LUGO MENDER et al v. EQUUS GAMING CO LP et al

OCR transcription for search; preserved printed pages are authoritative

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AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO

IN RE:
EL COMANDANTE MANAGEMENT : Case No. 04-10938
COMPANY, LLG, et al., : Chapter 11

Debtors. : (Jointly Administered)

WIGBERTO LUGO MENDER as

LITIGATION TRUSTEE under EL :
COMANDANTE RACETRACK LITIGATION :
TRUST AGREEMENT AND DECLARATION :
OF TRUST. :

Plaintiff, : Adv. Proc. No. 07-00096
Vv.

EQUUS GAMING CO., L.P.

JAMES WILSON, BARBARA WILSON,
AND THEIR CONJUGAL PARTNERSHIP,
THOMAS WILSON, JANE WILSON, AND
THEIR CONJUGAL PARTNERSHIP,

ET AL.

Defendants.

OPINION AND ORDER

This case is before the court on a motion for summary judgment filed by Defendants on
May 8, 2007 (Docket No. 7). El Comandante Racetrack Litigation Trust Agreement and
Declaration Trust through Mr. Wigberto Lugo Mender, in his capacity as Litigation Trustee of
the Litigation Trust (the “Plaintiff’) filed Opposition to Motion for Summary Judgment on June

14, 2007 (Docket No. 11). On that same date the Plaintiff filed Statement of Additional

Uncontested Material Facts (Docket No. 12). In turn, on June 20, 2007, Defendants filed a reply

to Plaintiff's opposition to the motion for summary judgment (Docket No. 15). For the reasons

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stated below Defendants’ motion for summary judgment is denied in part and granted in part.

On April 11, 2007 the Plaintiff, Mr. Wigberto Llugo as the Litigation Trustee, filed a
complaint against Defendants to avoid and recover preferential and/or fraudulent transfers
pursuant to §§ 544, 547 and 548 of the Bankruptcy Code. Defendants request summary
judgment alleging that the complaint is time-barred because the tolling agreements signed by Mr.
James Wilson and Mr. Stanley Pinkerton are invalid under Puerto Rico law, and are not binding
upon Mr. Thomas Wilson, his wife and their conjugal partnership, and Mrs. Barbara Wilson and
her conjugal partnership with Mr. James Wilson. Defendants explain that on October 11, 2006
co-defendants Equus Gaming Co. L.P. (“Equus”) and Mr. James Wilson executed two tolling
agreements including the following language “[t]his Tolling Agreement shall be governed by the
laws of the Commonwealth of Puerto Rico”. Defendants argue that under Puerto Rico law the
prescription term could not be extended. Furthermore, they argue that the remaining Defendants;
Mrs. Barbara Wilson; her conjugal partnership with Mr. James Wilson, Mr. Thomas Wilson,
Jane Wilson, and their conjugal partnership, are not signatories of the tolling agreements and,
thus, are not bound by them.

In his opposition to the motion for summary judgment Plaintiff argues that: the tolling
agreements are valid under the applicable federal bankruptcy law which preempts any limitation
imposed under Puerto Rico law, if any exists. Plaintiff further argues that the tolling agreements
are valid pursuant to Puerto Rico law, that the Defendants are estopped from arguing that an
extension of the term provided in section 546(a) is invalid and void, and that the tolling
agreements are valid as to Mrs. Barbara Wilson, Mr. Thomas Wilson, his wife, and their
respective conjugal partnerships. Plaintiff explains that when a contract includes a particular
state choice of law provision, the same cannot preempt or limit the application of federal law.
Furthermore, Plaintiff argues that Congress’ intent upon enacting § 546(a) was that the

