Vivas-Ruiz v. Ambush et al, No. 3:2012cv02046 - Document 26 (D.P.R. 2014)

Court Description: OPINION AND ORDER GRANTING 20 MOTION to Dismiss filed by Law Offices of Joshua M. Ambush, LLC, Joshua M. Ambush. Judgment will be entered dismissing the present case. Signed by Judge Jose A. Fuste on 06/12/2014.(mrj)

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UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO 1 2 3 4 RUBà N VIVAS RUIZ, Plaintiff, Civil No. 12-2046 (JAF) v. JOSHUA M. AMBUSH, et al., Defendants. 5 6 7 8 OPINION AND ORDER We must decide whether a claim is time-barred under relevant provisions of Commonwealth law. I. 9 10 11 12 13 This case has its origin in the 1972 terrorist attack at Lod Airport in Tel Aviv, 14 Israel, where several Puerto Ricans were killed. Plaintiff Rubén Vivas-Ruiz sustained 15 life threatening injuries in that attack. Background 16 The American Center for Civil Justice, which sponsors litigation by victims of 17 terrorism, recruited potential plaintiffs to sign a Claimant and Center Agreement, under 18 which the Center would cover all costs of investigating and litigating the potential 19 plaintiffs cases in return for twenty percent of any proceeds from litigation related to the 20 Lod Airport attack. The potential plaintiffs also signed a power of attorney in favor of 21 Michael Engelberg, the director of the Center. The Claimant and Center Agreement was Civil No. 12-2046 (JAF) -2- 1 not a retainer agreement, but it did obligate the Center to secure counsel to commence 2 litigation. 3 In furthering its duties under the agreements, the Center asked Joshua Ambush to 4 draft and file a complaint, which he did in April 2006. Without assistance from other 5 attorneys, Ambush began to litigate the case, known as Franqui v. Syrian Arab Republic, 6 No. 1:06 cv 00734 RBW (D.D.C., filed Apr. 21, 2006), in which Rubén Vivas-Ruiz 7 was a named plaintiff. 8 In August 2008, as the Franqui litigation progressed, the United States and Libya 9 signed a settlement agreement that foreclosed terrorism-related suits against Libya. In 10 exchange, Libya would compensate victims of terrorist acts it sponsored, by contributing 11 to a settlement fund to be administered by the United States Department of State. The 12 fund would pay $10 Million to the estate of each person killed in an act of Libyan- 13 sponsored terrorism. 14 In December 2008, Ambush traveled to Puerto Rico and presented plaintiffs, 15 including Vivas-Ruiz, with a retainer agreement that revoked Engelberg s power of 16 attorney, retroactively retained Ambush as the heirs counsel for the Franqui litigation 17 and for the administration of their claims in the Libyan settlement, and awarded Ambush 18 ten percent of any recovery. 19 Ambush then worked to obtain settlement funds for the Franqui plaintiffs. He 20 dismissed the Franqui litigation as the settlement agreement required, and he gathered the 21 documents that the State Department requested. By April 2009, the State Department 22 paid $10 Million to Ambush's trust account for each of the two estates. Of this $10 23 Million, Ambush sent $2 Million to the Center pursuant to the Claimant and Center Civil No. 12-2046 (JAF) -3- 1 Agreements, kept $1 Million pursuant to the retainer agreements, and sent $7 Million to 2 the heirs. 3 The heirs alleged that the retainer agreements were void because Ambush secured 4 their consent by deceit, known in Spanish as dolo. Puerto Rico law provides that dolo 5 is one reason to set aside a contract. See 31 L.P.R.A. § 3404. According to the heirs 6 complaint, Ambush failed to disclose at their meeting that the Center had paid him for his 7 work, falsely told them that the Center had done nothing on the estates behalf, and 8 misrepresented that the estates compensation was contingent on the heirs' signature of 9 the retainer agreements. The First Circuit ultimately agreed. See Estate of Berganzo- 10 Colón v. Ambush, 704 F.3d 22 (1st Cir. 2013). 11 Vivas-Ruiz filed this suit alleging that he was falsely induced to sign a retainer 12 agreement for attorney s fees. (Docket No. 1.) On June 26, 2012, Ambush moved to 13 dismiss the suit under Rule 12(b)(5), asserting insufficient service of process. We denied 14 Ambush s motion. (Docket No. 19.) Ambush filed a subsequent motion to dismiss under 15 Rule 12(b)(6). (Docket No. 20.) We grant the motion. II. 16 17 18 19 20 A plaintiff s complaint will survive a motion to dismiss if it alleges sufficient facts 21 to establish a plausible claim for relief. See Fed.R.Civ.P. 12(b)(6); Ashcroft v. Iqbal, 556 22 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In 23 assessing a claim s plausibility, the court must construe the complaint in the plaintiff s 24 favor, accept all non-conclusory allegations as true, and draw any reasonable inferences 25 in favor of plaintiff. San Geronimo Caribe Project, Inc. v. Acevedo-Vila, 687 F.3d 465, 26 471 (1st Cir. 2012) (citation omitted). Legal Standard Civil No. 12-2046 (JAF) -4III. 1 2 3 4 5 A few principles guide our resolution of the statute-of-limitations question at issue 6 here. Under Commonwealth law, an action for nullification of a contract cannot be 7 brought once four years have passed since the execution of the contract. 