Triangle Cayman Asset Co. v. LG and AC, Corp. ( 2022 )

United States Court of Appeals
For the First Circuit
Nos. 19-1251, 19-1786, 20-1284
TRIANGLE CAYMAN ASSET COMPANY,
Plaintiff-Appellee, Cross-Appellant,
v.
LG AND AC, CORP.; LEONARDO GOMEZ-VELEZ; LIVIAM MARGARITA
CASILLAS COLON; CONJUGAL PARTNERSHIP GOMEZ-CASILLAS,
Defendants, Third-Party Plaintiffs, Appellants, Cross-Appellees.
ANIBAL COLON-SANTIAGO,
Defendant.
ORIENTAL BANK,
Third-Party Defendant-Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Francisco A. Besosa, U.S. District Judge]
Before
Gelpí, Lipez, and Thompson,
Circuit Judges.
Bamily López-Ortiz, with whom Lizabel M. Negrón-Vargas was on
brief, for appellants/cross-appellees.
Carolina Velaz-Rivero, with whom Luis C. Marini-Biaggi,
Ignacio J. Labarca-Morales, and Marini Pietrantoni Muñiz, LLC were
on brief, for appellee/cross-appellant.
Carlos R. Baralt Suárez, with whom Alfredo Fernández Martínez
was on brief, for third-party defendant/appellee.
October 24, 2022
GELPÍ, Circuit Judge. These appeals arise from the
district court's grant of summary judgment in favor of Triangle
Cayman Asset Company ("Triangle") and Oriental Bank ("Oriental")
in a foreclosure action filed by Triangle against Liviam Margarita
Casillas-Colón, Leonardo Gómez-Vélez, their conjugal partnership,
and LG and AC Corporation (collectively, "Appellants"), who in
turn filed counterclaims against Triangle and brought Oriental in
as a third-party defendant. During the pendency of the appeals,
additional events have made the procedural history of the case
lengthy and convoluted.1 Ultimately, we conclude that several
aspects of the appeals as to Triangle are now moot and dismiss the
same without reaching their merits. We further affirm the district
court's dismissal of the breach of contract and fraud counterclaims
against Triangle and the entry of summary judgment in favor of
Oriental.
I. Background2
A. The Loan Agreement
In 2006, Appellants obtained a three-year loan with the now-
defunct Eurobank for the purchase of real estate in Canóvanas,
Puerto Rico, including a gasoline station. On December 23, 2009,
1 A chronology of important dates is provided as an appendix
to help make sense of the complex sequence of events.
2 The parties do not dispute the relevant facts, as outlined
in the district court's reports and recommendations and orders.
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the parties refinanced the loan for an additional three-year term,
in the amount of $1,240,188, amortized over twenty years (the
"Financing Agreement"). Pursuant to said agreement, the loan was
set to mature in December 2012. Upon said date, all obligations
under the agreement were due and payable without notice or demand.
Appellants secured the Financing Agreement with collateral that
included mortgages on four properties. They further agreed, in
the event of default, to assign any rents, income, and revenues
from their lease agreements on the four properties covered by the
mortgages to Eurobank.
On April 30, 2010, the Puerto Rico Office of the Commissioner
of Financial Institutions closed Eurobank, appointing the Federal
Deposit Insurance Corporation ("FDIC") as receiver. Subsequently,
the FDIC and Oriental agreed for the latter to acquire Eurobank's
Financing Agreement with Appellants.3
In 2011, Appellants and Oriental initiated preliminary
conversations for the refinancing of the loan. In December 2012,
Appellants failed to make the outstanding balloon payment due under
the Financing Agreement. However, Oriental granted them two
administrative extensions until May 2013.
On March 13, 2013, Oriental sent Appellants a draft proposal
for the refinancing of the Financing Agreement, but it was never
3Bayview Loan Servicing, LLC ("Bayview"), not a party to this
case, in turn, was retained by Oriental to service the loan.
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finalized. Appellants continued making monthly payments under the
Financing Agreement until May or June 2013, when Oriental refused
to accept the payments, on the ground that Appellants had to pay
off the loan or refinance it as the entire payment was due. As a
result, Oriental appraised Appellants' properties during February
2014 through March 2015 to determine whether the loan had adequate
collateral.
On September 28, 2015, Oriental entered into an Assignment
and Assumption Agreement with Triangle, transferring Eurobank's
prior credit relationship with Appellants from Oriental to
Triangle.
