In re: Jose Hernandez Amador; Coca Mir Correa

Opinion

I IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO

IN RE: : CASE NO. 01-06388 : JOSE HERNANDEZ AMADOR; COCA MIR CORREA, : CHAPTER 13 Debtors JOSE HERNANDEZ AMADOR; g COCA MIR CORREA, : ADVERSARY NO. 07-00337 Plaintiffs i0 BANCO SANTANDER PUERTO RICO- JET ALS, Defendant By

This adversary proceeding is before the court upon the motion to dismiss filed by Banco Santander Puerto Rico (the “Defendant”) on September 3, 2008 (Docket No. 13) alleging that this action is barred by the doctrine of res judicata (claim preclusion) and alternatively by the lack of joinder of an indispensable party. José Hernandez Amador and his wife Elsa Coca Mir Correa (the “Plaintiffs”) filed an opposition to the motion to dismiss on October 10, 2008 (Docket No. 40 in lead case). For the reasons set forth below the motion to dismiss is denied. Facts and Procedural Background Plaintiffs Jose Francisco Hernandez Amador and Elsa Coca Mir Correa filed a bankruptcy 44 petition under Chapter 13 of the Bankruptcy Code on June 1, 2001. Banco Santander was scheduled as an unsecured creditor and included in the master address list. Banco Santander was duly notified of the filing of the bankruptcy case. The 341 meeting of the creditors was held on June 13, 2001. 47 On July 17, 2001, Banco Santander filed a proof of claim. ' Debtor’s chapter 13 plan was ' The claims register shows that Banco Santander de Puerto Rico filed an unsecured claim in the amount of $20, 238.79, claim number 17-1.

I confirmed on January 24, 2002, and completed on August 15, 2006.” The discharge order was entered lion March 26, 2007, and the case was closed on the same date. On December 7, 2007, Plaintiffs filed an adversary proceeding against PRAMCO CV7, LLC, jet als (Adversary Number 07-00336). In the complaint Plaintiffs allege that PRAMCO violated the ldischarge injunction provisions of the Bankruptcy Code, 11 U.S.C. § 524 (a) and the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692c (a)(2) and 1692(1)\(1}) (“FDCPA”). The Plaintiffs llcontend that PRAMCO willfully violated the discharge injunction by incurring in the following jlactions: (i) continuing its collection efforts to collect on the discharged debt; (ii) Defendant sending la written statement sometime in April of 2007 informing Plaintiffs that their debt (obligation) was to PRAMCO CV7, LLC (“PRAMCO”) and requesting that all payments be sent to PRAMCO; (iii) sending a letter jointly with Defendant to Plaintiffs on April 2007 informing the same that the payments had to be made payable to PRAMCO. On May 8, 2008 the Plaintiffs and PRAMCO filed a Joint Stipulation of Voluntary Withdrawal of Complaint (Docket No. 15) pursuant to Rule of Bankruptcy Procedure, dismissing the case against PRAMCO with prejudice. No further idetails of the settlement were provided by the parties. On December 7, 2007, Plaintiffs filed the present adversary proceeding alleging that Defendant willfully violated the discharge injunction provisions of the Bankruptcy Code, 11 U.S.C. (a) by incurring in the following actions: (i) selling and transferring a discharged debt without of its discharged status; (ii) sending a written statement sometime in April of 2007 informing Plaintiffs that their debt (obligation) was sold to PRAMCO CV7, LLC (““PRAMCO”) and requesting all payments be sent to PRAMCO; and (111) Defendant and PRAMCO jointly sending a letter to \\Plaintiffs also on April 2007 informing the same that the payments had to be made payable to PRAMCO, Plaintiffs allege that on or about March 30, 2007, Defendant sold, transferred, assigned llor conveyed Plaintiffs’ debt to PRAMCO despite the fact it was already discharged on the Plaintiffs’ lbankruptcy case. The complaint against Defendant also includes allegations which state that 26. ———_— * The bankruptcy case docket shows that the chapter 13 trustee filed a final report on February 2, 2007 informing that the Debtors had completed their chapter 13 plan. The trustee’s report discloses payments to Banco Santander de Puerto Rico.

