In re: Pulsar Puerto Rico Inc; AT & T Mobility Puerto Rico Inc v. Pulsar Puerto Rico Inc, Wilfredo Segarra Miranda, Trustee, Wilfredo Rodriguez Flores

Opinion

THE DISTRICT OF PUERTO RICO 2

3 IN RE:

4 PULSAR PUERTO RICO INC CASE NO. 08-07557 BKT 5 CHAPTER 7

6 Debtor(s) ADVERSARY NO. 11-0042

8 Plaintiff

9 PULSAR PUERTO RICO INC FILED & ENTERED ON 04/05/2012 WILFREDO SEGARRA MIRANDA 10 ,TRUSTEE

12 Defendant(s)

16 Before the court is AT&T Mobility Puerto Rico, Inc.’s (“AT&T”) 17 Motion for Partial Summary Judgment (Dkt. No. 80), Trustee’s opposition 18 (Dkt. No. 100),AT&T’s Reply to the Trustee’s Opposition to Partial 19 Summary Judgment (Dkt No. 112) and the Trustee’s Sur-Reply (Dkt No. 123). 20 For the reasons stated herein AT&T’s motion for summary judgment is 21 hereby GRANTED. 22 I. JURISDICTION 23 24 This Court has jurisdiction over the subject matter and the parties 25 pursuant to 28 U.S.C. §§1334 and 157(a) and the General Order of referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of Puerto Rico dated July 19, 1984 (Torruella, C.J.). II. BACKGROUND The controversy in this case originates from two prepetition lease 1 agreements under which AT&T installed and operates cellular 2 telecommunication antennae on the rooftop of the former Diamond Palace 3 Hotel & Casino (the “Hotel”), a hotel complex owned by Pulsar Puerto 4 Rico, Inc. (“Debtor”).The first of the lease agreements was executed 5 between CCPR Services, Inc. (now AT&T) and Debtor on July 29, 2003, and 6 amended on August 1, 2008 (the “AT&T Lease Agreement”). The second lease 7 agreement was executed between Centennial Puerto Rico Operations Corp. 8 (now AT&T) and Wilfredo Rodríguez Flores (“Rodríguez Flores”)d/b/a 9 10 Rodríguez International Corp. on October 13, 2008 (the “Centennial Lease 11 Agreement”). 12 On November 7, 2008, Debtor filed a voluntary petition under Chapter 13 11 of the Bankruptcy Code. On September 13, 2010, Debtor’s bankruptcy 14 case was converted to Chapter 7 and Wilfredo Segarra Miranda was 15 appointed as Chapter 7Trustee(the “Trustee”). 16 On February 14, 2011, AT&T filed the Interpleader that initiated the 17 adversary proceeding at bar (Dkt No. 1).Among other things, the 18 interpleader seeks to join codefendants, Debtor and Rodríguez Flores, in 19 a single proceeding to determine who has the rightful claim to the rent 20 21 payments under the aforementioned lease agreements. On March 25, 2011, 22 the Trustee filed an Answer to Interpleader Complaint which also included 23 a Counterclaim against AT&T(the “Counterclaim”) (Dkt No. 16). In the 24 Counterclaim, the Trustee asserts three causes of action: 25 1. That the Court issue a declaratory judgment naming Debtor as the real party in interest or the real lessor in the Centennial Lease Agreement; 1 2. A collection action against AT&T for $190,296.00 of rent 2 allegedly owedand/or wrongfully paid under both, the AT&T and the 3 Centennial Lease Agreements; 4 3. Damages caused by AT&T for allegedly “aiding and abetting” in 5 supposedly illegal and willful acts by Rodríguez Flores to divest Debtor 6 of the rights and payments due under the Centennial Lease Agreement in 7 breach of Rodríguez Flores’ fiduciary duties. 8 On April 14, 2011, AT&T filed an answer to the Counterclaim and a 9 10 cross claim against Wilfredo Rodríguez and/or Rodríguez International 11 Corp. (Dkt no. 22). Also, on October 24, 2011,AT&T filed the Motion for 12 Partial Summary Judgment (the “Motion for Summary Judgment”) (Dkt No. 13 80), seeking dismissal of the Trustee’s Third Cause of Action against 14 AT&T for the purported liability and damages caused by AT&T’s alleged 15 “aiding and abetting” practices. AT&T’s arguments in favor of dismissal 16 are based upon the following: (i) neither federal law nor Puerto Rico law 17 provides a private cause of action for “aiding and abetting” tort 18 liability; (ii) even assuming that such a cause of action existed, the 19 Trustee cannot provide evidence that AT&T knew and/or substantially 20 21 assisted or encouraged Rodríguez Flores’s allegedly illegal actions; and 22 (iii) such a cause of action would be time-barred under Puerto Rico’s 23 applicable one year statute of limitations. 