242 F. Supp.2d 121 (2003) | Cited 0 times | D. Puerto Rico | January 28, 2003


Before the Court is Defendant's motion for partial summaryjudgment (Docket # 33). Plaintiff has duly opposed said motion(Docket # 36), and Defendant has filed a reply (Docket # 41).Having

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     considered the parties' arguments and the relevant case law,Defendant's motion will be GRANTED.

Factual Background

This case involves an insurance dispute between Plaintiff NPR,Inc. (NPR) and Defendant American International InsuranceCompany of Puerto Rico (AIICO, Puerto Rico) that arose afterHurricane Georges struck Puerto Rico on September 21, 1998,causing physical damage to NPR's San Juan port facility. NPRfiled suit against AIICO, Puerto Rico in the United StatesDistrict Court for the District of New Jersey, seeking adeclaration of coverage under a policy of insurance issued byAIICO, Puerto Rico to NPR, and compensatory and punitive damagesfor breach of contract and bad faith refusal to pay NPR's claimsarising out of Hurricane Georges. In Count III of the Complaint,NPR alleges, in part, that AIICO, Puerto Rico breached its dutyto deal with NPR fairly and in good faith in connection with thereview, adjustment and payment of NPR's claims. AIICO, PuertoRico denies these claims. Plaintiff NPR requests, among otherrelief, an award of punitive damages in an amount to bedetermined at trial.

AIICO, Puerto Rico then filed a motion to transfer venue tothis Court pursuant to 28 U.S.C. § 1404(a). NPR opposed saidtransfer to Puerto Rico. The District Court of New Jersey (U.S.District Judge Bassler), after carefully examining anddiscussing the various factors relevant to a determinationregarding transfer of venue, granted AIICO, Puerto Rico's motionto transfer.

NPR then filed a motion for reconsideration in the DistrictCourt of New Jersey, seeking to have this action transferred tothe United States District Court for the District of Delaware.On July 11, 2001, the District Court of New Jersey issued itsLetter Order Denying NPR's motion for reconsideration, therebyaffirming its earlier Opinion and Order regarding venuetransfer.

Once the case had been transferred to this Court, Plaintifffiled a motion requesting that the case be transferred toDelaware. Said motion was denied by this Court on July 17, 2002(Docket # 44). In summary, this Court agreed with the decisionof the District Court of New Jersey regarding the fact thatPuerto Rico was the most appropriate forum for this case.

Standard of Review

Fed.R.Civ.P. 56(b) provides that: "A party against whom aclaim . . . is asserted . . . may, at any time, move with orwithout supporting affidavits for a summary judgment in theparty's favor as to all or any part [of the claims assertedagainst him/her]." The Court may grant the movant's motion forsummary judgment when "the pleadings, depositions, answers tointerrogatories, and admissions on file, together with theaffidavits, if any, show that there is no genuine issue as toany material fact and that the moving party is entitled tojudgment as a matter of law." Fed.R.Civ.P. 56(c); See alsoAnderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.2505, 91 L.Ed.2d 202 (1986); NASCO, Inc. v. Public Storage,Inc., 29 F.3d 28 (1st Cir. 1994). "The principal judicialinquiry required by Rule 56 is whether a genuine issue ofmaterial fact exists." Chalres A. Wright, Arthur R. Miller &Mary Kay Kane, Federal Practice and Procedure: Civil 3d §2725, p. 401.

In this regard, the First Circuit Court of Appeals has notedthat for a dispute to be "genuine", there must be sufficientevidence to permit a reasonable trier of fact to resolve theissue in favor of the nonmoving party. U.S. v. One Parcel ofReal Property, 960 F.2d 200, 204 (1st Cir. 1992); See alsoBoston Athletic Assn. v. Sullivan, 867 F.2d 22, 24 (1st Cir.1989); Medina-Muñtoz v. R.J. Reynolds Tobacco, 896 F.2d 5, 8

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     (1st Cir. 1990) ("A `genuine' issue is one that must be decidedat trial because the evidence, viewed in the light mostfavorable to the nonmovant, would permit a rational factfinderto resolve the issue in favor of either party.") (citationsomitted).

