Court Opinion

ID: 2965338
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:38:53.555499+00
Date Added: 2024-06-11T11:43:06.773268
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<pre>                  UNITED STATES COURT OF APPEALS <br>                      FOR THE FIRST CIRCUIT <br>                       ____________________ <br> <br>No. 97-1802 <br> <br>            EUROMOTION, INC. d/b/a PRIME WHOLESALERS, <br> <br>                      Plaintiff, Appellant, <br> <br>                                v. <br> <br>                   BMW OF NORTH AMERICA, INC., <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. Juan M. Perez-Gimenez, U.S. District Judge] <br> <br>                       ____________________ <br> <br>                              Before <br> <br>                      Boudin, Circuit Judge, <br> <br>           Campbell and Bownes, Senior Circuit Judges. <br> <br>                                  <br>                       ____________________ <br> <br>     Rafael Escalera-Rodriguez, with whom Edna Hernandez and <br>Richard & Escalera, were on brief for appellant. <br>     Manuel A. Guzman, with whom Carlos A. Steffens and Manuel A. <br>Guzman Law Offices, were on brief for appellee. <br> <br>                       ____________________ <br> <br>                        February 23, 1998 <br>                       ____________________ <br>      

           CAMPBELL, Senior Circuit Judge.  Euromotion, Inc. <br>    ("Euromotion") brought this diversity action against BMW of <br>    North America, Inc. ("BMW"), alleging that BMW had terminated <br>    Euromotion's dealership agreement without good cause in <br>    violation of Puerto Rico's Law 75 of June 24, 1964, P.R. Laws <br>    Ann. tit. 10,  278 et seq. ("Law 75"), and that BMW had failed <br>    to negotiate with Euromotion in good faith concerning a <br>    dealership, thereby violating Article 1802 of the Puerto Rico <br>    Civil Code, P.R. Laws Ann. tit. 31,  5141.  BMW moved for <br>    summary judgment arguing, inter alia, that the undisputed facts <br>    established that Euromotion had never been a BMW dealer, and <br>    that BMW had never in fact negotiated with Euromotion.  The <br>    district court granted BMW's motion.  We affirm the district <br>    court's grant of summary judgment. <br>                            I. BACKGROUND. <br>             We state the facts in the light most favorable to <br>    Euromotion.  See Casas Office Machs., Inc. v. Mita Copystar <br>    Am., Inc., 42 F.3d 668, 684 (1st Cir. 1994).   <br>             Beginning in 1991, Euromotion, an independent vendor <br>    of automobiles, without encouragement from BMW, began to <br>    perform many of the functions of a BMW dealer in Puerto Rico.  <br>    It bought BMW automobiles from independent dealers in Florida <br>    for resale in Puerto Rico, maintained an extensive BMW <br>    inventory, acquired sales facilities, and advertised having BMW <br>    automobiles for sale. <br>             BMW had no authorized dealer of its own in Puerto <br>    Rico, and in 1993 began to search for an establishment to serve <br>    as its exclusive dealer there.  Euromotion's president <br>    corresponded with BMW about Euromotion's expressed desire to <br>    become the exclusive BMW dealer in Puerto Rico.  In October <br>    1993, BMW interviewed Euromotion's president and other <br>    potential candidates for the dealership position. <br>             Around the same time, BMW instituted an export <br>    prohibition on its automobiles.  As a result of that <br>    prohibition, Tom Bush BMW, an independent BMW dealer in <br>    Florida, informed BMW and Euromotion that it would not continue <br>    to sell cars to Euromotion. <br>             Sometime in October or November of 1993, John <br>    Ciontea, the area manager for BMW, met with Manuel Soltero, <br>    Euromotion's president (the "1993 meeting").  Also present at <br>    this meeting were Luis Rios, an automobile dealer used by <br>    Euromotion, and Carlos Kirigin, a sales representative for a <br>    Florida BMW dealership by the name of Fields BMW.  At this <br>    meeting, Soltero expressed concern that BMW's newly implemented <br>    prohibition on exports would impede Euromotion's ability to <br>    obtain BMW's cars.  In response, Ciontea gave Kirigin (and <br>    through him, Fields BMW) the "green light" to sell cars and <br>    other paraphernalia to Euromotion.  According to Euromotion, <br>    BMW encouraged it to develop the Puerto Rican market and to <br>    keep its inventories high.  BMW also told Euromotion's <br>    president not to worry about the lack of a written dealer <br>    application packet because "everything would be put [i]n black <br>    and white" eventually. <br>             Euromotion contends that the 1993 meeting established <br>    a dealer relationship with BMW.  After the meeting, Euromotion <br>    sold only BMW's cars and attempted to develop the Puerto Rican <br>    market for such cars.  