United States Court of Appeals
For the First Circuit
No. 01-1097
MANUEL GARCÍA-GUZMÁN, et al.,
Plaintiffs, Appellants,
v.
ELENA VILLOLDO, et al.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Justo Arenas, U.S. Magistrate Judge]
Before
Selya Circuit Judge,
Gibson, Senior Circuit Judge,*
and Lipez, Circuit Judge.
Antonio J. Amadeo-Murga for appellants.
Enrique Peral, with whom María T. Figueroa and Muñoz Boneta
González Arbona, Benítez & Peral, were on brief, for appellees.
December 3, 2001
* Hon. John R. Gibson, of the Eighth Circuit, sitting by
designation.
LIPEZ, Circuit Judge. Manuel García-Guzmán and his
wife, Maria Emilia García-Urgüelles, appeal from the order of
the district court granting summary judgment in favor of
appellees, the Villoldos. The district court determined that
García-Guzmán's1 claim of wrongful attachment was barred by the
one-year statute of limitations set forth in Article 1868 of the
Civil Code of Puerto Rico, 31 L.P.R.A. § 5298. The court
reasoned that García-Guzmán was not a party to the proceeding in
which his property was attached, and therefore he should not
have waited for the entry of a final judgment in the underlying
litigation before filing his wrongful attachment action. We
review the grant of summary judgment de novo, see Megwinoff v.
Banco Bilbao Vizcaya, 233 F.3d 73, 74 (1st Cir. 2000), and
conclude that the district court's application of the statute of
limitations was erroneous.
I.
This case arises out of a dispute between the Villoldos
and García-Guzmán's parents, the Garcías, over a business
jointly owned by the two families. In 1991, the relationship
between the families soured, and they filed lawsuits against
1In the interests of clarity and brevity, we omit any
further references to García-Guzmán's wife, appellant García-
Urgüelles. Our holding is, of course, equally applicable to
her.
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each other (the “1991 Cases”). The 1991 Cases were consolidated
and assigned to Judge Fusté. García-Guzmán was not named as a
party in either case.
Eventually, the Garcías and the Villoldos agreed to
settle their differences. On September 18, 1992, they executed
an agreement (the “Settlement Agreement”) providing that the
Garcías would buy the Villoldos' stock in the business for
$650,000, to be paid in a series of installments. García-Guzmán
joined his parents in signing the Settlement Agreement, although
it was not then clear in what capacity he signed. The terms of
the Settlement Agreement were incorporated into a judgment
disposing of the 1991 Cases (the “1992 Judgment”).
Although the Garcías began to make the agreed-upon
payments, they defaulted after paying slightly more than
$150,000. Invoking Judge Fusté's continuing authority to
enforce the 1992 Judgment, the Villoldos initiated attachment
proceedings against the Garcías in March, 1994, but the action
was suspended when the Garcías filed for bankruptcy. The
Villoldos then turned to García-Guzmán for satisfaction of the
debt. On September 14, 1994, they obtained an order from Judge
Fusté authorizing the attachment of García-Guzmán's personal
property. Instead of executing the attachment, however, the
Villoldos filed a separate action against García-Guzmán on
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November 19, 1994, alleging breach of contract and seeking to
enforce the terms and conditions of the Settlement Agreement
(the “1994 Action”). Leaving aside details not relevant here,
the crux of the Villoldos' claim was that García-Guzmán was a
full signatory to the Settlement Agreement, jointly responsible
for his parents' debt to the Villoldos. García-Guzmán moved to
dismiss the complaint on the ground that he had not assumed any
obligation to purchase the Villoldos' stock. Emphasizing that
he was not a party to the 1991 Cases that gave rise to the
Settlement Agreement, García-Guzmán argued that he had signed
the Agreement only in his representative capacity as manager of
the business being sold (which was a party in the 1991 Cases),
and that he was obligated in a personal capacity only with
respect to a non-compete covenant set forth in the Agreement.
