FRBSF Motion to Consolidate (D.E. 153) — 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. 153 · 2024-08-19 · Docket on CourtListener

Summary

A Motion to Consolidate filed by the Federal Reserve Bank of San Francisco, plaintiff-intervenor, in Oto Analytics, LLC v. Benworth Capital Partners PR LLC, Civil No. 23-01034, in the U.S. District Court for the District of Puerto Rico, filed August 19, 2024 as Doc. 153. The motion asks the court, under Fed. R. Civ. P. 42(a) and Local Rule 42, to consolidate that action with Civil No. 24-01313, transferred to the court by an order dated August 2, 2024. It states that both actions name the same four defendants and allege fraudulent transfers of assets connected to the Paycheck Protection Program Liquidity Facility. It recites a claim of approximately $200 million in unpaid fees and interest, rescission of a transfer of approximately $171 million, and an unpaid balance of nearly $67 million. The eleven-page motion states that the plaintiff consents and the defendants do not oppose.

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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. 23-01034 (GMM) 
 
 
 
 
 
 
 
FEDERAL RESERVE BANK OF SAN 
FRANCISCO,  
 
Plaintiff-Intervenor, 
 
v.  
 
OTO ANALYTICS, LLC, BENWORTH 
CAPITAL PARTNERS PR LLC, BENWORTH 
CAPITAL PARTNERS LLC, BERNARDO 
NAVARRO and CLAUDIA NAVARRO, 
 
Defendants in Intervention. 
 
 
 
MOTION TO CONSOLIDATE 
 
The Federal Reserve Bank of San Francisco (the “Reserve Bank”) requests, pursuant to 
Federal Rule of Civil Procedure 42(a) and Local Rule 42, that this Honorable Court consolidate 
the following two civil actions: Oto Analytics, LLC v. Benworth Capital Partners PR LLC, et al., 
Civil No. 23-01034 (the “Womply Action”), which has been pending before this Court since 
January 24, 2023, and Civil No. 24-01313 (the “Reserve Bank Action,” and, jointly with the 
Womply Action, the “Actions”), which was transferred to this Court pursuant to the order of Judge 
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María Antongiorgi-Jordán dated August 2, 2024 and is now pending before this Court.1  
For the reasons set forth below, consolidation of the Actions into the first-filed Womply 
Action, Civil No. 23-01034, is appropriate because (1) both Actions involve common questions of 
law and fact regarding Defendants’ fraudulent transfers of assets in connection with its 
participation in the Paycheck Protection Program (the “PPP”) and the Paycheck Protection 
Program Liquidity Facility (the “PPPLF”), and (2) consolidation will promote a just and efficient 
litigation in both Actions by streamlining scheduling, filings, hearings, discovery, and other 
matters and avoiding the risk of inconsistent adjudication of the same or even identical issues 
raised during the course of proceedings in both Actions.  
The undersigned has conferred with the parties in the Womply Action about the relief 
requested herein. Oto Analytics, LLC (“Womply”) consents to the consolidation requested herein, 
and Defendants (as defined below) do not oppose consolidation. 
FACTUAL BACKGROUND 
1. 
On January 23, 2023, Womply initiated the Womply Action by filing a 
Complaint against Benworth Capital Partners PR LLC (“Benworth PR”), Benworth Capital 
Partners LLC (“Benworth FL”), and the individuals Bernardo Navarro and Claudia Navarro 
(together, the “Navarros” and, together with Benworth PR and Benworth FL, the “Defendants”). 
See ECF No. 1. On July 1, 2024, Womply filed an Amended Complaint (the “Womply 
Complaint”). See ECF No. 123. 
2. 
As alleged in the Womply Complaint, Benworth FL contracted to use Womply’s 
services to facilitate the origination of PPP loans by Benworth FL. Under the parties’ agreements, 
Benworth FL was to pay Womply certain fees for these services. Womply alleges it is owed 
 
