United States Court of Appeals
For the First Circuit
No. 06-2623
CMI CAPITAL MARKET INVESTMENT, LLC; WILMINGTON TRUST COMPANY, as
TRUSTEE OF THE PR TAX-EXEMPT LEASE CERTIFICATE TRUST; RICHARD J.
SCHMEELK; WILLIAM B. FINNERMAN; JIRA ASSOCIATES, LP,
Plaintiffs, Appellees,
STRONG CAPITAL MANAGEMENT, INC.;
LEHIGH MUNICIPAL LEASING, INC.,
Plaintiffs,
v.
MARYLIN GONZÁLEZ-TORO; CONJUGAL PARTNERSHIP AGUIRRE-GONZÁLEZ,
Defendants, Appellants,
AA PUBLIC FINANCE CO., INC.; CROSS-BORDER LEASING CO., INC.;
LIMITED FUNDING SERVICES, INC.; ALVIN F. AGUIRRE, in his
individual and representative capacities; JOHN DOE, 03CV1770;
ADVANCE OFFICE ELECTRONICS CENTER, INC. AND ROYAL INTERNATIONAL
ELECTRONICS AND FURNITURE, INC.; INMOBILIARIA AA, INC.;
A-Z INSURANCE CO.,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Salvador E. Casellas, U.S. District Judge]
Before
Lipez and Howard, Circuit Judges,
and Smith,* District Judge.
*
Of the District of Rhode Island, sitting by designation.
Rubén T. Nigaglioni, with whom Nigaglioni & Ferraiuoli Law
Offices, P.S.C. was on brief, for appellants.
Manuel A. Pietrantoni, with whom Casellas Alcover & Burgos,
P.S.C. was on brief, for appellees.
March 18, 2008
HOWARD, Circuit Judge. In this tort and breach of
contract suit, Marilyn González-Toro ("González") and the Conjugal
Partnership Aguirre-González (together, "appellants") failed to
challenge plaintiffs' statement of material facts in support of a
motion for summary judgment. Because the appellants did not
counter the statement of material facts, the district court deemed
the facts admitted, granted summary judgment, and imposed joint and
several liability on the appellants for fraudulent acts committed
by Alvin Aguirre-González ("Aguirre") and several corporations. We
approve of the district court's decision to deem the uncontested
facts admitted under Local Rule 56(e), and against that backdrop we
affirm.
1. Facts
On review of a motion for summary judgment, we take the
facts in the light most favorable to the non-moving party, in this
case the appellants. Cash v. Cycle Craft Co., 508 F.3d 680, 682
(1st Cir. 2007). We likewise draw whatever reasonable inferences
favor the non-moving party. Id. In this case, the familiar
standard is qualified somewhat because the district court deemed
admitted the facts contained in the movant's statement of material
facts. We analyze that decision below, and as we find it within
the district court's discretion we will not upset it here.
Consequently, we review the facts as set out in the statement of
material facts accompanying the summary judgment motion. To the
-3-
extent that other facts might cast doubt on them, those other facts
are disregarded. This is because, on appeal from summary judgment,
we consider the same record that was before the district court.
Torres-Rosado v. Rotger-Sabat, 335 F.3d 1, 5 (1st Cir. 2003).
The plaintiffs are various companies, trustees, and
individuals who filed suit against Aguirre, González, their
conjugal partnership, and several corporations controlled by
Aguirre. The suit alleged fraud, breach of contract, and various
tortious violations of the Puerto Rico civil code. González and
Aguirre were married throughout conduct complained of and when the
complaint was filed -- the pair divorced only after the plaintiffs
filed suit. Their conjugal legal partnership has never been
settled. According to the complaint, Aguirre and other defendants
committed torts regarding leases they held with various municipal
and government entities in Puerto Rico. Some examples provide
enough of the flavor of the complaint. The complaint alleged that
Aguirre had assigned to more than one party, for value, the right
to receive the same payments from some leases. And Aguirre
allegedly concealed that some leases were in default and would
likely remain in default, thereby selling the right to receive
payments that would never come. Aguirre also allegedly
misrepresented the amounts due under some leases, leading
purchasers to pay more than they could ever receive.