The district court never addressed the merits of those
arguments, ruling instead that the Villoldos' claim against
García-Guzmán should have been addressed to Judge Fusté in the
form of a motion to enforce the Settlement Agreement. The court
reasoned that, since the terms of the Settlement Agreement were
incorporated into the 1992 Judgment, a breach of the Agreement
would be a violation of the Judgment itself. Therefore, the
court concluded, Judge Fusté retained jurisdiction over the 1991
Cases to enforce the terms of the Settlement Agreement. Rather
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than dismiss the Villoldos' complaint against García-Guzmán,
however, the court simply consolidated the 1994 Action with the
1991 Cases and transferred it to Judge Fusté.
On April 19, 1995, Judge Fusté dismissed the 1994
Action. In an order entered the same day, he explained his
ruling:
The 1994 suit is not a separate claim. It
only involves a claim for execution of
judgment which results from the earlier
judgment in the two consolidated cases [the
1991 Cases]. . . . The 1994 civil action is
duplicitous and there is no reason, legal or
otherwise, for it to be litigated separately
as an independent civil action.
Judge Fusté apparently believed that García-Guzmán already was
a party to the 1991 Cases – at least for enforcement purposes –
by virtue of his participation in the Settlement Agreement and
the incorporation of that Agreement into the 1992 Judgment.
Thus, there was no need for a separate action against him. Any
obligation García-Guzmán owed to the Villoldos under the
Settlement Agreement could be enforced by post-judgment motions
for execution of the 1992 Judgment.
As the Villoldos recognized, Judge Fusté determined
implicitly in his order that García-Guzmán was, in fact,
responsible for his parents' debt. Accordingly, the Villoldos
proceeded to execute the writ of attachment issued the previous
September against García-Guzmán's personal property. On June
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21, 1995, they attached $6,862 held in his bank account. They
also obtained (but did not execute) a second writ of attachment
against García-Guzmán, this time authorizing the attachment of
his real property.
García-Guzmán immediately filed an emergency motion
seeking return of the attached bank funds. Judge Fusté
initially responded on July 5, 1995, with the following margin
order:
The court has examined – once again – the
settlement agreement and it can be
interpreted as we did earlier to the effect
that García-Guzmán joined his parents in
guaranteeing the payment of the stipulated
accounts. The motion for execution was duly
notified and this appears to be a late
opposition to it. The Villoldos will
express their views in not more than 10
pages . . . .
Then, in an order entered on January 31, 1996, Judge Fusté
denied García-Guzmán's request for return of the attached bank
funds on the ground that García-Guzmán was obligated by the
terms of the Settlement Agreement and the 1992 Judgment to
satisfy the debt owed to the Villoldos.
García-Guzmán appealed, and we held in an unpublished
opinion that the Settlement Agreement was ambiguous as to the
extent of his responsibility for the debt to the Villoldos.
García-Guzmán v. Villoldo, No. 96-1215 (1st Cir. Feb. 14, 1997)
(unpublished). Accordingly, we vacated the January 31 order and
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remanded for a factual inquiry into the parties' intent. Judge
Fusté held an evidentiary hearing and, based on the evidence
presented there, determined that García-Guzmán “was asked to
sign, not as a full guarantor, but only in reference to the
covenant not to compete.” Therefore, he concluded, “the orders
that were originally entered against Mr. García Guzmán for
execution of judgment should be, for all purposes, vacated.” On
February 1, 1999, Judge Fusté entered judgment “dismissing the
complaint” against García-Guzmán. The Villoldos did not appeal.
On June 15, 1999, García-Guzmán filed the instant
diversity action for wrongful attachment and malicious
prosecution, seeking damages allegedly caused by the attachment
of his bank account and the order of attachment obtained – but
never executed – against his real property. The parties
consented to proceed before a magistrate judge. See 28 U.S.C.
§ 636(c). Several months later, they filed cross-motions for
summary judgment on the claim of wrongful attachment. The
Villoldos argued, as relevant here, that the claim was time-
barred because García-Guzmán's complaint was filed more than one
year after the date on which he became aware of the relevant
attachments. The magistrate judge agreed, reasoning that
García-Guzmán was not a party to the 1991 Cases, and therefore
the “applicable statute of limitations is one year from the day
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[on] which [García-Guzmán] knew of the attachment (i.e., June of
1995).” The judge rejected García-Guzmán's argument that he had
been “brought into” the 1991 Cases in 1994, when the Villoldos
obtained authorization to attach his property to enforce the
1992 Judgment. “[T]hroughout all the proceedings,” he pointed
out, “García-Guzmán has argued that he was not a party to the
original litigation, and in fact, on the basis of that argument
he was able to avoid liability under the settlement agreement.”
