Power Rental OP Co. v. V.I. Water & Power Auth.

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POWER RENTAL OP CO, LLC, Plaintiff, v. VIRGIN ISLANDS WATER AND POWER AUTHORITY, Defendant.

No. 24-mc-070 (MAJ)

United States District Court, D. Puerto Rico

May 31, 2024

OPINION AND ORDER

MARIA ANTONGIORGI-JORDAN, UNITED STATES DISTRICT JUDGE

I. Introduction

On February 23, 2024, Power Rental Op Co, LLC (“Plaintiff”) registered with this Court a judgment in its favor issued by the U.S. District Court for the Middle District of Florida (“Middle District of Florida”) pursuant to 28 U.S.C. § 1963.^[1] (ECF No. 1). On February 25, 2024, Plaintiff filed a Motion for Execution of Judgment which this Court granted. (ECF Nos. 3, 4). The Writ of Execution was issued that same day. (ECF No. 5).

Pending before the Court is the Virgin Islands Water and Power Authority's (“Defendant”) Emergency Motion to Quash Writ of Execution of Judgment (the “Motion”) filed on April 18, 2024.^[2] (ECF No 7). For the reasons stated hereafter, the Court DENIES Defendant's Motion.

II. Relevant Factual Background ^[3]

i. The Parties' Relationship

Plaintiff is a limited liability company with its principal place of business and headquarters in Florida. Power Rental Op Co., LLC v. Virgin Islands Water & Power Auth., 548 F.Supp.3d 1193, 1195 (M.D. Fla. 2021). Defendant is a municipal corporation existing under the laws of the U.S. Virgin Islands (“Virgin Islands”) with a mandate to provide water and power to residential and commercial customers in the Virgin Islands. Id.

In 2013, the two entities entered into a business relationship which began to deteriorate when Defendant failed to make required monthly payments to Plaintiff. Id. at 1196. The nature of the business relationship was summarized by the Middle District of Florida as follows:

On February 15, 2012, General Electric International (“GE”) entered into a contract (the “Rental Agreement”) with [Defendant] for the provision of water and energy-related services and rental of power generation equipment and water treatment systems. In exchange for the equipment and services, [Defendant] was required to make monthly payments. In 2013, due to an acquisition of GE businesses, [Plaintiff] assumed ownership of the Rental Agreement.

Id. at 1195. By 2019, Defendant owed Plaintiff $14,291,986.00. Id. However, Plaintiff agreed to reduce the amount owing to $9,310,971.00, in exchange for Defendant issuing a promissory note (“Note”) for the reduced amount. Id.

In June 2020, Defendant defaulted on the Note. Id. at 1997. Accordingly, Plaintiff filed suit in the Duval County Circuit Court, a Florida state level court, alleging breach of promissory note, services rendered, and quantum meruit. Id. There, Plaintiff also filed an ex parte motion for pre-judgment writs of garnishment, which the state trial court granted. Id. Defendant timely removed the case to the Middle District of Florida. Power Rental Op Co, LLC v. Virgin Islands Water & Power Auth., 20-cv-1015, 2021 WL 9881137, at *1 (M.D. Fla. July 6, 2021). The Middle District of Florida made three pertinent rulings for the purposes of this Opinion and Order. These include: (1) an order granting Defendant's motion to dissolve pre-judgment writs of garnishment; (2) an order granting Plaintiff's motion for summary judgment; and (3) an order granting Plaintiff's motion for order directing Defendant to complete a fact information sheet.

ii. Order Granting Defendant's Motion to Dissolve Pre-Judgment Writs of Garnishment

After removing the case to the Middle District of Florida, Defendant filed a motion to dissolve the pre-judgment writs of garnishment issued by the Duval County Circuit Court. Id. at 1. Defendant argued that Florida courts lacked jurisdiction to issue the writs because they did not have bank accounts located in Florida. Id. The Middle District of Florida was thus tasked with answering the question of “whether trial courts must have in rem jurisdiction over assets to issue a pre-judgment writ of garnishment, and what is the situs/location of a bank account in light of modern banking practices.” Id. at 2.