PRAMCO violated the discharge injunction provisions of the Bankruptcy Code by continuing its 2 Icollection efforts to collect on Plaintiffs’ discharged debt. 3 On September 3, 2008 Defendant filed a Motion to Dismiss and Memorandum of Law in Support Thereof (Docket No. 13) alleging that Plaintiffs’ action is barred by the doctrine of res 5 yudicata, which guards against claim-splitting. Defendant alleges that both of Plaintiffs’ complaints 6 jlare based upon the same set of facts, that Plaintiffs’ right of action is in its nature entire and lindivisible and, thus, may not be split up into several causes of action and sued piecemeal (Motion 8 {to Dismiss, p. 5). Defendant also argues that the dismissal with prejudice in the adversary proceeding llagainst PRAMCO bars the complaint against Defendant because it stems from the same transaction lland set of facts (Motion to Dismiss, p. 5). Defendant argues that the elements for a claim to be lprecluded, as established in Porn v. National Grange Mutual Ins. Co., 93 F. 3d 31, 34 (1* Cir, 1996), met; that is, a final judgment on the merits in an earlier action, sufficient identity between the of action asserted in both suits, and sufficient identity between the parties in the two suits. In alternative, Defendant argues that this adversary proceeding should be dismissed under Fed. R. P. 19(b) for failure to join an indispensable party (PRAMCO) in this proceeding. In its opposition Plaintiffs’ argue that the doctrine of res judicata is not applicable as one of lits three components was not satisfied, namely, a final judgment on the merits was not entered in the adversary proceeding against PRAMCO. Plaintiffs do not discuss in their opposition whether the two components of the three prong test necessary to establish claim preclusion were met by the Defendant. Plaintiffs’ position is that a voluntary dismissal achieved by means of a joint. stipulation prejudice does not constitute a final judgment on the merits. Subsequently, Defendant filed a Motion Requesting Leave to File Reply to Opposition to Motion to Dismiss and Submitting Tendered Reply Subject to the Court’s Leave to File the Same (Docket No. 22). In this motion Defendant reasserts its position that a voluntary dismissal by means a joint stipulation is an adjudication on the merits for claim preclusion purposes. Applicable Law and Analysis \\Standard for Granting a Motion to Dismiss Motions to dismiss are governed by Federal Rule of Civil Procedure 12(b)(6), which provides ;

I |Ithat a defense of “failure to state a claim upon which relief can be granted” to a claim for relief may 2 presented by motion before the filing of a responsive pleading. □ 3 For purposes of a motion to dismiss, “(1) the complaint is construed in the light most 4 ifavorable to the plaintiff, (2) its factual allegations are taken as true, and (3) all reasonable inferences 5 Ithat can be drawn from the pleading are drawn in favor of the pleader.” Wright & Miller Federal 6 iPractice and Procedure: Civil 3d § 1357 at 417, citing Viera Marcano v. Ramirez Sanchez, 224 F. 7 2d 397 (D.P.R. 2002). See also, Correa Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1* 8 1990), The plaintiff must set forth “factual allegations, either direct or inferential, regarding each

