Court Opinion

ID: 2964746
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:30:27.302161+00
Date Added: 2024-06-11T11:43:00.731102
License: Public Domain

USCA1 Opinion

	

                                [NOT FOR PUBLICATION] 

                            United States Court of Appeals
                                For the First Circuit
                                 ____________________

          No. 96-1888

                                GRAPHICS SUPPLY, INC.,

                                Plaintiff, Appellant,

                                          v.

                           POLYCHROME CORPORATION, ET AL.,

                                Defendants, Appellees.
                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                  [Hon. Juan M. Perez-Gimenez, U.S. District Judge]
                                               ___________________
                                 ____________________

                                        Before

                               Torruella, Chief Judge,
                                          ___________
                            Coffin, Senior Circuit Judge,
                                    ____________________
                              and Stahl, Circuit Judge.
                                         _____________

                                 ____________________

               Francisco M. Troncoso for appellant.
               _____________________
               Carlos M. Sanchez La Costa with whom  Pedro J. Santa-Sanchez
               __________________________            ______________________
          was on brief for appellees.

                                 ____________________

                                    June 23, 1997
                                 ___________________

               COFFIN,  Senior Circuit  Judge.   This  appeal concerns  the
                        _____________________

          nature  of  the  relationship  between  two  corporate  entities.

          Appellant   Graphics   Supply    contends   that   an   exclusive

          principal/dealer relationship existed  between it and  Polychrome

          Corporation,   which  was   impaired  by   Polychrome's  actions,

          allegedly in violation of Puerto Rico's Dealer Act.  The district

          court granted summary judgment for Polychrome.  We affirm.

               

                                        FACTS
                                        _____

               The two parties in the instant appeal are a manufacturer of

          lithographic supplies, Polychrome Corporation ("Polychrome"), and

          a Puerto Rico dealer of these supplies, Graphics Supply, Inc.

          ("Graphics").  Graphics contends that an exclusive dealer  

          relationship existed between the two entities, and that

          Polychrome took a series of actions that impaired the

          relationship, thereby violating Puerto Rico's Law 75, "the

          Dealer's Act,"  10 L.R.P.A. 278.  We review the pertinent facts

          in the light most favorable to Graphics.  See Grenier v. Cyanamid
                                                    ___ _______    ________

          Plastics, Inc., 70 F.3d 667, 671 (1st Cir. 1995).
          ______________

               Graphics has served as a dealer for Polychrome in the Puerto

          Rico market since 1975.  On January 1, 1989, a new Dealer

          Agreement was executed between the two (the "Dealer Agreement"),

          defining their arrangement as a standard dealer relationship. 

          While Graphics initially protested signing this new Agreement,

          contending that it wished to continue the exclusive relationship

                                         -2-

          it maintained existed between the two, Graphics eventually

          capitulated, at least partially in response to a letter from

          Polychrome's vice president for legal affairs, Barbara Cane,

          indicating that the two companies had never had an exclusive

          relationship and that Graphics' failure to sign the standard

          dealership agreement might result in a termination of the

          relationship altogether.1  Graphics asserted that it was assured

          by individuals at Polychrome that an exclusive relationship would

          continue to exist, the new Agreement notwithstanding; Polychrome

          disagrees with this assertion.  However, as of April 26, 1996,

          Graphics concedes that this is a non-exclusive agreement, and

          does not contend there were private assurances.   

               The dealings between the two companies apparently

          deteriorated over the following years, with Graphics contending

          that Polychrome improperly approached clients directly, and that

          Polychrome failed to keep Graphics adequately supplied, leading

          to losses by Graphics.  Graphics eventually filed suit against

          Polychrome, alleging violation of the Puerto Rico Dealer's Act,

          breach of contract, and tortious interference with the

                              
          ____________________

               1    Graphics cites  as support  for its contention  that an
          exclusive relationship had previously  existed a 1980 letter from
          James M. Graves, executive vice president of Polychrome, to Peter
          Javier, president of Graphics.  This letter (which confirmed  the
          substance of a  meeting between  Graves and Javier  in New  York)
          stated  that Polychrome  would  not  actively  pursue  additional
          distributors in  Puerto Rico, and that  Polychrome could continue
          to sell its products to another Puerto Rico company.  It did not,
          however, state  that the  relationship between the  two would  be
          exclusive.  

