Opinion and Order Denying Motion to Dismiss FRBSF Complaint (D.E. 225) — OTO Analytics v. Benworth

Record facts

U.S. District Court for the District of Puerto Rico · No. 3:23-cv-01034-GMM · Doc. 225 · 2025-04-02 · Docket on CourtListener

Summary

An opinion and order issued April 2, 2025 as Document 225 in Oto Analytics, LLC v. Benworth Capital Partners PR, LLC, Civil No. 23-01034 (GMM), consolidated with Civil No. 24-01313 (GMM), in the U.S. District Court for the District of Puerto Rico. The court denies Benworth Capital Partners, LLC's motion to dismiss the Federal Reserve Bank of San Francisco's complaint under Fed. R. Civ. P. 12(b)(6) and rejects the argument that it is an impermissible shotgun pleading. It recounts that the Reserve Bank provided about $4.3 billion in credit advances to Benworth beginning in May 2020 under the Paycheck Protection Program Liquidity Facility, and declared events of default by letter on February 27, 2024. The complaint seeks $66,980,967.08, rescission of transfers of about $171 million between the two Benworth entities, and findings of alter ego and veil piercing. The order is 31 pages.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

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)cons. 
Civil No. 24-01313 (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. 
 
 
 
Federal 
Reserve 
Bank 
of 
San 
Francisco, 
 
Consolidated Plaintiff, 
 
v. 
 
Benworth Capital Partners PR, LLC; 
Benworth Capital Partners, LLC; 
Bernardo 
Navarro 
and 
Claudia 
Navarro, 
 
Consolidated Defendants. 
 
 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 1 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -2- 
 
 
OPINION AND ORDER 
Before the Court is Defendant Benworth Capital Partners, 
LLC’s (“Benworth FL”) Defendant Benworth Capital Partners, LLC’s 
Motion to Dismiss the Federal Reserve’s Complaint and Complaint in 
Intervention (“Motion to Dismiss”) (Docket No. 169), joined by 
Defendants Benworth Capital Partners PR, LLC; Bernardo Navarro and 
Claudia Navarro at Docket No. 170. Therein, Benworth FL seeks to 
dismiss in its entirety Plaintiff Federal Reserve Bank of San 
Francisco’s (“Reserve Bank”) Complaint at Docket No. 1 in Civil 
No. 24-01313 pursuant to Fed. R. Civ. P. 12(b)(6). For the 
following reasons the Court DENIES the Reserve Bank’s Motion to 
Dismiss. 
I. 
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND 
This is a civil action against defendants Benworth Capital 
Partners PR LLC, a Puerto Rico limited liability company (“Benworth 
PR”), Benworth Capital Partners LLC, a Florida limited liability 
company 
(“Benworth 
FL” 
and, 
together 
with 
Benworth 
PR, 
“Benworth”), Bernardo Navarro (“Mr. Navarro”), and Claudia Navarro 
(“Ms. Navarro” and, together with Mr. Navarro, the “Navarros” and, 
collectively with Benworth, the “Defendants”) for, among other 
relief, damages for breach of contract, collection of money, 
conversion, and rescission of fraudulent transfers of various 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 2 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -3- 
 
assets from Benworth FL to Benworth PR and the Navarros. Before 
the Court is Defendant Benworth Capital Partners, LLC’s Motion to 
Dismiss the Federal Reserve’s Complaint and Complaint in 
Intervention (“Motion to Dismiss”). (Docket No. 169). 
The following facts, drawn from the Complaint, are accepted 
as true for purposes of the Motion to Dismiss. The Reserve Bank of 
San Francisco (“Reserve Bank” or “Plaintiff”) is part of the U.S. 
central bank system known as the Federal Reserve System. See 
(Docket No. 1 at ¶5). Beginning in May 2020, the Reserve Bank 
provided approximately $4.3 billion in credit advances to Benworth 
FL under the Paycheck Protection Program (“PPP”) which provided 
small businesses with funds to pay certain business costs during 
the COVID-19 pandemic. See (id. at ¶2). The Reserve Bank holds a 
properly perfected, valid first-priority security interest in 
certain PPP loans pledged as collateral (“PPP Collateral”) to 
secure those advances, as well as all “proceeds and products” 
thereof and other collateral. See (id.). 
The agreements that provided for such credit advances were 
the Paycheck Protection Program Liquidity Facility Letters of 
Agreement dated May 4, 2020, January 14, 2021, and January 30, 
2023 (collectively, the “Letters of Agreement”). See (id. at ¶¶ 
19, 20). The Letters of Agreement incorporate the Reserve Bank’s 
Operating Circular No. 10 (the “Operating Circular” and, together 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 3 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -4- 
 
with the Letters of Agreement, the “Program Agreements”), which 
together set forth the relevant terms and conditions that govern 
Benworth FL’s relationship with the Reserve Bank. See (id. at ¶20). 
Under the Program Agreements, Benworth FL was authorized to 
request credit advances (“Advances”) from the Reserve Bank. Those 
Advances were secured by PPP loans pledged as collateral to the 
Reserve Bank (the “Pledged PPP Loans”) and set to mature on the 
maturity dates of the Pledged PPP Loans, subject to the terms of 
the Program Agreements. See (id. at ¶ 21). The maturity date of 
all Advances is accelerated upon the occurrence of an event of 
default, and all Advances become due and owing. See (id. at ¶ 25). 
Additionally, if Benworth FL “(i) has breached any of the 
representations, warranties, or covenants made under the [Program 
Agreements] or (ii) has engaged in any fraud or misrepresentation 
in connection with any Advance or any request to obtain an Advance 
under the 
[Paycheck Protection Program Liquidity Facility 
(“PPPLF”),” all Advances made to Benworth FL immediately become 
recourse obligations, regardless of the value of the PPP 
Collateral. See (id. at ¶ 27). In addition, failure by a PPPLF 
borrower to meet any of the requirements of the Program Agreements, 
including if the PPP Collateral fails to satisfy the requirements 
for guaranty purchase of PPP loans by the Small Business 
Administration (“SBA”), may, at the sole discretion of the Reserve 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 4 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -5- 
 