_ 9 |lmaterial element necessary to sustain recovery under some actionable theory.” Id., citing Gooley v. Oil Corp,, 851 F.2d 513, 514 (1* Cir. 1988). See also, LaChapelle Vv. Berkshire Life Insurance Company, 142 F.3d 507, 508 (1* Cir. 1998) (In considering a motion to dismiss under Rule 12(b)(6), Ithe court must “determine whether the complaint, so read, limns facts sufficient to justify recovery jon any cognizable theory.”) “[A] complaint should not be disrnissed for failure to state a claim unless it appears beyond that the plaintiff can prove no set of facts in support of his claim which would entitle him to llrelief.” Federal Practice and Procedure §1357 at 571, quoting Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also, In re Diamond, 346 F.3d 224 (1* Cir. 2003); Leopoldo Fontanillas, [Inc. v. Luis Ayala Colon Sucesores, Inc., 283 F. Supp.2d 579 (D.P.R. 2003); Eastern Food Services, v. Pontifical Catholic University of Puerto Rico Service Association, Inc., 222 F. Supp.2d 131, 134 (D.P.R. 2002). Therefore, “the question on a motion to dismiss under Rule 12(b)(6) is whether lin the light most favorable to the plaintiff, and with every doubt resolved in the pleader’s behalf, the lcomplaint states any legally cognizable claim for relief.” Id. at 640. “Because a dismissal terminates lan action at the earliest stages of the litigation, without a developed factual basis for decision, the must carefully balance the rule of simplified civil pleading against the need for something more ithan conclusory allegations. Washington Legal Foundation v. Massachusetts Bar Foundation, 993 F. 962, 971 (1* Cir. 1993). The court will not accept unsupported conclusions or interpretations of ithe law. Id,

The Doctrine of Res Judicata “Res judicata makes a valid final judgment conclusive on the parties... and prevents llrelitigation of all matters that were or could have been adjudicated in the action. This doctrine is lsometimes known as “merger and bar,” nomenclature that emphasizes the doctrine’s role in guarding lagainst claim splitting.” Andrew Robinson Int’L, Inc. v. Hartford Fire Insurance Co., 547 F.3d 48, 52 Cir. 2008) (citations omitted). Issues surrounding the application of the doctrine or res judicata imay arise because of the exercise of concurrent jurisdiction by state and federal courts over similar Ilclaims based upon similar facts and involving the same parties. Suarez Cestero v. Pagan Rosa, 198 Supp. 52 73, 84 (D.P.R. 2002). “The doctrine of res judicata, now called claim preclusion, forecloses litigation of all matters which have been litigated or might have been litigated in an earlier case. The rule of collateral estoppel, now termed issue preclusion, precludes re-litigation of issues llactually adjudicated.” Id., citing 18 Charles Alan Wright, Arthur R. Miller and Edward H. Cooper, (Federal Practice and Procedure: Jurisdiction, § 4402, 4404 (1981). In this case both the allegedly precluding suit and the allegedly precluded suit were filed in |. federal courts. Thus, federal law governs the res judicata effect of the first judgment. Mass. School llof Law at Andover v. American Bar Assoc., 142 F. 3d 26, 37 (1* Cir. 1998) (citation omitted). A three test is used to determine whether res judicata precludes litigation of a party’s claims, to wit, a final judgment on the merits in an earlier suit, (2) sufficient identicality between the causes of asserted in the earlier and later suits, and (3) sufficient identicality between the parties in the suits. Perez v. Volvo Car Corporation, 247 F. 3d 303, 311, (1* Cir. 2001); Gonzalez v. Banco Corp., 27 F. 3d 751, 755 (1% Cir. 1994), Apparel Art Int], Inc. v. Amertex Enters. Ltd., 48 F. 13d 576, 583 (1* Cir. 1995); Porn v. National Grange Mutual Ins. Co., 93 F. 3d at 34. The first prong of the test needed to satisfy claim preclusion under the res judicata doctrine lis whether a final judgment on the merits was obtained in the adversary proceeding against PRAMCO. The adversary proceeding against PRAMCO culminated with a Joint Stipulation of Voluntary Withdrawal of Complaint filed on May 8, 2008 pursuant to Rule 7041 of the Bankruptcy Procedure, dismissing the PRAMCO case with prejudice. The issue presented before this court is lwhether a Joint Stipulation of Voluntary Withdrawal with prejudice constitutes a final judgment on

