Banco & Agencia v. Ponce Federal

Opinion

USCA1 Opinion

February 23, 1995     [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

____________________

        No. 94-1614

               BANCO & AGENCIA FINANCIAMIENTO VIVIENDA DE PUERTO RICO,

                                Plaintiff, Appellant,

                                          v.

                             PONCE FEDERAL BANK, F.S.B.,

                                 Defendant, Appellee.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                    [Hon. Raymond L. Acosta, U.S. District Judge]
                                             ___________________
                  [Hon. Jesus A. Castellanos, U.S. Magistrate Judge]
                                              _____________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________

                           Campbell, Senior Circuit Judge,
                                     ____________________

                          and Boyle, Senior District Judge.*
                                     _____________________

                                 ____________________

            Emilio F. Soler with whom Bufete  Roberto Corretjer Piquer was  on
            _______________           ________________________________
        brief for appellant.
            Francisco A.  Besosa, with  whom Axtmayer, Adsuar,  Muniz &  Goyco
            ____________________             _________________________________
        was on brief for appellee.

                                 ____________________

____________________

        *Of the District of Rhode Island, sitting by designation.

                                          1



____________________



Per Curiam.   Banco y Agencia  Financiamiento de la
                      __________

            Vivienda  de Puerto Rico ("the Housing Bank") appeals from an

            order  of the  district court  granting Ponce  Federal Bank's

            motion  for  summary judgment.    When  reviewing a  district

            court's  entry  of summary  judgment,  we  determine de  novo
                                                                 ________

            whether  the moving party has shown "that there is no genuine

            issue as to any material fact and that [it] is  entitled to a

            judgment as  a matter of law."   Fed. R. Civ. P.  56(c).  See
                                                                      ___

            also Data  General Corp. v. Grumman Systems Support Corp., 36
            ____ ___________________    _____________________________

            F.3d  1147, 1159 (1st Cir. 1994)  "In this context, 'genuine'

            means  that  the  evidence about  the  fact  is  such that  a

            reasonable  jury could  resolve  the point  in  favor of  the

            nonmoving  party and  'material' means that  the fact  is one

            that might affect the outcome of the suit under the governing

            law."  Pagano  v. Frank, 983  F.2d 343, 347  (1st Cir.  1993)
                   ______     _____

            (citations,  internal quotation marks, and brackets omitted).

            Although  "we read the  record and indulge  all inferences in

            the  light   most  favorable   to   the  non-moving   party,"

            Rivera-Ruiz v.  Gonzalez-Rivera, 983 F.2d 332,  334 (1st Cir.
            ___________     _______________

            1993),  the  adverse  party cannot  defeat  a  well-supported

            motion by "rest[ing] upon the  mere allegations or denials of

            [its] pleading," Fed.  R. Civ.  P. 56(e).   If the  nonmovant

            bears the ultimate  burden of persuasion with  respect to its

            claim  or defense, it may  avert summary judgment  only if it

            identifies   issues   genuinely  in   dispute   and  advances

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convincing theories as to their materiality.  See Pagano, 983
                                                          ___ ______

            F.2d at 347 (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
                                ________    ___________________

            242,  247-48 (1986)).  We may affirm a district court's grant

            of summary  judgment "'on any ground supported  in the record

            even  if  the  issue  was not  pleaded,  tried  or  otherwise

            referred  to in  the  proceedings below.'"    de Casenave  v.
                                                          ___________

            United  States, 991 F.2d 11, 12 n.2 (1st Cir. 1993) (citation
            ______________

            omitted).