By like token, "material" means that the fact is one thatmight affect the outcome of the suit under the governing law.Morris v. Government Development Bank of Puerto Rico,27 F.3d 746, 748 (1st Cir. 1994). "A fact is material if it tends toresolve any of the issues that have been properly raised by theparties." Wright, Miller & Kane, supra, § 2725 at p. 419. "Notevery genuine factual conflict necessitates a trial. It is onlywhen a disputed fact has the potential to change the outcome ofthe suit under the governing law if found favorably to thenonmovant that the materiality hurdle is cleared." Martinez v.Colón, 54 F.3d 980, 983-984 (1st Cir. 1995).

In addition, when determining whether to grant summaryjudgment, the Court may not weigh the evidence. Casas OfficeMachines, Inc. v. Mita Copystar America, Inc., 42 F.3d 668 (1stCir. 1994). Summary judgment "admits of no room for credibilitydeterminations, no room for the measured weighing of conflictingevidence such as the trial process entails." Id. (citingGreenburg v. Puerto Rico Maritime Shipping Authority,835 F.2d 932, 936 (1st Cir. 1987)). Accordingly, if the facts permit morethan one reasonable inference, the court on summary judgment maynot adopt the inference least favorable to the non-moving party.Casas Office Machines, 42 F.3d at 684.

While the moving party has the burden of initiallyestablishing that there is "an absence of evidence to supportthe non-moving party's case", Maldonado-Denis v.Castillo-Rodríguez, 23 F.3d 576, 581 (1st Cir. 1994); thenonmovant has a "corresponding obligation to offer the courtmore than steamy rhetoric and bare conclusions." Lawton v.State Mutual Life Assurance Company of America, 101 F.3d 218,223 (1st Cir. 1996). Furthermore, "the nonmovant must producespecific facts, in suitable evidentiary form sufficient to limna trialworthy issue . . . Failure to do so allows the summaryjudgment engine to operate at full throttle." Id.; see alsoKelly v. United States, 924 F.2d 355, 358 (1st Cir. 1991)(warning that "the decision to sit idly by and allow the summaryjudgment proponent to configure the record is likely to provefraught with consequence."); Medina-Muñoz, 896 F.2d at 8,quoting Mack v. Great Atlantic and Pacific Tea Co.,871 F.2d 179, 181 (1st Cir. 1989) ("The evidence illustrating the factualcontroversy cannot be conjectural or problematic; it must havesubstance in the sense that it limns differing versions of thetruth which a factfinder must resolve.")

Applicable Law and Analysis

Defendant argues that the District Court of New Jersey hasruled that the substantive law of Puerto Rico applies to thisaction, and that said ruling constitutes the law of the case.Under Puerto Rico law, a plaintiff such as NPR is not entitledto an award of punitive damages. Therefore, Defendant arguesthat the claim for punitive damages in Plaintiffs complaintshould be dismissed.

On the other hand, Plaintiff argues that the District Court ofNew Jersey only ruled on the matter of transfer of venue, andnot on the issue of choice of law. As such, Plaintiffunderstands that any comments regarding choice of law issues inJudge Bassler's Opinion and Order constituted obiter dicta,and are therefore not the law of the case. Having examined JudgeBassler's Opinion and Order, and the relevant case law regardingtransfer of venue, we find that Defendant's argument ismeritorious.

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28 U.S.C. § 1404(a) provides that "[f]or the convenience ofparties and witnesses, in the interest of justice, a districtcourt may transfer any civil action to any other district ordivision where it might have been brought." Section 1404(a)motions are considered procedural matters and are thereforegoverned by federal law. See Jumara v. State Farm Ins. Co.,55 F.3d 873, 877 (3d Cir. 1995). The purpose of Section 1404(a) is"to prevent the waste of `time, energy, and money' and to`protect litigants, witnesses and the public against unnecessaryinconvenience and expense.'" Van Dusen v. Barrack,376 U.S. 612, 616, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) quotingContinental Grain Co. v. Barge FBL-585, 364 U.S. 19, 26-27, 80S.Ct. 1470, 4 L.Ed.2d 1540 (1960). To obtain a transfer, themoving party must demonstrate that the proposed alternativeforum is not only adequate, but also more convenient than thepresent forum. See Jumara, 55 F.3d at 879.

