USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________

No. 94-2288

FEDERAL DEPOSIT INSURANCE CORPORATION,

Plaintiff, Appellee,

v.

TORREFACCION CAFE CIALITOS, INC., ET AL.,

Defendants, Appellants.
____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Carmen Consuelo Cerezo, U.S. District Judge]

___________________
____________________

Before

Boudin, Circuit Judge,

_____________

Campbell, Senior Circuit Judge,

____________________

and Schwarzer*, Senior District Judge.

_____________________

____________________

Gilberto Mayo-Pagan
____________________

with whom

Mayo & Mayo was

_____________

on

brief

appellants.
Daniel Glenn Lonergan ,
_________________________
Assistant

General Counsel,

Counsel,

with

whom

Ann DuRo
_________

Colleen B. Bombardier, Senior

_______________________

Federal Deposit Insurance Corportion,

______________________________________

and

Jose R. Garcia Per

_____________________

Gonzalez, Bennazar, Garcia-Arregui & Fullana,

_______________________________________________
appellees.

____________________

August 15, 1995

____________________

Couns

were

on

brief

____________________

*Of the Northern District of California, sitting by designation.

CAMPBELL,

Senior Circuit
Judge.
_______________________

The

Federal

Deposit Insurance Corporation ("FDIC") seeks to recover funds

under

several

promissory

notes once

held

by

Girod Trust

Company ("GTC"), a

are

failed Puerto Rico bank.

The defendants

the debtor, co-debtor, sureties, and guarantors of those

notes.

The

district court

partial

summary judgment and

summary

judgment.

defendants' motion

granted the FDIC's

Defendants

district court erred in

not barred by

denied

motion for

now appeal, arguing

holding that the FDIC's

the statute of limitations.

for

that the

claims were

We affirm in part

and reverse in part.

I.

The facts are

case

undisputed.

are: (1) Torrefaccion

The defendants

Cafe Cialitos ("TCC"),

in this

a Puerto

Rico company that processes and distributes coffee; (2) Pedro

Maldonado-Rivera

"Maldonado I"),

(referred

to

the president of

by

the

district

TCC; (3) Daisy

court

as

Ramirez de

Arellano

("Ramirez"), Maldonado I's

wife and an

officer of

TCC; (4) the legal conjugal partnership formed by Maldonado I

and Ramirez;

and

(5)

Pedro

II"), TCC's vice president.

transactions

remaining

that are

defendants

Maldonado-Ramirez

TCC

is the debtor for the

at

the

center of

are

the

co-debtors,

guarantors of those loans.

-22

("Maldonado

this

loan

case.

The

sureties,

and

In

principal

this

suit,

and interest

the

FDIC

due from

seeks

the

to

collect

following three

the

loan

transactions:

1.

1977 Loan Transaction

______________________

---

On May

Maldonado I (personally and as president of TCC)

(personally)

executed a

Financiero de Ahorro

loan agreement

de Ponce, under which

agreed to lend TCC $230,000.

(personally

and

promissory notes: Note

in

as

27, 1977,

and Ramirez

favor of

Banco

Banco Financiero

To evidence the loan, Maldonado

president

of

TCC)

I, for $70,000, due on

executed

two

May 30, 1992,

and Note II, for $160,000, due

secure

payment of

executed a

the loan,

and

any other

To

further

TCC debt,

TCC

pledge agreement delivering three bearer mortgage

notes and a

chattel mortgage.

signed personal guaranties

Administration

entered into

the loan,

on May 30, 1984.

Maldonado I

for the loan.

The Farmers

guaranteed 90% of the loan.

an agreement to

should TCC

consecutive months.

and Ramirez also

Home

GTC subsequently

purchase the remaining

default for a

term longer

TCC defaulted

on

10% of

than three

the loan,

and

GTC

purchased the loan on January 10, 1979.

2.

TCC executed

GTC loaned TCC

1979 Loan Transaction --______________________

a loan agreement

$110,000.

