Opinion ID: 4554736
Heading Depth: 3
Heading Rank: 2

Heading: Dolo Claim

Text: We review the grant of summary judgment de novo and draw all reasonable inferences in favor of the non-moving party. Tang v. Citizens Bank, N.A., 821 F.3d 206, 215 (1st Cir. 2016) (citing Pérez–Cordero v. Wal–Mart P.R., Inc., 656 F.3d 19, 25 (1st Cir. 2011)). Summary judgment is appropriate when there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). An issue is 'genuine' if it can 'be resolved in favor of either party,' and a fact is 'material' if it 'has the potential of affecting the outcome of the case.' Tang, 821 F.3d at 215 (quoting Pérez– Cordero, 656 F.3d at 25). The party moving for summary judgment bears the initial burden of showing that no genuine issue of material fact exists. Celotex Corp., 477 U.S. at 323. Then, [the nonmoving party] must respond to a properly supported motion with sufficient evidence to allow a reasonable jury to find in its favor 'with respect to each issue on which [it] has the burden of -17- proof.' Prado Álvarez v. R.J. Reynolds Tobacco Co., 405 F.3d 36, 39 (1st Cir. 2005) (alteration in original) (quoting DeNovellis v. Shalala, 124 F.3d 298, 306 (1st Cir. 1997)). The non-movant cannot merely rely on an absence of competent evidence, but must affirmatively point to specific facts that demonstrate the existence of an authentic dispute. McCarthy v. Nw. Airlines, Inc., 56 F.3d 313, 315 (1st Cir. 1995) (citing Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990)). Under Puerto Rico contract law, [t]here is deceit when by words or insidious machinations on the part of one of the contracting parties the other is induced to execute a contract which without them he would not have made. P.R. Laws Ann. tit. 31, § 3408. Deceit, or dolo, can exist either in the 'formation' of a contract where a party obtains the consent of another through deceptive means, or in the 'performance' of a contractual obligation where a party knowingly and intentionally, through deceitful means, avoids complying with its contractual obligation. Generadora de Electricidad del Caribe, Inc. v. Foster Wheeler Corp., 92 F. Supp. 2d 8, 18 (D.P.R. 2000) (first citing P.R. Laws Ann. tit. 31, §§ 3404-3409 then citing P.R. Laws Ann. tit. 31, §§ 3018-3019). Furthermore, dolo can be considered either 'substantial' ('grave'), when it determines the consent of a party, or 'incidental' when it merely influences the consent. -18- Burk v. Paulen, 100 F. Supp. 3d 126, 134 (D.P.R. 2015) (quoting P.R. Laws Ann. tit. 31, § 3409 and P.C.M.E., 952 F. Supp. at 92). Substantial dolo nullifies the contract. See P.R. Tel. Co. v. SprintCom, Inc., 662 F.3d 74, 99 (1st Cir. 2011) (citing Colón v. Promo Motor Imps., Inc., 144 P.R. Dec. 659, 668 (1997)). Incidental dolo, on the other hand, merely gives rise to a claim for damages. Burk, 100 F. Supp. 3d at 134; see Portugués-Santana v. Rekomdiv Int'l, 657 F.3d 56, 59 (1st Cir. 2011) (affirming a jury verdict awarding damages for a dolo claim alleging [defendants'] false representations . . . fraudulently induced [the plaintiff] to enter into retainer agreements). Dolo, like fraud, may not be presumed, and the party alleging dolo bears the burden of proof and must demonstrate the intentional fault or bad faith of the person to whom it is imputed. Burk, 100 F. Supp. 3d at 135 (quoting P.C.M.E., 952 F. Supp. at 92); see Miranda Soto v. Mena Eró, 9 P.R. Offic. Trans. 628, 634 (1980). [I]n 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. Citibank Glob. Markets, Inc. v. Rodríguez Santana, 573 F.3d 17, 29 (1st Cir. 2009) (citing Cabán Hernández v. Philip Morris USA, Inc., 486 F.3d 1, 12 (1st Cir. 2007)); see also -19- Citibank v. Dependable Ins. Co., 21 P.R. Offic. Trans. 496, 512 (1988). The cases in which a party has been held to a contract by virtue of that party's sophistication involve a lack of evidence of bad faith on the part of the defendant, a plaintiff that is a sophisticated business entity, or both. Estate of Berganzo-Colón ex rel. Berganzo v. Ambush, 704 F.3d 33, 42 (1st Cir. 2013) (citations omitted); see, e.g., Cabán Hernández, 486 F.3d at 12 ([While] the appellants are reasonably well-educated, experienced individuals, all of whom have held responsible positions in the private sector . . . they have presented no significantly probative evidence of deception.); see also Citibank Glob. Markets, 573 F.3d at 29 (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.). As we mentioned above, the district court credited Feliciano with having alleged a claim for deceit, or dolo, under Puerto Rico contract law. See Feliciano-Muñoz, 2018 WL 8805486, at . Although the dolo claim was only first named as such in the proposed pretrial order,6 the amended complaint stated that 6 In presenting his dolo claim, Feliciano actually articulated the test for fraud, see R. at 31 (citing P.R. Power Auth. v. Action Refund, 472 F. Supp. 2d 133, 138–39 (D.P.R. 2006)). Puerto Rico Power Authority relies on the legal test articulated in In re Las Colinas, Inc., 294 F. Supp. 582, 598–99 (D.P.R. 1968). [T]he claims in In