Opinion ID: 180299
Heading Depth: 2
Heading Rank: 1

Heading: Law 21 Claim

Text: The scope and nature of the promotional agreements bear upon Caribbean's ability to show that it is plausibly entitled to relief under Law 21. We thus begin by unpacking the parties' arguments regarding these agreements. It is undisputed that the parties executed two written promotional agreements that do not include any terms or conditions regarding Caribbean's alleged duties as a sales representative of Finlandia and Jack Daniel's in Puerto Rico. Rather, the agreements address Caribbean's duty to promote the products by engaging in promotional and advertising efforts. Absent written provisions regarding Caribbean's duties as a sales representative, Caribbean's claim revolves around its allegation that the parties intentionally excluded the terms of its duties as a sales representative and that this court should consider extrinsic evidence showing that the written contracts are incomplete and do not rule the entire and true commercial relationship between the parties. [6] Article 1233 of the Puerto Rico Civil Code provides that where the terms of a contract are clear and leave no doubt as to the intentions of the contracting parties, the literal sense of its stipulations shall be observed. P.R. Laws Ann. tit. 31, § 3471. The Article also states that [i]f the words should appear contrary to the evident intention of the contracting parties, the intention shall prevail. Id. In order to judge ... the intention of the contracting parties, attention must principally be paid to their acts, contemporaneous and subsequent to the contract. P.R. Laws Ann. tit. 31, § 3472. Construing the substantive provisions of the Puerto Rico Civil Code and Puerto Rico's former parol evidence rule, P.R. Laws Ann. tit. 32, App. IV, R. 69(B) (repealed 2004), [7] we have stated that courts may not consider[ ] ... extrinsic evidence to vary the express, clear, and unambiguous terms of a contract. Borschow Hosp. & Med. Supplies, Inc. v. César Castillo Inc., 96 F.3d 10, 15 (1st Cir.1996); see also Vulcan Tools of Puerto Rico v. Makita U.S.A., Inc., 23 F.3d 564 (1st Cir.1994). Following this reading of Puerto Rico's rules of contract interpretation, we have declined to consider extrinsic evidence of the parties' intent when, for example, the evidence is offered to show that the written agreement was not the entire agreement between the parties. See Exec. Leasing Corp. v. Banco Popular de Puerto Rico, 48 F.3d 66, 69 (1st Cir.1995); see also Borschow Hosp. & Med. Supplies, Inc., 96 F.3d at 15. Caribbean contends, however, that our decisions declining to consider extrinsic evidence are no longer good law in as much as the parol evidence rule of Puerto Rico was repealed in 2004. [8] Although Caribbean claims that we should re-evaluate our prior decisions concerning Puerto Rico's substantive rules of contract interpretation, it has not pointed to any decisions from the Puerto Rico Supreme Court showing that our interpretation of Article 1233 is erroneous, even in the face of the repeal of Puerto Rico's parol evidence rule. [9] However, we need not conclusively decide this issue that involves Puerto Rico's rules of contract interpretation. Even if we consider evidence tending to show that the parties intended to omit Caribbean's sales duties from the promotional agreements, the evidence is insufficient to establish that Caribbean procured and closed sales on Brown Forman's behalf in an exclusive manner as required by Law 21. First, Caribbean's well-pleaded allegations regarding its sales activities do not support the conclusion that Caribbean had the authority to procure and conclude sales on Brown Forman's behalf. Per Caribbean's allegations and admissions, Caribbean procured and sent purchase orders to the local distributors who then processed and concluded the sales. Caribbean also admitted that it did not place orders directly with Brown Forman. That is, the complaint lacks any factual allegations that would tend to show that Brown Forman was bound by the sales Caribbean claims that it procured and closed. At most, the well-pleaded allegations show that a principal-sales representative relationship existed between Caribbean and the local distributors. However, in order to enjoy protection under Law 21, a sales representative must have the authority to procure and conclude orders that bind the principal. P.R. Laws Ann. tit. 10, § 279(c) (stating that in a sales representation agreement, the principal is bound to comply with the commitments that may result from the sales representative's efforts and coordination); see also Cruz-Marcano, 2007 TSPR 198, 172 D.P.R. at 546 (explaining that a Law 21 sales representative procures and concludes orders on behalf of the principal). Secondly, Caribbean's allegations reveal that it was not compensated for its sales efforts. Rather than receiving compensation for the sales that Caribbean claims it procured and closed, Caribbean's commission was based on the terms of the promotional agreements. Under the terms of these agreements, Caribbean received a fixed percentage of overall product sales, regardless of whether it actually procured or concluded the sales. Thus, per Caribbean's own allegations and admissions, there is no indication that Brown Forman agreed to compensate Caribbean on the basis of its purported sales representation efforts. Finally, Caribbean's Law 21 claim fails on the pleadings as it failed to put forth sufficient facts to show that it was entrusted with exclusive sales responsibilities within a defined territory. Exclusivity is generally apparent either from the contract or from the arrangements agreed upon between the parties. Orba, Inc., 49 F.Supp.2d at 71. The exclusivity requirement is met where neither the principal merchant nor third parties are allowed to sell the product in the same territory or market in which the sales representative operates. Cruz-Marcano, 2007 TSPR 198, 172 D.P.R. at 537-38. Caribbean's amended complaint mentions the exclusivity requirement in a conclusory and casual fashion. The amended complaint merely avers that Caribbean solicit[ed] and negotiate[d] purchase orders of Finlandia vodka and Jack Daniel's whiskey with its clients in an exclusive nature. Although Caribbean claims that it was involved in the sale of more than 400,000 cases of Finlandia and 4,500 cases of Jack Daniel's, its amended complaint is devoid of any factual allegations regarding the scope of Caribbean's alleged exclusive right to procure and execute purchase orders on Brown Forman's behalf, and does not include any factual allegations regarding any assurances from Brown Forman that would support the contention that no other sales representatives were allowed to sell the products in Puerto Rico. Surprisingly, the complaint nowhere explains the territorial scope of Caribbean's duties, an explanation that would support the assertion that Caribbean indeed was granted the right to sell the products in Puerto Rico. In conclusion, even if we take as true Caribbean's factual allegations that the parties intended to exclude Caribbean's sales duties from the written promotional agreements, and even if we credit the allegations that Caribbean was involved in the sale of more than 400,000 cases of Finlandia and 4,500 cases of Jack Daniel's, we are bound by Caribbean's admissions that it did not send purchase orders to Brown Forman, and that it was not compensated on the basis of the sales that it allegedly made. Because the well-pleaded facts in Caribbean's complaint do not support the conclusion that Caribbean procured and closed sales on Brown Forman's behalf, we find that the complaint fails to establish that Caribbean is plausibly entitled to relief under Law 21. Additionally, the allegations fail to establish that Caribbean enjoyed exclusivity in its sales endeavors. The district court properly dismissed Caribbean's Law 21 claim for failure to state a claim.