Opinion ID: 203914
Heading Depth: 2
Heading Rank: 3

Heading: Dolus/Dolo

Text: Notwithstanding our conclusion that the compromise between Fernandez and Smith Barney was valid and reaches all commission-related disputes, Fernandez argues that the presence of contractual deceit (dolus or dolo) nevertheless requires invalidation of the contract. Dolus or dolo is a form of contractual deceit that can serve to invalidate consent to an otherwise valid contract or compromise. See P.R. Laws Ann. tit. 31, § 4828 (providing that a compromise in which error, deceit, violence or forgery of documents is involved, shall be subject to section 3404 of this title). In turn, section 3404 provides that consent given by error, under violence, by intimidation or deceit shall be void. P.R. Laws Ann. tit. 31, § 3404. Nevertheless, the Puerto Rico Supreme Court has made clear that good faith on the part of contracting parties is always presumed, and one seeking to rely on dolo to invalidate a contract must rebut the presumption of good faith with evidence of intentional fault or bad faith. Citibank, 21 P.R. Offic. Trans. at 512 ( citing Canales v. Pan Am., 112 D.P.R. 329, 12 P.R. Offic. Trans. 411 (1982)); accord Cabán Hernández, 486 F.3d at 12. Moreover, in determining whether to permit invalidation of a contract on the basis of dolo, Puerto Rico courts place considerable weight on the education, social background, economic status, and business experience of the party seeking to avoid the contract. Cabán Hernández, 486 F.3d at 12 ( citing Miranda Soto v. Mena Ero, 109 P.R. Dec. 473, 9 P.R. Offic. Trans. 628, 634 (1980)). Applying these factors, we have declined to invalidate English-language releases signed by individuals, two of whom lacked fluency in English, and all of whom were educated at slightly beyond the high school level. Cabán Hernández, 486 F.3d at 9, 12. In the present case, of course, the party seeking to invalidate the contract was a wealthy and accomplished attorney experienced enough to have a portfolio that generated in excess of a million dollars in brokerage commissions. Fernandez's sophistication, coupled with his failure to allege sufficient, colorable bad faith on the part of Smith Barney, defeats any claimed dolo in this case. Recognizing this possibility, Fernandez maintains that the Puerto Rico Supreme Court has been expanding the law of dolo, and that it is increasingly viewing failures to speak during contract negotiations with a jaundiced eye, even when the party seeking to avoid a contract is sophisticated. In support of this proposition, Fernandez cites Ortiz Burnet v. El Mundo Broad. Corp., in which an equally divided Puerto Rico Supreme Court upheld a lower court's decision permitting a trial on the question of whether a party to lease negotiations had a duty to disclose to his commercially sophisticated counterparty a pre-existing agreement to sub-lease his space to third parties at a (possibly substantial) profit. 2006 T.S.P.R. 154, 2006 WL 3055516 (P.R. Oct. 18, 2006). It is not clear to us that either this case or Banco Popular v. Succession Talavera, 2008 T.S.P.R. 132, 2008 WL 3834118 (P.R. July 31, 2008), another case cited by Fernandez in support of his dolo argument, suggest a contrary outcome. In any event, English translations of these cases are not available in the bound volumes of the court's reporter, and Fernandez has not provided us with certified translations of these cases, as required our rules. See 1st Cir. Loc. R. 30(d). Consequently, these cases may not be used to support Fernandez's argument with respect to dolo. Lopez-Gonzalez v. Municipality of Comerio, 404 F.3d 548, 553 n. 4 (1st Cir.2005). Having determined that the counterclaim does not adequately raise a claim that the settlement was infected with dolo, we need not consider whether Article 1055 of the Puerto Rico Civil Code requires that the settlement agreement be set aside. Similarly, because we conclude that the district court correctly determined that the settlement agreement was a valid compromise reaching all commission-related claims between the parties we need not reach the question of whether the settlement agreement was a novation. Finally, we turn to Fernandez's argument based on agency law (mandato) principles. Fernandez argues that under general principles of agency law, Smith Barney was required to provide an accounting of its commission overcharges in order for any release to be valid. He further argues that the accounting of overcharges that Smith Barney prepared for his review was insufficient to satisfy its obligations under agency principles and their attendant fiduciary duties. Assuming arguendo that Smith Barney was required to render an accounting, [11] the detailed forty-plus page analysis of the overcharges satisfied Smith Barney's obligations on that score. Smith Barney's accounting detailed all transactions, commissions charged, and the amount of commission that Smith Barney believed should have been charged. We discern nothing in Puerto Rico agency law requiring anything more; if Fernandez believed he should have been charged a different commission, it was incumbent on him to engage in further negotiations. We have reviewed the remainder of Fernandez's contentions and find them without merit, and therefore affirm the district court's dismissal of Fernandez's counterclaim on the basis of release.