Bank, void the non-recourse provisions of the Program Agreements 
and any related provisions. The Reserve Bank’s rights therefore 
become full recourse with respect to the portion of any Advance 
equal to the amount of the valuation of the non-conforming PPP 
Collateral. See (id. at ¶ 28). 
Beginning in February 2021, Benworth FL contracted with Oto 
Analytics, LLC (“Womply”) to use its services to collect loan files 
from borrowers to originate PPP loans. See (id. at ¶¶ 39, 42). In 
August 2021, Womply commenced JAMS arbitration against Benworth FL 
in San Francisco, California (the “Arbitration”), seeking payment 
of unpaid fees that Benworth FL allegedly owes Womply under the 
parties’ agreements. See (id. at ¶ 40). On December 21, 2023, the 
arbitrator overseeing the Arbitration issued an interim award (the 
“Interim Award”) that, if finalized and not set aside, would 
require Benworth FL to pay Womply over $86 million on account of 
unpaid fees, plus contractual interest and Womply’s costs of 
collection of the debt. See (id. at ¶ 41). On June 11, 2024, the 
arbitrator issued a final award requiring Benworth FL to pay Womply 
nearly $118 million in unpaid fees, interest, and costs. See (id.). 
Pursuant to the Final Award, Womply is required to promptly 
transmit numerous loan files related to Benworth FL’s PPP loan 
portfolio that it had failed to return, and which are necessary 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 5 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -6- 
 
for the SBA to provide payment to Benworth FL for PPP loans that 
are not eligible for forgiveness. See (id. at ¶¶ 42-44).  
Benworth FL informed the Reserve Bank that the loan files 
were not in its possession and that they were necessary to process 
guaranty purchase applications that were pending or were on appeal 
with the SBA. See (id. at ¶ 34). If an application for guaranteed 
purchase of a PPP loan was not approved by the SBA, Benworth FL 
would not receive any payment on the loan thereby likely affecting 
its ability to repay the Reserve Bank. See (id. at ¶ 43). 
Based on the information acquired by Womply during discovery 
in the arbitration proceedings, it filed an action in this Court 
to, inter alia, unwind an alleged fraudulent transfer (the 
“Fraudulent Transfers”) of approximately $171 million from 
Benworth FL to Benworth PR, both of which the Navarros own and 
control. See (id. at ¶ 45). Plaintiff alleges the funds at issue 
in the Fraudulent Transfers include PPP Collateral over which the 
Reserve Bank hold a first-priority lean. As a result of the 
Fraudulent Transfers, Benworth FL did not have access to sufficient 
funds to service the Pledged PPP Loans and pay its debt to the 
Reserve Bank. See (id. at ¶ 63). 
 
On or about December 27, 2023, Benworth FL informed the 
Reserve Bank of certain developments impacting its financial 
position which caused the Reserve Bank to determine that various 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 6 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -7- 
 
Events of Default had occurred per the definition provided in the 
Program Agreements. See (id. at ¶ 31). One such development was 
Benworth FL’s acknowledgement to the Reserve Bank that it did not 
have access to sufficient funds to pay the interim arbitral award, 
or any commensurate or larger final award yet to be awarded. See 
(id. at ¶ 30). On the basis of this acknowledgement and on 
“financial statements, reports, and other information disclosed by 
Benworth FL,” the Reserve Bank concluded that at least the 
following Events of Default had occurred: “(i) that the Reserve 
Bank “deem[ed] itself insecure with respect to the financial 
condition of” Benworth FL and Benworth FL’s ability to perform its 
obligations under the Program Agreements as provided for under the 
Operating Circular, and (ii) Benworth FL’s Insolvency (as defined 
under the Operating Circular)[.]” See (id. at ¶ 32). As such, 
Plaintiff alleged that due to the Events of Default, the entire 
amount outstanding on Benworth FL’s Advances became due.  
Further, the Reserve Bank determined that Benworth FL had 
breached multiple representations, warranties, or covenants it 
made under the Program Agreements, causing the Advances to Benworth 
FL to become recourse obligations. See (id. at ¶ 33). These 
breaches included, but were not limited to, a breach of the 
representation that no event of default had occurred or was 
continuing, and a breach of the covenant to promptly notify the 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 7 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -8- 
 
Reserve Bank when Events of Default occurred. See (id.). Moreover, 
the Reserve Bank states a separate basis for Benworth FL’s loans 
becoming recourse obligations: the SBA denied over $60 million of 
Benworth Fl’s requests for guaranty purchase of PPP loans because 
Benworth FL lacked the appropriate documentation to support the 
requests. See (id. at ¶ 34). The Reserve Bank states this was due 
either to Womply’s withholding the necessary documentations, or 
“due to other problems internal to Benworth, FL.” (Id.). 
On February 27, 2024, the Reserve Bank sent Benworth FL a 
letter (“Default Notice”) memorializing the Events of Default and 
breached covenants the Reserve Bank believed to have caused the 
Advances to become immediately payable and the obligations to 
become full recourse. See (id. at ¶ 35). The Default Notice, 
attached to the Complaint as Exhibit D, states in relevant part as 
follows: 
Various facts and circumstances have occurred that have 
caused the Reserve Bank to conclude that Events of 
Default, as defined in the PPPLF Agreement, have 
occurred. Among other things, Benworth informed the 
Reserve Bank that the U.S. Small Business Administration 
(the “SBA”) has denied guaranty purchase applications 
for over 3,600 PPP Loans pledged as PPPLF Collateral 
which could result in these PPP Loans not being fully 
guaranteed by the SBA. Moreover, Benworth has provided 
various facts to the Reserve Bank regarding the 
concerning state of Benworth’s financial condition. On 
December 27, 2023, Benworth informed the Reserve Bank 
that it is in arbitration proceedings with Oto Analytics 
(d/b/a “Womply”), and that the arbitrator issued an 
interim award that would require Benworth to pay Womply 
over $86 million. Benworth acknowledged to the Reserve 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 8 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -9- 
 
Bank that it may not have access to sufficient funds to 
pay Womply the amount of the interim award or any larger 
amount that may be finally awarded, which assertion is 
supported by Benworth’s financial statements provided to 
the Reserve Bank. 
. . . 
 