I merits. Our analysis starts by stating that, “the principle that a judgment be on the merits before it can the basis for claim preclusion was established long ago. Modern opinions continue to refer to the liprinciple. However, the term is misleading, because many dispositions short of trial are considered the merits’ for claim preclusion purposes even though the validity of some or all of the theories liability, claims for relief, and defenses of the parties may remain undetermined.” Moore’s Federal Practice Civil §131.30 (3){a). A voluntary dismissal with prejudice is ordinarily deemed a final judgment that satisfies the Ilres judicata criterion. See United States vy. Cunan, 156 F. 3d 110 (1* Cir, 1998); Langton v. Hogan, F. 3d 930, 935 (1* Cir. 1995). Also, a voluntary dismissal under Fed. R. Civ, P. 41(a) by which the parties intend to put and end to their claims by means of a joint stipulation with prejudice is iconsidered to be a judgment on the merits for claim preclusion purposes and is an exercise of judicial lpower having a presumption of validity. Moore’s Federal Practice Civil §131.30.(3){c)(ii). Thus, the lvoluntary dismissal by way of a joint stipulation with prejudice under Rule 7041(a){1)(A)Gi) of the Bankruptcy Procedures which is analogous to Fed. R. Civ. P. 41(a)(1)(A){it) is considered an ladjudication on the merits for claim preclusion purposes. Furthermore, the dismissal of an action with Iprejudice pursuant to a settlement agreement constitutes a final judgment on the parties and precludes parties from reasserting the same claim in a subsequent action. See Union of Operating Eng’rs v. IKarr, 994 F. 2d 1426, 1429 (9" Cir. 1993); □□ re Dominelli, 820 F. 2d 313, 316-317 (9" Cir. 1987); Astron Indus. Assocs, Inc. v. Chrysler Motors Corp., 405 F. 2d 958 (5" Cir. 1968). The Plaintiffs in their “Opposition to Motion to Dismiss” cite the case of American Cyanamid \Company v. Capuano, 381 F. 3d 6 (1* Cir. 2004) to sustain their argument that, “this type of dismissal lcannot be used as the bases of res judicata since no issues or facts were resolved nor any question of Therefore, it is not a ruling on the merits” (Opposition to Motion to Dismiss, p. 3). In American \Cyanamid Company vy. Capuano the specific issue before the United States Court of Appeals for the First Circuit, and which is relevant to the case at hand, is whether under the doctrine of res judicata, and Haas Company (“R&H”) was precluded from seeking contribution against Capuano. American Cyanamid dealt with an action under the Comprehensive Environmental Response,

Tt |}Compensation and Liability Act (‘CERCLA’) §§ 101-405, as amended by the Superfund [Amendments and Reauthorization Act of 1986 (“SARA”), 42 U.S.C. §§ 9601-9675 brought by R&H hazardous waste was deposited at the Picillo site against a group of people who were involved the site. American Cyanamid Company v. Capuano, 381 F. 3d at 9. R&H had entered into multiple settlement agreements and dismissal agreements which were approved by the district court which the parties which entered these agreements also sued in the King Industries case. American (Cyanamid v. Capuano, 381 F. 3d at 16. Some of these settlement agreements included dismissals with prejudice. Capuano’s position was that the dismissals with prejudice were judgments on the merits thus are barred by the doctrine of res judicata. However, the court established that, “a dismissal prejudice contained in a consent decree is ‘not a ruling on the merits... [that] applies fo others the law of claim preclusion. American Cyanamid Company v. Capuano, 381 F, 3d at 17 quoting Langton v. Hogan, 71 F. 3d 930, 935 (1* Cir. 1995). The First Circuit held that the claims llasserted by R&H against the Capuanos do not have a res judicata effect because (1) the Capuanos not defendants in the King Industries case and were not parties to any of the settlement llagreements, meaning that there is no identicality between the parties in the two suits; (2) at the time llof the King Industries lawsuit, R&H could not pursue a claim against the Capuanos because the groundwater remediation had not yet occurred and the Capuanos had contribution immunity for Iclaims relating to the soil remediation, meaning that there was no sufficient identicality between the of action asserted in the earlier and later suit; and (3) the “two dismissal rule” under Fed. R. P. 41(a)(1) is not applicable because the defendants are not the same nor were they in privity the defendants in King Industries. See American Cyanamid Company v. Capuano, 381 F. 3d llat 17. The First Circuit held that the res judicata doctrine does not apply to the claim presented by for the reasons stated above, however, the decision does not conclude that a voluntary dismissal joint stipulation with prejudice under Fed. R. Civ. P. 41(a)(1)(A)Gi) is not an adjudication on the for claim preclusion purposes. In light of the above discussion regarding the first prong of the claim preclusion test, this court that a voluntary dismissal by joint stipulation with prejudice is a judgment on the merits.

