Rojas-Buscaglia v. Taburno-Vasarhelyi , 897 F.3d 15 ( 2018 )

United States Court of Appeals
For the First Circuit
No. 16-2343
LUIS ROJAS-BUSCAGLIA; INART CORP.; INART SERVICES, INC.,
Plaintiffs, Appellees,
v.
MICHELE TABURNO-VASARHELYI,
a/k/a Michele Taburno-Vasarely,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Francisco A. Besosa, U.S. District Judge]
Before
Torruella, Selya, and Kayatta,
Circuit Judges.
Lydia M. Ramos Cruz for appellant.
David A. Carrión Baralt for appellees.
July 24, 2018
TORRUELLA, Circuit Judge. Following a lengthy bench
trial, the district court entered judgment for Michele Taburno-
Vasarhelyi ("Vasarely")1 on several of her counterclaims against
her business partner, Luis Rojas-Buscaglia ("Rojas"),2 awarded her
over $400,000 in damages, ordered her to provide Rojas certificates
of authenticity for two disputed pieces of artwork, and dismissed
several of her remaining counterclaims. Unsatisfied with this
result, Vasarely sought our assistance. Finding no error in the
district court's rationale, we affirm the district court's
judgment.
I. BACKGROUND
A. Factual Background
We begin with the relevant facts, reciting them as they
relate to the issues presented on appeal. Vasarely,
daughter-in-law of deceased "Op Art" artist Victor Vasarely, and
widow of Victor's son, Jean Pierre Vasarely (better known as
"Yvaral"), accumulated a large and valuable artwork collection as
a result of her relationship with both artists. Rojas, a Puerto
1 Also known as Michele Taburno-Vasarely. Throughout the
proceedings below and in her appellate brief, our appellant refers
to herself as "Vasarely." Accordingly, we do the same.
2 For ease in exposition, and because the other plaintiffs in the
underlying case, Inart Corporation and Inart Services, are wholly
owned and controlled by Rojas we refer to plaintiffs, collectively,
as "Rojas."
-2-
Rican entrepreneur and art dealer, and widower of Vasarely's best
friend, moved to France in December 2000 to work as Yvaral and
Vasarely's assistant. Yvaral died in August 2002.
From 1981 to 1985, Rojas's father, Dr. Luis Rojas ("Dr.
Rojas"), purchased eleven Victor Vasarely paintings from a gallery
in Venezuela. Among the works he bought were: Grilles-II, Helios-
Neg, Tridim-S, and Tsoda. Dr. Rojas gave Rojas custody of the
works of art along with the right to sell or exchange them in his
father's name. In September 2002, Rojas consigned the works of
art to Vasarely for exhibit or possible sale.
1. The 2009 Settlement Agreement
In 2004, Vasarely and Rojas moved to Chicago and acquired
what, according to Rojas's allegations, was community property
shared between the two of them. After their relationship took a
negative turn, Rojas moved back to Puerto Rico in 2005. At some
point between 2005 and 2009, Vasarely alleged that Rojas and his
father had sold some of her artwork to a private party, Dr.
Fernando Zalduondo, but never paid Vasarely for the sale. On
February 5, 2009, Vasarely and Rojas signed a settlement agreement
(the "2009 Settlement Agreement") stating that Rojas would give
nine of Dr. Rojas's paintings, including Grilles II,3 Helios-Neg,
3 While the 2009 Settlement Agreement lists the name of this
painting as Guilles, it is clear from the record and the parties'
-3-
Tridim-S and Tsoda, to Vasarely as payment for the sale to Dr.
Zalduondo.
2. The Chicago Agreement
From 2008 to 2012, Vasarely was involved in a civil
lawsuit in the Circuit Court of Cook County, Illinois, against an
art gallerist, Thomas Monahan, during which the Cook County court
attached hundreds of works of art that Vasarely had in storage in
Chicago. This included three pieces of artwork listed in the 2009
Settlement Agreement: Grilles II, Tridim-S, and Tsoda. On January
20, 2009, Vasarely wrote to Dr. Rojas that she regretted the
situation and that she hoped his seized works would be returned to
him in March or April. On September 22, 2010, Dr. Rojas and
Vasarely signed an agreement (the "Chicago Agreement"), in which
Vasarely recognized that Dr. Rojas was the owner of these
paintings, as well as Helios-Neg.
3. The 2010 Artwork Agreement
In June 2009, Rojas sued Vasarely for the division of
their community property. On September 22, 2010, Rojas and
Vasarely settled their community property dispute by entering into
an agreement (the "2010 Artwork Agreement") pursuant to which
Rojas, as the sole owner, director, and officer of Inart
briefs that this is the same painting as Grilles II.
-4-
Corporation and Inart Services, would earn commissions by selling
Vasarely's artwork to Inart's clients. According to the agreement,
Vasarely would receive eighty percent of the sale price and Inart
would receive the other twenty percent. Appendix A of the 2010
Artwork Agreement listed eleven paintings and three sculptures,
which Vasarely gave to Inart on consignment. Pursuant to Clause 8
of the 2010 Artwork Agreement, after the consigned artwork was
sold and Vasarely received her share of the payment, she was to
deliver the sold artwork's certificate of authenticity to the
purchaser. Clause 11 provided that either Rojas or Vasarely was
entitled to terminate the agreement with eight days' notice for
reasonable cause or for a breach of the contract by the other
party. Upon termination, Clause 12 established that Inart had to
return all artworks to Vasarely within forty-eight hours by
depositing them in a storage facility of Vasarely's choice. If
the forty-eight hours passed without Inart returning the artwork,
Inart would be fined $1,000 per day payable to Vasarely.
4. Verbal Agreement: Pompari and Quasar-Zett
The parties restored their working relationship and, in
December 2011, Vasarely and Rojas verbally agreed that Rojas would
travel to Paris for five days to complete some tasks for her.
Pursuant to her instructions, Rojas found several pieces of artwork
in storage facilities that Vasarely maintained in France, prepared
-5-
the artwork to be shipped to Puerto Rico -- where Vasarely was
contemplating moving -- contacted a shipping company to relay
Vasarely's specific moving instructions, and supervised the move.
