Tenerife Real Estate Holdings v. WM Capital Management Inc.

United States Court of Appeals
For the First Circuit
No. 19-1765
FRANCISCO ALMEIDA-LEÓN; WANDA CRUZ-QUILES;
CONJUGAL PARTNERSHIP ALMEIDA-CRUZ; JUAN ALMEIDA-LEÓN,
Plaintiffs, Appellants,
TENERIFE REAL ESTATE HOLDINGS, LLC,
Plaintiff,
v.
WM CAPITAL MANAGEMENT, INC.,
Defendant, Appellee.
____________________
No. 19-1766
TENERIFE REAL ESTATE HOLDINGS, LLC,
Plaintiff, Appellant,
FRANCISCO ALMEIDA-LEÓN; WANDA CRUZ-QUILES;
CONJUGAL PARTNERSHIP ALMEIDA-CRUZ; JUAN ALMEIDA-LEÓN,
Plaintiffs,
v.
WM CAPITAL MANAGEMENT, INC.,
Defendant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. John A. Woodcock, Jr.,* U.S. Senior District Judge]
* Of the District of Maine, sitting by designation.
Before
Howard, Chief Judge,
Thompson and Kayatta, Circuit Judges.
Edilberto Berríos-Pérez for appellants.
Roberto E. Berríos-Falcón and Berríos Falcón, LLC on brief
for appellant Tenerife Real Estate Holdings, LLC.
Jairo A. Mellado-Villarreal, with whom Tessie Leal-Garabís,
and Mellado & Mellado-Villarreal were on brief, for appellee.
March 26, 2021
THOMPSON, Circuit Judge. This appeal arises from a
dispute over the enforcement of a contract that controls the
assignment and liquidation of several mortgage notes. Francisco
Almeida-León, his wife Wanda Cruz-Quiles, the couple's conjugal
partnership, and Francisco's brother Juan Almeida-León
(collectively, "the Almeidas"), initiated an action against WM
Capital Management, Inc. ("WM Capital"). The complaint includes
claims for redemption of property and breach of contract. WM
Capital filed a counterclaim seeking specific performance of the
contract and also sought joinder of Tenerife Real Estate Holdings
LLC ("Tenerife"), a signatory to the contract at issue. The
district court joined Tenerife, dismissed the claims in the
Almeidas' complaint, and granted summary judgment in favor of WM
Capital on its counterclaim for specific performance. The Almeidas
and Tenerife (collectively, the "appellants" where appropriate)
challenge those district court orders on appeal. We affirm.
I. Factual and Procedural Background
We note at the outset that the procedural history of
this case has many moving parts, so we beg the reader's patience
as we make our way through the setup. In 2007, an official from
R-G Premier Bank of Puerto Rico ("R-G Premier") approached
Francisco and Juan Almeida with a business opportunity. A
businessman named Emérito Estrada-Rivera wanted to obtain
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financing from R-G Premier for his car dealership venture but was
unable to obtain a loan from R-G Premier on his own. The R-G
Premier official therefore suggested to Francisco and Juan that
they take advantage of their strong credit to obtain a loan from
R-G Premier and use the funds to provide a loan to Estrada-Rivera.
In exchange, Francisco and Juan would receive interest from
Estrada-Rivera, and the R-G Premier official also promised to
facilitate a separate construction loan application on their
behalf. Francisco and Juan agreed to this arrangement, taking out
two loans from R-G Premier totaling approximately $2.6 million,
and subsequently providing a loan in that amount to Estrada-Rivera.
The deal was short-lived. Estrada-Rivera defaulted on
his obligations soon after the deal was finalized, which led Juan
and Francisco to default on their obligations to R-G Premier. In
2011, the Almeidas brought a foreclosure action against Estrada-
Rivera in Puerto Rico state court. The Almeidas obtained a
judgment enabling them to foreclose on three mortgage notes that
secured Estrada-Rivera's property on John F. Kennedy Avenue in San
Juan ("Kennedy Notes").1 These three mortgage notes were
The Almeidas originally brought a lawsuit against
1
Estrada-Rivera in 2008 in Puerto Rico state court. Through that
lawsuit the Almeidas obtained control over the Kennedy Notes. The
2011 foreclosure action involved the same Kennedy Notes. However,
for reasons unclear to this Court, the named plaintiffs in the
2011 action included Francisco and his wife, Wanda, but not Juan.
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subordinate to a fourth mortgage note that was originally issued
to the General Motors Acceptance Corporation ("GMAC Note").
Tenerife, a corporate entity controlled by the Almeidas, later
acquired the GMAC Note.
With that judgment in hand, Francisco and Juan set out
to resolve the debt owed to R-G Premier. However, continuing the
string of defaults, R-G Premier itself failed and in 2012 was put
under the stewardship of a receiver, the Federal Deposit Insurance
Corporation ("FDIC-R"). Shortly thereafter, the FDIC-R initiated
an action in the U.S. District Court for the District of Puerto
Rico to recoup on the loan originally made by R-G Premier.2 The
district court granted a judgment in FDIC-R's favor for
$2,828,850.11 and also put in place a temporary restraining order
prohibiting liquidation of the mortgage notes acquired in the
Almeidas' state court action against Estrada-Rivera.3 Negotiations
ensued with the FDIC-R regarding how to satisfy the judgment for
$2,828,850.11.
