Brightpoint North America, L.P. v. Acosta, No. 3:2009cv01500 - Document 29 (D.P.R. 2010)

Court Description: OPINION AND ORDER GRANTING IN PART 17 Plaintiff's motion for summary judgment with regard to Acosta. We DISMISS WITH PREJUDICE the complaint against the conjugal partnership. We DISMISS WITHOUT PREJUDICE of independent litigation the claim aga inst Fernandez if any remedy is otherwise available. We DENY 27 Defendants' motion for summary judgment. The Plaintiff may request from the Clerk of Court the issuance of a writ for execution of judgment, by attachment or otherwise, based on t he final Indiana Judgment against Acosta's share in his jointly-owned properties or any other property solely belonging to Acosta. Signed by Chief Judge Jose A Fuste on 3/8/2010. (Attachments: # 1 Appendix Certified translation of Ex parte Marquez, # 2 Appendix Certified translation of the pertinent section of Aviles)(mrj)

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1 2 3 UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO BRIGHTPOINT NORTH AMERICA L.P., 4 Plaintiff, 5 v. 6 7 Civil No. 09-1500 (JAF) RAMON ACOSTA, et al., Defendants. 8 9 OPINION AND ORDER 10 Plaintiff, Brightpoint North America L.P., brings the present diversity action to enforce 11 an Indiana state-court judgment against Defendants, Ramón Acosta, Velia Fernández, and the 12 conjugal partnership between them. (Docket No. 4.) Plaintiff moves for summary judgment. 13 (Docket No. 17.) Defendants oppose and counter with a cross-motion for summary judgment. 14 (Docket No. 27.) Plaintiff opposes. (Docket No. 28.) 15 I. 16 Factual and Procedural Synopsis 17 We derive the following factual summary from Plaintiff s statement of uncontested 18 material facts. (Docket No. 18.) According to Local Civil Rule 56(e), [f]acts contained in a 19 supporting or opposing statement of material facts . . . shall be deemed admitted unless properly 20 controverted. L.Cv.R. 56(e). Because Defendants have failed to submit a statement of 21 material facts as contemplated by the Local Rules, we take Plaintiff s facts as true. See 22 Cosme-Rosado v. Serrano-Rodríguez, 360 F.3d 42, 45 (1st Cir. 2004) ( We have consistently Civil No. 09-1500 (JAF) -2- 1 upheld the enforcement of [the District Court of Puerto Rico s local rule], noting repeatedly that 2 parties ignore [it] at their peril and that failure to present a statement of disputed facts, 3 embroidered with specific citations to the record, justifies the court s deeming the facts 4 presented in the movant s statement of undisputed facts admitted. (quoting Ruiz Rivera v. 5 Riley, 209 F.3d 24, 28 (1st Cir. 2001))). 6 Plaintiff is a Delaware limited partnership with its principal place of business in 7 Indianapolis, Indiana. Acosta is a citizen of Puerto Rico and the president of CAT 8 Communications, Inc. ( CAT ), a Puerto Rico corporation with its principal place of business 9 in San Juan, Puerto Rico. CAT entered into a contract with Plaintiff, and Acosta guaranteed the 10 payment of all liabilities of CAT to Plaintiff. The contract between Plaintiff and Acosta 11 included a Governing Law and Forum clause. (Docket No. 18-4.) Should there be a lawsuit 12 concerning the payment of the guaranty, the parties consented to the application of the laws of 13 Indiana and the jurisdiction of the superior court of Marion County, Indiana. Id. at 10. In 14 accordance with the forum-selection clause, Plaintiff filed a complaint in Marion Superior Court 15 and served Defendants with a summons and complaint via certified mail. Defendants received 16 service of process on November 3, 2008. (Docket No. 18-4.) On December 4, 2008, Plaintiff 17 obtained entry of a partial summary judgment in the Marion Superior Court ( Indiana 18 Judgment ) against Acosta for $115,047.27. (Docket No. 1-2.) This was comprised of the 19 principal amount of $102,087.87; pre-judgment interest on said amount at the rate of 1.5% per 20 month for a total of $10,554.36; and Plaintiff s reasonable attorneys fees in the sum of $2,405. 