As compensation for his work, Vasarely agreed to give Rojas two
pieces of artwork, Pompari and Quasar-Zett, together valued
between $240,000 and $300,000, as well as their certificates of
authenticity. Rojas received the artwork after the items arrived
in Puerto Rico, but Vasarely did not provide him the certificates
of authenticity.
5. Shipment of Vasarely's belongings from Chicago
In late October 2012, Vasarely moved from Chicago to
Puerto Rico. At Vasarely's request, Rojas agreed to take care of
the shipment of Vasarely's belongings and hired a company to pack
and ship the items located in her condo and four storage warehouses
in Chicago. Vasarely oversaw a representative from the shipping
company, Bill Mamer, as he packed her things in the condo, and she
put Rojas in charge of overseeing the packing of her items in the
warehouses. Vasarely did not create an inventory of the items
from the warehouses that were placed into each of the six shipping
containers and did not ask Rojas to do so either. The shipping
company prepared lists with very general descriptions of the
contents packed in each of the containers, which held hundreds of
boxes in total. Contrary to her instructions to ship the
-6-
containers and lease storage units in Puerto Rico under her name,
Rojas used either his name (or various misspellings of his name)
or his companies' names for the shipping and leasing agreements.
Five of the containers arrived in Puerto Rico on different dates
between September 19 and December 20, 2012, where Rojas received
them and, with the help of two hired assistants, unloaded them at
either the storage facility or at the building where he and
Vasarely both lived. The sixth container was sent to a storage
facility in New Jersey, purportedly with Vasarely's knowledge,
because Rojas believed not all of the boxes would fit into
Vasarely's Puerto Rico apartment. This New Jersey storage is also
where Vasarely stored items that she purchased at auction, and the
plan was to keep the shipped items there until she had room in
Puerto Rico for the container and auctioned items. Vasarely
received the container in Puerto Rico in June 2013. Vasarely now
contends that many of her possessions, including a number of
valuable works of art, are missing and were lost or stolen either
in transit or upon arrival in Puerto Rico.
6. Sale of the Chicago condominium
In 2003-04, when Vasarely moved from France to the United
States, Vasarely and Rojas purchased a condominium in Chicago under
Rojas's name for $1,160,000. Subsequent renovations to the
condominium cost approximately $250,000. On September 3, 2010,
-7-
Rojas and Vasarely signed a "Memorandum of Note" stating that
Vasarely would receive the proceeds of the sale of that condominium
when it was sold. In November 2010, Vasarely put the condominium
up for sale and, because she felt that the $1,100,000 offer she
received was too low,4 she took the property off the market. After
Vasarely moved to Puerto Rico in October 2012, Rojas hired a
realtor and recommended that Vasarely sell the condominium for
$1,100,000. Vasarely still felt that this amount was too low and
said that an appraisal needed to be done to know the true market
value of the property. On April 15, 2013, Rojas sold the
condominium without an appraisal for $1,075,000.
7. Vasarely's demands for return of her artwork
Because she suspected that Rojas was taking artwork from
her storage unit without her permission, on March 14, 2013,
Vasarely emailed Rojas requesting that he give her the keys to the
Puerto Rico storage units and a list of artwork that he had taken.
Rojas did not answer. On April 7, 2013, Vasarely sent Rojas an
email that, after addressing personal matters, stated, "I no longer
want to work with you, you don't do anything, other than abuse me
and take away my fortune by [f]orce." On May 16, 2013, Vasarely
wrote to Rojas: "If tomorrow prior to my leaving at one, all of my
4 Rojas remembered an additional offer for $950,000.
-8-
works of art have not arrived, I forewarn you that we are going to
file a complaint in court and of course I am going to cancel all
pending projects." The next day, she wrote in another email, "[w]e
are not going to have any business until everything is clarified
with attorneys and all my works of art are in my possession."
Between May and October 2013, she wrote Rojas several emails
requesting that he return all of the artwork that he took from her
storage units, as well as the keys to those storage units, but
Rojas nevertheless continued to ignore her repeated requests.
Rojas did not return the artwork or keys to Vasarely until February
2014 after the district court ordered him to do so on January 30,
2014. The set of artwork, consisting of at least thirty-one works,
was worth between $3,000,000 and $10,000,000.
B. Procedural Posture
1. Complaint and Counterclaims
On October 9, 2013, Rojas filed suit in the United States
District Court for the District of Puerto Rico, claiming inter
alia that Vasarely breached the 2010 Artwork Agreement by reducing
Rojas's commissions, interfering with artwork sales, and delaying
providing the purchasers certificates of authenticity for the
artwork. Rojas further sought injunctive relief and urged the
district court to order Vasarely to produce the certificates of
authenticity for the paintings already sold, as well as for Pompari
-9-
and Quasar-Zett. Finally, Rojas alleged that Vasarely defamed him
and his companies, causing damage to their commercial reputation.
On November 14, 2013, Vasarely asserted numerous
counterclaims; those relevant to this proceeding we discuss below.
Vasarely counterclaimed that Rojas breached the 2010 Artwork
Agreement by refusing to give her proceeds from certain artwork
sales, entering into her property and removing artwork and her
personal belongings, and refusing to return artwork after she
terminated the 2010 Artwork Agreement. She next counterclaimed
that Rojas breached a "mandate contract" when he failed to follow
her instructions regarding the shipment of her belongings from
Chicago to Puerto Rico, and breached a consignment contract when
he leased the storage units in Puerto Rico under his name and
failed to return to her the items that she deposited. Vasarely
also claimed Rojas was liable for the unauthorized sale of her
condo in Chicago, and for the proceeds of the sale for not proving
that he had paid her in full. She further requested damages for
mental and moral anguish suffered due to Rojas's "purposeful,
illegal, mean and disloyal acts" towards her.
