Dopp v. Barid Patrick
Case Date: 12/14/1994
Court: United States Court of Appeals
Docket No: 93-2374
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January 3, 1995 UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT _________________________ Nos. 93-2374 94-1128 94-1129 JAY A. PRITZKER, Plaintiff, Appellee, v. BOB YARI, ET AL., Defendants, Appellants. _________________________ ERRATA SHEET ERRATA SHEET The opinion of the court issued on December 13, 1994, is corrected as follows: On page 38, line 11, change "Words of Days" to "Works and ______________ _________ Days". ____ UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT _________________________ Nos. 93-2374 94-1128 94-1129 JAY A. PRITZKER, Plaintiff, Appellee, v. BOB YARI, ET AL., Defendants, Appellants. _________________________ APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Jaime Pieras, Jr., U.S. District Judge] ___________________ _________________________ Before Selya and Cyr, Circuit Judges, ______________ and Zobel,* District Judge. ______________ _________________________ Roger R. Crane, with whom Bachner, Tally, Polevoy & Misher, ______________ _________________________________ Roberto Boneta, Munoz Boneta Gonzalez Arbona Benitez & Peral, _______________ _______________________________________________ Jose Trias-Monge, and Trias & Melendez were on brief, for ________________ __________________ defendant Bob Yari. Martin I. Kaminsky, with whom W. Hans Kobelt and Pollack & __________________ ______________ _________ Kaminsky were on brief, for defendant Baird, Patrick & Co. ________ Benjamin Rodriguez-Ramon, Rodriguez-Ramon & Rodriguez- __________________________ _______________________________ Hernandez, and Emigdio R. Seles on brief for defendant Lincoln _________ ________________ Realty, Inc. Ruben T. Nigaglioni, with whom Diana Mendez-Ondina and _____________________ ____________________ Ledesma, Palcu & Miranda were on brief, for defendant Paul S. _________________________ Dopp. Gael Mahony, with whom Frances S. Cohen, David A. Hoffman, ____________ _________________ ________________ Joshua M. Davis, Hill & Barlow, Salvador Antonetti-Zequeira, ________________ ______________ ____________________________ Ricardo Ortiz-Colon, and Fiddler, Gonzalez & Rodriguez were on ___________________ ______________________________ brief, for plaintiff Jay A. Pritzker. _________________________ December 13, 1994 _________________________ _______________ *Of the District of Massachusetts, sitting by designation. SELYA, Circuit Judge. In this troika of appeals, we SELYA, Circuit Judge. _____________ address several questions arising collaterally from a bitterly fought breach-of-contract suit between Paul S. Dopp and Jay A. Pritzker (the D/P Litigation) concerning the ownership of two hotels, situated on approximately 1,000 beachfront acres, in the Commonwealth of Puerto Rico. The engine of high-stakes litigation runs on money, and at various times during the course of the D/P Litigation Dopp forged financing agreements with three different financiers, namely, Bob Yari, Lincoln Realty, Inc. (Lincoln), and Baird, Patrick & Co. (BPC), for the apparent purpose of fueling his prosecution of the suit. Although we first must address BPC's jurisdictional challenge, our principal task today is to resolve the contested legal status of these financing agreements. Having carefully examined the relevant law and the facts of the case, we hold that all three financing agreements involve "litigated credits" within the meaning of article 1425 of the Civil Code of Puerto Rico, P.R. Laws Ann. tit. 31, 3950 (1991); that all are, therefore, subject to redemption by Pritzker under Puerto Rico law; and that Pritzker properly perfected his rights to redemption. We also hold that the lower court's trimming of Pritzker's right to redeem Yari's litigated credit lacked any legal basis. Consequently, we affirm in part and reverse in part. I. BACKGROUND I. BACKGROUND The facts relating to the underlying breach of contract and the protracted litigation emanating from it are chronicled in 3 a series of opinions, see Dopp v. Pritzker, ___ F.3d ___, ___ ___ ____ ________ (1st Cir. 1994) [Nos. 93-2373, 94-1130, & 94-1131, slip op. at 3- 6]; (Dopp IV); Dopp v. HTP Corp., 947 F.2d 506, 508-09 (1st Cir. _______ ____ __________ 1991) (Dopp II); Dopp v. HTP Corp., 831 F. Supp. 939, 941-92 _______ ____ _________ (D.P.R. 1993) (Dopp III); Dopp v. HTP Corp., 755 F. Supp. 491, ________ ____ _________ 492-94 (D.P.R. 1991) (Dopp I), and need not be rehearsed. Hence, ______ we confine our account to the facts that are needed to place the instant appeals into workable perspective.1 A. The Financing Agreements. A. The Financing Agreements. ________________________ In March 1990, a jury sitting in the United States District Court for the District of Puerto Rico found Pritzker liable to Dopp in the sum of $2,000,000 for breach of an oral contract concerning the purchase of the Dorado Beach Hotel Corporation (DBHC). The district court entered judgment in the D/P Litigation, see Dopp I, 755 F. Supp. at 504, and a firestorm ___ ______ of appeals ensued. We eventually upheld the liability finding but vacated the damage award