I The First Circuit has adopted the “transactional” approach to determine whether causes of llaction are sufficiently related to support a res judicata defense. Massachussetts Sch. of Law at Andover, Inc. v. American Bar Ass’n., 142 F. 3d 26, 38 (1* Cir. 1998); Porn v. National Grange A [Mutual Ins. Co., 93 F.3d at 34 citing Manego v. Orleans Bd. of Trade, 773 F. 2d 1, 5 (1* Cir. 1985), IIcert. denied, 475 U.S. 1084, 89 L. Ed. 2d 722, 106 8. Ct, 1466 (1986); Aunyx Corporation v. Canon U.S.A., Inc... 978 F. 2d 3, 11 (1" Cir. 1992); Gonzalez v. Banco Cent. Corp., 27 F. 3d at 755. Under approach, a valid and final judgment in the first action will extinguish subsequent claims “ ‘with llrespect to all or any part of the transaction, or series of connected transactions, out of which the action farose.’” Porn v. National Grange Mutual Ins. Co., 93 F.3d at 34 quoting Restatement of the Law, Second, Judgments §24 (1982)). The court determines the factual grouping which constitutes a transaction” pragmatically, giving weight to such factors as “ whether the facts are related in time, origin, or motivation, whether they form a convenient trial unit, and whether their treatment llas a unit conforms to the parties’ expectations.” Porn v. National Grange Mutual Ins. Co., 93 F.3d jjat 34 citing Restatement §24; Aunyx Corporation v. Canon U.S.A.., Inc.. 978 F. 2d at 7. However, factors are suggestive and are not intended to be exhaustive, nor is any one factor determinative. Porn v. National Grange Mutual Ins. Co., 93 F.3d at 34. Therefore, we must analyze whether the facts llunderlying the willful violation of the discharge injunction in the PRAMCO and Banco Santander lladversary proceedings are related in time, space, origin or motivation, and whether, they arise out of Ithe same transaction, seek redress for essentially the same basic wrong, and rest on the same or a lsubstantially similar factual basis. Porn v. National Grange Mutual Ins. Co., 93 F. 3d at 34 citing v. Combined Ins. Co, of Am., 924 F. 2d 1161, 1166 (1* Cir.), cert. denied, 502 U.S. 816, 116 Ed. 2d 44, 112 S. Ct. 69 (1991). The facts underlying the two different complaints stem from different transactions or lloccurrences (which are not sufficiently identical) that involve the violation of the discharge injunction lby different parties which are not related to one another. Upon comparison of both complaints, the pleading (claim) that they have in common is that Defendant and PRAMCO jointly sent a letter the Plaintiffs informing the same that the debt had been sold to PRAMCO, and requesting that payments be made to PRAMCO. However, the claim in the adversary proceeding against PRAMCO

