Garcia-Monagas v. Garcia-Ramirez de Arellano , 674 F.3d 45 ( 2012 )

United States Court of Appeals
For the First Circuit
No. 09-1460
JORGE GARCÍA MONAGAS, DIEGO GARCÍA MONAGAS
AND GISELDA GARCÍA MONAGAS,
Plaintiffs, Appellants,
v.
ILEANA GARCÍA-RAMIREZ DE ARELLANO; FREDESWINDA GARCÍA-RAMIREZ
DE ARELLANO; BD. OF DIR. OF W. HOLDING COMPANY, INC.; FRANK C.
STIPES-GARCÍA; BD. OF DIR. A TO K; BD. OF DIR. OF WESTERN BANK
OF PR; BD. OF DIR. OF WESTERN BANK INS. CORP.; JOHN DOE;
BD. OF DIR. A THROUGH F OF CENTRAL EUREKA, CKI INS. CO.;
ESTATE OF MIGUEL A. GARCÍA-MENDEZ; ESTATE OF FREDESWINDA
GARCÍA-RAMIREZ DE ARELLANO; ESTATE OF ANTONIA CABASSA-TEXIDOR;
ESTATE OF OSCAR ARTURO GARCÍA-PALACIOS; ESTATE OF OSCAR GARCÍA
CABASSA; ESTATE OF MYRIAM GARCÍA-BARBER; ESTATE OF OSCAR
GARCÍA-BUSH; ESTATE OF ZULMA ANSELMA GARCÍA-CABASSA; ESTATE OF
ZULMA VILELLA-GARCÍA; ESTATE OF JUAN E. VILELLA; ESTATE OF
FIORI VILELLA-GARCÍA; ESTATE OF CONSUELO GARCÍA-CABASSA;
ESTATE OF ZOE BLASINI-GARCÍA; ESTATE OF OSCAR BLASINI-GARCÍA;
ESTATE OF TEODORO PASCUAL FAJARDO-CABASSA; ESTATE OF
MANUEL MOREDA; ESTATE OF RITA VILELLA-BOTHWELL; ESTATE OF
REINA COLON-ALFONSO; FEDERAL INS. CO.; INSURANCE
COMPANIES A TO Z; INSURANCE COMPANIES AA, BB, CC, DD, EE, FF;
ANNETTE BLASINI-BATISTA, A/K/A ANNETTE RITA BLASINI-BATISTA;
ELBIA GARCÍA-CAMARA; OSCAR GARCÍA-CAMARA; CARLOS T.
GARCIA-CAMARA; ANTONIA BLASINI-BATISTA; SYLVIA CONSUELO
BLASINI-BATISTA; ZOE BLASINI-GARCIA; BLANCA TOLEDO;
ALEJANDRO SANTOPALO-VILELLA; FABIOLA SANTOPALO-VILELLA;
W. HOLDING COMPANY, INC., D/B/A WESTERN BANK OF PR;
WESTERN BANK INS. CORP.; ESTATE OF FLAVIA VILELLA-GARCÍA;
DELOITTE & TOUCHE, LLP.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Aida M. Delgado-Colón, U.S. District Judge]
Before
Lipez, Howard and Thompson,
Circuit Judges.
Ralph Vallone, Jr., with whom Ralph Vallone, Jr. Law Offices
was on brief, for appellants.
Armando J. Martínez Vilella, with whom Martínez Vilella Law
Offices and Ramon Torres Rodriguez were on brief, for appellees
Flavia Vilella García, Fiori Vilella García, Zulma Vilella García,
Silvia Consuelo Blasini Batista, Annette Mary Blasini Batista and
Antonia Rita Blasini Batista.
Ruben T. Nigaglioni, with whom Veronica Ferraiuoli Hornedo,
Rafael J. Martínez and Nigaglioni & Ferraiuoli Law Offices were on
brief, for appellees Ileana García-Ramirez de Arellano, Fredeswinda
García-Ramirez de Arellano, Frank Stipes-García and W. Holding
Company, Inc.
Antonio Moreda Toledo, Irma R. Valldejuli and Moreda (M)
Moreda, P.S.C., on brief for appellees Manuel A. Moreda, Blanca
Toledo de Moreda and their Conjugal Partnership.