21 Acosta owns undivided interests in property located in the Commonwealth of Puerto Rico, Civil No. 09-1500 (JAF) -3- 1 which includes real property jointly owned with Fernández outside of a conjugal partnership. 2 Acosta and Fernández entered into a prenuptial agreement that stipulated against the creation 3 of a conjugal partnership and for the individual ownership of all property during the marriage. 4 (Docket No. 21.) Acosta has not paid any part of the Indiana Judgment. 5 Plaintiff filed an amended complaint in this court against Acosta, Fernández, and their 6 conjugal partnership on June 18, 2009, seeking the enforcement of the Indiana Judgment. 7 (Docket No. 4.) On September 21, 2009, Plaintiff moved for summary judgment (Docket 8 No. 17) and filed a statement of uncontested facts (Docket No. 18). On October 20, 2009, 9 Defendants filed a memorandum in opposition to Plaintiff s summary-judgment motion, as well 10 as a cross-motion for summary judgment. (Docket No. 27.) Plaintiff submitted a motion in 11 opposition to Defendants summary-judgment motion on November 9, 2009. (Docket No. 28.) 12 II. 13 Standard for Summary Judgment 14 We grant a motion for summary judgment if the pleadings, the discovery and disclosure 15 materials on file, and any affidavits show that there is no genuine issue as to any material fact 16 and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A factual 17 dispute is genuine if it could be resolved in favor of either party and material if it potentially 18 affects the outcome of the case. Calero-Cerezo v. U.S. Dep t of Justice, 355 F.3d 6, 19 (1st Cir. 19 2004). 20 The movant carries the burden of establishing that there is no genuine issue as to any 21 material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In evaluating a motion for Civil No. 09-1500 (JAF) -4- 1 summary judgment, we view the record in the light most favorable to the non-movant. Adickes 2 v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). Once the moving party has made a preliminary 3 showing that no genuine issue of material fact exists, the nonmovant must produce specific 4 facts, in suitable evidentiary form, to establish the presence of a trialworthy issue. Clifford v. 5 Barnhart, 449 F.3d 276, 280 (1st Cir. 2006) (internal quotation marks omitted). The non-movant 6 may not rely merely on allegations or denials in its own pleading; rather, its response must 7 . . . set out specific facts showing a genuine issue for trial. Fed. R. Civ. P. 56(e)(2). 8 III. 9 Analysis 10 Defendants argue that we cannot enforce the Indiana Judgment because Puerto Rico 11 courts, applying the laws of the Commonwealth, would not enforce the judgment. They argue 12 that the Indiana Judgment would not be recognized under Puerto Rico law because the Indiana 13 court: (1) lacked personal and subject-matter jurisdiction; (2) lacked competence to hear the 14 matter; (3) issued the judgment without observing due process of law; (4) was known for its bias 15 against foreigners; and (5) honored a forum-selection clause that would contravene Puerto 16 Rico s public policy. (Docket No. 27.) We begin our analysis by reviewing our jurisdiction and 17 the proper procedure for enforcing state-court judgments in federal court. Then, we proceed 18 to treat each of Defendants arguments in turn. 19 Congress grant of diversity jurisdiction to federal district courts provides original 20 jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of 21 $75,000. 28 U.S.C. § 1332 (emphasis added). We, therefore, have subject-matter jurisdiction Civil No. 09-1500 (JAF) -5- 1 over claims to enforce state-court judgments if those claims meet the § 1332 requirements of 2 diversity and amount in controversy. Plaintiff is a citizen of Indiana and Defendants are citizens 3 of Puerto Rico, while the judgment to be enforced exceeds $115,000. 