I is derived from PRAMCO’s separate and independent violations of the discharge injunction which 2 ldo not stem from the same common nucleus of operative facts as the alleged violations of the 3 discharge injunction by Banco Santander. That is, that despite the fact that there is an alleged 4 ldischarge injunction violation which was jointly caused by Defendant and PRAMCO, the other § flalleged violations of the discharge injunction which were caused by these two different entities 6 (PRAMCO and Banco Santander) are separate and independent and do not stem from the same 7 transaction or the same nucleus of operative facts. The complaint against Banco Santander pleads 8 the same violated the discharge injunction by selling and transferring Plaintiffs’ discharged 9 lwithout notice of its discharged status and sending a written statement informing Plaintiffs that their (obligation) was sold to PRAMCO and requesting that all payments be sent to PRAMCO (paragraphs 20 and 24 of complaint). Furthermore, these facts do not form a convenient trial unit to the extent the witnesses or needed in the second action do not overlap substantially with the witnesses or proof relevant Ito the first as the claims alleged in the complaints stem from substantially different transactions. See Porn v. National Grange Mutual Ins. Co., 93 F.3d at 36 citing Restatement §24. This inquiry focuses lupon what would happen at trial. Iannochino v. Rodolakis, 242 F. 3d 36, 47 (1* Cir. 2001) citing Restatement (Second) of Judgments §24 cmt. b (1982). Finally, as to the parties’ expectations, we are guided by the principle that, where “two claims llarose in the sare time frame out of similar facts, one would reasonably expect them to be brought lltogether.” Iannochino y, Rodolakis, 242 F. 3d at 48 citing Porn v. National Grange Mutual Ins. Co., 2) 93 F. 3d at 37. In the present case, the two claims for willful violation of the discharge injunction at different times and from different facts or transactions, thus one would expect the claims be lbrought separately under different cases. Thus, because the claims are independent and separate it lwould be expected that they be brought under different cases or complaints by the Plaintiffs. In summary, applying the transactional test to this adversary proceeding, the court concludes _26 |Ithat the two lawsuits involve different causes of action which stem from different transactions which lloccurred at different times. The third requirement for claim preclusion requires sufficient identicality between the parties

I the two suits. A prior judgment obtained on a lawsuit bars a subsequent action on the same claim only between the same parties or their privies. Moore’s Federal Practice Civil §131.40 (1). The Supreme Court established that, “[i]t is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service or process.” Hansberry v. 311 U.S. 32, 40, 61 S. Ct. 115, 85 L. Ed. 22 (1940). The Hansberry principle establishes that {preclusion may not be used in an action by or against a person who was not a party in a prior ladjudication. Id. However, the term “parties” in light of the requirement of identicality between the lparties for claim preclusion purposes refers to parties in interest, meaning those parties whose interest so closely related that a judgment against one should preclude all. Moore’s Federal Practice Civil $131.40 (3)a) quoting Latham v. Wells Fargo Bank, N.A., 896 F. 2d. 979, 983 (5" Cir. 1990). Traditionally, courts have referred to a “party” as a party of record and referred to nonpartics who are isubject to the preclusive effect of the judgment as being in “privity” with a party. See Richards v. Jefferson County, 517 U.S. 110, 129-130, 103 8. Ct. 1761, 135 L. Ed. 2d 76, 84 (1996). Given that is no specific rule or test for determining privity the same is identified by specific relationships lbetween parties and nonparties that may preclude nonparties. Moore’s Federal Practice Civil $131.40 quoting the Restatement (Second) of Judgments Ch.1 intro, 13-14. Generally to justify claim preclusion, a nonparty will be considered in privity, or sufficiently Iclose to a party in the prior suit in three situations: (1) a nonparty who has succeeded to a party’s linterest in property is bound by any prior judgments against that party, (2) a nonparty who controlled original suit will be bound by the resulting judgment, and (3) federal courts will bind a nonparty lwhose interests were represented adequately by a party in the original suit. Ford Gas Co, v. Wanda Petroleum Co., 833 F. 2d 1172, 1174 (5" Cir. 1987), Freeman v. Lester Coggins Trucking, Inc. ,771 2d 860,864 (5" Cir. 1985) quoting Southwest Airlines Co. v. Texas International Airlines, 546 F. 84,95 (5" Cir.). Privity will not exist if either a preexisting legal relationship or identity of interests missing from the equation. Moore’s Federal Practice Civil $131.40 (3)(a). Defendant in its Motion to Dismiss argues that there is a close relationship or privity of interest lbetween the assignor Santander and the assignee PRAMCO. Defendant cites the case of In Re El San 10