                                         -3-

          contractual relationship between Graphics and two of its

          employees.

               The district court initially granted Polychrome's Motion for

          Summary Judgment on four of the six counts brought by Graphics,2

          but refused to grant summary judgment on the remaining two 

          counts, stating that there was a genuine issue of material fact

          on Count IV, and that Count VI could not be dismissed where Count

          IV survived.3  However, the district court, on Polychrome's

          motion for reconsideration, with little explanation for its

          actions, subsequently granted summary judgment on these counts as

          well.  This appeal by Graphics followed.

                                      DISCUSSION
                                      __________

          1.   Standard of Review.
               __________________

               

               Our review of the district court's grant of summary judgment

          is de novo.   See Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir.
             __ ____    ___ _________    ____

                              
          ____________________

               2    These four counts  were as follows:   Count I: tortious
          interference   by   Polychrome    with   Graphics'    contractual
          relationship  with  two  of  its employees;  Count  II:  tortious
          interference by  Polychrome  with Graphics'  business  operations
          through a series  of actions; Count III:  violation of Law 75  by
          Polychrome by  selling its  products directly  to several  of its
          customers in Puerto Rico;  and Count V:  violation  by Polychrome
          of  Law  75 by  negotiating  with potential  distributors  in the
          Dominican Republic.

               3    Count  IV  alleged   that  Polychrome  breached   their
          contract  by purposely  failing  to  supply ordered  merchandise;
          Count  VI alleged  that Polychrome  failed  to honor  debit notes
          submitted by Graphics to Polychrome.  

                                         -4-

          1996).  We may affirm on the grounds cited by the district court,

          or on any independently sufficient ground.  See Garside v. Osco
                                                      ___ _______    ____

          Drugs, Inc., 895 F.2d 46, 49 (1st Cir. 1990). 
          ___________

               Graphics appeals three issues:  first, the district court's

          determination that a non-exclusive relationship existed between

          Polychrome and Graphics;4 second, the grant of summary judgment

          on Count IV; and finally, the grant of summary judgment on Count

          VI.  We address each in turn. 

               

          2.   Nature of the Dealer Agreement.
               ______________________________

               

               As noted above, Graphics contends that the district court

          erred in concluding that the parties did not have an exclusive

          relationship.  Our starting point in reviewing this determination

          must be the language of the Dealer Agreement between Graphics and

          Polychrome, as it is well established that the interpretation of

          such a contract under Puerto Rico law is limited to the terms of

          the Agreement, barring ambiguities in those terms or apparent

          inconsistency with the contracting parties' intent.  See Borschow
                                                               ___ ________

          Hosp. & Medical v. Cesar Castillo, 96 F.3d 10, 15 (1st Cir.
          _______________    ______________

          1996); see also Vulcan Tools of Puerto Rico v. Makita USA, Inc.,
                 ___ ____ ___________________________    ________________

          23 F.3d 564, 567 (1st Cir. 1994); Marina Ind. Inc. v. Brown
                                            ________________    _____

                              
          ____________________

               4    Graphics  casts this issue as an appeal on Counts III &
          V;  Polychrome,  on  the  other  hand,  addresses  this issue  as
          relating to Counts II and III.  The district court, for its part,
          primarily addressed this issue in its discussion of Count III.

                                         -5-

          Boveri Corp., 114 P.R. Offic. Trans. 64, 72 (1983).  Indeed
          ____________

          Article 1233 of the Puerto Rico Civil Code provides:

               If 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.  If the words should appear
               contrary to the evident intention of the
               contracting parties, the intention shall prevail. 
               31 L.R.P.A.   3471 (1991).

          The 1989 Dealer Agreement between Graphics and Polychrome states

          in section 1, "Purpose of Agreement": 

               The purpose of this Agreement is to set forth the
               relationship of Polychrome and dealer and to
               reduce to writing their entire Agreement. 
               Polychrome agrees to sell to dealer, on a
                                                    ____
               non-exclusive basis, such of the Polychrome
               ___________________
               Products of the Printing Division (Polychrome
               Products) that from time to time Polychrome may
               elect to make available to the Dealer (emphasis
               added).