On March

in favor of GTC,

To evidence the

5, 1979,

under which

loan, Maldonado I

(as president

of TCC)

executed two

promissory notes:

III, for $35,000 and Note IV, for $75,000.

Note

Final payment on

-33

Note III was due March 5, 1986; final payment for Note IV was

due March 5, 1981.

(as

president

To secure payment of the loan, Maldonado

of

TCC)

executed

pledge

agreement

delivering

secure

TCC)

one

bearer

mortgage note.

the loan, Maldonado

and

Ramirez

Later,

(personally and as

(personally)

executed

to further

president of

second

agreement delivering another bearer mortgage note.

pledge

Maldonado

I and Ramirez also signed personal guaranties for the loan.

3.

1981 Line of Credit --_____________________

Maldonados I and

vice president)

its

checking

April 3,

II (personally, and as TCC's

executed an open-end

GTC, under which GTC

to $250,000, to

On

be disbursed as cash advances

account.

Maldonados

president and

credit agreement

extended to TCC a line of

and

1981,

with

credit of up

or credits to

II executed

continuing guaranty without collateral, jointly and severally

guaranteeing to the bank the punctual payment of TCC's debts.

Under

the

line

of credit,

sixteen

promissory

notes were

executed in 1981 and 1982, with payment due throughout 1982.

On July

under

chapter 11.

TCC's

creditors.

31, 1984,

In

On

TCC

petitioned for

the petition,

August

16,

GTC was

1984, GTC

bankruptcy

listed among

was

declared

insolvent, and the FDIC was appointed its receiver, acquiring

the assets giving

rise to the claims in this case.

11, 1986, the TCC

bankruptcy case was dismissed.

1991,

the

FDIC

brought

this

-44

action

to

On April

On May 10,

collect

on

the

promissory notes

summary

judgment,

collection

opposed

it had

on the

the motion

acquired from GTC.

arguing that

the limitations

promissory notes had

and

TCC

filed its

own

moved for

period for

expired.

The FDIC

motion for

summary

judgment, which the district court granted.

II.

Under

commercial

Puerto

Rico

promissory notes

law,

are

actions

subject

to

to a

collect

on

limitations

period of three years from the note's date of maturity.

P.R.

Laws Ann. tit. 10,

period,

1908.

however, is

The running of this

interrupted "by

suit

proceeding brought against the debtor,"

10,

1903, including bankruptcy

Barrera, 595 F. Supp. 894,

_______

law

further provides

period

or any

judicial

P.R. Laws Ann.

proceedings.

901 (D. P.R. 1984).

that interruption

limitations

of the

See
___

tit.

FDIC v.
____

Puerto

Rico

limitations

"in joint obligations equally benefits or injures all

the creditors

or debtors," P.R.

Laws Ann. tit. 31,

5304,

and an interruption "against the principal debtor by suit for

debt shall also lie against his surety."

31,

P.R. Laws Ann. tit.

5305.

Federal

law

limitations period for

establishes

an

additional

suits brought by the

six-year

FDIC to collect

on

assets it

acquires as

receiver

U.S.C.

1821

(d)(14)(A) (1988

Thus, if

the state limitations

&

of a

failed bank.

Supp. 1995)

12

("FIRREA").

period has not yet

run when

-55

the FDIC steps in, the federal limitations period will apply.

The

period begins

to run

upon appointment

of the

FDIC as

receiver or

U.S.C.

accrual of the

1821 (d)(14)(B).

action, whichever is later.

The

federal limitations

12

period

does not, however, operate to extend claims that have already

lapsed under the state limitations period before the FDIC has

acquired them.

See, e.g., Barrera, 595 F. Supp. at 898.

___ ____ _______

Applying these various statutory provisions to this

case, the district court

on the three

held that the FDIC's

loan transactions, were all timely

court found that the three-year

applied to

of each

for

loan: May 30, 1992 for the

credit.

loan; throughout

In calculating the

filed.

limitations period of

the three loans, commencing on

the 1979

claims, based

1982

The

1908

the maturity date

1977 loan; March 5, 1986

for the

1981 line

of

maturity dates of the loans, the

court looked

each

to the date when

loan transaction

maturity

dates

of

example, although

as

the final payment was

a whole,

the underlying

Note IV

not

to the

promissory

of the 1979

due on

individual

notes.

loan had

For

a maturity

date of March 5, 1981, the district court considered the note

part of

a single loan transaction, with

an overall maturity

date of March 5, 1986.1

____________________

1.