On November 22, 2013, and again on July 2, 2014, Vasarely
moved to replevy several works of art, including the Pompari,
Quasar-Zett, Grilles-II, Helios-Neg, Tridim-S, and Tsoda
-10-
paintings, and other belongings that she alleged that Rojas
illegally possessed. The district court denied both motions.
2. Motions for Partial Summary Judgment
On January 30, 2015, Vasarely filed a motion for partial
summary judgment, requesting that the court grant judgment in her
favor on her counterclaims related to the breach of the 2010
Artwork Agreement and the sale of the Chicago condo, and that it
dismiss all of Rojas's claims. She again urged the district court
to order Rojas to return the artwork in their possession. On the
same day, Rojas filed a motion for partial summary judgment,
requesting that the court dismiss Vasarely's breach of the
consignment contract claim and her request for replevin of the
artworks, with the exception of La Bergere, Quasar-Zett and
Pompari.
The district court denied Rojas's motion for partial
summary judgment in its entirety and granted in part and denied in
part Vasarely's motion for partial summary judgment.
Specifically, as is relevant to this appeal, the district court:
1) granted judgment in Vasarely's favor as to her counterclaims
that Rojas breached the 2010 Artwork Agreement by failing to
provide her proceeds from the sale of several pieces of artwork;
2) denied her request for judgment as to her counterclaim that
Rojas breached the 2010 Artwork Agreement by not returning her
-11-
artwork; 3) denied her motion for summary judgment on Rojas's claim
that Vasarely breached the 2010 Artwork Agreement; and 4) granted
in part and denied in part her motion for summary judgment as to
her counterclaim regarding the sale of the Chicago condominium.
As to the condominium counterclaim, the district court found that
Rojas had not provided Vasarely the full net proceeds from the
sale of the Chicago condominium, but denied Vasarely judgment as
to her claim that Rojas negligently and in bad faith undersold the
condominium by not first obtaining an appraisal.
3. The Trial
On August 10, 2015, the district court commenced a
nineteen-day bench trial on the remaining claims. After hearing
the testimony of nine witnesses and reviewing the 252 exhibits
admitted into evidence, on August 5, 2016, the district court
dismissed the remainder of Rojas's claims that Vasarely breached
the 2010 Artwork Agreement as well as Rojas's defamation claim.
The district court did, however, find in Rojas's5 favor as to his
request for injunctive relief as to the Pompari and Quasar-Zett
paintings, finding that Vasarely gave them to Rojas in exchange
for his work in Paris, and ordered Vasarely to provide Rojas the
respective certificates of authenticity.
5 Rojas brought this claim individually, apart from the other
plaintiffs in the underlying case.
-12-
As to Vasarely's remaining counterclaims, the district
court found in Vasarely's favor on her counterclaims for breach of
contract relating to the sale of several pieces of artwork and
awarded her further damages in addition to those already awarded
at summary judgment. As to Vasarely's counterclaim for damages
for Rojas's breach of the 2010 Artwork Agreement by failing to
return her artwork in a timely manner, the district court found
that Vasarely had provided sufficient notice of her intent to
terminate the agreement and that a penalty pursuant to the
agreement's penalty clause was warranted. The court dismissed
Vasarely's counterclaim that Rojas breached the contract by
keeping an unauthorized inventory as it found that Rojas eventually
returned the artwork, and that Vasarely failed to show any damages
-- outside of those warranted by the contract's penalty clause --
from the delayed return of the art.
Next, the district court dismissed Vasarely's
counterclaim that Rojas breached an agency contract6 and also
dismissed Vasarely's breach of depositum contract counterclaim.7
As to the sale of the condominium in Chicago, the district court
6 This claim was labeled a breach of a "mandate contract" in
Vasarely's counterclaims.
7 This claim was labeled a breach of a "consignment contract" in
Vasarely's counterclaims.
-13-
found that Vasarely did not present any evidence that Rojas sold
the condo for less than it was worth, and thus dismissed her
counterclaim that Rojas negligently and in bad faith undersold the
property. The district court did, however, find in Vasarely's
favor on her tort counterclaim for mental anguish and ordered Rojas
to pay her $5,000.
Lastly, the district court dismissed Vasarely's replevin
requests as to Quasar-Zett, Pompari, Grilles-II, Helios-Neg,
Tridim-S, and Tsoda. The district court found that Vasarely gave
the first two paintings to Rojas as payment for work that he did
for her in Paris, and thus, because she does not own the paintings,
her motion for replevin must fail.8 As for the latter four
paintings, the district court found that they belonged to Dr. Rojas
pursuant to the Chicago Agreement.
The district court denied Vasarely's motion for
reconsideration on September 20, 2016. On October 19, 2016,
Vasarely timely appealed, which leads us to the following.
II. DISCUSSION
Vasarely raises a number of issues on appeal, which we
will handle in turn. Because the facts and application of the law
8 Rojas had physical possession of the paintings until the district
court ordered him to deposit them in a storage warehouse.
-14-
are largely disputed by the parties, we begin with the standard by
which we review the issues presented in this appeal.
A. Standard of Review
Following a bench trial, this Court reviews the district
court's findings of fact with deference, overturning them only
when clearly erroneous, but review "its legal conclusions de novo."
Portland Pilots, Inc. v. NOVA STAR M/V, 875 F.3d 38, 43 (1st Cir.
2017) (quoting Ne. Drilling, Inc. v. Inner Space Servs., Inc., 243
F.3d 25, 37 (1st Cir. 2001)). This Court will overturn a finding
of fact "only if it 'hit[s] us as more than probably wrong -- it
must prompt a strong, unyielding belief, based on the whole of the
record, that the judge made a mistake.'" Sánchez-Londoño v.
González, 752 F.3d 533, 539 (1st Cir. 2014) (alteration in
original) (quoting Darín v. Olivero–Huffman, 746 F.3d 1, 8-9 (1st
Cir. 2014)).