-4-
González was a director, officer, incorporator, or
resident agent for all of the defendant corporations. She signed
checks on their behalf and drew a monthly salary from one. After
the divorce, González continued to derive all her support from her
husband, taking cash advances on a credit card he paid and
receiving wire transfers totaling hundreds of thousands of dollars
from corporations he controlled. She understood this money to be
an advance on the settlement of their conjugal legal partnership.
Aguirre never answered the complaint; he had decamped to
the Dominican Republic, or perhaps Panama.1 Neither did the
defendant corporations answer. González answered on her own behalf
and for the conjugal legal partnership.
The district court issued an attachment order against
those defendants who had not answered the complaint. The
appellants were directed to show cause why the order should not
apply to them, and they did so to the district court's
satisfaction. The district court declared Aguirre and the
defendant corporations (the "other defendants") in default and
issued partial judgment against them.
1
Alvin Aguirre-González has since been arrested and pled guilty to
18 counts of mail fraud. During the pendency of this appeal he was
sentenced to 57 months' imprisonment, forfeiture of one and a half
million dollars, and restitution of nearly five million dollars.
See United States v. Aguirre-González, 3:05-cr-00387-PG (D.P.R.).
An appeal is pending.
-5-
The plaintiffs moved to expand the scope of the
attachment order so that it would apply to the appellants.
González testified at a hearing on the motion and was cross-
examined by her own counsel. On the basis of that hearing and
evidence received into the record, the district court expanded the
attachment order as requested.
The plaintiffs then moved for summary judgment against
the appellants, citing the facts adduced at the attachment hearing.
The plaintiffs, in conformance with Local Rule 56(b), submitted a
statement of material facts to support their motion for summary
judgment. The appellants submitted an opposition to the summary
judgment motion, but failed to include an opposing statement of
material facts as required by Local Rule 56(c). The district court
noted the procedural failure, deemed the facts in the plaintiffs'
statement to be admitted by the appellants, and on the basis of
those facts granted summary judgment against the appellants.
2. Discussion
The appellants claimed in their opposition to summary
judgment, and claim again on appeal, that there is a genuine
dispute about a material fact. But given their failure to
challenge the plaintiffs' facts, in reality their argument is that
the plaintiffs have failed to prove that they are entitled to
judgment as a matter of law. Neither formulation of the argument
avails.
-6-
a. The Anti-Ferret Rule
District of Puerto Rico Local Rule 56(c) is clear about
the obligation of a party opposing summary judgment:
A party opposing a motion for summary judgment
shall submit with its opposition a separate,
short, and concise statement of material facts.
The opposing statement shall admit, deny or
qualify the facts by reference to each numbered
paragraph of the moving party’s statement of
material facts and unless a fact is admitted,
shall support each denial or qualification by
a record citation as required by this rule.
Local Rule 56(c). Rule 56(e) sets forth in mandatory terms the
result of failure to follow Rule 56(c): "Facts contained in a
supporting or opposing statement of material facts, if supported by
record citations as required by this rule, shall be deemed admitted
unless properly controverted." Local Rule 56(e) (emphasis added).
The purpose of this rule is to relieve the district court
of any responsibility to ferret through the record to discern
whether any material fact is genuinely in dispute.2 We have upheld
the application of the rule. Mariani-Colon v. Dep't of Homeland
Sec., 511 F.3d 216, 219 (1st Cir. 2007). We review the "deeming
order" for an abuse of discretion. Hernandez v. Philip Morris USA,
Inc., 486 F.3d 1, 7 (1st Cir. 2007).
2
The deeming order is both a sanction for the parties and a balm
for the district court: the parties are given an incentive to
conform to the rule (provided they wish to have their version of
the facts considered), and the district court is in any case
relieved of the obligation to ferret through the record.
-7-
Here, the appellants failed to submit a separate
statement of material facts. Nor did they anywhere in their
opposition undertake to "admit, deny or qualify the facts by
reference to each numbered paragraph of the moving party's
statement of material facts." The appellants did include five
facts in their opposition to the motion, but those facts are not
explicitly directed at qualifying or contradicting specific facts
in the plaintiffs' statement, nor are they presented in an
"opposing statement" "separate" from the opposition itself.3 The
language of the rule is plain, and the appellants' conduct
obviously falls within its scope. The district court therefore was
within its discretion to deem the facts in the statement of
material facts admitted.
