author: REYNOLDS, Chief Judge.

text:
    Jerome G. AUSLOOS, William H. Fulkerson, Debra Poch Griem, Richard Karl Griem, Greg A. Hageman, Arnold H. Heimann, John T. Hemauer, Jerome H. Janty, Elizabeth Ann Karls, Melody Sue Konen, Gerald B. Lorenz, Richard E. Luehrs, Clemens O. Mayer, Jean M. Presto, Wayne J. Roers, Edward P. Staub, James W. Schneider, Donna K. Schwantes, Carol A. Stenz, John P. Stephany, Sharon Judy Thome, Donna Marie Vollmer, John R. Wagie, David Wheeler, and John T. Wilberscheid, Plaintiffs, v. CHROMALLOY AMERICAN CORPORATION, Defendant.
    Civ. A. No. 84-C-816.
    United States District Court, E.D. Wisconsin.
    Jan. 17, 1986.

      Gordon E. Stillings and Mark W. Morrow, Chilton, Wis., for plaintiffs.
    James E. Braza, Milwaukee, Wis., for defendant.
   DECISION AND ORDER

REYNOLDS, Chief Judge.

This is a claim for severance payments by former employees of a manufacturing corporation, which sold the division of its operations in which the claimants were employed. This Court has jurisdiction over the claim by virtue of Section 502(e) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. sec. 1132(e). Presently before the Court are the parties’ cross motions for summary judgment. Because no probative facts are disputed and because, as a matter of law, the defendant’s denial of severance payments to these employees was not arbitrary and capricious, the defendant’s summary judgment motion is granted and the plaintiffs’ is denied.

The twenty-five plaintiffs were formerly all employed by the defendant Chromalloy American Corporation (“Chromalloy”) at its Arps Division in New Holstein, Wisconsin (“Arps Division”). On Friday, January 21, 1983, each plaintiff was terminated by Chromalloy when it sold its Arps Division to an entity called Arps Manufacturing, Inc. (“Arps, Inc.”). Arps, Inc., asked all the plaintiffs to interview on the following day, Saturday, at which time Arps, Inc., offered the plaintiffs the jobs they had held with Chromalloy but for somewhat reduced compensation. The plaintiffs all accepted this offer and were immediately employed with Arps, Inc., effective Monday, January 24, 1983.

The “Asset Purchase Agreement,” which set the terms of Chromalloy’s sale of its Arps Division to Arps, Inc., does not contain a provision requiring Arps, Inc., to rehire the plaintiffs. However, during the course of sale negotiations Arps, Inc., representatives, Marvin B. Lorig and Donald N. Brown, assured Chromalloy’s representatives, James A. Silkwood and John J. Dowling, III, that Arps Division employees would in fact be rehired.

Chromalloy’s policy with respect to the payment of severance money is governed by a document entitled “Separation Guidelines” (“Guidelines”). This document was drafted by Andrew A. Kole, President of Chromalloy’s Farm and Industrial Equipment Company, for all the farm and industrial equipment divisions. The Guidelines went into effect on January 1, 1982, and were added to the Arps Division corporate procedures manual on February 10, 1982. The written Guidelines had not been modified in any relevant respect by January 21, 1983, when the plaintiffs were terminated. The portions of the Guidelines relevant to this litigation are as follows:

II. Severance Pay
A. Separation Without Cause (Exempt Only)
Employees who are separated by the company without cause are eligible to receive pay as severance. Employees laid off (not to exceed 90 days) are not eligible for severance pay. Payment is based on the length of service of the employee. Employees with six (6) months service up to two (2) years will receive two (2) weeks severance pay. All other covered employees will receive one (1) weeks pay for each year of service up to a maximum of twenty-six (26) weeks.
B. Separation Without Cause (Nonexempt Only)
Employees who are separated by the company without cause are eligible to receive pay as severance. Employees laid off (not to exceed ninety (90) days) are not eligible for severance pay. Payment is based on the length of service of the employee. Payments will be made under the following schedule:

6 months thru 2 years — 2 weeks pay

2 years thru 5 years — 3 weeks pay

5 years thru 10 years — 4 weeks pay

10 years thru 15 years — 6 weeks pay

15 years or more — 8 weeks pay

Payment will be made on the company’s established pay period.
C. Separation With Cause Employees separated for cause are not eligible for severance pay.

III. Insurance & Other Fringe Benefits

A. Separation With/Without Cause
Employees who voluntarily separate from the company, at their request, are not eligible for insurance or other benefits beyond their last day worked. Employees separating at the request of the company will be eligible for insurance benefits during the period in which the company pays severance pay under the schedule defined in Section II, A and B. This includes coverage for eligible dependents. Those benefits which have a conversion privilege will be honored if all provisions of the conversion are fulfilled. The conversion privilege for those individuals receiving severance pay under the policy commences on the day following the last day of severance pay.
B. Laid Off Employees
Employees on layoff will be eligible for health and life coverage for a maximum of ninety (90) days after the last day worked. This includes coverage for eligible dependents. All other fringe benefits cease on the last day worked.
IV. Notice of Change
The company, at its option, may change, delete, modify, or rescind any part or parts of this policy at any time without prior notice. Employees may not accrue eligibility for benefits beyond the last day worked. All provisions of the policy are guidelines and are completely discretionary by the company.

The plaintiffs had access to the Guidelines, which were kept in the corporate procedures manual in the office of plaintiff Wayne Roers, the Plant Manager. The plaintiffs all knew prior to January 21, 1983, that Chromalloy had a severance pay plan. All the plaintiffs except one also knew prior to that date that defendant was preparing to sell its Arps Division.

Prior to the sale of its Arps Division, Chromalloy had sold several other of its farm and industrial equipment divisions. In no case did Chromalloy make severance payments to an employee terminated as a result of such sale if the employee was offered a position with the division’s purchaser. Chromalloy did make severance payments, however, to employees who were terminated as a result of a division sale and who were not offered employment by the purchaser. Consistent with its past practices, Chromalloy made no severance payments to the plaintiffs.

I.

The parties agree that the defendant’s severance pay plan was an “employee welfare benefit plan” within the .meaning of ERISA, and that the appropriate standard of this Court’s review of the defendant’s administration of that plan, pursuant to 29 U.S.C. sec. 1104, looks to whether the administrator’s action was “arbitrary and capricious.”

Besides specific ERISA provisions this Court must look to the developing body of federal common law concerning the specific issues raised in this case. For “Congress intended for the courts, borrowing from state law where appropriate, and guided by the policies expressed in ERISA and other federal labor laws, to fashion a body of federal common law to govern ERISA suits.” Scott v. Gulf Oil Corporation, 754 F.2d 1499, 1502 (9th Cir.1985); see also Holland v. Burlington Industries, Inc., 772 F.2d 1140, at III. (4th Cir.1985).

The plaintiffs make essentially two arguments that Chromalloy arbitrarily and capriciously administered the severance pay provision of their employee- benefit plan. They first argue that the defendant’s failure to specify in the written Guidelines that employees terminated in the course of the sale of a division of the company, who were rehired by the purchaser, would not receive severance payments violated ERISA’s requirement that employee benefit plans be in writing (29 U.S.C. sec. 1022). Second, they argue that the defendant arbitrarily and capriciously interpreted the Guidelines, as written, to deny severance payments to the plaintiffs. Both the plaintiffs’ arguments are refuted by what must now be regarded as settled federal law on the nonpayment of severance money to employees in the plaintiffs’ situation pursuant to ERI-SA-regulated employee benefit plans. See Sly v. P.R. Mallory & Company, Inc., 712 F.2d 1209 (7th Cir.1983); Anderson v. Ciba-Geigy Corporation, 759 F.2d 1518, 1519 (11th Cir.1985); Jung v. FMC Corporation, 755 F.2d 708, 711 (9th Cir.1985); Holland v. Burlington Industries, Inc., 772 F.2d 1140 (4th Cir.1985).

In determining whether the defendant acted arbitrarily and capriciously, the Court may not substitute its judgment for that of the defendant. Smith v. CMTAIAM Pension Trust, 654 F.2d 650, 655 (9th Cir.1981). Nor may the Court choose between several reasonable interpretations of the plan, Tomlin v. Board of Trustees, 586 F.2d 148,151 (9th Cir.1978), or to determine whether the defendant drafted the best possible eligibility requirements. Vaughan v. Metal Lathers Local ^6 Pension Fund, 474 F.Supp. 613, 617 (S.D.N.Y. 1979). The Court is required only to determine whether the defendant acted reasonably and rationally. Gordon v. ILWTJPMA Benefit Funds, 616 F.2d 433, 439 (9th Cir.1980).

II.

The plaintiffs’ first argument is that defendant arbitrarily and capriciously failed to describe the severance pay policy in written detail sufficient to forewarn these plaintiffs that they would not be receiving severance pay. This argument has been rejected, however, by the United States Court of Appeals for the Eleventh Circuit in a case directly on point. The failure to specify in writing that retention by employees of their jobs following the sale of a corporate subdivision fell into a “special situation” exception to the severance pay provision of an ERISA-regulated employee benefit plan is not arbitrary and capricious where the provision was amenable to such an interpretation and had been consistently applied in similar fashion in other divestment situations, and there was no showing that the administrator had acted in bad faith. Anderson v. Ciba-Geigy Corporation, 759 F.2d at 1521. As indicated below, Chromalloy’s Guidelines were amenable to the interpretation put on them by the company, and that interpretation was consistently applied in similar situations. The plaintiffs have not alleged nor does the evidence show bad faith by the defendant.

It is, of course, true that the facts in this case vary to some degree from those in Anderson. The Guidelines in this case afford the company broad discretion regarding severance payments, whereas the plan in Anderson contained a provision for determination by the company of “special exceptions” to severance pay eligibility. Here, there is some reduction in the compensation the plaintiffs will receive as employees of Arps, Inc., whereas in Anderson plaintiffs lost seniority rights and vacation benefits. But these factual variations are not sufficient to distinguish the two cases. Whatever procedural error the defendant committed by failing carefully to specify the situations in which no severance payments would be made, such error does not render the defendant’s administration of its severance pay plan “arbitrary and capricious.”