With

respect

to

Note

IV,

the

district

court

alternatively found that, even if the later maturity date did

not

control and

untimely (since

the claim
the

based on

Note IV

bankruptcy proceeding

three years later), it was

was therefore

began more

revived through TCC's listing

-66

than
of

The court then found that TCC's bankruptcy petition

was

"judicial proceeding"

limitations periods

loans

under

for the claims against TCC

were tolled as of July 1984.

pursuant to

1903, and

that

the

on all three

The court further found,

5304 and 5305, that the

tolling also applied

for suits against TCC's co-debtors, guarantors, and sureties.

Finally,

the court found

receiver in

August 1984,

that, once the

the FIRREA's

FDIC was appointed

six-year limitations

period came into effect, since the claims had not yet lapsed.

Under

12 U.S.C.

period began to run

1821, the court held, FIRREA's limitations

in April 1986 at the earliest,

emerged from bankruptcy

the suit

and the FDIC's

claims accrued.

was filed within six years, in

timely.

when TCC

As

May of 1991, it was

III.

On appeal, defendants argue that the district court

erred in holding:

the running

(1) that the bankruptcy

proceeding tolled

of the limitations period for claims against the

co-debtors, sureties, and guarantors arising from Note II and

the notes

the claims

1979

underlying the 1981

against all

defendants based on

loan transaction were

that they

do not appeal

line of credit; and

timely filed.

from the district

Note IV

(2) that

of the

Defendants state

court's decision

regarding the claims based on Note

I and Note III.

As

this

____________________

the claim in

the bankruptcy filing.

P.R. Laws Ann. tit. 10,

1903.

-77

is an appeal from a

summary judgment, we review the district

court's decision de novo.

_______

347 (1st Cir. 1993).

See Pagano v. Frank, 983 F.2d 343,

___ ______
_____

Thus, we will affirm a grant of summary

judgment if there are no

genuine issues of material fact and

the moving party is entitled to

judgment as a matter of law.

Fed R. Civ. P. 56(c).

A.

Tolling of Limitations Period

_____________________________

Defendants

argue

first

that,

bankruptcy proceeding may have tolled

although

the

the limitations period

for suits against the debtor TCC, it did not toll the statute

of limitations for suits against co-debtors, guarantors,

sureties as well.

automatic

stay

This

is so, defendants argue, because the

provision

found in 11 U.S.C.

and

of the

362, preempts

federal

bankruptcy code,

5304 and 5305 of Puerto

Rico's

commercial code.

U.S.C.

362,

a bankruptcy

and therefore tolls

against debtors

sureties.

(1st Cir.),

Defendants

argue

that, under

proceeding automatically

the statute of limitations

but not against

11

stays,

for, actions

co-debtors, guarantors,

or

See Austin v. Unarco Indus., Inc., 705 F.2d 1, 4-5

___ ______
___________________

cert. dismissed, 463

_______________

U.S. 1247 (1983).

To the

extent they toll the limitations period for suits against co-

debtors, guarantors, and sureties,

and

5305 conflict

with

defendants argue,

the bankruptcy

preempted.

-88

code

and are

5304

thus

If

5304

and 5305

are

preempted,

defendants

argue, then the

claims against

co-debtors, guarantors,

sureties

on

and

based

underlying

example, the

the 1981

Note

II2

letter

promissory notes

of credit

in August of

promissory

are

underlying the

credit all had maturity dates in 1982.

notes

the

1984, before the

and

notes

untimely.

1981 line

For

of

The FDIC acquired the

three-year limitations

period had

lapsed.

suits against the

not tolled by

FIRREA

when the

if the limitations

co-debtors, guarantors,

limitations period began

FDIC acquired the

period for

and sureties

the bankruptcy proceedings, then

TCC emerged from

debtors,

However,

the six-year

running in August

assets, not April of

bankruptcy.

