D.E. 96: Opinion and Order — Motion to Dismiss Denied, Stay Pending Arbitration Granted (Oct. 12, 2023) — Oto Analytics v. Benworth

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U.S. District Court for the District of Puerto Rico · No. 3:23-cv-01034-GMM · Doc. 96 · 2023-10-12 · Docket on CourtListener

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IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF PUERTO RICO 
 
 
Oto Analytics, LLC, 
 
Plaintiff, 
 
v. 
 
Benworth Capital Partners PR LLC, 
Benworth Capital Partners LLC, 
Bernardo Navarro and Claudia 
Navarro, 
 
Defendants  
 
Civil No. 23-1034(GMM) 
 
 
OPINION AND ORDER 
Pending before the Court is Benworth Capital Partners PR LLC’s 
(“Benworth PR” or “co-Defendant”) Motion to Dismiss or Stay 
Proceedings Pending the Outcome of Arbitration. (Docket No. 34). 
For the reasons stated herein, co-Defendant’s request to dismiss 
for lack of jurisdiction is DENIED and request to stay pending 
arbitration is GRANTED. 
I. 
RELEVANT PROCEDURAL HISTORY 
On January 24, 2023, Plaintiff Oto Analytics, LLC (f/k/a Oto 
Analytics Inc., d/b/a Wombly) (“Wombly”) filed this case against 
Benworth PR; Benworth Capital Partners LLC (“Benworth FL”); and 
Bernardo 
Navarro 
and 
Claudia 
Navarro 
(collectively 
the 
“Navarros”), for alleged fraudulent transfers between 
co-
Defendants to avoid paying Plaintiffs nearly $200 million in fees 
and interest. (Docket No. 1).  
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Wombly, a technology company, provided Benworth FL, a Florida 
lender wholly owned by Bernardo Navarro, with technology services 
that enabled it to efficiently manage loans made through the 
Federal Paycheck Protection Program (“PPP”). (Id. at 1-2.). Wombly 
alleges that under the technology services contract between itself 
and Benworth FL, Benworth FL owed it approximately $197 million in 
fees and accrued interest. (Id.).  
In August 2021, Wombly initiated JAMS arbitration proceedings 
against Benworth FL to recover those costs. (Id.). During these 
proceedings, Wombly contends that it learned Benworth FL and the 
Navarros fraudulently transferred funds that they owed Wombly to 
Benworth PR. (Docket Nos. 1 ¶¶ 1-2, 19, 92-93, 168-184; 47 at 5-
6). Wombly alleges that during arbitration proceedings the 
Arbitrator stated that “[p]ursuant to the relevant agreements 
between the parties, either party may seek equitable or injunctive 
relief concerning issues relevant to this Arbitration in a court 
of law,” which “allow[s] Wombly to seek equitable or injunctive 
relief in a court of competent jurisdiction.” (Docket Nos. 1 ¶¶ 
29,214; 47 at 10). Wombly states that it accordingly received 
permission from the arbitrator to “unwind the Fraudulent Transfer 
and for other equitable relief.” (Docket No. 1 at 1). Thus, on 
January 24, 2023, Wombly filed its complaint in this Court seeking 
to obtain a prejudgment attachment and other equitable relief for 
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co-Defendants’ alleged fraudulent transfer of funds from Benworth 
FL to Benworth PR. (Docket No. 47 at 10). 
On March 27, 2023, Benworth PR filedits Motion to Dismiss or 
Stay Proceedings Pending the Outcome of Arbitration. (Docket No. 
34). Benworth FL moved for joinder on this motion on March 29, 
2023 and the Court granted that request on September 25, 2023. 
(Docket Nos. 35 and 92). Benworth PR argues (1) that until the 
parties’ arbitration proceedings conclude and an award against 
Benworth FL is determined, Wombly’s claims are not ripe for 
litigation and (2) Wombly lacks standing to bring a claim against 
co-Defendant because it cannot demonstrate that it has yet suffered 
an injury or faces substantial risk of an injury. (Docket No. 34 
at 2). In alternative to co-Defendant’s jurisdictional motions, it 
requests that the Court stay litigation pending arbitration. (Id. 
at 3). 
II. 
LEGAL STANDARD 
A. 
Motion to Dismiss for lack of Jurisdiction 
Pursuant to Rule 12(b)(1) of the Federal Rules of Civil 
Procedure, a court should grant a motion to dismiss when it lacks 
subject 
matter 
jurisdiction 
over 
a 
complaint. 
Fed.R.Civ.P.12(b)(1). Rule 12(b)(1) motions are subject to the 
same standard of review as Rule 12(b)(6) motions. See Negrón-
Gaztambide v. Hernández-Torres, 35 F.3d 25, 27 (1st Cir. 1994); 
Torres v. Bella Vista Hosp., Inc., 523 F.Supp.2d 123, 132 (D.P.R. 
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2007). As such, in evaluating a 12(b)(1) motion, a court “must 
accept as true all well-pleaded factual claims and indulge all 
reasonable inferences in plaintiff's favor.” Viqueira v. First 
Bank, 140 F.3d 12, 16 (1st Cir.1998). See also Rolón v. Rafael 
Rosario & Associates, Inc., et al., 450 F.Supp.2d 153, 156 
(D.P.R.2006). In doing so, a court must review the evidence in the 
record. Colon v. Diaz, 174 F. Supp. 3d 667, 669 (D.P.R. 2016). The 
party asserting jurisdiction bears the burden of establishing its 
existence. See Valentín v. Hospital Bella Vista, 254 F.3d 358, 62-
63 (1st Cir. 2001).  
 