Euromotion obtained these cars from <br>    Fields BMW in Florida at a wholesale price.  Although it is <br>    clear from the record that BMW did not have the authority to <br>    impose any terms or conditions on Fields BMW regarding its sale <br>    of automobiles to Euromotion, and although these sales were <br>    negotiated between Fields BMW and Euromotion, Fields BMW would <br>    have charged Euromotion a higher price if the 1993 meeting had <br>    not taken place.  Euromotion also obtained brochures, T-shirts, <br>    and other BMW-related advertising materials from Fields BMW.  <br>    Further, the BMW-authorized service representative in Puerto <br>    Rico gave full warranty service to cars sold by Euromotion. <br>             The parties agree that Euromotion never bought a car <br>    directly from BMW, never placed a purchase order with BMW, <br>    never received any promotional material directly from BMW, <br>    never consulted or negotiated directly with BMW the prices or <br>    terms of its sales relationships with any of BMW's independent <br>    dealers, and never saw a copy of BMW's dealership agreement. <br>             On December 13, 1993, Soltero acknowledged in a <br>    letter written to BMW that BMW had "a lot of candidates for the <br>    [BMW dealership] franchise . . . [that] I understand you have <br>    to evaluate."  Soltero expressed the "hope that before [BMW <br>    picked its] candidate [it] should come to Puerto Rico and give <br>    [Euromotion] a chance to show our business, meet our great <br>    staff and finally demonstrate why we are the best choice to <br>    proudly represent the BMW franchise in Puerto Rico."  Soltero <br>    also asked BMW to "always remember that [Euromotion] already <br>    control[s] the BMW market and everybody recognize[s] us as the <br>    BMW dealer in Puerto Rico." <br>             On June 22, 1995, BMW announced in the Puerto Rican <br>    papers that it had chosen a company called "Autogermana" to <br>    serve as the exclusive BMW dealer for Puerto Rico.  Sometime <br>    after Autogermana was appointed as BMW's authorized dealer in <br>    Puerto Rico, Fields BMW ceased to give Euromotion the benefit <br>    of advantageous prices and business terms. <br>             On June 25, 1996, Euromotion filed the present action <br>    alleging that BMW had violated Law 75 and the duty of good <br>    faith and fair dealing imposed by Article 1802 of the Puerto <br>    Rican Civil Code.  Thereafter, Euromotion filed a motion for <br>    preliminary injunctive relief under Law 75, which the court <br>    denied after discovery and a hearing.  On October 24, 1996, BMW <br>    filed a motion for summary judgment on both of Euromotion's <br>    claims. <br>             On May 21, 1997, the district court allowed BMW's <br>    summary judgment motion.  On the Law 75 claim, the district <br>    court found that Soltero's letter of December 13, 1993, wherein <br>    he acknowledged that there were many contenders for BMW to <br>    evaluate for a possible Puerto Rican dealership, established <br>    conclusively that an actual dealer relationship did not then <br>    exist as a result of the prior meeting between Ciontea and <br>    Soltero.  On the good faith claim, the court found that none of <br>    the interactions between BMW and Euromotion constituted <br>    negotiations.  Since no negotiations took place, the court <br>    reasoned that BMW was not under a duty to negotiate in good <br>    faith.  The court did not address BMW's statute-of-limitations <br>    defense.  On May 22, 1997, the court dismissed the case with <br>    prejudice.  Euromotion has appealed.  We affirm. <br>                       II. STANDARD OF REVIEW. <br>             We review a grant of summary judgment de novo, <br>    viewing "the entire record in the light most hospitable to the <br>    party opposing summary judgment, indulging all reasonable <br>    inferences in that party's favor."  Griggs-Ryan v. Smith, 904 <br>    F.2d 112, 115 (1st Cir. 1990) (citations omitted).  Summary <br>    judgment is appropriate only if "the pleadings, depositions, <br>    answers to interrogatories, and admissions on file, together <br>    with the affidavits, if any, show that there is no genuine <br>    issue as to any material fact and that the moving party is <br>    entitled to judgment as a matter of law."  Fed. R. Civ. P. <br>    56(c).     <br>             Summary judgment is properly awarded against a party <br>    who, "after adequate time for discovery . . . fails to make a <br>    showing sufficient to establish the existence of an element <br>    essential to that party's case, and on which that party will <br>    bear the burden of proof at trial."  Celotex Corp. v. Catrett, <br>    477 U.S. 317, 322 (1986).  Not all disputes preclude summary <br>    judgment, only those that relate to genuine issues of material <br>    fact.  "The evidence manifesting the dispute must be <br>    'substantial,' going beyond the allegations of the complaint."  <br>    Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir. 1975) (citations <br>    omitted).  Further, "neither conclusory allegations, improbable <br>    inferences, and unsupported speculation, nor [b]rash  <br>    conjecture coupled with earnest hope that something concrete <br>    will materialize" prevent us from awarding summary judgment.  <br>    J. Geils Employee Benefit Plan v. Smith Barney Shearson, <br>    Inc., 76 F.3d 1245, 1251 (1st Cir. 1996) (internal quotation <br>    marks and citations omitted).  Rather, to prevail over a <br>    properly supported motion for summary judgment, a nonmoving <br>    party must establish the existence of a trial-worthy issue by <br>    presenting "enough competent evidence to enable a finding <br>    favorable to the nonmoving party."  Goldman v. First Nat'l Bank <br>    of Boston, 985 F.2d 1113, 1116 (1st Cir. 1993) (citing Andersonv. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). <br>                           III. DISCUSSION. <br>    A.  The Law 75 Claim. <br>             Law 75 prohibits a principal from terminating its <br>    business relationship with a dealer unless the principal has <br>  "just cause."    P.R. Laws Ann. tit. 10,  278a.  We interpret <br>    the language of Law 75 "in the light of the ends sought by the <br>    statute," see Sudouest Import Sales Corp. v. Union Carbide <br>    Corp., 732 F.2d 14, 16 (1st Cir. 1984), which are "to protect <br>    Puerto Rico dealers from the harm caused when a supplier <br>    arbitrarily terminates a distributorship once the dealer has <br>    created a favorable market for the supplier's products, 'thus <br>    frustrating the legitimate expectations and interests of those <br>    who so efficiently carried out their responsibilities,'"  R.W. <br>    Int'l Corp. v. Welch Food, Inc., 13 F.3d 478, 482 (1st Cir. <br>    1994) (citing Medina & Medina v. Country Pride Foods, Ltd., 858 <br>    F.2d 817, 820 (1st Cir. 1988)). <br>             To that end, Law 75 is drafted in broad terms.  Law <br>    75 defines a dealer as a "person actually interested in a <br>    dealer's contract."  P.R. Laws Ann. tit. 10,  278(a).  A <br>    "dealer's contract" includes any business relationship <br>        established between a dealer and a principal or grantor <br>        whereby and irrespectively of the manner in which the <br>        parties may call, characterize or execute such <br>        relationship, the former actually and effectively takes <br>        charge of the distribution of a merchandise, or the <br>        rendering of a service, by concession or franchise, on the <br>        market of Puerto Rico. <br>    P.R. Laws Ann. tit. 10,  278(b). <br>             Euromotion argues that it succeeded in raising an <br>    issue of material fact regarding whether the 1993 meeting <br>    created a dealer-principal relationship.  Euromotion analogizes <br>    its relationship with BMW (through Fields BMW) to the dealer <br>    relationship in a case decided by the Puerto Rican Supreme <br>    Court, J. Soler Motors, Inc. v. Kaiser Jeep International <br>    Corp., 8 P.R. Offic. Trans. 138, 108 D.P.R. 134 (1978).  In J. <br>    Soler Motors, the defendant appointed the plaintiff as its <br>    dealer in Puerto Rico, then assigned the dealership contract to <br>    its general distributor in the area.  See id. at 141.  This <br>    meant that the dealer had to place orders for cars and parts <br>    through the general distributor.  See id.  Despite the presence <br>    of this intermediary, the court applied Law 75 to cover the <br>    dealer.  See id. at 145. <br>             We are not persuaded.  In J. Soler Motors, the <br>    plaintiff had signed a dealership contract setting out detailed <br>    terms to govern its business relationship with the defendant.  <br>    No such evidence appears in the present case.  Euromotion <br>    admits that it never even saw the standard dealership agreement <br>    routinely used by BMW much less became a party to such a <br>    contract. <br>             Perhaps sensing the weakness in its argument, <br>    Euromotion notes that we have defined the necessary dealer <br>    relationship for Law 75 purposes quite generously.  We have <br>    held that a party still in the process of negotiating the final <br>    terms of a dealer's contract may fall under the protective <br>    aegis of Law 75 where, for some time, it had been acting de <br>    facto as a dealer.  See Welch, 13 F.3d at 486. <br>             But Welch was an altogether different case.  The <br>    defendant in Welch had written to the plaintiff stating that it <br>    had "reached a decision to continue the frozen food <br>    distribution . . . in Puerto Rico by transferring [its] account <br>    to [the plaintiff]."  Id. at 480.  In that same letter, the <br>    defendant agreed to "draft an agreement" that would establish <br>    the plaintiff as an authorized dealer.  