Tenerife was also not involved in that lawsuit.
2 The lawsuit named Juan, but not Francisco, as the
defendant.
While the FDIC-R's judgment was against Juan, the
3
temporary restraining order effectively halted the sale of the
John F. Kennedy Avenue property and therefore tied the hands of
all appellants, each of whom had an interest in notes secured by
that property.
-5-
In July 2014, the FDIC-R and appellants entered into a
contract entitled "Agreement to Satisfy Judgment[] and Assignment
of Mortgage Notes" ("2014 Agreement"). According to the 2014
Agreement, the FDIC-R would receive "an undivided one-half
interest" in the Kennedy Notes and the GMAC Note. The parties to
the agreement agreed to jointly motion the state court to amend
the judgment in the foreclosure proceedings against Estrada-Rivera
to recognize the FDIC-R as a "co-plaintiff and judgment creditor."
They also agreed that the FDIC-R would facilitate a "Phase 1
Environmental Site Assessment" of the John F. Kennedy Avenue
property. Once those conditions were met, the Kennedy Notes and
the GMAC Note would be liquidated through the sale of the real
estate collateral. Following the liquidation, the agreement
stipulated that the proceeds necessary to satisfy the judgment
would first be distributed to FDIC-R and any remaining proceeds
would be distributed to appellants.4
In December 2015, the FDIC-R sold its interest in the
2014 Agreement to WM Capital, a company based in New York. This
transfer gave the Almeidas, who had been frustrated at the amount
of time it was taking to liquidate the mortgage notes, what they
Appellants disagree with certain aspects of this
4
reading of the 2014 Agreement, and we address that issue in our
analysis below.
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hoped was an opportunity to reclaim full ownership of the Kennedy
Notes.5 Before the state court certified WM Capital as a substitute
co-plaintiff in the Estrada-Rivera case, the Almeidas initiated
the suit underlying this appeal in Puerto Rico state court alleging
breach of contract and right to redemption of property. WM Capital
removed the case to the U.S. District Court for the District of
Puerto Rico on diversity grounds.
At the outset of the case, WM Capital successfully moved
the district court to dismiss the Almeidas' right of redemption
claim under Fed. R. Civ. P. 12(b)(6). The district court reasoned
that the 2014 Agreement assigned only an interest in the proceeds
from a liquidation of the mortgage notes, not an ownership interest
in the notes themselves. As such, WM Capital's interest in the
mortgage notes could not be subject to a co-ownership redemption
claim.
WM Capital also filed a counterclaim against the
Almeidas and Tenerife for specific performance of the 2014
Agreement, and requested that Tenerife be joined as a plaintiff
under Fed. R. Civ. P. 19. The district court denied the joinder
motion, finding that WM Capital had not established that Tenerife
was a required plaintiff, but noted that permissive joinder under
5Tenerife was not a named plaintiff in the original
state court lawsuit underlying this appeal.
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Fed. R. Civ. P. 20 might be appropriate. Accordingly, WM Capital
moved the district court to join Tenerife as a plaintiff under
Fed. R. Civ. P. 20. The Almeidas did not oppose this second
joinder motion, and the district court summarily granted it.
WM Capital also filed two motions for summary judgment.
First, WM Capital sought summary judgment on the Almeidas' breach
of contract claim, which the district court granted.6 The district
court explained that the state court did not acknowledge WM Capital
as a co-plaintiff and judgment creditor in the Estrada-Rivera case
until after the Almeidas filed their complaint. Since WM Capital's
entrance into the state court case was a condition precedent to
liquidation, the district court reasoned that WM Capital could not
have been the cause of a failure to liquidate the mortgage notes
at the time the complaint was filed. The district court therefore
granted summary judgment in WM Capital's favor on the Almeidas'
breach of contract claim.
WM Capital's second motion for summary judgment
addressed its claim for specific performance, the sole remaining
claim in the case. Having already found the existence of a valid
contract and having dismissed the Almeidas' right to redemption
6 While this motion was filed prior to Tenerife's
joinder, the court granted the motion approximately one year after
Tenerife's joinder.
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and breach of contract claims, the district court held that WM
Capital was entitled to summary judgment for specific performance
of the 2014 Agreement. It then entered a final judgment requiring
liquidation of the three Kennedy Notes and the GMAC Note, with the
proceeds first distributed to WM Capital to satisfy the
$2,828,850.11 judgment resolved by the 2014 Agreement and the
remaining proceeds distributed to appellants.
