Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc.

• Decision Date: 29 March 2012
• Docket Number: Civ. No. 10–2155 (PG).
• Parties: PRESTIGE CAPITAL CORPORATION, Plaintiff v. PIPELINERS OF PUERTO RICO, INC.; Puerto Rico Aqueduct and Sewer Authority; and Economic Development Bank for Puerto Rico, Defendants.
• Court: U.S. District Court — District of Puerto Rico

849 F.Supp.2d 240

PRESTIGE CAPITAL CORPORATION, Plaintiff

v.PIPELINERS OF PUERTO RICO, INC.; Puerto Rico Aqueduct and Sewer Authority; and Economic Development Bank for Puerto Rico, Defendants.

Civ. No. 10–2155 (PG).

United States District Court,

D. Puerto Rico.

March 29, 2012.

Hermann D. Bauer–Alvarez, Maria Ligia Giraldez–Rodriguez, O'Neill & Borges, San Juan, PR, for Plaintiff.

Alexis Fuentes–Hernandez, Fuentes Law Offices, Guillermo De–Guzman–Vendrell, De Guzman Law Offices, Charles E. Vilaro–Valderrabano, Jose Raul Cancio–Bigas, Cancio Covas & Santiago, LLP, Juan M. Casellas–Rodriguez, Nolla, Palou & Casellas, LLC, San Juan, PR, for Defendants.

OPINION AND ORDER

JUAN M. PEREZ–GIMENEZ, Senior District Judge.

This ongoing dispute between secured creditors Prestige Capital Corporation (“Prestige”) and the Economic Development Bank for Puerto Rico (“EDB”), has given rise to a new conflict, this time between EDB and debtor Pipeliners of Puerto Rico (“Pipeliners”). Pipeliners has brought a Crossclaim against EDB under this Court's supplemental jurisdiction, asserting breach of contract and tortious interference with contractual obligations claims, relating to a loan agreement perfected between the two on July 22, 2010. Docket No. 30. EDB seeks dismissal of said Crossclaim arguing that Pipeliners is precluded from bringing suit in this Court under the agreement's forum selection clause, and in the alternative, that this Court lacks supplemental jurisdiction to entertain the claim. Docket No. 60. Pipeliners has filed its opposition. Docket No. 71. Because this Court finds that the forum selection clause at issue is permissive, and that it has supplemental jurisdiction to entertain the claims, it must DENY EDB's request for dismissal.

I. BACKGROUND

The Court will recount only the relevant facts surrounding the EDB–Pipeliners dispute. For a more detailed background on the whole of this case, please see our prior Opinion and Order dated October 14, 2011, 2011 WL 4899968. Docket No. 81.

Pipeliners is a Puerto Rico corporation engaged in the business of repairing and rehabilitating aqueduct and sanitary lines using principally trenchless methods, and has entered into multiple contracts with the Puerto Rico Aqueduct and Sewer Authority (“PRASA”). On June 9, 2005 Prestige and Pipeliners entered into a Purchase and Sale Agreement (the “P & S Agreement”) and an amendment thereto on November 7, 2006. Docket No. 1–A. Pursuant to the P & S Agreement, Pipeliners agreed to sell, and Prestige agreed to purchase, from time to time, certain accounts receivables and contract rights of Pipeliners. Pursuant to Section 11 of the P & S Agreement, Pipeliners granted Prestige a continuing security interest in all of its accounts receivables, among other assets, as security for the payment of any unpaid invoices. Prestige duly perfected its security interest on June 16, 2005 by filing the appropriate financing statements with the Puerto Rico Department of State.

Five years later, on July 22, 2010, Pipeliners and EDB executed a Loan Agreement pursuant to which EDB granted Pipeliners a revolving line of credit in the amount of $2, 000, 000 (the “Loan Agreement”).Pipeliners also granted EDB a continuing security interest in the same accounts receivables encumbered by Prestige's earlier security interest. EDB perfected its security interest on July 28, 2010, by filing a financing statement with the Puerto Rico Department of State.

On August 19, 2010, counsel for Prestige sent a letter to the attorney and public notary who drafted and executed the closing documents for the EDB Loan Agreement. In it, Prestige alleged that it held a senior security interest encumbering the same collateral as EDB's security interest and demanded that EDB turn over any proceeds deriving from said collateral. Docket No. 1–C. Two months later, on October 21, 2010, EDB sent a letter to Pipeliners indicating that it had defaulted on the terms of the Loan Agreement by not disclosing the alleged liens held by Prestige. Docket No. 8–4. This purported failure to disclose effectively triggered an acceleration clause in the EDB Loan Agreement, rendering the EDB Loan immediately due and payable. Id.