4 Congress has mandated that federal courts grant full faith and credit to the judgments of 5 all states, territories, and possessions of the United States, including Puerto Rico. See 28 U.S.C. 6 § 1738. Federal courts sitting in diversity apply the Federal Rules of Civil Procedure unless the 7 rule in question is shown to violate the Rules Enabling Act or the U.S. Constitution. Johnson 8 Chem. Co. v. Condado Ctr., Inc., 453 F.2d 1044, 1046 (1st Cir. 1972) (citing Hanna v. Plumer, 9 380 U.S. 460, 469-74 (1965)). Rule 69(a) states that a federal court must execute a money 10 judgment in accordance with the procedure of the state in which the court sits. Fed. R. Civ. 11 P. 69(a). While the mandate of full faith and credit in § 1738 requires states and territories to 12 recognize each other s valid judgments, it does not require them to apply the same mechanisms 13 to enforce those judgments. See Baker v. Gen. Motors Corp., 522 U.S. 222, 235 (1998) 14 ( Enforcement measures do not travel with the sister state judgment . . . [and] such measures 15 remain subject to the evenhanded control of forum law. ) 16 Because foreign judgments do not automatically operate in Puerto Rico, exequatur 17 proceedings are required for such judgments to be officially recognized. Ex parte Márquez 18 Estrella, 128 P.R. Dec. 243 (1991) (defining exequatur as a proceeding for the recognition and 19 enforcement of foreign judgments by the courts of the forum where enforcement is sought); see 20 infra App. A (certified translation of Ex parte Márquez). In a recent opinion, the Puerto Rico 21 Supreme Court distinguished foreign judgments rendered by states of the U.S. from those Civil No. 09-1500 (JAF) -6- 1 rendered by foreign nations. Avilés v. P.R. Tel. Co., 09 TSPR 163, ¶¶ 12-13; see infra App. B 2 (certified translation of the pertinent section of Avilés). When enforcing a judgment from a 3 U.S. state, Puerto Rico courts utilize a simplified form of the exequatur procedure that looks 4 only to whether the state court: (1) had personal and subject-matter jurisdiction to hear the case; 5 (2) observed due process of law; and (3) did not issue its judgment on a fraudulent basis. Avilés 6 infra App. B. 7 The crux of Defendants argument is that the forum-selection clause contained in the 8 contract between Plaintiff and Defendants was invalid and, therefore, that the Indiana court was 9 not competent to hear the original case. (Docket No. 27 at 6-8.) Competence, however, is 10 properly considered only in an exequatur analysis of judgments from foreign nations.1 See 11 Avilés, infra App. B. There is no separate competence inquiry for the recognition of U.S. state- 12 court judgments. Avilés, infra App. B. Since the case at bar concerns the recognition of a 13 judgment from Indiana s state court, we will construe Defendants argument for the invalidity 14 of the forum-selection clause as pertaining solely to the personal and subject-matter jurisdiction 15 prongs of exequatur. 1 In an exequatur analysis, competence refers to the power of a court to hear a case. See Efectos Litográficos v. Nat'l Paper & Type Co., 12 P.R. Offic. Trans. 486, 501 (1982) (citing Restatement (Second) of Conflict of Laws § 105 (1980)); see also Black s Law Dictionary 406 (9th ed. 2009) (defining a competent court as [one] that has the power and authority to do a particular act; one recognized by law as possessing the right to adjudicate a controversy ). Competence is distinct from exequatur s general inquiry into personal and subject-matter jurisdiction because it shall be measured against the rules of the foreign nation. Efectos Litográficos, 12 P.R. Offic. Trans. at 501 (emphasis added). In other words, competence is a question of whether the rendering court s sovereign granted it the power to hear a case, not a question of whether jurisdiction existed by the standards of the nation where enforcement is sought. Thus, a competence inquiry would be inapposite when the judgment to be enforced was rendered by a court of the same nation. Civil No. 09-1500 (JAF) -7- 1 Defendants also argue that the selection of the Indiana forum contravenes Puerto Rico s 2 public policy as embodied by the Puerto Rico Dealers Act, 10 L.P.R.A. § 278 (2004). (Docket 3 No. 27 at 11.) But the Puerto Rico Supreme Court clearly held in Ex Parte Márquez that the 4 public-order prong of the exequatur analysis does not apply to judgments from federal courts 5 or state courts. Infra App. A, 9-10; accord Avilés, infra App. B. In addition, Defendants have 6 made conclusory allegations that the Indiana forum could be prejudiced against foreigners. The 7 Puerto Rico Supreme Court has held, however, that the prejudice prong of exequatur does not 8 apply to state-court judgments.2 Avilés, infra App. B. 9 We now proceed to address the remaining prongs of the exequatur analysis: Personal 10 jurisdiction, subject-matter jurisdiction, due process, and fraud. 