CARIBBEAN SEASIDE HEIGHTS PROPERTIES, INC., Plaintiff, Appellant,
ERIKON LLC, Defendant, Appellee, KOENIGER DEVELOPMENT, INC.; ERICK KOENIGER, in his personal capacity, Defendants.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
PUERTO RICO Hon. Salvador E. Casellas, U.S. District Judge
Julián Rivera-Aspinall and Fernando L. Gallardo on
brief for appellant.
Iván Aponte-González, Héctor J.
Quiñones Inserni, García, Aponte &
Quiñones, Tomás A. Román-Santos, and
Román Santos, LLC on brief for appellee.
Lynch, Thompson, and Barron, Circuit Judges.
Seaside Heights Properties, Inc. ("Seaside")
appeals the district court's determination on summary
judgment that, under Puerto Rico law, Seaside's suit for
breach of contract against its former investment partner
Erikon LLC is barred by a release that Seaside had earlier
executed in Erikon's favor. The court made this
determination in two separate unpublished opinions in which
it rejected Seaside's arguments that (1) the release does
not cover the instant suit and (2) the release is void for
lack of consideration. Seaside argues those rulings were
erroneous and additionally argues there were disputes of
material fact, which precluded entry of summary judgment on
the basis of the release. We disagree with Seaside and
on the district court's two thorough opinions for a full
recounting of the case and summarize here only the essential
background facts. See United States ex rel. Booker
v. Pfizer, Inc., 847 F.3d 52, 55 (1st Cir.
1998, Seaside and Erikon became co-investors in a real estate
project known as the Christopher Columbus Landing Project in
Aguadilla, Puerto Rico ("the Project"), as
evidenced in a public deed, which provided that "all
expenses incurred" in connection with the Project would
be "distributed equally" between the two parties.
In 2006, the parties executed a private agreement with
Caribbean Management Group, Inc. ("Caribbean") to
sell the Project to Caribbean. As part of that agreement,
Seaside and Erikon each agreed to execute releases in favor
of Caribbean and in favor of each other. Accordingly, in
December 2006, Seaside and its sole stockholder executed a
release in favor of Erikon, which provided as follows:
[Seaside] hereby remises, waives, releases and forever
discharges . . . [Erikon] of and from any and all claims,
actions, charges, suits, debts, liabilities, contracts,
agreements and promises, of any kind or nature whatsoever,
which [Seaside] may have or assert against [Erikon] . . .
arising out of or relating to [the Project]; Furthermore,
[Seaside] further promise[s] never to institute any claim,
action, charge or suit, of any kind or nature whatsoever,
against [Erikon] which arises from or relates to [the
Project] or any other event or action which occurred before
or after the date of execution of this Release . . . .
than six years later, on February 5, 2013, Seaside for the
first time issued to Erikon a collection notice demanding
reimbursement for expenses Seaside had purportedly incurred
in connection with the Project. After Erikon refused to pay,
Seaside initiated this diversity suit on May 20, 2013,
alleging that Erikon had breached the terms of the 1998
public deed, and claiming that Erikon owed it more than $3
January 14, 2015, Seaside moved for summary judgment, arguing
that "there is no genuine issue of material fact as to
Erikon's obligation [under the 1998 deed] to pay 50% of
the expenses incurred in developing the Project." In
turn, Erikon filed a cross-motion for summary judgment,
asserting that Seaside had released its claim in the 2006
release. In response, Seaside argued that (1) the release was
not intended to cover, nor could it cover, the claims made in
the instant suit because such claims allegedly did not exist
at the time the release was executed; and (2) the release,
which was executed pursuant to the 2006 agreement, is, in any
event, void for lack of consideration because Erikon never
fulfilled its obligation under that agreement to execute a
release in favor of Seaside.
opinion dated September 30, 2015, the district court held
that the release, if valid, would bar the instant suit.
First, the court rejected Seaside's argument that the
release was not "intended" to excuse Erikon from
its obligation under the 1998 deed to share Project-related
expenses. The court noted that, under Puerto Rico law,
"[i]f the terms of a contract are clear and leave no
doubt as to the intentions of the contracting parties, the
literal sense of its stipulations shall be observed."
P.R. Laws Ann. tit. 31, § 3471; see also Exec.
Leasing Corp. v. Banco Popular de Puerto Rico,
48 F.3d 66, 69 (1st Cir. 1995). It then observed that the
release, which waives all "claims, debts, contracts, and
suits related to [the Project], " clearly and
unambiguously covers this suit "to collect a debt
arising from a contract whose object is precisely [the
the court rejected Seaside's argument that Seaside did
not have a "cause of action" against Erikon that it
could have waived at the time it executed the release in 2006
because Erikon had not yet refused its 2013 demand for
payment. The court explained that Seaside knew in 2006 that
it had a contractual right to collect a debt from Erikon
related to the Project, which it had simply chosen not to
enforce. That, the court reasoned, was precisely the sort of
claim that Seaside had agreed to waive in the release. And in
any event, as the court pointed out, the release explicitly