When summary judgment is granted after a deeming order,
we are bound by the order as well, provided it was not an abuse of
the district court's discretion. If it were otherwise, then the
task of sifting through the record for genuine issues of material
fact would merely have been transferred from the district court, at
3
We have previously held that failure to set forth a paragraph-by-
paragraph admission or denial of the movant's material facts
justifies a deeming order even where the opposition does propound
other facts. See Hernandez, 486 F.3d at 7. Hernandez leaves open
the possibility that facts marshaled in opposition might be
accepted to "augment" the facts contained in movant's statement of
material facts, rather than contradict them. Id. at n.2. Without
deciding the issue of whether the district court could have
excluded these facts entirely, we proceed to evaluate the record as
though those facts were accepted to augment the movant's facts; as
we shall see, they do not change the result.
-8-
summary judgment, to the appellate court, on appeal of that summary
judgment. The anti-ferret rule would thus be rendered toothless.
The appellants do not contest the district court's
deeming order. Nor do they seek to controvert any of the facts in
plaintiffs' statement. Rather, they claim that the facts therein
and in the remainder of the record are insufficient as a matter of
law to hold them liable for Aguirre's actions. Although they couch
the issue in terms of genuine issues of material fact, their real
arguments are these: first, that the conjugal legal partnership
should not have liability imposed on it because there is
insufficient evidence in the record that it received the benefit of
Aguirre's actions; and second, that the plaintiffs have failed to
introduce evidence establishing that González is liable under
Puerto Rico law for her husband's commission of these torts. We
examine each in turn.
b. The Conjugal Legal Partnership
Under Puerto Rico law, the conjugal legal partnership can
be held responsible for torts committed by one spouse as long as
the action that gave rise to the tort was for the benefit of the
conjugal legal partnership. "The generally acknowledged rule is
that if the member's work is profitable for the community the
liability will also fall on said community's property." Asociacion
De Proprietarios Del Condominio Villas De Playa I De Dorado Del
Mar, Inc. v. Santa Bárbara Company of Puerto Rico, Inc., 12 P.R.
-9-
Offic. Trans. 41 (1982). This has been the rule in Puerto Rico
since Lugo-Montalvo v. González-Manon, 4 P.R. Offic. Trans. 517
(1975). In that case, the Puerto Rico Supreme Court held the
conjugal legal partnership shared the husband's potential liability
in a malpractice action. The court reasoned:
While [the husband] is married, everything he
earns exercising his profession goes to the
community property. In the course of his
professional practice he may incur civil
liability for malpractice. Should he be the
only one liable with his separate property, or
should he have the backing of the community
for which he works? . . . [H]is professional
economical endeavor benefits the bulk of the
community property and the latter should also
be liable when the obligation arises.
Id. at 525-26. So it is here. Alvin Aguirre earned money from his
business activities, money that went to the conjugal legal
partnership. His business activities included the fraudulent
transactions at issue. Therefore the conjugal legal partnership,
which has yet to be settled, is liable. The appellants' contention
that Aguirre was acting on behalf of the defendant corporations and
therefore not for the benefit of the conjugal legal partnership is
an argument that was squarely rejected by the Puerto Rico Supreme
Court twenty-five years ago. "[R]espondents' argument that since
it was not the marital community that directly received the income
of engineer Ariel Gutiérrez, but rather another artificial person
who received it--Sociedad E.H.G. Arquitectos e Ingenieros--it is
exempted from liability, fails to convince us." Asociacion De
-10-
Proprietarios Del Condominio Villas De Playa I De Dorado Del Mar,
Inc., 12 P.R. Offic. Trans. at 61.
This provides a basis for the liability of the conjugal
legal partnership even if González herself were not liable for the
actions of her husband. But, as we establish below, the district
court was right to hold her liable as well.
c. Marilyn González-Toro
The district court also found González jointly and
severally liable for the acts of her husband. The district court
based summary judgment on Article 1802 of the Puerto Rico Civil
Code. "A person, who by an act or omission causes damage to
another through fault or negligence shall be obliged to repair the
damage done." Id. The district court determined that González
negligently assisted the fraud. We instead affirm the judgment
because the evidence supports a finding of "fault." The terms
"fault" and "negligence" used here have specific meanings in the
civil code context of Puerto Rico law. "Fault consists in the
failure to exercise due diligence, the use of which would have
prevented the wrongful result. Due diligence is that which one can
expect from the average human being, the good paterfamilias."