III.

Plaintiffs’ second theory is that Chromalloy arbitrarily and capriciously interpreted its Guidelines to exclude from severance pay eligibility employees retained by the purchaser of a former Chromalloy division. This argument fares no better than the first in light of unanimous federal precedent. The crucial term to be interpreted in these Guidelines is “severance pay.” In another case directly on point the United States Court of Appeals for the Seventh Circuit defines “severance pay” as remuneration paid to a terminated employee to cushion the financial blow that necessarily accompanies a period of unemployment following termination. Sly v. P.R. Mallory & Company, Inc., 712 F.2d at 1211; see also Jung v. FMC Corporation, 755 F.2d at 713. The defendant’s practice, when it sold a division, of paying no severance money to employees who were immediately rehired by the new owners in the same jobs, for similar' compensation, and who therefore suffered no financial blow due to unemployment, was reasonable. Therefore, the defendant’s interpretation of its Guidelines, in light of the widespread understanding of the purpose of severance pay, was not arbitrary and capricious.

Consistency in the application of a challenged interpretation of a severance pay plan is evidence of the rationality of that interpretation. See Sly v. P.R. Mallory & Co., Inc., 712 F.2d at 1213; Anderson v. Ciba-Geigy Corporation, 759 F.2d at 1522; Jung v. FMC Corporation, 755 F.2d at 713. Here, it is uncontroverted that during the course of selling off its farm and industrial equipment divisions, the defendant both consistently made severance payments to terminated employees who were not rehired and consistently denied such payments to terminated employees who were rehired by the division’s purchaser. Far from being arbitrary, defendant’s interpretation of the Guidelines has been consistent with the purpose of severance payments.

Nothing in the written Guidelines promulgated by the defendant indicates that the purpose of severance pay within the defendant’s package of employee benefits was anything other than unemployment compensation. While it is true that severance payments were to vary in size according to the length of the terminated employee’s service with the defendant, this does not indicate that severance payments were a form of deferred compensation. Such a variation is as likely to have been designed to compensate for the increased reliance by and possibly decreased employment prospects for senior employees. Moreover, it would be odd to provide health insurance benefits to all former employees receiving severance payments, as the Guidelines specify, were such employees to include persons, like the plaintiffs in this case, who were already re-employed and covered by their new employer’s health insurance plan. The co-extensive coverage of severance pay and health insurance benefits suggests that both provisions were meant financially to cushion terminated employees during a period of unemployment. See Pabst Brewing Co. v. Anger, 610 F.Supp. 214, 217 (D.C.Minn.1985).

The plaintiffs’ argument that their “fortuitous” rehiring by Arps, Inc., is legally irrelevant to the question whether the defendant acted arbitrarily in refusing to make severance payments to them is untenable. The defendant’s action must be evaluated in light of what they knew or had reason to believe would become of their former employees. Evidence that the defendant’s officers had received verbal assurance from the officers of Arps, Inc., that all the defendant’s employees would be retained after the acquisition is relevant to the question whether the defendant’s refusal to make severance payments was reasonable or capricious. The fact that plaintiffs were all rehired without missing a single day of employment is evidence that defendant’s reliance on the purchaser’s oral assurances was reasonable.

ORDER

The defendant is entitled to judgment as a matter of well-established federal common law.

IT IS THEREFORE ORDERED that defendant’s motion for summary judgment is granted and plaintiffs’ motion for summary judgment is denied.


source: Caselaw Access Project

author: FUSTE, District Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Eugenia Amparo OSORIO de SANTIAGO, Ariel Santiago, Rosa Santiago, Manuel Flores, Defendants.
    Crim. No. 85-489 (JAF).
    United States District Court, D. Puerto Rico.
    Jan. 17, 1986.

      Franklin Mandel, New York City, Francisco Dolz Sanchez, Old San Juan, Puerto Rico, for Eugenia Amparo Osorio de Santiago.
    Jorge Toledo, Hato Rey, Puerto Rico, Arturo Negron Garcia, Santurce, Puerto Rico, for Rosa Santiago.
    Frank Inserni, Hato Rey, Puerto Rico, for Ariel Santiago.
    William De la Cruz, San Juan, Puerto Rico, for Manuel Flores.
   MEMORANDUM OPINION IN SUPPORT OF ORDER

FUSTE, District Judge.

Defendants were indicted on charges of aiding and abetting to achieve an unlawful importation of cocaine in violation of 21 U.S.C. § 952(a), 18 U.S.C. § 2. Defendants were also charged with unlawful possession with intent to distribute cocaine, 21 U.S.C. § 841(a)(1), 18 U.S.C. § 2.

On December 26 and 27, 1985, co-defendant Osorio de Santiago filed a motion for return of property and a motion to suppress evidence. Fed.R.Crim.P. 41(e)(f). This Memorandum Opinion is entered in support of our Order given in open Court on January 7, 1986. On said occasion we heard evidence and denied defendants’ motions to suppress.

I.

The following account is based on our credibility judgment of government witnesses that testified at the combined preliminary and detention hearing held on November 14, 1985, and at the suppression hearing held on January 7, 1986.

On November 9, 1985, at approximately 1:00 P.M., U.S. Customs Service officers at Pier 3, San Juan, Puerto Rico, observed that Manuel Flores, a crewmember of the M/V CARLA C, disembarked walking in a strange manner. He seemed to have difficulty in flexing his shoes as he walked. The agents became suspicious. A lawful border search on Flores produced 527.9 grams of cocaine. The controlled narcotic was concealed in compartments under the inner sole of Flores’ shoes. The crewmember was placed under arrest and was Miranda warned. A search incidental to the arrest produced a piece of paper with a note indicating “Dupont Plaza Hotel, Room 902”.

During the post-arrest detention, Flores voluntarily stated that he had an agreement to deliver the cocaine to the occupants of Room 902 in exchange for $500.00. Flores was not aware of the identity of the recipients of the cocaine. At about 1:45 P.M., Flores voluntarily agreed to cooperate with government authorities by performing a controlled delivery of the cocaine. A surveillance team of about ten Drug Enforcement Administration and U.S. Customs Service agents was established. The team arrived at the Dupont Plaza Hotel at about 2:15 P.M. At least one of the agents there posted had observed a male, later identified as Ariel Santiago, and two females, later identified as Eugenia Osorio de Santiago and Rosa Santiago, check out of the hotel. Properly speaking, DEA agent Enrique Nieves saw Ariel Santiago check out and board a taxi where two females were waiting. As they left the hotel in the taxicab, the three individuals were followed in another vehicle by DEA agents F. Duncan and E. Nieves up to the Palace Hotel in Isla Verde. After the individuals arrived at the Palace Hotel, the agents saw the male (Ariel Santiago) and one of the females (Rosa Santiago) board another cab. The couple came to Pier 6 in Old San Juan. Eugenia Osorio de Santiago was not seen boarding the second cab. On foot, the two mentioned persons approached Pier 3, where the M/V CARLA C was stationed. There, they met cooperating co-defendant Flores and Customs agent Ken Torres, who was acting in undercover capacity as a narcotics trafficker.

Meanwhile, at the DuPont Plaza Hotel, the agents learned that Room 902 had been registered to E. Santiago with address at 232 Stanhope St., Brooklyn, New York.

The hotel manager agreed to open Room 902. The group proceeded upstairs, knocked on the door, but no one answered. The manager opened the door and realized that the occupants were gone.

Agent Ken Torres testified at the suppression hearing that at Pier 3 he pointed to either his shoes or to Flores’ shoes. Co-defendant Ariel Santiago nodded as if he understood. Ariel and Rosa Santiago then invited the agents to Room 2025 of the Palace Hotel. This invitation given by signals and brief words was subsequently confirmed by Ariel Santiago in a cafeteria nearby the Palace hotel. It appears that the agents later discovered that the name and address listed for the registered guest of Palace 2025 was the same as the one provided for Dupont 902.

At about 4:15 P.M., agent Ken Torres, in an undercover capacity and with cooperating co-defendant Flores, arrived at the Palace Hotel. They met briefly behind a rental car business. Flores put his cocaine-loaded shoes back on. Both persons joined Ariel Santiago, who had arrived independently at the hotel area, and the three took the elevator to the twentieth floor. Rosa Santiago was not in the elevator with them. As they stepped out into the hallway, Ariel Santiago commented in Spanish that “they had caught two this morning”, as if implying a motive for their sudden change of accommodations. Ariel Santiago then knocked on the door of Room 2025, although it is unclear as to who opened the same, that is, Ariel Santiago or an occupant. Santiago then escorted agent Torres and co-defendant Flores into the room, where they met Eugenia Osorio de Santiago and Rosa Santiago. Agent Torres saw as Manuel Flores gave the shoes with the cocaine — that had earlier been seized — to Ariel Santiago. Torres then observed as Ariel passed on the shoes with the cocaine to Eugenia Osorio de Santiago, Ariel Santiago’s wife. Rosa Santiago inquired whether Manuel Flores had an extra pair of shoes. He did not. One or the other female asked Ariel Santiago to buy two pairs of shoes for Flores and Torres. Torres had indicated that he also had cocaine in his sneakers. The cocaine delivery lasted about five minutes.

Agent Ken Torres further testified that he had previously arranged with his fellow officers that upon his opening the door of Room 2025, that would constitute the signal for an immediate apprehension of the occupants.