1 See the Reserve Bank Action at ECF Nos. 15-16. 
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approximately $200 million in unpaid fees and interest from Benworth FL, which it claims it was 
also pursuing in an arbitration proceeding commenced in August 2021.2 The Womply Complaint 
requests, among other relief: (1) the recission of a transfer of approximately $171 million from 
Benworth FL to Benworth PR, (2) attachment of the Defendants’ assets, (3) a declaration that 
Benworth PR is the alter ego of and/or the successor to Benworth FL, making Benworth PR 
liable to Womply; (3) a declaration that the Navarros are personally liable for satisfying 
Benworth FL’s and Benworth PR’s obligations to Womply as a result of the piercing the 
corporate veil; and (4) an award of collection costs and attorneys’ fees and costs.  
3. 
On July 10, 2024, the Reserve Bank initiated the Reserve Bank Action by filing 
a Complaint (the “Reserve Bank Complaint”) against the same Defendants in the Womply 
Action.  
4. 
The Reserve Bank Complaint alleges that Benworth FL owes the Reserve Bank 
millions of dollars in fees, accrued interest, and additional costs arising from Benworth FL’s 
default under certain agreements pursuant to which the Reserve Bank provided credit advances 
to Benworth FL under the PPPLF. See Reserve Bank Compl. ¶¶ 16-37. Like the Womply 
Complaint, the Reserve Bank Complaint further alleges that Benworth FL fraudulently 
transferred assets to Benworth PR and the Navarros while it was insolvent, undercapitalized, and 
unable to pay its debts when due, or that such transfers caused it to become insolvent, 
undercapitalized, and unable to pay its debts as they became due. See id. ⁋⁋ 46-63. As Womply 
also alleged, these transfers have left the Reserve Bank unable to collect its debt from Benworth 
 
2 On June 11, 2024, the arbitrator issued a final award (subsequently corrected on June 26, 2024) requiring Benworth 
FL to pay Womply nearly $118 million in unpaid fees, interest, and costs. Womply has filed a petition to confirm the 
final award in the United States District Court for the Northern District of California. See Reserve Bank Compl. ¶¶ 
39-41; see also Petition to Confirm Arbitration Award and For Entry of Judgment, Oto Analytics, LLC v. Benworth 
Capital Partners LLC, No. 3:24-cv-03975 (N.D. Cal. July 1, 2024). 
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FL under the parties’ agreements.  
5. 
Accordingly, the Reserve Bank Complaint requests, among other relief: 
(1) rescission of certain transfers from Benworth FL to Benworth PR and the Navarros; (2) a 
declaration that Benworth PR is the alter ego of and/or the successor to Benworth FL, making 
Benworth PR liable to the Reserve Bank; (3) a declaration that the Navarros are personally liable 
for satisfying Benworth FL’s and Benworth PR’s obligations to the Reserve Bank as a result of 
the piercing of the corporate veil; and (4) an award of costs in the Reserve Bank’s favor, including 
unpaid principal, accrued interest (including default interest, as applicable), and additional costs 
owed under the Program Agreements. 
6. 
The Reserve Bank Action was originally assigned to Judge María Antongiorgi-
Jordán. On August 2, 2024, Judge Antongiorgi-Jordán ordered the Reserve Bank Action 
transferred to this Court. See ECF No. 15 (Civil No. 24-01313). 
7. 
On July 10, 2024, the Reserve Bank also filed a Motion to Intervene Under Fed. 
R. Civ. P. 24 (the “Motion to Intervene”) requesting that this Court allow it to intervene in the 
Womply Action. See ECF No. 127. All parties to the Womply Action filed statements confirming 
that they did not oppose the Reserve Bank’s intervention, see ECF No. 140-41, and this Court 
granted the Motion to Intervene by its order dated July 29, 2024, see ECF No. 145. 
8. 
For the reasons set forth below, the Reserve Bank requests that this Court 
consolidate the Reserve Bank Action, Civil No. 24-01313, with the first-filed Womply Action, 
Civil No. 23-01034 for all purposes. In the alternative, the Reserve Bank requests consolidation 
for purposes of pre-trial proceedings, including discovery, without prejudice to the availability 
of this Court ordering a joint trial at a later date. 
 
