Top Entertainment Corp. v. Torrejon, CIV. 99-2095(JP).

• Decision Date: 16 December 2004
• Docket Number: No. CIV. 99-2095(JP).,CIV. 99-2095(JP).
• Parties: TOP ENTERTAINMENT CORP., et al. Plaintiffs, v. Watsson Herbert TORREJON, Defendant
• Court: U.S. District Court — District of Puerto Rico

349 F.Supp.2d 248

TOP ENTERTAINMENT CORP., et al. Plaintiffs, v. Watsson Herbert TORREJON, Defendant

No. CIV. 99-2095(JP).

United States District Court, D. Puerto Rico.

December 16, 2004.

COPYRIGHT MATERIAL OMITTED

David Efrón, San Juan, PR, for Plaintiff.

Manuel R. López, Coral Gables, FL, Ramón L. Viñas Bueso, Guzmán & Steffens, San Juan, PR, for Defendant.

OPINION AND ORDER

PIERAS, Senior District Judge.

I. INTRODUCTION

Before the Court is Defendant's motion for attorneys' fees pursuant to P.R. R. Civ. P. 44.1(d) (docket No. 95) and its supplement thereto (docket No. 106), Plaintiffs' motion to dismiss (docket No. 122); Plaintiffs' supplementary motion regarding Defendant's request for attorneys' fees (docket No. 126); Defendant's opposition to Plaintiffs' supplementary motion (docket No. 130); Plaintiffs' opposition to Defendant's original motion for attorneys' fees (docket No. 134); Defendant's second memorandum in support for its motion for attorneys' fees (docket No. 136); and Plaintiffs' expert report (docket No. 140).

On November 20, 2003, the United States Court of Appeals for the First Circuit issued its opinion in Top Entm't Inc. v. Torrejon, 351 F.3d 531 (1st Cir.2003), where it vacated this Court's Order of October 23, 2002 and ordered the Court to reconsider Defendant's motion for attorneys' fees under Rule 44.1(d) of the Puerto Rico Rules of Civil Procedure. The Court will not further labor into the facts of this case, as they have been extensively discussed in both this Court's Order of October 23, 2002 (docket No. 105) and in the aforementioned decision by the First Circuit, and shall therefore limit itself to the instant facts.

After successfully defending an appeal which dismissed this case, counsel for Defendant filed a motion for attorneys' fees which the Court denied, finding that the First Circuit had already imposed sufficient sanctions in this case. On appeal, the First Circuit found that Plaintiffs and their counsel, David Efrón, Esq. filed and pursued frivolous claims against Defendant when they filed a complaint which asserted that María Ortega falsely purported to be the promoter representing entertainer Ricky Martin in a concert held in Peru in November 1998, claims which Mr. Efrón later admitted were completely false. The Court of Appeals also found that the filing of the complaint violated Fed.R.Civ.P. 11, and ordered this Court to reconsider its denial of the motion for attorneys' fees.

Upon reconsideration (docket No. 105), this Court found that, pursuant to Rule 44.1(d), Plaintiffs had acted with temerity and frivolousness when they filed a complaint containing false allegations, failed to amend the complaint according to the Court's Order, pursued this baseless claim over a two-year period, and then reversed their position. The Court then ordered Defendant to file with the Court a full accounting of the attorneys' fees charged during the litigation of this case, including the hours worked by Defendant's counsel and the actions performed. Defendant's counsel so complied. Having examined the information before it, the Court now turns to the issue of the amount of the award.

II. ANALYSIS

A. Legal standard

Rule 44.1(d) of the Puerto Rico Rules of Civil Procedure, 32 P.R. Laws. Ann. Appendix III, states that, "[i]n the event any party or its lawyer has acted obstinately or frivolously, the court shall, in its judgment, impose on such person the payment of a sum of attorneys' fees which the court decides corresponds to such conduct." P.R. R. Civ. P. 44.1(d), 32 P.R. Laws. Ann. Appendix III. The main purpose of this rule is simply "to impose a penalty upon a losing party that because of his stubbornness, obstinacy, rashness, and insistent frivolous attitude has forced the other party to needlessly assume the pains, costs, efforts, and inconveniences of a litigation." Vicente Fernández Marino v. San Juan Cement Co., 118 D.P.R. 713, 118 P.R. Offic. Trans. 823, 830 (P.R.1987) (finding that the party that risks litigating a case in which negligence appears prima facie should thus assume liability for its actions). Acting obstinately or frivolously "is a concept that implies a misuse of legal procedures to foment or delay litigation and by doing so, to frustrate the payment of an uncontested obligation or to make a claim on a frivolous basis." Ferrer Delgado v. Sylvia de Jesús, 440 F.Supp. 979, 982 (D.Puerto Rico 1976). A finding of temerity is clearly warranted where a party has filed or pursued frivolous claims. Id. The Court must award attorneys' fees if it finds that a party has acted with temerity or frivolously. See Fajardo Shopping Center v. Sun Alliance Insurance Co., 167 F.3d 1 (1st Cir.1999).

