United States Court of Appeals

For the First Circuit

No. 14-1405

QUALITY CLEANING PRODUCTS R.C., INC.; RAFAEL CORREA,

Plaintiffs, Appellants,

v.

SCA TISSUE NORTH AMERICA, LLC,

Defendant, Appellee,

JOHN DOE; RICHARD ROE

Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Carmen Consuelo Cerezo, U.S. District Judge] 

Before

Howard, Chief Judge,

Lynch and Thompson, Circuit Judges.

Miguel Angel Rangel-Rosas, Jr., with whom Maymi Rivera, LLC

was on brief, for appellant.

Alejandro Jose Cepeda-Díaz, with whom Raúl M. Arias and 

McConnell Valdés LLC were on brief, for appellee.

July 21, 2015
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HOWARD, Chief Judge. Eleven years after Appellee SCA 

Tissue North America ("SCA") allegedly breached its distribution 

agreement with Appellant Quality Cleaning Products ("QCP"), QCP 

filed this breach of contract action. The district court dismissed 

the action as time-barred under the applicable three-year statute 

of limitations. Applying Puerto Rico's statute of limitations and 

accrual rules, as we must when sitting in diversity, we affirm.

I.

SCA manufactures cleaning products and paper goods such 

as napkins, bath and facial tissue, and liquid soap. In August 

1997, QCP entered into a distribution agreement with SCA which 

designated QCP as a non-exclusive, authorized Puerto Rican 

distributor and wholesaler of SCA's "Tork" brand product line. 

QCP agreed that it would not distribute any of SCA's competitors' 

products and, in return, SCA promised to offer QCP all promotions 

and discounts that it extended to any other Puerto Rican 

distributor. QCP claims that SCA breached that agreement in 2001, 

when SCA agreed to sell its "Tork" products at a reduced rate to 

a third company, Bunzl/Melissa Sales Corp. ("Bunzl"), and when it 

granted Bunzl a five percent discount or profit on every sale of 

"Tork" products that Bunzl made to other distributors in Puerto 

Rico.

QCP filed this breach of contract action on December 7, 

2012 -- over a decade later. In Puerto Rico, Act 75 governs 
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distribution agreements. See P.R. Laws Ann. tit. 10, §§ 278 et 

seq. SCA moved to dismiss the action as (among other things) timebarred under Act 75's three-year statute of limitations. See id.

§ 278d. QCP opposed SCA's statute of limitations defense on the 

sole basis that the "continuing violation" doctrine applied to 

delay the accrual of its claims. Finding the continuing violation 

doctrine inapplicable, the district court granted SCA's motion to 

dismiss. Based on the allegations contained in the complaint, the 

court concluded that QCP "knew since at least the year 2001" that 

SCA had engaged in conduct that QCP believed had violated the 

contract. Seizing on that statement, QCP filed a motion to 

reconsider. In that motion, and for the first time, QCP raised 

the "discovery rule," claiming that it had no knowledge of SCA's 

alleged breach until 2011. The district court summarily denied 

that motion, and this timely appeal followed.

II.

We review the district court's dismissal on statute of 

limitations grounds de novo, and affirm "only if the record, 

construed in the light most flattering to the pleader [the party 

opposing dismissal], leaves no plausible basis for believing that 

the claim may be timely." Erlich v. Ouellette, Labonte, Roberge 

& Allen, P.A., 637 F.3d 32, 35 (1st Cir. 2011) (internal quotation 

marks omitted).
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Act 75 imposes a three-year statute of limitations "from 

the date of the definite termination of the dealer's contract, or 

of the performing of the detrimental acts, as the case may be." 

P.R. Laws Ann. tit. 10, § 278d. A limitations period "begins to 

run when the cause of action accrues -- that is, when the plaintiff 

can file suit and obtain relief." Heimeshoff v. Hartford Life & 

Accident Ins. Co., 134 S. Ct. 604, 610 (2013) (internal quotation 

marks omitted). Breach of contract actions, like those under Act 

75, traditionally accrue at the time of the breach. See 1 Calvin 

W. Corman, Limitation of Actions § 7.2.1, at 485-86 (1991); cf.

Erlich, 637 F.3d at 35 (discussing Maine law).

Under this traditional rule, Act 75's limitations period 

began to run when SCA allegedly breached its agreement with QCP. 