B. District Court Proceedings
On October 20, 2016, Triangle filed its complaint for
collection of monies and foreclosure of the mortgages and other
collateral based on Appellants' default on the loan. On March 13,
2017, Triangle filed an ex parte motion requesting an order for
attachment of rents. On March 22, 2017, the district court granted
Triangle's motion and issued an order to Appellants' tenants to
directly remit to Triangle all payments that they owed Appellants
in connection with the mortgaged properties.
Appellants, in turn, filed counterclaims against Triangle for
breach of contract, fraud, invasion of privacy, defamation,
violations of the Fair Debt Collection Practices Act ("FDCPA"),
and tortious interference with contractual agreements. Appellants
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also filed third-party claims against Triangle's predecessor,
Oriental, for breach of contract, fraud, defamation, and
violations of the FDCPA based on the assignment of the loan
agreement.
On January 25, 2018, Triangle moved to dismiss Appellants'
counterclaims. In turn, on August 3, 2018, the district court
adopted the magistrate judge's report and recommendation,
dismissing all such counterclaims, except that of invasion of
privacy.
On July 9, 2018, Triangle moved for summary judgment, seeking
immediate payment of amounts due or, alternatively, foreclosure of
the mortgaged properties. Oriental also moved for summary
judgment. On January 22, 2019, the district court adopted the
magistrate judge's reports and recommendations and entered an
order granting Triangle's and Oriental's motions for summary
judgment. Said order also incorporated the August 3, 2018
dismissal of counterclaims against Triangle (minus that for
invasion of privacy). On January 28, 2019, the district court
entered judgment in the third-party complaint against Oriental,
reflecting its dismissal with prejudice. On February 26, 2019,
Appellants filed a notice of appeal as to the January 22, 2019
order granting summary judgment in favor of Triangle and Oriental
and the January 28, 2019 judgment, which dismissed the third-party
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claims against Oriental. This notice of appeal led to the
docketing of appeal number 19-1251 in this court ("Appeal No. 1").
C. Post-Notice of Appeal Proceedings
On April 23, 2019, this court entered an order directing
Appellants to show cause as to why Appeal No. 1 should not be
dismissed for lack of jurisdiction. In response, Appellants (1)
suggested that they only intended to appeal from the district
court's order and judgment dismissing their third-party complaint
against Oriental and (2) informed this court that they had filed
two motions before the district court to establish finality -- one
seeking certification under Federal Rule of Civil Procedure 54(b)4
and another seeking voluntary dismissal of the sole remaining
counterclaim against Triangle for invasion of privacy. In an
4 Rule 54(b) states:
When an action presents more than one claim
for relief—whether as a claim, counterclaim,
crossclaim, or third-party claim—or when
multiple parties are involved, the court may
direct entry of a final judgment as to one or
more, but fewer than all, claims or parties
only if the court expressly determines that
there is no just reason for delay. Otherwise,
any order or other decision, however
designated, that adjudicates fewer than all
the claims or the rights and liabilities of
fewer than all the parties does not end the
action as to any of the claims or parties and
may be revised at any time before the entry of
a judgment adjudicating all the claims and all
the parties’ rights and liabilities.
Fed. R. Civ. P. 54(b).
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electronic amended order entered on May 14, 2019, the district
court granted the second motion, dismissing Appellants' invasion
of privacy counterclaim against Triangle with prejudice. That
same day via a separate electronic order, the district court denied
as moot Appellants' motion for Rule 54(b) certification due to
their voluntary dismissal of the sole remaining counterclaim
against Triangle.5
On May 16, 2019, the district court entered a judgment (the
"May 16 Judgment") which stated: "In accordance with the Judgment
entered on January 28, 2019 [dismissing third-party claims against
Oriental] and the Amended Order entered on May 14, 2019 [dismissing
with prejudice the invasion of privacy counterclaim against
Triangle], this case is DISMISSED with prejudice." Concerned by
the wording of the May 16 Judgment, Triangle sought
reconsideration, asking the district court to dismiss only the
invasion of privacy counterclaim with prejudice and to enter
judgment in Triangle's favor on the amended complaint, as set out
in the January 22, 2019 order. The district court directed the
parties to submit proposed orders and judgments. In response,
Triangle filed a motion in compliance, which included two proposed
The order entered by the district court states: "Motion for
5
Certificate of Appealability: MOOT. [Appellants] have voluntarily
dismissed their third party complaint against Oriental Bank." We
note, however, that Appellants' counterclaim against Triangle
(rather than any claim against Oriental) was what Appellants moved
to voluntarily dismiss.