These actions by EDB triggered the filing of Pipeliners' Crossclaim in the instant action, where Pipeliners makes the following allegations:

During the negotiations by and between Pipeliners and EDB, Pipeliners informed EDB personnel of the existence of the P & S Agreement by and between Pipeliners and Prestige as well as of the fact that Pipeliners' accounts receivables served as collateral to said Agreement. Indeed, Pipeliners understood throughout its negotiations with the EDB that a substantial portion of the proceeds of the EDB Loan would be precisely used to repay the amounts owed by Pipeliners to Prestige, in order for EDB to obtain a senior lien over such accounts. Crossclaim, ¶ 6.

Pursuant to requests made by Pipeliners, between July and September 2010, EDB made certain disbursements under the Loan Agreement totaling approximately $375,000.00. Crossclaim, ¶ 8.

However, on October 14, 2010, the EDB sent a letter to Pipeliners whereby the EDB unilaterally terminated the Loan Agreement. As grounds for this termination, the EDB stated that subsequent to the execution of the Loan Agreement, the bank became aware that Prestige had a senior security interest over Pipeliners' accounts receivables from PRASA, and that this information had been somehow withheld by Pipeliners during the negotiations of the Loan Agreement. Crossclaim, ¶ 9.

On November 14, 2010, Pipeliners answered the EDB letter and clarified that the EDB was fully aware at all times of the Prestige security interest because Pipeliners had so informed it all throughout the negotiations with EDB and, beyond said applicable disclosures, EDB had to be aware of the situation being Prestige's security interest a matter of public record easily noticeable when EDB filed its own financing statement before the Puerto Rico State Department. At that time, Pipeliners requested that EDB refrain from terminating the Loan Agreement and that the same be allowed to continue according to its terms. Crossclaim, ¶ 10.

Nonetheless, the EDB continued to insist on the termination of the Loan Agreement and subsequent conversations between all parties involved failed to lead to any sort of understanding that could somehow provide a solution. Crossclaim, ¶ 11.

As a result of the foregoing: (i) the EDB refused and continues to reject to acknowledge that Prestige has a senior lien over Pipeliners' accounts receivables from PRASA; (ii) the EDB failed to fully deliver on its Loan Agreement with Pipeliners; and, (iii) the EDB has demanded immediate payment of the funds advanced under the Loan Agreement. Crossclaim, ¶ 12.

Furthermore, the EDB has interfered with the contracts existing by and between Pipeliners and PRASA, by demanding and obtaining from PRASA the payment directly to EDB of certain amounts owed by PRASA to Pipeliners, which in turn are owed by Pipeliners to Prestige. Moreover, the EDB has further interfered in the contractual relationship Pipeliners has with PRASA by demanding and causing undue delays in the PRASA process of payments to Pipeliners and/or Prestige. Crossclaim, ¶ 13.

As a result of the foregoing, Pipeliners requests this Court order EDB to effect specific performance of its obligations under the Loan Agreement, as well as to indemnify Pipeliners in damages resulting from the alleged breach of contract and the tortious interference with its contractual obligations to third parties, including Prestige. EDB contends these claims should be dismissed, because under the Loan Agreement's forum selection clause, said claims could only have been brought before the state court sitting in San Juan, Puerto Rico. EDB also moves for dismissal of the claims on the grounds of lack of subject matter jurisdiction under 28 U.S.C. § 1367.

II. DISCUSSION

A. The Forum Selection Clause

EDB's first argument is that the Loan Agreement's forum selection clause precludes Pipeliners from asserting its claims in this forum. The Court will address this argument below after outlining the applicable standard of review.

i. Standard of Review

In our circuit, motions to dismiss based on a forum selection clause are treated as a motion alleging a failure to state a claim upon which relief can be granted under Rule 12(b)(6). Silva v. Encyclopedia Britannica, Inc., 239 F.3d 385, 387 (1st Cir.2001). In these cases, the 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.” Rivera v. Centro Medico de Turabo, Inc., 575 F.3d 10, 15 (1st Cir.2009). Further, under the Rule 12(b)(6) standard the Court may only consider facts and documents that are part of or incorporated into the complaint; if documents outside of the pleadings are considered, the motion should be adjudicated under the more stringent standards of a Rule 56 motion for summary judgment. Id.;Trans–Spec Truck Serv., Inc. v. Caterpillar, Inc., 524 F.3d 315, 321 (1st Cir.2008). The First Circuit has carved out several exceptions to this rule “for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs' claim; or for documents sufficiently referred to in the complaint.” Rivera, 575 F.3d at 15. These may be properly considered on a Rule 12(b)(6) motion.

In this case, the parties have not raised any controversy regarding the authenticity of the Loan Agreement where the forum selection clause at issue is contained. The Crossclaim filed by Pipeliners is mostly concerned with the enforcement of said Loan Agreement. Consequently, although Pipeliners did not include a copy of the Loan Agreement in its...