B. 
Ripeness 
Article III of the United States Constitution limits the 
jurisdiction of federal courts to cases and controversies. U.S. 
CONST. art. III, § 2, cl. 1. “An actual “case or controversy” 
exists when “the party seeking to invoke the court's jurisdiction 
(normally, the plaintiff) has a ‘personal stake in the outcome’ of 
the claim asserted.” AES Puerto Rico, L.P. v. Trujillo-Panisse, 
133 F. Supp. 3d 409, 416 (D.P.R. 2015)(quoting Pagan v. Calderon, 
448 F.3d 16, 27 (1st Cir.2006).  
To be a justiciable controversy, there must be “a real and 
substantial controversy admitting of specific relief through a 
decree of a conclusive character, as distinguished from an opinion 
what the law would be upon a hypothetical state of facts.” Aetna 
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Life Ins. Co. of Hartford, Conn. V. Haworth, 300 U.S. 227, 241 (1937). 
Ripeness is thus a key component of a justiciable controversy as 
it ensures that courts do not “entangl[e] themselves in abstract 
disagreements” by preventing the entertainment of “premature 
adjudication.” Roman Catholic Bishop of Springfield v. City of 
Springfield, 724 F.3d 78, 89 (1st Cir.2013) (quoting Abbott Labs. 
v. Gardner, 387 U.S. 136, 148 (1967)). 
Ripeness doctrine “seeks to prevent the adjudication of 
claims relating to ‘contingent future events that may not occur as 
anticipated, or indeed may not occur at all.’” Reddy v. Foster, 
845 F.3d 493, 500 (1st Cir. 2017) (citing Texas v. United States, 
523 U.S. 296, 300 (1998)). In determining whether a matter is ripe 
for litigation a court must evaluate “whether there is a 
sufficiently live case or controversy, at the time of the 
proceedings, to create jurisdiction in the federal courts.” Id. at 
501 (citing Roman Catholic Bishop of Springfield, 724 F.3d at 89). 
“There are two factors to consider in determining ripeness: the 
fitness of the issues for judicial decision and the hardship to 
the parties of withholding court consideration.” Roman Catholic 
Bishop, 724 F.3d at 89 (internal quotation omitted). See also Labor 
Relations Div. of Constr. Indus. of Mass., Inc. v. Healey, 844 
F.3d 318, 330 (1st Cir. 2016)). Critically, a court is tasked with 
determining if “[T]he facts alleged, under all the circumstances, 
show that there is a substantial controversy, between parties 
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having adverse legal interests, of sufficient immediacy and 
reality to warrant the issuance of the judicial relief sought.”  
Labor Relations Div. of Constr. Indus. of Mass., Inc., 844 F.3d at 
326 (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 
(2007). 
C. 
Standing 
Standing is a related though independent justiciability 
doctrine. See Foisie v. Worcester Polytechnic Inst., 967 F.3d 27, 
35 (1st Cir. 2020)(“The constitutional standing and ripeness 
inquiries are interrelated and often duplicative.”). A plaintiff 
invoking federal jurisdiction under Article III bears the burden 
of meeting the “irreducible constitutional minimum” of standing by 
establishing that they: (1) suffered an injury in fact; (2) the 
injury was fairly traceable to the defendants’ challenged conduct; 
and (3) a favorable judicial decision can redress the plaintiff’s 
claimed injury. See Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), 
as revised (May 24, 2016); Lujan v. Defenders of Wildlife, 504 
U.S. 555, 560-561 (1992). An injury in fact must be “concrete and 
particularized” and “actual or imminent, not ‘conjectural’ or 
‘hypothetical.’” Lujan, 504 U.S. at 560 (some internal question 
marks omitted). See also Monsanto Co. v. Geertson Seed Farms, 561 
U.S. 139, 149 (2010).  Allegations that an injury may occur in the 
future might be sufficient to qualify as an injury in fact if the 
threatened injury is “certainly impending” or there is a “realistic 
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and impending threat of direct injury.” See Clapper v. Amnesty 
Int’l USA, 568 U.S. 398, 401-402 (2013); Davis v. Federal Election 
Com’n, 554 U.S. 724, 734 (2008). “‘The party invoking federal 
jurisdiction 
bears 
the 
burden 
of 
establishing’ 
standing.”  Clapper, 568 U.S. at 411-412. 
III. DISCUSSION 
A. 
Ripeness – Prejudgment attachment 
Benworth PR, joined by Benworth FL, argues that Wombly’s 
claims are not yet ripe because the issue of whether Benworth FL 
is a creditor of Wombly, and thus if it owes Wombly anything, has 
not yet been determined through the arbitration. (Docket No. 43 at 
4.). As such, Benworth PR maintains that no claim ripe for 
adjudication can be established until arbitration has concluded. 
(Id.). Conversely, Wombly argues that fraudulent transfer claims 
can be ripe for consideration even when the “underlying claims are 
actively being litigated.” (Docket No. 47 at 13) (citing Foisie, 
967 F.3d at 36). Wombly finds that the remedy of prejudgment 
attachment functions to make its claim against co-Defendants ripe 
in the instant cause of action. (Id.). Wombly admits that it has 