The three or four agents who were to assist Torres stood by the side of the hallway in a place not visible to one opening the door of Room 2025. As Torres opened the door, presumably to buy a pair of shoes with Ariel Santiago and also to signal his colleagues, he could not see or hear his fellow officers. In a split second decision, agent Torres initiated the arrest procedure by himself, starting with Ariel Santiago by grabbing him at the moment he was about to leave the room. Torres identified himself as a federal agent. Immediately thereafter, the other agents entered the hotel room without a warrant and assisted Torres in arresting the defendants. Agent Torres took custody of Flores. The Miranda warnings were dutifully given. The arrest did not give rise to any physical violence nor to any overt destruction of evidence. At the time of the arrests, the agents noticed several handbags scattered throughout the room. Some were on top of a dresser, others on a bed. The handbags were seized by government agents, and later searched at the U.S. Customs House in Old San Juan. Defendants seek to suppress the fruits of said search, including $8,368.61 and some airline tickets seized from one of the handbags. The airline tickets are not material. They were not used as evidence at trial.

II.

At the outset we must decide whether the warrantless entry by undercover agent Ken Torres into room 2025 of the Palace Hotel constitutes a “search” within the meaning of the Fourth Amendment. Absent a “search”, the Fourth Amendment standards governing the reasonableness of the government’s intrusion are inapplicable.

A “search” represents an infringement by the government of a legitimate expectation of privacy, one which society is prepared to accept as reasonable. Katz v. United States, 389 U.S. 347, 351-53, 88 S.Ct. 507, 511-12, 19 L.Ed.2d 576 (1967). If a person has control over information which he considers to be personal, but he fails to make an objective manifestation of it, no legitimate expectation of privacy can possibly attach. Even when the accused has a subjective expectation that an illegal activity would go unnoticed by the authorities, there is no privacy in the Katz sense for activities conducted in “open fields”. Oliver v. United States, 466 U.S. 170, 180, 104 S.Ct. 1735, 1742, 80 L.Ed.2d 214 (1984). Similarly, there is no “search” when an undercover agent enters a store as an ordinary customer for the purpose of transacting business. Maryland v. Macon, — U.S. -, -, 105 S.Ct. 2778, 2782, 86 L.Ed.2d 370 (1985). “What a person knowingly exposes to the public, even in his own home or office, is not a subject of Fourth Amendment protection.” Katz v. United States, 389 U.S. at 351, 88 S.Ct. at 511. Thus, a home or hotel room is not any different from a store or any public place when objectively it appears that an expectation of privacy which could have been recognized as legitimate, was lost. Lewis v. United States, 385 U.S. 206, 210, 87 S.Ct. 424, 427, 17 L.Ed.2d 312 (1966). In Lewis, the Supreme Court recognized the value of undercover police activity for effective law enforcement. There, as here, an undercover agent was invited and admitted by defendant into his home for the purpose of negotiating a felonious sale of narcotics.' The Supreme Court of the United States held:

Without question, the home is accorded the full range of Fourth Amendment protections. (citations omitted). But when, as here, the home is converted into a commercial center to which outsiders are invited for purposes of transacting unlawful business, that business is entitled to no greater sanctity than if it were carried on in a store, a garage, a car, or on the street. A government agent, in the same manner as a private person, may accept an invitation to do business and may enter upon the premises for the very purposes contemplated by the occupant.

Id. at 211, 87 S.Ct. at 427.

Here, agent Ken Torres, while at Pier 3, was invited by Ariel and Rosa Santiago, and later escorted by Ariel Santiago, into Room 2025 of the Palace Hotel only for the purpose of executing a felonious sale of cocaine. Further, there has been no deception of the kind proscribed by Gouled v. United States, 255 U.S. 298, 41 S.Ct. 261, 65 L.Ed. 647 (1921). The consensual entry by agent Torres is therefore not a Fourth Amendment “search”. This holding is not intended to undercut the well-established rule that an occupant of a hotel room is entitled to have as much privacy there as in his own home, absent the criminal activity described herein. United States v. Jeffers, 342 U.S. 48, 51-52, 72 S.Ct. 93, 95, 96 L.Ed. 59 (1951); United States v. Baldacchino, 762 F.2d 170, 175— 76 (1st Cir.1985); 1 W. LaFave, Search and Seizure, Ch. 2 § 2.3(b) at 298 (1978). We emphasize, however, that whatever privacy interests could have been asserted by the occupants of Room 2025, those interests vanished as a result of the legitimate undercover police activity conducted in this case. The lawful entry and presence of agent Torres also “... precludes any argument that later entries [by his fellow officers] violate the privacy of occupants.” United States v. Bradley, 455 F.2d 1181, 1186 (1st Cir.1972), affd on other grounds, 410 U.S. 605, 93 S.Ct. 1151, 35 L.Ed.2d 528 (1973); cf. United States v. Harris, 713 F.2d 623, 626 (11th Cir.1983) (“search”, but exigent circumstances justified re-entry); United States v. Farra, 725 F.2d 197, 199 (2d Cir.1984) (warrantless entry justified by exigent circumstances).

When an undercover agent conducts a criminal investigation within the boundaries of Lewis v. United States, 385 U.S. at 211, 87 S.Ct. at 427, as agent Torres did here, any subsequent intervention by his fellow law enforcement officers with the purpose of assisting said agent in the apprehension of suspects is not a Fourth Amendment “search". Accordingly, it is unnecessary for us to consider whether any exigent circumstances could have justified a warrantless “search” of the premises. But cf, United States v. Veillette, 778 F.2d 899, 902 (1st Cir.1985).

III.

We turn now to the legality of the warrantless arrests of co-defendants Ariel Santiago, Rosa Santiago, and Eugenia Osorio de Santiago.

Based on the totality of the circumstances of this case, the agents had reason to believe that a crime was being committed, or about to be committed by defendants. Illinois v. Gates, 462 U.S. 213, 230-31, 103 S.Ct. 2317, 2328, 76 L.Ed.2d 527 (1983). While at Palace Hotel Room 2025, agent Torres witnessed Manuel Flores give the coeaine-loaded shoes to Ariel Santiago. He also observed how Ariel passed the shoes to Eugenia Osorio de Santiago. Accordingly, agent Torres had probable cause to initiate the arrest, commencing with Ariel Santiago. As to the assisting officers, probable cause was also present. First, both the surveillance team and the plans for the controlled delivery were initiated as a result of co-defendant Flores’ willingness to deliver the cocaine to the occupants of Room 902. Second, as is typical of many drug transactions, the agents gained knowledge of defendants’ sudden change of accommodations and were aware of the meeting of Ariel and Rosa Santiago with undercover agent Torres and co-defendant Flores at Pier 3, and of the subsequent invitation to the Palace Hotel. The agents had reason to believe that the occupants of Room 2025 were probably the same as those previously occupying Room 902. Finally, the agents saw — pursuant to their pre-arranged plan — as agent Torres opened the door of Room 2025 and initiated the arrest of Ariel Santiago. We conclude that probable cause existed. That alone legally .justifies the warrantless arrests of Ariel Santiago, Eugenia Osorio de Santiago, and Rosa Santiago.

Our analysis is not in contradiction with the settled rule that absent exigent circumstances, warrantless arrests inside .the home are unlawful even when supported by probable cause. Payton v. New York, 445 U.S. 573, 585-89, 100 S.Ct. 1371, 1379-81, 63 L.Ed.2d 639 (1980). Payton clearly presupposes an unwarranted, non-consensual intrusion into the privacy of an individual’s home that is noticeably absent here. Id. at 583, 100 S.Ct. at 1378. That case "... did not purport to decide ... whether an initial consensual entry would justify a subsequent warrantless arrest.” United States v. White, 660 F.2d 1178, 1182-83 (7th Cir. 1981). Having already determined the legality of the initial entries under Lewis, and the requisite probable cause, we hold that United States v. Watson, 423 U.S. 411, 423-24, 96 S.Ct. 820, 827-28, 46 L.Ed.2d 979 (1976), which justifies a warrantless, probable cause arrest in a public place, controls here. In accord, Florida v. Perry, 398 So.2d 959, 961 (Fla.Dist.Ct.App. 1981). The arrests of defendants are, as stated before, lawful.

IV.

Concurrent with the lawful arrests, the agents seized several handbags which were visibly scattered throughout the room. A stationhouse search of the handbags later produced evidence to be used by the government at trial, to wit: the $8,368.61. The government contends that the seizure was constitutional as the evidentiary items were in “plain view”, and that the station-house search constituted a valid inventory search. Defendants do not appear to question the legality of the seizure. They do contend that the inventory search cannot be justified under Illinois v. Lafayette, 462 U.S. 640, 103 S.Ct. 2605, 77 L.Ed.2d 65 (1983).

It is undeniable that the government’s taking of the property located inside of the room constitutes a Fourth Amendment “seizure”, as it interfered with defendants’ possessory or ownership interests. See Project: Criminal Procedure, 73 Geo.L.J. 253, 312-17 (1984). The Supreme Court, in Illinois v. Andreas, 463 U.S. 765, 771, 103 S.Ct. 3319, 3323, 77 L.Ed.2d 1003 (1983), explained:

The plain view doctrine authorizes seizure of illegal or evidentiary items visible to a police officer whose access to the object has some prior Fourth Amendment justification and who has probable cause to suspect that the item is connected with criminal activity.

As to the first requirement, we have concluded that the officers were lawfully present inside the room at the time of the seizure. With respect to probable cause, the standard is not whether the officers knew that incriminating evidence would be found inside the handbags, but whether there was a fair probability that the contents of the luggage may be “useful as evidence of a crime.” Texas v. Brown, 460 U.S. 730, 742, 103 S.Ct. 1535, 1543, 75 L.Ed.2d 502 (1983). Given all the circumstances surrounding the arrests of said defendants, the agents had reason to act as they did regarding the seizure of the luggage at the scene of the delivery of narcotics. Thus, we agree that the items seized were in “plain view”. This brings us to Osorio’s motion for return of property, i.e., monies seized from her handbag at the U.S. Customs House in Old San Juan. Fed.R. Crim.P. 41(e).

