Rojas v. Loewen Group International, Inc.

178 F.R.D. 356, 1998 U.S. Dist. LEXIS 4758, 1998 WL 168711
CourtDistrict Court, D. Puerto Rico
DecidedMarch 30, 1998
DocketNo. Civ. 95-1196(HL)
StatusPublished
Cited by15 cases

This text of 178 F.R.D. 356 (Rojas v. Loewen Group International, 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
Rojas v. Loewen Group International, Inc., 178 F.R.D. 356, 1998 U.S. Dist. LEXIS 4758, 1998 WL 168711 (prd 1998).

Opinion

OPINION AND ORDER

LAFFITTE, District Judge.

Before the Court is a motion to dismiss pursuant to Federal Rule 12(b)(7) filed by Defendants The Loewen Group, Inc. (“Loewen”) and Loewen Group International, Inc. (“LGII”). The movants are non-Puerto Rico corporations. Plaintiffs are Juan Rivera Rojas (“Juan Rivera”), his wife Leyda Rivera Vega, their conjugal partnership, and Carlos Rivera Bustamente (“Carlos Rivera”); they are all Puerto Rico residents. Carlos Rivera is the son of Juan Rivera. Plaintiffs bring this claim for breach of contract for a series of agreements that the parties entered into starting in October 1993. Jurisdiction is based on diversity of the parties. 28 U.S.C.A. § 1332 (West 1993 & Supp.1998).

In order to resolve the present controversy, it is necessary to provide a brief history of the numerous agreements that the parties have entered into in the course of the sale of a funeral home business. In 1993 Juan Rivera was the owner of El Señorial funeral home and cemetery in Puerto Rico. On October 14, 1993, Juan Rivera and LGII entered into an initial agreement whereby LGII or a subsidiary would acquire all the assets of Juan Rivera’s funeral business in exchange for $4,465,000. The agreement also provided that Juan Rivera and Carlos Rivera would be given five-year management agreements with the funeral business; that if certain sales goals were met, Juan Rivera would receive additional payments on the third, sixth, and tenth anniversaries of the sale; that he would obtain a five percent partnership interest in either LGII or a nominee; and that the parties would later enter into a more detailed purchase agreement setting forth all the terms and conditions of the sale.1 The more detailed agreement was entered into on December 14,1993, between Juan Rivera, his wife, and LGII. In addition to covering the details of the sale of the funeral business, the agreement reiterated the provisions regarding possible additional future payments to Juan Rivera and the five-year management agreements.2

On January 21, 1994, Defendants formed Camposanto PR, Inc., as a Puerto Rico corporation.3 On January 25, 1994, the parties entered into another round of agreements. They included the following:

(1) A loan agreement between Camposanto PR, Inc., El Señorial Funeral Home, [359]*359Inc., El Señorial Memorial Park, Inc., and Plaintiffs. Camposanto agreed to loan the El Señorial corporations $251,393.59 until the closing of the sale occurred. Plaintiffs appeared as guarantors of the loan. The agreement stated that LGII had designated Camposanto as the entity which, in the course of the purchase of the El Señorial corporations, would acquire all Plaintiffs’ shares in them.4

(2) Letter agreements signed by Plaintiffs and directed to LGII and Camposanto. In these letters, Plaintiffs guaranteed the payment of the loan made by Camposanto.5

(3) A promissory note signed by Juan Rivera, his wife, and the two El Señorial corporations promising to pay Camposanto the amount of the loan.6

(4) A stock pledge agreement between Juan Rivera, his wife, Camposanto, and LGII pledging all of Juan Rivera’s stock in the two El Señorial corporations as security on the loan.7

(5) A management services agreement between Plaintiffs, the two El Señorial corporations, Camposanto, and LGII. The El Señorial corporations agreed to retain Camposanto and LGII as consultants until the loan was paid off. Under this agreement, Camposanto and LGII would provide assistance and guidance in the management of the funeral companies. Juan Rivera and Carlos Rivera remained responsible for the day-to-day management of the business, but any management decisions which could have “a material financial effect” on the companies had to be approved by Camposanto and LGII.8

On February 28, 1994, Camposanto purchased the real estate, fixtures, and equipment that belonged to the two El Señorial corporations.9 The closing date for the sale of the corporations was May 20, 1994.10 At the closing the following agreements were executed:

(1) Camposanto employment agreements with Juan Rivera and Carlos Rivera. The agreements stated that Camposanto owns and operates funeral homes in Puerto Rico. Plaintiffs were to be employed as regional managers in Puerto Rico. For their services they were to be paid annual salaries of $100,000 and would be entitled to additional bonuses based on sales commissions.11

(2) A shareholder agreement between Neweol Investments, Inc., Juan Rivera, and Carlos Rivera. Neweol is a wholly owned subsidiary of LGII. In the agreement the parties acknowledged that Camposanto had been created. The agreement further provided that Camposanto would have 100 issued shares, of which Juan Rivera and Carlos Rivera would receive together five “Class A” shares, Neweol would receive 90 Class B shares, and Robert Russell would receive 5 Class A shares. Class A shares were voting shares, but they did not have the right to dividends or earnings. Plaintiffs were given the right to name one of Camposanto’s five directors. Plaintiffs were also responsible for providing Camposanto with $165,000 in capital.12

(3) Non-competition agreements between LGII and Plaintiffs. Plaintiffs agreed that they would not compete with LGII or Camposanto for a period of two years following the expiration of their employment agreements.13

(4) Assignment and assumption agreements between LGII and Camposanto. LGII assigned to Camposanto all its rights under the initial agreement of October 14, [360]*3601993, and the purchase agreement of December 14,1993. Camposanto assumed all of the terms and obligations of these agreements. Additionally, LGII guaranteed the payment and performance of Camposanto’s obligations under the agreements.14

Notwithstanding this abundance of papered agreements, the relationship between the parties went awry. In their complaint, Plaintiffs allege that Defendants have engaged in a scheme of misrepresentation and noncompliance. Specifically, they claim that Defendants concealed information regarding unspecified moneys that were owed to Plaintiffs; that Defendants induced Plaintiffs to sell the funeral business by falsely misrepresenting to them that they would be given control of Camposanto; that Plaintiffs were coerced into signing the purchase agreement, with the result that Juan Rivera has been placed in a dire economic position; that Defendants dishonored their contractual commitments and withdrew capital which had been set aside for investment in the business; that Defendants forced Plaintiffs to cede certain benefits that were originally agreed to in the negotiations; that Defendants took advantage of nonrelated criminal proceedings against Plaintiffs to amend certain conditions of the sale; that as a result of Defendants’ negotiation demands, Plaintiffs were placed in a “dire economic situation” and forced to ask Defendants for a loan; that the loan and management agreements of January 25, 1994, were intended to reduce Plaintiffs’ profits from the sale; and that Plaintiffs were not in an equal bargaining position with Defendants and were therefore forced to enter into these agreements.

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Cite This Page — Counsel Stack

Bluebook (online)
178 F.R.D. 356, 1998 U.S. Dist. LEXIS 4758, 1998 WL 168711, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rojas-v-loewen-group-international-inc-prd-1998.