not yet moved for prejudgment attachment but claims that its cause 
of action is nevertheless ripe. (Docket No. 95 at 2). 
First Circuit precedent holds that jurisdictional ripeness 
and a tribunal’s liability determination under a particular 
statute are independent questions. In Foisie, the First Circuit 
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reversed the district court’s finding that a plaintiff lacked 
standing to bring a claim under the Uniform Fraudulent Transfer 
Act (“UFTA”). Foisie, 967 F.3d at 36. The Appellate Court 
determined that an ex-wife plaintiff seeking to recoup assets from 
the beneficiary of her deceased ex-husband (“WPI”), who allegedly 
defrauded such funds from her during divorce proceedings, had 
standing and a ripe cause of action against the beneficiary under 
Massachusetts law even when her “underlying civil claims are 
actively being litigated.” Id. at 34–35. Critically, the First 
Circuit emphasized that a trial court’s pending determination that 
Foisie was a creditor with a valid claim under the UFTA was 
irrelevant to the question of whether she possessed standing and 
a ripe cause of action that granted the court subject matter 
jurisdiction over the case. Foisie, 967 F.3d. at 35. See also 
Enter. Fin. Grp. v. Podhorn, 930 F.3d 946, 950 (8th Cir. 2019).  
The 
First 
Circuit’s 
differentiation 
between 
the 
jurisdictional and pending substantive statutory questions is 
informative in the present matter. This Court agrees that the 
ripeness of Wombly’s case does not stand on the Arbitrator’s final 
determination of whether Benworth PR is Wombly’s creditor. As such, 
co-Defendant’s core argument that this Court lacks subject matter 
jurisdiction over Wombly’s claim until the conclusion of 
arbitration is unavailing. The Court will thus analyze the ripeness 
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of Wombly’s cause of action independent of the arbitrator’s 
liability determination for co-Defendant. 
As previously noted, the purpose of ripeness doctrine is to 
prevent the adjudication of causes of action relating to 
“contingent future events that may not occur as anticipated, or 
indeed may not occur at all.” Texas, 523 U.S. at 300 (quoting 
Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 580–
81(1985)). In the instant matter, Wombly seeks equitable and 
injunctive relief from co-Defendant’s alleged fraudulent transfer 
which was supposedly conducted as a means avoid payment for 
Wombly’s services. This cause of action thus differs from the 
primary dispute being arbitrated regarding debt owed for services 
rendered by Wombly to Benworth FL. Wombly requests remedies 
including recission of the fraudulent transfer and attachment of 
Defendants’ assets. (Docket No. 1 at 68).  
In reviewing a 12(b)(1) motion, a court is instructed to 
construe the complaint liberally and take the pleadings as true 
“according plaintiff the benefit of all reasonable inferences.” 
Murphy v. U.S., 45 F.3d 520, 522 (1st Cir. 1995). Applying such a 
standard here, the Court concludes that Wombly plausibly alleged 
that Benworth FL owed Wombly approximately $200 million for fees 
and services rendered and that Benworth FL transferred funds to 
Benworth PR a corporation wholly owned by the same owners of 
Benworth FL. Drawing on these facts and the associated reasonable 
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inferences, the Court finds the existence of a substantial 
controversy between adverse parties regarding the occurrence of a 
fraudulent transfer to avoid repayment of debt owed. Moreover, 
should Wombly prevail in its fraudulent transfer claims, various 
remedies including prejudgment attachment could be invoked to 
redress its injury even pending the resolution of arbitration. See 
Fonsie, 967 F.3d at 36 (“The plaintiff’s underlying civil claims 
are actively being litigated and, if she successfully prosecutes 
her fraudulent conveyance claims, various remedies could be 
crafted to redress her injury regardless of whether her civil 
claims have been reduced to judgment by that time.”). (Emphasis 
supplied) 
Having 
established 
the 
existence 
of 
a 
substantial 
controversy, the Court considers the hardship element of a ripeness 
determination by evaluating “the extent to which withholding 
judgment will impose hardship — an inquiry that typically turns 
upon whether the challenged action creates a ‘direct and immediate’ 
dilemma for the parties.” Stern v. U.S. Dist. Court, 214 F.3d 4, 
10 (1st Cir. 2000). Again, based on reasonable inferences drawn 
from Wombly’s pleadings, the Court’s withholding of its decision 
at this time could enable the secondary disposal or conveyance of 
the allegedly fraudulently transferred funds, frustrating the 
satisfaction of any award or judgment arising from the pending 
arbitration proceedings or the instant civil case. As such, the 
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Court finds that the hardship prong of the ripeness test is met 
and concludes that Wombly’s claim is ripe for adjudication. 
 