          The language of the Agreement unambiguously states that the

          relationship established is a non-exclusive one.  Furthermore,

          the Agreement stipulates that it constitutes the full Agreement

          between the parties.  See Borschow, 96 F.3d at 16 (integration
                                ___ ________

          clause nullifies any other oral or written understandings reached

          between the two parties).5  In addition to these terms, the
                              
          ____________________

               5    We  note that  the conduct  in  Borschow was  much more
                                                    ________
          egregious than that alleged here.  Here, there is a dispute as to
          whether Polychrome ever made  representations to Graphics that an
          exclusive  relationship between  the two  was either  intended or
          contemplated.    In Borschow,  the  manufacturer's representative
                              ________
          explicitly assured the dealer  that an exclusive relationship was
          intended,  notwithstanding  the  non-exclusive  language  in  the
          contract between  the  two, and  the representative  subsequently
          sent the dealer a document to  that effect.  See Borschow Hosp. &
                                                       ___ ________________
          Medical v. Cesar  Castillo, 96  F.3d 10, 12-13  (1st Cir.  1996).
          _______    _______________
          However,  even  in that  situation,  the  court  adhered  to  the

                                         -6-

          Agreement contains other terms indicating that a non-exclusive

          relationship is contemplated.  For example, it explicitly

          reserves to Polychrome the right to sell directly to any class of

          customers and to appoint other dealers.

               Graphics offers several theories as to why we should

          disregard the Dealer Agreement's clear terms and find instead

          that an exclusive relationship existed: the company alleges that

          an earlier, 1980 agreement established an exclusive arrangement;

          it claims that the new Agreement was signed under duress; and

          most importantly, it alleges that the non-exclusive agreement was

          either altered or replaced by a new one reflected in a January 1,

          1992 letter from a Polychrome official to Graphics. 

               We note at the outset that much of the information upon

          which Graphics hangs its hat is patently inadmissible since the

          language of the Agreement is clear.  See Borschow, 96 F.3d at
                                               ___ ________

          15-16 (Puerto Rico Civil Code and parol evidence rule both

          preclude reference to extrinsic evidence where contract terms are

          clear).  It is therefore unnecessary to dwell on these

          allegations; however, we choose to dispose of them briefly.6

               The January 1, 1992 letter, which Graphics suggests is

          either a novation or a substitution of an exclusive Agreement for

          the non-exclusive one created by the Dealer Agreement, does not
                              
          ____________________

          language of the contract and found that the relationship  between
          the two was a non-exclusive one.  See id.
                                            ___ __

               6    The  parties'  intent  is  not  an issue  here,  as  no
          evidence has  been presented suggesting that  Polychrome intended
          an exclusive  relationship other than  Graphics' obviously  self-
          serving statements to this effect.

                                         -7-

          support Graphics' position.7  The letter nowhere says that it

          establishes an exclusive relationship.  Graphics contends that,

          because the letter sets out the terms of compensation Graphics

          was to receive for accounts pursued directly by Polychrome, it

          establishes that an exclusive relationship already existed

          between the two.  In fact, the letter merely specifies

          compensation rates for services to be rendered by Graphics to

          accounts pursued directly by Polychrome, in exact accordance with

          the terms stipulated in the Dealer Agreement,  7.8

               Under Law 75, where the conduct of the parties indicates an

          intent to continue operating according to the terms of an

          Agreement, this Agreement remains in continuing force between
                              
          ____________________

               7    Paragraph six of the letter states as follows:

               6.   Graphics Supply and Polychrome will prepare a
               joint target account list* [sic] (film and plates)
                     ____________________
               of accounts  $50,000 or larger  in annual  volume.
               In  situations  where competitive  prices  are not
               acceptable  to  Graphics  Supply, Polychrome  will
               pursue  the business  on  a direct  basis.   Where
               Polychrome direct business is obtained, Polychrome
               will compensate Graphics  Supply based upon annual
               account   volume.     This  compensation   is  for
               equipment  maintenance   and  emergency  inventory
               fulfillment services (emphasis in original).

               8    Section 7 of the Dealer Agreement states as follows:

               It is agreed that the execution of this Agreement shall
               not limit  in anyway  [sic] Polychrome's right  to sell
               any  Polychrome  Products  directly  to  any  class  of
               customers,  in any  geographical  location.    However,
               Polychrome, at its discretion, may  elect to compensate
               Dealer for  services performed  by Dealer for  accounts
               sold directly to Polychrome.