re Las Colinas centered around fraud, not dolo. See Huongsten Prod. Imp. & Exp. Co. v. Sanco Metals LLC, 810 F. Supp. -20- [t]his is a breach of contract arising from false representations and warranties whereby Feliciano reasonably relied on Rebarber's representations and warranties. Presumably responding to this allegation, Rebarber's motion for summary judgment argued that Feliciano, who had several professionals assisting him with the deal and who had prior experience purchasing airplanes, had been provided with lists of the airplanes' serial numbers, avionics, and equipment and had had the opportunity to visually inspect the airplanes with one of his consultants. Thus, Rebarber's motion posited that Feliciano had not reasonably relied on Rebarber's alleged representations. 7 In response, Feliciano argued that, notwithstanding the fact that he had retained experts to assist with the deal, Rebarber had forbidden him from conducting a mechanical inspection of the aircraft and [p]recisely[] for said 2d 418, 433 (D.P.R. 2011) (explaining that fraud and dolo are distinct concepts that should not be confused). 7 In addition, Rebarber's motion for summary judgment argued that based on the parties' exchanges prior to the SPA, Feliciano knew the deal was as is; Rebarber represented a truthful fact when [he] guaranteed that the company was in compliance with the Federal Aviation Regulations and that the certificates were in full effect and Feliciano admitted as much in his deposition; and that all expenses related to the aircraft post-dating the SPA were for routine maintenance, normal unexpected repairs or voluntary adding of non-regulatory equipment. However, because Rebarber failed to comply with several orders pertaining to discovery, this final argument, relying on expert reports that the court excluded, is not supported by the summary judgment record. -21- reason the SPA contain[ed] provisions for Plaintiff Feliciano to recover from Defendant Rebarber any expenses for repairs that Defendant Rebarber should have done before the SPA. In addition, Feliciano alleged that the airplanes' records used by his aviation consultant to evaluate the airplanes were not true or reliable. He also stated that the airplanes he had previously owned were different from AA's airplanes. In an effort to make sense of the parties' arguments, the district court concluded that Feliciano was essentially alleging dolo, akin to fraud in the inducement, which requires the asserting party to show (1) a false representation by the defendant; (2) the plaintiff's reasonable and foreseeable reliance thereon; (3) injury to the plaintiff as a result of the reliance; and (4) an intent to defraud. Feliciano-Muñoz, 2018 WL 8805486, at  (citing Kellogg USA v. B. Fernández Hermanos, Inc., 2010 WL 376326, No. 07-1213 (GAG/BJM), at  (D.P.R. Jan. 27, 2010)); see Portugués-Santana, 657 F.3d at 62 (citing P.R. Elec. Power Auth. v. Action Refund, 515 F.3d 57, 66 (1st Cir. 2008)); Lummus Co. v. Commonwealth Oil Ref. Co., 280 F.2d 915, 933 (1st Cir. 1960). The district court, accepting for purposes of summary judgment Feliciano's allegations that Rebarber had made misrepresentations about the airplanes, nevertheless, determined that the circumstances showed that Rebarber was a sophisticated -22- buyer who had not reasonably relied on Rebarber's representations about AA's compliance with FAA regulations or the airplanes' excellent condition. Feliciano-Muñoz, 2018 WL 8805486, at . On appeal, Feliciano argues that the district court erred in considering whether or not Feliciano was a sophisticated buyer. He explains that the cases the court relied on to set forth the law of sophisticated buyer all dealt with claims of serious dolo, where the party alleging deceit was seeking to invalidate the contract. See Kellogg USA, 2010 WL 376326, at ; Citibank Glob. Markets, Inc., 573 F.3d at 29; Citibank, 21 P.R. Offic. Trans. at 512; Miranda Soto, 9 P.R. Offic. Trans. 628. As Feliciano is only requesting damages for incidental dolo, he insists the law of sophisticated buyer is inapplicable. In the alternative, Feliciano posits that his education, social background and economic status w[ere] never put into evidence for the district court to consider the degree of his sophistication as a buyer, or the degree in which he relied on the false representations by Rebarber. Finally, Feliciano avers that there was reasonable reliance and that the district court's determination that Feliciano threw caution to the wind and chose to rely on Rebarber's representations . . . rather than insisting on a mechanical inspection was contrary to the evidence in the record. -23- First, we acknowledge that most of the cases applying the sophisticated party concept relate to the invalidation of contracts under a theory of serious dolo. See, e.g., Citibank Glob. Mkts., Inc., 573 F.3d at 29. But see Portugués-Santana, 657 F.3d at 62 (rejecting argument in a case of incidental dolo that plaintiff's education and business experience meant that his reliance on defendants' assurances was unreasonable not because the plaintiff's background was irrelevant, but because defendants' assurances were made following the contract's formation). Nonetheless, we find no support in these precedents for Feliciano's claim that the same principles should not be applied to a deceit claim seeking damages, and Feliciano has articulated no other reason to reject this approach. Therefore, we confirm that the district court applied the correct legal framework for the dolo analysis. 