Court Opinion

ID: 194691
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:22:52+00
Date Added: 2024-06-11T15:11:20.530544
License: Public Domain

April 26, 1993
                    [NOT FOR PUBLICATION]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.

                          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.

                      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.

                          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.
                  

                             -10-