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limitations period provided therein be subject to extension through agreement between the
parties, and that consistent with Congress’ intent, bankruptcy courts have held that the § 546(a)
term to file actions to avoid preferences may be modified, extended and/or tolled by agreement.
The Plaintiff also states that even if this court were to consider Puerto Rico law, a temporary
tolling of the prescription period is valid. As to why Defendants are estopped from raising the
invalidity of the tolling agreements, Plaintiff states that the Defendants proposed, drafted and
submitted to the Indenture Trustee the tolling agreements, requesting that the Indenture Trustee
delay the filing of avoidance actions and extending the period to file until April 11, 2007. The
tolling agreements were executed by Defendants because if Debtors’ or Caribbean
Thoroughbred’s plan of reorganization had been confirmed, instead of the Indenture Trustee’s
plan, the avoidance actions would not have been filed, and Defendants would have avoided
defending themselves from these actions. Finally, Plaintiff argues that Mr. James Wilson’s
execution of the tolling agreement is the type of “administrative act” recognized under Puerto
Rico law (art. 93 of the Civil Code, 31 L.P.R.A. § 286) as binding on the community property
and the conjugal partnership, thus, the tolling agreement is enforceable against Mrs. Barbara
Wilson. Furthermore the agreements are enforceable against Mrs. Barbara Wilson, Mr. Thomas
Wilson and his wife and their conjugal partnerships, because Mr. James Wilson had “implied
and/or apparent authority to act on their behalf. The Plaintiff cites the District Court for the

District of Puerto Rico case of Green v. Davila, 392 F. Supp. 533, 537 (D.P.R. 1975) regarding

apparent authority.

Apparent authority is a concept which arises when certain basic premises are established:
(1) that the principal has manifested his consent to the exercise of such authority or has
knowingly permitted the agent to assume the exercise of such authority[;] ...(2) that the
third person knew of the facts and, acting in good faith, had reason to believe, and did in
fact and actually believe, that the agent had the authority to act on behalf of the principal

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in binding him to contractual obligations[;] ... and (3) that the third person, relying on

such appearance of authority, has changed his position and is injured or suffered a loss.
Opposition to Motion for Summary Judgment, Docket No. 11, page 20.

The Plaintiff argues that all three elements of the concept of “apparent authority” were
met in this case. Implied authority, states the Plaintiff, may arise either through an express grant
of authority or “independently ... as from some manifestation from the principal which,
reasonably interpreted, causes the agent to believe that the principal desires him so to act on the
principal’s account.” 3 Am Jur. 2d Section 75. The Plaintiff's reasoning is that because Mr.
James Wilson represented, under oath, in the tolling agreement, that he had the authority to sign
on behalf of his wife, son and daughter in law, he must have thought he had the authority from
them to act on their behalf from their manifestations. In any event, according to Plaintiff, the
authority Mr. James Wilson had to act on behalf of his wife, son and daughter in law presents a
genuine issue of material fact precluding summary judgment in this case. However, Plaintiff did
not submit any evidence showing that Mr. James Wilson had the authority to act on behalf of his
wife, son and/or daughter in law.

In the reply to Plaintiff's opposition Defendants reiterate that the tolling agreements are
invalid under Puerto Rico law and under federal Jaw. In support of their position Defendants cite

bankruptcy cases and the Supreme Court case of Midstate Horticultural Co., Inc. v. Pennsylvania

Railroal Company, 320 U.S. 356 (1943) involving whether an action under § 16(3)(a) of the

Interstate Commerce Act was brought in time. According to the Defendants the Supreme Court
reasoned that if the cause of action is one created by statute the parties may not modify the
limitations period but if the cause of action arises from the common law, the bar may be waived
by contract or otherwise. Defendants conclude that these causes of action are by constitutional

definition statutory, therefore the bar is absolute and invariable. Defendants refute the Plaintiff's

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arguments that under the Civil Code of Puerto Rico the tolling agreements are valid because the
limitations period such as the one in this case, can be modified or extended through an agreement
between the parties. Defendants further argue that the tolling agreements fail to specify that Mr.
James Wilson was signing on behalf of his family members, whereas it clearly identifies that he
was signing on behalf Equus and in his personal capacity, and Mr. Stanley Pinkerton on behalf of
El Comandante Management Company, LLC, Housing Development Associates, S.E. and El
Comandante Capital Corp.

Findings of Fact

The following material facts are stipulated as being uncontested:

1. On October 15, 2004 debtors El Comandante Management Company, LLC, Housing
Development Associates, S.E. and El Comandante Capital Corp. (collectively “Debtors”), filed a
voluntary bankruptcy petition under Chapter 11 of the Bankruptcy Code at which time the order
for relief was entered.