24 In his Opposition to AT&T’s Motion for Partial Summary Judgment, 25 filed on December 21, 2011(the “Opposition”) (Dkt No. 100), the Trustee avers that the facts upon which AT&T moves for summary judgment are subject to controversy. The Trustee also argues that AT&T has failed to establish the legal basis upon which summary judgment can be granted. Specifically, the Trustee alleges that:(i) AT&T entered into a lease 1 agreement with Rodríguez International Investment Corp. and/or Rodríguez 2 Flores despite knowing that Debtor was the owner of the leased premises; 3 and (ii) that AT&T facilitated and furthered a breach of fiduciary duty 4 by directing monthly rent payments under multiple lease agreements to 5 Rodríguez Flores when it knew that Debtor had the right to such 6 payments.In support of his Third Cause of Action, the Trustee asks the 7 Court to look into Delaware corporate law and adopt its doctrine on 8 aiding and abetting a breach of fiduciary duty. 9 10 On January 26, 2012, AT&T filed a Reply to the Trustee’s Opposition 11 to Partial Summary Judgment (the “Reply”) (Dkt No. 112)reiterating that 12 the Trustee’s Opposition lacked merits, and therefore, summary judgment 13 as to the “aiding and abetting” cause of action should be granted. 14 Specifically, AT&T refutes the Trustee’s connection to Delaware’s 15 corporate law, insofar as the Counterclaim raises a damages and torts 16 claim based on “aiding and abetting” that does not concern any of Puerto 17 Rico’s corporate statutes. In fact, the Trustee does not cite any 18 corporate law statute under Puerto Rico’s General Corporations Law that 19 supports an “aiding and abetting” action in Puerto Rico. The remaining 20 21 statements put forth by AT&T in the Reply are a repetition of the 22 arguments raised in the Motion for Summary Judgment. 23 On February 10, 2012 (Dkt No. 123), the Trustee filed a Sur-Reply to 24 AT&T’s Reply (the “Sur-Reply”) to substantiate its claim against AT&T for 25 the aiding and abetting breach of fiduciary duty claim. The Sur-Reply further discusses the potential wrongdoings of Rodríguez Flores and the Trustee’s claim of breach of fiduciary duty against him. The Trustee argues conclusively that AT&T substantially assisted Rodríguez Flores in breaching his fiduciary duties to the Debtor by restating that: (i) the 1 named lessor under the Centennial Lease Agreement was Rodríguez 2 International and/or Rodríguez Flores, when Rodríguez Flores had no right 3 to lease the premises, and (ii) all the checks that AT&T issued to pay 4 the rent under the Centennial Lease Agreement were made jointly to the 5 order of Rodríguez International and/or Rodríguez Flores. 6 III. ANALYSIS AND DISCUSSION 7 A. Summary Judgment Standard 8 9 Under Federal Rule of Civil Procedure 56(c), made applicable in 10 bankruptcy by Federal Rule of Bankruptcy Procedure 7056, summary judgment 11 is available if the pleadings, depositions, answers to interrogatories, 12 and admissions on file, together with the affidavits, if any, show that 13 there is no genuine issue as to any material fact and that the moving 14 party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); 15 Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 4 (1st Cir. 2010). 