QCP's amended complaint identifies SCA's breach (the Bunzl

agreement) as taking place around the time that two companies 

merged to form Bunzl. The complaint alleges that the merger, and 

thus the breach, occurred in 2001. Because QCP did not file its 

complaint until 2012, the complaint facially indicates that Act 

75's three-year statute of limitations has been far exceeded.

Nevertheless, QCP invokes both the continuing violation 

doctrine and the discovery rule in an attempt to argue that its

Act 75 claim did not accrue until years later. In order to 

establish when QCP's claim accrued, we thus must determine whether 

those doctrines apply to Act 75.
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A. Does State or Federal Accrual Law Apply?

A threshold question, disputed by the parties, is 

whether we look to Puerto Rico or federal law in making that 

accrual determination. Federal courts sitting in diversity apply 

the substantive law of the state and, pursuant to statute, Puerto 

Rico is treated as a state for diversity purposes. See Erie R.R.

Co. v. Tompkins, 304 U.S. 64, 78 (1938); 28 U.S.C. § 1332(e). 

State law includes the applicable state statute of limitations. 

See Guaranty Trust Co. of N.Y. v. York, 326 U.S. 99, 110 (1945);

Morel v. DaimlerChrysler AG, 565 F.3d 20, 23 (1st Cir. 2009). 

QCP's breach of contract action is based on Puerto Rico law and, 

consistent with Erie and Guaranty Trust, the parties agree that 

Act 75's three-year statute of limitations applies. But, pointing 

to cases in which we have borrowed a state's statute of limitations 

for purposes of federal law while noting that the date of accrual 

remains a federal law question, QCP urges that -- even in a 

diversity action -- accrual is necessarily governed by federal 

law.

QCP's contention is mistaken. In fact, it directly

conflicts with the Supreme Court's remark in Ragan v. Merchants 

Transfer & Warehouse Co. that a cause of action in a diversity 

action "accrues and comes to an end when local law so declares." 

337 U.S. 530, 533 (1949). Relying on this plain statement, several 

other circuits have held that it "is long since settled" that state 
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law governs "when a state-created cause of action accrues." Walko 

Corp. v. Burger Chef Sys., Inc., 554 F.2d 1165, 1171 (D.C. Cir. 

1977); accord Cantor Fitzgerald Inc. v. Lutnick, 313 F.3d 704, 

709-10 (2d Cir. 2002); Joyce v. A.C. & S., Inc. 785 F.2d 1200, 

1203 (4th Cir. 1986). We agree.

Moreover, this rule makes eminent sense because a 

federal court sitting in diversity must apply related state-law 

rules that form "an integral part of the several policies served 

by the [state's] statute of limitations." Walker v. Armco Steel 

Corp., 446 U.S. 740, 751 (1980) (holding that whether filing of 

the complaint tolls the statute of limitations is governed by state 

law); see also, e.g., West v. Am. Tel. & Tel. Co., 311 U.S. 223, 

239 (1940) (applying Ohio law requiring a plaintiff to make a prelawsuit demand before the statute of limitations begins to run). 

State accrual rules fit comfortably within this category. When

state law commands that the statute of limitations hourglass is to 

be turned is no less an "integral part" of a state's statute of 

limitations scheme than how long the state allows the sand to 

drain.

That we frequently apply federal accrual rules in the 

context of § 1983 actions and other federal laws does not aid QCP. 

When a federal statute contains no statute of limitations, we apply 

"the most analogous statute of limitations in the state where the 

action was brought." Greenwood ex rel. Estate of Greenwood v. 
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N.H. Pub. Utils. Comm'n, 527 F.3d 8, 13 (1st Cir. 2008); see also, 

e.g., Randall v. Laconia, N.H., 679 F.3d 1, 4-5 (1st Cir. 2012) 

(applying state statute of limitations but federal accrual rules

for purposes of the Residential Lead-Based Paint Hazard Reduction 

Act, 42 U.S.C. § 4852d). In those circumstances, federal rules 

determine when the claim accrues because "the cause of action is 

created by federal law," even if the statute of limitations is set 

by reference to state law. Cantor Fitzgerald, 313 F.3d at 710. 

