
    PRESTIGE CAPITAL CORPORATION, Plaintiff v. UNITED SURETY AND INDEMNITY COMPANY, Defendant.
    CIVIL NO. 16-1998 (GAG)
    United States District Court, D. Puerto Rico.
    Signed March 28, 2017
    
      Gerardo Pavia, Pavia & Lazaro PSC, San Juan, PR, for Plaintiff.
    Carlos Lugo-Fiol, Hector Saldana-Egozcue, Saldaa & Saldaar-Egozcue, P.S.C., San Juan, PR, for Defendant.
   OPINION AND ORDER

GUSTAVO A. GELPI, United States District Judge

On May 29, 2016, Prestige Capital Corporation, (“Prestige” or “Plaintiff’) filed the instant suit against United Surety and Indemnity Company (“USIC”) seeking reimbursement of the funds USIC acquired in an interpleader action in local court. (Docket No. 1.) In essence, Prestige argues it has a superior claim over the $104,505.36 conferred to USIC and thus, requests the Court order their reimbursement. Id. Prestige invokes the Court’s diversity jurisdiction pursuant to 28 U.S.C. § 1332.

Pending before the Court is USIC’s Motion to Dismiss at Docket No. 10. After carefully reviewing the parties’ submissions and pertinent law, the Court GRANTS USIC’s Motion to Dismiss.

I. Relevant Factual and Procedural Background

Prestige is a New Jersey corporation with its principal place of business in Fort Lee, New Jersey that provides accounts receivables financing, among other services. (Docket No. 1 ¶ 4.) USIC is á corporation organized under the laws of Puerto Rico that engages in the surety business. Id. ¶5.

A. Prestige-Pipeliners: Purchase and Sale Agreements

On June 9, 2005, Prestige and Pipeliners of Puerto Rico, Inc. (“Pipeliners”) entered into a Purchase and Sale Agreement (the “P & S Agreement”) under which Pipelin-ers sold to Prestige certain accounts receivables and contract rights of Pipeliners. Id. ¶ 6. Section 11 of the P&S Agreement provides that Pipeliners grants to Prestige a continuing security interest in, and a lien upon, all its accounts, inventory, instruments, documents, chattel paper and general intangibles, as such terms are defined in the Puerto Rico Commercial Transactions Act, then existing or thereafter acquired by Pipeliners at any time which were in Prestige’s possession. Id. ¶ 7.

B. Pipeliners-PRASA Contracts

Pipeliners entered into several contracts with the Puerto Rico Aqueduct and. Sewer Authority (“PRASA”) for the provision of services in connection with the maintenance, repair and construction of PRASA’s infrastructure. Id. ¶ 9. On May 19, 2010, PRASA and Pipeliners executed the “Agreement for Capacity Increase of the Sewer Trunk from 8 to 10” and “Connections, Cabo Rojo, Puerto Rico”. Id. ¶10. USIC issued a Payment and Performance Bond to guarantee the project’s completion. Id. These PRASA contracts required that PRASA pay Pipeliners on the basis of certifications of work and purchase of materials. Two of these certifications were the following: A) Certification # CIF-7128000-1 for $127,260.12 and B) Certification # CIP-7128000-2 for $311,893.01. (collectively “Certifications 1 and 2”). Id. ¶ 11. These certifications were.invoiced to PRA-SA for work done by Pipeliners. Id. Pursuant to the terms of the P&S Agreement, PRASA was required to pay to Prestige or Pipeliners the amounts which would be owed to Pipeliners under Certifications 1 and 2. Id. ¶ 12.

Pipeliners failed to fulfill its payment obligations; therefore, all amounts advanced by Prestige to Pipeliners became due. (Docket No. 1 ¶ 13.) Pipeliners defaulted under the terms and conditions of the P&S Agreement and, as of November 23, 2010, owed Prestige not less than $1,211,968.66, plus accruing costs and fees. Id. On November 23,2010, Prestige served Pipeliners a notice informing that it had defaulted under the terms and conditions provided in the P&S Agreement, owing as of that date an outstanding balance of not less than $1,210,527.18, plus accrued interests and costs. It demanded payment thereof. Id. ¶ 14. On November 29, 2010, Prestige also served a notice of foreclosure of Pipeliners’ accounts to its account debtors, including PRASA. Id ¶ 15.