A post-arrest inventory search of an arrestee’s person or area within his immediate control or possession is lawful even without probable cause. Illinois v. Lafayette, 462 U.S. at 643-44, 646, 103 S.Ct. at 2608, 2609. Beyond the narrow confines of Lafayette, a valid inventory search may still be justified if the government proves that 1) the intrusion into the home did not raise Fourth Amendment concerns, and 2) there was probable cause to seize items beyond the arrestee’s person or area within his immediate possession or control. Here, the agents were lawfully inside the room, and also had probable cause to seize those evidentiary items in plain view. Cf United States v. Lyons, 706 F.2d 321, 331-35 (D.C.Cir.1983). The rationale which justified an inventory search in Lafayette, fully applies where, as here, the government entries are consensual, and the subsequent arrests and seizures are lawful. We conclude that in this case the government’s search of Osorio’s handbag at the stationhouse was reasonable.

By virtue of the foregoing, our bench ruling of January 7, 1986 at the conclusion of the suppression hearing stands. The motion for the return of moneys and the motion to suppress shall stand DENIED.

IT IS SO ORDERED.

      . The motion for the return of property relative to $8,368.61 is in the nature of a motion to suppress. The trial of this cause took place January 8-10, 1986. Co-defendant Flores pleaded guilty. The remaining co-defendants were found guilty on both counts of the indictment. We note that the evidence received at trial reinforces and does not detract from the factual scenario developed during the hearing on the motions to suppress held January 7, 1986.

      . Flores, the only defendant with standing to challenge the seizure of the cocaine, has not contested the legality of the border search and seizure. As to the government entry into Room 2025 of the Palace Hotel, the "standing" of co-defendants is premature, unless we first find that said intrusions constitute a "search”. Both are distinct inquiries. See Y. Kamisar, W. La-Fave, J. Israel, Modern Criminal Procedure, Ch. 11 at 806 (5th ed. 1980). A "search” focuses on the nature of the particular government intrusion and its impact on anyone's legitimate privacy interests, whereas "standing” refers to the particular person that has a right to assert that his legitimate privacy concerns have been infringed by government conduct.

      . At the trial, this matter came to light in a complete perspective. A customs agent, while arresting the female co-defendants at Palace Hotel Room 2025, noticed Eugenia Osorio de Santiago's foreign accent. As a matter of fact, the file of this cause shows that she is a Colombian national with residence in the United States. The customs agent asked the co-defendant for an identification card. She stated that her ID card was in a handbag and allowed the agent to secure the same. When the agent opened the handbag, he saw a substantial amount of money. The identification of the arrested co-defendant was done. The agent instructed others to transfer the co-defendant to the U.S. Customs House with her bag so that the exact amount of money could be accounted for. These facts do not alter our finding on the subject of the inventory search.

      . At the suppression hearing, the government did not establish the location of the items seized with respect to the location of those defendants arrested. This made it impossible for us to decide at the suppression hearing whether Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969), applied. Notwithstanding that fact, at trial the evidence established clearly the relationship of the moneys seized with a particular defendant, Eugenia Osorio de Santiago. See footnote 3, ante.

      . "This inventory, which is a search for Fourth Amendment purposes, has been rather consistently upheld by the courts as meeting these legitimate objectives: (1) protecting the arrestee’s property while he is in jail; (2) protecting the police from groundless claims that they have not adequately safeguarded the defendant’s property; (3) safeguarding the detention facility by preventing introduction therein of weapons or contraband; and (4) ascertaining or verifying the identity of the person arrested.” W. LaFave & J. Israel, Criminal Procedure, Ch. 3 § 3.5(c) at 251 (1984). Items 1 and 4 are directly applicable to this case.


author: PEREZ-GIMENEZ, District Judge.

text:
    TRECO, INC., et al., Plaintiffs, v. MARINA de PALMAS, INC., Defendant.
    Civ. No. 84-0847(PG).
    United States District Court, D. Puerto Rico.
    Jan. 17, 1986.

      Edilberto Berrios Pérez, San Juan, Puerto Rico, for plaintiffs.
    Manuel Moreda Toledo, San Juan, Puerto Rico, for defendant.
   OPINION AND ORDER

PEREZ-GIMENEZ, District Judge.

Plaintiffs filed this action seeking foreclosure of some pledged mortgage notes and assigned accounts receivables. Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332. Defendant answered the complaint admitting the execution of the mortgage notes (complaint pleadings 5 to 9); the release of certain portions of land from the effects of the mortgage (complaint pleading 10); and the existence of a debt to plaintiffs in the principal amount of $2,820,000.

Defendant raised as a defense, as well as a counterclaim, that plaintiffs made certain false representations related to the condition of the mortgaged property, namely, that the property had been constructed and operated in conformity with the Corps of Engineers permit. However, defendant simultaneously alleges and acknowledges having received a disclosure or exception to the effect that the property may not comply with the harbour construction permit issued by the U. S. Army Corps of Engineers (counterclaim pleading 7).

Plaintiffs have moved for summary judgment supported by affidavits, correspondence, documents from the U.S. Army Corps of Engineers, transcripts from depositions and admissions in record. Defendant has opposed the requested entry of summary judgment alleging that a controversy exists over one substantial, genuine and material issue of fact, which alleged issue defendant has phrased as follows:

“Whether plaintiffs have any responsibility toward defendant counterclaimant if the harbour was constructed in violation of the Corps permit” (item six of the Opposition to Motion Requesting Summary Judgment and Dismissal of Counterclaim).

After examining the pleadings, their annexed exhibits and supporting affidavits, the record in this case now reveals no genuine issue of material fact and that plaintiff is entitled to judgment as a matter of law.

FINDINGS OF FACT

1. Co-plaintiff Treco, Inc., is a Corporation organized and existing under the Laws of Florida (pleading 2 of the complaint and affidavit by Mr. Thomas A. Barrett), having its principal place of business in Jacksonville.

2. Co-plaintiff Chemical Real Holdings, Inc., is a corporation organized and existing under the Laws of New York (pleading 3 of the complaint and pleading 3 of the counterclaim), having its principal place of business in New York.

3. Defendant, Marina de Palmas, Inc., is a Corporation organized and existing under the laws of Puerto Rico, with its principal place of business in Puerto Rico (see pleading 1 of the counterclaim) and presently is the owner of the real estate described in paragraphs 12 and 13 below (certifications from the Property Registry).

4. The parties held negotiations which culminated in the purchase and financing of the harbour of Palmas del Mar and its surrounding land. Mr. Jorge Martel negotiated on behalf of Marina de Palmas (oral deposition of Mr. Jorge Martel dated September 10, 1984). Mr. Martel worked with Palmas del Mar from 1973 to 1977 and had been in charge of the financing of the development of the harbour.

5. On August 27, 1981, the parties to this case executed a document entitled Agreement (Exhibit A of defendant’s answer to the complaint). Said Agreement contains the following provisions pertinent to the case at bar:

3.4 CONDITION OF PROPERTY: Treco and Chemical make no representation or warranty expressed or implied, regarding the condition or fitness for any purpose of the property. The property is being sold on an “as is” basis.
6.1 (E) Except as disclosed to purchaser in writing, within 30 days from the date hereof, to the best knowledge and belief of Palmas (a reasonable investigation having been made) all of the property to be purchased by purchaser pursuant to this Agreement has been constructed, and is being operated and maintained, substantially in accordance with all applicable statutes, rules, regulations and orders, including, but not limited to those related to labor (Article 5 refers to Article 6 as conditions precedent).
9.9 ENTIRE AGREEMENT: This Agreement and the exhibits attached hereto, together with the documents of even date executed by the parties hereto, embody the entire agreement between the parties in connection with this transaction and there are no oral or parole agreements, representations or inducements existing between the parties relating to this transaction which are not expressly set forth herein and covered hereby. This agreement may not be modified except by a written agreement signed by all of the parties.

6. Defendant admits having been notified and received copy of certain Exhibit “C” (Exhibit 7 of the Opposition to Motion) Requesting Summary Judgment..., and pleading number 7 of the counterclaim. The information received by Marina de Pal-mas was the following in its pertinent part:

The released property was excavated and other works carried out such as bulk-heading, breakwaters, causeways, gates, boat slips, road and the like for the construction of the marina and harbour facilities commonly known as “the Palmas Marina”. Consequently no assurance can be given that the surface area of the said Property now under water or a road or that the works built on sand banks or on the ocean bed may not be construed to be, in accordance with the applicable statutory authority, waters of the United States, public roads or lands reclaimed from the sea and therefore deemed to be of the public domain and thus the ownership and/or under the jurisdiction of Federal or Commonwealth governments. Any transfer of title of the referenced property, is and will be and limited to whatever rights and interest Palmas has on the Property.
The released property may not comply with certain Coast Guard regulations pertaining to navigational aids and proper maintenance for the Palmas Marina, and may additionally not presently comply fully with the harbour construction permit issued by the Corps of Engineers due to lack of sufficient funds for such purposes and/or due to force majeure considerations including but not limited to hurricanes designated as David and Frederick.

7. Having knowledge of the information previously quoted, Marina de Palmas signed the Agreement and proceeded before the U.S. Army Corps of Engineers to obtain permit for the repair of the breakwater in conformity with Exhibit E of the August 27,1981, Agreement, which Exhibit E provided as follows:

A) REQUIRED IMPROVEMENTS:
1. Reconditioning of the breakwater in accordance with U.S. Army Corps of Engineers specifications and requirements. Satisfactory evidence of the reconditioning shall be an unconditional certificate from an engineer acceptable to Treco and Chemical to the effect that the U.S. Army Corps of Engineers has found the repair satisfactory.
2. Dredging of the channel serving the bulkhead harbour area to an average depth of at least eight (8) feet.