Id.  Shortly <br>    afterwards, while still in the process of negotiating the terms <br>    of a written dealership agreement, the parties began doing <br>    business directly with one another as if a dealer relationship <br>    had already been formalized. <br>             The defendant in Welch conceded that the plaintiff <br>    was "performing the functions of a distributor within the <br>    meaning of Law 75."  Id. at 482.  In the circumstances, we <br>    stated that Law 75 "clearly incorporates within its reach any <br>    arrangement between a supplier and dealer in which the dealer <br>    is actually in the process of distributing the suppliers' <br>    merchandise in Puerto Rico."  Id. at 482-83. <br>             Focusing only on the last statement quoted above, <br>    Euromotion argues that whenever "parties are dealing, a <br>    dealership exists for purposes of the Act," quoting Welch, 13 <br>    F.3d at 484.  We made that statement, however, in a context <br>    very different from that at bar.  First, Euromotion never <br>    reached the point here of becoming engaged in negotiations with <br>    BMW regarding the terms of an actual dealership contract.  <br>    Second, there is no substantial evidence that BMW ever <br>    designated Euromotion, even informally, to act as its <br>    authorized dealer as distinct from continuing to sell BMW cars <br>    independently.  Third, the parties in Welch directly dealt with <br>    one another for over a year in the manner of a de facto <br>    dealership arrangement.  Although the lack of direct dealings <br>    may not always be determinative, see J. Soler Motors, 8 P.R. <br>    Offic. Trans. at 145, direct business relations as in Welch can <br>    provide evidence of a dealer relationship.  Fourth, <br>    Euromotion's president wrote a letter to BMW after the dealer <br>    relationship was supposedly established in which he <br>    acknowledged that BMW had "a lot of candidates for the [BMW <br>    dealership] franchise . . . [that] I understand you have to <br>    evaluate."  This letter is clearly inconsistent with <br>    Euromotion's position that it had an understanding with BMW <br>    that it was BMW's authorized dealer.  Welch, therefore, is in <br>    no sense dispositive. <br>             Euromotion also argues that Law 75 allows recovery by <br>    any dealer, such as itself, who "invest[s] time, effort, and <br>    expense in the development of a market, . . . even where <br>    certain other trappings of the typical dealership [are] <br>    missing."  Sudouest Import Sales Corp., 732 F.2d at 16 <br>    (citation omitted).  However, unilateral efforts to sell a <br>    product and develop a market are not sufficient, alone, to <br>    create a dealer relationship within the purview of Law 75.  SeeLneas Areas Costarricenses v. Caribbean Gen., Inc., 682 F. <br>    Supp. 117, 121 (D.P.R. 1988) (collecting cases). <br>             It is true that there is evidence that BMW encouraged <br>    its independent dealer in Florida, Fields BMW, to continue its <br>    favorable business relationship with Euromotion.  At that time, <br>    BMW may well have been pleased, and so expressed itself, by <br>    Euromotion's efforts to sell BMW automobiles in Puerto Rico.  <br>    However, BMW's encouragement of Euromotion to proceed at that <br>    time as an independent seller of BMW automobiles could not <br>    create a dealer relationship. <br>             On this record, the only conclusion a reasonable fact <br>    finder could reach is that Euromotion did not have a dealer <br>    relationship within Law 75 with BMW.  The absence of such a <br>    relationship is fatal to its claim.  See Welch, 13 F.3d at 483 <br>    (declaring that Law 75 "insists upon establishment of a <br>    'supplier/dealer' relationship").  Accordingly, the district <br>    court correctly dismissed Euromotion's Law 75 claim. <br>    B.  Duty to Negotiate in Good Faith. <br>             The Puerto Rican Supreme Court has held that, <br>    although parties generally may withdraw from negotiations at <br>    any time prior to forming a contract, parties once engaged in <br>  a negotiation process have a duty to proceed in good faith.    <br>    See Producciones Tommy Muiz, Inc. v. COPAN, 13 P.R. Offic. <br>    Trans. 660, 676, 113 P.R. Dec. 517 (1982).  Euromotion charges <br>    that BMW violated that duty.  The district court did not <br>    explore the question whether BMW had terminated negotiations <br>    with Euromotion in bad faith because it found that Euromotion <br>    had failed to demonstrate that Euromotion and BMW ever reached <br>    the point of becoming involved in contract negotiations.   <br>             Euromotion asserts that it is "indisputable" in light <br>    of the evidence that the court, in reaching its conclusion, <br>    improperly weighed the credibility of the witnesses.  