On appeal, appellants challenge various aspects of four
district court orders and the final judgment discussed above. They
contend that the district court erred when it (1) dismissed the
Almeidas' right to redemption claim, (2) joined Tenerife under
Fed. R. Civ. P. 20, (3) granted summary judgment in WM Capital's
favor on the Almeidas' breach of contract claim, and (4) granted
summary judgment in WM Capital's favor on its counterclaim for
specific performance. Appellants also raise several arguments
with respect to the district court's final judgment, which largely
track their arguments regarding summary judgment.
II. Analysis
Having carefully considered the record, we affirm the
four district court orders and the final judgment challenged by
appellants. They are addressed below in the order they were
decided by the district court.
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A. Appellants' Right of Redemption Claim
The Almeidas brought a claim against WM Capital
asserting the right of redemption in property under Puerto Rico
law. According to the Almeidas, they had the right to purchase WM
Capital's interest in the 2014 Agreement for the price WM Capital
had paid the FDIC-R.7 The district court dismissed the right of
redemption claim pursuant to Fed. R. Civ. P. 12(b)(6). We review
the district court's ruling de novo, accepting all well-pleaded
facts in the operative complaint and drawing all reasonable
inferences in appellants' favor. Kader v. Sarepta Therapeutics,
Inc., 887 F.3d 48, 56 (1st Cir. 2018).8 As this case falls under
our diversity jurisdiction, we apply the substantive law of Puerto
Rico. Rinsky v. Cushman & Wakefield, Inc., 918 F.3d 8, 16 n.3
Notably, according to the Almeidas, WM Capital obtained
7
the FDIC-R's interest in the 2014 Agreement -- including the
"undivided one-half interest" in the Kennedy Notes and the GMAC
Note -- for $92,840.71. Given that the Kennedy Notes and the GMAC
Note were potentially worth several million dollars, the Almeidas
had a strong financial incentive to try to consolidate their
interest in the 2014 Agreement by paying WM Capital the
comparatively small sum of $92,840.71.
We consider the text of the 2014 Agreement in reviewing
8
the district court's order. Appellants refer to the 2014 Agreement
in their briefs on appeal. Further, the 2014 Agreement is "central
to" appellants' right of redemption claim and is "sufficiently
referred to in the complaint." Gargano v. Liberty Int'l
Underwriters, Inc., 572 F.3d 45, 47 n.1 (1st Cir. 2009) (quoting
Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir. 1993)).
-10-
(1st Cir. 2019) (quoting Levin v. Dalva Bros., Inc., 459 F.3d 68,
73 (1st Cir. 2006)).
The right of redemption is essentially the right to
acquire property. See Baetjer v. Garzot, 124 F.2d 920 (1st Cir.
1942). Under the Civil Code of Puerto Rico, a co-owner of property
may exercise the right of redemption whenever another co-owner
transfers ownership to a third party. P.R. Laws Ann. tit. 31,
§ 3922 ("A co-owner of a thing held in common may exercise the
redemption in case the shares of all the other co-owners, or of
any of them, are sold to a third party."). The co-owner asserting
this right must purchase the property from the third party for the
amount paid by the third party plus expenses. Id. § 3912. This
serves to reduce joint ownership of property, which Puerto Rico
law disfavors. Ortiz Roberts v. Ortiz Roberts, 3 P.R. Offic.
Trans. 876, 879 (1975).
In determining whether the right of redemption is
available to appellants, we must first consider the property
interest at issue. The 2014 Agreement defines the property
interest purchased by WM Capital from the FDIC-R as a one-half
interest in the Kennedy Notes and the GMAC Note. The 2014
Agreement does not assign WM Capital rights to the underlying real
property, nor does it envision that WM Capital will hold its one-
half interest in the mortgage notes indefinitely. Instead, WM
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Capital's interest is limited to the proceeds from liquidation of
the real property equal to the amount owed under the 2014
Agreement. This interest is described as an "assignment for
payment" and requires that the parties take steps to sell the
mortgaged properties at a foreclosure auction "as soon as
possible." Only after the parties take these steps is the
underlying debt extinguished.
We agree with the district court that this form of
property assignment constitutes what is known under Puerto Rico
law as a pago por cesión de bienes or payment by assignment of
property. See P.R. Laws Ann. tit. 31, § 3179. Like the 2014
Agreement, the purpose of a pago por cesión de bienes is to
"release[] [the debtor] from liability" through the assignment of
an interest in property. Id. Also, like the 2014 Agreement, a
pago por cesión de bienes extinguishes the debt only after the
creditor collects the funds generated by the liquidation of
property, with any surplus proceeds transferred back to the debtor.
Trabal Morales v. Ruiz Rodríguez, 125 P.R. Dec. 340, 345 n.5
(1990).