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judgments. However, the district court entered an electronic order
on June 20, 2019, denying Triangle's motion in compliance as
"unnecessary" and stated: "The judgment entered May 16, 2019 is
sufficient." On July 22, 2019, Triangle filed a notice of appeal
challenging the effective denial of the motion in compliance, the
May 16 Judgment, and the denial of Triangle's motion to alter or
amend. This appeal was docketed as 19-1786 ("Appeal No. 2").
Meanwhile, while this court's show cause order was pending in
Appeal No. 1 (and Appeal No. 2 had been filed), Appellants
petitioned for bankruptcy. This court entered a stay of appeal
pending Appellants' bankruptcy proceedings on October 16, 2019.
On January 3, 2020, while both appeals were stayed, the
district court sua sponte entered two judgments. First, the
district court entered a partial judgment ordering Appellants to
pay Triangle $1.4 million (to satisfy the remaining balance on the
loan). Second, it entered a final judgment which incorporated (1)
the partial judgment entered that same day, (2) the judgments
entered on January 28, 2019 (dismissing Appellants' third-party
complaint against Oriental), and (3) the judgment entered on May
14, 2019 (dismissing Appellants' invasion of privacy counterclaim
against Triangle) -- thereby dismissing the entire case with
prejudice (the "January 3 Judgments").
On January 14, 2020, Appellants filed a motion to alter and
amend, asking the district court to set aside its January 3
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Judgments on the ground that it lacked jurisdiction because of the
automatic bankruptcy stay. That same day, the district court noted
the pendency of the stay, yet did not vacate the January 3
Judgments. Appellants hence filed a second notice of appeal
challenging the January 3 Judgments. This appeal is pending as
appeal 20-1284 ("Appeal No. 3"). Via order on August 5, 2020, we
consolidated the three appeals.
II. Appellate Jurisdiction: Finality
Prior to addressing the merits of the claims on appeal, we
must first examine the jurisdictional issues these consolidated
appeals present. As previously noted, this court issued a show
cause order on April 23, 2019 flagging the issue of finality,
observing that the judgment being appealed was not final or
appealable on an interlocutory basis given that at the time one
claim remained pending before the district court. Furthermore,
said order signaled a timeliness issue regarding the January 22,
2019 order.
Oriental posits that we have no jurisdiction over Appeal No.
1 because Appellants filed their notice of appeal as to a non-
final judgment on February 26, 2019 and failed to subsequently
file a notice of appeal after the May 16 Judgment.6
6 Triangle asserts that the portion of Appeal No. 1
challenging the district court's January 22, 2019 order falls out
of the statutory timeframe to appeal provided by Federal Rules of
Appellate Procedure 3(a)(1) and 4(a)(1). Because, as described
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Generally, this court only has jurisdiction over appeals from
final decisions from district courts, 28 U.S.C. § 1291, and certain
interlocutory and collateral orders, see 28 U.S.C. § 1292; Fed. R.
Civ. P. 54(b); Bautista Cayman Asset Co. v. Asociacion de Miembros
de la Policia de P.R., 17 F.4th 167, 170-71 (1st Cir. 2021). Final
decisions -- which we also often refer to as final judgments --
are those that "dispose[] of all claims against all parties."
Galvin v. U.S. Bank, N.A., 852 F.3d 146, 154 (1st Cir. 2017)
(quoting Me. Med. Ctr. v. Burwell, 841 F.3d 10, 15 (1st Cir.
2016)). Here, Appeal No. 1 was docketed before the district court
entered a final judgment, given that a pending claim was still
alive, to wit, the invasion of privacy counterclaim against
Triangle.7 However, given that the district court issued
subsequent orders, including the May 16 Judgment and the January
3 Judgments, we must determine whether Appellants' prematurely
below, the outcome on the merits of Appeal No. 1 ultimately is
straightforward, we bypass this question. See VS PR, LLC v. ORC
Miramar Corp., 34 F.4th 67, 70 n.3 (1st Cir. 2022) (noting that,
unlike Article III jurisdiction, which we may never disregard, "we
may occasionally bypass statutory jurisdiction" if there is no
merit to the appeal (quoting Alvarado v. Holder, 743 F.3d 271, 276
(1st Cir. 2014))).
7 Moreover, the district court did not enter a partial
judgment under Federal Rule Of Civil Procedure 54(b), which would
have indicated that claims as to Oriental had been fully
adjudicated. See United States v. Univ. of Mass., Worcester, 812
F.3d 35, 38, 45 (1st Cir. 2016).
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filed notice of appeal ripened with the entry of any of these
subsequent judgments.