11 A. Personal Jurisdiction 12 Defendants attempt to deny the Indiana court s personal jurisdiction over them by casting 13 doubt on the validity of both the forum-selection clause and the service of process; they succeed 14 in neither argument. We turn first to the forum-selection clause.3 Indiana courts may exercise 2 To the extent a claim of prejudice could be construed as a separate challenge to due process, we reject the argument as a conclusory allegation unsupported by the factual record. Defendants have not submitted any evidence as to partiality or prejudice exercised by Indiana courts against citizens of other jurisdictions. 3 While Defendants have argued against the validity of the Indiana forum, they have not directly addressed the Indiana court s use of Indiana law in interpreting the contract s forum-selection clause. Regardless, the point is moot; the contract between the parties contained a choice of law clause stipulating to the application of Indiana law. (Docket No. 18-4 at 10.) Furthermore, the Puerto Rico and Indiana standards for measuring the validity of forum-selection clauses are identical and, thus, would lead to the same result. Compare Dexter Axle Co. v. Baan USA, Inc., 833 N.E.2d 43, 48 (Ind. Ct. App. 2005) (adopting federal standard for forum-selection clause validity), and Unisys P.R., Inc. v. Ramallo Bros. Printing, Inc., 128 P.R. Dec. 842 (1991) (same). Civil No. 09-1500 (JAF) -8- 1 jurisdiction on any basis not inconsistent with the Indiana constitution or the U.S. Constitution. 2 Ind. R. Trial P. 4.4(A) (2008). This language extends the personal jurisdiction of Indiana courts 3 to the full extent of the Fourteenth Amendment s Due Process Clause. See LinkAmerica Corp. 4 v. Albert, 857 N.E.2d 961, 967 (Ind. 2006). The Supreme Court has held that forum-selection 5 clauses, where freely negotiated and neither unreasonable nor unjust, act as consent to personal 6 jurisdiction and do not offend principles of due process. Burger King Corp. v. Rudzewicz, 471 7 U.S. 462, 473 n.14 (1985). A valid forum-selection clause establishes specific personal 8 jurisdiction for claims arising out of the contract of which it is a part. Jallali v. Nat l Bd. of 9 Osteopathic Med. Exam rs, Inc., 908 N.E.2d 1168, 1174 (Ind. Ct. App. 2009). A forum- 10 selection clause is presumptively enforceable in the absence of fraud, overreaching, 11 unreasonableness of forum selection, or violation of the forum s public policy. M/S Bremen 12 v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972); Dexter Axle Co. v. Baan USA, Inc., 833 13 N.E.2d 43, 48 (Ind. Ct. App. 2005). 14 Under this standard, the forum-selection clause at issue in this case was enforceable. 15 The contract between Acosta and Plaintiff included a provision under the heading Governing 16 Law and Forum stating that any and all disputes hereunder shall be decided exclusively by 17 litigation in state or federal courts located within the Southern District of Indiana, Indianapolis 18 Division, United States of America. (Docket No. 18-4 at 10.) Upon examining the record, 19 there is nothing to bar the enforcement of the forum-selection clause. Defendants fail to 20 establish that fraud or overreaching were factors in the negotiation of the contract. While 21 Defendants argue that the forum-selection clause is unreasonable because it would entail Civil No. 09-1500 (JAF) -9- 1 litigating this case in a court 2,000 miles from Puerto Rico (Docket No. 27), such 2 inconvenience is insufficient to invalidate the clause. While litigating a case in Indiana might 3 indeed be burdensome for Acosta, a resident of Puerto Rico, nothing in the record leads us to 4 believe that the selection of the Indiana forum was arbitrary. After all, it is paramount to note 5 that Plaintiff s principal place of business is in Indianapolis, Marion County, Indiana. For the 6 aforementioned reasons, the forum-selection clause is valid; the parties freely and voluntarily 7 consented to bring suit within the jurisdiction of Indiana. 