Puerto Rico courts have not directly addressed whether
a pago por cesión de bienes constitutes a transfer of ownership
subject to the right of redemption. However, persuasive Spanish
-12-
authority holds that it does not.9 There is no dispute that a
change in property ownership is required to trigger the right of
redemption. P.R. Laws Ann. tit. 31, § 3922 (allowing redemption
for "[a] co-owner of a thing held in common"). And with respect
to an "assignment for payment," one Spanish treatise makes clear
"[t]here is no acquisition by the creditors of the ownership of
the assigned property." I-2 José Puig Brutau, Fundamentos de
Derecho Civil 312 (Bosch ed., 4th ed. 1988). Instead, the
creditors take over the property as liquidators of the debtor's
assets and with the fixed purpose of applying the amount obtained
to the extinction of the debts. Id. at 313. Spanish Supreme Court
precedent makes this same point. See id. at 314 (citing Spanish
Supreme Court Judgment of May 11, 1912, holding that "operations
. . . do not suppose a change of ownership" where the "debtor
confers upon the creditors the possession and administration of
the property in benefit of the transferees, and a mandate to
proceed with the sale and payment of their respective credits,"
Puerto Rico's Civil Code is "derived from Spanish law."
9
Rivera-Colón v. AT&T Mobility P.R., Inc., 913 F.3d 200, 209 (1st
Cir. 2019) (quoting Borschow Hosp. & Med. Supplies v. Cesar
Castillo Inc., 96 F.3d 10, 15 (1st Cir. 1996)). Therefore, "[i]n
interpreting the Civil Code of Puerto Rico . . . authoritative
commentaries on analogous provisions of the Spanish Civil Code are
more persuasive than common law analogies, which are inapplicable
but for purpose of comparative analysis." Republic Sec. Corp. v.
P.R. Aqueduct & Sewer Auth., 674 F.2d 952, 958 (1st Cir. 1982).
-13-
and citing Spanish Supreme Court Judgment of March 13, 1953,
reaffirming that assignments of the right to proceeds from a sale
can occur "without transmission of ownership").
Appellants do not provide any contrary Puerto Rico or
Spanish authority holding that a pago por cesión de bienes
constitutes a transfer in ownership subject to the right of
redemption. Instead, appellants argue that the district court's
order defined the 2014 Agreement as a trust agreement, and that
property held in trust is subject to the right of redemption.
There is Puerto Rico case law holding that the right of redemption
applies to property held in a statutory trust. Appellants rely on
Ortiz Roberts, in which the Puerto Rico Supreme Court held that
where real property is held in a trust, the beneficiaries of the
trust are akin to "tenants in common." 3 P.R. Offic. Trans. at
885. As such, when one beneficiary sells their share in that trust
to a third party, the other beneficiaries maintain "a right and
cause of action to redeem the share." Id. at 886. This result,
the Puerto Rico Supreme Court reasoned, aligned with the policy
behind redemption, which is "the extinction of the common
ownership, or at least the reduction of the number of co-owners."
Id. at 880.
The fundamental flaw in appellants' argument is that the
district court never held that the 2014 Agreement creates trust
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obligations, and instead explicitly rejected that argument.10 In
fact, it likely would have been erroneous for the district court
to have held that the 2014 Agreement created a trust.
Trusts in Puerto Rico are governed by the Trust Act, Act
No. 219 of August 31, 2012, P.R. Laws Ann. tit. 32, §§ 3351 et
seq.11 The 2014 Agreement does not comply with the statutory
requirements for creating a trust. It does not include an express
statement of the parties' intention to create a trust -- a key
requirement under the Trust Act. See P.R. Laws Ann. tit. 32, §§
3352, 3352a (stating that, among other requirements, "[t]he trust
instrument shall specify . . . the express statement of the
intention to create said trust"). The 2014 Agreement is also
missing other statutorily required information. See id. §§ 3352a
10 According to the Almeidas, the district court found
that "the Agreement created a trust and held that, under the laws
of Puerto Rico, redemption does not apply to participants in a
trust." That is not accurate. The district court considered the
Almeidas' argument that the 2014 Agreement created trust
obligations and summarily rejected it. Appellants do not actually
challenge that finding before this Court, but rather recast the
district court's order to suit their purposes and argue that Ortiz
Roberts applies to that alternative rendition.
11 Prior to the enactment of the Trust Act, trusts were
governed by the provisions of Sections 834 through 874 of the
Puerto Rico Civil Code, which have since been repealed.
See Section 71 of Act No. 219 of August 31, 2012, codified at P.R.
Laws Ann. tit. 31, § 2541.
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(requiring that the "[t]he trust instrument" specify "the name of
the trust being created"; "the designation of the person who may
include other assets in the trust . . . and the manner in which
such other assets may be included"; and "the full and clear
designation of the trustor, the trustee, and the beneficiary or
substitutes thereof," among other information). Furthermore, it
was not constituted through a deed. See id. § 3352 (requiring
that a trust be created "through a deed"). Nor are there any well-
pleaded facts in the second amended complaint (or even elsewhere
in the record) that the alleged "trust" was recorded in the Special
Trust Registry, that all statutory requirements related to the
recordation were complied with, and that the execution of the trust
was timely notified to the Notarial Inspection Office. See id.