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ARGUMENT 
Under Fed. R. Civ. P. 42(a), “[i]f actions before the court involve a common question of 
law or fact,” the Court may “consolidate the actions.” Fed. R. Civ. P. 42(a). The Court may also 
“join for hearing or trial any or all matters at issue in the actions” or “issue any other orders to 
avoid unnecessary cost or delay.” Id.  
“District courts enjoy substantial discretion in deciding whether and to what extent to 
consolidate cases.” Hall v. Hall, 584 U.S. 59, 77 (2018) (citation omitted). “The threshold issue 
is whether the . . . proceedings involve a common party and common issues of fact or law. Once 
this determination is made, the trial court has broad discretion in weighing the costs and benefits 
of consolidation to decide whether that procedure is appropriate.” Seguro de Servicio de Salud v. 
McAuto Sys. Group, Inc., 878 F.2d 5, 8 (1st Cir. 1989) (citations omitted). Courts have stressed 
that the purpose of joining actions is to promote convenience and judicial economy. See Johnson 
v. Manhattan Railway Co., 289 U.S. 479, 496-97 (1933); Arroyo v. Chardon, 90 F.R.D. 603, 605 
(D.P.R. 1981). Consolidation is appropriate if it will “promote the aims of all the parties [and] 
economize time and effort without circumscribing the opportunity for full litigation of all relevant 
claims,” but not proper if it causes prejudice to a party. See González–Quiles v. Coop. De Ahorro 
Y Credito De Isabela, 250 F.R.D. 91, 92 (D.P.R. 2007). “A motion for consolidation will usually 
be granted unless the party opposing it can show demonstrable prejudice.” Storlazzi v. Bakey, 
No. 95–1595, 1995 WL 623676, * 1 (1st Cir. Oct. 24, 1995) (citation omitted).  
The Local Rules for the United States District Court for the District of Puerto Rico (the 
“Local Rules”) provide that “[a] motion for consolidation shall be presented in the case first filed 
within the cases identified for consolidation.” Loc. Civ. R. 42. If this Court orders consolidation, 
“the clerk shall designate the case having the earliest docket number as the lead case, unless 
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otherwise directed by the court,” and subsequent documents or pleadings filed in either action 
shall “(1) include the caption of all consolidated cases, (2) be served on all parties within such 
cases, and (3) be filed only in the lead case.” Id. 
A. Consolidation Is Appropriate Under Rule 42(a) and Would Streamline and Simplify 
Proceedings in Both Actions Because They Share Multiple Claims and Numerous 
Factual and Legal Issues. 
 