The applicable standard of review for an award of
damages, and for the modification of a penalty clause, is for an
abuse of discretion. See Lawton v. Nyman, 327 F.3d 30, 37 (1st
Cir. 2003) (stating that the abuse of discretion standard of review
applies to damages awards); see also Lussier v. Runyon, 50 F.3d
1103, 1111 (1st Cir. 1995). Under this framework, an appellant
must convince this Court that the district court "committed a
meaningful error in judgment." Lussier, 50 F.3d at 1111 (quoting
-15-
Rosario–Torres v. Hernandez-Colon, 889 F.2d 314, 323 (1st Cir.
1989)) (internal quotation marks omitted).
B. The Contested Issues
With these standards in mind, we turn to Vasarely's
claims.
1. Agency and depositum contracts
Vasarely argues that the district court disregarded
circumstantial evidence showing that Rojas had breached both an
agency and depositum agreement, and therefore was liable for the
disappearance of fifty-seven items belonging to her. We begin
with her claim for breach of the agency contract before moving on
to her claims regarding the depositum contract.
a. Agency contract
The district court found that Vasarely and Rojas formed
an agency contract under which Rojas would hire a company to pack
Vasarely's belongings, lease storage units in Puerto Rico, and
unload and store those belongings once in Puerto Rico. Vasarely
does not challenge this characterization, but instead disagrees
with the district court's conclusions that 1) Rojas's only breach
of the agency contract was his failure to follow Vasarely's
instructions by shipping her items from Chicago to Puerto Rico and
leasing storage units under his name or the name of his companies,
and 2) that Vasarely did not show any loss from Rojas's breach.
-16-
Instead, she argues that "the district court discarded much
[circumstantial evidence] as 'gossip'" and erroneously failed to
apply a presumption that Rojas was at fault for her purportedly
lost items as they were last in his custody.
Pursuant to Puerto Rico law, under which Vasarely's
counterclaims were brought, an agency contract is formed when a
person "binds himself to render some service . . . for the account
or at the request of another." P.R. Laws Ann. tit. 31, § 4421.
The agent must follow the instructions of the principal in
fulfilling his obligations. Id. at § 4442. Moreover, the agent
will be "liable for the losses and damages caused to the principal
through his noncompliance." Id. at § 4441.
There is no question that, at her request, Rojas hired
a moving company to pack and ship Vasarely's belongings from
Chicago to Puerto Rico. According to Vasarely's own testimony at
trial, at the time that she decided to make this move, she was too
exhausted from her court cases to make arrangements for her items
to be packed and shipped, and therefore Rojas agreed to -- and did
-- hire movers to take care of that work. She acknowledges that
she oversaw the packing of the items in her Chicago apartment, and
that Rojas oversaw the movers who packed the items in the Chicago
warehouses. But, other than her bald allegations that items went
missing, she fails to point to any evidence that Rojas did not
-17-
follow her instructions to pack the items in her Chicago storage
units. The record even shows that Rojas requested that Vasarely's
shipment be handled with care and asked for protective coverings
for the shipping containers. And, despite her testimony to the
contrary, there was plenty of evidence that Vasarely was able to,
and in fact did, communicate with at least two of the supervisors
of the moving company and was involved in planning the details of
the move. Therefore, as it relates to Rojas hiring a company to
pack and move Vasarely's belongings, the district court did not
clearly err in finding that Rojas complied with Vasarely's
instructions in all respect aside from using the incorrect name(s)
to do so.
The parties don't dispute that Rojas leased storage
units in the AAA Mini Almacenes storages in Puerto Rico for
Vasarely's belongings, but again did so in the wrong name. The
record shows that Rojas did unload the items that were shipped to
Puerto Rico, with the assistance of two helpers and stored them
either at the La Cima condominium facility -- where both of the
parties lived -- or in the leased storage units. Given the support
in the record, and our deference to the district court's
credibility determinations, see Sawyer Bros., Inc. v. Island
Transporter, LLC, 887 F.3d 23, 31 (1st Cir. 2018) ("We have
repeatedly said that 'in a bench trial, credibility calls are for
-18-
the trier.'" (quoting Carr v. PMS Fishing Corp., 191 F.3d 1, 7
(1st Cir. 1999))), we find no clear error in the district court's
finding that Rojas's only breach of the agency contract was Rojas's
improper use of his and his companies' names for the shipments
from Chicago and leasing of storage units in Puerto Rico.
Further, the district court did not clearly err in
finding that Vasarely did not show any damages from Rojas's uses
of the wrong names for shipping and leasing purposes. While
Vasarely alleges that numerous items are missing or are lost,
Vasarely provided no evidence from which the district court could
conclude that these alleged losses were a result of the use of the
wrong name, or that, as she claims, "this is a theft case."
Vasarely acknowledges that the containers arrived in Puerto Rico
with the seals unbroken, proving that nothing was stolen en route,
and that Rojas had people help unload those shipping containers.
She alleges that Rojas sent a container to New Jersey without her
knowledge, but based on the testimonies of both Rojas and Vasarely,
the district court was justified in finding that Vasarely knew and
agreed to ship one container to New Jersey for storage until she
moved into a larger apartment in Puerto Rico. The evidence also
shows that she eventually received this sixth container in Puerto
Rico. And, although she protests otherwise, there was also
evidence to support the conclusion that she had access to those
-19-
storage units in Puerto Rico. Therefore, we find no clear error
in the district court's finding that Vasarely failed to show any
loss from the non-compliance.
As to her legal challenge, the district court applied
the correct legal standard for a breach of agency contract and
properly applied the law to these record-supported facts. As this
was Vasarely's counterclaim, it was her burden to show a loss from
Rojas's noncompliance, and not Rojas's burden to prove a negative
-- that he was not at fault for purportedly lost items. Cf. Dir.
