In re: Emilio Ocasio Acosta; Liduvina Rosario Ortiz v. Commonwealth of Puerto Rico; Puerto Rico Department of Housing; Hon. Yesef Y. Cordero; John Doe; XYZ Corporation

Opinion

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2 3 IN RE: : CASE NO. 06-03821 4 : EMILIO OCASIO ACOSTA; LIDUVINA : 5 [ROSARIO ORTIZ : CHAPTER 13 6 Debtors : 7 EMILIO OCASIO ACOSTA; LIDUVINA_: g ROSARIO ORTIZ : ADVERSARY NO. 10-00081 9 Plaintiffs 10 : COMMONWEALTH OF PUERTO RICO; : 11 |PUERTO RICO DEPARTMENT OF HOUSING; HON. YESEF Y. CORDERO; : 12 |JOHN DOE; XYZ CORPORATION : 13 Defendants :

15 OPINION AND ORDER 16 This adversary proceeding is before the court upon the motion to dismiss filed on August 20, 17 2010 by the Department of Housing of the Commonwealth of Puerto Rico (hereinafter referred to as 18 “Defendant” or “Housing Department”) based on two (2) alleged reasons: (1) for failure to state a 19 claim upon which relief may be granted pursuant to Fed. R. Civ. P. 12(b)(6); and (2) the claims 20 against the Housing Department are barred by an alleged executive order issued on February 12, 2010 21 by the Governor of the Commonwealth of Puerto Rico, Hon. Luis G. Fortufio granting jurisdiction 22 of the Home Programs to the Puerto Rico Housing Financing Authority (“PRHFA”) effective as of 23 July 1, 2010 (Docket No. 12). Plaintiffs filed their reply to the Housing Department’s motion to 24 dismiss on September .13, 2010 (Docket No. 16). On September 24, 2010 a status conference was | . 25 held regarding the Housing Department’s motion to dismiss by which the court granted Defendant 26 ten (10) days to file a copy of the executive order referenced in its motion to dismiss (Docket No. 27 21). As of this date, Defendant has not filed with the court the above referenced executive order. 28 Defendant in its motion to dismiss summarizes the following facts from Plaintiffs’ complaint:

1 “[oJn or about the date of October 11, 2009, the PRDH thru its Home Program contracted with Mr. 2 |\Carlos Rafael Graziani Alfaro and Mrs. Ana M. Alvarado Rivera (“Graziani’’) the rehabilitation of 3 jlhousing units located in a building in Juncos, Puerto Rico (“The Project’). [...] At the time of the 4 |signing of the contract, Graziani were owners of the building and the project name was Apartamentos 5 ||Graziani;” (11) “[p]rior to the signature of the before mentioned agreement Graziani had contracted 6 Sun Construction Group, Inc. the improvements to an existing structure for residential units;” 7 “[t]he project was financed by FirstBank of Puerto Rico and the PRDH because the building was 8 |jto be destined for public and/or low cost and/or subsidized housing. To this extent, PRDH assigned _ 9 |ifederal funds specifically set aside for the development of The Project;” (iv) “Graziani, FirstBank of 10 |/Puerto Rico and PRHD all approved the certifications submitted and the work was performed and 11 accepted. The general contractor was Sun Construction Group, Inc. who was withholding amounts 12 certifications paid by it;” (v) [t]o this date PRHD has yet to disburse to Sun Construction Group, 13 |Inc. the amount of $32,212.20 even though the work has been performed and The Project was 14 |delivered;” and (vi) “PRHD is contractually bound to pay the sum of $32,212.20, amounts which it 15 withheld as it was its custom to withhold a percentage of the certification submitted” (Docket. No. 16 12, pgs. 10-11). Defendant in its motion to dismiss left out two (2) significant alleged facts from 17 Plaintiffs’ complaint, namely: (i) “[t]he project was contracted for the total sum of $675,000.00 and 18 same was to be paid as per periodic certifications which were paid after being submitted by the 19 main contractor Sun Construction Group, Inc. and approved by the FirstBank of Puerto Rico and 20 |}PRHD;” and (ii) “[o]n or about the date of October 23, 2009, Sun Construction Group, Inc. and 21 Plaintiffs herein entered into a settlement agreement where, in order to settle controversies set forth 22 adversary proceeding number 08-00021 ESL, Sun Construction Group, Inc. assigned to Plaintiffs 23 |herein the equivalent amount of $28,500.00 of the amounts owed to it by PRHD.” (Docket No. 1, pgs. 24 13-4). 25 || Standard for Granting a Motion to Dismiss 26 Motions to dismiss for failure to state a claim upon which relief may be granted are governed 27 \by Federal Rule of Civil Procedure 12(b)(6), which provides that a defense of “failure to state a claim 28 |jupon which relief can be granted” to a claim for relief may be presented by motion before the filing