and ordered a new trial limited to questions of remediation. See Dopp II, 947 F.2d at 520. ___ _______ As these events were unfolding, Dopp launched a collateral enterprise, assigning various portions of the anticipated proceeds of the D/P Litigation to third parties. He ____________________ 1For purposes of oral argument, we consolidated the financiers' appeals with three other appeals two taken by Pritzker and one by Dopp involving the remedial phase of the main litigation. We resolved most of the points raised in Pritzker's and Dopp's appeals by means of a separate opinion issued on October 28, 1994. See Dopp IV, supra. In this ___ ________ _____ opinion, we deal with not only the financiers' appeals but also the complaints voiced by Pritzker and Dopp concerning the district court's rulings anent the financing agreements. 4 undertook this effort, in his words, "to meet some of the litigation and personal expenses . . . incurred during the years of this intense litigation and in connection therewith." All told, Dopp entered into three separate nonuniform financing agreements with three distinct financiers. Dopp signed the first financing agreement, styled as a "Judgment or Settlement Purchase Agreement," on June 26, 1990. In this transaction, Lincoln agreed to provide $50,000 in exchange for an 8% interest in the proceeds of the D/P Litigation above a stipulated floor. The agreement obliged Dopp to apprise Lincoln of developments in the litigation on a current basis. Dopp entered into the second financing agreement on October 16, 1991. In it, BPC agreed to provide $100,000 in exchange for a 5% interest in the proceeds of the D/P Litigation over a floor different from that negotiated between Dopp and Lincoln. Moreover, the BPC agreement mandated certain minimum repayments to the financier. These minima varied depending upon the date on which, in the words of the contracting parties, the D/P Litigation might eventually be "settled or otherwise decided." Like the Lincoln agreement, the BPC agreement obliged Dopp to keep the financier seasonably informed of litigatory developments. Dopp entered into the third and last financing agreement on July 23, 1992. In consideration of $250,000 in cash and a promise to obtain, or at least to assist in obtaining, a $2,500,000 to $3,000,000 line of credit for one year, Dopp agreed 5 to allocate the remainder of the proceeds of the D/P Litigation according to a preset formula: "(i) first, to repayment of all indebtedness in relation to the line of credit to have been obtained in Dopp's name; (ii) second, $2,500,000 to Yari; (iii) third, $12,000,000 to Dopp; (iv) fourth, $7,000,000 to Yari; and (v) fifth, the remaining amount, if any, to be divided equally between Dopp and Yari." Dopp III, 831 F. Supp. at 954.2 The ________ Yari agreement also set in place virtual joint control of the litigation. Although Yari ultimately provided less funding (somewhere between $500,000 and $625,000) than Dopp claims was due, the district court found that Yari "complied with all of his obligations under his agreements . . . ." Id. at 956. ___ B. Pertinent Proceedings Below. B. Pertinent Proceedings Below. ___________________________ On October 9, 1992, Dopp disclosed the existence of the financing agreements in the midst of a new discovery round. Exactly one week later, Pritzker wrote to Lincoln, offering to tender the amount paid to Dopp in exchange for Lincoln's rights and beneficial interests under its financing agreement. On the same date, Pritzker sent substantially identical missives to BPC andYari,3and notifiedthe districtcourtof hisletter-writing spree. ____________________ 2On September 24, 1992, Dopp and Yari entered into a written modification of their agreement. The amendment is only peripherally related to the issues we must decide today. To the extent it is relevant, we discuss it in Part III(D), infra. _____ 3Pritzker made the three tenders pursuant to article 1425 of the Civil Code of Puerto Rico, which provides in its entirety: When a litigated credit is sold, the debtor shall have the right to extinguish the same by reimbursing the assignee for the 6 When his communiques drew no meaningful response, Pritzker promptly filed a complaint in the district court. He named Dopp and the three financiers as defendants, along with an ostensible partnership between Dopp and Yari. Pritzker averred that each of the financing agreements involved the sale of a litigated credit within the meaning of article 1425 and, hence, was subject to extinguishment. Between December 18, 1992, and June 1, 1993, Pritzker, through a series of motions, deposited with the district court the funds that he believed were necessary to redeem the financiers' interests in the proceeds of the D/P Litigation. BPC moved to dismiss Pritzker's complaint against it for want of in personam jurisdiction, but the district court __ ________ demurred.4 After all defendants had answered the complaint, the ____________________ price the later [sic] paid for it, the judicial costs incurred by him, and the interest on the price from the day on which the same was paid. A credit shall be considered as litigated from the day the suit relating to the same has been answered. The debtor may make use of his right within nine (9) days, counted from the day the assignee should demand payment of him. P.R. Laws Ann. tit. 31, 3950 (1991). 