B. 
Standing 
 
The Court similarly concludes that Plaintiff’s pleadings are 
sufficient to survive a 12(b)(1) standing challenge. Taking 
Wombly’s well-pleaded facts as true and drawing inferences in its 
favor, the alleged fraudulent transfer of funds between co-
Defendants, would prevent Benworth FL from paying Wombly millions 
of dollars for services rendered. This would qualify as a concrete 
injury that can be fairly traceable to co-Defendant’s actions. The 
Court next considers the redressability of Wombly’s claims. 
Wombly emphasizes that its requested remedy of attachment of 
Defendants’ assets supports the Court’s finding that its cause of 
action as ripe. (Docket No. 47 at 8-9). However, Benworth PR noted 
in its reply to Wombly’s opposition that Wombly had not yet 
properly requested this remedy. (Docket No. 61 at 2-4). See HMG 
Prop. Invs., Inc. v. Parque Indus. Rio Canas, Inc., 847 F.2d 908, 
913 (1st Cir. 1988) and Fed.R.Civ.P 64 (noting that pursuant to 
Rule 64 of the Federal Rules of Civil Procedure, a plaintiff 
seeking a provisional remedy must “be issued in a manner compatible 
with state law”) (emphasis supplied); see also  P.R. Laws Ann. 
Tit. 31, Ap. I, § 56.1 (official translation)(stating that the 
court may issue a provisional order “on motion of claimant.”)In 
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its surreply, Wombly admits that it has not yet moved for 
prejudgment attachment but argues that its claims are nevertheless 
justiciable. (Docket No. 95 at 2).  
Wombly’s 
complaint 
also 
requested 
additional 
remedies 
including: recission of the fraudulent transfer, declaratory 
judgments finding Benworth PR and the Navarros liable for any debts 
owed by Benworth FL to Wombly due to the alleged fraudulent 
transfer, costs and fees arising from the present action, and any 
other relief deemed proper by the Court. (Docket No. 1 at 68).  
The Court concludes that should Wombly succeed in its 
fraudulent transfer claims, its requested remedies would provide 
redress for its claimed injury of being denied access to the 
transferred 
funds 
should 
it 
prevail 
in 
the 
adjudication 
proceedings. For instance, should Wombly succeed in its claims, it 
can still move for prejudgment attachment of co-Defendant’s assets 
to support satisfaction of any award granted to it in arbitration. 
Moreover, Wombly’s claimed injury could similarly be redressed 
through the recission or an equitable injunction against co-
Defendant for disposing of the funds pending the resolution of 
parallel arbitration proceedings. Thus, the Court concludes that 
Plaintiff’s pleadings are currently redressable and thus function 
to survive co-Defendant’s 12(b)(1) standing challenge. See 
analogously Foisie, 967 F.3d at 36. 
 
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C. 
Arbitration 
No party objects to a stay in proceedings pending arbitration. 
(Docket Nos. 47 at 13; 61 at 1, 95 at 2-3). Notably, in its most 
recent filing, Wombly stressed that it “agreed with Benworth’s 
request for a short stay of this case pending a decision of the 
arbitrator.” (Docket No. 95 at 2-3). The Court sees no reason to 
further analyze a matter over which there is no dispute.  
IV. 
CONCLUSION 
The Court DENIES co-Defendant’s request to dismiss for lack 
of jurisdiction and GRANTS the request to stay pending arbitration. 
IT IS SO ORDERED. 
In San Juan, Puerto Rico, this October 12, 2023. 
 
 
 
 
 
 
 
 
s/Gina R. Méndez-Miró 
 
 
 
 
 
 
 
GINA R. MÉNDEZ-MIRÓ 
 
 
 
 
 
 
 
UNITED STATES DISTRICT JUDGE 
 
 
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