2. On October 11, 2006, two tolling agreements were executed (the “Tolling
Agreements”). Ex. 1 and 2. Mr. James J. Wilson and Mr. Stanley Pinkerton were the only
signatories to these contracts.

3. Mrs. Barbara Wilson and Mr. Thomas Wilson are respectively, the wife and the son of
Mr. James J. Wilson.

Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure, made applicable to this proceeding by
Rule 7056 of the Federal Rules of Bankruptcy Procedure, provides that summary judgment
should be entered “if the pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Bankr. P. 7056;

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see also, Inre Colarusso, 382 F.3d 51 (1* Cir. 2004), citing Celotex Corp. v. Catrett, 477 U.S.

317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). “The summary-judgment procedure
authorized by Rule 56 is a method for promptly disposing of actions in which there is no genuine
issue as to any material fact or in which only a question of law is involved.” 10A Wright and

Miller, Federal Practice and Procedure § 2712 (3d ed. 1998). “Rule 56 provides the means by

which a party may pierce the allegations in the pleadings and obtain relief by introducing outside
evidence showing that there are no fact issues that need to be tried.” Id. Summary judgment is
not a substitute for a trial of disputed facts; the court may only determine whether there are issues
to be tried, and it is improper if the existence of a material fact is uncertain. Id.

For there to be a "genuine" issue, facts which are supported by substantial evidence must
be in dispute thereby requiring deference to the finder of fact. Furthermore, the disputed facts

rust be "material" or determinative of the outcome of the litigation. Hahn v. Sargent, 523 F.2d

461, 464 (1st Cir. 1975), cert. denied, 425 U.S. 904 (1976). When considering a petition for

summary judgment, the court must view the evidence in the light most favorable to the

nonmoving party. Poller v. Columbia Broadcasting Systems, Inc. 368 U.S. 464, 473 (1962);

Daury v. Smith, 842 F.2d 9, 11 (1st Cir. 1988).

The moving party invariably bears both the initial as well as the ultimate burden in

demonstrating its legal entitlement to summary judgment. Adickes v. Kress & Co., 398 USS.

144, 157 (1970). See also Lopez v. Corporacién Azucarera de Puerto Rico, 938 F.2d 1510, 1516

(1st Cir. 1991). It is essential that the moving party explain its reasons for concluding that the
record does not contain any genuine issue of material fact in addition to making a showing of

support for those claims for which it bears the burden of trial. Bias v. Advantage International,

Inc., 905 F.2d 1558, 1560-61 (D.C. Cir. 1990), cert. denied, 498 U.S. 958 (1990).
The moving party cannot prevail if any essential element of its claim or defense requires

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trial. Lopez, 938 F.2d at 1516. In addition, the moving party is required to demonstrate that

there is an absence of evidence supporting the nonmoving party's case. Celotex, 477 U.S. at 325.

See also, Prokey v. Watkins, 942 F.2d 67, 72 (1st Cir. 1991); Daury, 842 F.2d at 11. Inits
opposition, the nonmoving party must show genuine issues of material facts precluding summary
judgment; the existence of some factual dispute does not defeat summary judgment. Kennedy v.

Josepthal & Co., Inc., 814 F.2d 798, 804 (1st Cir. 1987). See also Kauffman v. Puerto Rico

Telephone Co., 841 F.2d 1169, 1172 (1st Cir. 1988); Hahn, 523 F.2d at 464. A party may not

rely upon bare allegations to create a factual dispute but is required to point to specific facts
contained in affidavits, depositions and other supporting documents which, if established at trial,

could lead to a finding for the nonmoving party. Over the Road Drivers, Inc. v. Transport

Insurance Co., 637 F.2d 816, 818 (1st Cir. 1980).