4BPC's motion stressed that it is a New York corporation transacting no routine business in Puerto Rico; that it has never had an office or agent in Puerto Rico; that Dopp and BPC signed the financing agreement in New York; that Dopp is a citizen and resident of New Jersey; and that Pritzker is a citizen and resident of Illinois. The district court found these facts, by and large, to be accurately stated. See Pritzker v. Yari, Civ. ___ ________ ____ No. 92-2825, 1993 WL 71760, at *3, slip op. at 6 (D.P.R. Mar. 5, 7 court consolidated Pritzker's suit with Dopp's suit against Pritzker. See id. at 942-43. In an opinion dated March 5, 1993, ___ ___ the court held that all three financing agreements involved litigated credits within the reach of article 1425, and that Pritzker was entitled, pursuant to that statute, to extinguish such credits through full reimbursement of the amounts advanced (together with interest and costs). See Pritzker v. Yari, Civ. ___ ________ ____ No. 92-2825, 1993 WL 71760, at *5-7, slip op. at 11-17 (D.P.R. Mar. 5, 1993). In a later, end-of-case opinion, the court reaffirmed this holding, see Dopp III, 831 F. Supp. at 952, ___ ________ carved out a partial exception applicable to Yari, see id. at ___ ___ 957-58, and determined the monetary amounts each party stood to lose or gain, see id. at 958-59. ___ ___ Following the entry of final judgment, the three financiers filed notices of appeal. Lincoln and Yari contested the application of article 1425 to their agreements. BPC piggybacked on this argument, but focused its appeal mainly on jurisdictional questions. Dopp joined the chorus, but, as he contributed no arguments that were both novel and substantial, we subsume his views in our ensuing discussion of the financiers' points on appeal. Pritzker cross-appealed, excoriating the district court's determination that he could redeem only one-half of Yari's litigated credit. ____________________ 1993). The court added, however, "that the agreement [BPC] entered into with Dopp involved the purchasing of an interest in a case being tried in the District of Puerto Rico and that BPC has manifested a continuing interest in the conduct of the litigation." Id. ___ 8 II. PERSONAL JURISDICTION II. PERSONAL JURISDICTION Before proceeding to the main event, we must first jump through a jurisdictional hoop and determine whether the district court properly exercised in personam jurisdiction over BPC. The __ ________ hoop does not present an impenetrable obstacle. A. Charting a Course. A. Charting a Course. _________________ In its simplest formulation, in personam jurisdiction __ ________ relates to the power of a court over a defendant. It is of two varieties, general and specific. General personal jurisdiction, as its name implies, is broad in its ambit: it is the power of a forum-based court, whether state or federal, over a defendant "which may be asserted in connection with suits not directly founded on [that defendant's] forum-based conduct . . . ." Donatelli v. National Hockey League, 893 F.2d 459, 462-63 (1st _________ _______________________ Cir. 1990). Put another way, "[g]eneral jurisdiction exists when the litigation is not directly founded on the defendant's forum- based contacts, but the defendant has nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state." United Elec. Workers v. 163 Pleasant St. Corp., _____________________ _______________________ 960 F.2d 1080, 1088 (1st Cir. 1992) (Pleasant St. I). Specific ______________ personal jurisdiction, by contrast, is narrower in scope and may only be relied upon "where the cause of action arises directly out of, or relates to, the defendant's forum-based contacts." Id. at 1088-89. ___ Nothing in the record before us suggests that BPC engaged within Puerto Rico in continuous and systematic activity. 9 Since it is the plaintiff's burden to establish facts sufficient to sustain general in personam jurisdiction, see Ticketmaster-New __ ________ ___ ________________ York, Inc. v. Alioto, 26 F.3d 201, 207 n.9 (1st Cir. 1994); __________ ______ Dalmau Rodriguez v. Hughes Aircraft Co., 781 F.2d 9, 10 (1st Cir. ________________ ___________________ 1986), and since Pritzker failed to carry that burden here, we may assume that general jurisdiction is lacking. Our analysis, therefore, focuses exclusively on specific jurisdiction. The proper exercise of specific in personam __ ________ jurisdiction hinges on satisfaction of two requirements: first, that the forum in which the federal district court sits has a long-arm statute that purports to grant jurisdiction over the defendant; and second, that the exercise of jurisdiction pursuant to that statute comports with the strictures of the Constitution. See Ticketmaster, 26 F.3d at 204; Pleasant St. I, 960 F.2d at ___ ____________ _______________ 1086; Hahn v. Vermont Law Sch., 698 F.2d 48, 51 (1st Cir. 1983). ____ ________________ We analyze these requirements separately, mindful that, in the circumstances of this case, the second prong of the inquiry necessitates an examination