Court Opinion

ID: 194479
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:18:03+00
Date Added: 2024-06-11T12:06:04.346143
License: Public Domain

January 6, 1993
                      [NOT FOR PUBLICATION]

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                           

No. 92-1076

                        DRAFT-LINE CORP.,

                      Plaintiff, Appellant,

                                v.

                         THE HON COMPANY,

                       Defendant, Appellee.

                                           

No. 92-1173

                        DRAFT-LINE CORP.,

                       Plaintiff, Appellee,

                                v.

                         THE HON COMPANY,

                      Defendant, Appellant.

                                           

No. 92-1653

                        DRAFT-LINE CORP.,

                      Plaintiff, Appellant,

                                v.

                         THE HON COMPANY,

                       Defendant, Appellee.

                                           

          APPEALS FROM THE UNITED STATES DISTRICT COURT

                 FOR THE DISTRICT OF PUERTO RICO

          [Hon. Jose Antonio Fuste, U.S. District Judge]
                                                       

                                           

                              Before

                       Selya, Circuit Judge,
                                           
                  Coffin, Senior Circuit Judge,
                                              
                     and Cyr, Circuit Judge.
                                           

                                           

  Thomas Lincoln  with  whom Jose  A.  Feliciano  was on  brief  for
                                                
Draft-Line Corp.
  John F. Malley, III for The Hon Company.
                     

                                           

                                           

     COFFIN,  Senior  Circuit  Judge.   These  are  cross-appeals
                                    

arising out of a diversity suit based on the Puerto Rico Dealers'

Act, Act No. 75 of June 24, 1964, as amended, 10 L.P.R.A.    278-

278d.   Plaintiff, Draft-Line Corp., is a retail dealer in office

furniture;   defendant,  The   Hon   Company,  is   a   stateside

manufacturer and supplier.  After a ten year relationship, during

which time Draft-Line was Hon's sole  distributor in Puerto Rico,

Hon entered into sales distribution relationships with four other

Puerto Rico  dealers.  Draft-Line  filed a lawsuit  charging that

Hon illegally terminated  an exclusive dealership, i.e.,  without

"just cause."  The company claimed $248,604 for statutory damages

measured  by five  years of  past profits,  $500,000 for  loss of

investment and good  will, $500,000 for  loss of future  profits,

and $500,000 for "[l]oss of the business which was devoted solely

to the distributorship of defendant's products."  

     The  relevant history  of the  parties' relationship  can be

briefly stated.   In 1977  Hon began  a six  month trial  period,

treating  Draft-Line as an exclusive dealer.  When the period had

expired, there  was no further discussion of  exclusivity, but in

fact  Draft-Line was Hon's only Puerto Rico dealer for ten years.

Credit terms were the ultimate cause of the rift between supplier

and dealer.  They started out at net 30 days, then liberalized to

net 60  days, until 1981.  By this time Draft-Line was finding it

difficult to  make payments, since  the shipments from  Hon often

did not  arrive  until after  payments  were due.   In  1981  Hon

decided to require cash  in advance of shipment.   Draft-Line was

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unable  to  expand  its sales  of  Hon  products  because of  its

inability to  obtain financing that  would allow the  handling of

larger volume.  In 1987 Hon  announced that it was taking on four

other dealers, none of whom were given any better terms than were

given to Draft-Line.

     Over the  decade from 1977 to 1987, Draft-Line's orders from

Hon  (and Hon's total sales in Puerto Rico) averaged some $60,000

a  year.     Between  the  end  of  1987  and   1989,  after  the

establishment of the four new  dealerships, Hon's sales in Puerto

Rico multiplied ten-fold to $669,490 in 1989.  Draft-Line, on the

other  hand,  after a  two year  hiatus  in which  it practically

ceased  selling Hon products, resumed selling  at its former rate

of $60,000 in 1990.  It remains a Hon dealer.

     On this record, defendant moved for summary  judgment on the

grounds that, as a matter of law, it had established "just cause"

for  terminating Draft-Line's  exclusive  relationship  and  that

Draft-Line had failed  to identify any genuine issue  of material

fact as to damages.  The court's grant of summary judgment rested

solely on the complete absence of any factual showing of damages.

The court  observed, moreover, that  it was unlikely  that Draft-

Line had been  damaged.  Its own sales had  held up well, showing

that its customers had not been taken by the new  dealers, and it

was even likely that  Draft-Line would be  helped by the new  and

expanded exposure of Hon's products. 

     The  court addressed  what  it perceived  to be  plaintiff's

basic position  -- that  Law 75 authorizes  automatic damages  in

                               -4-

case  of any  violation.   The provision  invoked, 10  L.P.R.A.  

278b(d), states that in the event of a violation, a dealer may be

indemnified "to the extent of the damages caused him . . . on the

basis  of  the  following   factors:"  investment  in  plant  and

inventory,  good  will  (listing  such  determinants  as  age  of

dealership, volume of sales,  proportion of dealer's business and

of  Puerto Rican market), and profits realized over the past five

years.  

     The court reasoned that if any part of this statute  were to

be  read as justifying the automatic grant of damages, the result

would  be tantamount  to awarding  punitive damages,  contrary to

Puerto Rico policy.   It  cited the Puerto  Rico Supreme  Court's

pronouncement in  Marina Industrial, Inc. v.  Brown Boveri Corp.,
                                                                

114 D.P.R. 64, 90 (1983), that the factors  above noted are "only

guidelines  for the  fixing of  the damages and  do not  bind the

court to  automatically award  indemnity applying each  and every

factor."   Judge Cerezo quoted  from the same  source in Computec
                                                                 

Systems  Corp. v. General Automation, Inc., 599 F. Supp. 819, 825
                                          

(D.P.R.   1984):     "[The  factors]  are   not  to   be  imposed

automatically  without their  being proven  and connected  to the

breach of contract or detrimental act."

     We  conclude that the district court did not err in granting

summary judgment to defendant Hon on the ground that there was no

showing  by Draft-Line  that there  was a  genuine issue  of fact

relating to damages meeting the standards  of Anderson v. Liberty
                                                                 

                               -5-

Lobby, Inc., 477 U.S.  242 (1986), and Celotex Corp.  v. Catrett,
                                                                

477 U.S. 317 (1986).

     Hon,  inexplicably,  has  sought  to  mount  a  cross-appeal

challenging  a "finding"  that  it had  terminated its  exclusive

relationship with Draft-Line without "just cause."  It was unable

to  give  us  any authority  for  the  proposition  that a  party

receiving a favorable judgment from the  trial court has anything

to  appeal.   It  is true  that the  court  began its  opinion by

referring  to the  termination  of the  exclusive  nature of  the

parties' relationship  as improper.  But at  several other places

in the  opinion the court made it crystal clear that it could not

reach the "just  cause" issue  on the record  made and  therefore

could not give defendant summary judgment on this issue.  And its

phrasing of  its  final action  was solely  confined to  damages.

This cross-appeal should never have left counsel's desk.

     Affirmed. No costs.
                       

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