Court Opinion

ID: 2961934
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:50:01.81856+00
Date Added: 2024-06-11T15:01:24.855591
License: Public Domain

USCA1 Opinion

	

          April 26, 1993                                [NOT FOR PUBLICATION]                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 92-2372                           CONSULTANTS IN TECHNOLOGY, INC.,                               FERNANDO SULSONA-NIEVES,                         ROSA MERCEDES RAMIREZ-FREYRE AND THE                        CONJUGAL PARTNERSHIP COMPOSED BY THEM,                               Plaintiffs, Appellants,                                          v.                                ELIAS CRUZ-FERNANDEZ,                        FLORENCIO BRITO-MONTERO, AND JANE DOE                    AND THE CONJUGAL PARTNERSHIP COMPOSED BY THEM,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                    [Hon. Jaime Pieras, Jr., U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________               Wallace Vazquez Sanabria, on brief for appellants.               ________________________               Enrique  G. Figueroa  Llinas,  Jos  F.  Cardona Jimenez  and               ____________________________   ________________________          Rivera  Iturbe &  Cardona Jimenez,  on brief  for appellee  Elias          _________________________________          Cruz-Fernandez.               Manuel  Moreda-Toledo,  Marisa  Rivera-Barrera and  Sweeting               _____________________   ______________________      ________          Gonzalez Cestero  & Bruno, on brief for appellee Florencio Brito-          _________________________          Montero.                                 ____________________                                 ____________________                      BOWNES,   Senior   Circuit   Judge.     Plaintiffs,                                ________________________            Consultants in  Technology,  Inc. ("CTI"),  Fernando  Sulsona            Nieves   ("Sulsona")  and   Rosa   Mercedes  Ramirez   Freyre            ("Ramirez"), appeal  the district  court's  order of  summary            judgment  entered   against  them   in  their  suit   against            defendants Elias Cruz Fernandez  ("Cruz") and Florencio Brito            Montero ("Brito")  for violations of federal  securities laws            and  various  laws  of  Puerto  Rico.    Defendants'  summary            judgment motion was unopposed.  We affirm.                                          I.                                          I.                                      Background                                      Background                                      __________                      CTI,  a  Puerto   Rico  corporation  controlled  by            Sulsona  and Ramirez,  acquired  the stock  of Libreria  Alma            Mater,  Inc. ("Alma  Mater"),  a corporation  engaged in  the            wholesale and retail  distribution of textbooks.   Plaintiffs            also engaged in negotiations with defendants for the purchase            of two other corporations engaged in the publication and sale            of  textbooks,  Librotex,  Inc.  ("Librotex")  and  Editorial            Librotex,  Inc. ("Editorial  Librotex").   When  the sale  of            Librotex  and  Editorial  Librotex  fell  through, plaintiffs            brought suit for alleged  violations of "the Securities Act,"            "the  Securities  and   Exchange  Act,"   and  "the   Uniform            Security's  [sic] Laws  of Puerto  Rico," and  sought further            relief under Puerto Rico tort and contract laws.   Plaintiffs            alleged that they were  fraudulently induced to purchase Alma                                         -2-            Mater's stock  by defendants' promise to  sell plaintiffs the            stock of the other two publishing companies.                      Plaintiffs  moved  for  partial  summary  judgment,            which motion was  opposed by defendants  on the grounds  that            plaintiffs'  motion  failed to:    (1)  "present an  adequate            statement of  the relevant substantive  law to be  applied to            the  facts of  this case;"  and (2)  "comply with  Local Rule            311.2  which  in  its  pertinent   portion  establishes  that            `motions shall  be accompanied by a brief which shall contain            a  concise statement of reasons in support of the motion, and            citations of authorities upon which the movant relies.'"  The            district  court agreed  and  struck  plaintiffs'  motion  for            summary judgment from the record.                      Defendants  moved  for  summary  judgment   on  the            grounds that:  (1) "the Security Act, 15 USCA  77[q](a), does            not provide a private cause of  action for fraud in the  sale            of  securities;"  (2) "the  Security  Exchange  Act, 15  USCA             78(j)(b), [17] CFR  [240], Rule 10[]b[][-][]5,  fraud action            is limited to the  actual sale or purchase of securities.  No            private  action is provided in  cases where an  offer to sale            [sic]  stocks is not consummated.  In this case, the offer to            sell Librotex and Editorial [Librotex]  was not consummated;"            and (3) there were, in any event, no facts  that a reasonable            jury  could find to support  the contention that  the sale of            Alma Mater was fraudulently induced by promises that the sale                                         -3-            of  Librotex  and  Editorial  Librotex would  closely  follow            plaintiffs' purchase of Alma Mater.                      On June 16, 1992, when plaintiffs failed to respond            to defendants'  summary judgment  motion,  after having  been            granted two extensions of time in  which to do so, the  court            deemed  defendants' motion  to  be unopposed.   Despite  that            ruling,  plaintiffs filed a response on July 10 in which they            claimed that their complaint relied not only on section 17 of            the Securities Act of 1933,  but also on sections 12 and  15.            The  district  court  disregarded  the  plaintiffs'  untimely            response.                      The   district   court   agreed  with   defendants'            characterization of the complaint, and, in an order issued on            July 31, held that:  (1) there is no implied private right of            action in section  17(a) of  the Securities Act  of 1933,  15            U.S.C.   77q(a);  and (2) plaintiffs  lacked standing to  sue            under Rule 10b-5 because  plaintiffs were not "purchasers" of            either  Librotex  or  Editorial  Librotex.    