Linares v. Jose Luis Herrera Virguez

Background

Zelhideth Montaño Linares and Jose Luis Herrera Virguez had previously been involved in litigation concerning ownership and distribution of accounts held by Merrill Lynch. They resolved their claims against each other through a February 2019 settlement agreement and a court-ordered stipulation. The settlement agreement contained a mutual release of claims, subject to an exception for claims involving child support, visitation, or custody. It also provided that New York law governed the agreement and that enforcement suits would be brought in the Southern District of New York.

Linares alleged that Herrera Virguez breached the settlement agreement by filing four lawsuits in Venezuela seeking seizure of more than $20 million of her property in Venezuela and elsewhere. She asserted a breach-of-contract claim and requested declaratory relief.

Jurisdiction

The court rejected Herrera Virguez’s challenges to subject-matter jurisdiction. It held that the settlement agreement’s express terms gave the court jurisdiction to enforce the agreement. The court agreed that it did not have diversity jurisdiction, but stated that diversity jurisdiction was not necessary because enforcement jurisdiction arose from the settlement agreement. The court also held that the foreign-government-acts doctrine did not prevent the case from proceeding because Linares was not asking the court to invalidate an official act of Venezuela.

The court further held that it had personal jurisdiction over Herrera Virguez for actions involving enforcement of the settlement agreement. It declined to revisit that earlier ruling.

Failure to State a Claim

The court explained that a breach-of-contract claim under New York law requires allegations showing an agreement, the plaintiff’s adequate performance, the defendant’s breach, and damages. Linares alleged that Herrera Virguez breached the agreement by filing the Venezuelan lawsuits, but the Second Amended Complaint did not allege that Linares had adequately performed or complied with the settlement agreement.

The court held that the failure to allege Linares’s performance was enough to dismiss the breach-of-contract claim. It also found that Linares abandoned the claim by failing to address Herrera Virguez’s argument about that missing element in her opposition to the motion. Because the performance allegation was missing, the court did not decide whether the Venezuelan lawsuits fell within the settlement agreement’s release provision.

The court separately held that Linares’s request for declaratory judgment could not stand alone because declaratory relief is a remedy, not an independent cause of action.

Disposition

Judge Vernon S. Broderick granted Herrera Virguez’s motion to dismiss. The court dismissed the Second Amended Complaint with prejudice because Linares had failed to state a claim after three opportunities to amend. The Clerk was directed to terminate the motion and close the case.