Due to Pipeliners’ failure to pay, on November 30, 2010, Prestige filed a collection of monies civil action in this court against Pipeliners, PRASA—as assignee of the amounts owed by PRASA to Pipeliners through the P&S Agreement—and against the Economic Development Bank for Puer-to Rico (“EDB”) because this entity also claimed payment of the amounts owed by PRASA to Prestige (Case No. 10-2155 (PG)) (“District Court Case”). (Docket No. 1 ¶ 16.)

C. The Interpleader Action

On December 3, 2010, PRASA filed an interpleader action pursuant to Rule 19 of the Puerto Rico Rules of Civil Procedure, P.R. Laws Ann. tit, 32A, App. V., in the Puerto Rico Superior Court, San Juan Part, to consign therein the funds requested for payment through the Certifications 1 and 2, (Case No. KAC 2010-1450(508)) (“Interpleader Action”). (Docket No. 1 ¶ 17.) USIC was not party to the inter-pleader action because, at that moment, it had not disbursed any funds for the completion of the project, had not made any work related to the project; and had not made any claims to the funds whose payment had been requested through Certifications 1 and 2. Id. On May 20, 2011, PRASA notified Pipeliners that it had not complied with the terms of their agreement and was terminated for default. Id As stated in the preceding paragraph, by this date PRASA had filed the interpleader action, thus admitting that the amounts requested in Pipeliners' Certifications 1 and 2 for work done by it were in fact owed. (Docket No. 1 ¶ 18.)

D. Takeover Agreement

On January 11, 2013, PRASA and USIC executed a Takeover Agreement whereby USIC would complete the project. Id. ¶ 19. Paragraph 3(b) of the Takeover Agreement provides that Pipeliners sent Certifications 1 and 2 to PRASA for work performed. Id.

USIC allegedly spent $279,321.75 in the completion of the project. Id. Because this amount exceeded the Project’s remaining balance (after the Certifications 1 and 2 consigned of the funds in the interpleader action by $104,505.56) USIC filed a motion to intervene and a complaint in the inter-pleader action claiming a preferential credit to recover the excess amount spent to complete the project. IA ¶ 20.

The District Court case was eventually settled through a “Final Settlement Agreement” dated July 14, 2015. Id. ¶ 21. Negotiations between the defendants in the in-terpleader action ensued and a stipulation between Prestige and the Puerto Rico Treasury Department was executed. Id. USIC opposed this stipulation. In order to end the controversies as to the monies consigned by PRASA through the inter-pleader action and permit that the stipulation between Prestige and the Puerto Rico Treasury Department be approved, Prestige and USIC negotiated and executed a stipulation to eliminate the sole objection to the stipulation between Prestige and Puerto Rico Treasury Department. Id. Partial Judgment entered in the Inter-pleader Action and notified on August 26, 2015, approving both stipulations and providing that under the stipulation between Prestige and USIC, Prestige reserved its right to claim that USIC reimburse to Prestige the $104,505.36 it had received from the funds deposited in court in order to eliminate the objection to the stipulation between Prestige and P.R. Treasury. (Docket No. 1¶ 21.)

■ E. The instant action

On May 19, 2016, Prestige filed the above-captioned complaint, requesting that USIC reimburse it the $104,505 to which is legally entitled under the duly recorded Agreement.

In its complaint, Prestige alleges it had a perfected first priority lien for any and all accounts receivable due to Pipeliners by PRASA, including those amounts invoiced by Pipelmers through the Certifications. Id. ¶33. Prestige alleges PRASA discharged its payment obligation before Pi-peliners was terminated for default and before the USIC assumed the completion of the Project, and thus it contends that the consigned funds were not PRASA’s property or in its possession when the Takeover Agreement was executed and the work completed. Consequently, Prestige claims to have a first priority lien to the consigned funds and “is entitled to receive them.” Id. ¶30. Prestige further posits that “the terms of the P&S Agreement provide that Pipeliners is liable to Prestige for the amounts invoiced by Pipelmers to PRASA in the .Certifications.” Id. ¶ 32. Prestige concludes that, because these amounts were no longer owed by PRASA, USIC has no claim as surety. (Docket No. 1 ¶ 36.) Because Prestige had a perfected first security interest in Pipeliners accounts, Prestige is entitled to the funds consigned by PRASA. Id. ¶ 37.