Oriental argues that the entry of the May 16 Judgment had no
effect on the prematurely filed notice of appeal because said
judgment dismissed the case entirely as to all parties.
Additionally, Oriental asserts that Appellants should have filed
a second notice of appeal after the May 16 Judgment. Appellants,
on the other hand, claim that, if the May 16 Judgment was the final
judgment, then pursuant to Federal Rule of Appellate Procedure
4(a)(2), the prematurely filed notice of appeal related forward.
If not, they argue the January 3 Judgments were the final ones
that caused the prematurely filed notice of appeal to ripen. We
agree with Appellants.
The Federal Rules of Appellate Procedure allow us to treat
"[a] notice of appeal filed after the court announces a decision
or order--but before the entry of the judgment or order--[] as
filed on the date of and after the entry." Fed. R. App. P. 4(a)(2).
As the Supreme Court has observed, the Rule "permits a notice of
appeal from a nonfinal decision to operate as a notice of appeal
from the final judgment . . . when a district court announces a
decision that would be appealable if immediately followed by the
entry of judgment." FirsTier Mortg. Co. v. Invs. Mortg. Ins. Co.,
498 U.S. 269, 276 (1991) ("[P]ermitting the notice of appeal to
become effective when judgment is entered does not catch the
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appellee by surprise."); see also Ramos-Santiago v. WHM Carib,
LLC, 919 F.3d 66, 70 (1st Cir. 2019); Clausen v. Sea-3, Inc., 21
F.3d 1181, 1185 (1st Cir. 1994).
As the Supreme Court in FirsTier explained, Rule 4(a)(2) does
not improperly expand the courts of appeals' § 1291 jurisdiction.
The source of finality for jurisdictional purposes is the eventual
judgment required by Rule 4(a)(2). FirsTier, 498 U.S. at 274-76.
The previously announced "decision" must be encapsulated by that
final judgment, such that an appellant's blunder in prematurely
filing the notice of appeal is "understandable" for "[l]ittle would
be accomplished by prohibiting the court of appeals from reaching
the merits of such an appeal." Id. at 276. Thus, we conclude
that Appellants' prematurely filed notice of appeal related
forward to the May 16 Judgment. No second notice was required,
either by Rule 4(a)(2) itself or by caselaw interpreting the rule.
Id. at 277. Therefore, we conclude that we have jurisdiction over
Appeal No. 1.
III. Article III Jurisdiction: Mootness
Article III of the Constitution confines federal courts to
deciding actual cases and controversies. U.S. Const. art. III,
§ 2, cl. 1. A case is moot, and therefore non-justiciable, "when
the issues presented are no longer 'live' or the parties lack a
legally cognizable interest in the outcome." Harris v. Univ. of
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Mass. Lowell, 43 F.4th 187, 191 (1st Cir. 2022) (quoting Chafin v.
Chafin, 568 U.S. 165, 172 (2013)).
Here, Appellants have satisfied the amounts due under the
Financing Agreement, after reaching an agreement for the sale of
real estate collateral to third-party VPP Holdings LLC. The sale
of the collateral took place on July 7, 2020, and the proceeds
were delivered to Triangle to pay off the amounts owed. As a
result, Triangle filed a motion before the district court informing
the court of the satisfaction of judgment, which Appellants did
not oppose. Triangle also filed a similar motion before this court
on October 13, 2020, requesting dismissal of the appeals.
Subsequently, the district court entered an order noting the
satisfaction of the monies owed and a judgment dismissing the case
-- the fifth in this case. Consequently, many of Appellants'
challenges to the district court's decisions regarding Triangle -
- the denial of Appellants' motion to dismiss Triangle's claims
(including Appellants' argument that Triangle's complaint was
time-barred); the denial of Appellants' motion to set aside the
district court's ex parte attachment order; the denial of
Appellants' motion to strike an affidavit submitted by Triangle;
and the grant of summary judgment to Triangle -- are now moot.8
In the district court proceedings, Appellants unsuccessfully
8
challenged Triangle's complaint, the district court's ex parte
attachment order, and an affidavit submitted by Triangle. Appeal
No. 1 included appeals from these decisions.
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Our inquiry as to said matters ends here. Additionally, Appeal
No. 2 (Triangle's challenge to the district court's wording in the
May 16 Judgment) is also moot. With the jurisdictional issues set
aside, we now proceed to the merits of Appellants' breach of
contract and fraud counterclaims against Triangle and third-party
claims against Oriental.
IV. The Merits
We review a district court's grant of summary judgment de
novo, resolving it is appropriate only if "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); see Modeski
v. Summit Retail Sols., Inc., 27 F.4th 53, 56 (1st Cir. 2022).