March 16, 2012
Howard, Circuit Judge. This appeal is the latest chapter
in a long-running intra-family dispute over property in Puerto
Rico. Attempting to secure this property, siblings Jorge, Diego
and Giselda García-Monagas have previously filed multiple lawsuits
in the Puerto Rico Commonwealth courts. In each of these actions,
the siblings, appellants here, advanced the same basic claim: under
Puerto Rico inheritance law they were the rightful owners of the
property. Each action was resolved against them.
Undeterred, the appellants filed this action in federal
district court in Puerto Rico. They again claimed an ownership
interest in the contested property and further alleged that the
appellees violated a panoply of federal laws by defrauding them of
their rightful inheritances. The appellees moved to dismiss the
complaint on various grounds, the chief one being that res judicata
precluded relitigation of the claims. The district court dismissed
the complaint on this basis. After careful review, we affirm.
I. Facts
Because we are reviewing the dismissal of a complaint
under Federal Rule of Civil Procedure 12(b)(6), we state the facts
as they are alleged in the amended complaint and draw all
reasonable inferences therefrom in favor of the appellants.
González Figueroa v. J.C. Penney P.R., Inc., 568 F.3d 313, 316 (1st
Cir. 2009). We supplement the appellants' allegations with
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documentation pertaining to the prior state court judgments against
them. Giragosian v. Ryan, 547 F.3d 59, 66 (1st Cir. 2008).
The seeds of this dispute were sown in 1904 upon the
death of García St. Laurent, the appellants' grandfather. He left
behind his widow, Cabassa Texidor, and four children, one of whom
was the appellants' father, Jorge Placido García Cabassa. At the
time of his death, St. Laurent had amassed a great deal of real
property, including the Santa Ana Farm and the Santa Ana Sugar
Mill. This property belonged to St. Laurent alone, as Cabassa
Texidor brought no property to the marriage and the marriage
generated no communal property.
Following St. Laurent's death, Cabassa Texidor became
involved with a man named Mateo Fajardo Cardona. They eventually
married and had a son. Around this time, the appellants allege,
Cabassa Texidor and Fajardo Cardona began scheming to deprive the
four children from Cabassa Texidor's first marriage of their
rightful inheritance. In 1908, through a judicial sale and
repurchase, Cabassa Texidor acquired the Santa Ana Farm and Sugar
Mill, which were the main assets of the St. Laurent estate. In the
1920s and 1930s, Cabassa Texidor also purchased property from the
children of her first marriage that the children had inherited upon
St. Laurent's death. This included a 1930 purchase of property
belonging to the appellants' father, García Cabassa. Ultimately,
some of the property acquired by Cabassa Texidor was used to form
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"Central Eureka, Inc.," ("Eureka") a sugar producing company, and
to help form "Westernbank," a savings and loan association.1
In 1968, the appellants filed an action in Puerto Rico
Commonwealth court against Cabassa Texidor. In that action, the
appellants contested Cabassa Texidor's acquisition of property
formerly belonging to St. Laurent. They claimed that, although
various properties were registered in Cabassa Texidor's name, the
appellants were the rightful heirs to the contested property. The
appellants' action targeted both real property and shares of
Eureka. The court found that the appellants' father had sold his
hereditary rights in St. Laurent's estate to Cabassa Texidor in a
legally valid sale in 1930. The court then ruled that Cabassa
Texidor had lawfully acquired all of the contested property through
acquisitive prescription,2 a rule of Puerto Rico property law that
is the functional equivalent of adverse possession. See Rodriguez
v. Escambron Dev. Corp., 740 F.2d 92, 93 (1st Cir. 1984).
Specifically, the court found that Cabassa Texidor had remained in
possession as owner of the contested property quietly, publicly,
peacefully, and without interruption for over thirty years. The
court thus granted summary judgment against the appellants. The
1
Although the complaint is not entirely clear on this point,
it appears to allege that Cabassa Texidor and her associates sold
some of the acquired property and used the money from this sale to
form Eureka and to help form Westernbank.
2
P.R. Laws Ann. tit. 31, §§ 5276, 5280.
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appellants appealed to the Puerto Rico Supreme Court, which denied
review in 1974.
In 1990, the appellants filed an action in Puerto Rico
Commonwealth court against a long list of defendants, including
some of the appellees in this case. In that action, the appellants
asserted, among other things, that Cabassa Texidor had improperly
turned over property formerly belonging to St. Laurent to her
second husband, Fajardo Cardona, who then co-mingled this property
with his own to form Eureka. The case was dismissed on res
judicata grounds, viz., that the judgment in the 1968 case
foreclosed litigation of the claims. The Puerto Rico Circuit Court
of Appeals affirmed the dismissal and the Puerto Rico Supreme Court
denied review.