After  granting            summary judgment, the court dismissed the pendent Puerto Rico            law  claims, and  awarded costs  and  attorney's fees  on the            ground that plaintiffs  had failed to file  a timely response            to defendants' summary judgment motion.                      The  court subsequently  ordered plaintiffs  to pay            costs  in the  amount  of $3,425.01,  but denied  defendants'            motion  for attorney's fees in  the amount of $28,745 because                                         -4-            the submitted bill was  neither sufficiently detailed nor was            it  prepared  contemporaneously  with  the   work  performed.            Defendants filed  a motion  for reconsideration of  the order            denying  the award of attorney's fees and to amend the motion            for attorney's fees.   The record does  not indicate whether,            when or how the district court disposed of that motion.                      Plaintiffs  appeal  the district  court's  grant of            summary  judgment,  dismissal  of  pendent  Puerto  Rico  law            claims, and the award of attorney's fees.                                         II.                                         II.                                  Standard of Review                                  Standard of Review                                  __________________                      Review  of  a  summary judgment  order  places this            court on  a well-worn and familiar  path.  Rule  56(c) of the            Federal  Rules  of  Civil  Procedure  provides  that  summary            judgment  is  appropriate  "if  the  pleadings,  depositions,            answers to interrogatories, and admissions on  file, together            with  the affidavits, if any,  show that there  is no genuine            issue as to any  material fact and  that the moving party  is            entitled to a judgment as a matter of  law."  Fed. R. Civ. P.            56(c).  Interpreting this rule, the Supreme Court held that                      the plain language of Rule 56(c) mandates                      the  entry  of  summary  judgment,  after                      adequate  time  for  discovery  and  upon                      motion, against a party who fails to make                      a  showing  sufficient  to establish  the                      existence of an element essential to that                      party's  case, and  on  which that  party                      will bear the burden of proof at trial.                                         -5-            Celotex Corp. v.  Catrett, 477  U.S. 317, 322  (1986).   Rule            _____________     _______            56(e) provides that                      [w]hen a  motion for summary  judgment is                      made  and supported  as provided  in this                      rule,  an adverse party may not rest upon                      the  mere allegations  or denials  of the                      adverse   party's   pleadings,  but   the                      adverse party's response  must set  forth                      specific  facts showing  that there  is a                      genuine issue for trial.  If the  adverse                      party  does  not   so  respond,   summary                      judgment,   if   appropriate,  shall   be                      entered against the adverse party.            Fed. R. Civ. P. 56(e).                      Review of a district court's summary judgment order            is plenary, and we review the entire record in the light most            favorable  to the nonmoving party.  Fragoso v. Lopez, No. 92-                                                _______    _____            2046,  slip op.  at 18 (1st  Cir. April 5,  1993); Mesnick v.                                                               _______            General Elec. Co., 950  F.2d 816, 822 (1st Cir.  1991), cert.            _________________                                       _____            denied, 112  S. Ct. 2965  (1992); Griggs-Ryan  v. Smith,  904            ______                            ___________     _____            F.2d  112, 115 (1st Cir.  1990); Garside v.  Osco Drug, Inc.,                                             _______     _______________            895 F.2d 46, 48 (1st Cir. 1990).                      In  this  case,  we  are faced  with  the  somewhat            unusual  circumstance of an appeal of a summary judgment by a            nonmoving  party who  failed to  oppose the  summary judgment            motion.   Local  Rule 311.12  of the  United States  District            Court for  the District of Puerto Rico  provides, in relevant            part:                         Upon any motion for  summary judgment,                      there  shall be served  and filed annexed                      to  the motion  a  separate,  short,  and                      concise statement of  the material  facts                                         -6-                      as  to  which the  moving  party contends                      there is no genuine issue to be tried and                      the  basis of such  contention as to each                      material  fact,   properly  supported  by                      specific reference to the record.                          All  material facts  set forth  in the                         ______________________________________                      statement  required to  be served  by the                      _________________________________________                      moving  party   will  be  deemed   to  be                      _________________________________________                      admitted   unless  controverted   by  the                      _________________________________________                      statement  required to  be served  by the                      _________________________________________                      opposing party.                      ______________            (Emphasis  supplied.)   This  court  has consistently  upheld            Local  Rule 311.12.    Rivas v.  Federacion de  Associaciones                                   _____     ____________________________            Pecurias, 929 F.2d 814,  816 n.2 (1st Cir. 1991);  Laracuente            ________                                           __________            v. Chase Manhattan  Bank, 891  F.2d 17, 19  (1st Cir.  1989);               _____________________            Alvarado-Morales v.  Digital Equip. Corp., 843  F.2d 613, 615            ________________     ____________________            (1st Cir. 1988).                      