into the sufficiency of the relationship between BPC's contract to finance Dopp's Puerto Rico-based litigation and the exercise of jurisdiction over BPC by the Puerto Rico-based federal district court. B. The Long-Arm Statute. B. The Long-Arm Statute. ____________________ The requirement that the forum have a long-arm law of appropriate reach is easily satisfied here. A Puerto Rico statute provides in pertinent part that a Puerto Rico-based court may take jurisdiction over a person not domiciled in Puerto Rico 10 "if the action or claim arises because said person . . . transacted business in Puerto Rico personally or through an agent . . . ." P.R. Laws Ann. tit. 32, app. III, R.4.7(a)(1) (1984 & Supp. 1989). We have concluded before, and today reaffirm, that this statute extends personal jurisdiction as far as the Federal Constitution permits. See Dalmau Rodriguez, 781 F.2d at 12 ___ ________________ (citing A.H. Thomas Co. v. Superior Court, 98 P.R.R. 864, 870 n.5 _______________ ______________ (1970)); Mangual v. General Battery Corp., 710 F.2d 15, 19 (1st _______ ______________________ Cir. 1983). C. Due Process. C. Due Process. ___________ The second requirement that the exercise of jurisdiction fall within constitutional bounds presents a more intricate puzzle. Whether or not BPC "transacted business" within the meaning of the long-arm statute depends on whether the requisite minimum contacts can be attributed to it. By its very nature, the inquiry into minimum contacts is far from exact: "the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative." International Shoe Co. v. State of Washington, _______________________ ____________________ 326 U.S. 310, 319 (1945). The inquiry into minimum contacts is also highly idiosyncratic, involving an individualized assessment and factual analysis of the precise mix of contacts that characterize each case. See Pleasant St. I, 960 F.2d at 1088; ___ ______________ Hahn, 698 F.2d at 51. ____ To sharpen the logic of the personal jurisdiction 11 inquiry, we have developed a tripartite analysis: First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's court foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable. Pleasant St. I, 960 F.2d at 1089; see also Ticketmaster, 26 F.3d ______________ ___ ____ ____________ at 206; Pizarro v. Hoteles Concorde Int'l, C.A., 907 F.2d 1256, _______ ____________________________ 1258 (1st Cir. 1990). A careful application of these three elements to the facts at hand demonstrates that the exercise of in personam jurisdiction over BPC, for the specific purpose of __ ________ determining the legal status of its agreement with Dopp, does not offend constitutional principles. 1. Relatedness. The element of relatedness is not 1. Relatedness. ___________ difficult to satisfy here. For one thing, the relatedness test is, relatively speaking, a flexible, relaxed standard. See ___ Ticketmaster, 26 F.3d at 207. For another thing, it is self- ____________ evident that the dispute between Pritzker and BPC over the legal status of BPC's contract with Dopp would not have arisen but for that contract. Because the very document that represents BPC's forum-related activity is itself the cause and object of the lawsuit, this activity comprises the source and substance of, and is thus related to, Pritzker's squabble with BPC. See Pleasant ___ ________ St. I, 960 F.2d at 1089. _____ 2. Purposeful Availment. We must next determine 2. Purposeful Availment. ____________________ 12 whether BPC's Puerto Rico-based contacts "represent a purposeful availment of the privilege of conducting activities in [Puerto Rico], thereby invoking the benefits and protections of [its] laws and making the defendant's involuntary presence before [the Puerto Rico-based] court foreseeable." Id. ___ The path of inquiry is neither long nor winding. It necessarily begins with McGee v. International Life Ins. Co., 355 _____ ___________________________ U.S. 220 (1957). There, the Court ruled that a California court could properly exercise jurisdiction over an out-of-state insurer in a suit brought by a beneficiary of a policy written by the insurer at the behest of a California resident, even though the insurer had no office or agent in California and had never performed any other business in that state. The McGee Court _____ articulated a principle of marked importance for our purposes: in order to be subject to the jurisdiction of the forum state, a nonresident need have only one contact with the forum, so long as the contact is meaningful. See id. at 223 ("It is sufficient ___ ___ for purposes of due process that the suit was based on a contract which had substantial connection with that State."). Accordingly, McGee stands for the proposition that "minimum _____ contacts" is not necessarily a numbers game; a single contract can fill the bill. For our purposes, McGee remains good law.5 In Burger _____ ______ ____________________ 5The court below expressed some hesitation about relying on McGee, fearing that "the broad view of personal jurisdiction _____ articulated in McGee was curtailed in the next major Supreme _____ Court case dealing with the issue, Hanson v. Denckla, 357 U.S. ______ _______ 235 (1958)." Pritzker v. Yari, supra, at *4, slip op. at 9. ________ ____ _____ 13 King Corp. v. Rudzewicz, 471 U.S. 462 (1984), the Court, citing __________ _________ McGee, affirmed the principle that "even a single act can support _____ jurisdiction." Id. at 475 n.18. In that case, the Justices held ___ that a court sitting in Florida properly could exercise jurisdiction over a Michigan resident in a suit brought by a Florida corporation for breach of a franchise agreement, even though the defendant's only relationship to the forum state was of a contractual nature. Explaining that "[j]urisdiction in these circumstances may not be avoided merely because the defendant did not physically enter the forum State," id. at 476, ___ the Supreme Court observed that "where individuals `purposefully derive benefit' from their interstate activities, it may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities; the Due Process Clause may not readily be wielded as a territorial shield to avoid interstate obligations that have been voluntarily assumed." Id. at 474-75 (quoting Kulko v. California Superior ___ _____ ___________________ Court, 436 U.S. 84, 96 (1978)). _____ These opinions demonstrate that the jurisprudence of ____________________ This observation is true but beside any relevant point. The Hanson Court placed its principal emphasis on the requirement ______ that there be a purposeful act by the defendant, and that this ________________ requirement may not be satisfied merely by the unilateral act of another. See Hanson, 357 U.S. at 253-54. The Court ___ ______ distinguished McGee on this basis, and on the ground that Hanson, _____ ______ unlike McGee, "involve[d] the validity of an agreement that was _____ entered without any connection with the forum State." Id. at ___ 252. In the instant case, neither of these problems looms. BPC's decision to enter into the financing agreement was clearly its own, and that agreement, which entitled it to share the proceeds of Puerto Rico-based litigation, bears close ties to the forum. 14 minimum contacts casts a wide net, and a nonresident defendant may not always be able to elude the net by such simple expedients as remaining physically outside the forum or limiting contact with the forum to a single commercial transaction. Rather, courts must look beyond these formalistic measures and evaluate the nature of the contacts and, relatedly, the degree to which they represent a purposeful availment of the forum's protections and benefits. In the instant case, we conclude that BPC, by knowingly acquiring an economically beneficial interest in the outcome of a Puerto Rico-based lawsuit that involved control over property located in Puerto Rico, necessarily exhibited sufficient minimum contacts to subject it to the district court's exercise of specific in personam jurisdiction. Two considerations in __ ________ particular lead us to this conclusion. First, the subject matter of BPC's contact or relationship with Puerto Rico the consummation of the financing agreement is such that it can only be characterized as an act of purposeful availment. We think it is doubly significant that the financing agreement directly concerned forum-based litigation, and, in turn, that the litigation directly concerned forum-based real estate. Other than physical presence, we can imagine few contacts that are more integral to a forum than acquiring a financial stake in forum-based litigation concerning 15 forum-based property.6 The significance that Puerto Rico attaches to such an interest is reflected elsewhere in its long- arm statute, in which land ownership is deemed an independently sufficient basis for exercising personal jurisdiction. See P.R. ___ Laws Ann. tit. 32, app. III, R.4.7(a)(5) (extending jurisdiction of Puerto Rico courts over a person who "[o]wns, uses or possesses, personally or through his agent, real property in Puerto Rico"). Second, the specific nature of a contact is also important in discerning the elements of purposeful availment and foreseeability. BPC entered into its financing agreement precisely because it stood to benefit commercially from the eventual outcome of the Puerto Rico-based D/P Litigation. Furthermore, given the location of DBHC's assets and the nature of the remedies potentially available to Dopp, see Dopp II, 947 ___ ________ F.2d at 519 (listing alternative remedies), both the extent of BPC's profits and the value of its agreement were closely tied to the integrity and stability of Puerto Rico's economy. This means that the practical importance of BPC's relationship with Puerto Rico was far greater than the importance that could be attached to the random, fortuitous, or attenuated relationships about which the Court has previously voiced concern. See, e.g., Burger ___ ____ ______ King, 471 U.S. at 475; Keeton v. Hustler Magazine, Inc., 465 U.S. ____ ______ ______________________ ____________________ 6Indeed, had Dopp succeeded in obtaining resolution (his preferred remedy in the D/P Litigation, see Dopp IV, ___ F.3d at ___ ________ ___ [slip op. at 7-17]), he might have wound up with the hotels and the land, and, if so, BPC would presumably have been the equitable owner of a measurable interest in those properties. 