In 1998, the appellants filed several different actions
in the Puerto Rico Commonwealth courts, and again included as
defendants a number of the appellees in the present case. In each
of the actions, which were later consolidated, the appellants
alleged that the judgment in the 1968 case was the result of fraud.
They claimed that during the pendency of the 1968 action, the
defendants had failed to apprise the court of Cabassa Texidor's
death. But these 1998 claims were also deemed to be precluded by
the doctrine of res judicata, and again the intermediate appeals
court affirmed and the Puerto Rico Supreme Court denied review.
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In 2004, the appellants filed an action in Puerto Rico
Commonwealth court against various defendants, once again including
a number of the appellees. This time, the appellants claimed that
they were entitled to portions of the contested property under a
Puerto Rico statute referred to as the "Widow's Reserve." P.R.
Laws Ann. tit. 31, § 2731. That statute, in sum, requires a widow
entering a second marriage to set aside for the children and
descendants of her first marriage any property acquired from the
deceased spouse, apart from the widow's half of the conjugal
profits. Id. The court dismissed this action as well on res
judicata grounds and reprimanded the appellants for frivolously
filing claims that had been previously dismissed on three separate
occasions.
In 2007, while their appeal of the Commonwealth court's
decision in the 2004 action was pending, the appellants filed this
action in federal district court against certain descendants of
Cabassa Texidor, former attorneys of the appellants' adversaries in
the prior Commonwealth court actions, and officers and directors of
Eureka and Westernbank.3 The appellants again claimed that they
3
The appellants also initially named as a defendant the W.
Holding Company, d/b/a Western Bank of Puerto Rico, but
subsequently filed a notice of voluntary dismissal under Fed. R.
Civ. P. 41(a)(1)(i). Because the plaintiffs had voluntarily
dismissed identical claims in a federal action filed against the
company in 2006, the court dismissed the claims with prejudice
pursuant to the so-called "two-dismissal" rule. See Fed. R. Civ.
P. 41(a)(1)(B). The plaintiffs did not appeal this dismissal.
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were entitled to portions of the contested property under the
"Widow's Reserve." They also claimed that the appellees or their
predecessors in interest had violated a number of federal laws in
both acquiring and maintaining control over the contested property.
The gist of their federal claims was that the appellees or their
predecessors in interest concocted a scheme to defraud the
appellants of their rightful inheritance, and that this scheme
continued to the present day. Altogether, the appellants claimed
that the appellees: (1) violated the Racketeering Influenced and
Corrupt Organizations Act ("RICO Act") by (i) managing and
operating Eureka and Westernbank to further a scheme to defraud, 18
U.S.C. § 1962(c), (ii) laundering money and property which "are in
fact, and should be adjudged the property" of the appellants, id.§ 1962(a), and (iii) denying the appellants' claims "in all ways
possible," id. § 1962(a)-(c); (2) committed bank fraud by failing
to communicate to a financial institution relevant information
regarding the original ownership of Westernbank shares, id. §
1344;4 and (3) committed securities fraud by failing to disclose
the appellants' 2004 Commonwealth court action in Westernbank's
federal filings, 15 U.S.C. § 78j, n(a).
4
Presumably, the appellants are claiming that they were the
original owners of Westernbank's shares in the sense that they were
the rightful owners of the real property used to help form
Westernbank.
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The district court dismissed each claim, adopting a
magistrate judge's report and recommendation that res judicata
again barred this latest action.5 During the pendency of the
present appeal, the Puerto Rico Court of Appeals affirmed the
dismissal of the 2004 action on res judicata grounds, and the
Puerto Rico Supreme Court denied review.
II. Discussion
"Res judicata is an affirmative defense, but where, as
here, the defendant[s] ha[ve] raised the question on a motion to
dismiss, the plaintiff[s] do[] not object to the procedure, and the
court discerns no prejudice, the issue may be resolved on such a
motion." In re Sonus Networks, Inc., 499 F.3d 47, 56 (1st Cir.
2007) (citing Rodriguez v. Baldrich, 628 F.2d 691, 692 n.2 (1st
Cir. 1980)). The applicability of the doctrine of res judicata
involves a question of law that we review de novo. Id. (citing
Pérez-Guzmán v. Gracia, 346 F.3d 229, 233 (1st Cir. 2003)).
Under the full faith and credit statute, 28 U.S.C.