But when, by contrast, "federal jurisdiction is based on diversity 

. . . state substantive law must govern" accrual and the statute 

of limitations alike. Id. Indeed, we have consistently adhered 

to this delineation in diversity cases, albeit without explicitly 

referencing this threshold distinction. See, e.g., Erlich, 637 

F.3d at 35 (considering Maine's accrual rules); Loguidice v. Metro. 

Life Ins. Co., 336 F.3d 1, 6 (1st Cir. 2003) (applying 

Massachusetts' discovery rule).

To remove all doubt, we take this opportunity to clearly 

hold that a federal court sitting in diversity must apply the 

relevant state's statute of limitations, including its accrual 

rules. The mere fact that a diversity-based action is brought "in 

a federal court instead of in a State court a block away, should 

not lead to a substantially different result." Guaranty Trust 

Co., 326 U.S. at 109. Accordingly, we decline QCP's invitation to 
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graft a federal common law of accrual onto local statutes of 

limitation when sitting in diversity. 

B. Applying Puerto Rico's Accrual Rules to QCP's Claim

We thus look to Puerto Rico law to resolve whether the 

continuing violation doctrine or the discovery rule applies. We 

discuss each doctrine in turn.

i. The Continuing Violation Doctrine

QCP first argues that the discounts SCA granted pursuant 

to the Bunzl agreement -- which continued at least until 2010, and 

perhaps extend into the present -- constitute a continuing 

violation of the distribution agreement. In narrow circumstances, 

typically including Title VII and other discrimination claims, the 

continuing violation doctrine permits a plaintiff to recover for 

injuries occurring outside of the limitations period. See PérezSánchez v. Pub. Bldg. Auth., 531 F.3d 104, 107 (1st Cir. 2008). 

As long as a related act falls within the limitations period, the 

doctrine allows a lawsuit to be delayed in cases -- such as hostile 

work environment claims -- in which a course of "repeated conduct" 

is necessary before "a series of wrongful acts blossoms into an 

injury on which suit can be brought." Ayala v. Shinseki, 780 F.3d 

52, 57 (1st Cir. 2015) (internal quotation marks omitted). The 

doctrine does not apply, however, to allow the late filing of a 

claim based on a discrete discriminatory act that occurs on a 

specific day, and thus does not permit a plaintiff "to avoid filing 
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suit so long as some person continues to violate his rights," 

Pérez-Sánchez, 531 F.3d at 107; see also Nat'l R.R. Passenger Corp.

v. Morgan, 536 U.S. 101, 113 (2002). In that sense, the doctrine 

is not truly "about a continuing [violation], but about a 

cumulative violation." Limestone Dev. Corp. v. Village of Lemont, 

Ill., 520 F.3d 797, 801 (7th Cir. 2008).

We agree with the district court that the continuing 

violation doctrine does not apply to Act 75 claims.1 The parties 

have not cited any decisions of the Supreme Court of Puerto Rico 

that apply the continuing violation doctrine to Act 75, nor have 

we independently found any case that does. Thus, it appears that 

"the Puerto Rico Supreme Court has not spoken directly to the 

precise question that confronts us." González Figueroa v. J.C. 

Penny P.R., Inc., 568 F.3d 313, 318 (1st Cir. 2009). Where that 

is the case, "our task is to ascertain the rule the state court 

would most likely follow under the circumstances." Blinzler v. 

 

1 SCA does not argue that QCP's complaint failed to adequately 

invoke the continuing violation doctrine. When the dates listed 

and the allegations contained in the complaint facially suggest 

that the limitations period had been exceeded, the plaintiff must, 

to avoid dismissal, "'sketch a factual predicate'" that provides 

a basis for avoiding the statute of limitations, concluding that 

the limitation period has not run, or finding that a different 

statute of limitations applies. Trans-Spec Truck Serv., Inc. v. 

Caterpillar Inc., 524 F.3d 315, 320 (1st Cir. 2008) (quoting 

LaChapelle v. Berkshire Life Ins. Co., 142 F.3d 507, 509-10 (1st 

Cir. 1998)). We assume for the sake of argument that QCP has

sketched an adequate factual predicate.
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Marriot Int'l, Inc., 81 F.3d 1148, 1151 (1st Cir. 1996). We are 

convinced that Puerto Rico is unlikely to apply the continuing 

violation doctrine to Act 75 claims.