The moving party has the burden to establish that it is entitled to summary judgment; no
defense is required where an insufficient showing is made. Lépez, 938 F.2d at 1517. The
nonmoving party need only oppose a summary judgment motion once the moving party has met
its burden. Adickes, 398 U.S. at 159. The court must interpret the record in the light most
favorable to the nonmoving party, reconciling all competing inferences in that party’s favor.
However, “[nJeither wishful thinking ... nor conclusory responses unsupported by evidence will

serve to defeat a properly focused Rule 56 motion.” Velazquez-Garcia v. Horizon Lines of Puerto

Rico, Inc., 473 F.3d 11 (1* Cir. 2007) citing Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.

1990).
Discussion

Limitations Period

This action was filed on April 11, 2007 under §§ 544, 547 and 548 of the Bankruptcy

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Code. The time period within which one may file such actions is found in section 546(a), which

provides as follows:

(a) An action or proceeding under section 544, 545, 547, 548, or 553 of this title may not
be commenced after the earlier of -

(1) the later of -
(A) 2 years after the entry of the order for relief, or

(B) 1 year after the appointment or election of the first trustee under
section 702, 1104, 1163, 1202, or 1302 of this title if such appointment or
such election occurs before the expiration of the period specified in
subparagraph (A); or

(2) the time the case is closed or dismissed.
11 USC § 546(a). Therefore, an action pursuant to §§ 547 and 548 may be initiated within two
years from the entry of the order for relief (the filing date) if a trustee is not appointed during that
two year period. In this case the applicable time limit to file an action under §§ 544, 547 and 548
was 2 years from October 15, 2004, that is, until October 15, 2006. Although some courts have
found otherwise’, the better view is that the statute of limitations of § 546(a) is not jurisdictional
in nature, thus a defendant may waive it as a defense and the limitations period may be extended
by stipulation between the parties to the proceeding. 5 Lawrence P. King, Collier on Bankrupicy,
{ 546.02[4] page 546-20 (15" ed rev’d Rel. 102-6/2007), citing 140 Cong. Rec. E 2204(Oct 8,
1994); In re Shape, 138 B.R. 334, 337 (Bankr. D. Me. 1992) (“Given the legislative history and
the opinion expressed in the foregoing case, this Court finds no reason to interpret § 546(a) as a
jurisdictional grant. Instead, this section prescribes a statute of limitations which, like any other,
may be extended by agreement of the parties.”) The legislative history of the enactment of
section 546(a) of the Bankruptcy Code contains the following excerpt supporting the viewpoint

that the time period set forth in § 546(a) may be extended or modified by agreement:

1 We have found none within the First Circuit.

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1 This section defines the applicable statute of limitation period under section 546(a)(1) of
the Bankruptcy Code as being two years from the entry of an order of relief or one year
after the appointment of the first trustee if such appointment occurs before the expiration
of the original two-year period. Adoption of this change is not intended to create any
negative inference or implication regarding the status of current law or interpretations of
section 546(a)(1).

The section is not intended to have any bearing on the equitable tolling doctrine where
there has been fraud determined to have occurred. Further, the time limits are not
intended to be jurisdictional and can be extended by stipulation between the
necessary parties to the action or proceeding.

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140 Cong Rec E 2004 (emphasis ours). However, Defendants maintain that the § 546(a)

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limitations period is jurisdictional and thus, not subject to modifications. Defendants mainly rely

10 | on the Supreme Court case of Midstate Horticultural Co., v. Pennsylvania Railroad Company,
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320 U.S. 356 (1943) in support of their position that the tolling agreements executed in this case

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3 are invalid. However, we find the Midstate case inapplicable here because, as cited by

14 Defendants, the Midstate Court found that “the agreement is invalid as being contrary to the
15 || intent and effect of the section and the Act [the Interstate Commerce Act]” Jd. at 358-359. The

16 || Court seemed most concerned with the intent of Congress enacting this legislation as shown in

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the following excerpt:

We do not think the decision should turn on refinements over whether the residuum of
19 freedom to contract which the Act leaves to the parties or the quantum of restriction it
imposesconstitutes the gist of the action. Origin of the right is not per se conclusive

20 whether the limitation of time ‘extinguishes’ it or ‘merely bars the remedy’ with the

21 accepted alternative consequences respecting waiver. Source is merely evidentiary, with
other factors, of legislative intent whether the right shall be enforceable in any event after

22 the prescribed time, which is the ultimate question.