§ 1738, a state court judgment is entitled to the same preclusive
effect in federal court as it would be given in the state in which
5
The appellees advanced as alternative grounds for dismissal
a statute of limitations defense and the jurisdictional bar of the
Rooker-Feldman doctrine. See D.C. Court of Appeals v. Feldman, 460
U.S. 462, 482 (1983); Rooker v. Fidelity Trust Co., 263 U.S. 413,
416 (1923). In light of our disposition of the appeal, we bypass
these issues. Torromeo v. Town of Fremont, 438 F.3d 113, 115 (1st
Cir. 2006); Penobscot Nation v. Georgia-Pacific Corp., 254 F.3d
317, 324 (1st Cir. 2001).
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it was rendered. Id.; see also Boateng v. InterAmerican Univ.,
Inc., 210 F.3d 56, 61 (1st Cir. 2000) (noting that "Puerto Rico is,
for this purpose, the functional equivalent of a state") (citing
Cruz v. Melecio, 204 F.3d 14, 18 n.2 (1st Cir. 2000)). We
therefore look to Puerto Rico law to determine the implications of
the Puerto Rico Commonwealth court judgments.
Puerto Rico's law of res judicata is codified at P.R.
Laws Ann. tit. 31, § 3343,6 which has been interpreted as
encompassing both claim preclusion and issue preclusion (issue
preclusion is also sometimes referred to as collateral estoppel),
"albeit with slightly different requirements for each." R.G. Fin.
Corp. v. Vergara-Nuñez, 446 F.3d 178, 183 (1st Cir. 2006) (citing
Baez-Cruz v. Munic. of Comerio, 140 F.3d 24, 29 (1st Cir. 1998)).
Under this regime, claim preclusion "binds parties from litigating
or relitigating any claim that was or could have been litigated in
a prior adjudication and prevents claim splitting," Gener–Villar v.
Adcom Group, Inc., 417 F.3d 201, 205 (1st Cir. 2005) (per curiam)
(internal quotation marks and brackets omitted), while issue
6
The relevant statutory language provides:
In order that the presumption of res adjudicata may be
valid in another suit, it is necessary that, between the
case decided by the sentence and that in which the same
is invoked, there be the most perfect identity between
the things, causes, and persons of the litigants, and
their capacity as such.
P.R. Laws Ann. tit. 31, § 3343.
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preclusion "forecloses relitigation in a subsequent action of a
fact essential for rendering a judgment in a prior action between
the same parties, even when different causes of action are
involved," id. at 205–06.
The appellants argue that neither the requirements
specific to claim preclusion nor those necessary for issue
preclusion have been satisfied. They also appear to argue that,
even if res judicata would otherwise bar their claims, various
exceptions to the doctrine apply in this case.
We reject these arguments. As a result of one or more of
the previous actions, each of the appellants' claims is precluded
by one or both of the doctrines of claim preclusion and issue
preclusion. Moreover, none of the exceptions to the doctrine of
res judicata apply.
A. Claim under Puerto Rico law
In this action, the appellants argue that the Puerto Rico
Widow's Reserve statute gives them an ownership interest in a
significant portion of the contested property.7 As previously
explained, the Widow's Reserve requires a widow who enters a second
marriage to set aside property acquired from the deceased spouse
for the children and descendants of her first marriage. It
provides:
7
The appellants do not precisely identify what property they
are entitled to, beyond saying that it is substantial and worth at
least $15,000,000.
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Widower or widow contracting second marriage:
The widower or widow contracting a second
marriage shall be obliged to set apart for the
children and descendants of the former the
ownership of all the property he may have
acquired from the deceased spouse by will, by
intestate succession, by gift, or for any
other good consideration, but not his or her
half of the conjugal profits.
P.R. Laws Ann. tit. 31, § 2731. According to the appellants, when
Cabassa Texidor purchased the Santa Ana Farm and Sugar Mill in
1908, and later the property from her children in the 1920s and
1930s, that property became subject to the Widow's Reserve. They
further claim that their rights to this property vested when
Cabassa Texidor died in 1973.
This particular claim is barred by claim preclusion. A
party asserting claim preclusion under Puerto Rico law must
establish that: (i) there exists a prior judgment on the merits
that is "final and unappealable"; (ii) the prior and current
actions share a perfect identity of both "thing" and "cause"; and
(iii) the prior and current actions share a perfect identity of the
parties and the capacities in which they acted. See R.G. Fin.