Accordingly, we hereby declare and provide notice to 
Benworth that Events of Default have occurred, as 
defined in the Operating Circular, including, without 
limitation, under sections (ii), (iii) and (vii) of the 
definition of an Event of Default. See Operating 
Circular at 2-3. 
. . . 
 
In addition to the foregoing, the Letters of Agreement 
state that “all Advances made to the Borrower pursuant 
to the PPPLF shall become a recourse obligation if, in 
the sole discretion of the Reserve Bank, the Borrower 
(i) has breached any representations, warranties, or 
covenants made under the PPPLF Agreement or (ii) has 
engaged in any fraud or misrepresentation in connection 
with any Advance or request to obtain an Advance under 
the PPPLF.” See each Letter of Agreement at 4. 
Accordingly, under the terms of the PPPLF Agreement, the 
Reserve Bank hereby notifies the Borrower that the 
Borrower’s Obligations under the PPPLF Agreement have 
become full recourse obligations of the Borrower. 
 
(Docket No. 1-8).  
The Operating Circular provides the definition for Events of 
Default under the Program Agreements. As referenced in the Default 
Notice, the Reserve Bank notified Benworth FL that the following 
Events of Default had occurred: “(ii) the Borrower fails to perform 
or observe any of its obligations or agreements under the Lending 
Agreement or under any other instrument or agreement delivered or 
executed in connection with the Lending Agreement or under any 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 9 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -10- 
 
other agreement with the Bank or another Reserve Bank;” “(iii) any 
representation or warranty made or deemed to be made by the 
Borrower under or in connection with the Lending Agreement, or 
that is contained in any certificate, document or financial or 
other statement delivered by it or in connection with the Lending 
Agreement, is inaccurate in any material respect on or as of the 
date made or deemed made;” and “(vii) whenever the Bank deems 
itself insecure with respect to the financial condition of the 
Borrower or the Borrower’s ability to perform its Obligations.” 
See (Docket No. 1-6 at 5-6). 
On July 10, 2024, the Reserve Bank filed a Complaint before 
this Court seeking a judgment that Benworth FL defaulted on its 
obligations under the Program Agreements and ordering them to pay 
the amounts owed, specifically $66,980,967.08. The Reserve Bank 
also asks the Court to issue an order of recission for the 
Fraudulent Transfers between Benworth FL and Benworth PR, to 
declare Benworth PR am alter ego of Benworth FL, to pierce the 
corporate veil and find the Navarros personally liable for 
Benworth’s obligations, and to find that Defendants converted the 
property of the Reserve Bank. See (Docket No. 1 at 31-32).  
On August 20, 2024, the Court granted the Reserve Bank’s 
request to consolidate this case with the case file by Womply 
against the defendants, Oto Analytics, LLC v. Benworth Capital 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 10 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -11- 
 
Partners PR LLC, et al., Civil No. 23-01034. See (Docket No. 153). 
Thereafter, on October 1, 2024, Bentworth FL filed the Motion to 
Dismiss. (Docket No. 169). Codefendants Benworth PR, Bernardo 
Navarro, and Claudia Navarro joined the Motion to Dismiss through 
its request at Docket No. 170. Since then, the complaint in case 
Civil No. 23-01034 has been dismissed, see (Docket No. 196), and 
thus the Motion to Dismiss as to the Complaint in Intervention has 
become moot, see (Docket No. 205).  
In the Motion to Dismiss, Defendants allege that the Reserve 
Bank’s Complaint fails to state a claim upon which relief can be 
granted under Fed. R. Civ. P. 12(b)(6). Particularly, Defendants 
argue that statements in support of the four breach of contract 
claims asserted in Federal Reserve’s Complaint are conclusory and 
fail to sufficiently allege conduct by Benworth FL that constitutes 
a breach. Defendants challenge the sufficiency of the facts alleged 
to support the Reserve Bank’s assertion that an Event of Default 
occurred or that Benworth FL could reasonably be considered 
“insolvent” under the Program Agreements. See (Docket No. 169 at 
8-9). Those facts being only that (1) Benworth FL does not have 
sufficient funds to pay the arbitration award, and (2) “financial 
statements, reports, and other information disclosed by Benworth 
FL to the Reserve Bank.” See (id. at 10; citing Complaint at ¶¶ 
30, 32). Thus, “without more detailed allegations,” Plaintiff 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 11 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -12- 
 
failed to sufficiently allege Benworth FL was insolvent or that 
Plaintiff’s “financial insecurity is objectively reasonable.” (Id. 
at 11). Defendants also contend that by stating that Events of 
Default “included but were not limited to” the two alleged, 
Plaintiff failed to notify Defendants of their breaches and leaves 
then without sufficient information to respond to the Complaint. 
See (id. at 12-13). 
Defendants further argue Plaintiff’s determination that 
Benworth FL had breached multiple representations, warranties, or 
covenants under the Program Agreements, making the amount owed a 
recourse obligation was not sufficiently pled. The Motion to 
Dismiss provides three reasons: (1) the Complaint does not identify 
which event of default occurred or were continuing at the time of 
the representations; (2) the Complaint does not allege which event 
of default Benworth FL failed to promptly notify it about; and (3) 
the Complaint uses the same overbroad “including but not limited 
to” language. See (id. at 13-14). The Motion to Dismiss also argues 
the Complaint fails to allege specific terms of the PPP loan 
program which Benworth FL failed to comply with thus warranting 
the amount owed becoming a full recourse debt to the Reserve Bank.  
See (id. at 14-15).  
Defendants also posit that because Plaintiff fails to state 
a claim as to its Breach of Contract claims, then its fraudulent 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 12 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -13- 
 