8 See Citibank Glob. Mkts., Inc., 573 F.3d at 29 (determining that appellant's argument against the application of the sophisticated party concept because the Puerto Rico Supreme Court has been expanding the law of dolo[] and . . . is increasingly viewing failures to speak during contract negotiations with a 8 Although we acknowledge that dolo can include a broader swath of conduct than just fraud in the inducement, see Burk, 100 F. Supp. 3d at 134-35, Feliciano does not contest this aspect of the district court's opinion and does not offer an alternative framework by which to assess his deceit claim. -24- jaundiced eye, even when the party . . . is sophisticated was not adequately supported by translated caselaw).9 Second, we find that Feliciano has failed to put forth evidence that would allow a reasonable factfinder to conclude that he reasonably relied on Rebarber's alleged misrepresentations.10 See Portugués-Santana, 657 F.3d at 59 (requiring the plaintiff's reasonable and foreseeable reliance on a party's false representation); see also P.R. Elec. Power Auth., 515 F.3d at 67 (Puerto Rico law places little weight on a sophisticated and experienced business party's assertion of unknowing reliance.). Feliciano faults the district court for ruling that he was a 9 Feliciano does not argue that the concept of sophisticated party should not apply in cases of serious dolo where a party is seeking to avoid the contract. 10For purposes of this analysis and because it is non-dispositive, see Celotex Corp., 477 U.S. at 323, we bypass the question of whether a reasonable jury could find that Rebarber falsely represented the condition of the airplanes as excellent and that AA was operating in compliance with FAA rules and assume this to be the case. See Feliciano-Muñoz, 2018 WL 8805486, at . However, we rule out that a jury could find that Rebarber misrepresented the number of pilots needed to operate AA. The district court did not address this claim, and Feliciano does not challenge the district court's omission on appeal. Furthermore, we find Feliciano's unsupported, conclusory statement that Rebarber misrepresented the number of pilots needed to operate AA -- contained in Feliciano's self-serving affidavit and seemingly contradicted by his own admission in his opposition to summary judgment -- is insufficient to give rise to a disputed material fact. See Torrech-Hernández v. Gen. Elec. Co., 519 F.3d 41, 48 (1st Cir. 2008). -25- sophisticated buyer when [his] education, social background and economic status was [sic] never put into evidence. Although Feliciano points to gaps in the record about his background, he cannot resist summary judgment by rest[ing] on mere allegations or denials, but must identify and allege specific facts showing a genuine issue for trial. Torrech-Hernández v. Gen. Elec. Co., 519 F.3d 41, 47–48 (1st Cir. 2008) (citing Colantuoni v. Alfred Calcagni & Sons, Inc., 44 F.3d 1, 6 (1st Cir. 1994)). He has failed to do so. Setting aside the question of whether Feliciano was a sophisticated buyer per se, we find that there is not sufficient evidence in the record to allow a jury to find reasonable reliance. Feliciano does not dispute that he was an experienced businessman, who had owned airplanes in the past, and that he hired three experts, including an aviation consultant, to advise him on this deal. To the extent that the district court found this to be dispositive as to whether it was reasonable for Feliciano to rely on Rebarber's alleged misrepresentations, we disagree. See Feliciano-Muñoz, 2018 WL 8805486, at . Surely, we can think of situations where a party with Feliciano's background, as evidenced in the record, is outsmarted by a conniving fraudster so that reliance might be reasonable. Yet, in his efforts to prove that he was not a sophisticated buyer, Feliciano essentially points out -26- the many ways his reliance on the alleged misrepresentations would not have been reasonable under the circumstances. See Wadsworth, Inc. v. Schwarz-Nin, 951 F. Supp. 314, 326 (D.P.R. 1996) ([T]he unreasonableness of the plaintiff's reliance may be regarded as sufficient evidence that he did not in fact rely upon the claimed false representation.). Puerto Rico law does not allow us to attribute [to P]laintiff an ingenuousness almost inexistent in the business[] world in which he moved, as Feliciano would have us do. Planned Credit of P.R., Inc. v. Page, 3 P.R. Offic. Trans. 