16 770, 774 (1984); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. ___________________________ _______ 286, 299 (1980). Consequently, we believe that BPC's venture represented nothing less than a purposeful availment of the privilege of conducting activities in Puerto Rico.7 BPC disagrees with this conclusion. It argues that the singularity of its contact renders the financing agreement quantitatively insufficient as a predicate for the exercise of jurisdiction. This argument fails for two reasons. In the first place, we do not view BPC's financing agreement as merely a one-time rendezvous with the forum. BPC cannot retract the fact that it backed Dopp's forum-based suit, so that its pact can hardly be cracked up to be an act that lacked incessant impact, but, rather, smacked of the exact sort of contact through which jurisdiction, if attacked, might be tracked and should remain intact. A contract conferring an interest in ongoing litigation that touches upon the legal status ____________________ 7Although we have been unable to find any judicial decision squarely on point, we are reinforced in our conclusion by the results reached in analogous cases. See, e.g., Grimes v. ___ ____ ______ Vitalink Communications Corp., 17 F.3d 1553, 1559-60 (3d Cir.) ______________________________ (finding specific personal jurisdiction over a nonresident who owned stock in a forum-based corporation and who tendered it in accordance with a tender offer, on the ground that the defendant purposefully availed himself of the privilege of having a forum- based court determine his rights and thus invoked the benefits and protections of the forum), cert. denied, 115 S. Ct. ___ _____ ______ (1994); Manley v. Fong, 734 F.2d 1415, 1419-20 (10th Cir. 1984) ______ ____ (finding personal jurisdiction over a nonresident in regard to litigation arising out of a contract between the nonresident and a resident, executed out-of-state, for the purchase of an interest in a forum-state oil-and-gas lease); Quasha v. Shale ______ _____ Dev. Corp., 667 F.2d 483, 486-89 (5th Cir. 1982) (finding ___________ personal jurisdiction over nonresidents in a suit concerning the existence, enforceability, and performance of a contract to purchase mineral interests located in the forum state). 17 of real property situated in the forum establishes, by its very nature, a significant relationship with the forum and its legal system. Thus, it is easy to see how such a contact can become a hook on which in personam jurisdiction can be hung. See Burger __ ________ ___ ______ King, 471 U.S. at 475 n.18 (noting that "[s]o long as it creates ____ a `substantial connection' with the forum, even a single act can support jurisdiction," and distinguishing this from an "isolated" act in respect to which "the reasonable foreseeability of litigation in the forum is substantially diminished") (quoting McGee, 355 U.S. at 223). _____ In the second place, BPC's emphasis on the quantitative ____________ aspects of its contact ignores both the contact's qualitative ___________ aspects and the role of substance, as opposed to mere frequency, in the minimum contacts calculus. So one-sided a view distorts reality. See International Shoe, 326 U.S. at 318 (assessing a ___ __________________ defendant's acts by "their nature and quality and the circumstances of their commission"). BPC also contends that the exercise of jurisdiction here would be inconsistent with circuit precedent. In this vein, BPC directs our attention to Pizarro, a case in which we held _______ that a corporation's placement of nine advertisements in a Puerto Rico newspaper did not create in personam jurisdiction for __ ________ purposes of a tort suit brought by a person who responded to an advertisement, took a trip to the advertised resort, and 18 sustained personal injuries outside of Puerto Rico.8 See ___ Pizarro, 907 F.2d at 1260. _______ We do not think that Pizzaro is in any way antithetical _______ to the result we reach today. We decided Pizarro based on a lack _______ of relatedness, specifically finding that the advertisements had "no connection with the negligent act . . . that allegedly caused the injury," and that, therefore, it could not "be said that the negligent act `arose out of' [the defendant's] placing of the advertisements . . . ." Id. at 1259. Since relatedness is ___ beyond question in the present case, see supra Part II(C)(1), ___ _____ Pizarro is not on point and BPC's reliance on it is mislaid. _______ 3. The Gestalt Factors. Having determined that BPC's 3. The Gestalt Factors. ___________________ financing agreement falls within the ambit of sufficient minimum contacts, we proceed to the third and final element of our analysis and inquire whether the exercise of jurisdiction over BPC in the circumstances of this case would, holistically viewed, offend traditional notions of "fair play and substantial justice." Burger King, 471 U.S. at 476 (quoting International ___________ _____________ Shoe, 326 U.S. at 320). ____ Admittedly, "fair play" and "substantial justice" are not the most self-defining of legal formulations. For that reason, we have added the flesh of a five-factor gestalt analysis to these skeletal due process concepts. The factors include: ____________________ 8Pizarro typifies a line of cases to like effect. See, _______ ___ e.g., Fournier v. Best W. Treasure Island Resort, 962 F.2d 126 ____ ________ _______________________________ (1st Cir. 1992); Marino v. Hyatt Corp., 793 F.2d 427 (1st Cir. ______ ___________ 1986). 