Eastern Fine Paper, Inc. v. Garriga Trading Co., Inc.

CourtSupreme Judicial Court of Maine (US)
Writing for the CourtBefore McKUSICK; GODFREY
Citation457 A.2d 1111
Decision Date17 March 1983

Page 1111

457 A.2d 1111
Supreme Judicial Court of Maine.
Argued Nov. 3, 1982.
Decided March 17, 1983.

Eaton, Peabody, Bradford & Veague, Daniel E. McKay (orally), John E. McKay, Bangor, for plaintiff.

Paine & Lynch, Martha J. Harris (orally), Bangor, for defendant.


GODFREY, Justice.

Defendant, Garriga Trading Company ("Garriga"), appeals from a declaratory judgment entered in Superior Court, Penobscot County. The only issue we need address is whether the Superior Court erred in

Page 1112

granting the declaratory judgment in view of the fact that when the Maine action was commenced, there was already pending in the United States District Court for the District of Puerto Rico an action between the same parties that would settle all the factual and legal issues presented in the Maine action. We vacate the judgment and remand with instructions to dismiss the action. 1

Plaintiff, Eastern Fine Paper, Inc. ("Eastern"), is a manufacturer of paper products in Brewer, Maine; Garriga is an importer, distributor, and seller of paper products in Puerto Rico. Sometime in 1974, Garriga became a buyer of Eastern's products and a distributor for Eastern in Puerto Rico. During 1976 and early 1977, the volume of orders received by Eastern from Garriga dropped substantially. When Eastern complained, Garriga attributed the decline to non-competitive pricing by Eastern. Garriga, in turn, complained that Eastern was selling some of its paper products to another Puerto Rican paper distributor. Thereafter Eastern refused to sell exclusively to Garriga, and the two companies became embroiled in a dispute over whether the distributorship agreement was exclusive, whether it was terminable at will, and whether Eastern or Garriga had been in breach of it.

The parties could not resolve the dispute amicably. In June of 1979, Garriga commenced an action for damages and attorneys' fees against Eastern in federal district court in San Juan, alleging breach of contract and violation of Puerto Rico's Dealers Contract Law, Act No. 75 of 1964, P.R.Laws Ann. tit. 10, § 278, which provides in effect that a Puerto Rican dealer's contract with a manufacturer, regardless of any provision for termination, is renewable indefinitely at the option of the local dealer unless the manufacturer has "just cause" to terminate the arrangement. Eastern's answer in the Puerto Rican action included affirmative defenses alleging that Act No. 75 is unconstitutional for various stated reasons and that Eastern had just cause to terminate the contractual relationship because of Garriga's non-performance of essential obligations. Eastern made no counterclaim.

At some point it was agreed between counsel for the two parties in Puerto Rico that the case there be stayed pending decision of a case or cases then pending before the Supreme Court of Puerto Rico involving the construction and constitutionality of Act No. 75. The date of the initial agreement for the stay does not appear in the record in the instant case, but the stay was certainly still operative when the Superior Court heard the present case.

In September of 1979, Eastern filed the present action pursuant to the Declaratory Judgments Act, 14 M.R.S.A. ch. 707 (§§ 5951-5963) (1980), seeking a declaration that (1) the rights and obligations of the contract are governed by Maine law; (2) the contract was terminable at will by either party; (3) Garriga's failure to market Eastern's products effectively constituted a breach of contract; and (4) Eastern had "just cause" to contract with others to sell its paper products in Puerto Rico within the meaning of Act No. 75.

Garriga moved to dismiss the action on several grounds, among others that the Superior Court should decline to exercise subject-matter jurisdiction because suit was already pending in Puerto Rico involving the same litigants and issues. The Superior Court denied the motion and later denied a motion, made on the same grounds, to stay the Maine action pending decision by the United States District Court in Puerto Rico. After a trial, the court granted Eastern substantially the declaratory relief it sought.

Generally speaking, whether a declaratory judgment should be issued rests in the sound discretion of the trial court.