                      The district court determined that the Housing Bank

            was estopped to maintain the instant  action against Ponce by

            virtue  of  what  it   described  as  "public  and  notarized

            documents  to  settle and  release  the  parties from  future

            claims."    The  documents  referred  to  were  submitted  as

            exhibits to Ponce's  Statement of Material Facts  as to Which

            There  is No Genuine Issue.   They included  a notarized Deed

            dated December 7, 1984 and a notarized Acclaratory Deed dated

            December 31, 1984, whereby  Capitana conveyed all unsold lots

            in the project Colinas  de Villa Rosa (the "project")  to the

            Housing  Bank.    Of  particular relevance  was  a  so-called

            Agreement,    Release   and   Payment    of   Guaranty   (the

            "Settlement").   The Settlement recites that  it was executed

            on December 7, 1984 by Capitana, Ponce, and the Housing Bank,

            and was signed by Jos   F. Blasini, Executive Vice President,

            for  Ponce; Amado  Vega  Vega, President,  for Capitana;  and

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                                          4



Francisco  Fantauzzi, President,  for the  Housing Bank.   It

            provides, in pertinent part,

                      5th:   By  virtue  of this  document  the
                      ___
                      Housing Bank and Finance Agency of Puerto
                      Rico  releases  in  its   entirety  Ponce
                      Federal  Bank,  F.S.B., from  any present
                      and  future  claim  with  respect  to the
                      project Colinas de  Villa Rosa of  Sabana
                      Grande,   Puerto   Rico,   and   releases
                      Capitana Corporation from  any debt  with
                      respect to the loan granted to the latter
                      by  the  Ponce   Federal  Bank,   F.S.B.,
                      secured  by the Housing  Bank and Finance
                      Agency of Puerto Rico.

                      Regarding the Settlement, the Housing Bank contends

            that there is a disputed issue of fact between the parties as

            to whether the Settlement accurately  evidences the agreement

            of the parties made  on December 7,  1984.  The Housing  Bank

            notes that there is  reference made to a document of the same

            date, between the same parties, in an entry in Notary Wendell

            W.  Col n's registry of affidavits, a certified copy of which

            entry was  submitted as  an exhibit  to Ponce's  statement of

            material facts.  It is conceivable, the Housing Bank  argues,

            that the Settlement's  terms are different from  those of the

            referenced document,  which cannot now be  found.  Therefore,

            the Housing  Bank argues, Ponce may not  rely on the terms of

            the Settlement as a  defense to the Housing Bank's  claim for

            repayment.

                      We  find  this argument  to  be  lacking in  merit.

            There is a wealth of evidence indicating that the signatories

            to  the Settlement entered into such a release on December 7,

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                                          5



1984 and that the Settlement is a valid copy of that release.

            Ponce submitted the affidavit of Mr. Jose Blasini, one of the

            signatories, reciting  the terms of the  release entered into

            on   December  7,  which  were  the  same  as  those  in  the

            Settlement.  Ponce also presented deposition testimony, given

            in  an earlier case, Vega v.  Ponce Federal, No. 88-369(JAF),
                                 ____     _____________

            by  Capitana's  outside auditor,  Mr.  Rivera-Lebr n, stating

            that  he obtained a copy  of the Settlement,  signed by Vega,

            Blasini, and  Fantauzzi, from  Mr. Vega.   Further deposition

            testimony  from  the Vega  case was  submitted, in  which Mr.
                                 ____

            Fantauzzi, the president of  the Housing Bank, testifies that

            he signed  the release on  December 7, the  same day  that he

            signed the  notarized Deed transferring the  remainder of the

            project to the Housing Bank.   He stated that by that release

            the parties  "mutually relieved each other  from any claims,"

            and he  mentioned several  possible claims between  the three

            parties of which  he was aware at  that time.  Thus,  whether

            the copy of the Settlement submitted bears a notarial seal is

            not dispositive of this case; all  of this evidence, combined

            with  the copy of the  Settlement, was more  than adequate to

            establish the existence of a release which would serve to bar

            the instant action.

                      Ponce's evidence strongly suggests,  moreover, that

            the  Settlement was  identical  in its  terms to  the missing

            document  referenced  in Mr.  Col n's  registry.   It  is not

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disputed that  the signatures on the  Settlement are genuine.