Corp., 446 F.3d at 183 (citing Boateng, 210 F.3d at 61-62). A
prior and current action will share a perfect identity of "thing"
if they involve the same "object or matter," Lausell Marxuach v.
Diaz de Yanez, 3 P.R. Offic. Trans. 742, 745 (1975), and will share
a perfect identity of "cause" if "they flow from the same principal
ground or origin," id. at 746, or, put another way, if they "derive
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from a common nucleus of operative facts," Silva v. City of New
Bedford, 660 F.3d 76, 79 (1st Cir. 2011) (internal quotation marks
omitted). Perfect identity of the parties exists if either (1) the
parties in the current action were also parties in the prior action
or (2) the parties in the current action are in "privity" with the
parties in the prior action. See P.R. Laws Ann. tit. 31, § 3343.
In their briefing, the appellants do not dispute that the
judgments in the 1968, 1990, and 1998 Commonwealth court actions
are "final and unappealable." Nor, from all appearances, do they
dispute that those actions and the current action share a perfect
identity of "thing," namely, the assets that comprise Saint
Laurent's estate that were found in Cabassa Texidor's name. They
do, however, argue that the prior actions and current action share
neither a perfect identity of cause nor a perfect identity of
parties. These arguments are largely foreclosed by the decision in
the 2004 Commonwealth action, which was made final and unappealable
by the Puerto Rico Supreme Court's denial of certiorari during the
pendency of this appeal. Cruz v. Mendez, 204 F.3d 14, 20 (1st Cir.
2000) (holding that judgment becomes final for purposes of Puerto
Rico preclusion law once no further appeal can be taken); see also
Boateng, 210 F.3d at 63 (holding that final judgment rendered in
parallel Commonwealth court action was preclusive in pending
federal action). In the 2004 action, the appellants advanced the
very Widow's Reserve theory that they advance here against many of
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the same defendants. The Commonwealth courts found that this
latest theory was merely an attempt to recast previously
unsuccessful arguments of entitlement to the contested property and
was therefore barred by res judicata.
The Commonwealth courts' res judicata determination
itself creates a preclusive effect. See Parsons Steel, Inc. v.
First Alabama Bank, 474 U.S. 518, 525 (1986) ("[T]he Full Faith and
Credit Act requires that federal courts give the state-court
judgment, and particularly the state court's resolution of the res
judicata issue, the same preclusive effect it would have had in
another court of the same State."); Hameed v. Aldana, 296 F. App'x
154, 155 (2d Cir. 2008). The appellants are thus barred from
pursuing their Widow's Reserve claim against those defendants-
appellees who were themselves named in the 2004 action, or who have
succeeded to the estates of the individuals named in that action.
See R.G. Fin. Corp., 446 F.3d at 187 ("[W]here one party acts for
or stands in the place of another in relation to a particular
subject matter, those parties are in privity for purposes of the
Puerto Rico preclusion statute." (citations omitted)). This group
includes the descendants of Cabassa Texidor and the former
attorneys of the appellants' adversaries in the prior actions.8
8
Specifically, the 2004 action bars litigation of the Widow's
Reserve claim against the following individuals or their estates:
Ileana García-Ramirez de Arellano; Fredeswinda García-Ramirez de
Arellano ; Frank Stipes-García; Miguel A. García-Mendez; Antonia
Cabassa-Texidor; Oscar Arturo García-Palacios; Oscar García-
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This brings us to the defendant-appellee officers and
directors of Eureka and Westernbank. The 2004 action included
these individuals as defendants only in their capacities as
descendants of Cabassa Texidor, and thus the present claims against
them in their corporate capacities are not necessarily barred by
the claim preclusive effects of the final judgment in the 2004
case.9 We therefore look to the earlier 1968, 1990 and 1998
actions to determine whether the Widow's Reserve claim against
Cabassa; Estate of Myriam García-Barber; Oscar García Bush; Zulma
Anselma García-Cabassa; Fiori Vilella-García; Consuelo García-
Cabassa; Zoe Blasini-García; Oscar Blasini-García; Teodoro Pascual
Fajardo-Cabassa; Manuel Moreda; Rita Vilella-Bothwell; Reina Colon-
Alfonso; Annette Blasini-Batista, a/k/a Annette Rita Blasini-
Batista; Elba García-Camara; Oscar García-Camara; Carlos T. García-
Camara; Antonia Rita Blasini-Batista; Sylvia Consuelo Blasini-
Batista; Blanca Toledo; Alejandro Santopalo-Vilella; Fabiola
Santopalo-Vilella; Flavia Vilella-García; Zulma Vilella-García; and
Juan E. Vilella.