Office of Workers' Comp. Programs, Dept. of Labor v. Greenwich
Collieries, 512 U.S. 267, 272-76 (1994) (party bearing the "burden
of proof" -- that is, the party seeking the award -- has the
"burden of persuasion"). As just mentioned, a proper application
of the law shows that because Vasarely failed to show any loss
caused by the use of improper names to ship or store her items,
the district court properly dismissed this breach of agency
contract claim.
b. Depositum Contract
The district court dismissed Vasarely's breach of
depositum contract counterclaim because, although Rojas received
five of the containers in Puerto Rico, Vasarely failed to show
that the purportedly missing items were in any of those containers
as she never inventoried the containers' contents. Vasarely argues
-20-
that because Rojas admitted to removing some artwork from the
storages in Puerto Rico without her authorization, the burden of
proof shifted to him to show that all of the allegedly "missing"
artwork was not in his possession.
While Vasarely is correct that a depositary is liable
for items in his or her control under a depositum agreement, the
burden is on the party alleging the breach, as the one claiming to
have made such a deposit, to first show that the missing items
were in fact deposited with the depositary. See P.R. Laws Ann.
tit. 31, §§ 3192, 4661; see also Díaz Ayala v. E.L.A., 153 P.R.
Offic. Trans. 675, 697 (P.R. 2001) (stating that, under Puerto
Rico law, the burden of proof rests on the one claiming the
affirmative of the issue); P.R. R. Evid. 110(B).
We find no clear error in the district court's finding
that Vasarely did not present probative evidence of what exactly
was in those five containers that Rojas received in Puerto Rico or
whether those five containers contained the specific items that
she alleges are missing. As is evidenced by the record, some of
Vasarely's items were still in storage in Chicago, some still in
Paris, and some in storage in New Jersey. When Vasarely was shown
exhibits during trial, she was unable to specify how many pieces
of the artwork shown were missing because they may have been in
storage and admitted that she was not present when the shippers
-21-
packed the artwork in the Chicago storage facility. Further, the
district court found credible Rojas's testimony that he only
removed the artwork that belonged to his father, the artwork
pending sale, and the artwork given to him as payment for the tasks
he performed for Vasarely in Paris. The district court also found
that Rojas returned the rest of the "unauthorized inventory" when
the court so ordered.
Vasarely claims that the district court "modified the
Civil Code" by requiring that she have an inventory in order to
show that these allegedly missing items were received by Rojas.
But, Vasarely mischaracterizes the nature of the district court's
findings. The district court did not find that a breach of a
depositum contract cannot be proven without an inventory; instead,
it required that Vasarely meet her burden of proving which items
she deposited with Rojas. Without some method of proving what
items Rojas received -- whether that be an inventory, a receipt,
or some other proof -- Vasarely simply did not fulfill her
requirement to show a breach of depositum contract claim.
In response, Vasarely points out that she had an
inventory of all of her artwork, and that she specifically
inventoried the artwork that was packed in the Chicago condominium
under her supervision. She further draws the court's attention to
the inventory of artwork that was prepared by the Cook County court
-22-
while her paintings were in its custody. But, again, she does not
show which pieces of artwork were put into the containers deposited
with Rojas. The fact that she may have had a general inventory of
all of her artwork at some unspecified time, and that the Cook
County court made an inventory of the artwork in its possession
during prior litigation, does not prove which items were
specifically packed in those five containers that Rojas received
in Puerto Rico. Although Vasarely claims that Rojas should bear
the fault for failing to inventory the artwork from the Chicago
storages going into the five containers, the district court did
not clearly err in finding that she did not ask Rojas to prepare
such an inventory.
As Vasarely failed to prove what items she deposited
with Rojas, we cannot find that the district court clearly erred
in its conclusion that she had failed to prove her breach of
depositum contract claim.
2. Motions for writ of replevin
Next, Vasarely alleges that, by denying her motions for
writ of replevin, the district court "validated the theft of
Vasarely's artwork." She specifically points to six pieces of
artwork that were not returned to her, claiming that the court
"failed to see that the[y were] removed under . . . false excuses."
-23-
a. Pompari and Quasar-Zett
Vasarely challenges the district court's conclusion that
she gave Rojas these two artworks as payment for completing tasks
on her behalf in Paris, claiming there to be no evidence to support
this finding. She instead contends that the evidence shows that
Rojas went to Paris for his own purposes and then, after taking
the paintings without authorization, made up this story as an
afterthought. But this was a factual finding based on the district
court's credibility determinations, and is supported by the
record. It is not clearly erroneous.
The district court heard Vasarely's and Rojas's
testimonies and found Rojas's testimony that Vasarely agreed to
give him these paintings to be the more credible of the two. The
"[d]istrict court determinations of credibility are . . . entitled
to great deference." Jennings v. Jones, 587 F.3d 430, 444 (1st
Cir. 2009). The district court could have reasonably concluded
that, while extravagant, Vasarely gave Rojas the paintings in
exchange for supervising a complex move that took approximately
five days to complete. The record contains emails between
Vasarely, Rojas, and the movers in France, in which Vasarely warns
Rojas to be extremely careful with the moving of the paintings as
"the price to pay for [] mistakes are, generally, very heavy." In
these emails, Rojas inquires about the process of the move and
-24-
discusses its cost with the movers. Rojas testified, and the court
believed, that he had to locate and ship several dozen paintings
amongst the hundreds of valuable paintings in storage, had to
coordinate with a shipping company to move hundreds of paintings
from one storage facility to another, and did various other errands
for Vasarely while he was in France. Even if Rojas went to Paris
on his own accord, as Vasarely claims, this does not preclude an
agreement between the parties regarding payment for work performed
while he was there.
Pursuant to Puerto Rico law, verbal contracts are valid
and enforceable. See P.R. Laws Ann. tit. 31, § 3451. Based on
the district court's finding, there was a verbal agreement between
the parties that Vasarely would give Rojas these paintings and
their certificates of authenticity in exchange for his work on her
behalf in Paris. Therefore, despite the lack of a written
contract, the district court did not err in finding the verbal
agreement between the two parties was binding and that Pompari and
Quasar-Zett belonged to Rojas. And, because a petitioner must
prove that they own an item in order to recover it through
replevin, see id. at §§ 1111, 1479, and Vasarely failed to prove
that she owned Pompari and Quasar-Zett at the critical time, the
district court properly denied her motions for writ of replevin as
to these two paintings.
