Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc.

849 F. Supp. 2d 240, 2012 WL 1034459, 2012 U.S. Dist. LEXIS 44411
CourtDistrict Court, D. Puerto Rico
DecidedMarch 29, 2012
DocketCiv. No. 10-2155 (PG)
StatusPublished
Cited by4 cases

This text of 849 F. Supp. 2d 240 (Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prestige Capital Corp. v. Pipeliners of Puerto Rico, Inc., 849 F. Supp. 2d 240, 2012 WL 1034459, 2012 U.S. Dist. LEXIS 44411 (prd 2012).

Opinion

OPINION AND ORDER

JUAN M. PEREZ-GIMENEZ, Senior District Judge.

This ongoing dispute between secured creditors Prestige Capital Corporation (“Prestige”) and the Economic Development Bank for Puerto Rico (“EDB”), has given rise to a new conflict, this time between EDB and debtor Pipeliners of Puerto Rico (“Pipeliners”). Pipeliners has brought a Crossclaim against EDB under this Court’s supplemental jurisdiction, asserting breach of contract and tortious interference with contractual obligations claims, relating to a loan agreement perfected between the two on July 22, 2010. Docket No. 30. EDB seeks dismissal of said Crosselaim arguing that Pipeliners is precluded from bringing suit in this Court under the agreement’s forum selection clause, and in the alternative, that this Court lacks supplemental jurisdiction to entertain the claim. Docket No. 60. Pipeliners has filed its opposition. Docket No. 71. Because this Court finds that the forum selection clause at issue is permissive, and that it has supplemental jurisdiction to entertain the claims, it must DENY EDB’s request for dismissal.

I. BACKGROUND

The Court will recount only the relevant facts surrounding the EDB-Pipeliners dispute. For a more detailed background on the whole of this case, please see our prior Opinion and Order dated October 14, 2011, 2011 WL 4899968. Docket No. 81.

Pipeliners is a Puerto Rico corporation engaged in the business of repairing and rehabilitating aqueduct and sanitary lines using principally trenchless methods, and has entered into multiple contracts with the Puerto Rico Aqueduct and Sewer Authority (“PRASA”). On June 9, 2005 Prestige and Pipeliners entered into a Purchase and Sale Agreement (the “P & S Agreement”) and an amendment thereto on November 7, 2006. Docket No. 1-A. Pursuant to the P & S Agreement, Pipeliners agreed to sell, and Prestige agreed to purchase, from time to time, certain accounts receivables and contract rights of Pipeliners. Pursuant to Section 11 of the P & S Agreement, Pipeliners granted Prestige a continuing security interest in all of its accounts receivables, among other assets, as security for the payment of any unpaid invoices. Prestige duly perfected its security interest on June 16, 2005 by filing the appropriate financing statements with the Puerto Rico Department of State.

Five years later, on July 22, 2010, Pipeliners and EDB executed a Loan Agreement pursuant to which EDB granted Pipeliners a revolving line of credit in the amount of $2, 000, 000 (the “Loan Agree[243]*243ment”). Pipeliners also granted EDB a continuing security interest in the same accounts receivables encumbered by Prestige’s earlier security interest. EDB perfected its security interest on July 28, 2010, by filing a financing statement with the Puerto Rico Department of State.

On August 19, 2010, counsel for Prestige sent a letter to the attorney and public notary who drafted and executed the closing documents for the EDB Loan Agreement. In it, Prestige alleged that it held a senior security interest encumbering the same collateral as EDB’s security interest and demanded that EDB turn over any proceeds deriving from said collateral. Docket No. 1-C. Two months later, on October 21, 2010, EDB sent a letter to Pipeliners indicating that it had defaulted on the terms of the Loan Agreement by not disclosing the alleged liens held by Prestige. Docket No. 8-4. This purported failure to disclose effectively triggered an acceleration clause in the EDB Loan Agreement, rendering the EDB Loan immediately due and payable. Id.

These actions by EDB triggered the filing of Pipeliners’ Crossclaim in the instant action, where Pipeliners makes the following allegations:

During the negotiations by and between Pipeliners and EDB, Pipeliners informed EDB personnel of the existence of the P & S Agreement by and between Pipeliners and Prestige as well as of the fact that Pipeliners’ accounts receivables served as collateral to said Agreement. Indeed, Pipeliners understood throughout its negotiations with the EDB that a substantial portion of the proceeds of the EDB Loan would be precisely used to repay the amounts owed by Pipeliners to Prestige, in order for EDB to obtain a senior lien over such accounts. Crossclaim, ¶ 6.
Pursuant to requests made by Pipeliners, between July and September 2010, EDB made certain disbursements under the Loan Agreement totaling approximately $875,000.00. Crossclaim, ¶ 8.
However, on October 14, 2010, the EDB sent a letter to Pipeliners whereby the EDB unilaterally terminated the Loan Agreement. As grounds for this termination, the EDB stated that subsequent to the execution of the Loan Agreement, the bank became aware that Prestige had a senior security interest over Pipeliners’ accounts receivables from PRASA, and that this information had been somehow withheld by Pipeliners during the negotiations of the Loan Agreement. Crossclaim, ¶ 9.
On November 14, 2010, Pipeliners answered the EDB letter and clarified that the EDB was fully aware at all times of the Prestige security interest because Pipeliners had so informed it all throughout the negotiations with EDB and, beyond said applicable disclosures, EDB had to be aware of the situation being Prestige’s security interest a matter of public record easily noticeable when EDB filed its own financing statement before the Puerto Rico State Department. At that time, Pipeliners requested that EDB refrain from terminating the Loan Agreement and that the same be allowed to continue according to its terms. Crossclaim, ¶ 10.
Nonetheless, the EDB continued to insist on the termination of the Loan Agreement and subsequent conversations between all parties involved failed to lead to any sort of understanding that could somehow provide a solution. Crossclaim, ¶ 11.
As a result of the foregoing: (i) the EDB refused and continues to reject to acknowledge that Prestige has a senior lien over Pipeliners’ accounts receivables from PRASA; (ii) the EDB failed to fully deliver on its Loan Agreement with [244]*244Pipeliners; and, (iii) the EDB has demanded immediate payment of the funds advanced under the Loan Agreement. Crossclaim, ¶ 12.
Furthermore, the EDB has interfered with the contracts existing by and between Pipeliners and PRASA, by demanding and obtaining from PRASA the payment directly to EDB of certain amounts owed by PRASA to Pipeliners, which in turn are owed by Pipeliners to Prestige. Moreover, the EDB has further interfered in the contractual relationship Pipeliners has with PRASA by demanding and causing undue delays in the PRASA process of payments to Pipeliners and/or Prestige. Crossclaim, ¶ 13.

As a result of the foregoing, Pipeliners requests this Court order EDB to effect specific performance of its obligations under the Loan Agreement, as well as to indemnify Pipeliners in damages resulting from the alleged breach of contract and the tortious interference with its contractual obligations to third parties, including Prestige. EDB contends these claims should be dismissed, because under the Loan Agreement’s forum selection clause, said claims could only have been brought before the state court sitting in San Juan, Puerto Rico.

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Bluebook (online)
849 F. Supp. 2d 240, 2012 WL 1034459, 2012 U.S. Dist. LEXIS 44411, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prestige-capital-corp-v-pipeliners-of-puerto-rico-inc-prd-2012.