9
In addition to being named in the present action in their
personal capacities as descendants of Cabassa Texidor, Frank
Stipes-García, Ileana García-Ramirez de Arellano, Fredeswinda
García-Ramirez de Arellano, and Fiori Vilella-García were named in
their capacities as members of the boards of directors of Eureka
and/or Westernbank. Although the appellants do not specify whether
they sued these board members in their corporate or personal
capacities, the allegations in the complaint reveal that the
allegedly wrongful acts relate to managerial and operational
conduct undertaken to the benefit of the corporations. See
McCarthy v. Azure, 22 F.3d 351, 360 (1st Cir. 1994) (indicating
that whether a claim is asserted against a party in his corporate
or personal capacity "is ultimately a function of the facts, not of
pleading techniques alone"). Therefore, the claims arguably lie
against the defendants-appellees in their corporate capacities.
Cf. United States v. Cincotta, 689 F.2d 238, 241-42 (1st Cir. 1982)
(holding that corporation may be held criminally liable for acts of
agent that are "of the kind which he is authorized to perform, and
. . . motivated -- at least in part -- by an intent to benefit the
corporation.").
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these remaining defendants is barred by res judicata. In doing so,
we revisit the issues of identity of cause and identity of parties.
In assessing whether the prior actions and the current
action share a perfect identity of cause, the Commonwealth courts'
resolution of the issue in the 2004 action has at least
precedential, if not preclusive, effect.10 Cf. United States v.
177.51 Acres of Land, 716 F.2d 78, 80-81 (1st Cir. 1983) (invoking
doctrine of stare decisis to rule against plaintiffs,
notwithstanding that plaintiffs were not involved in previous
action and thus collateral estoppel did not apply). Irrespective
of the 2004 action's effect, however, the perfect identity of cause
requirement plainly is satisfied. The inheritance claims presented
in the prior actions and the Widow's Reserve claim presented in the
current action stem from the same factual predicate: Cabassa
Texidor's acquisition of the contested property. The appellants
allege, as they did in the prior actions, that Cabassa Texidor
could not have acquired lawful title to the contested property in
contravention of their asserted ownership interests in the property
under Puerto Rico law. Although the appellants now cite different
10
Even though the corporate capacity defendants' absence from
the 2004 Commonwealth action may prevent them from benefitting from
that case's claim preclusive effects, the plaintiffs nevertheless
may be barred by issue preclusion from relitigating the issue of
perfect identity of cause even against these defendants. In light
of the less-than-clear status of the viability vel non of non-
mutual defensive estoppel under Puerto Rico law, see infra note 12,
we will treat the Commonwealth courts' determination as persuasive,
rather than preclusive. In any event, the perfect identity of
cause requirement is satisfied.
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legal authority to support their claim of ownership -- the Widow's
Reserve -- the factual predicate of the claim remains the same. As
we have said in the past, "a mere difference in the legal theories
on which two causes of action are grounded does not destroy the
identity of thing or cause that otherwise exists between two suits
arising out of a common nucleus of operative fact." R.G. Fin.
Corp., 446 F.3d at 184.
The perfect identity of parties requirement is also
satisfied. Although the corporate capacity defendants were not
parties to the prior suits, the corporations that they represent --
Eureka and Westernbank -- were. A suit against individuals in
their corporate capacities effectively operates as a suit against
the corporation itself. McCarthy v. Azure, 22 F.3d 351, 359 (1st
Cir. 1994) ("An official capacity suit is, in essence, another way
of pleading an action against an entity of which an officer is an
agent. Consequently, such a suit is, in all respects other than
name, to be treated as a suit against the entity." (internal
quotation marks and citations omitted)). Hence, the weight of
authority is that an individual sued in his or her corporate
capacity as an officer or director of a corporation is in privity
with the corporation. See, e.g., United States v. Gurley, 43 F.3d
1188, 1197 (8th Cir. 1994), cert. denied, 516 U.S. 817 (1995)
(holding as a matter of federal preclusion law that officers and
directors may be in privity with corporation if named in their
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corporate capacity). The appellants give us no reason to believe
that the Commonwealth courts would not follow this rule. Cf. R.G.