"We do this while 'drawing all reasonable inferences in favor of
the non-moving party.'" Doe v. Trs. of Bos. Coll., 892 F.3d 67,
79 (1st Cir. 2018) (quoting Roman Cath. Bishop of Springfield v.
City of Springfield, 724 F.3d 78, 89 (1st Cir. 2013)). Similarly,
we review the grant of a motion to dismiss de novo, Lyman v. Baker,
954 F.3d 351, 359 (1st Cir. 2020), accepting well-pled facts as
true and drawing all inferences in favor of the non-moving party,
Irizarry v. United States, 427 F.3d 76, 77 (1st Cir. 2015).
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A. Appellants' Counterclaims Against Triangle and Third-Party
Claims Against Oriental (Appeal No. 1)
1. Breach of Contract
Appellants seek review of the district court's grant of
summary judgment in favor of Oriental and the dismissal of the
breach of contract and fraud counterclaims against Triangle.
Because Appellants seek review of closely related claims as to
both Oriental and Triangle, we address them simultaneously.
Appellants assert that the district court's judgment in Oriental's
favor constitutes error because there was, in fact, a binding loan
proposal between the parties that was breached by Oriental;
Oriental committed fraud by selling the loan to Triangle after
promising to refinance it; and Oriental violated the FDCPA. As to
Triangle, Appellants contend that the district court failed to
review the Financing Agreement in its entirety and misconstrued
Puerto Rico contractual principles by failing to consider
extrinsic evidence.
Neither party disputes that Puerto Rico contract principles
apply to the instant diversity action. Almeida-León v. WM Cap.
Mgmt., Inc., 993 F.3d 1, 7 (1st Cir. 2021). A cognizable claim
for breach of contract under "Puerto Rico law requires sufficient
allegations of a breach of the contractual terms and that the
breach caused an identifiable harm." Almeida-León, 993 F.3d at
13; Soc. de Gananciales v. Velez & Asoc., 145 P.R. Dec. 508 (1998).
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When disputes arise as to contract interpretation, the 1930 Civil
Code of Puerto Rico (applicable at the time of the proceedings
below) explicitly calls for construing "the meaning of [the
contract's] terms." Borschow Hosp. & Med. Supplies, Inc. v. Cesar
Castillo Inc., 96 F.3d 10, 15 (1st Cir. 1996) (quoting Hopgood v.
Merrill Lynch, Pierce, Fenner & Smith, 839 F. Supp. 98, 104 (D.P.R.
1993), aff'd, 36 F.3d 1089 (1st Cir. 1994)). Thus, Article 1233
provides that "[i]f the terms of a contract are clear and leave no
doubt as to the intentions of the contracting parties, the literal
sense of its stipulations shall be observed. If the words should
appear contrary to the evident intention of the contracting
parties, the intention shall prevail." P.R. Laws Ann. tit. 31, §
3471. Courts are barred from considering extrinsic evidence in a
written contract where the terms are clear and unambiguous.
Borschow Hosp., 96 F.3d at 15-16; Vulcan Tools of P.R. v. Makita
U.S.A., Inc., 23 F.3d 564, 567 (1st Cir. 1994); Marina Indus.,
Inc. v. Brown Boveri Corp., 114 P.R. Dec. 64, 72 (1983).
In support of their breach of contract claims, Appellants
posit two factual scenarios that are simply unsupported by the
record. First, that Oriental's in-house approval of the loan
proposal -- without being signed by both parties -- perfected a
new contract. Second, that Oriental's failure to notify Appellants
of the approval of the loan violated its duty of good faith.
Appellants thus assume that the loan proposal for the refinancing
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of the Financing Agreement was signed, valid, and in effect.
However, nowhere in the Financing Agreement do we find a provision
requiring refinancing of the loan and nowhere in the record do we
find that any new loan proposal was ever finalized. Instead, the
Financing Agreement is clear and unambiguous as to the following:
the term loan was to be paid in full no later than thirty-six
months after the date of the Financing Agreement, that is, December
23, 2012; the failure to pay, when due, any principal of or
interest on the Promissory Note is considered an event of default;
no delay or failure of the bank in the exercise of any right (e.g.
collection of amounts due and payable) shall affect said right;
and no amendment of any provision of the loan agreement shall be
effective "unless it is in writing and signed by the Bank and each
Borrower[.]" (Emphasis added). Here, there exists no written
agreement signed by both parties, Appellants and Oriental, that
indeed refinances the loan and binds Triangle. Furthermore, there
is no provision in the Financing Agreement that mandates
refinancing.