USIC moves to dismiss the above-captioned complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Docket No. 10.) In essence, USIC contends Prestige’s claim fails because, as a matter of law, USIC—as a performing surety—had a preferential interest over the unpaid funds of the bonded project which is superior to any legal right that Prestige may claim over them. (Docket No. 10.) USIC contends that pursuant to the subrogation doctrine, as a performing surety it is entitled to the funds that PRA-SA deposited at the Court of First Instance to recover its costs of finishing the project. As a matter of law, its right to those funds is superior to any rights that Prestige held. Particularly, Prestige’s allegation that its claim preceded USIC’s by two years has no relevance whatsoever to USIC’s subrogation rights. (Docket No. 10 at 9-10.) Thus, USIC posits Prestige has no right to the funds it acquired from the interpleader action. Id. USIC further requests attorneys’ fees. Id.

In opposition to USIC’s motion to dismiss, Prestige contends it is legally entitled to recover the consigned funds wrongfully paid out to USIC. (Docket No. 15.) Prestige argues that at the moment PRA-SA filed the interpleader action USIC was not party to the interpleader action and had not disbursed funds for the completion of the project. Prestige further posits that pursuant to the provisions of the Puerto Rico Civil Code governing consignation, payment is considered made upon the deposit of the funds. Accordingly, Prestige argues that payment for Certifications 1 and 2 should be deemed made upon the consignation of the funds. (Docket No. 15 at 10.) Thus, Prestige posits said funds were wrongfully paid to USIC, given that as surety USIC did not have a superior right over paid funds. Therefore, Prestige posits it has a superior right over the funds at issue and thus, now Prestige seeks reimbursement. Id Per leave of Court, USIC replied. (Docket No. 18.)

II. Standard of Review

When considering a motion to dismiss for failure to state a claim upon which relief can be granted, see Fed. R. Civ. P. 12(b)(6), the court analyzes the complaint in a two-step process under the current context-based “plausibility” standard established by the Supreme Court. See Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citing Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011) which discusses Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). First, the court must “isolate and ignore statements in the complaint that simply offer legal labels and conclusions or merely rehash cause-of-action elements.” ■ Id. A complaint does not need detailed factual allegations, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937. Second, the court must then “take the complaint’s well-[pleaded] (i.e., non-conclusóry, noii-speculative) facts as true, drawing all reasonable inferences in the pleader’s -favor, and see if they plausi bly narrate a claim for relief.” Schatz, 669 F.3d at 55. Plausible, means something more than merely possible, and gauging a pleaded situation’s plausibility is a context-specific job that compels the court to draw on its. judicial- experience and common sense. Id. (citing Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937). This “simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of’ the necessary element. Twombly, 550 U.S. at 556,127 S.Ct. 1955.

“[Wjhere the well-pleaded facts, do not permit the. court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting Fed. R. Civ. P. 8(a)(2)). If, however, 'the “factual content, so taken, ‘allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged,’the claim has facial plausibility.” Ocasio-Hernández, 640 F.3d at 12 (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937).

III. Legal Analysis

Under Puerto Rico law, “a surety is subrogated to the owner’s and contractor’s rights in contract retainages as a consequence of its performance of the , contractual obligations of the contractor, and this right of subrogation is superior to that of an attaching creditor, even where such a creditor has attached the retainages before subrogation occurs,” Segovia Dev. Corp. v. Constructora Maza, Inc., 628 F.2d 724, 729-30 (1st Cir. 1980). Article 1737 of the Puerto Rico Civil Code states that:

A surety who pays for a debtor shall be indemnified by the latter.

The indemnity consists óf: (1) The total amount of the debt/ (2) Legal interest on the same from the day on which the payment may have been communicated "to the -debtor, even when it- did not produce interest for the creditor. (3) The expenses incurred by the surety after the latter has informed thé debtor that he has been sued for payment. (4) Loss- ' es and damages, when proper. The provisions of this section shall be valid, even should the security have been given without knowledge of the debtor.