Fin. Corp., 446 F.3d at 186 (holding under Puerto Rico law that
joinder of additional defendants who were derivatively liable for
acts of defendant in prior action did not destroy perfect identity
of parties). The corporate capacity defendants thus qualify as
persons in privity with Eureka and Westernbank, and the res
judicata defense is available to them.
B. Federal law claims
Having determined that the appellants' Widow's Reserve
claim is barred by res judicata, we turn to their counterpart
federal claims. While the complaint is not a model of clarity, the
appellants appear to allege that the appellees (or their
predecessors in interest) committed various kinds of fraud both in
acquiring the contested property (acts that occurred in 1908, the
1920s and the 1930s) and in maintaining control over it (acts that
post-date the judgment in favor of Cabassa Texidor in the 1968 case
-- which became final for purposes of res judicata in 1974 -- and
that continue to the present day). The appellants' securities
fraud claim is subject to dismissal under Federal Rule of Civil
Procedure 9(b).11 The remaining federal claims are precluded by
11
Under Rule 9(b), allegations of fraud must be pled with
particularity. Fed. R. Civ. P. 9(b). "To satisfy this
particularity requirement, the pleader must set out the 'time,
place, and content of the alleged misrepresentation with
specificity.'" SEC v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010)
(quoting Greebel v. FTP Software, Inc., 194 F.3d 185, 193 (1st Cir.
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either the doctrine of claim preclusion or the doctrine of issue
preclusion. We explain.
To the extent that these claims are based on fraud that
the appellees or their predecessors in interest are alleged to have
committed when acquiring the contested property, they are barred
under claim preclusion. Because the appellants concede the
elements of finality and perfect identity of thing, and perfect
identity of the parties is established, the only remaining element
in legitimate dispute here is whether the prior actions and the
current action share a perfect identity of cause. They do.
Again, the various claims presented all derive from the
same nucleus of operative facts -- Cabassa Texidor's acquisition of
the contested property. That acquisition gave rise to the
appellants' prior actions in 1968, 1990, and 1998, in which they
claimed to be the rightful owners of the contested property under
Puerto Rico inheritance law, as well as to their 2004 action, in
which they claimed to be the rightful owners of the contested
property under the Widow's Reserve statute. That acquisition has
also given rise to the claims presented in this action, inasmuch as
they allege that the appellees or their predecessors in interest
committed fraud when acquiring this property. Accordingly, the
appellants could have previously advanced their allegations of
fraud and are barred from doing so for the first time here.
1999)). The securities fraud claim in the appellants' complaint is
far too general in nature to satisfy Rule 9(b).
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To the extent that the appellants' claims are based on
fraud that the appellees committed in order to maintain control
over the contested property following the 1974 judgment in Cabassa
Texidor's favor, they are barred by issue preclusion. A party
asserting issue preclusion under Puerto Rico law must establish
that: (i) the prior and current actions share the same issue of
fact; (ii) the issue was "actually litigated" in the prior action;
(iii) the issue was necessary to support a valid and final judgment
in the prior action; and (iv) the prior and current actions share
a perfect identity of parties.12 See Felix Davis v. Vieques Air
Link, 892 F.2d 1122, 1124-25 (1st Cir. 1990). Under Puerto Rico
law, the doctrine of issue preclusion, unlike the doctrine of claim
preclusion, does not require that the prior and current actions
share a perfect identity of cause. Baez-Cruz, 140 F.3d at 30.
12
Citing the Puerto Rico Supreme Court's decision in A & P
Gen. Contractors, Inc. v. Asociacion Caná, Inc., 10 P.R. Offic.
Trans. 984 (1981), the magistrate judge concluded that Puerto Rico
law does not require that the actions share a perfect identity of
parties if issue preclusion is being asserted defensively. A & P
Gen. Contractors, Inc., however, merely notes that the non-mutual
defensive use of issue preclusion had been "generally accepted."
Id. The court ultimately emphasized that, under Puerto Rico law,
issue preclusion may only apply in a second action "between the
same parties." Id. (emphasis in original); accord Puerto Ricans
for P.R. Party v. Dalmau, 544 F.3d 58, 69 (1st Cir. 2008). While
we have previously noted "our skepticism that Puerto Rico law would
allow a plaintiff who lost against one defendant to then bring a
new claim against another defendant . . . based on the same
transaction where the outcome in the first case effectively negates
the claim in the second," Cruz-Berríos v. González-Rosario, 630
F.3d 7, 15 (1st Cir. 2010), we need not address the scope of the
doctrine here because we find perfect identity of the parties in
any event.