               The  letter states:    "This compensation  is for  equipment
          maintenance and emergency inventory fulfillment services."

                                         -8-

          them, despite any expiration date contained in the Agreement.9 

          See Gemco Latinoamerica, Inc. v. Seiko Time Corp., 623 F. Supp.
          ___ _________________________    ________________

          912, 918 (D.P.R. 1985).  We discern nothing in the record

          indicating that the parties intended anything other than to

          continue the relationship as set out in the Dealer Agreement. 

          Graphics contends that the 1992 letter reveals a new exclusive

          relationship, formed because Polychrome wished Graphics to

          transfer to it business that Graphics handled for a competitor;

          in return for doing so, Graphics alleges that Polychrome agreed

          to reappoint Graphics as its sole distributor within Puerto Rico. 

          In order for an Agreement to be novated, either the new agreement

          must expressly declare that it replaces the old agreement, or the

          old and the new agreements must be incompatible in all points. 

          See id. at 919 (citing Article 1158 of the Civil Code of Puerto
          ___ __

          Rico, 31 L.R.P.A.   3242).  However, as noted above, the letter

          mirrors the terms of the continuing non-exclusive Dealer

          Agreement.  Additionally, it defies credulity to view the letter

          as a replacement for the five page extremely detailed non-

          exclusive Agreement of January 1, 1989, impliedly -- but without

          explicitly saying so -- instituting an exclusive dealership. 

          Furthermore, it is logically impossible for Graphics to be

          "reappointed" to a status which the prior Agreement did not

                              
          ____________________

               9    We  note that  this  also counters  Graphics' assertion
          that the non-exclusive Dealer Agreement had expired.

                                         -9-

          confer.  The letter is therefore neither a novation nor the

          substitution of an exclusive relationship for the existing one.10

               The district court summarily dismissed the duress claim,

          stating that Graphics had failed to provide sufficient evidence

          to support it.  Our review of the record supports this

          conclusion, as the only evidence presented was Javier's statement

          to this effect in his Declaration.  As for the purported 1980

          Agreement (as reflected in the 1980 Graves letter, see supra note
                                                             ___ _____

          1), even were this to be seen as an exclusive relationship, which

          we doubt, it is clearly superseded by the 1989 non-exclusive

          Dealer Agreement.

               

          3. Summary Judgment on Count IV.
             ____________________________

               

               Count IV alleged that Polychrome breached the Dealer

          Agreement by purposefully failing to supply merchandise ordered

          by Graphics.  Law 75 specifically provides that "when the

          principal or grantor unjustifiably refuses or fails to fill the

          order for merchandise sent to him by the dealer in reasonable

          amounts and within a reasonable time," this shall be presumed to

                              
          ____________________

               10   We  also note that the novation theory may be waived as
          it  was   not  presented  below.     See  Teamsters,  Chauffeurs,
                                               ___  _______________________
          Warehousemen & Helpers  Union, Local No. 59 v.  Superline Transp.
          ___________________________________________     _________________
          Co., 953 F.3d 17, 21 (1st Cir. 1992). 
          ___

                                         -10-

          have impaired the relationship, in contravention of the law.  10

          L.R.P.A.   278a-1(b)(3) (1991).11  

               The district court, in its April 1, 1996 Opinion and Order, 

          originally denied summary judgment on Count IV, saying there was

          a genuine issue of material fact regarding Graphics' allegation

          that Polychrome had breached the Dealer Agreement by purposely

          failing to supply ordered merchandise.  However, in its April 25,

          1996 Order, the court stated only that it found that Polychrome

          was entitled to judgment as a matter of law on all counts

          (including Count IV) on the ground that Graphics had not provided

          any evidence suggesting the existence of any issues of material

          fact.  The court therefore issued an order on that same day

          dismissing the complaint, and later denied Graphics' motion for

          reconsideration. 