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In this case however, we know, as expressed in the legislative history, that Congress’ intent was

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that the time limits not be jurisdictional and be subject to modification and extension.
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26 The Defendants’ argument that Puerto Rico law governs in this situation is without merit.
27 || While we acknowledge that the Tolling Agreements specifically provide that they “shall be

28 || governed by the laws of the Commonwealth of Puerto Rico”, the limitations period to file the

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action subject to the Tolling Agreements is controlled by the Bankruptcy Code. Whether the
limitations period to file an action under §§ 544, 547 and 548 could be extended or not must be
found in the interpretation of § 546(a) and nowhere else because it is § 546(a) of the Bankruptcy
Code the statute that sets forth the time frame to file such an action. Whether the Tolling
Agreements themselves are valid or not is governed by the laws of Puerto Rico as set forth in
these agreements.
Conjugal Partnership

Plaintiff argues that the Tolling Agreements are enforceable against the conjugal
partnership between Mr. James Wilson and Mrs. Barbara Wilson because under Puerto Rico law
any of the spouses can legally represent and bind the conjugal partnership. Art. 93 of the Civil

Code of Puerto Rico provides as follows:

Save as provided in § 284 of this title, either of the spouses may legally represent the
conjugal community. Any unilateral administration act of one of the spouses shall bind
the community property [sociedad legal de gananciales| and shall be presumed valid to
all legal effects.

31 L.P.R.A. § 286 (original Spanish text in brackets). The exception referred to in Section 284
of title 31 is that “[tJhe real property of the conjugal community may not be alienated or
encumbered, under penalty of nullity, except with the written consent of both spouses. The
execution of the Tolling Agreements does not implicate alienating or encumbering real property
of the conjugal community. Therefore, Mr. James Wilson signed the Tolling Agreement in his
personal capacity also binding his conjugal partnership (sociedad legal de gananciales) with
Mrs. Barbara Wilson, if one exists. The execution of the Tolling Agreement is one such

“unilateral administrative act” referred to in Art. 93. See, Urbino v. San Juan Racing Assoc.,

Inc., 141 D.P.R. 210, 215 (1996)(Individually each spouse has the capacity to represent the

conjugal partnership (sociedad legal de gananciales) before the courts, even without including or

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1 || mentioning the conjugal partnership or the other spouse.)

However, this court has not been presented with facts that would lead it to conclude that a
4 conjugal partnership or sociedad legal de gananciales between Mr. James Wilson and his wife

5 || Mrs. Barbara Wilson exists. The complaint alleges that Mr. James Wilson and his wife are

6 || citizens of a jurisdiction other than Puerto Rico. Plaintiffs have not divulged where Mr. James

7 | Wilson married Mrs. Barbara Wilson, nor where they established their domicile. The presence of
° any of the spouses in Puerto Rico is not sufficient for the marriage to be governed by our statutes
. related to the conjugal partnership or sociedad legal de gananciales. Gearheart v. Haskell, 87

11 || D-P-R. 57 (1963). In view of the above, his court cannot determine that a conjugal partnership or

12 || sociedad legal de ganaciales between Mr. James Wilson and Mrs. Barbara Wilson exists,

13 |) therefore article 93 of the Civil Code of Puerto Rico is inapplicable in this case.

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5 Mrs. Barbara Wilson and Mr. Thomas Wilson and spouse (the “Family Members”’)

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Defendants argue that Mr. James Wilson did not have the authority to sign the Tolling

17 || Agreements on behalf of his spouse, his son and his daughter in law, thus the agreements are not

18 || binding upon them. We have read the Tolling Agreements carefully and they do not provide that

19 Mr. James Wilson had the authority and was in fact signing on behalf of his Family Members.
20

The body of the Agreements do not mention that Mr. James Wilson would appear representing
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7 his Family Members, and the signature block does not include the names of any of the Family

73 || Members appearing through Mr. James Wilson or anybody else.