Courts have largely, if not exclusively, held that 

application of the continuing violation doctrine is cabined to 

certain civil rights or tort actions.2 See e.g., Lutz v. Chesapeake 

Appalachia, LLC, 717 F.3d 459, 466 & n.5 (6th Cir. 2013) (citing 

cases noting that courts have been reluctant to apply the 

continuing violation doctrine outside of the Title VII context); 

Schaffhauser v. Citibank (S.D.) N.A., 340 F. App'x 128, 131 (3d 

Cir. 2009) ("[O]ur decisions have limited the continuing violation 

doctrine to the employment discrimination context."). The only 

Puerto Rico Supreme Court case that we have found arguably

endorsing the concept of a continuing wrong tracks this 

delineation, and applies the concept in the employment

discrimination context. See Sánchez v. Elec. Power Auth., 142 

P.R. Dec. 880, 1997 P.R.-Eng. 878520, slip op. at 3-4 (1997)

(García, J., concurring); id. slip op. at 8-9 (Naveira de Rodón, 

J., concurring). We are not aware of any case in which a court, 

including the Puerto Rico Supreme Court, has applied the doctrine

 

2 QCP suggests that SCA's alleged contractual infractions 

sound in tort, but provides no legal or factual support for that 

assertion. In any event, the pleaded claim is plainly a breach of 

contract action under Act 75.
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to a contract claim. See 1 Corman, supra § 7.2.1, at 487 ("The 

tort concept of continuing wrong, which postpones the time of 

accrual of the cause of action, does not apply to actions for 

breach of contract."). And this apparent resistance to applying 

the doctrine in contract cases makes sense. Unlike a prolonged 

series of wrongful acts, a contract breach is a single, readily 

ascertainable, event. Cf. 51 Am. Jur. 2d Limitation of Actions § 

139, at 601 (2011) (noting that a breach "occurs when a party fails 

to perform when performance is due").

Given this general principle, and the dearth of any 

Puerto Rico authority on point, we see no basis to assume that the

Puerto Rico Supreme Court would extend the continuing violation 

doctrine to Act 75 claims. In fact, that conclusion is all the 

more likely because, when that court has considered mechanisms 

that might prolong Act 75's limitation period, the court has 

emphasized the need for expeditious resolution of commercial 

disputes. In an effort to "encourage diligence and speed in 

commercial relations" and to "expedite mercantile traffic," the 

court has held that the restrictive tolling provisions of the 

Commerce Code, not the more generous provisions of the Civil Code, 

apply to Act 75. Pacheco v. Nat'l W. Life Ins. Co., 122 P.R. Dec. 

55, 22 P.R. Offic. Trans. 49, 60 (1988). To nevertheless apply 

the continuing violation doctrine here -- and allow QCP to assert 

a claim eleven years after SCA's alleged breach -- would permit
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QCP to more than triple Act 75's limitations period. That result 

would directly conflict with Pacheco's rationale.3

Ultimately, we see no basis to apply the continuing 

violation doctrine to Act 75 and thus prolong the statute of 

limitations. "A federal court sitting in diversity cannot be 

expected to create new doctrines expanding state law." Gill v. 

Gulfstream Park Racing Ass'n, 399 F.3d 391, 402 (1st Cir. 2005).

ii. The Discovery Rule

QCP also raises the discovery rule as an alternative 

ground to escape the limitations bar, claiming that it had no 

knowledge of SCA's alleged breach until 2011. The rule "delays 

accrual of a cause of action until the plaintiff has 'discovered'

it." Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 645 (2010). 

The Puerto Rico Civil Code's general statute of limitations 

explicitly includes a discovery rule. See P.R. Laws Ann. tit. 31, 

§ 5298 (statutory period runs "from the time the aggrieved person 

 

3 Furthermore, even if the doctrine did apply, because the 

alleged detrimental act here is SCA's agreement with Bunzl, we are 

doubtful that any later discounts granted pursuant to that 

agreement could even be construed as a continuing violation. See, 

e.g., McNamara v. City of Nashua, 629 F.3d 92, 97 (1st Cir. 2011) 