Consolidation of the Reserve Bank Action, Civil No. 24-01313, with the first-filed 
Womply Action, Civil No. 23-01034, is appropriate under Rule 42(a) because both Actions 
involve similar questions of law and fact and should be granted in this Court’s exercise of 
discretion because consolidation would yield significant efficiencies and cost savings for both 
the parties and the Court’s own judicial resources, avoid the risk of inconsistent resolution of the 
same or substantially similar issues, and present minimal—if any—risk of prejudice or confusion.  
First, both Actions involve the same four Defendants, who are represented by the same 
counsel in both cases, underscoring the benefit of consolidation for the parties’ and the Court’s 
schedules. 
Second, the Actions share substantially similar, and sometimes identical, questions of law 
and fact, chief among them whether, as alleged by both the Womply Complaint and the Reserve 
Bank Complaint, Benworth FL fraudulently transferred assets to Benworth PR and the Navarros. 
See, e.g., Womply Complaint ⁋⁋ 1-2, 165-184, 215-240; Reserve Bank Complaint ⁋⁋ 3, 46-63, 
68-77. To pursue their claims, both Womply and the Reserve Bank will seek similar discovery 
of Benworth FL, Benworth PR, and the Navarros. Consolidation will simplify this exchange of 
information, avoid duplicative discovery and overlapping evidence, and reduce any 
inconvenience on deponents and witnesses at trial, who are likely to substantially overlap 
between the two Actions.  
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Furthermore, the unpaid debts underlying the relief sought in the Womply Complaint and 
the Reserve Bank Complaint both arise out a common nucleus of fact: Benworth FL’s role as a 
participant in the PPP and PPPLF. As a borrower under the PPPLF, Benworth FL obtained 
PPPLF financing from the Reserve Bank, secured by, inter alia, the PPP loans Benworth FL 
originated to small businesses and the proceeds thereof. As of the filing of the Reserve Bank 
Complaint, Benworth FL had an unpaid balance under the PPPLF of nearly $67 million. 
Meanwhile, Womply facilitated Benworth FL’s origination of PPP loans by providing a 
technology platform and referring hundreds of thousands of PPP loans to Benworth FL and 
earning millions of dollars in fees. The Womply Complaint alleges Benworth FL has failed to 
pay fees and accrued interest totaling approximately $200 million. Factual or legal developments 
(for example, affirmative defenses) that occur during the course of proceedings are thus likely to 
arise in both Actions, and consolidation would provide a single forum for their resolution.  
Third, both the Womply Complaint and the Reserve Bank Complaint seek, inter alia, the 
recission of the alleged fraudulent transfers and a declaration that Benworth PR and the Navarros 
are liable, based on veil piercing and alter ego theories, for the debts owed by Benworth FL to 
the respective plaintiffs. See, e.g., Womply Complaint ⁋⁋ 241-256; Reserve Bank Complaint ⁋⁋ 
78-105, 111.3  
Consolidation will ensure that the Court efficiently and consistently resolves these 
common legal issues for all parties involved. See Fazio v. James River Ins. Co., No. CV 20-1074 
(MEL), 2022 WL 5434220, at *3 (D.P.R. Oct. 7, 2022) (finding that “consolidation further avoids 
the risk of inconsistent judgments”). 
 
3 The Reserve Bank Complaint also asserts a cause of action for conversion. See Reserve Bank Complaint ⁋⁋ 106-
110. 
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B. Consolidation Would Not Cause Prejudice or Confusion Because Both Actions 
Remain Legally Distinct and are in a Similarly Early Stage. 
 