            In the Vega case Mr.  Colon had testified that either  one or
                   ____

            two days  before December  7, 1984,  he sent  a draft  of the

            document in question from his office in the city of  Ponce to

            the San Juan offices of the Housing Bank.  While the document

            was at that  office a change was made to  the language of the

            third  page, which  was  then retyped.    He stated  that  on

            December 7, 1984, when he arrived at the San Juan offices, he

            found  a change in  the manner  of expression  of one  of the

            clauses.1  He then  took the signatures of Mr.  Fantauzzi and

            Mr. Vega  in San Juan.   Mr. Col n's testimony is not crystal

            clear as  to whether Mr.  Blasini signed for the  bank in San

            Juan or in Ponce, nor as to placement of the affidavit on the

            final copy.   However,  he recorded  the notarization  of the

            document,  dated  December  7,  1984, in  his  registry,  and

____________________

            1.  The third and last page of the Settlement appears to have
            been  typed on  a different  machine than  that used  for the
            first two  pages.  It is  this page that contains  the clause
            reciting the pertinent release language, followed immediately
            by a clause denominated an "Acceptance," which reads:
                      The   appearing    parties   accept   the
                      foregoing Agreement in the manner drafted
                      since  they find same  in accordance with
                      the covenants agreed upon among them, and
                      in  proof  of  approval  acknowledge  and
                      subscribe  same  in  the  place  and date
                      first above written.
            This  clause  is  followed by  the  signatures  of  the three
            parties'  officers.  All three pages of the document bear the
            initials of each of the three signatories.  Thus, it is plain
            that the signatories of the third page were all aware  of the
            release  clause,  as the  clause was  on  the page  that they
            signed.

                                         -7-
                                          7



neither his testimony nor  any other suggests the possibility

            that more than one version  of the release was signed  by all

            three parties as of December 7, 1984.

                      The  Housing  Bank,  in  any  event,  presented  no

            evidence  contesting the  above.   Ponce's  submissions amply

            support its  assertion that the Housing  Bank released Ponce,

            as the Settlement recites, from "any present and future claim

            with respect to the project," on December 7, 1984.  "When one

            party has  properly supported a motion  for summary judgment,

            the  opposing party  must 'set  forth specific  facts showing

            that   there  is  a  genuine  issue  for  trial.'"    Playboy
                                                                  _______

            Enterprises, Inc.  v. Public  Serv. Comm'n,  906 F.2d  25, 40
            _________________     ____________________

            (1st Cir. 1990),  cert. denied, 498  U.S. 959 (1990)  (citing
                              ____________

            Anderson  v. Liberty  Lobby Inc.,  477 U.S.  242, 248  (1986)
            ________     ___________________

            (quoting First  Nat'l Bank v.  Cities Service, 391  U.S. 253,
                     _________________     ______________

            288-89 (1968))); see also Fed. R. Civ. P. 56(e).  The Housing
                             ________

            Bank  has  offered  nothing  to  show  that  no  release  was

            executed, or  that the Settlement  differs in its  terms from

            the  release  agreed to  by the  parties.   The  Housing Bank

            merely presented  several documents, none of  which was fully

            executed,  which  appear from  their  prior  dates and  their

            incompleteness  to  be  earlier  drafts  of  the  Settlement.

            Because  none of these  documents, including  the Settlement,

            are notarized,  it argues  that there remains  the unanswered

            question of where the notarized document is and what it says,

-8-
                                          8



requiring "further evidentiary  development."  However,  "[a]

            court is not  obliged to deny an otherwise  persuasive motion

            for summary  judgment 'on  the basis  of a  vague supposition

            that  something  might  turn up  at  the  trial.'"   Soar  v.
                                                                 ____

            National Football League Players'  Ass'n, 550 F.2d 1287, 1289
            ________________________________________

            n.4 (1st  Cir. 1977) (quoting  Lundeen v.  Cordner, 354  F.2d
                                           _______     _______