Work had been initiated as of July 28, 1981, to repair the breakwater in accordance with the Corps of Engineers permit issued and later modified (letter dated July 28, 1981, to the U.S. Corps of Engineers by Mr. Gustavo E. Sánchez, copy to Marina de Palmas, Inc.). Permit for the repair was given on August 6, 1981 (pages 7 and 8 of the Appendix to Motion for Summary Judgment).

8. On November 23, 1981, Marina de Palmas purchased the real estate and issued the mortgage notes object of this foreclosure. The purchase and mortgage were executed by deeds 199 and 200, both dated November 23, 1981, before Notary Public Roberto Santana Aparicio. As per the public deeds executed between the parties, the purchaser and mortgagor of the real estate did not receive any warranty against eviction over the inner and outer harbours, water areas, breakwater, legal easements, maritime zone, planning board limitations and surface area. Marina de Palmas expressly waived any claim, right or cause of action for receiving less land and structures than contained within the boundaries (clause twelve of Deed 199 above).

9. At the moment of the closing when the purchase and mortgage were executed, Mr. Jorge Martel, who negotiated the matter on behalf of Marina de Palmas, was present, and his perception and understanding of the transaction was that the property was being purchased “as is” (transcript of the oral deposition of Mr. Jorge Martel at pages 26 and 27, not opposed by defendant).

10. Marina de Palmas, on November 23, 1981, for value received executed certain mortgage note payable to the bearer under affidavit No. 756 of same date, before Notary Public Roberto Santana Aparicio, in the principal amount of $3,975,000, agreeing to pay an additional amount as liquidated damages of $200,000 (clauses twenty-eight and twenty-four of Deed 199) in case of foreclosure to cover costs, expenses and attorney’s fees. Principal bearing interests at 8% per year, except in case of default when interests would accrue at 15% per year (accepted pleading 5 of the complaint).

11. On that same date, Marina de Pal-mas also issued, for value received, mortgage note payable to the bearer under Affidavit No. 757, dated November 23, 1981, before Notary Public Roberto Santana Aparicio, in the principal amount of $25,-000, and a liquidated sum of $1,500,000 for costs, expenses and attorney’s fees in case of foreclosure. The terms for interests were identical as those previously stated (accepted pleading 6 of the complaint).

12. To secure the Mortgáge Note previously described in the amount of $3,975,000 (a distribution of this credit was made) and additional advances (the liquidated credit in case of foreclosure in the amount of $199,-750) Marina de Palmas by Deed 199 (previously identified) encumbered with a first mortgage the following property in the amount of $3,975,000.

RURAL: Parcel of land located in Candelera Abajo Ward, of the Municipality of Humacao, P.R., with an area of ninety-one cuerdas with three thousand three ten-thousandths of another (91.3003), equivalent to eighty-four ten-thousandths of another (86.6734), equivalent to three hundred fifty-eight thousand eight hundred forty-seven meters and seven thousand six hundred seventeen ten-thousandths of another (358,847.7617) boundaring: on the NORTH, WEST AND SOUTH with property of Palmas del Mar Company, and on the EAST with the Caribbean Sea and with property of Pal-mas del Mar Company.”
(Farm # 16,290, recorded at page 95, volume 372 of Humacao, Puerto Rico.)

As a consequence of segregations of land and partial releases of mortgage, this property has been reduced in area by approximately 9.1724 cuerdas and the description remains substantially the same, (complaint pleading 10, admitted by defendant).

13. To secure the Mortgage Note previously described in the amount of $25,000 Marina de Palmas by Deed 200 previously identified encumbered with a first mortgage the following property:

“RURAL: Parcel located in Candelero Abajo Ward in the Municipality of Humacao, composed as per survey of a surface area of twelve thousand five hundred sixty nine (12,569) square meters, nine thousand nine hundred thirty one (0.9931) ten thousandths of a square meter equivalent to three (3) cuerdas one thousand nine hundred eighty one (0.1981) ten thousandths of an acre, one thousand sixty one (0.1061) ten thousandths of an acre, boundaring in the North, South, East and West by the propety from which it is segregated.” (Farm # 16,838 recorded at page 120, volume 382 of Humacao, Puerto Rico— Pleadings # 7 and # 8).

14. The mortgage notes previously identified were pledged to Treco, Inc., and Chemical Real Holdings, Inc., on a 50% undivided interest to each of them. The pledge agreement was executed under Affidavit 761, dated November 23, 1981, before Notary Public Roberto Santana Aparicio (Pledge Agreement and Sworn Statement of Mr. Thomas A. Barrett).

15. Treco, Inc., and Chemical Real Holdings, Inc., are the holders of those two mortgage notes herein referred to (Sworn Statement of Mr. Thomas A. Barrett).

16. Both mortgage deeds 199 and 200 were properly recorded at the Property Registry of Puerto Rico, Humacao Section (certifications from the Property Registry).

17. The parties agreed that the transaction was being consumated in consideration of the experience, expertise and knowledge of Marina de Palmas and its principals with respect to the mortgaged property and that kind of development (clause twenty-fifth “7” of Deed 199).

18. Both mortgages were made extensive to the land property, the land itself, all buildings, structures, facilities and improvements present or future; all rights of way, easements, tenements, hereditaments and appurtenances present or future belonging or appertaining to the mortgaged property; and, to all rents, earnings, revenues, issues and profits of the property and all items encumbered with the mortgages.

19. The parties in this case also executed a statement of assignment of accounts receivable, assigning as collateral all accounts receivable to be generated by the mortgaged properties. Said statement of assignment was recorded at the Property Registry of Puerto Rico, San Juan Section, at entry 205, page 205, volume 4 of the Registry of Factor’s Lien (Statement of Assignment, 10 L.P.R.A. 581-588).

20. Marina de Palmas, Inc., did repair the breakwater and it is presently standing as part of the property object of foreclosure and is essential to its safety, security and preservation.

21. The mortgage notes were payable in yearly installments of one million dollars plus accrued interests. The principal amount owed under the mortgage notes has been reduced by partial payments to $2,820,000.

22. This Court has previously determined in this case, by admission of defendant (Order dated August 13, 1984) that defendant has not made payments of interests since November 23, 1982, and that the one million dollar payment that became due on November 23, 1983, was not made. Furthermore, this Court also found in the order dated August 13, 1984, from admissions and documents on record (Deed 199, clause 23) that such non-payment is an event of default under the mortgage notes and mortgage deeds; and as a consequence of the default incurred by defendant, plaintiffs, after granting a grace period to defendant to cure the default without defendant having cured said default, declared Marina de Palmas in substantial default under the Mortgage Notes and Deeds previously identified, with the consequences contracted by the parties of acceleration of maturity and default interest rate of 15% per year (clause twenty third of Deed 199 and clause fourteen of Deed 200).

23. This Court by Order dated August 13, 1984, appointed a receiver to take possession of the property and administer it. The Receiver appointed was Mr. Hans López Stubbe, and plaintiffs as of August 1985 had advanced to the Receiver the sum of $47,484.82, which were useful and necessary and incurred in the ordinary course of receivership for the proper administration of the property under receivership. Said amount is secured under the mortgage notes (clause 14 of Deed 199).

24. The receivership was ordered as a provisional remedy under F.R.Civ.P. 64 and Rule 56 of the Puerto Rico Rules of Civil Procedure and the agreement of the parties in Deeds 199 and 200 previously identified, to adequately protect that portion of plaintiffs’ collateral consisting of an assignment of rents and profits generated by the mortgaged property and perfected under the laws of Puerto Rico for being contained in a public instrument with true date, 31 L.P. R.A. 3941, and for having been recorded at the Property Registry of Puerto Rico. (10 L.P.R.A. 581-588).

25. Plaintiffs have a lien, under the assignment of rents and the extension of the mortgages, over the income generated by the receivership.

26. Defendant owes plaintiffs the sum of $2,820,000 principal; the sum of $345,-396.16 of accrued and unpaid interests as of March 2, 1984, and interests continue to accrue at $1,158.91 per day, $201,500 for liquidated damages for costs, expenses and attorney’s fees in case of judicial foreclosure like the present one (sworn statement of Mr. Thomas A. Barrett) and $47,-484.82 for advances by plaintiffs to the Receiver. Simple mathematical computations show a total amount of interest owed as of July 31, 1985, of $943,393.72 (516 days from March 2, 1984, to July 31, 1985), and interests continue to accrue at the rate of $1,158.91 per day. Said sum is liquidated, due and payable.

27. The parties agreed that the mortgage would be none recourse as permitted under the laws of Puerto Rico and that plaintiffs’ sole recourse to collect their credit would be foreclosure of the various collaterals given to plaintiffs, that is, the mortgages and their extensions and the rents, profits and accounts receivable. (Clause 23(2)(b); 30 L.P.R.A. 2603). The parties valued the property described in fact number 11 above, that is, farm number 16,290, recorded at page 95, volume 372, of Humacao at $3,980.000 for the first public sale in case of judicial foreclosure; and valued farm No. 16,838, recorded at page 120, volume 382, Registry of Property of Puerto Rico, Humacao Section, in the amount of $25,000 for the first public sale in case of judicial foreclosure. (Deed 199, clauses 18 and 28; Deed 200, clauses 9 and 19).

28. These facts are sufficient as a matter of law to enter judgment in the foreclosure complaint. Nevertheless, this Court must make further findings inasmuch as Marina de Palmas has raised both as a defense and as a counterclaim allegations of false representations by plaintiffs as to the condition of the property, thereby inducing defendant to purchase the property object of foreclosure. Marina further raises as a defense the issuance of a cease and desist order by the U.S. Army Corps of Engineers to discontinue construction in the harbour.

29. It is undisputed that the U.S. Army Corps of Engineers issued a cease and desist order against Marina de Palmas, Inc., on October 17, 1983, enjoining it from further construction or development in the harbour for having constructed certain items without the required permit.