As the claims

guarantors, and sureties

was

of 1984,

1986, when

against the co-

were filed more

than six

years later in 1991, the claims would be untimely.

We

find

without merit.

preempt

only

federal

law.

(1918).

True,

defendants'

preemption

argument

to

be

The provisions of the federal bankruptcy code

those state

laws

See Stellwagen
___ __________

that are

v.

362 automatically

in

Clum, 245
____

conflict with

U.S. 605,

stays only

613

suits filed

against

debtors

and

debtors, guarantors, or

not suits

against

sureties.

that

debtor's co-

Austin, 705
______

F.2d at 4-5.

____________________

2.
in

Although defendants do

not explicitly refer to

Note II

their argument, the argument based on the 1981 promissory

notes

is equally

applicable to

argument as applied to Note II,

event, the same.

-99

Note II.

We

consider the

since the result is, in

any

But this does not indicate

5305.

an inconsistency with

Nothing in the decisions construing

suits against

debtors implies

that

5304 and

362 to stay only

362 precludes
_________

states

from themselves staying suits against co-debtors, guarantors,

and sureties.

These decisions hold

itself stay, nor

___________

only that

require the staying of, such

362 does not

________

actions.

See
___

Austin, 705 F.2d at 5 (recognizing that circumstances may, in

______

some

cases,

warrant

Furthermore,

these

periods; thus,

against

cases deal

even if

debtors, guarantors,

bankruptcy

a stay

with stays,
_____

a creditor may

or sureties

proceeding, nothing

co-debtors

as well).

not limitations

proceed against

during the

bars a state

pendency of

co-

from extending

the

limitations period
___________________

Puerto

for such

Rico is still free to

suits

under

state law.3

extend the limitations period,

under its own laws, for actions against co-debtors, sureties,

and guarantors, as it has done under

There

the purpose

is no conflict between such an extension and

behind

362.

debtor during bankruptcy,

breathing

room,

5304 and 5305.

By

362

relieving

it

staying actions

against the

gives the debtor a degree of

of

allowing it to attempt repayment of

financial

pressure

its debts or to adopt

and

____________________

3.

For the

same reason, defendants'

Insular v. Anadon, 83 P.R.R. 360,

_______
______
v. Ares, 25 P.R.R. 446,
____

reliance upon

Camara
______

365-66 (1961) and Santiago

________

448 (1917) is misplaced, as both

of

those

cases

deal

only

with

proceedings on the liability

_________
sureties, not upon

the

impact

of

bankruptcy

of co-debtors, guarantors,

the limitations period for

and

bringing such

claims.

-1010

reorganization plan.

Sess.

54-55

5840-41.

See
___

S. Rep. No.

(1978), reprinted in
_____________

1978

989, 95th

Cong., 2d

U.S.C.C.A.N. 5787,

In tolling the limitations period for suits against

co-debtors, guarantors, and sureties during the pendency of a

bankruptcy proceeding against the debtor,

not impinge

upon this

breathing room

5304 and 5305 do

or otherwise

from the protection offered the debtor by

As there is

preempted and serve

bankruptcy

no conflict,

362.

5304 and

to extend the limitations

proceedings

guarantors, and sureties.

detract

5305 are not

period during

for

suits

against

co-debtors,

See
___

Barrera, 595 F. Supp. at 901;

_______

FDIC v. Marco Discount House, 575 F. Supp. 730, 732 (D.

____
____________________

1983).

the

Accordingly,

FDIC's claims

sureties

did

bankruptcy case

the district court correctly

against the

not accrue

was

until

dismissed.

held that

co-debtors, guarantors,

April

As the

of

1986,

P.R.

when

claims were

and

the

filed

within FIRREA's six-year limitations period, they are timely.

B.

