Court Opinion

ID: 2961679
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:46:20.224765+00
Date Added: 2024-06-11T11:40:04.499882
License: Public Domain

USCA1 Opinion

	

          January 6, 1993                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                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                                         -3-          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.               ________  ________                                         -6-