24 The Plaintiff argues that this could be an genuine issue of material fact precluding the

25 entry of summary judgment in this respect. As above stated a party may not rely upon bare

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allegations to create a factual dispute but is required to point to specific facts contained in
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1 || a finding for the nonmoving party. Over the Road Drivers, Inc. v. Transport Insurance Co., 637

F.2d 816, 818 (1st Cir. 1980). The bare allegation, without any support, that Mr. James Wilson
appeared in the Tolling Agreements in representation of his Family Members is not sufficient to
defeat Defendant’s request for summary disposition of this matter.

Conclusion

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In view of the foregoing this court finds that the Tolling Agreements executed on October
8 11, 2006 are valid and enforceable against Mr. James Wilson and Equus Gaming Co. L.P.

Therefore, this court grants in part and denies in part the motion for summary judgment filed by

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Defendants.
11

12 The Clerk shall schedule a pre-trial.

13 SO ORDERED.

14 In San Juan, Puerto Rico, this 29" day of August 2007.
15

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ENRIQUE S. LAMOUTTE
U.S. Bankruptcy Judge

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TOLLING AGREEMENT

Effective as of October 11, 2006, (hereinafter the “Effective Date”) the undersigned parties,
hereby enter into this Tolling Agreement in consideration of the mutual promises made herein and
other good and valuable consideration the sufficiency of which the parties hereto acknowledge and
stipulate as indicated by their signatures hereto. .

Definitions
As used in this Tolling Agreement the following terms shall have the following meanings:
1. “Equus Gaming” shall mean Equus Gaming Co. L,P., its managing partner, and

latter's officers, directors, majority shareholder(s), and their respective spouses and conjugal
partnerships if any;

2. “Claimants” shail mean El Comandante Management Company, LLC, El
Comandante Capital Corp. and Housing Development Associates, S.E., and their successors and
assigns; and

3. The term “Claim” or “Claims” means any and all claims which the Claimants may

have against Equus Gaming including without limitation, any and all claims under 11 U.S.C. §§ 544,
547, 548, 550 and/or 553 and as applicable under the laws of the Commonwealth of Puerto Rico,
including Puerto Rico Civil Code Art. 1249 et seq, as made applicable by 11 U.S.C. § 544.

Agreements

In order to provide an adequate period of time in which to investigate any possible Claims
by the Claimants against Equus Gaming, and in consideration of the Claimants postponing the
prosecution of suit based upon one or more of the Claims against Equus Gaming for at least six (6)
months from the Effective Date of this Tolling Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned Parties
hereby unequivocally and irrevocably agree and stipulate for all purposes in all proceedings to
exclude the period of time starting with the Effective Date of this Tolling Agreement through April
11, 2007 (“Tolling Period”) from the calculation of any applicable statute of limitation, statute of
repose, or other possible time related defense or statutory extension of deadline to file an action,
howsoever arising including without limitation whether arising by common law, agreement, court
order, or statute, including without limitation anything contained in the laws of the Commonwealth
of Puerto Rico, the United States Code, the Bankruptcy Code or any plan or order of reorganization
in Jn Re: El Comandante Management Company, et al, Debtors, Bankruptcy Case No. 04-10938 et
seq, Chapter 11, U.S. Bankruptcy Court , District of Puerto Rico. The undersigned Parties hereby
unequivocally and irrevocably agree and stipulate for all purposes in all proceedings that if suit is
filed by the Claimants against Equus Gaming on the Claims on or before April 11, 2007, that such

EQUUS GAMING TOLLING AGREEMENT Page J

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suit for purposes hereof shall be deemed to have been filed as of the Effective Date, and Equus
Gaming will not interpose a defense, plea, motion or argument that any Claim asserted by the
Claimants against Equus Gaming is barred, expired or otherwise adversely affected due to the
running of any statute of limitations, statute of repose, or any other time related defense during the
Tolling Period, or any Claim is barred, expired or otherwise adversely affected by virtue of the
inclusion of the Tolling Period in any period of limitations, repose, or-other time related defense to
any Claim averred in any such suit, or that any extension of the statute of limitation, statute of repose
or other time-related defense extant at any time during the Tolling Period has expired or is of no
effect, subject to the following:

1. If any applicable statute of limitation and any legal extension thereof whether by
statute or otherwise expired prior to the Effective Date of this Tolling Agreement as
to any portion of a Claim, Equus Gaming reserves the right to interpose such statute
of limitation defense to such portion of such Claim which expired prior to the
Effective Date of this Tolling Agreement; and

2. ° Nothing in this Tolling Agreement shall be used or construed as an admission of
liability or a waiver of any other defense or claims not addressed herein, in whole or
in part, by anyone, to any part of any Claim.