Since our <br>    review is de novo, see Griggs-Ryan, 904 F.2d at 115, we need <br>    not consider whether the specific reasoning set out by the <br>    district court contained errors.  Rather, we ask whether the <br>    evidence presented by Euromotion was adequate to establish that <br>    negotiations sufficient to be regarded as such ever took place <br>    between the parties.  Cf. Celotex Corp., 477 U.S. at 322 <br>    (stating that, in order to avoid a properly supported motion <br>    for summary judgment, a nonmoving party must make a "showing <br>    sufficient to establish the existence of an element essential <br>    to that party's case, and on which that party will bear the <br>    burden of proof at trial").  We find Euromotion's evidence <br>    insufficient to establish that a course of negotiations looking <br>    to the creation of a dealer's contract ever occurred.  We <br>    therefore affirm the district court. <br>             According to Euromotion, the following facts <br>    constituted negotiations between itself and BMW.  First, <br>    Euromotion's president was interviewed by BMW, along with other <br>    candidates, to determine whether to select Euromotion for the <br>    position of dealer.  Second, BMW encouraged Euromotion in 1993 <br>    to continue to sell BMW automobiles, as it was then doing, and <br>    develop a market in Puerto Rico.  Third, BMW urged Fields BMW <br>    at that time to aid Euromotion in developing the Puerto Rican <br>    market, as it had been doing for a while.  Fourth, because <br>    Euromotion's president believed that Euromotion was being <br>    considered as a candidate for the Puerto Rican dealership, <br>    Euromotion took action to create a larger market for BMW's cars <br>    in Puerto Rico.  Fifth, Euromotion kept BMW informed of its <br>    progress. <br>             None of the above, in our view, were negotiations <br>    such as might trigger the duty of good faith in the Puerto <br>    Rican Civil Code.  Rather they were preliminary activities and <br>    dealings reflecting, among other things, a modicum of initial <br>    interest by BMW in Euromotion's activities as an independent <br>    salesman of BMW vehicles, and also reflecting Euromotion's <br>    intense but unsuccessful efforts to become a finalist for the <br>    dealership position.  While BMW encouraged Euromotion to <br>    proceed with its independent sales of BMW cars and interviewed <br>    Euromotion's president along with others, BMW never selected <br>    Euromotion as someone with whom it intended to negotiate a <br>    dealership contract.  And, in fact, no contract negotiations <br>    ever took place.  None of the interactions between the parties <br>    addressed the concerns that parties looking to form a dealer <br>    relationship would address.  BMW and Euromotion did not discuss <br>    inventory requirements, sales goals, promotional allowances, <br>    showroom standards, trademark use, minimum service facilities, <br>    warranty conditions, payment and credit arrangements, letters <br>    of credit, or personnel and staffing requirements.  Further, <br>    the record establishes that Euromotion never submitted the <br>    required dealer application to BMW and never saw the BMW <br>    authorized dealer standard agreement.  Lastly, Euromotion's <br>    letter to BMW in December of 1993 confirms that Euromotion <br>    understood itself to be just one candidate among several.  The <br>    district court concluded that: "None of this [evidence <br>    presented by Euromotion] constitutes contract 'negotiations' by <br>    any stretch of the imagination."  We agree.   <br>             It is true, of course, that "when the facts support <br>    plausible but conflicting inferences on a pivotal issue in the <br>    case, the judge may not choose between those inferences at the <br>    summary judgment stage."  Coyne v. Taber Partners I, 53 F.3d <br>    454, 460 (1st Cir. 1995); see also Anderson, 477 U.S. at 249 <br>    (noting that a judge should not weigh the evidence when <br>    considering a motion for summary judgment).  Still, a court <br>    should not indulge a nonmoving party's inferences if they do <br>    not "flow rationally from the underlying facts."  Rubinovitz v. <br>    Rogato, 60 F.3d 906, 911 (1st Cir. 1995).  On the facts of this <br>    case viewed in the light most favorable to Euromotion, no <br>    reasonable fact finder could conclude that BMW entered into <br>    negotiations with Euromotion concerning the formation of a <br>    dealership contract.  It follows that BMW's refusal, for <br>    whatever reason, to talk further with Euromotion could not <br>    amount to a breach of Puerto Rico's doctrine requiring parties <br>    who enter into contract negotiations to proceed in good faith.  <br>    We hold that summary judgment was appropriate on Euromotion's <br>    good faith claim. <br>             Affirmed.</pre>

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