P.R. Laws Ann. tit. 31, § 4911; see also U.S. Fid. & Guar. Co. v. Challenge Const. Corp., 704 F.Supp.2d 73, 78 (D.P.R. 2009). Moreover, Article 1738 provides that a surety who pays for a debtor is “subrogat-ed in all the rights which the creditor had against the debtor,” P.R. Laws Ann. tit. 31, § 4912. Article 1166 states that: “Subrogation transfers to the subrogated the credit, with the corresponding rights, either against the debtor or against third persons, be they sureties or holders of mortgages.” P.R. Laws Ann. tit. 31, § 3250; see also Segovia Dev. Corp., 628 F.2d at 727.

The heart of the dispute between the parties lies on whether the consigned funds should be considered paid or unpaid, for purposes of the subrogation doctrine. USIC argues that this case is undis-tinguishable from National Shawmut Bank and American Fire & Casualty Co., and therefore constitutes the governing precedent of the First Circuit on the subject of sureties. As in those cases, the funds presently at issue had not been paid to Prestige prior to USIC’s subrogation; rather, they had been earned ■ and certified by Pipeliners, but. had not been paid. Therefore, USIC, as a performing surety, had a right over the funds of the bonded project, which is preferential to any other interest that Prestige may assert. (Docket No. 10 at 10.)

The First Circuit Court held that surety could not recover progress payments eared and paid prior to default. However, a surety “has a superior claim by way of subrogation” and therefore could recover progress payments earned prior to default, but not paid. American Fire & Casualty Co. v. First Nat. City Bank of New York, 411 F.2d 755, 758 (1st Cir. 1969). In American Fire & Casualty Co. the First Circuit adhered to its holding in National Shaw-mut Bank this occasion concerned rights of a surety under Puerto Rico law and what a surety a recover under the theory of legal subrogation.

“The teaching of National Shawmut Bank, is that the surety has a superior claim to these payments. But for the surety’s completion of the work, the obligee on the bond, be the owner or prime contractor, would have been entitled to apply the funds against the cost of completion. It is the surety’s performance which frees the funds, and, in our view, the surety is entitled to them.” American Fire & Casualty Co., 411 F.2d at 758 (citing Nat’l Shawmut Bank of Boston v. New Amsterdam Cas. Co., 411 F.2d 843 (1st Cir. 1969)).

Prior to default, the contractor had the right to assign progress payments and had the Bank received payment, it could not (absent circumstances amounting to fraud) have been divested by the surety. But upon default, the surety which is obligated to complete the icork steps into the shoes of the govemment-not of the contractor which on default has forfeited its rights. It is subrogated not only to the right of the government to pay laborers and materialmen from funds retained out of progress payments, but also to the government’s right to apply to the cost of completion the earned but unpaid progress payments in its hands at the time of default.

(Nat’l Shawmut Bank 411 F.2d at 848) (internal citations omitted) (emphasis added).

The Court now turns to Prestige’s argument regarding the legal effect of PRA-SA’s payment through the judicial consignment of funds. Prestige argues that when partial Judgment in the interpleader action was entered, pursuant to the Puerto Rico Supreme Court’s T.O.L.I.C decision, PRA-SA’s payment “had to be deemed made on the day when the funds were consigned through the Interpleader. As such, the funds were earned and paid before USIC’s intervention. USIC did not have any alleged preferential right on such date.” Id. at 12.

Consignation is “the legal deposit ... of the thing owed. The asset is placed under the power of the judicial authority, which shall retain it and put it at the disposal of the creditor.” T.O.L.I.C. v. Rodriguez Febles, 170 D.P.R. 804, 818-821 (2007) (Slip. Trans, Op. at 1) (Appendix 1 to this Opinion). Articles 1130 to 1135 of the Puerto Rico Civil Code, P.R. Laws Ann. tit. 31, §§ 3180-3185, govern the payment of obligations by way of consignation. While Article 1130 provides that consignation releases the debtor from liability “when several persons claim a right to collect,” Article 1134 of the Puerto. Rico Civil Code provides that:

After the consignation has been duly made the debtor may request the court or judge to order the cancellation of the obligation.
Until the creditor may accept the con-signation or a judicial decision should be rendered that it was properly done, the debtor may withdraw the thing or amount consigned, leaving the obligation in force.

P.R. Laws Ann. tit. 31, § 3184.

