Court Opinion

ID: 2966187
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:50:16.624256+00
Date Added: 2024-06-11T11:43:08.893726
License: Public Domain

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<pre>                 United States Court of Appeals <br>                     For the First Circuit <br> <br> <br> <br> <br> <br>No. 99-1445 <br> <br>               BASIC CONTROLEX CORPORATION, INC.; <br>               POWERLINE INDUSTRIES CORPORATION, <br> <br>                     Plaintiffs, Appellants, <br> <br>                                v. <br> <br>                  KLOCKNER MOELLER CORPORATION, <br> <br>                       Defendant, Appellee. <br> <br> <br> <br>           APPEAL FROM THE UNITED STATES DISTRICT COURT <br> <br>                 FOR THE DISTRICT OF PUERTO RICO <br> <br>          [Hon. Jose Antonio Fuste, U.S. District Judge] <br> <br> <br> <br>                              Before <br> <br>                      Stahl, Circuit Judge, <br>                Campbell, Senior Circuit Judge, <br>                   and Lynch, Circuit Judge. <br>                                 <br>                                 <br>                                 <br>                                 <br>     Rafael Baella-Silva with whom Baella-Silva Law Office was on <br>brief for appellant. <br>     Ral M. Arias-Marxuach with whom Rossell M. Barrios-Amy and <br>McConnell Valds were on brief for appellee. <br> <br> <br> <br> <br> <br>February 7, 2000 <br> <br> <br> <br>                                 <br>                                 <br> <br>  STAHL, Circuit Judge.  Plaintiff Basic Controlex <br>Corporation ("Basic Controlex") appeals a judgment in favor of the <br>defendant, Klockner Moeller Corporation ("KMC").  For the following <br>reasons, we affirm. <br>                               I. <br>                           Background <br>  On October 28, 1986, KMC and Basic Industries Company, <br>Inc., executed a letter of intent whereby a to-be-formed company, <br>Basic Controlex, would become the exclusive agent to sell KMC <br>products in Puerto Rico.  Although the letter of intent left open <br>many details that the parties were to negotiate in good faith at a <br>later date, these further negotiations never took place.  <br>Nevertheless, both parties acted upon the letter as though it <br>constituted a binding contract.   <br>  On May 3, 1993, KMC informed Basic Controlex that it <br>intended to sell its products through other distributors in Puerto <br>Rico, "effective immediately."  The parties dispute whether KMC <br>actually began to do so.  Although Basic Controlex took no <br>immediate legal action in response to this letter, it did write to <br>KMC urging it to abide by its contractual obligations.  KMC <br>responded in November 1995 by asking Basic Controlex to agree to a <br>nonexclusive dealing arrangement and to waive any claims that it <br>might have against KMC under either the letter of intent or Puerto <br>Rico law.  Basic Controlex refused. <br>  Dwindling sales caused Basic Controlex to dissolve on <br>December 13, 1995 and to sell its assets to Powerline, which <br>assumed Basic Controlex's rights under the letter of intent as a <br>successor-in-interest.  On January 7, 1997, the two companies filed <br>this diversity action in the United States District Court for the <br>District of Puerto Rico, alleging violations of the Puerto Rico <br>Dealers' Act,  see P.R. Laws Ann. tit. 10,  278 (1964) ("Act 75"), <br>and other provisions of the Puerto Rico Civil Code ("the Code").   <br>  On September 3, 1998, the district court granted summary <br>judgment for KMC on the grounds that Basic Controlex had failed to <br>bring suit within the three-year statute of limitations established <br>by Act 75.  The court also concluded that, because Act 75 governed <br>the relationship between the two companies, its three-year statute <br>of limitations superceded the longer limitations period that <br>otherwise would have applied to the breach of contract claim under <br>the Code.  Basic Controlex then filed a cryptic Fed. R. Civ. P. <br>59(e) motion to alter or amend the judgment which, even generously <br>construed, largely reargued its summary judgment position.  The <br>court denied the motion.