transfer claims and claim for declaratory judgment are not yet 
ripe for adjudication because those claims hinge on an accelerated 
debt becoming due as a consequence of the breaches. See (id. at 
15). Thus, Defendants contend, if the Court should dismiss the 
Reserve Bank’s breach of contract claims, the Court should also 
dismiss these claims under Federal Rule of Civil Procedure 12(b)(1) 
and 12(b)(6). See (id. at 16). 
Defendants further request the Court dismiss the Reserve 
Bank’s conversion claim for failure to state a claim because 
Plaintiff “fails to allege an essential element of a conversion 
claim” under Puerto Rico law and because the claim of conversion 
is a tort, and cannot be based on a claims for breach of contract. 
See (id. at 17). Finally, the Motion to Dismiss asserts that the 
Complaint is an impermissible “shotgun pleading” because (1) each 
cause of action incorporates by reference the allegations for each 
cause of action that preceded it and (2) it asserts multiple claims 
against multiple defendants without specifying which defendant is 
responsible for the conduct, or which of the defendants the claim 
is brought against. See (id. at 19). 
On October 29, 2024, Plaintiff filed Federal Reserve Bank of 
San Francisco’s Opposition to Defendant Benworth Capital Partners, 
LLC’s Motion to Dismiss the Federal Reserve’s Complaint and 
Complaint in Intervention (“Opposition”), the Reserve Bank refutes 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 13 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -14- 
 
each one of Benworth FL’s arguments. See (Docket No. 177). First, 
the Reserve Bank states that it has adequately stated a claim for 
breach of contract, including properly alleging that Events of 
Default took place and that Benworth FL was insolvent, according 
to the language of the Program Agreements. See (id. at 12-13). The 
Reserve Bank also argues that the Complaint provides a clear basis 
for the allegation that Benworth FL’s debt is now a recourse 
obligation. Specifically, it “identities three representations or 
covenants that have been breached and the basis for the Reserve 
Bank’s determination as to each.” (Id. at 18). 
The Opposition also argues that the Complaint adequately 
pleads fraudulent transfer, alter ego, veil piercing, and 
conversion. See (id. at 20-23). Finally, the Reserve Bank argues 
that the complaint is not an impermissible shotgun pleading because 
its use of incorporation is not improper and because the Complaint 
provides 
sufficient 
information 
regarding 
which 
claim 
is 
applicable to each defendant, and thus not an impermissible “group 
pleading.” See (id. at 25-26). 
On November 12, 2024, Defendants jointly filed Defendants’ 
Reply in Support of Motion to Dismiss the Federal Reserve’s 
Complaint and Complaint in Intervention (“Reply”). (Docket No. 
180). In the Reply, Defendants reassert Plaintiff’s failure to 
adequately plead facts to support its claim for breach of contract, 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 14 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -15- 
 
thus making the fraudulent transfer claims and claim for 
declaratory judgment not ripe. (Id.). Defendants also reiterate 
their arguments regarding the inadequate pleading of the Reserve 
Bank’s conversion claim as well as the overall impermissibility of 
the Complaint as a “shotgun” pleading. See (id. at 7-8). 
II. 
LEGAL STANDARD 
A. Motion to Dismiss Standard Rule 12(b)(6) 
In evaluating a motion to dismiss under Federal Rule of Civil 
Procedure 12(b)(6), the Court must determine “whether, construing 
the well-pleaded facts of the complaint in the light most favorable 
to the plaintif[f], the complaint states a claim for which relief 
can be granted.” Cortés-Ramos v. Martin-Morales, 956 F.3d 36, 41 
(1st Cir. 2020) (quoting Ocasio-Hernández v. Fortuño-Burset, 640 
F.3d 1, 7 (1st Cir. 2011)). The complaint must allege “a plausible 
entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 
559 (2007). “A claim has facial plausibility when the plaintiff 
pleads factual content that allows the court to draw the reasonable 
inference that the defendant is liable for the misconduct alleged.” 
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “While legal 
conclusions can provide the framework of a complaint, they must be 
supported by factual allegations.” Id. at 679.  
In performing a 12(b)(6) analysis, a Court first “accepts as 
true the non-conclusory factual allegations in the complaint and 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 15 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -16- 
 
draws all reasonable inferences in the plaintiff's favor.” In re 
Fin. Oversight & Mgmt. Bd. for Puerto Rico, 633 B.R. 463, 471–72 
(D.P.R. 2021) (citing Mississippi Pub. Emps.’ Ret. Sys. v. Boston 
Scientific Corp., 523 F.3d 75, 85 (1st Cir. 2008)); see also 
Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 17 (1st Cir. 2011) 
(In ruling on a 12(b)(6) motion, a court is “obligated to view the 
facts of the complaint in the light most favorable to the 
plaintiffs, and to resolve any ambiguities in their favor.”).  The 
Court must then “isolate and ignore statements in the complaint 
that simply offer legal labels and conclusions or merely rehash 
cause-of-action elements.” Reyes de Leon v. Coconut Prop., LLC, 
546 F.Supp.3d 116, 122 (D.P.R. 2021) (quoting Schatz v. Republican 
State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012)). If 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” and the Court must deny the 
motion to dismiss. Ocasio-Hernández, 640 F.3d at 12 (quoting Iqbal, 
556 U.S. at 678, 129 S.Ct. 1937).  
Additionally, 
at 
the motion to dismiss stage, 
a Court may consider: “(1) ‘implications from documents’ attached 
to or fairly ‘incorporated into the complaint,’ (2) ‘facts’ 
susceptible to ‘judicial notice,’ and (3) ‘concessions’ in 
plaintiff's ‘response to the motion to dismiss.’” Nieto-Vicenty 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 16 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -17- 
 