16 As to issues on which the movant, at trial, would be compelled to carry 17 the burden of proof, it must identify those portions of the pleadings 18 19 which it believes demonstrates that there is no genuine issue of material 20 fact. In re Edgardo Ryan Rijos & Julia E. Cruz Nieves v. Banco Bilbao 21 Vizcaya & Citibank (In re Rijos), 263 B.R. 382, 388 (B.A.P. 1st Cir. 22 2001). A fact is deemed "material" if it potentially could affect the 23 outcome of the suit. Borges at 5. Moreover, there will only be a 24 "genuine" or "trial worthy" issue as to such a "material fact," "if a 25 reasonable fact-finder, examining the evidence and drawing all reasonable inferences helpful to the party resisting summary judgment, could resolve the dispute in that party's favor." Id. at 4. The Court must view the evidence in a light most favorable to the nonmoving party. Alt. Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23, 26 (1st Cir. 2004). 1 Therefore, summary judgment is “inappropriate if inferences are necessary 2 for the judgment and those inferences are not mandated by the record.” 3 Rijos at 388. 4 B. Aiding and abetting theory 5 The question is whether the alleged theory of “aiding and abetting” 6 is cognizable under state law. The Counterclaim cites no controlling law 7 in support of the Third Cause of Action on “aiding and abetting” and, in 8 9 his Opposition, the Trustee relies on Delaware’s corporate law provisions 10 for aiding and abetting a breach offiduciary duty. 11 In general, under Puerto Rico law, a person who by an act or 12 omission causes damage to another through fault or negligence shall be 13 obliged to repair the damage so done. 31 LPRA § 5141. All damages, 14 whether moral or material, give rise to a remedy if the following three 15 elements are met: (1) a real damage or injury occurred; (2) there is 16 causal nexus between injury and act or omission of another; and the (3) 17 act or omission was culpable or negligent. Bonilla v. Chardón, 118 18 D.P.R. 599 (1987). “[T]here is fault when one does not act as a man of 19 20 normal or ordinary diligence would, a good father of a family, according 21 to the circumstances of the case.”Gierbolini v. Employers Fire Ins. Co., 22 104 D.P.R. 853 (1976). 23 This Court concludes that the “aiding and abetting” theory is not 24 recognized under Puerto Rico law as a right to recover damages. In fact, 25 with very few exceptions provided by legislation, the right to recover damages in Puerto Rico is governed --both in form and in content--by the civil law system. Valle v. Amer. Inter. Ins. Co., 108 D.P.R. 692 (1979); Gierbolini v. Employers Fire Ins. Co., supra. Accordingly, the Trustee’s claim against AT&T for “aiding and abetting” is improper and legally 1 unsupported. 2 Moreover, taking into account all facts proffered by the parties an 3 extending the Trustee every reasonable inference in his favor, there is ‘ no basis to conclude that AT&T assisted Rodriguez Flores in the allegedl ° dubious activities investigated and asserted by the Trustee. It has not been proven that AT&T had actual knowledge of any wrongdoings b

3 Rodriguez Flores. Even if the Trustee were to establish a breach of 9 fiduciary duty by Rodriguez Flores, no evidence has been provided toa i190 JjJestablish that AT&T knew, assisted, participated and/or encourage 11 ||/Rodriguez Flores to commit any illegal acts. With the considerable 12 ||evidence submitted so far, it appears reasonable to conclude that the 13 ||Trustee cannot support his “aiding and abetting” claim, and therefore he 14 would not be entitled to a relief for damages. Iv. CONCLUSION 16 WHEREFORE, IT IS ORDERED that in light of the foregoing legal 18 conclusions, AT&T’s Motion for Partial Summary Judgment shall be, an 19 hereby is, GRANTED. Judgment will be entered accordingly. 20 A separate order will be entered scheduling a status conference t 21 |}consider the course of action to resolve remaining controversies. 23 San Juan, Puerto Rico, this 05 day of April, 2012. 24

rian K. Tester U.S. Bankruptcy Judge