No rigid rule governs a transfer determination; a Section1404(a) analysis is flexible and turns on the unique facts ofeach case. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22,29-30, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988). When "ruling on §1404(a) motions, courts have not limited their consideration tothe three enumerated factors in § 1404(a) (convenience ofparties, convenience of the witnesses, and interests ofjustice)." Jumara, 55 F.3d at 879. Nonetheless, the SupremeCourt has articulated a series of factors that should guide acourt's analysis under Section 1404(a). Gulf Oil Corp. v.Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). TheGulf Oil factors fall into two categories: the private interestsof the litigants and the public's interest in fair, efficientadministration of justice. See Jumara, at 879. Privateinterests have included plaintiffs preferred forum, the relativephysical and financial condition of the parties, and therelative ease of access to the sources of proof. Id. Publicinterests have included the trial judge's familiarity with theapplicable state law, "the local interest in adjudicatingdisputes at home, court congestion in the two fora, the fairnessof placing the burden of jury duty on the citizens of the statewith the greater interest in the dispute, and practicalconsiderations that could make the trial easy, expeditious, orinexpensive." Id. Neither list of factors is exhaustive, andcertain factors may be more or less relevant in particularcases. Van Cauwenberghe v. Biard, 486 U.S. 517, 528-29, 108S.Ct. 1945, 100 L.Ed.2d 517 (1988).

However, for the purposes of this particular case, it isimportant to note that one of the main Gulf Oil factors is thetrial judge's familiarity with the applicable state law. Ofcourse, before a trial judge can determine how familiar he/sheis with the applicable state law, he/she must establish whichis the applicable state law. This choice of law determination,then is central to the question of whether transfer of venueis appropriate.

Judge Bassler precisely followed the jurisprudence regardingtransfer of venue discussed above. In doing so, he reached aconclusion of law regarding which state law is applicable to thecase at bar. Judge Bassler held that the substantive law ofPuerto Rico applies to this action. Specifically, he stated: Justice requires that, whenever possible, a diversity action should be decided by the court most familiar with the applicable state law. A federal court sitting in diversity must apply the choice of law rules of the forum state. Thus, New Jersey choice of law rules govern Plaintiffs claims. According to those rules, the law of the state with the most significant connections to the parties and the action applies.

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      Puerto Rico clearly has a stronger interest in this case because the complained of activity arose directly out of Defendant's alleged breach in San Juan, of an insurance policy negotiated in Puerto Rico to which Puerto Rican law applies. Furthermore, Puerto Rico has strong connections with both Parties, not just with Defendant. Although New Jersey also has a strong interest in this case, namely protecting a resident corporation from the alleged wrongful acts of a nonresident corporation, it is not a sufficient connection to warrant application of New Jersey law. Accordingly, this factor favors transfer.NPR, Inc. v. American International Insurance Company of PuertoRico, 2001 WL 294077, *8 (N.J. March 28, 2001) (citationsomitted) (emphasis added). This quotation shows how JudgeBassler made a choice of law determination, and used thatdetermination in a crucial part of his transfer of venueanalysis.

The choice of law issue was also used by Judge Bassler whendiscussing one of the private interest factors of the Gulf Oiltest. When discussing the importance of Plaintiffs choice offorum to the transfer of venue determination, Judge Basslerexplained: The Court is hard pressed to see how the operative facts tie this breach of contract claim to New Jersey. Plaintiff does not refute that the Policy was issued, negotiated, paid out and cashed, and signed by both Parties, in Puerto Rico, and according to the laws of Puerto Rico. This coupled with the fact that the alleged breach of contract occurred in Defendant's Puerto Rican office, demonstrates that the operative facts of this matter arise in Puerto Rico. Therefore, Plaintiff's choice of forum will be accorded significantly less weight in the Courts § 1404(a) analysis.Id. (emphasis added). Here, we can again see how establishingthat Puerto Rico law is applicable to the case at bar was infact crucial to the transfer of venue question. Based on thisreasoning, we find that Judge Bassler did in fact hold thatPuerto Rico law is the applicable law in the case at bar. Assuch, this determination constitutes the law of the case.