v. Valledor, 984 F.Supp.2d 17, 20 (D.P.R. 2013); see also Schatz, 
669 F.3d at 55-56.1 
III. 
APPLICABLE LAW AND ANALYSIS 
A. Breach of Contract 
Defendants argue that the allegations contained in the 
Complaint that state that “various events of default ha[ve] 
occurred under the. . .Agreements” are insufficiently pled because 
the Federal Reserve did not provide enough facts to allege that 
“Benworth FL was, in fact, insolvent pursuant to the Operating 
Circular or that the Federal Reserve’s financial insecurity is 
objectively reasonable.” (Docket No. 169 at 11). Defendants claim 
California case law governs the pleading standard here. See (Docket 
No. 169 at 7). Relying on Levy v. State Farm Mut. Auto. Ins. Co., 
150 Cal. App. 4th 1, 5 (2007), Defendants assert the pleading 
standard for breach of contract requires that facts alleging breach 
“must be pled with specificity.” However, as District Courts in 
California have recognized, the Federal Rules of Civil Procedure 
will apply over conflicting state law, creating a one-size-fits-
 
1 Attached to its Opposition, the Reserve Bank includes Benworth FL financial 
statements for the year 2023, stating that those statement were sufficiently 
incorporated into the Complaint for the Court to consider them in evaluating 
the Motion to Dismiss. The Court will disregard this attached exhibit as there 
is not sufficient mention of this financial document in the Complaint, only 
that “financial statements, reports, and other information” were disclosed by 
Benworth FL which caused the Reserve Bank to determine that Events of Default 
had occurred. See (Docket No. 1 at ¶32). Nor will the court consider the Reserve 
Bank’s argument pointing to the existence of “negative equity” in Benworth FL’s 
financial documents in determining its insolvency as those facts were not pled 
in the Complaint.  
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 17 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -18- 
 
all pleading standard in federal court. See Ramirez v. U.S. Bank 
Nat'l Ass'n, No. 17-CV-0786 W (BGS), 2017 WL 3478740, at *9 (S.D. 
Cal. Aug. 14, 2017); Qingdao Tang-Buy Int’l Imp. & Exp. Co., Ltd. 
v. Preferred Secured Agents, Inc., No. 15-CV-00624-LB, 2016 WL 
6524396, at *3 (N.D. Cal. Nov. 3, 2016); Lanini v. JPMorgan Chase 
Bank, No. 2:13-CV-00027 KJM, 2014 WL 1347365, at *5 (E.D. Cal. 
Apr. 4, 2014). Fed. R. Civ. P. 8 (“Rule 8”) requires only “a short 
and plain statement of the claim showing that the pleader is 
entitled to relief”, —one in which a pleading is sufficient so 
long as it “contain[s] sufficient factual matter, accepted as true, 
to state a claim to relief that is plausible on its face.” Iqbal, 
556 U.S. at 678. Thus, Rule 8 applies over the rule of Levy. Put 
differently, “it is unnecessary for a plaintiff to allege the terms 
of the alleged contract with precision,” but “the Court must be 
able generally to discern at least what material obligation of the 
contract the defendant allegedly breached.” Langan v. United 
Servs. Auto. Ass’n, 69 F.Supp.3d 965, 979 (N.D. Cal. 2014). 
1. Events of Default 
The Complaint alleges that an Event of Default occurred under 
Section 2.1, Event of Default, clause (vii) of the Operating 
Circular. This clause states that an Event of Default occurs 
“whenever the [Reserve] Bank deems itself insecure with respect to 
the financial condition of the Borrower or the Borrower’s ability 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 18 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -19- 
 
to performing its Obligations.” (Docket No. 1-6 at 3) (emphasis 
added). The Complaint further alleges that the Reserve Bank did 
deem itself insecure as to Benworth FL’s ability to perform its 
Obligations, and that it notified Benworth FL of that determination 
on February 27, 2024. See (Docket No. 1 at ¶¶ 31,32,35). The 
allegation that the Reserve Bank deemed itself insecure based on 
information regarding Benworth FL’s finances and notified Benworth 
FL of that determination through a Letter of Default, is 
sufficiently pled at this stage. The Reserve Bank gave adequate 
notice to Defendants of the allegations against them as to this 
potential breach, both prior to this litigation and in the 
Complaint, and to the Court to determine which “material obligation 
of the contract the defendant allegedly breached.” See Langlan, 69 
F.Supp.3d at 965.  
The Reserve Bank also alleges that an Event of Default 
occurred under Section 2.1, Event of Default, clause (iv) of the 
Operating Circular, which Defendants argue was not adequately 
pled. Specifically, Defendants point to the fact that the Complaint 
does not identify which definitions of ‘Insolvency’ apply to 
Benworth FL, instead, it “generally assets insolvency and 
financial insecurity as an event of default without any factual or 
legal foundation[.]” (Docket No. 169 at 11). In this regard, the 
Complaint alleges the Reserve Bank identified Events of Default 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 19 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -20- 
 