As if the aforementioned were not sufficient, Appellant
Leonardo Gómez admitted in his deposition that the Financing
Agreement's balloon payment was set to expire in 2012 and the
balance due in December 2012 was not paid off. Additionally, he
testified that the loan proposal "was never signed[] because the
people that we were in communication with never contacted us, for
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us to be able to refinance." Lastly, when questioned on whether
the loan proposal was signed, he replied "[n]o, it was never
signed."
The clause in the Financing Agreement that points to a
revision of the commercial credit on May 5, 2010 in no way implies
or creates an obligation to refinance. Appellants attempt to evade
the effect of the Financing Agreement provisions by arguing that
they engaged in preliminary negotiations for refinancing with
representatives of Oriental and Bayview. Additionally, Appellants
argue that Oriental dealt in bad faith when it failed to notify
them of the alleged approval of the loan proposal.9 Once again,
Appellants rely upon the misconception that their loan proposal
was approved and in effect, despite the fact that the record does
not so evidence.
Nonetheless, Appellants posit that "if there is no mention in
the Financing Agreement of an obligation to refinance, then the
proper inquiry was to ascertain the intention of the parties at
the time of entering into the contract." Specifically, Appellants
claim that the district court erred in failing to consider the
parties' shared intentions to refinance, and the fact that
Appellants stopped making payments to Oriental "to force a reaction
9 Article 1210 of the Civil Code of Puerto Rico establishes
the duty to act in good faith while fulfilling a contract. P.R.
Laws Ann. tit. 31, § 3375; Unisys Puerto Rico, Inc. v. Ramallo
Bros. Printing, Inc., 128 P.R. Dec. 842, 852 (1991).
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from Bayview," the loan servicer. But, again, when contracts are
unambiguous, as this one is, we need not consider extrinsic
evidence. See P.R. Laws Ann. tit. 31, § 3471; Borschow Hosp., 96
F.3d at 15-16; Vulcan Tools, 23 F.3d at 567. The Financing
Agreement is straightforward in stating that said agreement could
not be amended unless in writing and signed by the Bank and
Appellants. Subsequent events cannot change what the parties
agreed to, and Appellants have not alleged any ambiguity within
the contract.10 In sum, the loan proposal was never signed by both
parties, thus there was no agreement to refinance the loan and no
breach when Oriental, and later Triangle, insisted on payment.11
2. Fraud
In federal diversity cases involving claims of fraud, state
law governs all issues related to the elements of fraud. See
Borschow Hosp., 96 F.3d at 15. Under Puerto Rico law, fraud
arising out of a contractual relationship "is a type of contractual
deceit" that occurs at the formation of a contract or during the
performance of said contract. Dialysis Access Ctr., LLC v. RMS
10 To the extent that any issues prior to the contract's
formation could be alleged, such as under the Puerto Rico doctrine
of culpa in contrahendo, Appellants did not include any such claim
in their third-party complaint against Oriental and as such, the
claim is waived.
11As discussed above, the Financing Agreement did not include
an obligation to refinance, foreclosing Appellants' breach of
contract arguments under the 2009 contract.
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Lifeline, Inc., 638 F.3d 367, 378 (1st Cir. 2011); see also Colón
v. Promo Motor Imps., Inc., 144 P.R. Dec. 659, 668 (1997) (official
translation). If the contractual deceit, known in Spanish as
"dolo," takes place during the performance of the contractual
obligation, "a plaintiff must establish '(1) the intent to defraud;
(2) reliance on the fraudulent acts; (3) the false representations
used to consummate the fraud; and (4) that the fraud was
consummated by virtue of such representations.'" Est. of Berganzo-
Colon v. Ambush, 704 F.3d 33, 39 (1st Cir. 2013) (quoting P.R.
Elec. Power Auth. v. Action Refund, 472 F. Supp. 2d 133, 138-39
(D.P.R. 2006)); see also P.R. Laws Ann. tit. 31, §§ 3018, 3019.
Good faith is presumed between contracting parties and the party
that seeks to rebut this presumption carries the burden of proof.
Citibank Glob. Mkts., Inc. v. Rodriguez Santana, 573 F.3d 17, 29
(1st Cir. 2009); Citibank v. Dependable Ins. Co., Inc., 121 P.R.
Dec. 503 (1988).