"[T]he law of the case doctrine precludes relitigation of thelegal issues presented in successive stages of a single caseonce those issues have been decided." Tirado v. U.S., 1997 WL557627, *1 (P.R. Aug. 25, 1997). The law of the case doctrinealso applies when, as in this action, a case is transferred fromone district court to another. See McMasters v. U.S.,260 F.3d 814, 818 (7th Cir. 2001) citing Christianson v. Colt Indus.Operating Corp., 486 U.S. 800, 816, 108 S.Ct. 2166, 100 L.Ed.2d811 (1988). As Plaintiff points out, it is true that the law ofthe case doctrine is flexible, and any matters falling under theveil of the doctrine can be reconsidered. See e.g., RiveraRamos v. Román, 83 F. Supp.2d 233, 237 (P.R. 2000) (holding thatthe law of the case doctrine is not an absolute bar toreconsideration); Jiménez v. Dr. Heyliger, 792 F. Supp. 910,919 (P.R. 1992) (finding that federal courts retain the power toreconsider issues that were decided before if they wish);Gaztambide v. Gaztambide, 794 F. Supp. 451, 453-54 (P.R. 1992)(holding that clear error and preventing a manifest injusticejustify reconsideration of an issue). Nevertheless, while thelaw of the case doctrine may give way in the face of clear erroror manifest injustice, it is also true that AIICO, Puerto Ricoand this Court are entitled to rely on matters that have beensettled to remain so. See Christianson, 486 U.S. at 816, 108S.Ct. 2166 (noting both that the doctrine promotes the finalityand efficiency of the judicial process and that it applies todecisions of a coordinate court). More

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     importantly, Plaintiff has pointed to no clear error ormanifest injustice in Judge Bassler's ruling. And lastly, thisCourt finds no reason to disagree with Judge Bassler'sconclusion that the law of Puerto Rico governed the insurancecontract and all of the contract-related issues in the case,including the availability of punitive damages. In fact, thisCourt itself has already, somewhat tacitly but also somewhatexpressly, concurred and ratified Judge Bassler's holdings inthe Order denying Plaintiffs motion to transfer the case to theDistrict of Delaware. See Docket #4 4.

Now, let us go on to the substantive part of Defendant'sargument. The law of Puerto Rico does not, as a general rule,recognize or permit the recovery of punitive damages. See Noblev. Corporación Insular De Seguros, 738 F.2d 51, 54 (1st Cir.1984); Ganapolsky v. Park Gardens Development Corp.,439 F.2d 844, 846 n. 1 (1st Cir. 1971); Clarendon v. American Ins. Co.,1999 WL 33218159, *1-*2 (P.R. Oct. 4, 1999); Computec SystemsCorp. v. General Automation, Inc., 599 F. Supp. 819, 827 (P.R.1984). Specifically, and more on point with the case at bar, inClarendon, this Court held that an insurer cannot be heldliable for punitive damages under the law of Puerto Rico.Clarendon, 1999 WL 33218159 at *2. In that case, the insurerfiled suit, seeking a declaratory judgment that it did not owecoverage to the owners of a yacht under a marine insurancepolicy for a total loss to the vessel caused by an explosion andfire. Id. at *1. The owners counter-claimed, alleging breachof contract and seeking attorney's fees and "punitive damagesbecause [the insurer allegedly] . . . acted in bad faith andwith temerity." Id. This Court granted the insurer's motion tostrike the insureds' demand for punitive damages because"punitive damages do not exist in Puerto Rico." Id., citingNoble, 738 F.2d at 54.

Consequently, Plaintiffs claim for an award of punitivedamages against AIICO, Puerto Rico for any alleged bad faith onthe part of AIICO, Puerto Rico in handling, adjusting or payingNPR's claims arising from Hurricane Georges must be dismissedwith prejudice. The District Court of New Jersey ruled in itscomprehensive Opinion and Order dated March 28, 2001, that thesubstantive law of Puerto Rico applies to this action. Whetherpunitive damages are recoverable under the law of Puerto Rico isan issue of law, not fact. Since the law of Puerto Rico does notpermit recovery of punitive damages, AIICO, Puerto Rico isentitled to judgment on this issue as a matter of law.


For all the reasons discussed above, Defendant's motion isGRANTED, and Plaintiffs claim for punitive damages isDISMISSED WITH PREJUDICE.


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