“based on Benworth FL’s inability to pay the Final Award and 
financial statements, reports, and other information disclosed by 
Benworth FL to the Reserve Bank.” The Reserve Bank also argues 
that the allegations in the complaint put Benworth FL on sufficient 
notice of its claims because it is evident that only two of the 
definitions of insolvency in the Operating Circular could 
reasonably apply here: “(i) the condition of insolvency;” and 
“(viii) any other circumstances that evince the Borrower’s 
inability to pay its debts when due.” See (Docket Nos. 177 at 15, 
1-6 at 3-4). The Court agrees that the text of the contract on its 
face combined with the allegations presented in the Complaint are 
sufficient to provide Defendants notice as to the provisions of 
the contract that are the bases of the Reserve Bank’s claims.  
Defendants also argue that the reference in the Complaint to 
“financial statements, reports, and other information” received 
from Benworth FL, were not described with sufficient specificity 
because there was no notice of “which documents in particular where 
reviewed.” (Docket No. 169 at 12). In response, the Reserve Bank 
states that “Benworth FL knows which financial statements the 
Reserve Bank reviewed because they provided those statements to 
the Reserve Bank.” (Docket No. 177 at 16) (emphasis in original). 
In both the Complaint and the Letter of Default issued on February 
27, 2024, the Reserve Bank mentions their reliance on “financial 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 20 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -21- 
 
statements provided to the Reserve Bank.” See (Docket Nos. 1 at ¶ 
32, 1-8). Based on this allegation alone, the Court is able to 
conclude that the Defendants are on notice of the bases for the 
Reserve Banks claims. Whether these financial statements, combined 
with the notification that Benworth FL “may not have access to 
sufficient funds” to pay the final arbitral award, support the 
Reserve Bank’s conclusion that Events of Default had occurred is 
not a matter the Court may resolve on a motion to dismiss. Thus, 
the Court concludes that the facts alleged in the Complaint as to 
Events of Default, and thus breach of the contract, are 
sufficiently pled to survive the motion to dismiss stage. 
2. Representations, Warranties, or Covenants 
The Complaint also alleges the Advances it made to Benworth 
FL have become recourse obligations because it has “determined 
that 
Benworth 
FL 
had 
breached 
multiple 
representations, 
warranties, or covenants it made under the. . .Agreements.” See 
(Docket No 1. at ¶ 33). These breaches “included but were not 
limited to, a breach of the representation that no event of default 
had occurred or was continuing, and a breach of the covenant to 
promptly notify the [Federal Reserve] when events of default 
occurred.” (Id.); see also (Docket No. 1-6 at 13). Defendants 
reason that there is no breach of a representation because that 
representation was made only as of the date Benworth FL executed 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 21 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -22- 
 
the Program Agreements on January 30, 2023.16 See (Docket No. 169 
at Motion at 13-14). This argument side steps the clear language 
of the agreement:  
Each time the Borrower requests an Advance, incurs any 
Indebtedness, or grants a security interest in any 
Collateral to a Reserve Bank, the Borrower is deemed to 
make all of the foregoing representations and warranties 
on and as of the date such Advance or Indebtedness is 
incurred or security granted. Such representations and 
warranties shall be true on and as of such date and shall 
remain true and correct so long as the Lending Agreement 
remains in effect, any Obligation remains outstanding, 
or any other amount is owing to the Bank. 
(Docket No. 1-6 at 14) (emphasis added). Based on language of the 
Program Agreements, Defendants’ contentionthat there was no breach 
because of the timing of the alleged event of default is 
unsuccessful as there was a continuous obligation to maintain the 
representations and warranties in the agreement. The Reserve Bank 
has adequately pled that Events of Default have occurred, thus the 
allegation that a warranty that no event of default had occurred 
and of which they were not notified is also sufficiently pled.  
The Complaint alleges a second reason why the Benworth FL’s 
advances have become recourse obligations: the Federal Reserve has 
“become aware that Benworth FL has failed to comply with the terms 
of the PPP for at least some portion of the outstanding Pledged 
PPP Loans.” (Docket No 1.at ¶ 34). The Reserve Bank bases this 
allegation on the fact that “SBA has already denied over $60 
million of Benworth FL’s requests for guaranty purchase of Pledged 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 22 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -23- 
 
PPP loans” because of either “Womply’s withholding of the 
appropriate documentation” or “other problems internal to Benworth 
FL.” (Id.). As referenced in the Complaint, the Reserve Bank’s 
default notice states “Benworth informed the Reserve Bank that the 
[SBA] has denied guaranty purchase applications for over 3,600 PPP 
Loans pledged as PPPLF Collateral which could result in these PPP 
Loans not being fully guaranteed by the SBA.” (Docket No. 1-8). 
These factual assertions form the basis for the Reserve Bank’s 
allegation that Benworth FL violated the terms of the PPP loan 
program, thus converting the advances into full recourse 
obligations under the Program Agreements.  
Defendants argue that these allegations are insufficient 
because they do not identify “(1) which specific terms of the PPP 
Benworth FL has failed to comply with, (2) what actions by Benworth 
FL amount to a violation of the PPP, (3) which portion of Benworth 
FL’s PPP portfolio was denied because of Benworth FL’s violation 
of the PPP as opposed to Womply’s actions, and (4) which ‘problems 
internal to Benworth FL’ have caused violations of the PPP.” 
(Docket No. 169 at 15). Notwithstanding Defendant’s desire for 
this specific information, that is not what the federal pleading 
standard requires. The Court finds that the facts alleged allow 
the Court to draw the reasonable inference that the advances to 
Benworth FL’s have become recourse obligations under the Program 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 23 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -24- 
 
Agreements. See Iqbal, 556 U.S. at 678. Whether Benworth actually 
violated the Program Agreements, or the terms of the PPP loan 
program is a matter to be explored through discovery.  
3. “Including, but not limited to” 
Finally, Defendants call into question the Reserve Bank’s use 
of the phrase “including, but not limited to” when referring to 
Benworth FL’s alleged Events of Default and breaches of the 
representations, warranties, and covenant provisions. See (Docket 
No. 169 at 12, 14). They assert that this language is “inherently 
ambiguous and leaves the door open to unpled breaches.” As the 
Court has described in detail, the Reserve Bank has alleged 
sufficient facts to support its breach of contract claims. Stating 
that the allegations “include[e], but are not limited to” the 
alleged breaches do not negate that those breaches were 
sufficiently pled and meet the plausibility standard. Thus, this 
language does not destroy the adequacy of Plaintiff’s pleading. 
Neither do these statements function to expand the claims 
adequately pled –all legal conclusions “must be supported by 
factual allegations.” See Iqbal, 556 U.S. at 679. Thus, the Court 
understands that Defendants now have the clarity required to answer 
the Complaint and conduct discovery pursuant to the constraints of 
Fed. R. Civ. P. 26(b)(1).  
 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 24 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -25- 
 