It is  firmly established  that after  movants aver            pursuant to  Fed. R. Civ. P. 56(c) that there is  "an absence            of evidence to support  the nonmoving party's case," Celotex,                                                                 _______            477  U.S.  at 325,  the burden  shifts  to the  nonmovants to            establish the  existence  of at  least one  genuine issue  of            material fact.  Garside, 895 F.2d  at 48.  On this appeal, we                            _______            read  the  record  in   the  light  most  favorable   to  the            plaintiffs,  with  the  exception  of  those  material  facts            asserted by  defendants in support of  their summary judgment            motion  which facts  were  admitted by  plaintiffs when  they            failed to  timely respond  to defendants' motion  for summary            judgment.                                         -7-                                         III.                                         III.                                      Discussion                                      Discussion                                      __________                      Based on  defendants' recitation of  material facts            which accompanied their motion  for summary judgment, and the            rest of  the record  before it,  the district  court properly            granted  summary   judgment  as  to  plaintiffs'   claims  of            securities  fraud.    The   district  court  found  that  the            following evidence was uncontested:                         1.   The  offer to  sell the  stock of                      Librotex   and  Editorial   Librotex  was                      limited  to those  two companies  and was                      independent of the sale of Alma Mater.                         2.    Plaintiffs   have  admitted   on                      several  different   occasions  that  the                      purchase   of   Librotex  and   Editorial                      Librotex  was   not  consummated  because                      plaintiffs   lacked   the  financing   to                      purchase the two companies.                         3.  In the agreement which consummated                      the  sale of Alma Mater to plaintiffs, no                      representation  was  made  by  defendants                      regarding the future sale of Librotex and                      Editorial Librotex; in fact, in clause 17                      of  the  agreement,  the  parties  stated                      without   limitation    that   no   other                      agreements  existed  between  them as  of                      that date.                      The   court  reached  these  conclusions  based  on            documentary  evidence provided  by defendants  in support  of            their   motion  for   summary   judgment.     That   evidence            demonstrated that the  Alma Mater transaction was  completely            independent of any contemplated sale of Librotex or Editorial            Librotex.  Defendants' statement of undisputed material facts            was  adequately supported by defendants' sworn statements and                                         -8-            deposition  testimony.   Indeed,  at  the  initial scheduling            conference,  the  parties  stipulated  that  the  Alma  Mater            agreement "embodied  the entire understanding  of the parties            and  that  there  were  no  further  or  other  agreements or            understandings  written  or  oral   in  effect  between   the            parties."   The Alma Mater agreement  contained no mention of            the prospective sale of Librotex or Editorial Librotex.                      Plaintiffs offered no facts to  support their claim            that  defendants falsely represented  to plaintiffs  that the            Alma  Mater  sale was  linked to  the  sales of  Librotex and            Editorial  Librotex.   Therefore  plaintiffs  failed to  meet            their  burden to support their  claim as required  by Fed. R.            Civ. P.  56(e).   We see  no reason to  disturb the  district            court's findings  of undisputed  facts, and  therefore affirm            the district  court's grant of  summary judgment.   We  note,            however,  that  our  decision  should  not  be  taken  as  an            affirmance of the district court's holding regarding  private            rights of action under section 17(a) of the Securities Act of            1933,  15  U.S.C.    77q(a).   That  issue has  not  yet been            decided by  either the  Supreme Court or  the First  Circuit.            See Eichler v. Berner,  472 U.S. 299, 304 n.9  (1985); Cleary            ___ _______    ______                                  ______            v. Perfecture, Inc., 700 F.2d 774,  779 (1st Cir. 1983).  The               ________________            district court  need not have  reached that question  in this            case,  especially  when  plaintiffs  failed  to  identify the                                         -9-            specific  sections of  the federal  securities laws  on which            they based their claims.                      The  district  court  appropriately  dismissed  the            pendent state law  claims.   As the Supreme  Court has  held,            "when the federal-law claims have  dropped out of the lawsuit            in its  early stages, and  only state-law claims  remain, the            federal court should decline  the exercise of jurisdiction by            dismissing  the  case  without  prejudice."   Carnegie-Mellon                                                          _______________            Univ.  v. Cohill, 484 U.S.  343, 350 (1987);  see also United            _____     ______                              ___ ____ ______            Mine Workers v.  Gibbs, 383 U.S. 715 (1966).             ____________    ______                      We  decline to  discuss plaintiffs' claim  that the            court's award of  attorney's fees was improper.   Under Local            Rule 11 of the First Circuit Court of Appeals, "[i]n addition            to an appellant's  duties under FRAP 11(a),  it is appellants            responsibility  to  see that  the  record,  as certified,  is            complete."  In  the absence of a complete record, we lack any            basis  to  set  aside  the district  court's  order  awarding            attorney's fees, assuming such an order was entered.                      Affirmed.                      Affirmed.                      ________                                         -10-