Joglor, LLC v. First Am. Title Ins. Co.

261 F.Supp.3d 224

JOGLOR, LLC, Plaintiff,

v.FIRST AMERICAN TITLE INSURANCE COMPANY, Defendant.

Civil No. 15–1088 (BJM)

United States District Court, D. Puerto Rico.

Signed September 27, 2016

Michael C. McCall, Law Office of Michael C. McCall, Frank Gotay–Barquet, Gotay & Perez, P.S.C., San Juan, PR, for Plaintiff.

Ricardo F. Casellas, Casellas, Alcover & Burgos Psc, San Juan, PR, Carla S. Loubriel, Hato Rey, PR, for Defendant.

OPINION AND ORDER

BRUCE J. McGIVERIN, United States Magistrate Judge

Joglor, LLC ("Joglor") brought this action under the court's diversity jurisdiction against First American Title Insurance Company ("FATIC" or "Company"), alleging breach of two title insurance policies, bad-faith handling of Joglor's insurance claims, and entitlement to attorney's fees and costs. Docket No. 1 ("Compl."). Seeking a declaratory judgment, the Company counterclaimed. Docket No. 13. The parties stipulated to the dismissal of the bad-faith claim, and so that claim was dismissed. Docket Nos. 84, 105. Joglor and FATIC cross-moved for summary judgment, Docket Nos. 59, 67, and opposed each other's motions. Docket Nos. 77, 90, 114, 127, 128, 143. The case is before me on consent of the parties. Docket No. 24.

For the reasons set forth below, the Company's motion is GRANTED , and Joglor's motion is DENIED .

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the movant shows "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is "genuine" only if it "is one that could be resolved in favor of either party." Calero–Cerezo v. U.S. Dep't of Justice , 355 F.3d 6, 19 (1st Cir. 2004). A fact is "material" only if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions" of the record materials "which it believes demonstrate the absence" of a genuine dispute of material fact.

Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The court does not act as trier of fact when reviewing the parties' submissions and so cannot "superimpose [its] own ideas of probability and likelihood (no matter how reasonable those ideas may be) upon" conflicting evidence. Greenburg v. P.R. Mar. Shipping Auth. , 835 F.2d 932, 936 (1st Cir. 1987). Rather, it must "view the entire record in the light most hospitable to the party opposing summary judgment, indulging all reasonable inferences in that party's favor." Griggs–Ryan v. Smith , 904 F.2d 112, 115 (1st Cir. 1990). The court may not grant summary judgment "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson , 477 U.S. at 248, 106 S.Ct. 2505.

BACKGROUND

Except where otherwise noted, the following facts are drawn from the parties' Local Rule 56¹ submissions.² The facts giving rise to this case are largely undisputed.

The Actors

The Company is a Nebraska corporation authorized by the Puerto Rico Insurance Commissioner's Office to sell title insurance in Puerto Rico. CSUF ¶ 1. Joglor is a Puerto Rico limited liability company whose sole and controlling member is Jose Figueroa Morales ("Figueroa"). CSUF ¶ 2. As Joglor's executive director, Figueroa, who is authorized to practice law in Puerto Rico, negotiates on behalf of Joglor and makes its day-to-day decisions. CSUF ¶¶ 3, 5. Armando Orol Mesa ("Orol") is a certified public accountant who provides consulting and tax-preparation services to Joglor. CSUF ¶ 6. Since around 2006, Figueroa and Orol have owned Ecoland, Inc. ("Ecoland"), which was formerly doing business as Top Security Home Developers, Inc. ("Top Security"). CSUF ¶¶ 8, 10. Figueroa is Ecoland's president, and Orol is Ecoland's secretary. CSUF ¶ 9.

In August 2006, Figueroa sought two credit lines from Banco Popular de Puerto Rico ("Banco Popular" or "BPPR") to complete an industrial and residential real estate development project on lands previously purchased by his company. CSUF ¶ 18. Figueroa signed two credit line agreements between Ecoland (known as Top Security at the time) and Banco Popular, one for $700,000 of credit and the other for $2,000,000 of credit. CSUF ¶ 11. At that time, Figueroa also executed two promissory notes to the order of Banco Popular that corresponded to the amounts of credit Ecoland obtained. CSUF ¶ 12.

The $700,000 promissory note (the "$700,000 Mortgage Note") was to be secured by a first mortgage lien over seven properties in Puerto Rico. CSUF ¶ 13. And the $2,000,000 promissory note (the "$2,000,000 Mortgage Note") was to be secured by a first mortgage lien over five different properties in Puerto Rico. CSUF ¶ 14.