 
B. Ripeness of Fraudulent Transfer, Alter Ego, and Veil 
Piercing Claims 
 
Defendants correctly state that ripeness and ability of the 
Federal Reserve to state fraudulent transfer and declaratory 
judgment claims in the Complaint hinges on it sufficiently alleging 
that Benworth FL has an accelerated debt that is due because it 
breached the Agreements. Because the Court has found the breach of 
contract claims adequately pled, it is also true that there exists 
a controversy regarding the fraudulent transfer of funds from 
Benworth FL to other Defendants. These claims are ripe for 
adjudication.   
C. Conversion 
The Complaint also alleges a cause of action arising from the 
tort of conversion. See (Docket No. 1 at 30). Specifically, the 
Reserve Bank states, [d]uring the period of 2021 to 2024, Benworth 
FL transferred millions of dollars to Benworth PR and the Navarros, 
which include, in whole or in part, cash proceeds of the pledged 
PPP loans,” over which the Reserve Bank “holds a first-priority 
lien and, therefore, is the rightful property of the Reserve Bank.” 
(Id.). Thus, the transfers by Benworth FL of property allegedly 
belonging to the Reserve Bank “indicates its intent to unlawfully 
exercise or assert dominion over property inconsistent with the 
Reserve Bank’s right of possession.” (Id.). 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 25 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -26- 
 
Defendants argue that the Reserve Bank failed to state a claim 
for conversion under Puerto Rico law because it failed to plead 
facts demonstrating the Defendants’ “malicious and wrongful” 
intent in the act, and that the allegations sounded in contract, 
not in tort.2 See (Docket No. 169 at 18). Under Puerto Rico law, 
the intentional tort of conversion is “‘not the simple acquisition 
of another's property, but the malicious and wrongful privation of 
the ownership rights, the illegal exercise, or the assumption of 
authority over another’s property, thereby depriving the lawful 
owner or possessor, permanently or for an indefinite period, of 
its use and enjoyment.’” Montalvo v. LT's Benjamin Recs., Inc., 56 
F.Supp.3d 121, 139 (D.P.R. 2014) (quoting Hull Dobbs Co. v. 
Superior Court, 81 [P.R. Dec.] 214, 222 [81 D.P.R. 221] (1959)) 
(finding the allegation that Plaintiffs failed to pay royalties 
owed to defendants did not demonstrate malicious or wrongful 
intent).  
 
2 The reserve Bank correctly points out that the Court has not yet determined 
whether Puerto Rico law shall apply to their state law claims. See (Docket No. 
177 at 23). For the purposes of the Motion to Dismiss, the Court analyzes the 
conversion cause of action under Puerto Rico law. However, notably, the tort of 
conversion under California law does not contain the same element of “malicious 
and wrongful” intent. See Taylor v. Google, LLC, No. 22-16654, 2024 WL 837044, 
at *1 (9th Cir. Feb. 28, 2024) (“Under California law, conversion has three 
elements: (1) the plaintiff owns or has a right to possess the personal property; 
(2) the defendant disposes of the property in a manner that is inconsistent 
with the plaintiff’s property rights; and (3) resulting damages.”) (internal 
citations omitted). 
                                                        
 
 
 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 26 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -27- 
 
The Reserve Bank argues that the Complaint contains 
sufficient facts to support a reasonable inference that the 
Defendants maliciously and wrongfully deprived the Federal Reserve 
of its lawful property. The Court agrees. The Complaint alleges 
that Benworth PR “was not formed for a reasonable business 
purpose,” and that Defendants were aware of “serious risks to 
Benworth FL’s financial situation” and that “the Reserve Bank had 
a substantial secured claim that would become a recourse obligation 
upon an event of default.” (Docket No. 1 at 25). Knowing this, 
Benworth FL transferred millions of dollars to Benworth PR for 
services that are not of a reasonably equivalent value” which left 
“Benworth FL undercapitalized and unable to satisfy its debts to 
the Reserve Bank.” (Id.). Based on these facts, it is plausible to 
infer that Defendants engaged in tortious conversion by exercising 
dominion over PPP Collateral over which the Reserve Bank holds a 
first-priority lien. See United States v. GZ Constr. St, Inc., 155 
F.Supp.3d 147 (D.P.R. 2015) (finding it was plausible to infer 
president’s intent, maliciousness, and desire to defraud by 
transferring title to taxpayer’s only asset, an aircraft which was 
subject to seizure by the Internal Revenue Service (IRS) pursuant 
to its lien, to his son, which was sold to a third party, the 
proceeds of which were used to pay taxpayer’s other creditors’ 
claims, instead of known tax obligation to the IRS).  
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 27 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -28- 
 