341, 355 (1975). When we construe the facts in Feliciano's favor, as we must at this stage, his arguments foreclose the possibility that a reasonable factfinder could find in his favor, and he is not entitled to the inferences he seeks based on the evidence in the record. See Pina v. Children's Place, 740 F.3d 785, 796 (1st Cir. 2014) ([A] nonmovant cannot rely merely upon conclusory allegations, improbable inferences, and unsupported speculation. (internal quotation marks omitted) (quoting Dennis v. Osram Sylvania, Inc., 549 F.3d 851, 855-56 (1st Cir. 2008))). For example, Feliciano posits that because one of his experts advised him to walk away from the deal and he did not, he must have relied solely on Rebarber's warranties. Appellant's Br. 28 (emphasis added). This is not a reasonable inference. [B]lind faith -27- cannot vitiate the[] opportunity to detect the fraud. Kennedy v. Josephthal & Co., 814 F.2d 798, 805 (1st Cir. 1987). While this may not be relevant to a breach of contract claim, given the SPA's integration clause, the summary judgment record shows that Feliciano was on notice that Rebarber intended the deal to be as is and did not allow for a mechanical inspection of the airplanes. This further confirms that the dolo claim fails for want of reasonable reliance. If, on the one hand, the executed contract was as is, then a reasonable jury would have to conclude that any reliance by Feliciano was not reasonable. 11 Feliciano insisted in his deposition that he only conducted partial due diligence related to accounting and a long arm, soft appraisal; but he does not offer any evidence as to why a reasonable factfinder could find his reliance, in lieu of conducting due diligence, to be reasonable, given the circumstances and the stakes involved in the transaction. Feliciano also suggests that it would not have made a difference had his experts conducted due diligence because the information provided about the airplanes was not true or reliable. In the 11Take by analogy a first-time car buyer, who upon speaking to the current owner, decides to buy a forty-year-old car based solely on the owner's representation that the car is in excellent condition and complies with all current automobile standards, although the owner affirmatively prevents the prospective buyer from giving it a test drive or running the engine. -28- same breath, he argues that the airplane logbooks were not reliable because they did not show entries . . . of any discrepancies or maintenance issues, for a long time . . . in order to conceal that the aircrafts [sic] were not in airworthy condition. Feliciano's conclusion about the unreliability of the logbooks is based entirely on the face of them, and there is no evidence that this information was not available to Feliciano or his experts prior to the execution of the deal.12 If, on the other hand, the SPA -- contrary to Rebarber's stated intention -- was not as is, but contained, instead, an express warranty related to the condition of the assets, then a reasonable jury would here have to conclude that Feliciano did not actually rely on the alleged misrepresentation. Indeed, in this regard, Feliciano has argued that [p]recisely because he questioned Rebarber's alleged representation that the airplanes were in excellent condition, the SPA contain[ed] provisions for Plaintiff Feliciano to recover from Defendant Rebarber any expenses for repairs that Defendant Rebarber should have done before the SPA. Put otherwise, in this scenario, far from actually relying on a misrepresentation, Feliciano took contractual measures to safeguard against its falsity. Although we leave open the question of whether 12Nor did Feliciano put in the record the materials provided by Rebarber, which Feliciano claims contained false information. -29- the deal here was, in fact, as is, it is clear enough that, under either circumstance, the dolo claim fails. That there is no probative evidence indicating Feliciano's reasonable reliance does not create a triable issue. In fact, it is precisely because there is no evidence to support Feliciano's claim of reasonable reliance that there is not a question for the jury. McCarthy, 56 F.3d at 315 (As to issues on which the summary judgment target bears the ultimate burden of proof, she cannot rely on an absence of competent evidence . . . .). Based on the evidence in the record, we conclude that no reasonable jury could rule in Feliciano's favor as to the reasonable reliance issue.13 For the reasons explained above, we affirm the district court's decision to grant Rebarber's motion for summary judgment on the dolo claim. 13Nor do the cases Feliciano cites support his position that there was reasonable reliance here. See, e.g., Elias Bros. Rests. v. Acorn Enter., Inc., 831 F. Supp. 920, 926-27 (D. Mass. 1993) (finding that reli[ance] upon prior oral representations . . . was unreasonable as a matter of law because the agreement between the parties, which included a valid integration clause, disclaimed all earlier oral promises or representations between the parties so that any reliance on what the court determined was mere puffing or trade talk was unreasonable (quoting Schott Motorcycle Supply, Inc. v. Am. Honda Motor Co., 976 F.2d 58, 65 (1st Cir. 1992))). -30-