19 (1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies. Pleasant St. I, 960 F.2d at 1088. These gestalt factors are _______________ designed to put into sharper perspective the reasonableness and fundamental fairness of exercising jurisdiction in particular situations. See Ticketmaster, 26 F.3d at 210. They "are not ___ ____________ ends in themselves, but they are, collectively, a means of assisting courts in achieving substantial justice. In very close cases, they may tip the constitutional balance." Id. at 209. ___ When applied to the case sub judice, the gestalt factors point ___ ______ unerringly toward the exercise, and away from the declination, of jurisdiction over BPC. As to the first factor, we may fairly assume that the defendant's appearance in Puerto Rico is to some extent burdensome. But the concept of burden is inherently relative, and, insofar as staging a defense in a foreign jurisdiction is almost always inconvenient and/or costly, we think this factor is only meaningful where a party can demonstrate some kind of special or unusual burden. See, e.g., id. at 210 (noting that ___ ____ ___ "most of the cases that have been dismissed on grounds of unreasonableness [of the burden of appearing] are cases in which the defendant's center of gravity, be it place of residence or place of business, was located at an appreciable distance from 20 the forum"); see also Burger King, 471 U.S. at 474 (explaining ___ ____ ____________ that "it usually will not be unfair to subject [a nonresident defendant] to the burdens of litigating in another forum for disputes relating to [in-forum economic] activity"). In the modern era, the need to travel between New York and Puerto Rico creates no especially ponderous burden for business travelers. Thus, BPC has not adequately demonstrated that an exercise of jurisdiction in the present circumstances is onerous in a special, unusual, or other constitutionally significant way. The second factor the interest of Puerto Rico in having a Puerto Rico-based court adjudicate the dispute weighs heavily in favor of an exercise of jurisdiction. Sovereigns have few interests greater than those in the conduct of forum-based litigation and the disposition of forum-based real estate. Here, these interests are not only present; they constitute the essence of the suit which the nonresident defendant, BPC, seeks to avoid.9 The third factor is the plaintiff's interest in obtaining convenient and effective relief. This consideration likewise cuts in favor of jurisdiction. Not only must we "accord plaintiff's choice of forum a degree of deference in respect to the issue of its own convenience," Ticketmaster, 26 F.3d at 211, ____________ but also we must take note of the enormous inconvenience that ____________________ 9At the expense of carting coal to Newcastle, we think that the Commonwealth also possesses an atypically strong interest in having Puerto Rico-based courts hear and resolve controversies involving its litigated credit statute. 21 might result from forcing Pritzker to sue elsewhere theoretically, in every jurisdiction in which a financier is located despite ongoing litigation in a forum-based court. The fourth factor the judicial system's interest in obtaining the most efficacious resolution of the controversy similarly counsels against furcation of the dispute among several different jurisdictions. Such a result would both contravene the goal of judicial economy and conjure up the chimera of inconsistent outcomes. The fifth and last of the gestalt factors implicates the interests of the affected governments in substantive social policies. Here, the most salient such policy is that embodied in article 1425 itself: the discouragement of speculation in litigation. All sovereigns share both a general interest in preventing such speculation and a specific interest in respecting Puerto Rico's decision to control this activity through regulation. For obvious reasons, a failure to find jurisdiction in this case would necessarily subvert these interests. D. Recapitulation. D. Recapitulation. ______________ In sum, by deliberately contracting for a portion of the proceeds of litigation, the subject of which concerned Puerto Rico property and the situs of which was a Puerto Rico-based court, BPC deliberately sought to procure the commercial advantages of transacting business in Puerto Rico. Having called the tune, it now must pay the piper. Hence, we conclude that the instant litigation arises out of, and thus directly relates to, 22 the financing agreement that BPC consummated with Dopp. Because that agreement has a distinctive relationship to Puerto Rico as we have said, its subject matter and specific nature betoken that BPC purposefully availed itself of the benefits and protections of Puerto Rico and its legal apparatus and because BPC's subsequent (involuntary) presence