1 |jofa responsive pleading. A motion to dismiss a counterclaim pursuant to Fed. R. Civ. P. 12(b)(6) is | 2 |javailable to test a claim for relief in any pleading, including a defendant’s counterclaim. See 5B 3 | Wright & Miller, Federal Practice and Procedure: Civil 3d § 1356 at 368-369. 4 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted 5 true, to ‘state a claim to relief that is plausible on its face.”” Ashcroft v. Iqbal, 129 S. Ct. 1937, 6 1949 173 L. Ed. 2d. 868 (2009) citing Bell Atlantic v. Twombly, 127 S. Ct. at 1974. Thus, a 7 “complaint must plead facts ‘that raise a right to relief above the speculative level’” Dixon v. 8 |\Shamrock Fin. Corp., 522 F. 3d 76, 79 (1* Cir, 2008); Cook v. Gates, 528 F. 3d 42, 48 (1* Cir. 2008); 9 ||Gray v. Evercore Restructuring L.L.C., 544 F. 3d 320, 324 (1* Cir. 2008); Gagliardi v. Sullivan, 513 10 HF. 3d 301, 305 (1* Cir. 2008); Perez Acevedo v. Rivero-Cubano at 29; Trans-Spec Truck Serv. v. 11 ||\Caterpillar Inc., 524 F. 3d 315, 320 (1* Cir. 2008); Citibank Global Markets, Inc. v. Rodriguez 12 |\Santana, 573 F. 3d 17 (1* Cir. 2009). “Because a dismissal terminates an action at the earliest stages 13 the litigation, without a developed factual basis for decision, the court must carefully balance the 14 of simplified civil pleading against the need for something more than conclusory allegations. 15 ||Washington Legal Foundation v. Massachusetts Bar Foundation, 993 F. 2d 962, 971 (1* Cir. 1993). 16 |The court will not accept unsupported conclusions or interpretations of the law. Id. 17 After carefully reviewing the alleged facts of the complaint, this court concludes that the same 18 llpleads facts that certainly “raise a right to relief above the speculative level” and that are far from 19 |being considered “conclusory allegations.” Moreover, this court notes that Plaintiffs in their complaint 20 |lattached various exhibits such as copy of the Second Amendment of Home Program Grant Agreement 21 Rehabilitation between the Housing Department and Graziani and copy of the nine (9) 22 |\certifications issued by Sun Construction Group, Inc. which were allegedly accepted throughout the 23 |[project (Docket No. 1, Exhibits 1 & 2). Moreover, this court is aware of the settlement agreement and 24 |lrequest for judgment (Docket No. 42 in adversary proceeding No. 08-00021) filed on October 26, 25 2009 between Sun Construction Group, Inc. and Debtors and of the court order approving the same 26 |ion December 8, 2009 (Docket No. 43). 27 28

1 For the reasons stated herein, Defendant’s motion to dismiss is hereby DENIED. This court 2 llalso orders Defendant to answer the complaint within fourteen (14) days of the issuance of this Order. 3 4 SO ORDERED. 5 In San Juan, Puerto Rico, this 5 day of October 2010. 6

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