            401, 408 (8th Cir. 1966)), quoted in Playboy Enter., 906 F.2d
                                       _________ ______________

            at 40.   We conclude that there was no disputed issue of fact

            as  to whether the Housing  Bank had released  Ponce from all

            claims related to the project.2

                      The Housing Bank  also argues that at the  time the

            release was executed it was unaware of the final extension to

____________________

            2.  The  Housing  Bank  contends  that the  language  of  the
            Settlement  could not  be read  as an  effective release  for
            present purposes  because it referred explicitly  only to the
            first  two properly guaranteed disbursements to Capitana, and
            nowhere mentioned, either  explicitly or by implication,  the
            final,   unguaranteed  disbursement.     However   while  the
            Settlement  released   Capitana   only  as   to   "the   loan
            . . . secured by the [Housing  Bank]," it released Ponce from
            "all claims related to" the project. 
                      The  Housing Bank  also argues  that any  claims to
            recover  the payment to Ponce cannot be waived because such a
            waiver would contravene clear public  policy, citing Brooklyn
                                                                 ________
            Savings  Bank  v.  O'Neil,  324  U.S.  697,  704  (1945)  ("a
            _____________      ______
            statutory right  conferred on a private  party, but affecting
            the  public interest, may not  be waived or  released if such
            waiver or  release contravenes  the statutory policy").   The
            district court found that the statutory policy underlying Act
            72 was, to paraphrase, to facilitate the construction of low-
            income housing.   Ponce presented  substantial evidence  that
            cooperation  between  the  Housing  Bank  and  Ponce  greatly
            facilitated  the  completion of  the  Colinas  de Villa  Rosa
            Project.  We see no error in the district court's ruling that
            there was  no violation  of statutory policy  in the  present
            circumstances.

                                         -9-
                                          9



Capitana's line of credit, and that  any release was therefor

            obtained  by fraud.   There  is no  evidence to  support this

            assertion.  There is  uncontradicted evidence tending to show

            that when the Housing  Bank entered into the release,  it had

            all relevant  facts.   Ponce submitted evidence  which showed

            that, during construction of the project, various contractors

            would submit certifications of work performed to Capitana, as

            the  developer,  for  payment.    Because  the  Housing  Bank

            guaranteed the  loan, it  had to approve  each certification.

            For that reason, it contracted with Per z Miranda Engineering

            Services,  to review all certifications submitted for payment

            by the contractors and, when satisfied that the certification

            reflected the job  done, to recommend  that the Housing  Bank

            approve  payment.   The certifications  were approved  by the

            developer and an official  at the Housing Bank and  were sent

            to Ponce  Federal  for  payment.   This  procedure  was  used

            throughout  the   construction  of  the   project  until  its

            completion in 1984.   The Housing Bank thus  had the means at

            hand to  keep track of how  much money was being  paid out to

            Capitana, and it at no time notified Ponce that it considered

            its obligations as guarantor at an end.

                      The  uncontradicted  evidence also  showed  that an

            audit was conducted by a certified public accountant selected

            by the  Housing Bank before  it approved  payment of  Ponce's

            claim.   The record contains a series of Ponce's ledger pages

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for  loan #ML-5538  (the  number assigned  to the  guaranteed

            loan),  which show  toward the  bottom of  the final  page an

            increase  of  $954,609 to  the  amount  owed by  Capitana  to

            Ponce.3   The  auditor  requested "all  books, documents  and

            files"  relating to the loan;  there was no  evidence that he

            did not see and consider these pages in making his audit.  In

            addition, as the Housing Bank alleges in its complaint, Ponce

            collected in excess of $7 million from Capitana over the life

            of the project.   The auditor, in examining Ponce's  records,

            did not report  that the loan  was paid in  full.  The  audit

            revealed only  certain  bookkeeping  errors  resulting  in  a

            downward  adjustment  of  Ponce's claim  by  some $98,783.46.

            Thus, the  Housing Bank  honored Ponce's request  for payment

            only after it had independently  determined the extent of its

            liability.