("That the wrong (if any) had consequences that endure to the 

present does not make the violation a continuing one."); MuñizRivera v. United States, 204 F. Supp. 2d 305, 315 (D.P.R. 2002) 

aff'd, 326 F.3d 8 (1st Cir. 2003) ("A continuing violation occurs 

when there is a series of continual unlawful acts, not when there 

are merely continual harmful effects from an original unlawful 

act." (emphasis in original)).
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had knowledge" of the injury); see also Colón Prieto v. Géigel, 

115 P.R. Dec. 232, 15 P.R. Offic. Trans. 313, 326-27 (1984). Act 

75 contains no similar language.4

We need not definitively resolve whether Act 75 

nevertheless incorporates a discovery rule, however, because a 

basic infirmity abounds. QCP did not raise the discovery rule in 

its initial opposition to SCA's motion to dismiss. Instead, it 

only sought refuge in the discovery rule in its Rule 59(e) motion 

for reconsideration. In that motion, QCP first claimed that it 

had no knowledge of SCA's breach until it inadvertently received 

an e-mail from a Bunzl sales representative in 2011 revealing the 

 

4 Although SCA again raises no pleading deficiency, we note 

that QCP's complaint is devoid of any allegations suggesting it 

was oblivious to SCA's purported breach until 2011. We have not 

had the occasion to define the contours of a plaintiff's burden to 

plead facts necessary to invoke the discovery rule -- an inquiry 

governed by federal law, even in a diversity case. See Andresen

v. Diorio, 349 F.3d 8, 17 (1st Cir. 2003). While some courts, 

including one district court in our circuit, have concluded that 

a plaintiff must affirmatively plead the discovery rule, others 

have held that it is unnecessary for a plaintiff to specifically 

name the rule in order to rely upon it. Compare, e.g., Stone v. 

Colt Indus. Operating Corp., No. 86-1107-MA, 1986 WL 13073, at *2 

(D. Mass. Oct. 31, 1986), with Colonial Penn Ins. Co. v. Market 

Planners Ins. Agency, Inc., 1 F.3d 374, 376 (5th Cir. 1993). But 

even those courts that do not require a plaintiff to explicitly 

reference the discovery rule by name in the complaint note that a 

plaintiff must plead some facts "sufficient to give notice of its 

reliance on the discovery rule." Colonial Penn Ins. Co., 1 F.3d 

at 376. Thus, at the very least, QCP likely had to plead some 

facts that would indicate that it was unaware of or unable to 

discover SCA's breach until 2011. Nevertheless, we need not decide 

whether QCP failed to meet its pleading burden here because we are 

able to resolve this issue on other grounds.
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SCA/Bunzl agreement. We review the district court's dismissal of 

that motion only for abuse of discretion. Biltcliffe v. 

CitiMortgage, Inc., 772 F.3d 925, 930 (1st Cir. 2014).

As we have held time and again, however, a Rule 59(e) 

motion "does not provide a vehicle for a party to undo its own 

procedural failures" or to "introduce new evidence or advance 

arguments that could and should have been presented to the district 

court prior to judgment." Emmanuel v. Int'l Bhd. of Teamsters, 

Local Union No. 25, 426 F.3d 416, 422 (1st Cir. 2005) (internal 

quotation marks omitted); Aybar v. Crispin-Reyes, 118 F.3d 10, 16 

(1st Cir. 1997) (holding that plaintiffs could not rely on a new 

argument in a motion for reconsideration to toll the statute of 

limitations). Accordingly, because QCP did not raise the discovery 

rule until its motion for reconsideration, "the district court 

scarcely can be said to have abused its discretion in refusing to 

reconsider its decision based on the plaintiff's newly raised 

argument." Cochran v. Quest Software, Inc., 328 F.3d 1, 11 (1st 

Cir. 2003).5

 

5 QCP's complaint also alleged that its president, Rafael 

Correa, suffered mental and emotional distress as a result of SCA's

breach. In its opening brief, QCP made no argument that the 

district court erred in dismissing that tort claim; as a result, 

the argument is waived. See Sandstrom v. ChemLawn Corp., 904 F.2d 

83, 86 (1st Cir. 1990). In any event, QCP conceded in its reply 

brief that if the district court properly dismissed its Act 75 

claim, the dismissal of the tort claim necessarily followed. Thus, 

we similarly affirm the dismissal of the emotional distress count.
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III.

For the foregoing reasons, the district court's order 

dismissing QCP's complaint is affirmed.