30. It is also undisputed that the cease and desist order was left without effect and that permit was given on April 19, 1984, because the deviations consisted of work on dry land which did not require a permit and other work was minor. (Letter from the Corps of Engineers dated April 19, 1984).

31. It is alleged by Marina de Palmas that the issuance of the cease and desist order prevented Marina de Palmas from installing mooring piles for the finger piers.

32. It is undisputed that Marina de Pal-mas did not file with the Corps of Engineers a request for a permit to install the mooring piles until January 1984. (Oral depositen of Mr. José Negrón).

33. Engineer Gustavo Fuentes reviewed the U.S. Army Corps of Engineers permit for Marina de Palmas for the reconstruction of the breakwater prior to the execution of the purchase sale agreement (oral deposition of Mr. Fuentes, pages 19, to 21; letter to the Corps of Engineers dated July 28, 1981, and answer dated August 6, 1981).

34. Various of the items included in the cease and desist order had been constructed by Marina de Palmas. (Oral deposition of Mr. Fuentes, page 21; Marina de Palmas letters to the Corps of Engineers dated October 19, 1983, and November 18, 1983).

CONCLUSIONS OF LAW

This judgment is entered under F.R. Civ.P. 56. Sub-paragraph 6 of said Rule requires that the party opposing the request for summary judgment “must set forth specific facts” under affidavit “showing that there is a genuine issue for trial.” The rule commands that upon failure to respond the court “shall” enter judgment. This portion of Rule 56 was incorporated by a 1963 amendment to Rule 56 e; that amendment was a legislative recall of a line of cases holding that a mere controversy raised by the pleadings was sufficient to prevent summary judgment. U.S. v. Gos-sett, 416 F.2d 565 (9th Cir.1969), cert. denied, 397 U.S. 961, 90 S.Ct. 992, 25 L.Ed.2d 253 (1970). The legislative purpose was to strengthen this mechanism to eliminate sham issues and avoid long trials.

As a result of the 1963 amendment to Rule 56, today the function of said Rule is to pierce formal allegations of fact in the pleadings and to determine whether further exploration of the facts is necessary. Hahn v. Sargent, 523 F.2d 461 (1st Cir. 1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754.

Complexity of the issues does not prevent entry of summary judgment if there is no genuine issue over any material fact. Zweig v. Hearst Corp., 521 F.2d 1129 (9th Circuit 1975), cert. denied, 423 U.S. 1025, 96 S.Ct. 469, 46 L.Ed.2d 399.

Although summary judgment should not be entered when there is the slightest doubt as to any material fact, Unión de Tronquistas v. Arlook, 586 F.2d 872 (1st Cir.1978); Morrissey v. Proctor & Gamble, 379 F.2d 675 (1st Cir.1967), it is to be entered as mandated by the rule when the opposing party has not raised by affidavits of persons with personal knowledge a single issue over a material fact, Hahn v. Sargent, supra, a material fact being one which affects the outcome of the litigation. The Court has previously held the following:

Assertions, by affidavit or otherwise, that a genuine issue of fact exists for trial, or mere denials or conclusory denials even if under oath are insufficient to defeat Summary Judgment.” Molinos de Puerto Rico, Inc. v. Sheridan, 62 F.R.D. 172 (1973).

The undisputed facts have established that plaintiffs are holders of a credit against Marina de Palmas, Inc., in the principal amount of $2,820,000. That said sum, plus interests, and a $200,000 credit in case of judicial foreclosure is a liquidated sum, due and payable, for having defendant not made the one million dollar payment that became due on November 23, 1983, which constitutes an event of default under the terms of the mortgage deed and note.

The law applicable to this case is the law of Puerto Rico. Erie v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The law of Puerto Rico recognizes and permits the parties to enter into such contracts as they see fit except those that are against the law, moral or public order. 31 L.P.R.A. § 3372. Contracts are law between the parties. 31 L.P.R.A. § 2994. Defendant contracted to unconditionally pay the mortgage notes in four annual installments of one million dollars each, plus interests. Obligations entered to be fulfilled in a term are demandable when the term has elapsed. 31 L.P.R.A. § 3061. Marina de Palmas did not make the one million dollar payment that became due on November 23, 1983. As a result, plaintiffs declared default and accelerated the remaining installments and, consequently, interests accrued at 15%. Plaintiffs now demand payment and foreclosure on their collateral.

As collateral Marina de Palmas, Inc., executed two mortgage deeds encumbering certain parcels and complied with the legal requirements of establishing the amount of encumbrance for each farm, providing the minimum price for public sale on each farm. 30 L.P.R.A. § 2566, 2575. The mortgages were constituted by public deeds which were recorded at the Property Registry. 30 L.P.R.A. § 2607. This Court consequently holds that the mortgages created by deeds 199 and 200 previously identified constitute legal and valid mortgages of first rank encumbering farm number 16,290, recorded at page 95, volume 372 of Humacao, Puerto Rico, more precisely described in fact number 11 above, in the amount of $2,795,000 of principal, plus accrued interests, and farm number 16,838, recorded at page 120, volume 382 of Humacao, in the amount of $25,000 of principal, plus interests and credits.

A mortgage is a collateral against which the creditor may collect its credit. 30 L.P. R.A. § 2551. A creditor secured by a pledge of mortgage notes may foreclose simultaneously upon the pledge and mortgage in the collection of its credit. Acevedo v. Domenech, 52 D.P.R. 460 (1938); In matter óf Supermercados San Juan, Inc., 575 F.2d 8 (1st Cir.1978). Having a mortgage debtor defaulted on the payment of any accrued payment of principal or interests the mortgage creditor may seek foreclosure. 30 L.P.R.A. § 2701; 31 L.P.R.A. § 3061.

The previous findings of fact and conclusions of law lead to the unavoidable consequence of plaintiffs’ right to summary judgment unless defendant has isolated or established controversy over one material fact. Defendant has attempted to do that in its arguments and with one affidavit from Mr. Enrico Frigerio. The material fact before consideration is as previously transcribed. We shall examine the sworn statements and documents submitted by the parties.

Defendant in its answer to the complaint and its counterclaim annexed various of the contract documents between the parties to this case. Since a summary judgment analysis pierces through formal pleadings, we shall emphasize on the sworn statements and other documents, but inasmuch as defendant’s pleadings incorporate the contractual documents annexed thereto, our analysis is extensive to defendant’s pleadings.

Defendant, Marina de Palmas, both as a defense and as a counterclaim, has alleged misrepresentations on behalf of plaintiffs as follows:

a) Intending to deceive and defraud;

b) Made false representations as to the condition of the property, the only one invoked is the permit from the U.S. Army Corps of Engineers;

c) Certain exceptions were made, specifically, that the property may not presently comply with the harbour construction permit issued by the-U.S. Army Corps of Engineers;

d) Marina believed the representations and purchased the property from Palmas del Mar (not a party in this case);

e) The representations were false, either intentionally or negligently made;

f) The Corps of Engineers issued a cease and desist order stating various deficiencies (five);

The documents Marina de Palmas annexed to its pleadings establish the following:

a) Plaintiffs made no representation as to the condition of the property; the sale was to be made with the property “as is”. (Clause 3.4 of the August 27, 1981, agreement, entitled Condition of the Property);

b) Palmas del Mar as of August 27, 1981, except as disclosed in writing, was to warrant and represent that to its best knowledge and belief the property had been constructed and operated substantially in accordance with applicable statutes. (Clause 6.1 of the August 27, 1981, agreement);

c) In Deed 200 previously identified defendant waived any and all claims for water areas and land adjacent to water. (Clause 27 of deed 200).

The contractual documents incorporated into defendant’s pleadings by reference do not support, but rather contradict the pleadings made inasmuch as plaintiffs did not make any warranties or representations as to the condition of the property; defendant’s quoted representation was not made but was to be made by Palmas del Mar unless excepted or a contrary disclosure was made.

In support of the motion for summary judgment plaintiffs submitted, among others, the following documents:

1. Sworn statement by Mr. Thomas A. Barrett, an Officer of co-plaintiff Treco, Inc.;

2. Cease and desist order from the Corps of Engineers;

3. Letters of Marina de Palmas to the Corps of Engineers;

4. Copy of portions of the transcript of oral depositions taken to:

a) Mr. Enrique Frigerio, President of Marina de Palmas;
b) Mr. Jorge Martel, who negotiated the purchase of the property on behalf of Marina de Palmas;
c) Engineer Gustavo Fuentes employed by Marina de Palmas to handle the Corps of Engineers matters since July 1981;
d) Mr. José Negrón, officer of the U.S. Army Corps of Engineers.

Marina de Palmas, Inc., in support of its opposition to the summary judgment requested submitted:

1. Sworn statement by Mr. Enrico Frigerio;

2. its own pleadings in this case;

3. one letter from Palmas del Mar dated 1974 and a presentation document dated 1975;

4. - certain Exhibit C that contains the disclosures made to Marina de Palmas pertaining to the condition of the property, including non-compliance with the Corps of Engineers permit.

Mr. Enrico Frigerio has admitted not having been involved in the situation until mid 1983 while the closing took place on November 1981. Mr. Enrique Figerio has admitted not having discussed the terms and conditions upon which Marina de Pal-mas purchased the harbour of Palmas del Mar, furthermore, that he never really read the contract under which Marina de Palmas purchased from Palmas del Mar. Mr. Frigerio does not have direct personal knowledge of the negotiations for the purchase nor the terms and conditions of said agreement and purchase.

The sworn statement submitted by defendant, Marina de Palmas, executed by Mr. Enrico Frigerio, addresses the terms .and conditions under which Marina de Pal-mas purchased the property. Said sworn statement does not affirmatively show that the affiant is competent to testify to the matters stated therein, therefore, does not meet the standards required by F.R.Civ.P. 56(e), and as admitted, Mr. Frigerio does not have personal knowledge of the negotiations or execution of the deeds that created the collaterals object of this foreclosure. As mandated by Rule 56, if the party opposing the summary judgment does not oppose it by identifying rational issues of fact in controversy and supporting the same with sworn statements of competent witness, the Court shall enter summary judgment, if appropriate, as a matter of law.