Appellants contend that Oriental and Triangle engaged in
fraud because Oriental promised them it would refinance the
Financing Agreement but instead sold the loan to Triangle, who
allegedly had acquired the same duties as Oriental and had to
complete the process for the refinancing. In order to establish
fraud, Appellants must prove that Oriental and Triangle made false
representations, that Appellants reasonably relied on said
representations, that they suffered an injury as a result of that
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reliance, and that Oriental and Triangle had the intent to defraud.
P.R. Elec. Power Auth. v. Action Refund, 515 F.3d 57, 66 (1st Cir.
2008). Nothing in the record supports a finding that either
Oriental or Triangle made false representations with the intent to
defraud Appellants. As Oriental correctly states, it could not
have committed fraud by failing to honor the loan proposal as a
new contract. Consequently, Triangle had no refinancing
obligation to note. This is so because, as discussed supra, the
provisions of the Financing Agreement are clear and unambiguous in
stating that any amendment to said loan agreement must be in
writing and signed by both parties.
3. FDCPA Claim
Appellants contended in their third-party complaint against
Oriental that the bank violated the FDCPA by using "false,
deceptive, or misleading representation[s] or means in connection
with the collection of [the] debt." 15 U.S.C. § 1692e. However,
Appellants' opening brief to this court fails to include and
develop said claim. We "deem waived claims not made or claims
adverted to in a cursory fashion, unaccompanied by developed
argument." Aquinnah/Gay Head Cmty. Ass'n., Inc. v. Wampanoag Tribe
of Gay Head (Aquinnah), 989 F.3d 72, 80 (1st Cir. 2021) (quoting
Rodríguez v. Mun. of San Juan, 659 F.3d 168, 175 (1st Cir. 2011));
see Vázquez-Rivera v. Figueroa, 759 F.3d 44, 46-47 (1st Cir. 2014)
(deeming waived and therefore declining to review issues not
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briefed, even where appellant's "notice of appeal signaled his
intent to" raise them). Thus, we need not reach the FDCPA claim.
B. Appellants' Challenge to the January 3 Judgments (Appeal No.3)
Before we discuss this issue, we succinctly recap the
procedural history. While Appeal No. 1 and Appeal No. 2 were
pending before this court and stayed due to the bankruptcy
proceedings, the district court issued a new partial judgment on
January 3, 2020. Said partial judgment laid down the specific
amounts Appellants were to pay to Triangle and ordered the
foreclosure of the properties if payment was not made within 14
days. Additionally, the district court entered a new final
judgment incorporating the partial judgment with the judgments
entered on January 28, 2019 and May 14, 2019 --dismissing the case
with prejudice. Appellants filed a timely motion for
reconsideration before the district court, arguing it lacked
jurisdiction to issue the January 3 Judgments. The district court
noted the motion and indicated that "[t]he judgments have been
issued and the court of appeals has stayed the appeals."
Subsequently, Appellants filed Appeal No. 3. Triangle opposes and
posits this appeal should be dismissed because the district court
had no jurisdiction to enter the January 3 Judgments. In turn,
Appellants oppose Triangle's assertion, stating that even if the
judgments were ineffective when entered, they became effective
once the bankruptcy automatic stay was lifted on May 12, 2020. We
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agree with Triangle that there was, in fact, a bankruptcy automatic
stay in place that renders void the January 3 Judgments.
Section 362(a)(1) of the Bankruptcy Code, 11 U.S.C.
§ 362(a)(1), "provides that the filing of a bankruptcy petition
stays the commencement or continuation of all nonbankruptcy
judicial proceedings against the debtor." In re Soares, 107 F.3d
969, 973 (1st Cir. 1997). When the district court entered the
January 3 Judgments, the automatic bankruptcy stay was in effect,
as it had been since Appellants filed for bankruptcy on August 15,
2019. The automatic stay began at that very moment and "operate[d]
without the necessity for judicial intervention." Id. at 975(internal quotation marks omitted). We have consistently
recognized that actions in contravention of an automatic stay are
void and have no legal effect. Id. at 976; I.C.C. v. Holmes
Transp., Inc., 931 F.2d 984, 987-88 (1st Cir. 1991). Appellants
fail to cite to any authority that supports their contention that
the January 3 Judgments automatically became effective once the
bankruptcy case was dismissed. We agree with Triangle that the
January 3 Judgments were void and did not become effective when
the automatic stay was lifted.
C. Waived Claims
Appellants also advance that the district court erred in
dismissing the tortious interference with contractual relations
and defamation claims against Triangle. However, they have failed
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to develop any argument as to those counterclaims. Therefore, we
need not address them here. See United States v. Zannino, 895
F.2d 1, 17 (1st Cir. 1990) ("[I]ssues adverted to in a perfunctory
manner, unaccompanied by some effort at developed argumentation,
are deemed waived.")
