Vulcan Tools of Puerto Rico v. Makita USA, Inc.

• Decision Date: 08 March 1994
• Docket Number: No. 93-2089,93-2089
• Citation: 23 F.3d 564
• Parties: VULCAN TOOLS OF PUERTO RICO, Plaintiff, Appellant, v. MAKITA USA, INC., Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 564

23 F.3d 564

28 Fed.R.Serv.3d 1540

VULCAN TOOLS OF PUERTO RICO, Plaintiff, Appellant, v. MAKITA USA, INC., Defendant, Appellee.

No. 93-2089.

United States Court of Appeals First Circuit.

Heard March 8, 1994.

Decided May 4, 1994.

Rehearing and Suggestion for Rehearing

En Banc Denied May 25, 1994.

Wilfredo A. Geigel, with whom Law Offices of Wilfredo A. Geigel was on brief, for appellant.

Arturo J. Garcia-Sola, with whom Manuel Fernandez-Bared and McConnell, Valdes were on brief, for appellee.

Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.

BOWNES, Senior Circuit Judge.

Does the Dealers' Act of Puerto Rico, Act 75 of June 24, 1964, P.R. Laws Ann. tit. 10, Secs. 278-278d (1976 & Supp.1989) ("Law 75" or the "Act"), come into play where the sales or market share of a non-exclusive distributor decline after its supplier establishes additional non-exclusive distributors for its products in Puerto Rico? Because we answer this question in the negative, we affirm the district court's grant of summary judgment for the defendant.

I. BACKGROUND

The following facts are undisputed. Plaintiff-appellant, Vulcan Tools of Puerto Rico, Inc., sells and services power tools manufactured by a Japanese company, Makita Corp. Vulcan has distributed Makita products since May 1983, when it entered into a non-exclusive distribution contract with defendant-appellee, Makita U.S.A., Inc. ("Makita"), a subsidiary of its Japanese parent.

At the time Vulcan became a non-exclusive distributor for Makita, the latter already had three other non-exclusive distributors operating in Puerto Rico. In 1988 Makita appointed a sales representative in Puerto Rico and authorized thirty-four additional non-exclusive distributorships on the island. Vulcan continued to sell and service Makita tools. While the sale of Makita products in Puerto Rico has more than tripled since 1988, Vulcan's total sales of the same and its market share have fallen.

In February 1989 Vulcan filed this action in the United States District Court for the District of Puerto Rico alleging that Makita had impaired the existing relationship between the parties without just cause in violation of Law 75. The district court granted summary judgment in favor of Makita. This appeal ensued.

II. DISCUSSION

On appeal Vulcan argues (1) that the district court abused its discretion in entertaining Makita's motion for summary judgment, and (2) that summary judgment was improvidently granted because whether Makita's hiring of thirty-four additional distributors in Puerto Rico impaired Makita's established relationship with Vulcan is a disputed question of material fact. ¹

A. Timeliness of Makita's Summary Judgment Motion

On November 4, 1991 the Magistrate Judge assigned to the case issued a "Final Pretrial Conference Report" which established December 15, 1991 as the date for completing outstanding discovery, and December 30 as the deadline for filing dispositive motions. Vulcan argues on appeal the same argument rejected below: that because Makita's motion for summary judgment was not filed until August 3, 1993, the motion was untimely, and the district court was barred from considering it under Fed.R.Civ.P. 16(b) and 16(e). ²

Because trial judges must be able to control the management of their cases, we review a district court's decision to modify a pretrial scheduling order under an abuse of discretion standard. See Anda v. Ralston Purina, Co., 959 F.2d 1149, 1155 (1st Cir.1992); In re San Juan Dupont Plaza Hotel Fire Litigation, 859 F.2d 1007, 1020 (1st Cir.1988); see also Ramirez Pomales v. Becton Dickinson & Co., 839 F.2d 1, 3 (1st Cir.1988) (decision to modify a pretrial order is subject to the trial court's discretion). Moreover, pretrial orders are to be liberally construed, James W.M. Moore, et al., Moore's Federal Practice, p 16.19, at 16-90 (2d ed. 1993) (citing cases). Thus we are loathe to upset a district court's interpretation of its own order. See Martha's Vineyard Scuba HQ. v. Unidentified Vessel, 833 F.2d 1059, 1066-67 (1st Cir.1987) (citing cases) (recognizing "the special role played by the writing judge in elucidating the meaning and intendment of an order which he authored").