This Tolling Agreement may be executed in multiple counterpart originals. Facsimile copies
of signatures to this Tolling Agreement are stipulated as valid as original signatures. This written
Tolling Agreement is the entire agreement between the parties hereto and supersedes any other
agreements, written or oral, that may exist between them relating to the tolling of the statute of
limitations, statues of repose, and other time-related defenses. This Tolling Agreement may only
be modified in writing executed by all parties hereto. This Tolling Agreement shall be governed
by the laws of the Commonwealth of Puerto Rico.

Each individual signing this Tolling Agreement represents that they are authorized to sign
on behalf of the respective entity and that they have been authorized to execute the agreement on
behalf of such entity.

IN WITNESS WHEREOF, the undersigned Parties have executed this Tolling Agreement
for the purpose and consideration herein expressed.

EQUUS GAMING TOLLING AGREEMENT Page 2

Document

Case:07-CBQ96:5 bo RBCS, HERAT 29 Ae lense sASIBOIO E4HGH 1—Pesc: Main

AGREED:

EQUUS GAMING CO. LP. |

Commonwealth of Virginia

BEFORE ME, the undersigned authority, a Notary Public in and four Tee , Virginia,

on this day personally appeared the (ED of Equus
Gaming Co. L.P., known to méto be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes and consideration
therein expressed.

|
City/County of Lrgendown
|
|
|

Subscribed and sworn to before me this_}\ day of October, 2006.

Nope hablican Expires
——__—_September-30

My Commissiow expires 2009

Affidavit No. 3764

Sworn and subscribe by me by Stanley Pinkerton, of legal age, married, property owner, and
resident of San Juan, Puerto Rico, and identified by me with his Louisiana Driver License
No. 003099466 which contains his. photograph and its signed.

In San Juan,Pusito Rico, th 12" day of October, 2006. a4
f Q: went te “te F S Y
pe; ys Notary Public

EQUUS GAMING TOLLING AGREEMENT Page 3

we, rr
ant

Mes a f
co ° , ae

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TOLLING AGREEMENT

Effective as of October 11, 2006, (hereinafter the “Effective Date”) the undersigned parties,
hereby enter into this Tolling Agreement in consideration of the mutual promises made herein and
other good and valuable consideration the sufficiency of which the parties hereto acknowledge and
stipulate as indicated by their signatures hereto.

Definitions
As used in this Tolling Agreement the following terms shall have the following meanings:

1, “Wilson” shall mean James J. Wilson, his wife Barbara, his son Thomas and wife,
and their respective conjugal partnerships as may exist under Puerto Rico law;

2, “Claimants” shall mean El Comandante Management Company, LLC, El
Comandante Capital Corp. and Housing Development Associates, 8.E., and their successors and
assigns; and :

3. The term “Ciaim” or “Claims” means any and all claims which the Claimants may

have against Wilson including without limitation, any and all claims under 11 U.S.C. §§ 544, 547,
548, 550 and/or 553 and as applicable under the laws of the Commonwealth of Puerto Rico,
including Puerto Rico Civil Code Art. 1249 et seq. as made applicable by 11 U.S.C. § 544.

