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Jorge Garcia Monagas, Diego Garcia Monagas v. Ileana Garcia-Ramirez De Arellano; Fredeswinda

March 16, 2012

JORGE GARCIA MONAGAS, DIEGO GARCIA MONAGAS AND GISELDA GARCIA MONAGAS, PLAINTIFFS, APPELLANTS,
v.
ILEANA GARCIA-RAMIREZ DE ARELLANO; FREDESWINDA GARCIA-RAMIREZ DE ARELLANO; BD. OF DIR. OF W. HOLDING COMPANY, INC.; FRANK C. STIPES-GARCIA; BD. OF DIR. A TO K; BD. OF DIR. OF WESTERN BANK OF PR; BD. OF DIR. OF WESTERN BANK INS. CORP.; JOHN DOE; BD. OF DIR. A THROUGH F OF CENTRAL EUREKA, CKI INS. CO.; ESTATE OF MIGUEL A. GARCIA-MENDEZ; ESTATE OF FREDESWINDA GARCIA-RAMIREZ DE ARELLANO; ESTATE OF ANTONIA CABASSA-TEXIDOR; ESTATE OF OSCAR ARTURO GARCIA-PALACIOS; ESTATE OF OSCAR GARCIA CABASSA; ESTATE OF MYRIAM GARCIA-BARBER; ESTATE OF OSCAR GARCIA-BUSH; ESTATE OF ZULMA ANSELMA GARCIA-CABASSA; ESTATE OF ZULMA VILELLA-GARCIA; ESTATE OF JUAN E. VILELLA; ESTATE OF FIORI VILELLA-GARCIA; ESTATE OF CONSUELO GARCIA-CABASSA; ESTATE OF ZOE BLASINI-GARCIA; ESTATE OF OSCAR BLASINI-GARCIA; ESTATE OF TEODORO PASCUAL FAJARDO-CABASSA; ESTATE OF MANUEL MOREDA; ESTATE OF RITA VILELLA-BOTHWELL; ESTATE OF REINA COLON-ALFONSO; FEDERAL INS. CO.; INSURANCE COMPANIES A TO Z; INSURANCE COMPANIES AA, BB, CC, DD, EE, FF; ANNETTE BLASINI-BATISTA, A/K/A ANNETTE RITA BLASINI-BATISTA; ELBIA GARCIA-CAMARA; OSCAR GARCIA-CAMARA; CARLOS T. GARCIA-CAMARA; ANTONIA BLASINI-BATISTA; SYLVIA CONSUELO BLASINI-BATISTA; ZOE BLASINI-GARCIA; BLANCA TOLEDO; ALEJANDRO SANTOPALO-VILELLA; FABIOLA SANTOPALO-VILELLA; W. HOLDING COMPANY, INC., D/B/A WESTERN BANK OF PR; WESTERN BANK INS. CORP.; ESTATE OF FLAVIA VILELLA-GARCIA; DELOITTE & TOUCHE, LLP., DEFENDANTS, APPELLEES.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Aida M. Delgado-Colon, U.S. District Judge]

The opinion of the court was delivered by: Howard, Circuit Judge.

Before Lipez, Howard and Thompson, Circuit Judges.

This appeal is the latest chapter in a long-running intra-family dispute over property in Puerto Rico. Attempting to secure this property, siblings Jorge, Diego and Giselda Garcia-Monagas have previously filed multiple lawsuits in the Puerto Rico Commonwealth courts. In each of these actions, the siblings, appellants here, advanced the same basic claim: under Puerto Rico inheritance law they were the rightful owners of the property. Each action was resolved against them.

Undeterred, the appellants filed this action in federal district court in Puerto Rico. They again claimed an ownership interest in the contested property and further alleged that the appellees violated a panoply of federal laws by defrauding them of their rightful inheritances. The appellees moved to dismiss the complaint on various grounds, the chief one being that res judicata precluded relitigation of the claims. The district court dismissed the complaint on this basis. After careful review, we affirm.

I. Facts

Because we are reviewing the dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6), we state the facts as they are alleged in the amended complaint and draw all reasonable inferences therefrom in favor of the appellants. Gonzalez Figueroa v. J.C. Penney P.R., Inc., 568 F.3d 313, 316 (1st Cir. 2009). We supplement the appellants' allegations with documentation pertaining to the prior state court judgments against them. Giragosian v. Ryan, 547 F.3d 59, 66 (1st Cir. 2008).

The seeds of this dispute were sown in 1904 upon the death of Garcia St. Laurent, the appellants' grandfather. He left behind his widow, Cabassa Texidor, and four children, one of whom was the appellants' father, Jorge Placido Garcia Cabassa. At the time of his death, St. Laurent had amassed a great deal of real property, including the Santa Ana Farm and the Santa Ana Sugar Mill. This property belonged to St. Laurent alone, as Cabassa Texidor brought no property to the marriage and the marriage generated no communal property.