The district court determined that the deadline for filing dispositive motions established in the magistrate's order was vacated by a subsequent order issued by the court in which no such deadline was set, and that Makita's motion was therefore not untimely. The sequence of events is as follows. In March 1992 Vulcan moved to have a trial date set. Makita objected on the ground that the case was not ready for trial, in part, because Vulcan had not responded to various document requests and the deposition of Vulcan's President, Joseph Fayer, had not yet concluded. On April 27, 1992, in response to Makita's objections, the district court granted Vulcan additional time to produce specified documents, set deadlines for various depositions, ordered that discovery be completed by June 30, 1992, and referred the case to the magistrate judge for the scheduling of another pretrial conference. The court further instructed the parties to submit a revised proposed final pretrial order.

The parties submitted a proposed final pretrial order in August 1992, which was approved by the court six days later. Neither that order nor the April 27 order, set a deadline for filing dispositive motions. The district court viewed its decision to reopen discovery as vitiating the existing deadline for the filing of dispositive motions. Vulcan Tools of Puerto Rico, Inc. v. Makita U.S.A., Inc., No. 89-148, 1993 WL 719565, slip op. at 6 (D.P.R. Sept. 1, 1993). Because the original cut-off date for filing dispositive motions fell after the original discovery deadline, the court's finding that a change in the latter necessarily abolished the former is eminently reasonable. While it is true that Makita did not specifically request an extension of time for filing a motion for summary judgment, the court could have concluded that the "good cause" Makita demonstrated for extending the discovery deadline was also good cause for lifting the deadline for filing dispositive motions. We find no abuse of discretion in the court's decision to consider Makita's motion for summary judgment.

B. Law 75

We now turn to the principal issue raised on appeal. Vulcan argues that summary judgment was inappropriate because whether Makita's appointment of thirty-four additional distributors caused a "detriment" to Vulcan (i.e., the subsequent decline in Vulcan's sales and market share with respect to Makita products), is a question of fact for the jury. Vulcan apparently concedes that, under the parties' contract, Makita was entitled to name additional non-exclusive distributors at will, so long as it did not violate Law 75.

We say "apparently," because Vulcan has sent out mixed messages. Although it has made the above concession both in its brief, Appellant's Brief at 21, and in oral argument, at times during oral argument Vulcan maintained that, as part of its distribution contract, Makita agreed to limit the number of Makita distributors in Puerto Rico to three. Even if this argument has been properly preserved by Vulcan, it is without merit.

The terms of Vulcan's non-exclusive distributorship are set forth in a May 26, 1993 letter from Carl Schwinne, Makita's marketing manager, to Joseph Fayer, Vulcan's president. The letter states: "This letter will summarize our phone conversation today regarding a non-exclusive distributorship for Makita power tools in Puerto Rico." The letter also contains information about Makita's tool order program, payment terms, stock adjustments, Makita's advertising program, and warranty repairs. Vulcan never objected to the contractual terms set forth in the May 26 letter. Vulcan's argument that Makita agreed not to have more than three other distributors in Puerto Rico is based on a conversation that took place on May 18 between Fayer and Frank Isaacs, then Makita's regional sales manager. As evidence of such limitations, Vulcan offered Isaacs' deposition, at which Isaacs testified as follows:

Q. All right. Getting back to the agreement with Vulcan, as for the setting up of the distributorship, did you or anyone at Makita, to the best of your knowledge and recollection, ever indicate to Mr. Fayer that Makita would operate through only two or three distributors in the market.

A. Yes. I stated that right up front that we--on our visit to him--went and said these are the people--These are the channels of distribution that we're looking at. These are the distributors that we're going to try to sell to accomplish our objective in this market, and if--and we told this to each one. If you support our programs, grow our business here, in an acceptable rate, whatever that might be, then we see no reason to pursue any other distributors in these channels.

Q. At that time they didn't see a need for that?

A. That's right.

Q. But that could change?

A. Sure it can.

Q. And the company wanted to make sure that it retained the right to name others, other distributors?

A. Sure. You always retain that right, but if you change your strategy in the marketplace, you need to let your distributors know what that is.

Isaacs' Deposition at 71-72.

The law of Puerto Rico is clear that no oral extrinsic evidence may be admitted to add to, alter or modify a written agreement except when fraud or surprise is alleged. P.R.Laws Ann. tit. 32, App. IV, R. 69(B) (1983) (Parole Evidence Rule). ³ When an agreement leaves no doubt as to the intention of the parties, a court should not look beyond the literal terms of the contract. Marina Ind. Inc. v. Brown Boveri Corp., 114 P.R. Dec. 64, 72 (1983) (Official Translation); Catullo v. Metzner, 834 F.2d 1075, 1079 (1st Cir.1987). This principle is embodied in Article 1233 of the Puerto Rico Civil Code, which applies to the contract between...