-25-
b. Grilles-II, Helios-Neg, Tridim-S, and Tsoda
Vasarely avers that the district court improperly found
the 2009 Settlement Agreement, in which Rojas gave these paintings
to Vasarely, to be invalid, while erroneously enforcing the Chicago
Agreement, in which she recognized that Dr. Rojas was the true
owner of the paintings. She claims that the district court's
rejection of the validity of the 2009 Settlement Agreement was
contrary to the Puerto Rico Civil Code. Meanwhile, the Chicago
Agreement, she says, was never meant to transfer ownership of these
paintings to Dr. Rojas, but instead was created to allow him to
intervene falsely in the Chicago litigation to remove the artwork
from the court's custody. Therefore, she offers, because the
Chicago Agreement was a "simulated agreement" used for "illicit
purposes," it is void.
Although the district court did question the legitimacy
of the 2009 Settlement Agreement, it did not reject the agreement's
validity, as Vasarely claims it did. Rather, the district court
assumed the validity of the agreement but found that it had been
superseded by the Chicago Agreement. There was no error in this
conclusion. The Chicago Agreement complies in all respects with
the Puerto Rico Civil Code's requirements for a valid contract.
See P.R. Laws Ann. tit. 31, § 3391. The district court's disbelief
of Vasarely's story regarding the illicit purpose of the Chicago
-26-
Agreement is supported by the evidence, including Dr. Rojas's
testimony, as well as a letter that Vasarely wrote to Dr. Rojas
months before the Chicago Agreement was signed recognizing him as
the owner of the paintings. Likewise, the Chicago Agreement
clearly stated that Dr. Rojas was the owner of such paintings.
Further, the district court did not clearly err in
concluding that the Chicago Agreement, signed on September 22,
2010 superseded the 2009 Settlement Agreement. Vasarely failed to
present any evidence showing that she acquired title to the
paintings after the Chicago Agreement was signed. The district
court rightly weighed this against Vasarely's claim that she is
the owner of the paintings and found that she had transferred
ownership of those paintings back to Dr. Rojas. Therefore, as
with Pompari and Quasar-Zett, Vasarely could not replevy artwork
belonging to someone else. There was no error in the district
court's denial of her motions for writ of replevin.
3. The Chicago condominium
Marching on, Vasarely claims that the district court's
dismissal of her breach of contract counterclaim was erroneous,
and that the court improperly imposed on her the burden to prove
the exact loss or damage she suffered due to Rojas's sale of the
Chicago condominium without an appraisal. Instead, she argues,
because Rojas was the one who sold the property, and because he
-27-
"departed from the ordinary course of business in not obtaining an
appraisal," the burden should have been placed on Rojas to prove
his assertion that he sold the condominium at an adequate price.
By placing the burden on her, says Vasarely, the district court
required her to prove something –- the value of the real
estate -- that was impossible for her to prove because of Rojas's
negligence in failing to get an appraisal. In addition, she
maintains that the three years that elapsed between when she
rejected the prior offers for being too low and when the condo was
eventually sold is irrelevant, and what matters is that she was
unwilling to sell for $1.1 million. Therefore, it was clear that
she also would not have been willing to sell for the price at which
Rojas sold it, $1.075 million, and his decision to do so denied
her the right to sell her property at whatever price she deemed
reasonable.
When a party is "guilty of fraud, negligence or delay"
in complying with its contractual obligations, the aggrieved party
is entitled to "losses and damages" caused by that fraud,
negligence, or delay. P.R. Laws Ann. tit. 31, § 3018. However,
the court will not assume fraud, and he or she who claims it must
"establish its existence . . . by a preponderance of the evidence."
Portugues-Santana v. Rekomdiv Int'l, 657 F.3d 56, 61 (1st Cir.
2011); see id. (citing González Cruz v. Quintana Cortés, 145 P.R.
-28-
Dec. 463, 471 (P.R. 1998) ("The general rule that fraud is not
assumed only means that he who claims it must prove it to a
reasonable certainty, that is, with a preponderance of
evidence . . . .")).
Vasarely's argument that it was Rojas's burden to show
that he had sold the condo at or above the market value presupposes
a finding that Rojas's act of selling the condominium for $1.075
million was fraudulent and done in bad faith. Vasarely argued as
much in her motion for partial summary judgment, but the district
court supportably rejected summary disposition as to this issue.
Thus, as this was Vasarely's breach of contract counterclaim, it
remained her burden to prove by a preponderance of the evidence
that Rojas had committed fraud in the sale of her condo without
getting an appraisal. See id. Having failed to show any loss in
not getting an appraisal, the district court was correct in
dismissing her claim.
The record illustrates that Vasarely did not provide any
evidence showing that Rojas had sold the condominium for below
market value, resulting in a loss to Vasarely. Vasarely's only
evidence that the property was undersold was the cost of the
condominium and the estimated cost of renovations nearly a decade
prior to the sale. However, as Vasarely concedes in her appellate
brief, "the value of a piece of real estate is not necessarily
-29-
equal to its purchase price from a decade prior plus the value of
its renovations."
Vasarely argues that there is no way that she could have
met this burden, but does not state why she could not have
presented other information aside from an appraisal to show an
approximate value of the real estate at the time that it was sold.
It would not have been difficult to provide comparable real estate
data showing the price per square foot of similar condos in that
area at the relevant time, and extrapolate from that information
an approximate market value of the Chicago condominium. Cf. Sawyer
Bros., 887 F.3d at 32 (stating that under maritime law "[c]ourts
determine fair market value based on the price paid for comparable
property on the open market"); Roberts v. City of Woonsocket, 575
F.2d 339, 341 (1st Cir. 1978) (finding witness appraisal of
property that was subjected to city's amended zoning ordinance was
"not supported by data of sales of any comparable property");
Bailey v. United States, 325 F.2d 571, 572 (1st Cir. 1963) ("Th[e]
court is definitely committed to the proposition [that] . . .
usually the best evidence of value is the prices at which
comparable lands in the vicinity [are sold] . . . at about the
time of the taking."). Instead, Vasarely relied on her claim that
Rojas acted in bad faith by selling her property without an
appraisal, period, but did not attempt to show any losses or
-30-
damages from the sale, as was required to prove her asserted breach
of contract claim. See P.R. Laws Ann. tit. 31, § 3018. Given
that Vasarely did not provide any evidence to substantiate her
claimed loss of $335,000, the district court did not err in
dismissing this counterclaim.