8 Defendants also argue a lack of personal jurisdiction owing to deficient service of 9 process; they contend that service of process by certified mail cannot establish jurisdiction under 10 Puerto Rico law. (Id.) Exequatur proceedings, however, are not concerned with whether the 11 original judgment was issued by a court that would have had personal jurisdiction consistent 12 with the laws of Puerto Rico. See Roseberry v. Registrar, 14 P.R. Offic. Trans. 958, 964 (1983). 13 Rather, the question is whether personal jurisdiction existed under Indiana law and within the 14 confines of Fourteenth Amendment Due Process jurisprudence as announced by the U.S. 15 Supreme Court. See generally Underwriters Nat l Assurance Co. v. N.C. Life & Accident & 16 Health Ins. Guar. Ass n., 455 U.S. 691, 704-05 (1982) (discussing jurisdictional exceptions to 17 the Full Faith and Credit Clause); Int l Shoe Co. v. Washington, 326 U.S. 310 (1945) 18 (illustrating Due Process Clause restraints on personal jurisdiction). 19 We have seen no persuasive argument that the service of process leading to the Indiana 20 Judgment exceeded the Constitutional limits of due process. The U.S. Supreme Court, in 21 Mullane v. Central Hanover Bank & Trust Co., announced that service satisfies due process Civil No. 09-1500 (JAF) -10- 1 where it is reasonably calculated, under all circumstances, to apprise interested parties of the 2 pendency of the action and afford them an opportunity to present their objections. 339 U.S. 3 306, 314 (1950). Service by certified mail with return receipt to Acosta s known business 4 address was reasonably calculated to provide him with notice of a pending suit. See id. at 319 5 (endorsing mailings as a form of service reasonably calculated to provide notice); accord Greene 6 v. Lindsey, 456 U.S. 444, 455 (1982). Furthermore, although actual notice is unnecessary, 7 Plaintiff produced evidence of a phone message from Acosta to Plaintiff s attorney, a month 8 after service was received, referencing a desire to discuss a case with Brightpoint and an 9 affidavit from the same attorney testifying that Acosta admitted he had received the complaint 10 and summons. (Docket No. 18-4.) Acosta has never explicitly denied receipt of actual notice. 11 The method of service in the prior case also comported with Indiana law, even where 12 service was by certified mail with a return receipt signed by an individual other than Acosta and 13 without evidence that Acosta himself ever received the service or knew its contents. Indiana 14 Rule of Trial Procedure 4.1 provides that service on an individual may be effected by registered 15 or certified mail with return receipt. Under Indiana law, however, the party being summoned 16 need not sign the certified mail receipt. See Robinson v. Turner, 886 F. Supp. 1451, 1456 (S.D. 17 Ind. 1995). Service is effective as long as the signer had actual, apparent, or implied authority 18 to receive certified mail for the party. Id. at 1457. Furthermore, Indiana law does not require 19 that the party actually receive the summons in order for due process to be satisfied. Precision 20 Erecting v. Wokurka, 638 N.E.2d 472, 474 (Ind. Ct. App. 1994) ( [A]ctual delivery to the party 21 is not jurisdictionally necessary ). The record reflects that the Marion County Clerk sent, via Civil No. 09-1500 (JAF) -11- 1 certified mail, a summons addressed to Acosta. (Docket No. 18.) Defendants do not argue that 2 whoever signed for the summons was not authorized to do so. Thus, Acosta was properly 3 served under Indiana law. 4 In light of the foregoing, we hold that the Marion Superior Court had personal 5 jurisdiction over Acosta. 