Note IV
_______

Defendants

proceeding did

argue

toll the

that,

even

statute of

if

the

bankruptcy

limitations for

claims

against co-debtors, guarantors, and sureties, the claim based

on Note IV ($75,000) supporting the 1979 loan transaction was

nevertheless

maturity

three-year

untimely.

date on

the Note

Defendants

was March

point

out

5, 1981.

that

the

Under the

limitations period, the claim expired on March 5,

-1111

1984,

several months

before the

bankruptcy proceeding

instituted and before the FDIC acquired the note.

argue, neither the

nor the six-year

Thus, they

tolling provisions under Puerto

limitations period under FIRREA

was

Rico law

apply, and

the claim is untimely.4

The FDIC argues that

the district court

found that Note IV was

not a separate loan, but

of a single, 1979 loan

transaction.

for the

Note was actually

correctly

merely part

Thus, the maturity date

the maturity date for

the entire

loan, March 5, 1986, and not March 5, 1981.

conclusion, the district

fact that both

FHA for

Note IV were

that there was

the loan and

reaching its

court pointed in particular

Note III and

loan agreement,

In

to the

part of a

single

only one application

to the

guarantee stating the total

amount of

$110,000, and that there was only one guarantee for the total

amount of the

loan.

expressly contest

The FDIC argues that

defendants do not

this finding on appeal, and that it should

therefore be affirmed.

Since the maturity date was 1986, the

limitations period had not run

by the time the FDIC acquired

the loan.

____________________

4.

Defendants also argue

that the district court

erred in

concluding that TCC's

schedules served to
tit. 10,

1903.

listing of the Note

revive the

in its bankruptcy

claim under

Evidently recognizing

P.R. Laws

that the

Ann.

case law

appears to support defendants' argument, see FDIC v. Cardona,

___ ____
_______
723
this

F.2d 132, 137 (1st Cir. 1983), the FDIC does not contest
argument on

appeal, relying

instead

on the

district

court's alternate ground for the result.

-1212

While it is true that defendants have not expressly

contested

the district court's conclusion on this ground, we

find

that

the

defendants

district court's

have

implicitly

finding by consistently

contested

the

discussing Note IV

as a separate claim and by calculating the timeliness of that

claim from Note IV's date of maturity.

defendants' argument

treating

the

two

has merit.

limitations

notes.

purposes.

applies, by its

further hold that

We see no legal

promissory notes

statute of limitations

We

as

single

The three-year

basis for

loan for

statute of

terms, to commercial promissory

See P.R. Laws Ann. tit. 10,

___

1908, ("Actions arising

from drafts shall extinguish three years after maturity . . .

________

similar rule

shall be applied

to commercial bills

of

exchange and promissory notes . . . ." (emphasis added)); see

________________
___

also Barrera, 595 F. Supp.

____ _______

F. Supp. at 731.

supported

maturity

at 898; Marco Discount House, 575

____________________

In this case, the 1979 loan transaction was

by two separate promissory notes with two separate

dates: March

5, 1981 and

straightforward application

periods for

suits based

March 5, 1986.

of the statute,

on the two

Under a

the limitations

Notes began

running at

different times.

We

date of Note

date on

happened

see no legal

III into Note IV despite

the face of

to

basis for importing

be

part

Note IV.

of

The

the

-1313

the maturity

the separate maturity

fact that the

same "loan

two notes

transaction"

is

immaterial

operative

for statute

legal

Accordingly,

IV

of limitations

documents

were

purposes, since

the

notes

the

themselves.

the limitations period for claims based on Note

expired three

years after

maturity, on

before it could

be interrupted by the

and

FDIC acquired

before the

March 5,

1984,

bankruptcy proceeding

the note.

based on that note is therefore untimely.

The

FDIC's claim

IV.

We

affirm

FDIC's claims

underlying

the line

reverse the

IV was

on Note

I, Note II,

of credit

court's holding

that the

Note III, and

the notes

were all

timely filed,

district court's holding that the

timely filed.

recalculation

the district

of

the

We remand to

judgment

claim on Note

the district court for a

amount

in

light

of

decision.

So ordered.
__________

but

Each party to bear its own costs.

________________________________

this

-1414