Thus, the judge concluded, the fact that Judge Fusté's February
1, 1999, judgment purported to “dismiss” a “complaint” against
García-Guzmán was immaterial. The only complaint ever filed
against García-Guzmán was in connection with the 1994 Action,
and was dismissed in April 1995 – before the Villoldos attached
García-Guzmán's personal property, and long before Judge Fusté's
decision in 1999.
The magistrate judge granted the Villoldos' motion for
summary judgment on García-Guzmán's claim of wrongful
attachment. García-Guzmán then obtained a voluntary dismissal
of his remaining claim of malicious prosecution, and the
magistrate judge entered judgment dismissing the complaint in
its entirety. This appeal followed.
II.
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Claims of wrongful attachment are subject to a one-year
statute of limitations applicable to all actions for
“obligations arising from . . . fault or negligence.” 31
L.P.R.A. § 5298. The timing of the statute of limitations
depends on when the substantive elements of the claim are
present. Thus, before we can address the statute of limitations
question in this case, we need to understand what, in general,
makes an attachment “wrongful” under Puerto Rico law, and how
such wrongfulness ordinarily is established. We then can apply
those general principles to the facts here to determine when the
statute of limitations began to run on García-Guzmán's claim.
Rule 56 of the Puerto Rico Rules of Civil Procedure
provides that the plaintiff in any action may move, before or
after judgment is entered, for a provisional attachment of the
defendant's property to “secure satisfaction of the judgment.”
32 L.P.R.A. App. III R. 56.1. The validity of such an
attachment depends on the validity of the plaintiff's claim
against the defendant-attachee. If the court determines that
the plaintiff's claim against the defendant has no merit, it
follows that she has no right to the defendant's property, and
that the attachment was unwarranted. The plaintiff then may be
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liable to the defendant for the damages caused by the
attachment.2
Liability for a wrongful attachment is based on Article
1802 of the Civil Code, which provides that “[a] person who by
an act or omission causes damage to another through fault or
negligence shall be obliged to repair the damage so done.” 31
L.P.R.A. § 5141. A wrongful attachment claim, therefore, has
three elements: an act or omission, damages, and “fault or
negligence.” The first two elements are fairly straightforward.
The relevant “act” is the attachment of the defendant's
property, and, as Rule 56 recognizes, even a temporary
attachment can cause damage. The defendant's credit may be
adversely affected; his business may fail; he may suffer
emotional distress. See, e.g., Feliciano v. Mercantil Cedeño,
2
In the usual case, Rule 56 requires a plaintiff seeking to
attach a defendant's property to file a bond “sufficient to
secure all the damages arising from” the attachment. 32
L.P.R.A. App. III R. 56.3. However, the bond requirement is
waived in cases where it seems especially likely that the
plaintiff does, in fact, have a valid claim against the
defendant and his property. Thus, Rule 56.3 provides that the
plaintiff may obtain an attachment without bond if, inter alia,
the plaintiff alleges under oath that the defendant owes her a
legally enforceable obligation, or – as is the case here – the
attachment “is sought after judgment is entered.” In those
circumstances, the absence of a protective bond means that the
plaintiff is directly liable for any damages sustained by the
defendant in the event that the attachment is deemed wrongful.
See M. Quilichini Sucrs., Inc. v. Villa Inv. Corp., 12 P.R.
Offic. Trans. 401, 406, 408 (1982).
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S. en C., 85 P.R.R. 138 (1962) (recognizing that damages are
available to owner of business wrongfully attached for damages
caused to good name of business and for mental anguish and moral
damages suffered by owner).
The third element – that the damage was caused by the
attaching party's “fault or negligence” – is more complicated.
In the usual case, the question whether the attachment was
“wrongful” is answered by reference to the outcome of the
dispute between the parties. If the plaintiff-attachor
prevailed, it follows that the attachment was warranted and the
defendant-attachee has no cause for complaint. On the other
hand, a judgment in favor of the defendant-attachee establishes
that the plaintiff had no valid claim against the defendant or
his property, and, consequently, that the attachment was in
error. As the Supreme Court of Puerto Rico has explained:
[T]here is no doubt that a person is guilty
of fault who, to secure the result of an
action which he is prosecuting against a
specific person, requests and obtains of the
court the attachment of the property of his
adversary, which attachment afterward,
either through improper preparation of the
complaint or owing to the said complaint
being groundless or frivolous, must be
dissolved, after having caused considerable
damage and prejudice to the credit or
interests of the owner of the property
attached.
