plaintiffs' claims for defamation and libel are time-barred. Specifically, Defendants assert that the Complaint establishes a time-line for the allegedly defamatory/libelous conduct beginning on or after April 30, 1992 and ending on July 29, 1992. Plaintiffs do not contest this assertion, but argue that the extent of the damages resulting from that conduct was not known until September 13, 1995, when Martinez "was compelled to sign a stipulation for forfeiture" in civil case, 92-2648(HL).⁶ The Court disagrees with Plaintiffs' argument. The damages resulting from the alleged defamation and/or libel would have been to Plaintiffs' character. The stipulation had nothing to do with such damages. The Court agrees with Defendants that the statute of limitations began running, according to the Complaint, no later than November 9, 1992, the day on which the government seized Plaintiffs' properties in the civil forfeiture proceedings. At that time, at the latest, Defendants knew or should have known of the conduct they now allege to have been libelous and/or defamatory. Therefore, the Court holds that Plaintiffs claims under Article 1802 are time-barred.

C. Right to Financial Privacy Act ("RFPA")

The RFPA, 12 U.S.C. §§ 3401-3422, prohibits banks from disclosing the financial records of its customers without authorization. Plaintiffs claim that Defendants violated the RFPA when codefendant Morales reported allegedly suspicious transactions to "federal authorities."⁷ Plaintiffs have never maintained that the substance of what Morales conveyed to the federal...