Barretto Peat, Inc. v. Luis Ayala Colon Sucrs., Inc.

• Decision Date: 02 November 1989
• Docket Number: No. 89-1494,89-1494
• Citation: 896 F.2d 656
• Parties: BARRETTO PEAT, INC., Plaintiff, Appellant, v. LUIS AYALA COLON SUCRS., INC., Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 656

896 F.2d 656

BARRETTO PEAT, INC., Plaintiff, Appellant, v. LUIS AYALA COLON SUCRS., INC., Defendant, Appellee.

No. 89-1494.

United States Court of Appeals First Circuit.

Heard Nov. 2, 1989.

Decided Feb. 27, 1990.

Juan A. Ramos Diaz with whom Cobian & Ramos, San Juan, P.R., was on brief, for plaintiff, appellant.

Jose F. Sarraga, San Juan, P.R., for defendant, appellee.

Before CAMPBELL, Chief Judge, COFFIN, Senior Circuit Judge, and PIERAS, ^* District Judge.

PIERAS, District Judge.

Barretto Peat, Inc. appeals from an order of summary judgment in favor of Luis Ayala Colon Successors, Inc., dismissing the complaint pursuant to Puerto Rico's one-year statute of limitations for tort actions, Civil Code Article 1868, 31 L.P.R.A. Sec. 5298, and a similar limitations period provided by Section 1303(6) of the United States Carriage of Goods by Sea Act (COGSA), 46 U.S.C.App. Sec. 1303(6). For the reasons indicated below we affirm.

I. FACTUAL BACKGROUND

On October 12, 1986, plaintiff Barretto Peat, Inc. (Barretto), a New York corporation, sold to Papelera Puertorriquena, Inc. (Papelera), a shipment of 728 reels of unbleached virgin pine paper to be delivered from Brazil to San Juan, Puerto Rico. Under the terms of the sale, the price for the goods was set at $105,599.96 and payment was due 90 days after delivery of the goods. The terms of delivery were "C.I.F. San Juan." ¹ On October 12, 1986, the goods were delivered by the shipper, Industria de Papeis Santo Amaro (Industria Papeis) from a paper mill to the Brazilian port of Salvador. At the port, the ocean carrier Saguenay Shipping Limited (Saguenay) issued a bill of lading, originally endorsed by Barretto, to Industria Papeis, covering the goods to be carried to the port of San Juan. The terms of the contract of carriage between Saguenay and Industria Papeis were contained in this bill of lading and provided that upon delivery of the goods, the bill of lading would be surrendered in exchange for the goods. ²

On October 23, 1986, the defendant, Luis Ayala Colon Sucrs., Inc. (Ayala), as stevedoring contractor and steamship agent of Saguenay, unloaded the cargo from the M/V Transhope and delivered it to Papelera in San Juan, Puerto Rico. However, upon delivery of the goods, Ayala failed to request the surrender of the bill of lading from Papelera. On July 22, 1988, Barretto filed its complaint against Ayala, alleging that delivery of the goods without the simultaneous surrender of the bill of lading constituted a conversion, because the failure to collect the bill of lading prevented Barretto from collecting the goods or the $105,599.96 due on them.

Ayala moved for dismissal on the grounds that the one-year statute of limitations under Puerto Rico law had elapsed. As an alternate ground, Ayala sought dismissal under Section 1303(6) of COGSA, which provides that "the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered."

II. APPLICABLE STATUTE OF LIMITATIONS

The general civil liability statute of Puerto Rico provides compensation for damages caused by a person's fault or negligence. Article 1802, 31 L.P.R.A. Sec. 5141, states in relevant part: "A person who by an act or omission causes damage to another through fault or negligence shall be obliged to repair the damage so done." Under Article 1802, conversion is an intentional tort and " 'is merely a form of the fault (culpa).' " Federal Ins. Co. v. Banco Popular de Puerto Rico, 750 F.2d 1095, 1100 (1st Cir.1983) (citing Heirs of Sorba v. Vinas, 49 P.R.R. 31, 36 (1935)). As explained by the Puerto Rico Supreme Court, conversion is "not the simple acquisition of another's property, but the malicious and wrongful privation of the ownership rights the illegal exercise, or the assumption of authority over another's property, thereby depriving the lawful owner or possessor, permanently or for an indefinite period, of its use and enjoyment." Hull Dobbs Co. v. Superior Court, 81 P.R.R. 214, 222 (1959). The facts as stated in appellant's complaint allege in effect that defendant's failure to collect the bill of lading was a wrongful deprivation of plaintiff's right to collect the goods or the $105,599.96 due on them. Therefore, the district court properly noted that the defendant's alleged act and/or omission could give rise to a finding of conversion governed by 31 L.P.R.A. Sec. 5141. Barreto (sic) Peat, Inc. v. Ayala Colon Sucrs., 709 F.Supp. 321 (D.P.R.1989).