§ 3351d (stating that, once constituted, the trust "shall be
recorded in the Special Trust Registry," where the "deed number
and name of the notary before whom it was executed," among other
information, shall be stated); id. (requiring that "[t]he notary
before whom the trust instrument was executed . . . notify the
same to the Notarial Inspection Office not later than the first
ten days of the month following the execution thereof"). Because
the 2014 Agreement does not comply with these statutory
requirements, any "trust" created under the agreement would be
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null. See id. § 3351d (stating that if the statutory requirements
are not met, the trust will be deemed null).
Ortiz Roberts is therefore not binding in this case.
Moreover, we find that the policy goal addressed by Ortiz Roberts
-- reducing joint ownership of property through application of the
right of redemption -- does not apply with equal force here.
Unlike the trust at issue in Ortiz Roberts, the 2014 Agreement
operates to liquidate the underlying property "as soon as possible"
with the end result of extinguishing joint ownership. The 2014
Agreement therefore does not raise the same concerns with respect
to perpetuating joint ownership that the Puerto Rico Supreme Court
addressed in Ortiz Roberts.
In sum, we find that the 2014 Agreement is a pago por
cesión de bienes that does not constitute a change in ownership
subject to the right of redemption. Moreover, the 2014 Agreement
did not create a trust and this case does not raise the same policy
concerns with respect to joint ownership addressed in Ortiz
Roberts. The district court's dismissal of appellants' right of
redemption claim is affirmed.
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B. Joinder of Tenerife under Fed. R. Civ. P. 20
Appellants challenge the district court's joinder of
Tenerife into this litigation.12 The majority of their arguments
focus on how Tenerife was not an "indispensable" party under Fed.
R. Civ. P. 19. Those arguments are of no consequence, however,
because the district court denied WM Capital's joinder motion
brought pursuant to Fed. R. Civ. P. 19 and instead joined Tenerife
pursuant to Fed. R. Civ. P. 20. Appellants offer two additional,
highly abbreviated arguments against joinder, claiming that the
district court lacked subject matter jurisdiction and that joinder
violated Tenerife's due process rights. While we typically review
a district court's joinder decision for abuse of discretion,
Picciotto v. Cont'l Cas. Co., 512 F.3d 9, 15 (1st Cir. 2008), we
review questions of law de novo, Román-Cancel v. United States,
613 F.3d 37, 41 (1st Cir. 2010). We find appellants' arguments
unpersuasive and, with respect to the due process issue,
insufficiently developed to warrant further review. See United
States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("It is not
enough merely to mention a possible argument in the most skeletal
12 WM Capital argues that the Almeidas lack standing to
raise joinder-related arguments on Tenerife's behalf and that the
Almeidas forfeited these arguments by failing to object to joinder
before the district court. Given that we find the same arguments
raised by Tenerife fail, we need not resolve these standing and
forfeiture issues with respect to the Almeidas.
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way, leaving the court to do [the] work, create the ossature for
the argument, and put flesh on its bones.").
Appellants first argue that the dispute between WM
Capital and Tenerife is "fictitious" such that the district court
lacked subject matter jurisdiction. Appellants assert that WM
Capital, by joining Tenerife as a plaintiff, is "suing itself on
behalf of Tenerife, creating a fictitious controversy on the
pleadings." Appellants do not develop this point further, leaving
this Court largely to speculate how Tenerife's joinder raises
subject matter jurisdiction concerns.13 While the briefs are not
helpful in making clear their point, we are mindful that federal
courts have sua sponte recognized that they lack jurisdiction "when
the controversy is no longer 'live' or the parties 'lack a
legal[ly] cognizable interest in the outcome,'" Shelby v.
Superformance Int'l, Inc., 435 F.3d 42, 45 (1st Cir. 2006) (quoting
Ortiz–Gonzalez v. Fonovisa, 277 F.3d 59, 64 (1st Cir. 2002)), and
have accordingly dismissed such claims. If this is the challenge
appellants are attempting to make, they cannot succeed. The
disputes in this case are neither dead nor lacking an outcome-
interested litigant. Most notably here, WM Capital filed a
This Court has an independent duty to assess the
13
existence of subject matter jurisdiction. Espinal-Domínguez v.
Puerto Rico, 352 F.3d 490, 495 (1st Cir. 2003).
-19-
counterclaim alleging that Tenerife breached the 2014 Agreement,
and Tenerife filed an answer to that counterclaim denying the
allegations and asserting affirmative defenses. These pleadings
evidence an active dispute as to the proper operation of the 2014
Agreement, and appellants' arguments fail to provide an
identifiable basis for labeling this dispute as "fictitious."
Seeing no such basis on our own review,14 appellants' arguments
regarding subject matter jurisdiction fail.
Appellants next argue that Tenerife's joinder deprived
Tenerife of due process, because it occurred after the district
court already ruled on several issues in this case. Joining a
party in the middle of litigation is not inherently impermissible,
and there are some instances where even post-judgment joinder is
appropriate. See Perry v. Blum, 629 F.3d 1, 16–17 (1st Cir. 2010).