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Cintrón v. Insular Indus. & Agric. Exposition Ass'n, Inc., 58
P.R.R. 820, 825 (1941) (quoting Lowande v. Otero & Co., 14
P.R.R. 544 (1908)).
Thus, in order to prove that the damages arising out
of an attachment were caused by the attaching party's “fault or
negligence,” the attachee typically must show, at a bare
minimum, that “the action filed against him and in which action
the attachment was decreed terminated by a final judgment in his
favor.” Frigorífico M.H. Ortiz v. Quiles, 101 P.R.R. 928, 941
(1973) (citing Martí v. Hernández, 57 P.R.R. 804 (1940)).3 Such
a claim is “contingent” in the sense that its “legal basis
depends on the result of another action.” Rodón v. Franco, 105
P.R.R. 424, 425 (1976). The attachment is not actionable unless
and until the defendant obtains a final and unappealable
judgment establishing that the plaintiff has no valid claim to
his property, and, therefore, that the attachment was wrongful.
See Marti, 57 P.R.R. at 806-07 (holding that cause of action
“could not accrue before the judgment dismissing the complaint
. . . against [the attachee] had been affirmed. A reversal of
said judgment would have established the validity of the
3
This case does not require us to determine whether a
favorable judgment in the underlying action is not only
necessary, but also sufficient, to establish “fault” on the part
of the attaching party.
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attachment and deprived [the attachee] of any right to claim
damages”). Accordingly, the cause of action accrues, and the
statute of limitations begins to run, upon the entry of that
final judgment.
Sometimes, however, an individual's property is
attached by mistake in the course of litigation to which he is
not a party. See Fresh-O-Baking Co. v. Molinos de Puerto Rico,
Inc., 3 P.R. Offic. Trans. 708 (1975) (involving claim by non-
party whose equipment was stored in defendant's bakery, which
plaintiff attached). In such a case (as always), the attachment
is valid only if the plaintiff's claim against the attachee is
valid. The difference is that the plaintiff likely has not
asserted any claim against the non-party whose property she
attached. Therefore, in order to establish the plaintiff's
“fault or negligence,” all the non-party attachee must prove is
that the property belongs to him and not the defendant. See id.
at 715 n.4 (noting that non-party attachee could have availed
himself of “fast and simple” independent claim proceeding
specifically designed to “determine ' . . . whether the personal
property attached as belonging to a specific person, belongs to
another claiming it as his own'” (quoting Rona Electric Co. v.
Garriga, 99 P.R.R. 914, 921 (1971))). Because such proof does
not depend on a judicial determination of the merits of the
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plaintiff's claim, the non-party attachee's cause of action
accrues upon notice of the attachment, and the statute of
limitations begins to run on that date. See id. at 725 (holding
that non-party attachee “did not have to wait for the results of
[the underlying litigation between plaintiff and defendant] to
exercise his rights”).
III.
Applying these general principles to the undisputed
facts here, we conclude that the complaint was timely filed.
The Villoldos attached García-Guzmán's property because they
believed he was bound by the terms of the Settlement Agreement
to satisfy his parents' debt. The validity of that attachment
hinged on Judge Fusté's ultimate determination of García-
Guzmán's liability under the Settlement Agreement. It was Judge
Fusté's decision on February 1, 1999 – and not the attachments
themselves – that provided the relevant evidence of the
Villoldos' arguable “fault or negligence.” Accordingly, it was
not until that decision became final that García-Guzmán's claim
for wrongful attachment accrued and the statute of limitations
began to run.
The Villoldos seek to bring this case within the
alternate rule recognized in Fresh-O-Baking for cases in which
the attachee is not a party to the underlying litigation.
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García-Guzmán, they argue, was not originally a party to the
1991 Cases, nor was he ever joined as a party during the course
of the proceedings that began in 1994. Thus, “at the time of
the attachment, in 1995, García-Guzmán knew that his funds had
been attached in a legal action to which he was not included as
a party.”