Article 1868 of the Puerto Rico Civil Code provides for a one-year statute of limitations for torts which commences on the date the aggrieved party had knowledge of the tort. 31 L.P.R.A. Sec. 5298. ³ Barretto relies on the cognitive theory of damages as codified in Article 1868 in order to claim that its action was not time-barred. According to this theory, the one year "term does not start to run from the occurrence of the negligent act or damage, but from the moment the damage is known." Rivera Encarnacion v. Estado Libre Asociado de Puerto Rico, 113 D.P.R. 383, 385, 13 T.P.R. 498 (1982). While this theory of damages establishes that the one-year statute of limitations commences on the date plaintiff becomes aware of the damage and who caused it, if the plaintiff's lack of awareness is due to its own negligence or carelessness, then the prescriptive period will begin to run on the date the alleged tort occurred. A victim is presumed to have knowledge of the injury at the time of the tortious act, and the victim has the burden of proving that he learned of the act at a later date. Id. at 385 (citing L. Diez Picazo, La Prescripcion en el Codigo Civil 240 (Bosch ed.1964)). See also Brau del Toro, Los Danos y Perjuicios Extracontractuales en Puerto Rico Sec. 8.06 (J.T.S. 2d Ed.1986).

We have previously stated that the specific knowledge of the tort in question consists of knowledge of the injury and the person who caused it. Hodge v. Parke Davis & Co., 833 F.2d 6, 7 (1st Cir.1987) (citing Colon Prieto v. Geigel, 115 D.P.R. 232, 247 (1984)). Appellant argues that it first learned of the failure to collect the bill of lading upon delivery of the goods and who was responsible for this failure on April 22, 1988. Barretto alleges that it conducted an investigation to determine what happened. The investigation culminated in a meeting with Ayala's representative on April 22, 1988. At this meeting, Barretto discovered that Ayala's files contained no letter of guaranty in lieu of the bill of lading.

However, Barretto has not adequately established that its lack of knowledge was not due to its own carelessness. According to the record, the alleged conversion occurred on October 23, 1986, when Ayala delivered the goods to Papelera without requiring the surrender of the original bill of lading. The terms of Barretto's invoice provided that Papelera's payment to Barretto was due 90 days after delivery of the goods. Therefore, by late January of 1987, Barretto should have known of the tortious act when Papelera did not make the payment according to the terms provided by the invoice. The record reflects no evidence of an attempt by Barretto to collect the sum of money due to it. Likewise, there is no evidence of any inquiries directed to any of the parties involved in the transaction until April 22, 1988. Because the appellant has not shown that its lack of knowledge was not due to its own negligence, the prescriptive period must be measured from the date the alleged tort occurred, October 23, 1986. The complaint however, was not filed until July 22, 1988. Therefore, the district court correctly found that Barretto's complaint alleging conversion was time-barred.

In the alternative, Barretto argues that the district court erred in dismissing the action, because it should have applied the fifteen year statute of limitations for actions based on breach of contract, Article 1864 of the Puerto Rico Civil Code, 31 L.P.R.A. Sec. 5294. ⁴ See K-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 911 n. 2 (1st Cir.1989) (Article 1864 establishes a fifteen-year prescriptive period for contract claims). According to Barretto, the original bill of lading issued by the ocean carrier, Saguenay, was a contract binding on Barretto, Saguenay, and Ayala, because Barretto endorsed the original bill of lading, Saguenay issued the bill of lading as carrier, and Ayala was Saguenay's agent. Ayala breached the bill of lading's clause requiring its surrender upon the delivery of the goods to Papelera when it failed to secure the bill after delivery.

Although Barretto's complaint did not state a contractual cause of action, it asserted that the complaint stated a claim for breach of contract in its opposition to Ayala's motion to dismiss. It now argues that the district court erred by not allowing leave to include a contract cause of action, as requested in its opposition to Ayala's motion to dismiss. However, even if Barretto's action had stated a contract claim, the district court properly dismissed the complaint because of the application of COGSA.

III. APPLICATION OF COGSA

The COGSA applies when there is a contract for carriage of goods between a foreign port and a port of the United States. 46 U.S.C.App. Secs. 1300, 1312. ⁵ EAC Timberlane v. Pisces, Ltd., 745 F.2d 715 (1st Cir.1984). COGSA discharges the carrier and the ship from all liability for losses or damages unless "suit is brought within one year after delivery of the goods or the date when the goods should have been delivered...." 46 U.S.C.App. Sec. 1303(6). Insurance Co. of North America v. Puerto Rico Marine, 768 F.2d 470 (1st Cir.1985), cert. denied, 474 U.S. 1102, 106 S.Ct. 885, 88 L.Ed.2d 920 (1986). COGSA applies by its terms to the bill of lading in this case because it is a contract for the carriage of goods between a foreign port and a port of the...