We must therefore look to appellants for an explanation of why
they deem the process in this particular case insufficient. Id.In doing so, appellants must demonstrate that the lower court
failed to "comport with the strictures of due process," such as by
failing to provide "notice" or "an opportunity to be heard at a
meaningful time and in a meaningful manner." Id. at 16.
We note that the district court persuasively addressed
14
other challenges to subject matter jurisdiction below, and
appellants have not raised specific challenges to the district
court's reasoning on those points.
-20-
Generally, appellants must demonstrate that this alleged lack of
process caused "prejudice," such that the "abridgement of due
process is likely to have affected the outcome of the proceedings."
Amouri v. Holder, 572 F.3d 29, 36 (1st Cir. 2009) (quoting Pulisir
v. Mukasey, 524 F.3d 302, 311 (1st Cir. 2008)).
In this endeavor we find appellants' arguments entirely
lacking. As to whether the district court failed to provide
sufficient process in deciding to join Tenerife as a plaintiff,
appellants' arguments are highly abbreviated and contain factual
misstatements.15 Moreover, on the issue of prejudice, there is no
explanation for how the district court's joinder decision was
"likely to have affected the outcome of the proceedings." Id. at
36. Lastly, but importantly, appellants' opening briefs are
unaccompanied by a single citation to legal authority addressing
the issue of joinder and due process. More is required on an
appeal to this Court. Fed. R. App. P. 28(a)(8)(A) (appellant's
15For instance, appellants allege that the district
court permitted WM Capital to "select[]" Tenerife's complaint,
causes of action, and the requested remedy. This is not accurate
-- the district court merely granted WM Capital's joinder motion,
and Tenerife did not subsequently seek to assert claims on its own
behalf. Appellants also allege that Tenerife was "never notified"
of this litigation. Of course, Tenerife was joined into the
litigation and at that point was on notice of the proceedings.
But moreover, given that the Almeidas initiated this litigation
and also created and exert control over Tenerife, the notion that
this litigation was proceeding totally unbeknownst to Tenerife is
specious at best.
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brief "must contain . . . appellant's contentions and the reasons
for them, with citations to the authorities and parts of the record
on which the appellant relies"); cf. Paterson-Leitch Co. v. Mass.
Mun. Wholesale Elec. Co., 840 F.2d 985, 990 (1st Cir. 1988) (a
litigant must "spell out its arguments squarely and distinctly"
and may not present an argument "bereft of meaningful citation to
authority"). Under these circumstances, we find that appellants'
due process arguments must fail. Zannino, 895 F.2d at 17 (an
argument is "waived" if "adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation").
C. Appellants' Breach of Contract Claim
Appellants argue that the district court erroneously
dismissed their breach of contract claim on summary judgment and
prior to sufficient discovery. The Almeidas' second amended
complaint alleged that the FDIC-R breached the 2014 Agreement.
The FDIC-R purportedly failed to promptly conduct an environmental
impact study, resulting in a delay in the liquidation of the
mortgage notes. According to the complaint, this delay continued
"until the commencement of the present case" on January 22, 2016.
The delay, say the appellants, constituted a contract breach that
caused them damages, a disputed issue that should have been left
to a jury to decide.
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The district court saw things differently and held that
the breach of contract claim failed as a matter of law. We review
that determination de novo, construing the record in the light
most favorable to appellants and resolving all reasonable
inferences in their favor. Miller v. Sunapee Difference, LLC, 918
F.3d 172, 176 (1st Cir. 2019). For the reasons below, we affirm.
Under Puerto Rico law, "[w]here the terms of a contract
are clear, leaving no doubt as to the contracting parties'
intentions, such contract will be observed according to 'the
literal sense of its stipulations.'" Markel Am. Ins. Co. v. Díaz-
Santiago, 674 F.3d 21, 31 (1st Cir. 2012) (quoting P.R. Laws Ann.
tit. 31, § 3471). With respect to appellants' claim that WM
Capital is responsible for a delay in the property sale, the
relevant contractual provisions are clear. The 2014 Agreement
requires a foreclosure sale and liquidation of the associated
mortgage notes "as soon as possible." However, there are
conditions precedent to that sale and liquidation. One condition
is that the Puerto Rico state court must first amend its judgment
in the Estrada-Rivera case to recognize the FDIC-R as a "co-
plaintiff and judgment creditor." Another condition is that the
FDIC-R must facilitate an environmental site assessment. The
fulfillment of both conditions is required prior to sale.
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Based on this straightforward reading of the 2014
Agreement, we find that the district court properly dismissed
appellants' breach of contract claim. 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. Mattei Nazario v. Vélez &
Asociados, 145 P.R. Dec. 508 (1998) (a breach of contract claim
arises "when the breach of a contractual obligation causes harm to
any of the contracting parties"). In this case, the 2014 Agreement
only allowed the parties to move forward with the property sale
after the state court amended its judgment. Therefore, the breach
alleged by appellants (a delay in conducting the environmental
impact study) could only have caused the alleged harm (a delay in
the sale of the properties), at the earliest, starting on February
11, 2016, when the state court amended its judgment.