Although this legal provision establishes that the debtor shall not be released from his or her obligation until there is a corrective court order, this does not imply that debtor is obligated to pay interest from the time of the consignation until the court order issues. Formal release from the obligation— which arises from the contract—is one thing, while the requirement to pay interest is another. “[Slpanish doctrine agrees that the retroactive effectiveness of a properly executed consignation extends to the moment the deposit took place.”

T.O.L.I.C, 170 D.P.R. at 819; Slip. Trans. Op. at 1 (quoting J. Vélez Torres, Derecho de Obligaciones [Obligations Law], 189 (Interamerican U. CLE Program, 2nd rev. ed., 1997)) (emphasis added).

Prestige contends that the consignment of the funds by PRASA should be considered payment pursuant to the provisions of the Puerto Rico Civil Code. As such, December 3, 2010, would be the date of payment of Certifications 1 and 2. If Prestige’s theory were correct, Certifications 1 and 2 would have been earned and paid “before USIC intervened in the project” and pursuant to National Shawmut Bank and American Fire & Casualty Co., USIC would not be legally entitled to recover these funds. (Docket No. 15 at 11.)

The Court is not convinced by Prestige’s contention that PRASA’s consignation of the funds materialized payment. First, while the funds remained consigned in state court, at no moment was Prestige in possession of these funds. Notwithstanding, Prestige argues that the consignation of the funds should treated as PRASA’s payment of Certifications 1 and 2 to Prestige. This argument does not hold water. While the funds remained consigned pending the outcome of the interpleader proceeding, their ownership was disputed. More so, at the moment Prestige alleges it had a superior right over the funds, the consignation had not been approved by the Court, therefore, as per Article 1134 of the Puerto Rico Civil Code, PRASA could withdraw the funds at any moment.

Plaintiffs “at moment of consignation” theory also fails. The Court the Puerto Rico Supreme Court’s ruling in T.O.L.I.C. discusses the effects of consignation over payment interests. The Supreme Court held that upon approval of the consignation by the court, payment is deemed made at the moment of consignment, for purposes of interest over the amount owed. In its reply, USIC correctly points out that Prestige misconstrues the T.O.L.I.C. ruling. Simply put, the reasoning behind the ruling cannot be blindly extended to the case at bar.

“What the court order does is to rule that consignation has been properly done and recognize the intended effect of release sought by debtor when depositing the thing; hence, it must become effective as of [that] moment.” We thus conclude that, even though debtor’s formal release depends on the court finding that the consignation was properly done, payment of interest as of the consignation date does not apply if it was found, in fact, to have been properly done. We resolve that in cases such as this, where consignation is ruled to be correct, the effect of payment is retroactive to the date on which the thing was deposited....

T.O.L.LC, 170 D.P.R. at 820; Slip. Trans. Op. at 2 (internal quotations and citations omitted). It in uncontested that, in this case, the funds deposited in the interpleader action had been earned prior to Pipelin-ers’ default. Plaintiff concedes that the consigned funds constituted PRASA’s payment of the work invoiced in Certifications 1 and 2. Although USIC was not included originally, the Puerto Rico Court of First instance approved PRASA’s consignation after USIC has already formally joined the interpleader action as an intervening party-

In light of the above, the Court finds that the funds at issue were earned yet unpaid project funds that, pursuant to governing First Circuit precedent and applicable Puerto Rico law, USIC had superi- or right to than Prestige. By way of subro-gation, USIC acquired Pipeliners’ right over the earned yet unpaid funds. “[T]he surety’s right of subrogation may also be viewed from the standpoint of his filling the shoes of the contractor whose debts he has satisfied.” Fed. Ins. Co. v. Constructora Maza, Inc, 500 F.Supp. 246, 250 (D.P.R. 1979) (citing National Shawmut Bank, 411 F.2d at 843.).

In sum, the Court finds that Prestige’s complaint fails to state a claim upon which relief may be granted because Prestige is not legally entitled to the funds for which it seeks reimbursement. For the foregoing reasons, the Court GRANTS USIC’s Motion to Dismiss at Docket No. 10 and DISMISSES with prejudice Prestige’s claims.