Jimenez v. Pelegrina Espinet, 12 P.R. Offic. Trans. 881, 886
(1982); see also Gierbolini v. Employers Fire Ins. Co., 4 P.R.
Offic. Trans. 1197, 1201-02 (1976) ("[F]ault requires the execution
of a positive act causing a damage to another person different from
-11-
the one who executed it, and, in turn, negligence supposes an
omission producing the same effect, although both have in common
that the act be executed or the omission incurred without an
injurious intent." (internal quotation marks omitted) (citation
omitted)). Further, it is an oft-cited precept of Puerto Rico law
that "the concept of fault 'is as broad as the behavior of human
beings, and that it includes any fault that causes harm or
injury.'" Bonilla v. Chardon, 18 P.R. Offic. Trans. 696, 709
(1987) (quoting Colón v. Romero Barceló, 112 D.P.R. 573, 579
(1982)).
In granting summary judgment, the district court pointed
to González's behavior both during the frauds and afterwards.
During the frauds, González was a director, officer, incorporator,
or resident agent for all of the defendant corporations. After the
divorce, when she knew Aguirre was subject to an attachment order
and was being investigated for possible criminal charges, she
continued to receive money from him.
On appeal, González argues that the funds she received
came from corporations other than the defendant corporations, and
that she cannot be subject to a judgment of negligence because she
owed no duty to the plaintiffs. Considered in the context of the
statement of uncontested material facts, neither contention avails
her. The fact that the funds came from different corporations is
irrelevant. The statement of uncontested material facts cited to
-12-
González's own statements in the record that all or nearly all the
money she received came from Aguirre. In the opposition to summary
judgment, the appellants did set forth that the funds came from
other corporations. But because appellants failed to satisfy the
anti-ferret rule, we accept those facts only to the extent that
they do not contradict the facts deemed admitted by the district
court.4
Here, the two sets of facts are easy to harmonize.
González was not lying under oath when she said at the attachment
hearing that her ex-husband had given her the money; and it is
correct to say that the wire transfers came from corporations that
were not defendants in this case. Even viewing these facts in the
light most favorable to the appellants, the record is clear that
Aguirre was using these other corporations to disburse funds to
González, funds she knew or should have known were subject to the
attachment order.
The appellants spend considerable time in their brief
making this out to be a case of piercing the corporate veil. But
4
We repeat that because the opposition to summary judgment did not
include an "Opposing Statement of Material Facts" as required by
Local Rule 56(c), the district court would likely have been free to
disregard the facts in the opposition itself. We do not decide
that question because it is not presented to us. In this case the
district court did not explicitly reject the facts, nor did it
explicitly consider them. It makes no difference whether these
opposing facts are considered because they can easily be harmonized
with the view of the evidence propounded in the statement of
uncontested material facts.
-13-
it is not. Rather, this is a case where the established facts
point to a person aiding her spouse by participating in the
creation and administration of corporations used to defraud, and
then aiding him again by receiving funds from him even though she
knew he was under an attachment order and being sued to recover the
money those corporations had fraudulently obtained. Even assuming
that González is not liable for the actions of defendant
corporations by virtue of her role in them, she is still liable
because she helped her husband carry out these schemes and helped
him dispose of the money.
Turning to the appellants' contention that González owed
no duty to the appellees, it is true that the district court did
not spell out the duty owed. Nevertheless, summary judgment was
equally proper under the alternative "fault" standard in Puerto
Rico law. "We may affirm a summary judgment decision on any basis
apparent in the record." Perry v. Wolaver, 506 F.3d 48, 53 (1st
Cir. 2007) (internal quotation marks omitted) (quoting Uncle
Henry's, Inc. v. Plaut Consulting Co., 399 F.3d 33, 41 (1st Cir.
2005)). Here, the uncontested material facts support summary
judgment because no reasonable construction of them excuses
González from willfully receiving money from her ex-husband when
she knew he was subject to an attachment order in this case.
González had actual knowledge of the attachment order because she
had defended against the same order. While perhaps her earlier
-14-
actions, viewed alone, could have been put down to ignorance or a
good-faith belief that her husband had enlisted her aid in
incorporating and administering these corporations for legitimate
business purposes, such an inference is rendered unreasonable by
her subsequent actions. The district court properly assessed the
facts in context and supportably found no contested issue of
material fact to preclude summary judgment.
Affirmed.
-15-