Problematically for appellants, the operative complaint does not
allege that the FDIC-R caused a delay that extended to February
11, 2016, or beyond. Instead, the complaint alleges actions that
delayed the sale up until "the commencement of the present case,"
which occurred on January 22, 2016.
Simply put, delaying the sale of property through
January 22, 2016, could not have caused the harm alleged by
appellants where the sale of property was prohibited prior to
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February 11, 2016, in any event. The Almeidas could have sought
to supplement their complaint, if appropriate, to include
allegations that the FDIC-R caused a delay beyond February 11,
2016. See Fed. R. Civ. P. 15(d). But no such supplemental
complaint was filed. Instead, the second amended complaint, filed
on May 10, 2016, maintained that the FDIC-R's failure to conduct
an environmental impact study caused a delay in the property sale
only through January 22, 2016. The breach of contract claim
therefore fails to allege a plausible theory of liability, and
this failure provides a sufficient basis to affirm the district
court's dismissal of that claim. See RSA Media, Inc. v. AK Media
Grp., Inc., 260 F.3d 10, 16 (1st Cir. 2001) (summary judgment
appropriate absent a plausible theory of causation and evidence
thereof).
D. WM Capital's Specific Performance Claim and the Final
Judgment
The last challenge brought by appellants is to the
district court's grant of summary judgment in favor of WM Capital
on its claim for specific performance. WM Capital's specific
performance claim alleged that the 2014 Agreement requires the
liquidation of both the Kennedy Notes and the GMAC Note with the
funds stemming from that liquidation paid first to WM Capital. WM
Capital moved for summary judgment, which the district court
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granted. The district court thereafter entered a final judgment
requiring appellants to comply with the 2014 Agreement as
interpreted by the district court. Appellants single out the GMAC
Note and primarily argue that the district court erred in holding
that the 2014 Agreement unambiguously requires its liquidation
with the resulting proceeds going first to WM Capital. They argue
they should have been afforded a trial to resolve whether the
court's understanding of the agreement is correct.16 For the
reasons below, we affirm the district court's decision.
In addressing this issue, the district court first
determined that the 2014 Agreement was unambiguous as to the
As the district court observed below, appellants have
16
not pointed to any specific contract language that they claim is
ambiguous such that a trial is necessary. On appeal, appellants
continue to provide little explanation of what ambiguity in the
2014 Agreement must be resolved at trial. The Almeidas' brief
does not argue any specific portion of the 2014 Agreement is
ambiguous, and Tenerife's argument on this point is sparse.
Tenerife correctly observes that there is a disagreement between
appellants and WM Capital as to whether the GMAC Note is governed
by the 2014 Agreement. According to Tenerife, the district court
"should have considered [this disagreement] to be sufficient to
establish a material controversy of an essential fact since the
terms of the Agreement are then ambiguous enough to deny summary
judgment and proceed with a trial on the merits to present evidence
as to the intent of the parties." As best we can understand,
Tenerife is arguing that the parties' disagreement as to the
requirements of the 2014 Agreement demonstrates that the 2014
Agreement must be ambiguous. As we explain, because we find no
ambiguity in the relevant sections of the 2014 Agreement, this
argument must fail.
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handling of the GMAC Note. According to the district court, the
plain language of the contract assigned to the FDIC-R an undivided
one-half interest in the "Kennedy Notes" and the "GMAC Note."17
Further, the parties agreed to facilitate a liquidation of the
mortgage notes through a sale of the underlying properties, with
the proceeds of the sale going first to FDIC-R to satisfy its
judgment against appellants.18 Appellants, including Tenerife (the
17 Paragraph 3.1.2 reads:
Borrower, Co-Holders and Tenerife hereby assign to the
FDIC-R, as of the Effective Date of this Agreement, an
undivided one-half interest in each of the Kennedy
Notes, GMAC Note, and GMAC Judgment. The Kennedy Notes
and GMAC Note will be consigned by the FDIC-R, Co-Holders
and Borrower to the State Court in the Foreclosure Action
as of the date of the execution of this Agreement until:
(i) the sale of Kennedy Property, (ii) termination of
this Agreement under Section 3.2 below, (iii) or
cancellation of the Kennedy Notes and GMAC Notes. While
the Kennedy Notes and GMAC Note are consigned to the
State Court, the Parties and any potential purchaser of
the Kennedy Property accompanied by one or more of the
Parties may obtain access to inspect such notes.
18 Paragraph 3.1.3 reads:
To evidence the FDIC-R's one-half interest in the
Kennedy Notes given as assignment for payment ("Dación
o Cesión para Pago"), the Parties will immediately file
in the Foreclosure Action a joint motion, in the form
attached hereto as Exhibit 1, requesting that the
judgment entered in that case be amended to include FDIC-
R as co-plaintiff and judgment creditor. As soon as
such amended judgment is entered, the Parties, subject
to Section 3.2 below, will seek without delay and use
their best efforts to conduct the Foreclosure Auction as
soon as possible.