6 B. Subject-Matter Jurisdiction 7 Our analysis now turns to the question of whether the Marion Superior Court had 8 subject-matter jurisdiction over the case. Under Indiana law, the Marion Superior Court has 9 concurrent and coextensive jurisdiction with the Marion circuit court in all cases and upon all 10 subject matters. Ind. Code § 33-33-49-9(1) (2009). The [Marion] circuit court has original 11 jurisdiction in all civil cases and in all criminal cases . . . . Ind. Code § 33-28-1-2(a). 12 Therefore, the Marion Superior Court had subject-matter jurisdiction over the original case. 13 C. Due Process 14 Defendants argue that the Marion Superior Court did not observe due process of law in 15 issuing its judgment. This argument, however, is based on deficient service of process, a claim 16 we have already disposed of in our consideration of personal jurisdiction. We reiterate that 17 service on Acosta by certified mail with return service met the requirements of due process. 18 D. Fraud 19 No argument has been advanced by Defendants that the Indiana Judgment was obtained 20 through fraudulent means. Defendants point to a lack of negotiating that occurred between the Civil No. 09-1500 (JAF) -12- 1 parties prior to the execution of the [contract] from which the Indiana Judgment arose (Docket 2 No. 27 at 8), but this alone is not evidence of fraud. 3 For the preceding reasons, we find that the Indiana Judgment meets the test for exequatur 4 proceedings in Puerto Rico. We find that there is no genuine issue as to any material fact and 5 the Plaintiff is entitled to summary judgment as a matter of law. However, because Defendant 6 Fernández was not a party to the Indiana Judgment, we are unable to enforce that judgment 7 against her. 8 Nor can we enforce the judgment against a conjugal partnership between Defendants. 9 The Puerto Rico Civil Code dictates that a new legal entity separate from bride and groom, the 10 conjugal partnership, is created upon marriage. 31 L.P.R.A. § 3622 (1993); Montes-Santiago 11 v. State Ins. Fund Corp., 600 F. Supp. 2d 339, 343 (D.P.R. 2009). The conjugal partnership 12 generally holds all property acquired by the spouses during marriage as community property, 13 dividing interest in such property into equal shares upon dissolution of the marriage. See 31 14 L.P.R.A. §§ 3641, 3697. The Code also allows for prenuptial agreements that stipulate the 15 conditions for the conjugal partnership with regard to present and future property. 31 L.P.R.A. 16 § 3551. Puerto Rico s Supreme Court has determined that parties are free to totally eliminate 17 the legal regime of conjugal property through the use of prenuptial agreements. See Umpierre 18 v. Torres Díaz, 14 P.R. Offic. Trans. 578, 592 (1983). Defendants prenuptial agreement 19 stipulates that they are not married under the Community Property Partnership Regime 20 provided in the Puerto Rico Civil Code and that all property will be separately owned by Civil No. 09-1500 (JAF) -13- 1 Defendants. (Docket No. 21.) We cannot enforce a judgment against an entity that does not 2 exist. 3 IV. 4 Conclusion 5 For the reasons stated herein, we hereby GRANT IN PART Plaintiff s motion for 6 summary judgment (Docket No. 17) with regard to Acosta. 7 PREJUDICE the complaint against the conjugal partnership (Docket No. 4). We DISMISS 8 WITHOUT PREJUDICE of independent litigation the claim against Fernández (id.) if any 9 remedy is otherwise available. We DENY Defendants motion for summary judgment (Docket 10 No. 27). The Plaintiff may request from the Clerk of Court the issuance of a writ for execution 11 of judgment, by attachment or otherwise, based on the final Indiana Judgment against Acosta s 12 share in his jointly-owned properties or any other property solely belonging to Acosta. 13 IT IS SO ORDERED. 14 San Juan, Puerto Rico, this 8th day of March, 2010. 15 16 17 s/José Antonio Fusté JOSE ANTONIO FUSTE Chief U.S. District Judge We DISMISS WITH

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