The First Circuit has stated that, according to the Puerto Rico Supreme Court, the "degree of obstinacy is the critical factor in determining whether attorneys' fees are warranted". Tañón v. Muñiz, 312 F.Supp.2d 143, 152 (1st Cir.2004). Although P.R. R. Civ. P. 44.1(d) does not define the term "obstinately", this is a term of art which has been discussed at large by the courts. In particular, the Puerto Rico Supreme Court has stated that "obstinacy is an attitude which casts its shadow over the proceeding and which affects the sound operation and administration of justice. It also subjects the innocent litigant to the ordeal of the judicial process and unnecessary costs, and to retainment of professional services, including attorneys, with the usually exorbitant burden to his pocket." Fernández Marino, 118 P.R. Offic. Trans. at 829, 1987 WL 448327. A party shall be found obstinate if it "engages in actions which (a) make necessary litigation which could have been avoided, (b) prolongs the litigation unnecessarily, or (c) requires the other party to incur expenses in the pursuit of avoidable tasks." Newell Puerto Rico, Ltd. v. Rubbermaid Inc., 20 F.3d 15, 24 (1st Cir.1994).

As a result of Defendant's success in his appeal from this Court's denial of attorneys' fees, he filed a request for attorneys' fees on appeal in the amount of $197,465.00, representing allegedly 773.8 hours of legal services performed on the case. Defendant's counsel duly filed the billing ledger pages detailing the dates, time spent, and subject matter of counsel's work, as well as an affidavit describing his experience and hourly rate. Although the motion was filed on September 30, 2002, it was not actually opposed by Plaintiffs until almost a full two years later, on August 16, 2004 (docket No. 122).

B. Frivolousness, temerity, obstinacy and other matters

The criteria used to determine whether or not a party has acted with obstinacy are straightforward. The Supreme Court of Puerto Rico has consistently held that "nothing in the wording of... Rule 44.1(d) allows the reasonable inference that the amount the obstinate or frivolous party shall bear must necessarily match the actual attorneys' fees paid by the prevailing party." Corpak, Inc. v. Ramallo Bros. Printing, Inc., 125 D.P.R. 724, 738 (1990) (Slip P.R. Offic. Trans. at 11). See also Santos Bermúdez v. Texaco P.R., Inc., 123 D.P.R. 351, 357 (1989); Asociación de Condóminos v. Trelles Reyes, 120 D.P.R. 574, 579, 1988 WL 580846 (1988). More problematic, however, is the fact that no Court has adopted any specific method to aid courts in calculating fees awards, and therefore the criteria used to assess the amount of the award are not clear. See Corpak, 125 D.P.R. at 734. The Puerto Rico Supreme Court has instead held that trial courts "must bear in mind that the degree or intensity of the obstinate or frivolous conduct is the test or determining or critical factor to be considered when calculating the attorneys' fees that the obstinate or frivolous losing party shall bear...." Id. at 738 (citations omitted) (Slip P.R. Offic. Trans. at 12). See also Revlon Realistic, Inc. v. Las Américas Trust Co., 135 D.P.R. 363, 1994 WL 909203 (1994).

The District of Puerto Rico in the landmark case of Fajardo Shopping Center v. Sun Alliance Ins. Co. of Puerto Rico, 81 F.Supp.2d 331 (D.Puerto Rico 2000), has stated that obstinacy is measured by determining whether a party's behavior results in litigation which could have been avoided, if behavior prolongs litigation needlessly, or if it obliges the other party to embark on needless procedures. Id. at 335, quoting Dopp v. Pritzker, 38 F.3d 1239, 1253 (1st Cir.1994). It has further stated that consideration of a myriad of other factors is necessary to this analysis, such as "the nature of the action, the questions of law involved, the amount at issue, the time spent, the efforts and professional activity needed for the case and the skills and reputations of the lawyers involved". See Fajardo Shopping Center, 81 F.Supp.2d at 334, quoting Corpak, 125 D.P.R. at 738, Offic. Trans. at 11-12, 1990 WL 710162; see also Velázquez Ortiz v. Universidad de Puerto Rico, 128 P.R. Dec. 234, 238, 1991 WL 735405 (1991). With this in mind, the Court now turns to Plaintiffs' actions in this case.

The Court does not elaborate on the details of Plaintiffs' conduct, since the First Circuit has more than adequately summarized Plaintiffs' questionable conduct in the case at bar.

"In Top Entm't Inc. v. Ortega, 285 F.3d 115 (1st Cir.2002), this court addressed plaintiffs' appeal from that dismissal for failure to comply with the Initial Scheduling Order. This court noted that plaintiffs had made a complete about-face in the district court from the position stated in their complaint when they belatedly attempted to revise their allegations in response to the court's order to show cause. 285 F.3d at 117, 118. Furthermore, plaintiffs' counsel admitted that the allegations in the original complaint were false. Id. at 120. This court noted that it was `apparent that the complaint violated Rule 11.' Id. at 118. We also noted that plaintiffs' counsel had made misrepresentations to the district court and had willfully disobeyed the...