In answering this question, the Middle District of Florida noted that under Fed.R.Civ.P. 64, garnishment actions in Florida federal courts are governed by the procedures of the applicable Florida statutes. Id. In applying Florida law, the Middle District of Florida ultimately held that “trial courts must have in rem jurisdiction over bank accounts to garnish them . . . [and] that the Florida garnishment statute does not apply extraterritorially to out-of-state bank accounts.” Id. at 8. Because Plaintiff was unable to demonstrate that Defendant had bank accounts located in Florida, the Middle District of Florida granted the motion to dissolve the pre-judgment writs of garnishment. In so holding, the Middle District of Florida noted that Plaintiff had only submitted documents suggesting Defendant maintained accounts in Puerto Rico. Id. at 9.

iii. Order Granting Plaintiff's Motion for Summary Judgment

Thereafter, Plaintiff filed a motion for summary judgment on all three of its claims. Power Rental Op Co., LLC, 548 F.Supp.3d 1193 (M.D. Fla. 2021). In response, Defendant argued first that Plaintiff's claims must fail because Defendant has sovereign immunity which cannot be waived.^[4] Id. at 1201. The Middle District of Florida disagreed, noting that U.S. Virgin Islands “immunities law does not preclude courts from entering judgments against [Defendant], or preclude [Defendant] from using its assets to satisfy such judgments.” Id. at 1201.

Defendant next argued that Plaintiff's claims are barred because Plaintiff materially breached the Rental Agreement between the two parties. Id. at 1201. The Middle District of Florida again disagreed, noting that as per the Note, Defendant waived “all defenses.” Id. at 1201. Under New York law, which applies substantively to the Note, it found this waiver is enforceable. Id. Accordingly, finding no genuine dispute as to material fact, the Middle District of Florida granted Plaintiff's motion for summary judgment.^[5] Judgment was entered in favor of Plaintiff in the amount of $6,519,743.57, plus post-judgment interest at the rate of 0.07% per annum. (ECF No. 112).^[6] Though Defendant filed a timely notice of appeal, it subsequently voluntarily dismissed it. (ECF Nos. 113, 115).^[7]

iv. Order Granting Plaintiff's Motion for Order Directing Defendant to Complete a Fact Information Sheet

After the Middle District of Florida entered judgment in favor of Plaintiff, Defendant failed to satisfy the judgment. See Power Rental OP CO, LLC v. Virgin Islands Water & Power Auth., 20-cv-1015, 2023 WL 4187095, at *1 (M.D. Fla. May 31, 2023), report and recommendation adopted sub nom., Power Rental Op Co., LLC v. Virgin Islands Water & Power Auth., 20-cv-1015, 2023 WL 4181246 (M.D. Fla. June 26, 2023). Accordingly, Plaintiff requested an order directing Defendant to complete a “Fact Information Sheet,” as under Florida law, “the court, at the request of the judgment creditor, shall order the judgment debtor or debtors to complete the fact information sheet, including all required attachments, within 45 days of the order or such other reasonable time as determined by the court.” Id. (internal citations and quotations omitted) (emphasis in original). This is to aid in the execution of judgment.

In response, Defendant argued that it “should not be compelled to fill out the Fact Information Sheet for the simple reason that its assets are immune from collection” under 30 VIC § 111.^[8] Id. The Middle District of Florida disagreed and found that Defendant expressly “waived any statutory exemption defense from post-judgment execution proceedings.” Id. at 2. In so finding, the Magistrate Judge-and District Judge thereafter-cited to the Note which provides in relevant part that:

Maker unconditionally and irrevocably agrees that the execution, delivery and performance by it of this Note constitute private and commercial acts. In furtherance of the foregoing, Maker hereby irrevocably and unconditionally agrees that, to the extent permitted by Applicable Law,

(i) should any proceedings be brought against Maker or its assets . . . in any jurisdiction in connection with this Note, no claim of immunity from such proceedings shall be claimed by or on behalf of Maker on behalf of itself or any of its assets (other than Protected Assets);^[9]

(ii) it waives any right of immunity which it or any of its assets (other than Protected Assets) now has or may in the future have in any jurisdiction in connection with any such proceedings; and

(iii) it consents generally in respect of the enforcement of any judgment against it in any such proceedings in any jurisdiction, to the giving of any relief or the issuance of any process in connection with such proceedings, including, without limitation, the making, enforcement or execution against or in respect of any of its assets (other than Protected Assets).

Id. (emphasis added). Accordingly, the Middle District of Florida found Plaintiff to be a “valid judgment creditor” seeking “the enforcement of the relief to which it is entitled,” and ordered Defendant to complete the sheet. Id. at 2-3. Notably, Defendant did not appeal the Middle District of Florida's finding.

III. Applicable Law and Analysis

Here, Defendant maintains that the Writ must be quashed for three reasons. First, because it is unlawful under U.S. Virgin Islands law. (ECF No. 7 at 2 ¶ 5). Second, because this Court does not have jurisdiction to levy assets outside of Puerto Rico. (ECF No. 14 at 3). And finally, because public policy weighs in favor of this Court quashing the Writ.^[10] Id. at 8. The Court will address each argument in turn.

i. The Writ is a Violation Under U.S. Virgin Islands Law

In arguing the Writ...