                              II. <br>  As KMC points out in its appellate brief, Basic <br>Controlex's notice of appeal challenged only the district court's <br>denial of the Rule 59(e) motion.  While it is true that we review <br>the denial of such a motion only for a "manifest abuse of <br>discretion," Mariani-Giron v. Acevedo-Ruiz, 945 F.2d 1, 3 (1st Cir. <br>1991), the issues raised in both the motion and on this appeal are <br>purely legal, to a large extent repetitive of Basic Controlex's <br>summary judgment arguments, and unpersuasive even under a de novo <br>standard of review.  We thus reject them on the merits without <br>further exploring what it might mean to manifestly abuse one's <br>discretion in handing down a purely legal ruling.   <br>                              III. <br>  Basic Controlex's appeal raises three issues: (1) whether <br>the statute of limitations began to run as soon as Basic Controlex <br>knew of KMC's detrimental acts, or only once Basic Controlex's <br>dissolution caused the agreement to expire; (2) whether Basic <br>Controlex's degree of knowledge was a question for the jury; and <br>(3) whether the dismissal of Basic Controlex's breach of contract <br>claim under the Code was erroneous.  <br>                               A. <br>  Act 75 renders a supplier liable for impairing or <br>terminating a distribution agreement without "just cause."  P.R. <br>Laws Ann. tit. 10,  278(d) (1964).  The statute imposes a three- <br>year statute of limitations by providing that "[e]very action <br>arising from this chapter shall prescribe in three years reckoning <br>from the date of the definitive termination of the dealer's <br>contract, or of the performing of the detrimental acts, as the case <br>may be."  Id. (emphasis added).  We strictly construe a statute the <br>terms of which are clear and unambiguous.  See Pritzker v. Yari, 42 <br>F.3d 53, 68 (1st Cir. 1994). <br>  Basic Controlex contends that the statute of limitations <br>on its Act 75 claim did not begin to run until its dissolution as <br>a corporate entity definitively caused its agreement with KMC to <br>expire.  But as the district court properly concluded, Basic <br>Controlex had notice of its claim as soon as KMC announced its plan <br>to use other distributors in 1993.  That announcement constituted <br>the "performing of [a] detrimental act[]" under Act 75, sufficient <br>to trigger the statute. <br>                               B. <br>  We are similarly unpersuaded that a jury should have <br>evaluated Basic Controlex's knowledge in 1993 of KMC's detrimental <br>acts.  A genuine issue of fact exists only if a reasonable jury <br>could resolve it in favor of either party.  See Maldonado-Denis v. <br>Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994).  But summary <br>judgment is appropriate, and a case need not go to the jury, if <br>evidence for one side is "merely colorable, or is not significantly <br>probative."  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 <br>(1986) (citations omitted). <br>  On May 3, 1993, KMC expressly informed Basic Controlex of <br>its intent to use other distributors in alleged violation of the <br>parties' agreement.  Basic Controlex recognized the detrimental <br>effect that KMC's conduct would have on their relationship, and on <br>October 28, 1993, Basic Controlex's president responded that the <br>company would suffer "irreversible damage" because of KMC's <br>"repeated and deliberate acts . . . to unilaterally cancel our <br>agreement."  Although another Basic Controlex officer, Federico <br>Bengoa, tried to present in his deposition a different version of <br>events, he eventually acknowledged that the company knew in 1993 of <br>KMC's intent to impair the agreement.  On this undisputed evidence, <br>the district court appropriately concluded, as a matter of law, <br>that Basic Controlex knew of KMC's detrimental acts more than three <br>years before it filed suit.  See Cadle Co. v. Hayes, 116 F.3d 957, <br>960 (1st Cir. 1997).  <br>                               C. <br>  With respect to Basic Controlex's Code-based contract <br>claim, the Supreme Court of Puerto Rico has made it clear that, <br>when faced with a conflict between provisions in a specific statute <br>(here, Act 75) and the terms of a general law (here, Article 1864), <br>the provisions of the specific statute prevail.  See PaineWebber <br>Inc. v. First Boston (Puerto Rico) Inc., 1994 WL 909748, at *2 <br>(P.R. Offic. Trans. June 30, 1994) (invoking the principle of lex <br>specialis derogat lex generali).  Moreover,  the legislature's <br>intent to preempt general contract principles in enacting Act 75 <br>cannot seriously be questioned: <br>    The traditional provisions which regulate <br>  contracts between parties have shown their <br>  inefficacy in protecting the legitimate rights <br>  of the representative or agent, making it thus <br>  necessary to legislate in order to regulate <br>  this relationship and guarantee that <br>  manufacturers act in good faith, fairly, and <br>  not in an arbitrary manner, and to safeguard <br>  the rights and justified expectation of the <br>  representatives and agents inherent to the <br>  relationship. . . . This is a serious <br>  situation that we intend to remedy with the <br>  approval of this project. <br>Medina & Medina v. Country Pride Foods, Ltd., 858 F.2d 817, 820 <br>(1st Cir. 1988) (citing the legislative history).  The question <br>thus becomes whether Act 75 in fact governs Basic Controlex's <br>"breach of contract" claim.  Clearly it does.  <br>  A relationship is governed by Act 75 "irrespective[] of <br>the manner in which the parties may call, characterize or execute <br>such relationship," so long as the parties participate in the <br>supply and distribution of merchandise.  P.R. Laws Ann. tit. 10,  <br>278(b).  KMC began supplying Basic Controlex with merchandise on an <br>exclusive basis shortly after they reached their agreement in 1986.  <br>Act 75's statute of limitations therefore applied to the <br>relationship between the parties and overrode the limitations <br>period that otherwise might have applied.  See PaineWebber, 1994 <br>WL 909748, at *4 (applying the specific three-year statute of <br>limitations in Puerto Rico's Uniform Securities Act over the <br>general fifteen-year limitations period in Article 1864). <br>  Affirmed.  Costs to appellee.</pre>

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