4. Contractual damages for delayed return of artwork
a. Contract Termination Date
Clause 11 of the 2010 Artwork Agreement stated that
either party could terminate the agreement for reasonable cause or
for breach of contract with eight days' notice. The district court
found that Vasarely had provided sufficient notice of her intent
to terminate their agreement as a result of Rojas's breach on
May 17, 2013, the date on which Vasarely wrote Rojas an email
stating that, after months of asking him to return her artwork,
the two were "not going to have any business until everything is
clarified with attorneys and all my works of art are in my
possession." Vasarely disagrees with the district court's finding
as to the date that she gave sufficient notice of her intent to
terminate the contract, instead claiming that she gave sufficient
notice in her email to Rojas on April 7, 2013. She points to the
district court's statement during trial that it "seems . . .
pretty clear[] that she no longer wants to work with him" in
relation to her April 7 email, in which she stated "I no longer
-31-
want to work with you."
While there is no specific legal requirement in Puerto
Rico as to the manner in which an agreement must be terminated,
generally, a notice of a contract termination "must be clear,
definite, explicit, and unambiguous." Jasty v. Wright Med. Tech.,
Inc., 528 F.3d 28, 36 (1st Cir. 2008) (applying Massachusetts law)
(quoting Seaboard Sur. Co. v. Town of Greenfield, 370 F.3d 215,
223 (1st Cir. 2004)). After hearing all of the testimony and
viewing all of the evidence, and placing that evidence in the
context of the relationship between the two parties, the district
court's finding that the notice of contract termination was not
sufficiently clear until May 17, 2013, is supported by the evidence
in the record.
While Vasarely argues that she was perfectly clear when
she stated that "I no longer want to work with you anymore" in her
April 7, 2013 email, the district court also had before it a number
of emails exchanged between the two parties before and after
April 7, 2013, as well as Rojas's testimony that it was Vasarely's
modus operandi to send emails such as this one periodically --
insulting him and his family and claiming that she no longer wanted
to work with him -- yet continuing to work with him after the email
was sent. Like those previous emails described by Rojas, the
April 7, 2013 email from Vasarely consisted of repeated insults of
-32-
both Rojas and his wife, stating amongst other things that "without
me, you are nothing," and that "[y]ou work 4 hours a day, 4 days
a week, you slack off, you turn, you take care of the children and
the home while madam spends, spends my money, goes out, has fun,
. . . if it weren't so pathetic, it would be rather amusing."
Rojas further testified that after receiving the April 7, 2013
email from Vasarely, they kept working together -- including taking
a trip to Miami on April 15, 2013, to meet a potential client and
traveling together to the Dominican Republic on May 1, 2013, to
get Vasarely's visa and meet more clients. Further, in an email
that Vasarely sent Rojas on May 14, 2013, she criticized him for
not working, writing that "[y]esterday you did not work, today,
either [sic] . . . . You were always like that and it not at your
age . . . that you are going to change, [sic] you have so many
distractions and constant personal errands that you simply cannot
do other things." The evidence supports the district court's
conclusion that, when taken in context of the parties' relationship
and subsequent dealings, the April 7 email was not sufficient
notice of termination.
In finding that the May 17, 2013 email constituted
sufficient notice, the district court noted that on May 16, 2013,
Vasarely emailed Rojas that she would "cancel all pending projects"
if she did not receive her artwork before 1:00 p.m. the following
-33-
day.9 The next day, in her May 17, 2013 email, Vasarely referenced
her cause for terminating the agreement -- Rojas's breach of
contract by keeping what she claimed to be unauthorized inventory
-- and was clear that, as a result, she was "going to act as I
told you." She further stated that "[w]e are not going to have
any business until everything is clarified with attorneys and all
my works of art are in my possession." Given this support from
the evidence in the record, the district court did not clearly err
in finding that Vasarely gave sufficient notice of her intent to
terminate the 2010 Artwork Agreement on May 17, 2013.
b. Modification of the penalty
Upon official termination of the agreement, eight days
after sufficient notice was given Clause 12 of the agreement
provided that Inart had to return all works of art to Vasarely
within forty-eight hours by depositing them in a storage facility
of Vasarely's choice. If Inart did not return the artwork within
forty-eight hours of termination, Inart would be fined $1,000 per
day payable to Vasarely. As Vasarely gave sufficient notice of
her intent to terminate the 2010 Artwork Agreement on May 17, 2013,
the district court found that, pursuant to the agreement, the
contract terminated eight days later, and then Rojas had two
9 This statement from her May 16, 2013 email further indicates
that Vasarely had not ended business dealings with Rojas.
-34-
additional days after that termination date, or until May 28, 2013,
before the $1,000 daily fine began to accrue. It is undisputed
that Rojas returned the artwork on February 7, 2014, 255 days
later, and therefore the penal clause of the Agreement called for
a $255,000 fine.
As an initial matter, we address Vasarely's criticism of
the district court's inclusion of an eight-day termination notice
window, which she says was done "to minimize the fines for
[Rojas]." We easily dispose of this charge. Clause 11 of the
2010 Artwork Agreement unmistakably states that the contract "can
be terminated for reasonable cause or for breach of contract, with
eight (8) days['] notice." Thus, the district court was correct
in including an eight-day termination notice window before finding
that Clause 12 was triggered. As Vasarely gave sufficient notice
to terminate the contract on May 17, the 2010 Artwork Agreement
was terminated on May 25, 2013. Pursuant to Clause 12, Rojas then
had forty-eight hours from contract termination to return the
artwork.
But the district court did not award Vasarely $255,000.