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entity that controls the GMAC Note), signed the 2014 Agreement.
As such, appellants agreed that they had read the agreement,
understood its contents, and were entering into it voluntarily.19
Relying on this reading of the 2014 Agreement, and having
already dismissed appellants' causes of action, the district court
explained why specific performance was warranted. This task was
not a heavy lift. As noted by the district court, Puerto Rico law
provides for specific performance of a valid contract. See P.R.
Laws Ann. tit. 31, § 3052. The district court therefore granted
summary judgment in favor of WM Capital and entered a final
judgment that tracked the terms of the 2014 Agreement. The final
judgment required appellants to take steps "to foreclose on the
Paragraph 3.1.7 reads, in relevant part:
In the event that a third party purchases the Kennedy
Property at the Foreclosure Auction for the Minimum Bid
Amount, the proceeds of such sale up to the full amount
of the Judgment will be immediately paid first to the
FDIC-R as full satisfaction of the Judgment. FDIC-R
will then deliver or otherwise assign, as necessary, any
excess sale proceeds to Borrower and Co-Holders.
19 Paragraph 3.3 reads, in relevant part:
The Parties each represent and warrant that it has read
this Agreement and knows and understands its contents
fully and has voluntarily executed this Agreement after
having had the opportunity to consult with counsel of
their choosing, and without being pressured or
influenced by any representation of any person acting on
behalf of either party.
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four mortgage notes identified in paragraph 3.1.2 of the
Agreement," including the GMAC Note, "and sell the encumbered
Kennedy property via public auction as provided for under the
Agreement." Further, as required by paragraph 3.1.3 of the 2014
Agreement, WM Capital was given first priority in payment from the
proceeds of the sale.
Upon our own review, we agree with the district court's
interpretation of the relevant contract language. In short, the
2014 Agreement, to which Tenerife is a signatory, clearly
contemplates the liquidation of both the Kennedy Notes and the
GMAC Note with first priority from the proceeds going to WM
Capital. In the absence of any ambiguity in the terms of the 2014
Agreement, the district court properly enforced its plain meaning
at summary judgment. Torres Vargas v. Santiago Cummings, 149 F.3d
29, 33 (1st Cir. 1998); see also Vulcan Tools of P.R. v. Makita
USA, Inc., 23 F.3d 564, 567 (1st Cir. 1994) ("When an agreement
leaves no doubt as to the intention of the parties, a court should
not look beyond the literal terms of the contract." (citing Marina
Indus. Inc. v. Brown Boveri Corp., 114 P.R. Dec. 64, 72 (1983))).
Furthermore, given the clear language of the 2014 Agreement, and
having already affirmed the district court's dismissal of
appellants' claims, we find that the district court properly
-29-
ordered specific performance of the terms of that contract. See
P.R. Laws Ann. tit. 31, § 3052.2020 Appellants make several other arguments, none of which
merits substantial discussion. Appellants claim that WM Capital
failed to file a sworn statement with its summary judgment motion.
But this is of no consequence, as the question before the district
court was one of contract interpretation, and the parties both
submitted identical copies of the 2014 Agreement. Appellants also
make the sweeping claim that the district court erred when it
"decided every factual issue." However, appellants neither
identify the specific factual disputes allegedly resolved in error
nor explain how those factual disputes are "material" to WM
Capital's specific performance claim. Borges ex rel. S.M.B.W. v.
Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010) (facts are "material"
only if they have "the potential to change the outcome of the
suit"). Appellants next argue that the district court did not
properly account for the "deceit" and "fraud" allegedly committed
by WM Capital. But as the district court noted below, appellants
have not identified any record evidence to support this allegation,
and this fact alone dooms appellants' argument under Puerto Rico
law. See Citibank Glob. Mkts., Inc. v. Rodríguez Santana, 573
F.3d 17, 29 (1st Cir. 2009) (Puerto Rico law presumes "good faith"
by contracting parties and therefore requires a party seeking to
invalidate a contract based on contractual deceit to "rebut the
presumption of good faith with evidence of intentional fault or
bad faith"). Lastly, appellants attack the district court's final
judgment. These arguments largely track appellants' attacks on
the district court's summary judgment decision, and they fail for
the same reasons. Additionally, appellants had the opportunity to
object to the final judgment before the district court and failed
to do so. Appellants are therefore prohibited from raising these
objections on appeal. Rockwood v. SKF USA Inc., 687 F.3d 1, 9
(1st Cir. 2012) ("Our case law is clear that 'arguments not raised
in the district court cannot be raised for the first time on
appeal.'" (quoting Sierra Club v. Wagner, 555 F.3d 21, 26 (1st
Cir. 2009))).
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III. Conclusion
For the reasons stated above, we disagree with
appellants' challenges to the district court orders and final
judgment. We affirm.
We deny WM Capital's motion for sanctions. All other
pending motions are denied as moot.
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