Opinion ID: 203140
Heading Depth: 2
Heading Rank: 2

Heading: Count One: Declaratory Judgment

Text: Count One of the complaint seeks a declaratory judgment establishing that the Contract is void and invalid for lack of consideration. Specifically, PREPA asserts that the DOE refund was not obtained through any information or work by Action Refund. The district court allowed the defendants' motion for summary judgment. We begin with the requirements for a valid contract under Puerto Rico law: [3] (1) consent of the parties, (2) a definite object of the contract, and (3) consideration. See P.R. Laws Ann. tit. 31, § 3391 (2004). PREPA alleges that the contract lacked consideration because it was already entitled to the refund without any further action on the part of the defendants. [4] The allegation stems from PREPA's realization that Action Refund had only completed a simple, one-page form to obtain the refund. PREPA contends that the form is one that could easily have been completed without Action Refund and, therefore, there was no consideration. We disagree. The Contract, signed by both parties, provided as follows: 1. I hereby authorize Action Refund to act as our representative in the claim for Petroleum Refunds. 2. Action Refund will provide information and services about refunds regarding petroleum and petroleum product overcharges. 3. All refunds and interest realized in our favor as a result of the information and work performed by Action Refund will be sent directly to [PREPA]. 4. All refunds realized will be shared as follows: Action Refund will receive 20% of an amount equal to the total amount received and it is understood no other cost or fees will be paid to Action Refund. 5. Upon `receipt of the refund check [PREPA] will remit the appropriate amount of refund due to Action Refund within seven working days. 6. This authorization is effective for one year commencing on the date of September 21, 2004. The Contract thus specified that in return for successfully obtaining a crude oil refund on behalf of PREPA, Action Refund would receive twenty percent of the refund. [5] Action Refund's promise to act on behalf of PREPA and render services necessary to obtain the refund is consideration for the Contract. See P.R. Laws Ann. tit. 31, § 3431 ([the] promise of a thing or services by the other party is understood as a consideration). PREPA's related argument that the consideration is inadequate because those services amounted only to the filing of a single piece of paperis similarly unavailing. A general principle of contract law provides that courts will not inquire into the adequacy of consideration in an agreed-upon exchange, unless that consideration is `so grossly inadequate as to shock the conscience of the court.' Kenda Corp., Inc. v. Pot O'Gold Money Leagues, Inc., 329 F.3d 216, 229 (1st Cir. 2003) (citation omitted). We do not believe, taking into account the facts of this case, that the promise of services to obtain a $3 million refund in return for a twenty percent fee can be considered so grossly inadequate as to shock the conscience of the court. Moreover, the parties in this case are sophisticated business entities who engaged in arms-length negotiations. Given that they bargained and contracted for consideration terms which they deemed to be sufficient (and are sufficient under the law), we are loathe, on appeal, to evaluate the relative adequacy of the consideration or to reweigh the soundness of the parties' judgments. In re Newport Plaza Assocs., L.P., 985 F.2d 640, 647 (1st Cir. 1993). Accordingly, the district court appropriately entered summary judgment in favor of the defendants on Count One of the complaint.