Although the court found the penalty award appropriate in light of
the estimated value of the artwork that Rojas withheld, the court
reasoned that it was proper to toll the accrual of the daily
penalty from the day that Rojas brought the underlying lawsuit on
-35-
October 9, 2013. The court found this tolling justified as Rojas
had moved to attach the artwork in the litigation on the day that
they filed suit and this attachment issue was litigated over
several days of hearings and ultimately denied by the court on
January 30, 2014. In denying the motion, the court gave Rojas
until February 10, 2014, to return all of the artwork to Vasarely.
As Rojas returned the artwork on February 7, 2014, the district
court modified the penalty accordingly to reflect the 134 days
that passed between May 28, 2013, and October 9, 2013.
Vasarely states that the district court erroneously
"took on the role of Rojas'[s] counsel" when it sua sponte modified
the penal clause, despite the fact that this equitable remedy was
never raised by Rojas and was therefore waived. Noting that penal-
clause modifications should only be utilized with "great caution
and notorious justification," Jack's Beach Resort, Inc. v. Tourism
Dev. Co., 12 P.R. Offic. Trans. 430, 438 (P.R. 1982), she says
that the fact that attachment hearings were proceeding while Rojas
kept her artwork is not an extraordinary circumstance for
modification; rather, it was a self-created circumstance by Rojas.
The district court acted within its discretion to modify
the penalty award for Rojas's delinquent return of Vasarely's
artwork. See id. at 437-40; see, e.g., In re Alvarez,
473 B.R. 853, 861-63 (B.A.P. 1st Cir. 2012). Even though the court
-36-
in Jack's stated that the "equity must be prayed for," the Jack's
court found the debtor's mere objection to foreclosure proceedings
was sufficient to trigger the lower court's authority to then
exercise its equitable powers. 112 P.R. Offic. Trans. at 439.
Similarly, here, Rojas's allegation that he did not breach the
2010 Artwork Agreement and that a penal award was not justified
was equally sufficient to "activate the court's equitable
intervention." Id. Therefore, the district court did not abuse
its discretion in sua sponte taking up the issue of penalty
modification.
Here, the resulting unfairness of a penalty award
accumulating while Rojas's motion for attachment was being
litigated was sufficient justification for the district court to
exercise its "broad but not unfettered" discretion to reduce the
penal award. In re Alvarez, 473 B.R. at 863. The very issue of
whether the pieces of art needed to be returned immediately to
Vasarely was the subject of Rojas's motion, and therefore it was
well within the discretion of the district court, in its
"balanc[ing] between the punitive and remunerative functions of
penal clauses," id., to toll the accrual of the daily penalty from
the day the motion was initially filed, October 9, 2013. We find
that the district court did not abuse its discretion in modifying
the penalty for Rojas's failure to timely return Vasarely's artwork
-37-
to $134,000.
5. Moral Damages
We reach Vasarely's last claim of error -- that the
district court did not adequately assess the moral and mental
damages that she suffered as a result of Rojas's actions. Under
Puerto Rico law, "a court may award moral damages for the mental
and emotional suffering of a party which follows as a foreseeable
consequence of a defendant's acts or omissions." Gonzalez-Marin
v. Equitable Life Assur. Soc. of the U.S., 845 F.2d 1140, 1148
(1st Cir. 1988). A plaintiff must prove: "(1) an act or omission
constituting fault or negligence; (2) injuries; and (3) a causal
connection between the act or omission and the injuries." In re
Caribbean Petroleum, LP, 561 F. Supp. 2d 194, 199 (D.P.R. 2008)
(citing Bacó v. Almacén Ramón Rosa Delgado, Inc., 151 P.R. Dec.
711, 725 (P.R. 2000)).
After finding that Rojas acted with both fault and
negligence in failing to return Vasarely's artwork and the keys to
her storage units, and finding that this caused Vasarely extreme
stress and anxiety that exacerbated her stress-related illness,
the district court awarded Vasarely $5,000 for mental anguish.
Vasarely claims that the district court abused its discretion by
disregarding testimony of other damages that she suffered,
including that Rojas: deprived her of her Chicago properties and
-38-
"took away her visa, her artwork, her car, her web sites, her
health insurance, her reputation, her last name, the good will of
her artwork, her physical integrity, and her peace of mind." She
urges this Court to modify this damages award to compensate her
for the full amount of the fine under Clause 12 of the 2010 Artwork
Agreement, accounting for an April 7, 2013 termination date.
Vasarely bases her arguments on stipulated facts
contained in the parties' Joint Pretrial Order, which include that
during the ongoing litigation, Rojas filed a criminal complaint
against Vasarely for illegal misappropriation of a Mercedes car
that she alleged belonged to her, and that Rojas cancelled her
health insurance policy and notified her a month later. While
these agreed-upon facts prove that Rojas took certain actions,
Vasarely provided no evidence before the district court that these
actions were harmful or even wrong. The district court did not
need to individually assess each conclusory allegation of
wrongdoing for which Vasarely provided no support. Furthermore,
Vasarely did not prove that any of Rojas's actions directly caused
her any sufferings beyond the anxiety and stress that the district
court already considered.
Vasarely further argues that the district court only
considered damages that she suffered until October 2013, when this
underlying litigation began. She posits that the district court
-39-
needlessly disregarded ongoing damages that Rojas caused her while
the litigation was pending. But, as Vasarely correctly
acknowledges, the district court has wide discretion in
determining the appropriate award for moral damages, see Gonzalez-
Marin, 845 F.2d at 1148-49, and may determine the relevant period
of injury suffered from the defendant's actions that is supported
by the record, see T & S Serv. Assocs., Inc. v. Crenson, 666 F.2d
722, 728 (1st Cir. 1981). We see no basis for disturbing the
district court's award based on the record before us.
III. CONCLUSION
We linger no further. The record reflects that the
district court's factual findings are supported by the evidence,
that it properly applied the law to the facts, and that it did not
abuse its discretion where such discretion was afforded it.
Accordingly, the district court's judgment is affirmed.
-40-