Hotel Corporation, 841 F.2d 6 (1* Cir. 1988), to sustain its position that the requirement of isufficient identicality of the parties is met because there is a close relationship or privity of interest between Defendant and PRAMCO. In In Re El San Juan Hotel Corporation, one of the issues before court was whether nonmutual claim preclusion was appropriate, meaning whether a party not {involved in the earlier action may deflect the lawsuit because he should have been, but was not, jlincluded in the earlier suit. In Re El San Juan Hotel Corporation, 841 F. 2d at 10. To support its \lholding, the First Circuit incorporates the rationale that, “[o]ther courts have concluded that a version jlof claim preclusion is appropriate in these circumstances if the new defendants have a close and lsignificant relationship with the original defendants, such as when the new defendants were named as lconspirators in the first proceeding but were not joined in the action.” In Re El San Juan Hotel \Corporation, 841 F. 2d at 11 citing Gambocz v. Yelencsics, 468 F. 2d 837, 841 (3" Cir. 1972). Preclusion is appropriate “only if the new party can show good reasons why he should have been in the first action and the old party cannot show any good reasons to justify a second chance.” {In Re El San Juan Hotel Corporation, 841 F. 2d at 11 citing 18 Wright & Miller §4464, at 589. In this lparticular case, the court concluded that, “with regard to these allegedly joint harms, it is evident that iCuprill [trustee’s counsel] as the co-perpetrator, shared a significant relationship with Rodriguez [[trustee].” In Re El San Juan Hotel Corporation, 841 F. 2d at 11. The court held that the defendants lwere co-perpetrators of the harming act, and shared a significant relationship, thus the claim preclusion of identicality of the parties was satisfied. However, in the present case there are several lindependent and separate pleadings in the complaint that simply do not allege that Defendant and PRAMCO were co-perpetrators of the different violations of the discharge injunction nor that they a significant relationship. Only one of the pleadings of the complaint alleges that Defendant and PRAMCO were co-perpetrators in one of the violations of the discharge injunction. Furthermore, Defendant fails to establish how these two different entities are closely related other than as the lassignor and the assignee. In this case, the Plaintiffs are the same in both adversary proceedings but the defendants are Idifferent. The next question to be answered is whether the defendants, though not identical, are sufficiently in privity to satisfy this element. According to the pleadings in this adversary proceeding, 11

only relationship that exists between Defendant and PRAMCO is that of a business relationship lin which Defendant allegedly sold, transferred, assigned or conveyed to PRAMCO Plaintiffs’ Idischarged debt (paragraph #19 of complaint). This type of business relationship does not construe lprivity between these two separate entities since they are not under common control or share a common economic interest in attempting to satisfy Plaintiffs’ discharged debt. This court finds that is no identicality between Defendant and PRAMCO since they are separate and unrelated] - llcorporations that do not share a common economic interest. Failure to Join an Indispensable Party In the alternative, Defendant has presented to the court the position that this adversary lproceeding be dismissed under Fed. R. Civ. P. 19(b)for failure to join PRAMCO. Fed. R. Civ. P. 19 in part the following:

“(a) Persons Required to Be Joined if Feasible. (1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if: (A) in that person’s absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may: (i) as a practical matter impair or impede the person’s ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. (2) Joinder by Court Order. If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff. (3) Venue. If a joined party objects to venue and the joinder would make venue improper, the court must dismiss that party. (b) When Joinder Is Not Feasible. If a person who is required to be joined is feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.” Fed. R. Civ. P. 19. Before analyzing whether Fed. R. Civ. P. 19(b) applies to this case, the court must first determine whether the joinder of PRAMCO as described in Fed. R. Civ. P. 19(a) is desirable but not feasible. See Wright & Miller Federal Practice and Procedure: Civil 3d §1608 at 91. A necessary precursor to a decision under Fed. R. Civ. P. 19(b) is a decision under Fed. R. Civ. P. 19(a). See United States v. San Juan Bay Marina, 239 F. 3d 400, 405 (1* Cir. 2001). “Rule 19(b), which governs indispensable parties, works in two steps. Step one requires the district court to decide whether a person fits the definition 12