Following St. Laurent's death, Cabassa Texidor became involved with a man named Mateo Fajardo Cardona. They eventually married and had a son. Around this time, the appellants allege, Cabassa Texidor and Fajardo Cardona began scheming to deprive the four children from Cabassa Texidor's first marriage of their rightful inheritance. In 1908, through a judicial sale and repurchase, Cabassa Texidor acquired the Santa Ana Farm and Sugar Mill, which were the main assets of the St. Laurent estate. In the 1920s and 1930s, Cabassa Texidor also purchased property from the children of her first marriage that the children had inherited upon St. Laurent's death. This included a 1930 purchase of property belonging to the appellants' father, Garcia Cabassa. Ultimately, some of the property acquired by Cabassa Texidor was used to form "Central Eureka, Inc.," ("Eureka") a sugar producing company, and to help form "Westernbank," a savings and loan association.*fn1

In 1968, the appellants filed an action in Puerto Rico Commonwealth court against Cabassa Texidor. In that action, the appellants contested Cabassa Texidor's acquisition of property formerly belonging to St. Laurent. They claimed that, although various properties were registered in Cabassa Texidor's name, the appellants were the rightful heirs to the contested property. The appellants' action targeted both real property and shares of Eureka. The court found that the appellants' father had sold his hereditary rights in St. Laurent's estate to Cabassa Texidor in a legally valid sale in 1930. The court then ruled that Cabassa Texidor had lawfully acquired all of the contested property through acquisitive prescription,*fn2 a rule of Puerto Rico property law that is the functional equivalent of adverse possession. See Rodriguez v. Escambron Dev. Corp., 740 F.2d 92, 93 (1st Cir. 1984). Specifically, the court found that Cabassa Texidor had remained in possession as owner of the contested property quietly, publicly, peacefully, and without interruption for over thirty years. The court thus granted summary judgment against the appellants. The appellants appealed to the Puerto Rico Supreme Court, which denied review in 1974.

In 1990, the appellants filed an action in Puerto Rico Commonwealth court against a long list of defendants, including some of the appellees in this case. In that action, the appellants asserted, among other things, that Cabassa Texidor had improperly turned over property formerly belonging to St. Laurent to her second husband, Fajardo Cardona, who then co-mingled this property with his own to form Eureka. The case was dismissed on res judicata grounds, viz., that the judgment in the 1968 case foreclosed litigation of the claims. The Puerto Rico Circuit Court of Appeals affirmed the dismissal and the Puerto Rico Supreme Court denied review.

In 1998, the appellants filed several different actions in the Puerto Rico Commonwealth courts, and again included as defendants a number of the appellees in the present case. In each of the actions, which were later consolidated, the appellants alleged that the judgment in the 1968 case was the result of fraud. They claimed that during the pendency of the 1968 action, the defendants had failed to apprise the court of Cabassa Texidor's death. But these 1998 claims were also deemed to be precluded by the doctrine of res judicata, and again the intermediate appeals court affirmed and the Puerto Rico Supreme Court denied review.

In 2004, the appellants filed an action in Puerto Rico Commonwealth court against various defendants, once again including a number of the appellees. This time, the appellants claimed that they were entitled to portions of the contested property under a Puerto Rico statute referred to as the "Widow's Reserve." P.R. Laws Ann. tit. 31, § 2731. That statute, in sum, requires a widow entering a second marriage to set aside for the children and descendants of her first marriage any property acquired from the deceased spouse, apart from the widow's half of the conjugal profits. Id. The court dismissed this action as well on res judicata grounds and reprimanded the appellants for frivolously filing claims that had been previously dismissed on three separate occasions.

In 2007, while their appeal of the Commonwealth court's decision in the 2004 action was pending, the appellants filed this action in federal district court against certain descendants of Cabassa Texidor, former attorneys of the appellants' adversaries in the prior Commonwealth court actions, and officers and directors of Eureka and Westernbank.*fn3 The appellants again claimed that they were entitled to portions of the contested property under the "Widow's Reserve." They also claimed that the appellees or their predecessors in interest had violated a number of federal laws in both acquiring and maintaining control over the contested property. The gist of their federal claims was that the appellees or their predecessors in interest concocted a scheme to defraud the appellants of their rightful inheritance, and that this scheme continued to the present day. Altogether, the appellants claimed that the appellees: (1) violated the Racketeering Influenced and Corrupt Organizations Act ("RICO Act") by (i) managing and operating Eureka and Westernbank to further a scheme to defraud, 18 U.S.C. § 1962(c), (ii) laundering money and property which "are in fact, and should be adjudged the property" of the appellants, id. § 1962(a), and (iii) denying the appellants' claims "in all ways possible," id. § 1962(a)-(c); (2) committed bank fraud by failing to communicate to a financial institution relevant information regarding the original ownership of Westernbank shares, id. § 1344;*fn4 and (3) committed securities fraud by failing to disclose the appellants' 2004 Commonwealth court action in Westernbank's federal filings, 15 U.S.C. § 78j, n(a).

The district court dismissed each claim, adopting a magistrate judge's report and recommendation that res judicata again barred this latest action.*fn5 During the pendency of the present appeal, the Puerto Rico Court of Appeals affirmed the dismissal of the 2004 action on ...


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