Page 1113

Cape Elizabeth School Board v. Cape Elizabeth Teachers Association, 435 A.2d 1381, 1383 (Me.1981). The discretion to be exercised is of a judicial nature, not arbitrary but based on good reason. W. Anderson, Declaratory Judgments § 172, at 525-26 (1940). In exercising that discretion, the trial court must decide whether the adjudication will serve some useful purpose. Cape Elizabeth School Board, 435 A.2d at 1383; E. Borchard, Declaratory Judgments 299 (2d ed. 1941). The considerations forming the basis for a trial court's decision that the granting of declaratory relief will serve a useful purpose are subject to review and evaluation on appeal. 2

The record in the present case gives no clue to why the trial justice thought that a useful purpose would be achieved by granting the declaratory judgment. We must therefore resolve the question of the utility of that judgment by examining the facts revealed by the record. Having done so, we find that the judgment served no useful purpose and was improvidently granted in the circumstances.

The action already brought by Garriga in Puerto Rico involved exactly the same litigants; the issues presented in the Maine action had been raised by the pleadings in Puerto Rico. In effect, Eastern sought merely a declaratory judgment upholding its principal defense to that already pending suit. Ordinarily, when a party has begun an action, "it serves no sensible end to permit his adversary to appear as equitable actor and start the proceedings for an autonomous declaration that he has a good defense to his opponent's pending ... action." E. Borchard, supra, at 303. See also Rego Industries, Inc. v. American Modern Metals Corp., 91 N.J.Super. 447, 221 A.2d 35 (1966); Canadian Imperial Bank of Commerce v. Canada Life Assurance Co., 43 A.D.2d 920, 352 N.Y.S.2d 203, appeal dismissed, 34 N.Y.2d 959, 359 N.Y.S.2d 569, 316 N.E.2d 881 (1974).

Pendency of another action involving the same litigants and issues does not automatically require dismissal of a subsequently commenced action. Howell v. Howell, 418 A.2d 181 (Me.1980); Fitch v. Whaples, 220 A.2d 170 (Me.1966). Declaratory relief may be appropriate despite such a pending action if exceptional circumstances are alleged and proved, particularly if it is shown that denial of the...

To continue reading

Request your trial
19 cases
  • Citizens Ins. Co. of Am. v. Phx. Bay State Constr. Co., SUPERIOR COURT CIVIL ACTION DOCKET NO. CV-17-097
    • United States
    • Superior Court of Maine
    • October 4, 2017
    ...are different "actions involving the same subject matter, parties and issues." Id.; see also E. Fine Paper, Inc. v. Garriga Trading Co., 457 A.2d 1111, 1114 (Me. 1983) (vacating declaratory judgment for plaintiff because the trial court should have afforded comity to another court in which ......
  • Doe v. Board of Osteopathic Licensure, Docket: Ken-20-32
    • United States
    • Supreme Judicial Court of Maine (US)
    • November 17, 2020
    ...a declaratory judgment should be issued rests in the sound discretion of the trial court." E. Fine Paper, Inc. v. Garriga Trading Co., 457 A.2d 1111, 1112 (Me. 1983). The Superior Court did not address the viability of Count 1 separately from Count 2. This was a logical course of action bec......
  • Friedlander v. Hiram Ricker & Sons, Inc.
    • United States
    • Supreme Judicial Court of Maine (US)
    • December 13, 1984
    ...declaratory judgment should be issued rests in the sound discretion of the trial court. Eastern Fine Paper v. Garriga Trading Co., Inc., 457 A.2d 1111, 1112 (Me.1983); Cape Elizabeth School Board v. Cape Elizabeth Teachers Association, 435 A.2d 1381, 1383 For all the above reasons, I would ......
  • Perry v. Hartford Acc. and Indem. Co.
    • United States
    • Supreme Judicial Court of Maine (US)
    • August 13, 1984
    ...of discretion in granting or denying that relief is accorded deference on appeal. See Eastern Fine Paper, Inc. v. Garriga Trading Co., 457 A.2d 1111, 1113 n. 2 (Me.1983); Cape Elizabeth School Board v. Cape Page 136 Elizabeth Teachers Association, 435 A.2d 1381, 1383 (Me.1981); Liberty Mutu......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT