USCA1 Opinion

UNITED STATES COURT OF APPEALS

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
____________________

No. 97-1293

GARITA HOTEL LIMITED PARTNERSHIP d/b/a

GARITA HOTEL CORPORATION,

Plaintiff, Appellant,

v.

PONCE FEDERAL BANK,

Defendant, Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Dominguez, U.S. District Judge]

___________________

____________________

Before

Boudin, Circuit Judge,

_____________

Gibson,* Senior Circuit Judge,

____________________

and Pollak,** Senior District Judge.

_____________________

____________________

Eric A. Tulla
_____________

with whom

Rivera Tulla & Ferra

_____________________

was on brief

appellant.

J. Anthony Downs with whom A. Lauren Carpenter, Goodwin, Proc

________________
____________________ ______________
& Hoar,
______

Harold D. Vicente and

__________________

Vicente & Cuebas were

_________________

on brief

appellee.

____________________
September 5, 1997
___________________

_____________________

*Hon. John R. Gibson, of the Eighth Circuit, sitting by designation

**Of the Eastern District of Pennsylvania, sitting by designation.

Per Curiam.

In the district court, Garita Hotel claimed

__________

that

Ponce

Federal Bank

lend

Garita $6

operation of

that

million for

a hotel complex

the bank

advance

had unconditionally

breached

the

contracted to

expansion, renovation

in Carolina, Puerto

that contract

funds unless Garita obtained

when

and

Rico, and

it refused

a casino license.

to

The

district court, acting after a remand from this court, Garita

______

Hotel L.P. v.
__________

Ponce Fed. Bank, 958 F.2d 15 (1st Cir. 1992) ,

_______________

granted summary judgment

to Ponce Federal.

Garita's appeal

to this court followed.

We review the district court's grant of summary judgment

de novo,
_______

Grenier v.
_______

drawing reasonable

inferences

in Garita's

Vermont Log Bldgs., Inc., 96 F.3d 559,

_________________________

favor.

562 (1st

Cir. 1996).

the

On the record before the district court, most of

undisputed facts strongly suggested that approval of the

casino license had been an understood condition

Garita's main

oral

contrary rests on

an alleged

statement to Garita representatives, by a Ponce Federal

agent in

loan.

argument to the

of the loan.

September 1986,

Internal

bank

that the bank

documents

had "approved"

arguably

the

corroborate

the

contract must

be

making of this statement.

Under Puerto

corroborated,

existence of an

Rico law,

a commercial

and this requirement

extends not just

to the

agreement but also

to its essential

terms.

Vila & Hnos, Inc. v.

___________________

Owens Ill. de Puerto Rico, 17

___________________________

P.R.

-2-2-

Offic.

Trans.

987,

997-1000 (1986).

The

district court

invoked this requirement, holding that there was certainly no

corroboration for the claim that

the bank had agreed to make

the loan unconditionally

and without regard to

of the

On appeal,

loan

casino license.

agreement

should

not

have

the approval

Garita argues

been

classified

that the

as

commercial contract.

A Puerto

Rican statutory

provision defines

a loan

commercial if (1) at least one party is a "merchant"

the loan proceeds "are destined to

10

L.P.R.A.

1651;

see id.
___ ___

for

to an experienced

1001 (defining

hotel and casino

the purpose of renovating and

casino

complex,

we

whatever contract the

in nature under

agree

with

merchant).

sizable

management company

operating a luxury hotel-

the

district

parties may have formed

Puerto Rican law.

and (2)

commercial transactions."

Here, where an established bank proposed to extend a

loan

as

See
___

court

that

is commercial

FDIC v. Consolidated
____
____________

Mortgage & Fin. Corp., 805 F.2d 14, 18 (1st Cir. 1986).
_____________________

Garita contends that the loan was not commercial because

it

was

differed

extended

from

for

purpose

Garita's

(hotel

traditional

renovation)

business

that

(hotel

management).

It is true that courts have found noncommercial

transactions

where

borrowed funds

were

used

for personal

purposes, see, e.g., FDIC v. Martinez Almodavar, 671 F. Supp.

___ ____ ____
__________________

851, 868-70 (D.P.R. 1987); or

where the loan was

-3-3-

apparently

made for largely

v. Olmo Reyes, 48
__________

agreement

personal reasons, see, e.g., Barcel

& Co.
___ ____ ______________

P.R.R. 239, 241-42 (1935).

between Garita

and

clearly commercial purpose

Ponce

Federal

But any

was

for

of real estate development.

loan

the

See
___

Consolidated Mortgage, 805 F.2d at 18.

_____________________

Garita

Corp.,
_____

638

also relies

F.

Supp.

on

FDIC
____

v.

1216 (D.P.R.

Francisco Investment
_____________________

1986),

grounds, 873 F.2d

_______

474 (1st Cir. 1989).

court

held

that

loan

to a

doctors, who borrowed the money to

rev'd on other
_______________

There, the district

corporation

controlled

by

buy all the shares of

an

incorporated

nursing

it

as a

hospital or other medical facility, was not commercial.

This

court had no

home,

intending to

occasion to resolve the issue.

operate

Francisco, 873
_________

F.2d at 476.

Francisco
_________

rested heavily

practice was inherently

the

not a

specialized meaning of

Supp. at 1218-19,

hotel and

venture.

helpful to

the

notion that

within

section 1651, Francisco,

_________

638 F.

proposing a new

is some language in

Garita, but that

tension with Puerto Rico case

medical

"commercial" endeavor

a notion that has little

casino company

There

on

application to a

hotel and

casino

Francisco arguably more

_________

language may itself be

in some

law indicating that a loan may

be "commercial" even though the planned use of

from

the borrower's historical business.

Hnos,
____

17

P.R.

Offic. Trans.

at

990,

funds differs

See, e.g., Vila &

___ ____ ______

995-96 (corporation

-4-4-

engaged

in transportation of sand and stone sought financing

to purchase property capable of supplying these materials).

Thus,

we agree

agreement in

corroborating

with the district

this case was

court that

a commercial contract

evidence was required

as to the

the agreement and its essential terms.

the loan

for which

existence of

Nothing in the record

corroborates Garita's contention that Ponce Federal agreed to

loan

casino.

regardless

of government

approval

of

Summary judgment was properly granted.

Affirmed.
________

the planned

-5-5-