Consolidation does not present significant, if any, risk of prejudice to the parties. Because 
consolidated actions retain their separate character, cf. Hall v. Hall, 584 U.S. at 66, Defendants’ 
“rights to defend themselves against all claims asserted against them, including their right to 
conduct full-fledged discovery, remains untainted by consolidation.” Norton Lilly Int’l, Inc. v. 
P.R. Ports Auth., No. 18-1012 (GAG), 2019 WL 13094747, at *4 (D.P.R. May 16, 2019), report 
and recommendation adopted, No. 18-1012 (GAG) (D.P.R. June 18, 2019). 
Moreover, discovery in the Womply Action is still in its infancy, with the Rule 26(f) 
conference occurring on July 15, 2024 and Defendants’ Answer or response to the Womply 
Complaint not due until August 19, 2024, according to the proposed scheduling order. See ECF 
No. 122. The benefits of consolidating discovery at this early stage outweigh any potential 
prejudice, as courts in this District have observed when consolidating cases in postures far more 
divergent than the two Actions at issue here. See, e.g., Fazio v. James River Ins. Co., No. CV 20-
1074 (MEL), 2022 WL 5434220, at *3 (D.P.R. Oct. 7, 2022) (ordering consolidation of one 
action where discovery had closed with a second action where no discovery had yet occurred and 
dismissing defendant’s objection that it would have to “start from scratch” and “be exposed to 
demonstrable pressures to unduly accelerate proceedings” because the defendant retained full 
discovery rights and no trial date had been set). 
Similarly, the fact that the Reserve Bank and Womply allege they are owed different 
amounts by Benworth FL does not detract from the significant efficiencies gained by 
consolidation of these Actions—which, in any case, primarily concern Benworth FL’s fraudulent 
transfers. It is common for parties in consolidated proceedings to be seeking different amounts, 
and even different forms, of relief. See Gonzalez-Quiles v. Cooperativa De Ahorro Y Credito De 
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Isabela, 250 F.R.D. 91, 93 (D.P.R. 2007) (ordering consolidation over defendants’ objection that 
the two plaintiffs alleged harassment by different employees of the defendant and would “receive 
different remedies if they prevail in their claims” due to different defenses against each plaintiff, 
noting that any potential confusion could be addressed with carefully drafted jury instructions). 
The same is true about the fact that the Reserve Bank has asserted causes of action not asserted 
in the Womply Complaint. See Financial Guaranty Insurance Company v. Padilla, No. 16-1095 
(GAG), 2016 WL 369493, *1 (D.P.R. January 21, 2016) (ordering consolidation where “[b]oth 
cases assert most of the same claims,” despite that one case challenged the defendants’ actions 
on an additional basis not asserted in the second case). Therefore, consolidation of the Actions is 
proper.  
CONCLUSION 
The Reserve Bank has shown that consolidation of the Actions is appropriate under Rule 
42(a) because they share multiple claims and numerous factual and legal issues. Furthermore, 
consolidation would streamline and simplify proceedings without causing prejudice or confusion, 
as both Actions remain legally distinct and are in similarly early stages. By reducing redundant 
litigation and the potential for inconsistent rulings, consolidation also enhances the efficient use 
of judicial resources.  
Accordingly, the Reserve Bank requests the Court order the consolidation of the Reserve 
Bank Action, Civil No. 24-01313, with the Womply Action, Civil No. 23-01034, under Fed. R. 
Civ. P. 42(a) and Local Rule 42, for all purposes or, in the alternative, for purposes of pre-trial 
proceedings without prejudice to the availability of a joint trial. 
 
[SIGNATURE PAGE FOLLOWS] 
 
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Respectfully submitted in San Juan, Puerto Rico on August 19, 2024. 
Lisa M. Schweitzer (admitted pro hac vice) 
lschweitzer@cgsh.com 
 
Thomas S. Kessler (admitted pro hac vice) 
tkessler@cgsh.com 
 
CLEARY GOTTLIEB STEEN & 
HAMILTON LLP 
One Liberty Plaza 
New York, New York 10006 
Telephone: (212) 225-2000 
Facsimile: (212) 225-3999 
Attorneys for the Federal Reserve Bank of 
San Francisco  
 
 
s/ Antonio L. Roig Lorenzo 
Antonio L. Roig Lorenzo  
antonio.roig@oneillborges.com 
USDC-PR No. 207712 
s/ Salvador J. Antonetti Stutts 
Salvador J. Antonetti Stutts  
salvador.antonetti@oneillborges.com 
USDC-PR No. 215002 
s/ Ubaldo M. Fernández Barrera 
Ubaldo M. Fernández Barrera 
ubaldo.fernandez@oneillborges.com 
USDC-PR No. 224807 
s/ Aníbal A. Román Medina 
Aníbal A. Román Medina  
anibal.roman@oneillborges.com 
USDC-PR No. 308410 
 
O’NEILL & BORGES LLC 
250 Muñoz Rivera Ave., Ste. 800 
San Juan, PR 00918-1813 
Tel: (787) 764-8181 
Fax: (787) 753-8944 
Attorneys for the Federal Reserve Bank of 
San Francisco 
 
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CERTIFICATE OF SERVICE 
 
 
I certify that on August 19, 2024, I filed a copy of the foregoing document using the Court’s 
CM/ECF system, which will automatically generate a Notice of Electronic Filing to all counsel of 
record in this matter. 
 
 
 
 
 
 
 
 
s/ Aníbal A. Román Medina 
Aníbal A. Román Medina  
 
 
 
 
 
 
 
 
 
Case 3:23-cv-01034-GMM     Document 153     Filed 08/19/24     Page 11 of 11

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