Mr. Jorge Martel, who participated in the negotiations for purchase and in the final closing on behalf of Marina de Palmas, stated in his oral deposition that the only representation made was just that it was being sold “as is” (oral deposition of Mr. Jorge Martel, dated September 10, 1984, pp. 26-27).

Marina de Palmas, Inc., did not request a permit from the U.S. Army Corps of Engineers to drive mooring piles for boat slips until January 19, 1984, that is, three months after the issuance of the cease and desist order (oral deposition of Mr. José Negrón, dated January 24, 1985, at pp. 29-31; oral deposition of Mr. Enrico Frigerio, pp. 22-24). Without requesting and obtaining a permit from the U.S. Army Corps of Engineers the law prohibits construction in or over navigable waters of the United States (33 U.S.C. § 403). Defendant without the required permit was enjoined from constructing mooring piles in navigable waters, both before and after the issuance of the cease and desist order and because it did not request a permit. Furthermore, admittedly many of the items that contributed to the issuance of the cease and desist order were built by Marina de Palmas (letters from Marina de Palmas to the Corps of Engineers, dated October 19, 1983, and November 18, 1983) and all those items were minor (oral deposition of Engineer Gustavo Fuentes and letter dated April 19, 1984, from the U.S. Army Corps of Engineers) or did not require a permit.

The principals of Marina de Palmas, as agreed by the parties, had extensive experience in the development of harbours. Also, Marina de Palmas had the assistance of Engineer Gustavo Fuentes, and the corporation had experienced, educated professionals in the development and administration of that kind of property. Those are facts to be considered under the local law in determining whether reasonable reliance can be placed on the alleged misrepresentation, Doody v. John Secton, 411 F.2d 1119 (1st Cir.1969); Miranda Soto v. Mena Ero, 109 D.P.R. 473 (1980).

Defendant has not properly established the existence of an issue over a material fact. This Court does not have any doubt as to any material fact, inasmuch as Marina de Palmas was expressly informed on the non-fulfillment of the requirements of the Corps of Engineers permit, and with the experience and education of the persons acting on behalf of Marina de Palmas, such as an engineer who investigated the permit with the Corps of Engineers, the standards legally required under the laws of Puerto Rico for the inducement by misrepresentation are not met with the undisputed facts before this Court.

This Court holds that plaintiffs are creditors of Marina de Palmas and that such credit is liquidated, due and payable; that plaintiffs have as collateral a pledge agreement under affidavit over certain mortgage notes; that the mortgages were properly executed and recorded, thereby constituting valid first mortgages over the farms previously described; that defendant has failed to establish or isolate, with sworm statements of competent witnesses, one issue over a material fact; that the purchase-sale agreement was negotiated and executed for the transfer of the property “as is” without warranties or representations mainly over the water areas; that the cease and desist order did not cause the impossibility of Marina to drive mooring piles inasmuch as defendant was legally enjoined from constructing for not having requested the corresponding permit.

This Court does not have the slightest doubt about any material fact that may prevent plaintiffs to be entitled to judgment in their favor in both the complaint and the counterclaim, specially considering the record before this Court and the requirements of F.R.Civ.P. 56 and Local Rule 311.12.

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

1. The mortgage constituted by Marina de Palmas by Deed 199 before Notary Public Roberto Santana Aparicio, at San Juan, Puerto Rico, on November 23, 1981, securing a mortgage note in the amount of $3,975.000, payable to the bearer, is a valid and subsisting mortgage and constitutes a lien prior to the estate or interests of the defendant in the above cause, on the mortgaged premises, as described in paragraph 12 above, which is described as follows:

RURAL: Parcel of land located in Candelero Abajo Ward of the Municipality of Humacao, Puerto Rico, with an area of ninety-one cuerdas with three thousand three ten-thousandths of another (91.-3003), equivalent to eighty-four ten-thousandths of another (86.6734), equivalent to three hundred fifty-eight thousand eight hundred forty-seven meters and seven thousand six hundred seventeen ten-thousandths of another (358,847.-7617) boundaring: on the NORTH, WEST and SOUTH with property of Pal-mas del Mar Company, and on the EAST with the Caribbean Sea and with property of Palmas del Mar Company.

As a consequence of segregations of land and partial releases of mortgage, this property has been reduced in area by approximately 9.1724 cuerdas and the description remains substantially the same. (Pleading No. 10, admitted by defendant)

2. The mortgage constituted by Marina de Palmas, Inc., by Deed 200, before Notary Public Roberto Santana Aparicio, at San Juan, Puerto Rico, on November 23, 1981, securing a mortgage note in the amount of $25,000, payable to the bearer, is a valid and subsisting mortgage and constitutes a lien prior to the estate or interest of the defendant in the above cause, on the mortgaged premises, as described in paragraph 13 above. The description of said property is as follows:

RURAL: Parcel located in Candelero Abajo Ward in the Municipality of Humacao, composed as per survey of a surface area of twelve thousand five hundred sixty nine (12,569) square meters, nine thousand nine hundred thirty one (0.9931) ten thousandths of a square meter equivalent to three (3) cuerdas one thousand nine hundred eighty one (0.1981) ten thousandths acre, one thousand sixty one (0.1061) ten thousandths of an acre, boundaring in the North, South, East and West by the property from which it is segregated.

(Farm No. 16,838, recorded at page 120, volume 382 of Humacao, Puerto Rico, pleadings 7 and 8)

3. The mortgages created by Deeds 199 and 200 extend, encumber and constitute valid lien over buildings and structures erected on the mortgaged property, the breakwater and easements appertaining to the mortgaged property.

4. Defendant, as debtor under said mortgage notes and as present owner of the land and building herein before referred to, is hereby ordered and adjudged to pay on to plaintiff the sum of $2,820,000 of principal of the first mortgage notes plus interests of said sum, which as of July 31, 1985, amounted to $943,393.72, and those interests that accrue in the future at the rate of $1,158.91 per day; plus $201,500 for costs, charges, disbursements and attorney’s fees in the above cause, plus $47,-484.82, which constitutes advances made by plaintiff to the Receiver, for a total of $4,012,378.50.

5. That plaintiff holds a perfected pledge over the mortgage notes described in facts 10 and 11 above.

6. Plaintiff has a perfected lien consisting of an assignment of rents and profits generated by the mortgaged property, and said portion of plaintiff’s collateral is presently under the custody of a receiver in this case, particularly the funds generated during the receivership; the receiver’s report demonstrates that the funds generated by the mortgaged property have been substantially consumed by the ordinary expenses, and plaintiffs have advanced funds to the receiver to cover the ordinary, useful and necessary expenses.

7. The mortgage notes object of foreclosure in this case are held by plaintiffs.

8. In default of the payment of the sums hereinbefore specified or of any part thereof, within ten (10) days from the date of entry of this judgment, the mortgaged property described in paragraphs one (1), two (2) and six (6) hereof, shall be sold at public auction to the highest bidder therefor, without an appraisal or right of redemption for the payment and satisfaction of plaintiffs mortgage within the limits secured thereby.

9. Mr. Hans López Stubbe is hereby designated and appointed Special Master to make the sale hereinbefore mentioned, but said Special Master shall not proceed to carry out the said sale nor do anything in connection therewith until further order of this Court and under the form and conditions to be directed by this Court.

10. The sale to be made by the Special Master appointed herein shall be subject to the confirmation of this Court, and the purchaser or purchasers thereof shall be entitled to receive possession of the property sold. The minimum bid to be accepted at the first public sale in accordance with the mortgaged deeds referred to in this auction is $3,980,000 for farm No. 16,290, recorded at page 95, volume 372, as described in paragraph 1 hereof, and $25,000 for farm No. 16,838, recorded at page 120, volume 382, Humacao Section, as described in paragraph 2 hereof.

11. Any funds derived from the sale to be made in accordance with the terms of this judgment and such further orders of this Court shall be applied as follows:

a) To the payment of all proper expenses attendant upon said sale, including the expenses, outlays and compensation of the Special Master appointed herein, after the said compensation and expenses shall have been fixed and approved by the Court, all said expenses to be deducted from the sum of $201,500, provided in the deeds of mortgage for costs, charges and disbursements, expenses and attorney’s fees.

b) To the payment of all expenses or advances made by the plaintiff for an amount not to exceed $47,484.82.

c) To the payment of that part of the indebtedness owed to plaintiff up to the amount of $2,820,000 of principal with interest up to July 31, 1985, in the amount of $943,393.72 and continue to accrue at the rate of $1,158.91 per day to date of full payment (at 15% per annum), plus the balance of the sum of $201,500 for costs, charges, disbursements, expenses and attorney’s fees due in the above cause, after deduction of the expenses mentioned in the preceding subparagraph (a).

d) If after making all the above payments there shall be a surplus, said surplus shall be delivered to the Clerk of this Court, subject to further orders of the Court.

12. Plaintiff in these proceedings may apply to this Court for such further orders as it may deem advisable to its interests in accordance with the terms of this judgment.

13. That the Receiver and now also Special Master, Mr. Hans López Stubbe, is ordered to render a preliminary final report to this Court as to the present status of the receivership, including a list of accounts payable, accounts receivable, and cash on hand; the receiver is ordered to take such steps as are adequate to prepare the liquidation of the receivership, including payment of those debts incurred during the receivership; the receiver is ordered to continue the receivership until such time as the collateral is sold at public sale and until further order from this Court, and upon liquidation of the receivership, to render a final account to this Court with notice to the parties.