                      Finally,  Ponce submitted  a  sworn  and  notarized

            statement  introduced in  the Vega  case, dated  December 21,
                                          ____

            1989, from Mildred Goyco, who in 1984 was a vice president of

            the  Housing Bank.  In  this statement Ms.  Goyco states that

____________________

            3.  The Housing Bank  argues that this exhibit proves that it
            had complied  with all its  obligations to Ponce  by October,
            1982,  presumably because, as  of that date,  Capitana had no
            outstanding balance due with  Ponce on the guaranteed portion
            of the loan.   (We  note that the  district court  explicitly
            found  that the final credit extension was not covered by the
            guarantee.)  However,  this does not  prove that the  Housing
            Bank  did not know of the final credit extension to Capitana,
            either  at the time  it was made,  or at the  time it entered
            into the release.

                                         -11-
                                          11



she was contacted by  Ponce in connection with the  Vega case
                                                                ____

            for assistance in  locating a document in the  Housing Bank's

            files entitled  "Agreement, Release and  Payment of  Warranty

            [sic]" executed by  the parties and  Capitana on December  7,

            1984,  and that after several tries the document could not be

            found.   She asserted, however,  that "the  Housing Bank  did

            know that the  document must  have existed and  that it  must

            have been duly signed by all the parties involved."

                      Against  this   evidence  of  the   Housing  Bank's

            intimate  involvement with  all aspects  of the  project, the

            Housing  Bank  submitted a  second,  unsworn statement  under

            penalty  of perjury  from  Mildred Goyco,  dated October  28,

            1991,  in  which she  states  that the  authorization  by Mr.

            Fantauzzi to pay Ponce "was given with the factual impression

            that it was a 'bona fide' claim which arised [sic]  under the

            certificate of insurance."   This does not contradict Ponce's

            assertion that the Housing Bank knew of  the irregular nature

            of the final disbursement, but nonetheless agreed to treat it

            as  covered  by  the guarantee  in  order  to facilitate  the

            completion  of the project.   We therefore  conclude that the

            district court's implicit determination that the Housing Bank

            had knowingly  released Ponce from all claims  related to the

            project  was  supported  by  the  summary judgment  materials

            referred to in Fed. R. Civ. P. 56(c).

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                                          12



Under the statute that created it, the Housing Bank

            is a  corporation which may sue  and be sued.   7 L.P.R.A.   

            901, 910(a) (1982).  The capacity  to sue and be sued "is not

            only  the power to bring an action,  but is also the power to

            maintain it," Mather  Constr. Co. v. United  States, 475 F.2d
                          ___________________    ______________

            1152, 1155 (Ct. Cl.  1973), quoted in 6A Charles  Alan Wright
                                        _________

            et al., Federal Practice & Procedure   1559 (1990).  Implicit

            also is the  power to  settle.  Under  Puerto Rico law,  "[a]

            compromise  has,  with  regard   to  the  parties,  the  same

            authority as res  adjudicata."   31 L.P.R.A.    4827  (1990).

            Having once  settled this  matter, the Housing  Bank may  not

            reopen it now.4

                      Affirmed.  Costs for appellee.
                      _____________________________

____________________

            4.  As our decision disposes  of all issues in this  case, we
            do  not reach the estoppel and  statute of limitations issues
            raised by the Housing Bank in its brief.
                      We note with respect  to the latter issue, however,
            that the  complaint, while somewhat  unclear, may be  read as
            stating   causes  of   action   sounding   in  tort,   fraud,
            restitution, and illegality of the contract.  This being  so,
            the  district court may have erred in finding that the entire
            action   was   time-barred  under   the   fraud  statute   of
            limitations.    However,  as  the claims  sounding  in  tort,
            restitution and illegality are  clearly claims "with  respect
            to the project Colinas  de Villa Rosa," the Housing  Bank has
            released  Ponce with respect to these claims, and there is no
            need to consider  whether they  were still viable  as of  the
            date of the complaint.  With respect to the fraud claim,  the
            Housing  Bank   argues  that,  there  being   no  statute  of
            limitations in  Puerto Rico for  nullity of a  contract where
            consent  was obtained  by fraud,  this claim  cannot be  time
            barred.   Even if  so, we have already  said that the Housing
            Bank has not presented any evidence to defeat  Ponce's motion
            for summary judgment as to fraud; whether its action is time-
            barred or not is not dispositive.

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