before the district court was entirely foreseeable, bringing BPC before the bar of a Puerto Rico-based court in respect to litigation arising out of the financing agreement is neither unreasonable nor fundamentally unfair. It follows, therefore, as night follows day, that Puerto Rico's long-arm statute reaches this dispute, and the lower court's exercise of in personam jurisdiction over BPC is both __ ________ legally and constitutionally supportable. III. THE FINANCING AGREEMENTS III. THE FINANCING AGREEMENTS We turn now to the main event a series of questions involving the enforceability and interpretation of the financing agreements. In answering these questions, we look to the law of Puerto Rico for the rule of decision.10 See Erie R.R. Co. v. ___ ______________ ____________________ 10BPC and Yari halfheartedly attempt to challenge the district court's choice of Puerto Rico law to govern their respective contracts with Dopp. Neither entry makes it to the starting gate. Yari merely proposes how his contract with Dopp might be construed under California law, without pausing to explain why California law is relevant. Our corpus of cases, cumulatively considered, clearly commands that contentions which are not carefully composed and candidly constructed customarily careen beyond the cognizance of this court. See, e.g., Ryan v. ___ ____ ____ Royal Ins. Co., 916 F.2d 731, 734 (1st Cir. 1990) ("It is settled ______________ in this circuit that issues adverted to on appeal in a perfunctory manner, unaccompanied by some developed argumentation, are deemed to have been abandoned."). BPC's claim fails for several reasons, the first of which is that the record contains no indication that BPC developed it below. "It is a 23 Tompkins, 304 U.S. 64, 78 (1938). ________ Article 1425 of the Civil Code confers on a defendant a right to redeem a "litigated credit" or "litigious credit," that is, the interest of a third party who has purchased a stake in the outcome of civil litigation. Evaluating this statute is a daunting task, made all the more complicated in this case as the parties have raised a myriad of issues ranging from the legal status of the financing agreements to the propriety of Pritzker's efforts to prime the article 1425 pump. We address these issues sequentially, for the most part subjecting the district court's determinations to plenary review. See United States v. Gifford, ___ _____________ _______ 17 F.3d 462, 472 (1st Cir. 1994) (holding that questions of statutory interpretation are purely legal in nature, and, thus, engender de novo review); Liberty Mut. Ins. Co. v. Commercial __ ____ ______________________ __________ Union Ins. Co., 978 F.2d 750, 757 (1st Cir. 1992) (same); see _______________ ___ also Salve Regina Coll. v. Russell, 499 U.S. 225, 239-40 (1991) ____ __________________ _______ (holding that "courts of appeals [must] review the state-law determinations of district courts de novo"). __ ____ A. Article 1425. A. Article 1425. ____________ We begin our expedition by clarifying certain matters relating to article 1425 (the text of which is reproduced in its entirety in note 3, supra). The undue hullabaloo in this case _____ stems from the fact that article 1425 is a very unusual animal. ____________________ bedrock rule that when a party has not presented an argument to the district court, he may not unveil it in the court of appeals." United States v. Slade, 980 F.2d 27, 30 (1st Cir. ______________ _____ 1992). 24 Several aspects of the statute deserve emphasis or elaboration. First, the purpose of article 1425, as recently restated by the Puerto Rico Supreme Court, is to prevent "`the illegal trade of litigious credits which were purchased for a price below their actual value, and then the actual price was recovered from the debtor and big profits reaped.'" Consejo de __________ Titulares v. Urban Renewal & Hous. Corp., 93 J.T.S. 25 (1993) _________ _____________________________ (Official English Translation: No. RE-87-297, slip op. at 14) (quoting 3 D. Espin Canovas, Manual de Derecho Civil Espanol 240 _______________________________ (1983)); Mervin H. Riseman, The Sale of a Litigious Right, 13 _______________________________ Tul. L. Rev. 448, 448 (1939) ("A desire to put an end to litigation and to prevent speculation in lawsuits has resulted in the disapproval by the civil law of the sale of litigious rights."). To this extent, then, the district court hit the bull's-eye when it declared that the "single, serious purpose" of article 1425 is "to discourage financial speculation in litigation." Pritzker v. Yari, supra, at *5, slip op. at 11-12. ________ ____ _____ Second, the Puerto Rico Supreme Court has recognized, in fidelity to the statutory text, that "[a] credit is deemed litigious from the moment the lawsuit claiming the same is answered." Consejo de Titulares, supra, slip op. at 13. The _____________________ _____ court added: [A] credit is regarded as litigious when, upon being litigated, a final judgment is required to ascertain its existence, "that is, it is one which is in doubt and one in which the rights are uncertain. For a credit to be considered litigious it is essential that the litigation pending a |