V. Conclusion
For the foregoing reasons, we affirm the dismissal of the
breach of contract and fraud counterclaims against Triangle and
the granting of summary judgment in favor of Oriental. We
determine that Appeal No. 1 is moot in all other aspects as well
as Appeal No. 2. Lastly, we vacate the district court's January
3 Judgments that form the basis of Appeal No. 3, and remand for
further proceedings, as needed. Costs are awarded to Triangle and
Oriental.
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Chronology of Procedural Events
Table 1
October 20, 2016* Triangle files its complaint in
the district court for
collection of monies due under
the loan agreement.
*Triangle files an amended
complaint on August 14, 2017.
May 2, 2017 Appellants file their answer to
the complaint and assert
counterclaims against Triangle
and third-party claims as to
Oriental.
August 3, 2018 The district court enters an
order adopting the magistrate
judge's report and
recommendation dismissing
Appellants' counterclaims,
except for the invasion of
privacy counterclaim.
January 22, 2019 The district court enters an
order adopting the magistrate
judge's report and
recommendation granting
Triangle's and Oriental's
respective summary judgment
motions. The sole remaining
cause of action is Appellants'
invasion of privacy
counterclaim against Triangle.
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January 28, 2019 The district court enters
judgment on Appellants' third-
party complaint against
Oriental, dismissing it with
prejudice.
February 26, 2019 Appellants file a notice of
appeal, challenging the
district court's order granting
summary judgment in favor of
Oriental. That appeal is No.
19-1251.
April 23, 2019 This court enters an order
directing Appellants to show
cause why Appeal No. 19-1251
should not be dismissed for lack
of jurisdiction.
May 7, 2019 Appellants file in the district
court a motion to voluntarily
dismiss their invasion of
privacy counterclaim against
Triangle.
May 14, 2019 The district court enters an
amended order dismissing
Appellants' invasion of privacy
counterclaim against Triangle
with prejudice. The district
court also denies as moot
Appellants' motion for Rule
54(b) certification.
May 16, 2019 The district court enters a
final judgment (in accordance
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with the judgment entered on
January 28, 2019, and the
amended order entered on May 14,
2019) dismissing the case with
prejudice.
June 5, 2019 Triangle files in the district
court a motion to alter
judgment.
June 7, 2019 The district court orders
parties to submit proposed
orders and judgments.
June 20, 2019 The district court denies
Triangle's motion in compliance
as unnecessary and states: "The
judgment entered on May 16, 2019
is sufficient."
July 22, 2019 Triangle files a Notice of
Appeal challenging the district
court's denial of the motion in
compliance as unnecessary. That
appeal is No. 19-1786.
August 15, 2019 Appellants file a chapter 13
bankruptcy petition in the
United States Bankruptcy Court
for the District of Puerto Rico.
September 11, 2019 Appellants file a motion
informing this court of their
bankruptcy in both 19-1251 and
19-1786.
October 8, 2019 Oriental files a motion to
dismiss in 19-1251, asserting
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the appeal should be dismissed
for lack of finality.
October 16, 2019 This court stays appeals 19-
1251 and 19-1786 pursuant to 11
U.S.C. § 362(a)(1).
January 3, 2020 While both appeals were stayed,
the district court sua sponte
enters (1) a partial judgment
memorializing its previous
order granting summary judgment
to Triangle and (2) a final
judgment, which incorporated
the partial judgment and the
judgments entered January 28,
2019 and May 14, 2019.
January 14, 2020 Appellants file in the district
court a motion to alter
judgment, asking it to set aside
the January 3, 2020 judgments
because of the bankruptcy
automatic stay.
January 24, 2020 The district court "notes" the
motion to alter judgment and
acknowledges that there is a
stay in place.
February 21, 2020 Appellants file a second notice
of appeal challenging the
January 3, 2020 judgments. That
appeal is No. 20-1284.
May 12, 2020 This court enters an order
vacating the bankruptcy stay
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entered in Appeal Nos. 19-1251
and 19-1786.
October 13, 2020 Triangle files before the
district court an informative
motion regarding the
satisfaction of the monies due
to it as per the district
court's judgment. The district
court dismisses the case with
prejudice after noting the
judgment had been satisfied.
October 13, 2020 Triangle files a motion for
dismissal of appeals based on
satisfaction of judgment.
Appellants oppose the
dismissal.
April 14, 2021 This court denies without
prejudice Triangle's motion to
dismiss.
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