14. This Court further holds that defendant-counterclaimant has not established any controversy over a material fact and that the facts as uncontroverted before this Court do not entitle Marina de Palmas to the remedy prayed for, and not having Marina de Palmas properly opposed the motion for summary judgment under F.R. Civ.P: 56, this Court hereby DISMISSES the counterclaim.

Judgment is to be entered accordingly.

IT IS SO ORDERED.


text:
    Maria Luisa DEL VALLE RIVERA; Irma Teresa Colon; Juan Isidro Colon; Juan Gerardo Colon; and Maria De Lourdes Colon, Plaintiffs, v. UNITED STATES of America, Defendant.
    Civ. No. 85-0144 (JAF).
    United States District Court, D. Puerto Rico.
    Jan. 21, 1986.
    See also, D.C., 630 F.Supp. 750.
    Wilfredo A. Geigel, Santurce, P.R., Thomas R. Lincoln, San Juan, P.R., for plaintiffs.
    Fidel A. Sevillano, Asst. U.S. Atty., Hato Rey, P.R., for defendant.
   MEMORANDUM OPINION

FUSTE, District Judge.

Juan Isidro Colón died while hospitalized at the Veterans Administration Hospital. His widow, Maria Luisa del Valle Rivera, filed an administrative claim on the standardized Form 95 prescribed by the Department of Justice, 28 C.F.R. § 14.2. The named claimant was the “Estate of Juan I. Colón” and the amount of the claim was $200,000. Said claim was filed before the Agency by Attorney Wilfredo A. Géigel on behalf of the mentioned estate.

The final administrative disposition was made on November 5, 1984. Claimant’s petition for compensation was denied. The widow of Juan I. Colón initiated the present action naming individually as plaintiffs the heirs of Juan I. Colón that had been subsequently named in the administrative tort claim process. Now comes the United States requesting the dismissal of the present complaint based on the following reasons:

(a) That in the complaint the jurisdictional basis of their claim was not pleaded,

(b) that the children of Juan I. Colón, to wit: Irma Teresa, Juan Isidro, Juan Gerardo, and Maria de Lourdes Colón had not exhausted the administrative remedies as required by 28 U.S.C. § 2675,

(c) the original claimant mentioned, to wit: The Estate of Juan I. Colón, is not a person with the capacity to sue according to local state law, and

(d) that for any of the single reasons, the case should be dismissed as to all the plaintiffs.

Taking into consideration the specific facts of the present case, we hold that the Motion to Dismiss shall be DENIED.

I.

Defendant has raised the argument that plaintiffs’ Complaint did not allege the jurisdictional grounds for their suit. Even though such defect in the pleadings warrants the dismissal of the ease, Fed.R. Civ.P. 8(a)(1), a plaintiff has a right to amend his allegations so as to cure the defective pleading. Wright, Federal Courts 450 (4th ed. 1983). In the present case, plaintiffs have submitted an Amended Complaint where proper jurisdiction has been pleaded. We exercise discretion and accept the jurisdictional allegation.

II.

The Federal Torts Claim Act was approved by Congress in 1946 as an affirmative act of the Sovereign consenting to be sued. Affiliate UTE Citizens of The State of Utah v. United States, 406 U.S. 128, 92 S.Ct. 1456, 31 L.Ed.2d 741 (1972), reh. denied, 407 U.S. 916, 92 S.Ct. 2430, 32 L.Ed.2d 692 (1972). In the exercise of this power, the United States clearly defined the conditions under which tort actions against it should be conducted. In 1966, Congress amended the FTCA as to require that the individual who claims that an agency of the Federal Government has done him harm must first request an administrative determination by the agency imputed with the tortious conduct. 28 U.S.C. 2675(a). Said requirement is jurisdictional and cannot be waived. Collazo v. U.S., 372 F.Supp. 61 (D.P.R.1973); Van Fossen v. United States, 430 F.Supp. 1017, 1021 (D.Cal.1977). Determining whether the administrative requirements have been complied with, the First Circuit has established that the purpose of the FTCA is to accord injured parties an opportunity for recovery “as a matter of right” and that the enactment of the law was not intended to “put up a barrier of technicalities to defeat their claims”. López v. United States, 758 F.2d 806, 809 (1st Cir.1985).

The principal and relevant purpose of the administrative Federal Tort claim is to notify the government of the existence of the claim and also to provide the government with “more complete information as to the number of persons interested in the claim so that the value of the settlement can be accurately assessed.” Jackson v. United States, 558 F.Supp. 14 (D.D. C.1982), affd 730 F.2d 808 (D.C.Cir.1984). In Estate of Santos v. U.S., 525 F.Supp. 980 (D.P.R.1981), the Court considered that the relevant criteria for a correct administrative claim was whether the agency was fully aware who were the individuals actually pursuing a claim and the nature of the petition. Wherefore, a claim is valid if the claimant gives the agency written notice of the claim sufficient in form to enable the agency to investigate and place value on the total claim. López v. United States, supra; Fagot v. FDIC, 584 F.Supp. 1168 (D.P.R.1984). These requirements are met here.

III.

Having decided that a valid claim consists of giving full and specific notification of who are the claimants and the nature of the injury and relief sought to be redressed, we now examine who may file an administrative claim. The codified rule that regulates this issue provides that the claim based on death may be presented by the executor or administrator of the decedent’s estate, or by any other person legally entitled to assert such a claim in accordance with applicable state law. 28 C.F.R. § 14.3(c).

The issue in this respect is whether the claimants were “person(s) legally entitled to assert such claim” under the laws of Puerto Rico. In Van Fossen, the Court interpreted 28 C.F.R. § 14.3(c) expressing that the frame of analysis should bear in mind the intent behind this section. There the court stated that: “... [FTCA] is meant to benefit claimants and in no way is designed to preclude them from their day in court.” (at 1022).

In Van Fossen, the court held that the proper interpretation of Regulation 14.3(c) is that any person who is intended to be the legal beneficiary of a wrongful death action under the substantive law of the place of the accident, is entitled to file an administrative claim. Under Puerto Rico law, the heirs in their individual capacity are among the persons with standing to sue seeking redress as a result of the death of their father, which allegedly was caused by the negligence of the Veterans Administration Hospital.

The administrative claim was filed on January 25, 1984, and although Form 95 stated as claimant “the Estate of Juan I. Colón”, the Veterans Administration, through letter dated January 31, 1984, requested the following information as to initiate its investigation:

“3. Full names, addresses, birthdates, kinship, and marital status of the decedent’s survivors, including identification of those survivors who were dependent for support upon the decedent at the time of death.”

Thereafter, the Agency was fully informed of the names of Irma Teresa, Juan Isidro, Juan Gerardo, and Maria de Lourdes Colón in addition to the name of the widow, Maria Luisa del Valle. The Veterans Administration was fully notified of the number of persons seeking redress. The Administration cannot now argue the lack of an adequate claim so as to defeat jurisdiction. Estate of Santos v. U.S., 525 F.Supp. at 984; Douglas v. United States, 658 F.2d 445 (6th Cir.1981) (holding that § 2675 requirements were satisfied if the claimant (1) gives the agency written notice of his or her claim sufficient to enable the agency to investigate and (2) estimates a monetary value on his or her claim.) 615 F.2d at 289; see 28 C.F.R. § 14.2 (1980); see also Crow v. United States, 631 F.2d 28, 30 (5th Cir.1980). With this conclusion we are not establishing a waiver rule as to the requirements of 28 U.S.C. § 2675; instead, we have found that in the administrative investigation the agency was fully and consciously notified of the names of all claimants. This is not an action where parties seek relief based on their status of heirs of the estate, but an action by a widow and children seeking relief for the loss of their father and spouse with the consequent demand for damages based on negligence.

IV.

Defendant argues that the administrative claim presented is invalid due to the fact that Form 95 has no date of execution.' We do not find merit to said argument. The United States cannot “stand on technicalities to attack the claim in the judicial action once a claim has been fully investigated.” Locke v. U.S., 351 F.Supp. 185 (D.Hawaii 1972); Estate of Santos v. U.S., 525 F.Supp. at 982; Jackson v. U.S., 730 F.2d 808 (D.C.Cir.1984). The date of execution of the document became immaterial. The administrative file, seen as a whole, contains the necessary information.

V.

Defendant also requests that the amount of recovery stated in the Complaint —$500,000—be reduced to $200,000, since this was the amount originally claimed before the Veterans Administration. 28 U.S.C. § 2675(b). Said section imposes a limitation on the amount of damages which may be recovered from the United States in a suit under the Federal Tort Claims Act. Plaintiffs have not claimed newly-discovered evidence that would justify an increase on the amount administratively requested. Their basis for said assertion is that in a prior lawsuit they had requested said amount. Examining the facts alleged and the arguments of the parties, we hereby reduce the maximum recovery to $200,000 as if it was the amount originally claimed in the Complaint. López v. United States, supra; 28 U.S.C. § 2675(b).

IT IS SO ORDERED.

      . The United States has temporarily waived the issue of contested facts. In a Fed.R.Civ.P. 12 motion, the movant is deemed to face his adversary pleadings of fact in the light most favorable to the adversary. In any event, the Rule 12 motion is to be treated as a Fed.R.Civ.P. 56 motion for summary judgment. Matters outside the scope of the pleadings have been presented as part of the motion. See, e.g., General Office Products Corp. v. AM. Capen’s Sons, Inc., 780 F.2d 1077, 1078 (1st Cir.1986.).

      . The court held that the concept in 14.3(c) of "to bring a claim” is not equivalent to "bring an action” [judicial].

      . The Pretrial Report dated January 14, 1986 contains a stipulation of this date,

      . Said section establishes that:
      [an] action under this section shall not be instituted for any sum in excess of the amount of the claim presented to the Federal agency, except where the increased amount is based upon newly discovered evidence not reasonably discoverable at the time of presenting the claim at the Federal agency, or upon allegation and proof of intervening facts relating to the amount of the claim.