IV. Attorney’s Fees

Lastly, USIC requests an award for attorney’s fees for temerity pursuant to Rule 44 of the Puerto Rico Rules of Civil Procedure arguing Prestige’s complaint is frivolous, should have never been filed, and has forced USIC to incur in unnecessary expenses and inconvenience to defend itself. (Docket No. 10 at 14.) In opposition, Prestige argues that because this case it at the initial stage of litigation, USIC’s temerity allegation is “utterly ridiculous” as it “insinuate[s] that Prestige’s litigious conduct has prolonged litigation.” (Docket No. 15.) At first, the Court was skeptical as to USIC’s temerity allegation. However, a review of Prestige’s litigation conduct to date sings a different tune.

Pursuant to Rule 44 of the Puerto Rico Rules of Civil Procedure, a prevailing party is entitled to attorney’s fees and interest computed from the filing of the complaint when the losing party has been obstinate throughout the litigation. Dopp v. Pritzker, 38 F.3d 1239, 1252 (1st Cir. 1994) (“In a diversity case in which the substantive law of Puerto Rico supplies the basis of decision, the federal court must give effect to Rules 44.1(d) and 44.3(b) of the Puerto Rico Rules of Civil Procedure.”).

Roughly two months after USIC filed its motion to dismiss that the Court entertains today, on November 7, 2016, Prestige moved for summary judgment. (Docket No. 19.) Still pending before the Court, Prestige’s summary judgment is a preemptive attack, as it was filed while USIC’s motion to dismiss was pending before the Court and before the parties engaged in discovery, considering that the initial scheduling conference had not been held. See L. CIV. R. 16 (D.P.R. 2010). Prestige’s motion for summary judgment rehashes the same theories raised and argued at the motion to dismiss stage, and thus, these theories were still pending before the Court, until today. As a result of Prestige’s unreasonable litigation strategy, ÜSIC had no other choice but to respond in opposition and file a cross-motion summary judgment. (Docket Nos. 27; 28.)

“[A] losing party who has been obstinate during the course of a lawsuit can be held liable for prejudgment interest (if a money judgment has eventuated) and for its adversary’s attorneys’ fees.” Gomez v. Rodriguez-Wilson, 819 F.3d 18, 23-24 (1st Cir. 2016); De León López v. Corporación Insular de Seguros, 931 F.2d 116, 126 (1st Cir. 1991) (internal quotations omitted). The purpose of awarding attorney’s fees in cases of obstinacy is to impose a penalty upon a losing party that because of his stubbornness, obstinacy, rashness, and insistent frivolous attitude has forced the other party to needlessly assume the pains, costs, efforts, and inconveniences of a litigation. Fernandez v. San Juan Cement Co., 118 D.P.R. 713, 18 P.R. Offic. Trans. 823, 830 (1987). The imposition of pre-judgment interest shall follow “when the losing party has been obstinate; and, both pursue the same end: to discourage litigation and to favor transactions, by requiring the obstinate party to compensate the economic hardships and inconveniences caused to' the other party by the obstinate conduct.” Insurance Co. of P.R. v. Superior Court, 100 P.R. 404 (1972).

“[OJbstinacy is to be judged in light of the overall circumstances of the particular case.” Gomez, 819 F.3d at 24 (quoting Dopp, 38 F.3d at 1253.) “In order to determine if a party has been obstinate, we must determine whether a litigant has been “unreasonably adamant or stubbornly litigious, beyond the acceptable demands of the litigation, thereby wasting time and causing the court and the other litigants unnecessary expense and delay.” Gomez, 819 F.3d at 24 (internal quotations omitted). In sum, obstinacy “(1) forces an avoidable litigation, (2) needlessly prolongs it or (3) requires opposing party to engage in ' unnecessary efforts”. Fernández, 18 P.R. Offic. Trans. 823, 830; see also Nuñez Santiago v. P.R. Elec. Power Auth., 206 F.Supp.2d 231, 232-33 (D.P.R. 2002).

Prestige’s impetuous behavior does not sit well with the Court. This tactic casts doubt as to the seriousness and reasonableness of Prestige’s representations. By moving for summary judgment, Prestige made USIC waste time and incur in unnecessary efforts and economic hardship by having to respond to its filings.

In light of the above, the Court finds that Prestige acted in an obstinate and frivolous manner and thus, pursuant to Rule 44.1 of the Puerto Rico Rules of Civil Procedure, attorney’s fees are proper. Within thirty days from the entry of this Opinion and Order, USIC shall submit to the Court a supplemental petition for attorney’s fees award, including hourly rate, amount of hours in attorney’s fees, and any, additional information warranted by the applicable law.