               We note again that in the summary judgment context, the

          party seeking to avoid summary disposition must bring forth

          specific, material facts showing a genuine issue for trial.  See
                                                                       ___

          Garside, 895 F.2d at 48 (a fact is material if it could
          _______

          potentially affect the suit's outcome); see also Nat'l
                                                  ___ ____ _____

          Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.
          ________________    ______________

          1995) (an issue concerning such a fact is genuine if a reasonable

          factfinder, examining all the evidence and drawing all reasonable

                              
          ____________________

               11   Law  75  applies  to both  non-exclusive  and exclusive
          agreements;  the  central  focus  is  whether  the  terms  of  an
          agreement between  two parties have  been breached.   See  Vulcan
                                                                ___  ______
          Tools v. Makita USA, Inc., 23 F.3d 564, 569 (1st Cir. 1994). 
          _____    ________________

                                         -11-

          inferences helpful to the party resisting summary judgment could

          resolve the dispute in this party's favor).  

               Graphics' complaint listed two items of support for its

          allegation of unfilled orders:  first, that Polychrome failed to

          supply Graphics with lithographic film for more than nine months

          (para 36); and second, that Polychrome failed to supply Graphics

          with all the merchandise it had ordered, including lithographic

          plates, and to supply Graphics on time with ordered merchandise. 

          These failures, Graphics maintains, establish that Polychrome

          intentionally impaired the relationship.  Graphics' president,

          Peter Javier, notes in his Declaration several occasions on which

          orders were shipped via air freight rather than via the normal

          methods; he maintains this expedited shipping was utilized by

          Polychrome because it was not filling orders in a timely manner. 

               Polychrome counters by referring to a 1994 sworn statement

          (the Colon declaration) indicating that the delays Graphics

          experienced were due to a number of factors, none of which was

          motivated by an intent to not fully supply Graphics.  These

          included problems arising from special pricing accorded to

          Graphics (which slowed the approval process), and lack of

          inventory available for shipment due to the shutdown and

          renovation of one of Polychrome's plants.  Indeed, Polychrome

          points to the air shipments as evidence of its attempt to keep

          Graphics as fully supplied as possible in the circumstances.  

               Graphics makes no effort to refute the detailed explanations

          in the Colon declaration.  We are left with no evidence that the

                                         -12-

          alleged delays were unjustifiable.  Moreover, many of the

          documents submitted by the parties that bear on this issue and

          might elucidate it are in Spanish, without English

          translations.12  Where the existing record is inconclusive, it is

          the appellant who must bear the brunt of the insufficient record

          on appeal.  See Donovan v. Ritchie, 68 F.3d 14, 17 (1st Cir.
                      ___ _______    _______

          1995); see also Real v. Hogan, 828 F.2d 58, 60 (1st Cir. 1987). 
                 ___ ____ ____    _____

          We are therefore compelled to affirm the district court's

          dismissal of this claim, as without further assistance, we are

          unable to discern support for Graphics' position in the record. 

          4. Count VI:  Jurisdictional Minimum.
             _________________________________

               

               Graphics' original Count VI was a claim for debit notes

          allegedly due in the amount of $9,500 (see Para 41 of Amended
                                                 ___

          Complaint).  On appeal, Graphics maintains that the allegation

          contained in Count VI was that Polychrome refused to honor debit

          notes and intentionally and maliciously withheld sums of money

          due to Graphics, specifically $5,522.46 in commissions for

          services provided to accounts to which Polychrome had sold

          directly.13  However, there is no mention in the original Count
                              
          ____________________

               12     Furthermore,  the  district  court  supplied  minimal
          reasoning for its volte face on this issue. 

               13   This amount is undisputed by the parties, although they
          differ  as to when payment  for this amount  was actually issued.
          Graphics  alleges that  the check  was issued  on March  3, 1995,
          whereas Polychrome says  it was paid  on December 19, 1994.   The
          photocopy of the check contained in the record bears the date "03
          03 95."

                                         -13-

          VI of allegedly withheld commissions.  We have repeatedly noted

          that, absent extraordinary circumstances, a legal theory not

          raised squarely in the lower court cannot be broached for the

          first time on appeal.  See Superline, 953 F.3d at 21.  However,
                                 ___ _________

          whether this claim is seen as for $9,500 in debit notes or

          $5,522.46 in withheld commissions, the amount falls below the

          jurisdictional minimum, and we therefore affirm its dismissal on

          this ground.   

               

          Affirmed.
          ________

                    

                    

                    

                                             -14-

                    

                                                   

               

                                            -15-