31 L.P.R.A. § 8 3512; Rivera v. Heirs of Díaz, 70 P.R.R. 168, 172 73 (1949); see also Almodóvar v. 9 Méndez Román, 125 P.R. Offic. Trans. 218 (1990). In the Civil Code, this principle is 10 known as caducity. See Ortega Candelaria v. Orthobiologics LLC, 661 F.3d 675, 678 n.4 11 (1st Cir. 2011) (discussing principle of caducity.); see also J. Puig Brutau, Fundamentos 12 de Derecho Civil Vol. II No. 1, p. 323 (Bosch, Barcelona, 1971). Discussion 13 Caducity does not allow for a reasonable period for discovery, nor will any other 14 event toll the statute of limitations. In other words, lapse of time extinguishes the right to 15 a cause of action precluding even judicial tolling. Ortiz Rivera v. Heirs of González 16 Martínez, 93 P.R.R. 549, 552 56 (1966); see also Farnsworth & Co. v. P.R. Urban 17 Renewal & Housing Corp., 289 F.Supp. 666 (D.P.R. 1968) (a caducity term (1) has the 18 effect of extinguishing the right to a cause of action; (2) admits no interruption; it can be 19 raised as a defense by the court ex-officio judicis; and (3) the cause of action is barred 20 forever once the caducity period has elapsed.). Caducity is conceptually distinct from 21 prescription. 22 Prescription, unlike caducity, can be interrupted as provided by law. See 31 L.P.R.A. 23 § 5303. Within prescription, interruption can occur through the institution of an action 24 before the courts; by the extrajudicial claim of a creditor; and by any act of 1 See Muñoz-Rodriguez v. Ten General, 167 D.P.R. 297 (2006).1 Official Puerto Rico Supreme Court translation not available at the time of signing. Civil No. 12-2046 (JAF) -5- 1 acknowledgment of the debt by the debtor. Id.; see also Fireman s Ins. Co. of Newark, 2 N.J. v. Gulf Puerto Rico Lines, 349 F.Supp. 952 (D.P.R. 1972). 3 Here, Vivas-Ruiz executed the retainer agreement with Ambush on December 15, 4 2008. Accordingly, an action to nullify the agreement should have been brought on or 5 before December 15, 2012. Vivas-Ruiz filed suit on December 26, 2012. It follows that 6 the action for nullification is time-barred. 7 Vivas-Ruiz, however, claims that the retainer agreement falls under the 8 Commonwealth Civil Code s fifteen-year catch-all provision. Under the Civil Code, 9 contract claims that are covered by code provisions but are not designated for special 10 prescriptive treatment automatically fall within a fifteen-year prescriptive period. 11 Caribbean Mushroom Co., Inc. v. Government Development Bank for Puerto Rico, 102 12 F.3d 1307, (1st Cir. 1996); see also Kali Seafood, Inc. v. Howe Corp., 887 F.2d 7, 9 (1st 13 Cir.1989) (Civil Code s fifteen-year term applies to contracts and other personal claims 14 for which no special term of prescription is fixed ). But, the retainer agreement would 15 only fall within the ambit of the fifteen-year catch-all provision if no other term applied. 16 Here, another term does apply. See Arrieta Gimenez v. Arrieta Negron, 672 F.Supp 46, 17 49 (D.P.R. 1987). 18 Alternatively, Vivas-Ruiz claims that the four-year limitations period should begin 19 to run not on December 15, 2008, when appellant executed the retainer agreement, but on 20 December 9, 2009 when his wife received notice that the agreement she signed with 21 Ambush may have been fraudulent. But, the discovery rule the principle that the 22 statute-of-limitations clock begins to run when the claimant knew or should have known 23 that the defendant violated his rights, see, e.g., Arturet-Velez v. R.J. Reynolds Tobacco 24 Co., 429 F.3d 10, 14 (1st Cir. 2005) would only apply if we construed this action as one Civil No. 12-2046 (JAF) -6- 1 sounding in tort. This, however, is a contractual dispute. See, e.g., King v. TL Dallas & 2 Co., Ltd., 270 F.Supp.2d 262, 269 (D.P.R. 2003) (contract cases involve a previously- 3 existing relationship between the parties, whereas in tort liability cases, a plaintiff's right 4 accrues at the time of the injury.). 5 6 7 8 9 10 11 12 13 14 15 16 IV. Conclusion For the foregoing reasons, we hereby GRANT the defendants motion to dismiss. (Docket No. 20.) IT IS SO ORDERED. San Juan, Puerto Rico, this 12th day of June, 2014. S/José Antonio Fusté JOSE ANTONIO FUSTE U. S. DISTRICT JUDGE

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