For the foregoing reasons, the Court GRANTS USIC’s request for attorney’s fees.

Y. Conclusion

In light of the above, the Court GRANTS USIC’s Motion to Dismiss and DISMISSES with prejudice Plaintiffs claims.

SO ORDERED.

ATTACHMENT

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

PRESTIGE CAPITAL CORPORATION, Plaintiff v. UNITED SURETY AND INDEMNITY COMPANY, Defendant.

CASE NO. 16-1998 (GAG)

APPENDIX

INDEX

Appendix 1: ' Certified Translation of T.O.L.I.C. v. Rodriguez Febles, 170 D.P.R. 804, 818-821 (2007).

T.O.L.I.C. v. Rodriguez Febles, 2007 TSPR 67 (P.R. Apr. 10, 2007)

C. Finally, we shall consider the last error argued. Petitioner Febles Gordián claims that it was improper to exempt TOLIC from payment of interest from the date on which the minor’s funds were consigned until the date when judgment was issued. Her argument is based on the Civil Code provision establishing that an obligation survives as long as the creditor has not accepted the consignation or received an order from the court stating that the con-signation has been properly made. Civil Code Art. 1134, 31 L.P.R.A. sec. 3184. Petitioner is mistaken.

Consignation is “the legal deposit ... of the thing owed. The asset is placed under the power of the judicial authority, which shall retain it and put it at the disposal of the creditor.” (Emphasis removed.) J. Vélez Torres, Derecho de Obli-gaciones [Obligations Law], 2nd rev. ed., San Juan, Programa de Educación Continua, Universidad Interamericana, 1997, p. 186. This concept “results in extinguishing the obligation; and is a form of payment in the absence of the will of the creditor.” R. Bercovitz and Rodríguez Cano, and *819 E. Valladares Rascón (scholars), in M. Al-baladejo, Comentarios al Código Civil y compilaciones forales [Commentary on the Civil Code and Statutory Compilations], Madrid, Ed. Edersa, 1991, Art." 1.181, T. XVI, Vol. 1, p. 297.

This concept is ruled by Civil Code Arts. 1130 to 1135, 31 L.P.R.A. secs. 3185 to 3189. While Art. 1130 provides that consig-nation releases the debtor from liability “when several persons claim a right to collect,” Civil Code Art. 1134 provides that

[o]nce consignation has been properly done, the debtor may request that the court or the judge order the extinguishment of the obligation.

As long as the creditor has not accepted the consignation, or a court order has not issued stating it was properly done, debtor may withdraw the thing or amount deposited, leaving the obligation surviving. 31 L.P.R.A sec. 3184.

Although this legal provision establishes that the debtor shall not be released from his or her obligation until there is a corrective court order, this does not imply that debtor is obligated to pay interest from the time of the consignation until the court order issues. Formal release from the obligation—which arises from the contract—is one thing, while the requirement to pay interest is another. “[S]panish doctrine agrees that the retroactive effectiveness of a properly executed consignation extends to the moment the deposit took place.” (Emphasis in original.) Vélez Torres, ante, p. 189.

The fact that the court a quo delayed in ruling that the consignation had been properly done should not give rise to the imposition on debtor of the payment of interest on an amount paid by debtor in accordance with our legal requirements. If, under those circumstances, we were to impose the payment of interest from the date of the consignation, we would be undermining the purpose of Rule 19 of Civil Procedure, 34 L.P.R.A.. App. Ill, which allows for litigation between opposing parties and is one of the most useful instances of the legal concept of consignation. See Civil Code Art. 1130,31 L.P.R.A. sec. 3180.

What the court order does “is to rule *820 that consignation has been properly done and recognize the intended effect of release sought by debtor when depositing the thing; hence, it must become effective as of [that] moment.” Velez Torres, ante, p. 189. We thus conclude that, even though debtor’s formal release depends on the court finding that the consignation was properly done, payment of interest as of the consignation date does not apply if it was found, in fact, to have been properly done. We resolve that in cases such as this, where consignation is ruled to be correct, “the effect of payment is retroactive to the date on which the thing was deposited ...” Bercovitz and Rodríguez Cano, and Valladares Rascón, ante, p. 299.  