Agreements

In order to provide an adequate.period of time in which to investigate any possible Claims
by the. Claimants against Wilson, and in consideration of the Claimants postponing the prosecution
of suit based-upon one or more of the Claims against Wilson for at least six (6) months from the
Effective Date of this Tolling Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the undersigned Parties hereby unequivocally
and irrevocably agree and stipulate for all purposes in all proceedings to exclude the period of time
starting with the Effective Date of this Tolling Agreement through April 11,2007 (“Tolling Period”)
from the calculation of any applicable statute of limitation, statute of repose, or other possible time
related defense or statutory extension of deadline to file an action, howsoever arising including
without limitation whether arising by common law, agreement, court order, or statute, including
without limitation anything contained in the laws of the Commonwealth of Puerto Rico, the United
States Code, the Bankruptcy Code or any plan or order of reorganization in Jn Re: El Comandante
Management Company, et al, Debtors, Bankruptcy Case No. 04-10938 et seq, Chapter 11, U.S.
Bankruptcy Court , District.of Puerto Rico. The undersigned Parties hereby unequivocally and
irrevocably agree and stipulate for all purposes in all proceedings that ifsuitis filed by the Claimants
‘against Wilson on the Claims on or before April 11, 2007, that such suit for purposes hereof shall
be deemed to have been filed as of the Effective Date, and Wilson will not interpose a defense, plea,

WILSON INDIVIDUAL TOLLING AGREEMENT Page |

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motion or argument that any Claim asserted by the Claimants against Wilson is barred, expired or
otherwise adversely affected due to the running of any statute of limitations, statute of repose, or any
other time related defense during the Tolling Period, or any Claim is barred, expired or otherwise
adversely affected by virtue of the inclusion of the Tolling Period in any period of limitations,
repose, or other time related defense to any Claim averred in any such suit, or that any extension of
the statute of limitation, statute of repose or other time-related defense extant at any time during the
Tolling Period has expired or is of no effect, subject to the following: ~

1, If any applicable statute of limitation and any legal extension thereof whether by
statute or otherwise expired prior to the Effective Date of this Tolling Agreement as
to any portion of a Claim, Wilson reserves the right to interpose such statute of
limitation defense to such portion of such Claim which expired prior to the Effective
Date of this Tolling Agreement; and

2. Nothing in this Tolling Agreement shall be used or construed as an admission of
liability or a waiver of any other defense or claims not addressed herein, in whole or
in part, by anyone, to any part of any Claim.

This Tolling Agreement may be executed in multiple counterpart ori ginals. Facsimile copies
of signatures to this Tolling Agreement are stipulated as valid as original signatures. This written
Tolling Agreement is the entire agreement between the parties hereto and supersedes any other
agreements, written or oral, that may exist between them relating to the tolling of the statute of
limitations, statues of repose, and other time-related defenses. This Tolling Agreement may. only
be modified in writing executed by all parties hereto. This Tolling Agreement shall be governed
by the laws of the Commonwealth of Puerto Rico.

Each individual signing this Tolling Agreement represents that they are authorized to sign
on behalf of the respective entity and that they have been authorized to execute the agreement on.
behalf of such entity.

IN WITNESS WHEREOF, the undersigned Parties have executed this Tolling Agreement
for the purpose and consideration herein expressed,

WILSON INDIVIDUAL TOLLING AGREEMENT Page 2

ne “Case:07-CO828 6 -bodgeESt pth: Teg BERG O Pade tet 4@esc: Main

AGREED: S

JAMES J. dull
ity/County he pre,
Commonwealth of Virginia

BEFORE ME, the undersigned authority, a Notary Public in and Forfa dst UT hv Virgins,
on this day personally appeared James J. Wilson, known to me to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed.

Subscribed and sworn to before me this \\ day of October, 2006.

ChintaissButhipires
ember 30. 2009

My Commissior¥expires _

El Comandante Management Company, LLC, El Comandante Capital Corp.

By

Stanley J. Pi Chief Financial Officer Stanley J.P Acting Chief Fin. Officer

Housing Development Associates, S.E.

Stanley J. Piskertok} Acting Chief Fin. Officer
Affidavit No.: 3765S”

Sworn and subscribe by me by Stantey Pinkerton, of legal age, married, property owner, and
resident of San Juan, Puerto Rico; and identified by me with his Louisiana Driver License

No. 003099466 which contains Js photograph and its signed.

In San Juan, P & ‘Rico; hig iD day of October, 2006.

Care ZS

neal Notary Public

WILSON INDIVIRUAL FoLunk ee MENT Page 3

7 oS
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