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The fourth element is already established and the
remaining three are easily satisfied. The ultimate success of each
of the federal claims hinges on the appellants having an ownership
interest in the contested property. This ownership issue, however,
was actually litigated and necessarily decided in the 1968 action.
The judgment rendered in that case unequivocally established that
Cabassa Texidor had lawfully acquired this property by satisfying
the various elements of acquisitive prescription. By bringing
these federal claims, the appellants have attempted to place the
ownership issue in dispute once more. The previous Commonwealth
court decisions preclude this.
C. Exceptions
Puerto Rico law recognizes several exceptions to the
doctrine of res judicata. Barreto-Rosa v. Varona-Mendez, 470 F.3d
42, 48 (1st Cir. 2006). For example, res judicata may not apply in
the event of "fraud" or if "public policy demands an exception to
res judicata." Id. We take the appellants to be arguing that
these two exceptions apply here.
1. Fraud exception
The appellants allege, in effect, two distinct kinds of
fraud. First, they claim that the appellees frustrated their
ability to ascertain their purported right to the contested
property under the Widow's Reserve. They state:
Undersigned only recently . . . discovered
their right to Reserve . . . a right of law as
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to which judicial notice should have been
taken by the Courts. Until that time, by
intimidation, rumor, and other aggressive
means, the Actors under the R.I.C.O.
Enterprise . . . some of whom were Attorneys
(officers of the court) had lulled and legally
bludgeoned Plaintiffs into reliance on their
statements to the extent that these plaintiffs
felt they might not have any action at all.
In the past, we have said that claim preclusion may not
apply if a plaintiff could not have known the full dimensions of
their claim when the prior action was brought. In re Belmont
Realty Corp., 11 F.3d 1092, 1100 (1st Cir. 1993). But that
exception is inapplicable here. At the time that the appellants
brought their prior actions, they should have known the full
dimensions of any claim under the Widow's Reserve, which, according
to the appellants themselves, were plainly spelled out by a
statute.13 It is unclear to us how the appellees could have used
"intimidation, rumor, or aggressive means" to hide that statutory
right from the appellants.
Next, the appellants argue that the appellees, in
securing favorable judgments in the 1968, 1990, and 1998 actions,
committed fraud on the Commonwealth courts. The thrust of their
allegations is that the appellees duped the Commonwealth courts
into holding that Cabassa Texidor had lawfully acquired the
contested property through acquisitive prescription.
13
The appellants do not claim that the appellees concealed
the factual predicate necessary for the appellants to advance a
claim under the Widow's Reserve. Nor could such a claim be
maintained on this record.
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But the relevant allegations fail to satisfy the
strictures of Federal Rule of Civil Procedure 9(b). As already
noted, that rule requires allegations of fraud to be pled with
particularity. Such details are noticeably absent in the
appellants' complaint. The following allegation, perhaps the most
detailed of the relevant allegations, is illustrative. The
appellants allege:
By information and belief, the preparation and
presentation of false fraudulent documents,
including deeds, which were used by defendants
in the State Court cases to prove title to
properties, were all part of the Scheme
utilized to defraud the legitimate reserve
entitled heirs of [St.] Laurent . . . .
The appellants do not identify when and in which courts
the fraudulent representations were made. Nor do they describe the
content of the fraudulent representations. The claim, therefore,
necessarily fails.
2. Public policy exception
The appellants finally argue, rather summarily, that
because application of res judicata would defeat the ends of
justice, the public policy exception should apply here. We fail to
see the injustice. The appellants have had numerous opportunities
in the Commonwealth courts to press their claims. Moreover, they
have yet to convincingly argue that the judgment in the 1968 action
holding Cabassa Texidor to be the rightful owner of the contested
property was erroneous. As one treatise observes, general
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exceptions to the doctrine of res judicata like Puerto Rico's
public policy exception "must be limited to special circumstances,
lest they invite such frequent second actions as to weaken the
repose and reliance values of res judicata in all cases." 18
Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 4415 (2d ed. 2002); see also id. § 4408 ("Among the
traditional cases, litigation seeking to establish ownership of
property provides the clearest example of results dictated by the
need for repose. A plaintiff must advance in the first suit every
claim of title arising out of events occurring before that suit.").
Such special circumstances are lacking here.
III. Conclusion
For the reasons provided above, the judgment is affirmed.
Costs are awarded to the appellees.
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