That argument elevates form over substance. Throughout
the relevant time period, García-Guzmán was consistently treated
as a party, even if technically he was not one.4 For example,
Judge Fusté dismissed the 1994 Action against García-Guzmán
(thus depriving him of official party status) because he
believed, apparently, that García-Guzmán already was a party to
the 1991 Cases. Similarly, this court assumed that García-
Guzmán was a party when he appealed Judge Fusté's 1996 order
denying his motion for return of the attached funds. For their
part, the Villoldos not only treated García-Guzmán as if he were
a party, but explicitly referred to him as a “defendant[]” in
the 1991 Cases.
4 Although we do not need to decide the issue here, we note
that it is unlikely that García-Guzmán became a party to the
1991 Cases simply because he was bound by some of the terms of
the Settlement Agreement and those terms were incorporated into
the 1992 Judgment. See Hispanic Soc'y of the New York City
Police Dept., Inc. v. New York City Police Dept., 806 F.2d 1147,
1153 (2d Cir. 1986) (noting that participation in settlement
agreement “cannot confer party status on a nonparty”).
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In focusing on García-Guzmán's lack of official party
status, the Villoldos miss the point of the Fresh-O-Baking rule.
The fact that the attachee was not a party to the underlying
litigation matters because it usually signals that the plaintiff
never asserted any claim against him. Under those
circumstances, “the wrongfulness of the attachment is known at
the outset, and need not await an elucidation of the rights and
liability of the party who may have been erroneously deemed to
be the owner of the property.” W. Clay Jackson Enters., Inc. v.
Greyhound Leasing & Fin. Corp., 463 F. Supp. 666, 669 (D.P.R.
1979) (explaining Fresh-O-Baking rule).
The same is not true here. The Villoldos knew that
García-Guzmán owned the property they attached; they intended to
attach his property in order to satisfy a debt for which they
believed he was responsible. Their error lay, not in a factual
mistake as to who owned what property, but in a legal
misunderstanding of the extent of García-Guzmán's obligations
under the Settlement Agreement. Thus, the wrongfulness of the
attachments here became apparent only when Judge Fusté rejected
the Villoldos' interpretation of the Settlement Agreement and
their claim to García-Guzmán's property.
This case, therefore, is governed by the framework
established in Martí v. Hernández and its progeny for cases in
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which the claim for wrongful attachment is contingent on the
outcome of pending litigation. See Martí, 57 P.R.R. at 806
(holding that cause of action for wrongful attachment will not
lie while judgment rendered in attachee's favor at trial is
pending on appeal). García-Guzmán's claim against the Villoldos
depended on the outcome of the legal wrangling between the
parties – whatever its precise contours – that began in 1994 and
ended with the judgment on February 1, 1999. That judgment
supplied the legal basis for García-Guzmán's claim of wrongful
attachment; until it became final, “any question as to the
validity or wrongfulness of the attachment remained in
abeyance.” Id.; see also W. Clay Jackson Enters., Inc., 463 F.
Supp. at 669 (holding that claim for wrongful attachment accrued
upon entry of judgment, even where non-parties' property had
been attached, where merits of claim depended on outcome of
litigation). The Villoldos would have us hold that the statute
of limitations nevertheless required García-Guzmán to file suit
years before the attachment first became actionable, simply
because he was not officially a party to the 1991 Cases.
Nothing in Fresh-O-Baking compels such an anomalous result. See
W. Clay Jackson Enters., Inc., 463 F. Supp. at 669 (stating that
“neither case law nor logic” supports the argument that “non-
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parties who are aggrieved by an attachment are compelled to file
suit while the acts complained of are not yet actionable”).
We hold that the statue of limitations began to run
when Judge Fusté's February 1, 1999, judgment became final.
García-Guzmán's complaint was timely filed.5
Judgment vacated. Remanded for further proceedings consistent
with the decision herein. Costs are to be taxed in the
appellants' favor.
5
Our holding is limited to the question whether García-
Guzmán complied with the statute of limitations; we intimate no
view as to the ultimate merits of his claim for wrongful
attachment. García-Guzmán contends that if, as we have
determined, his claim is not time-barred, he is entitled to
summary judgment as to the Villoldos' liability for wrongful
attachment. In light of its conclusion that García-Guzmán's
claim was barred by the statute of limitations, the district
court did not address that argument. We believe the merits of
García-Guzmán's claim against the Villoldos should be considered
in the first instance by the district court.
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