I llof those who should “be joined if feasible” under Rule 19(a).” Pujol v. Shearson American Express, 11877 F. 2d 132, 134 (1* Cir. 1989) referring to Provident Tradesmens Bank v, Patterson, 390 U.S. 102, 1118, 19 L. Ed. 2d 936, 88 S. Ct. 733 (1968). “Ifthe person is a ‘necessary’ party (i.c., fits the definition llof 19(a)), but joinder is not feasible, the court must take step two. It must decide, using four “factors,” whether ‘in equity and good conscience the action should proceed among the parties before it, or lshould be dismissed.” Pujol v. Shearson American Express, 877 F. 2d at 134. The first step is to determine whether PRAMCO is a necessary party under Fed. R. Civ. P. 8 Necessary parties are those, “who ought to be made parties, in order that the court may act on rule which requires it to decide on, and finally determine the entire controversy, and do complete iljustice, by adjusting all the rights involved in it.” Shields v. Barrow, 58 U.S. 130, 139 15 L. Ed. 158 il (1855). “Thus, when applying Rule 19(a), a court essentially will decide whether considerations of lefficiency and fairness, growing out of the particular circumstances of the case, require that a particular [person be joined asa party.” Pujol v. ShearsonAmerican Express, Inc., 877 F. 2d at 134. Despite the that Fed. R. Civ. P. 19(a) no longer contains the word “necessary,” the term as been retained by courts as a convenient shorthand for the Rule 19{a) determination. Picciotto v. Continental Casualty Company, 512 F. 3d 9, 16 (1" Cir. 2008) referring to Janney Montgomery Scott, Inc. □□□ □ \Shepard Niles, Inc., 11 F.3d, 399, 404 n.4 (3 Cir. 1993) (citing Provident Tradesmen Bank & Trust v. Patterson, 390 U.S. at 116 n. 12). A party only has to satisfy one of the three criteria of Fed. IR. Civ. P. 19(a) to be deemed necessary. Picciotto v. Continental Casualty Company, 512 F. 3d at.16. In this case, the analysis of Fed. R. Civ. P. 19{a) consists in determining whether PRAMCO’s flabsence from this adversary proceeding would “impair or impede” Defendant’s “ability to protect its linterest” or if the case would leave Defendant subject to multiple obligations. See Picciotto_v. Continental Casualty Company, 512 F. 3d at 16. If Defendant fails to satisfy this test, it is not even la “Rule 19(a) person” who should be joined “if feasible,” let alone a Rule (1 9(b) “indispensable party.” See Pujol v. Shearson American Express, Inc., 877 F. 2d at 135. This court finds that PRAMCO is not lan indispensable party to this adversary proceeding because as previously discussed the violations of discharge injunction allegedly committed by PRAMCO and Banco Santander are independent and jseparate, meaning that they. stem from a different nucleus of operative facts. Furthermore, it has not 13

I’ |been established that there is privity or any type of relationship between Defendant and PRAMCO, as seller and buyer of debt obligations. This court finds that Defendant did not establish the lindispensability of PRAMCO as a necessary party. PRAMCO’s absence in this adversary proceeding idoes not impair or impede in any manner Defendant’s ability to protect its interest in this lawsuit. Since this court has determined that PRAMCO 1s not a necessary party under Fed. R. Civ. P. 19(a) we find it unnecessary to proceed to the second part of the analysis, that is of Fed. R. Civ. P. Conclusion For the reasons stated above, this court finds that the three prong test of the res judicata doctrine for claim preclusion is not met and thus Plaintiffs are not barred from ensuing their claim Defendant. The court also holds that PRAMCO is not an indispensable party to this adversary proceeding and Fed. Rule Civ. P. 19 is inapplicable and thus this court finds no reason to dismiss said fladversary proceeding. In view of the foregoing, Defendant’s motion to dismiss is hereby DENIED. In San Juan, Puerto Rico, this fie day of March 2009. YP f MRIQUE S. LAMOUTTE □□ S. Bankruptcy Judge 14