Figueroa also signed two pledge agreements in favor of Banco Popular in which the $700,000 and $2,000,000 Mortgage Notes were pledged and delivered as collateral security for the lines of credit granted to Ecoland. CSUF ¶ 15. In addition, Orol, Figueroa, and Figueroa's wife, Gloria Maria Santaella Paris ("Santaella"), signed agreements in their personal capacities to guarantee the funds granted by the lines of credit. CSUF ¶¶ 16, 17.

The Insurance Policies

As part of the transaction for financing the two lines of credit, FATIC issued two title insurance policies (one for $700,000 and another for $2,000,000) that corresponded to the mortgage deeds contemplated by the two promissory notes. CSUF ¶¶ 19–22, 24–25. Both policies named the insured as Banco Popular "and/or its successors and assigns as their respective interests may appear." CSUF ¶ 23 (emphasis removed). Both insurance policies also state that the insurance coverage is "subject to" the "conditions and stipulations" contained in the policy. CSUF ¶ 26 (emphasis removed). Section 9 of the Conditions and Stipulations of both policies states as follows:

9. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF LIABILITY.

(a) All payments under this policy, except payments made for costs, attorneys' fees and expenses, shall reduce the amount of the insurance pro tanto. However, any payments made prior to the acquisition of title to the estate or interest as provided in Section 2(a) of these Conditions and Stipulations shall not reduce pro tanto the amount of the insurance afforded under this policy except to the extent that the payments reduce the amount of the indebtedness secured by the insured mortgage.

(b) Payment in part by any person of the principal of the indebtedness, or any other obligation secured by the insured mortgage, or any voluntary partial satisfaction or release of the insured mortgage, to the extent of the payment, satisfaction or release, shall reduce the amount of insurance pro tanto. The amount of insurance may thereafter be increased by accruing interest and advances made to protect the lien of the insured mortgage and secured thereby, with interest thereon, provided in no event shall the amount of insurance be greater than the Amount of Insurance stated in Schedule A.

(c) Payment in full by any person or the voluntary satisfaction or release of the insured mortgage shall terminate all liability of the Company except as provided in Section 2(a) of these Conditions and Stipulations.

CSUF ¶ 28. And the pertinent part of Section 2(a) of the Conditions and Stipulations of both policies reads as follows:

(a) After Acquisition of Title. The coverage of this policy shall continue in force as of Date of Policy in favor of (i) an insured who acquires all or any part of the estate or interest in the land by foreclosure, trustee's sale, conveyance in lieu of foreclosure, or other legal manner which discharges the lien of the insured mortgage; (ii) a transferee of the estate or interest so acquired from an insured corporation, provided the transferee is the parent or wholly-owned subsidiary of the insured corporation, and their corporate successors by operation of law and not by purchase, subject to any rights or defenses the Company may have against any predecessor insureds; and (iii) any governmental agency or governmental instrumentality which acquires all or any part of the estate or interest pursuant to a contract of insurance or guaranty insuring or guaranteeing the indebtedness secured by the insured mortgage.

CSUF ¶ 29.

The Settlement & Release Agreement

In February 2013, Banco Popular informed Figueroa, Santaella, and Orol of arrears due on the $700,000 and $2,000,000 credit lines, as well as a third loan, and demanded payment of the loan balances. CSUF ¶¶ 32–34. The third loan had been issued to Joblar, Inc. ("Joblar"), a separate entity whose shareholders are Figueroa, Orol, and Blas Buono Correa ("Buono"). CSUF ¶ 33. After receiving the demand for payment, Figueroa and Orol negotiated with Banco Popular's attorneys and reached a "Settlement and Release Agreement" ("Settlement Agreement") in September 2013. CSUF ¶¶ 35, 36. Figueroa executed this agreement in his personal capacity, and as an authorized representative of Ecoland and Joblar. CSUF ¶ 37.

The loan agreements encompassed by the Settlement Agreement were the following: (1) the $2,000,000 line of credit agreement, the line of credit itself, and the $2,000,000 Mortgage Note; (2) the $700,000 line of credit agreement, the line of credit itself, and the $700,000 Mortgage Note; and (3) the third loan issued to Joblar. CSUF ¶ 38. Also encompassed by the Settlement Agreement were Ecoland's two pledge agreements and the guarantees signed by Figueroa, Santaella, Orol, and Buono. CSUF ¶ 39. The Settlement Agreement referred to these documents as the "Loan Documents." CSUF ¶ 40.

After acknowledging that the Loan Documents were due and payable, and that Banco Popular could accelerate the payments and request the full payment and satisfaction of all the amounts due under the Loan Documents, CSUF ¶ 42, the Settlement Agreement...