Further, the Court finds the facts alleged demonstrate that 
the Reserve Bank’s asserted cause of action for conversion is based 
on the Defendants’ conduct in transferring PPP loan collateral 
which the Reserve Bank presents as “separate and independent from 
Benworth FL’s defaults on its obligations to the Reserve Bank under 
the Program Agreement.” (Docket No. 1 at 30). Unlike in Montalvo, 
which centered on a failure to pay royalties under a contract, 
here, the Reserve Bank alleges the conversion of its property 
separate from its claims for breach of contract. Given that the 
Reserve Bank has sufficiently pled that Benworth FL had an 
obligation to it, by virtue of a first-priority lien over PPP 
Collateral, the Reserve Bank has met the pleading standard for its 
claim of conversion.  
D. Shotgun Pleading 
Federal Rule of Civil Procedure 8(a)(2) requires “a short and 
plain statement of the claim showing that the pleader is entitled 
to relief[.]” Fed. R. Civ. P. 8(a)(2). Such statement “needs only 
enough detail to provide a defendant with fair notice of what the. 
. .claim is and the grounds upon which it rests.” Ocasio-Hernández 
v. Fortuño-Burset, 640 F.3d 1, 11-12 (1st Cir. 2011) (citations 
and internal quotation marks omitted). Pursuant to Rule 10(b), 
A party must state its claims or defenses in numbered 
paragraphs, each limited as far as practicable to a 
single set of circumstances. A later pleading may refer 
by number to a paragraph in an earlier pleading. If doing 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 28 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -29- 
 
so would promote clarity, each claim founded on a 
separate transaction or occurrence—and each defense 
other than a denial—must be stated in a separate count 
or defense. 
 
Fed. R. Civ. P. 10(b). 
These rules exist so that the party being sued “‘can discern 
what [the plaintiff] is claiming and frame a responsive pleading.’” 
Barmapov v. Amuial, 986 F.3d 1321, 1324 (11th Cir. 2021) (quoting 
Weiland v. Palm Beach Cnty. Sheriff's Off., 792 F.3d 1313, 1320 
(11th Cir. 2015)). A defendant must be able to “understand ‘the 
grounds upon which each claim [against him] rests.’” Id. at 1326 
(quoting Weiland, 792 F.3d at 1322-23); see also Ocasio-Hernández, 
640 F.3d at 12 (“an adequate complaint must provide fair notice to 
the defendants and state a facially plausible legal claim.”). 
Defendants argue the Court should dismiss the Complaint 
because it is an impermissible shotgun pleading. See Sanchez-
Sifonte v. Fonseca, CV 22-1444 (RAM), 2023 WL 5753677, at *2 
(D.P.R. Sept. 6, 2023) (quoting Barmapov, 986 F.3d at 1324) (“A 
shotgun pleading is a complaint that violates either Federal Rule 
of Civil Procedure Rule 8(a)(2) or Rule 10(b), or both.”). 
Specifically, they argue the Reserve Bank has violated the Federal 
Rules of Civil Procedure because the Complaint (1)  contains 
multiple counts where each count adopts the allegations of all 
preceding counts, causing each successive count to carry all that 
came before and the last count to be a combination of the entire 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 29 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -30- 
 
complaint; and (2) asserts multiple claims against multiple 
defendants without specifying which of the defendants are 
responsible for which acts or omissions, or which of the defendants 
the claim is brought against. See (Docket No. 169 at 19) (citing 
Sanchez-Sifonte, 2023 WL 5753677, at *2).  
“Our federal rules promote the disposition of claims on the 
merits rather than on the basis of technicalities. . .and courts 
should be reluctant to impose a dismissal with prejudice for a 
rules violation that is neither persistent nor vexatious, 
particularly without some review of the merits.” Kuehl v. FDIC, 8 
F.3d 905, 908 (1st Cir. 1993) (internal citation omitted) (stating 
that dismissal based on over-drafting would be an overly harsh 
penalty but affirming the lower court's dismissal on other 
grounds); see also Miranda v. United States, 105 F.App’x 280, 281 
(1st Cir. 2004) (“‘Dismissal [for noncompliance with Rule 8] is 
usually reserved for those cases in which the complaint is so 
confused, ambiguous, vague, or otherwise unintelligible that its 
true substance, if any, is well disguised.’” quoting Salahuddin v. 
Cuomo, 861 F.2d 40, 42 (2d Cir. 1988)). 
Considering these principles, the Court cannot conclude that 
the Complaint is an impermissible shotgun pleading which warrants 
dismissal. Upon review of each of the causes of actions alleged in 
the Complaint, the Court cannot reasonably believe that Defendants 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 30 of 31

Civil No. 23-01034(GMM)cons. 
Civil No. 24-01313 (GMM) 
Page -31- 
 
could be so confused as to be unable to respond to the substance 
of the claims alleged. Not only does the Complaint give Defendants 
notice as to the facts and claims alleged, the Court agrees with 
the Reserve Bank that it also provides sufficient information to 
discern without much difficulty which claim is applicable to which 
defendant. See (Docket No. 177 at 26) (“¶¶ 65-67 (Benworth FL 
liable for breach of contract); ¶¶ 92-99 (Benworth PR liable under 
alter ego or successor liability); ¶¶ 104-105 (Mr. and Mrs. Navarro 
liable under theory of veil piercing). As for the claims of actual 
and constructive fraudulent transfer, rescission, and conversion, 
it is plausible that all four Defendants are responsible.”).  
IV. 
CONCLUSION 
For the forgoing reasons, 
Defendant Benworth Capital 
Partners, LLC’s Motion to Dismiss the Federal Reserve’s Complaint 
and Complaint in Intervention filed at Docket No. 169 is DENIED.  
IT IS SO ORDERED 
In San Juan, Puerto Rico, April 2, 2025.  
 
 
s/Gina R. Méndez-Miró         
 
 
 
 
 
 
GINA R. MÉNDEZ-MIRÓ 
 
 
 
 
 
 
UNITED STATES DISTRICT JUDGE 
 
 
Case 3:23-cv-01034-GMM     Document 225     Filed 04/02/25     Page 31 of 31

File and source

File

gov.uscourts.prd.175040.225.0.pdf

Size

248,523 bytes

SHA-256

eb21dda949eed3dbfb7caa92c7188a37761a1919c2ba240d5bcbfb7b644debfe

Our copy

gov.uscourts.prd.175040.225.0.pdf

Original

No public link identified.