Felix A. Rodriguez, Inc. v. Bristol-Myers Company

• Decision Date: 13 February 1968
• Docket Number: No. 847-67.,847-67.
• Citation: 281 F. Supp. 643
• Parties: FELIX A. RODRIGUEZ, INC., Plaintiff, v. BRISTOL-MYERS COMPANY, Defendant.
• Court: U.S. District Court — District of Puerto Rico

281 F. Supp. 643

FELIX A. RODRIGUEZ, INC., Plaintiff, v. BRISTOL-MYERS COMPANY, Defendant.

No. 847-67.

United States District Court D. Puerto Rico.

February 13, 1968.

Lino J. Saldaña and Arturo Estrella, San Juan, P. R., for plaintiff.

McConnell, Valdés, Kelley & Sifre, San Juan, P. R., for defendant.

MEMORANDUM OPINION^*

FERNANDEZ-BADILLO, District Judge.

On December 15, 1967, plaintiff, Félix A. Rodríguez, Inc., filed an action against the defendant, Bristol-Myers Co., upon a sworn complaint alleging defendant's breach of Law No. 75 of 1964, as amended (10 LPRA § 278 et seq.), (hereinafter referred to as the Act). Plaintiff simultaneously requested an order directed to the defendant to show cause why a preliminary injunction should not issue in this case.

The matter now before the Court is plaintiff's prayer that an injunction issue. At this juncture in the proceedings the Court in no way wishes to make a finding or rule upon the ultimate liability of defendant, if any; a short statement of the relevant facts at the outset will serve as a basis for orientation.

In its complaint plaintiff alleges that it was appointed an exclusive distributor for defendant within the Commonwealth of Puerto Rico in 1946. Since that time, the original contract, evidenced by letters of agreement, has been amended from time to time. By letter dated November 15, 1967, and signed by one of its officials, defendant gave notice to plaintiff that the contract then existing between the parties was to be terminated as of January 20, 1968. In the verified complaint above mentioned, plaintiff seeks damages in the amount of $375,000, and prays for the issuance of a preliminary injunction prohibiting defendant from having the proposed cancellation of the dealership contract take effect unless and until plaintiff has been compensated for all damages subject to be indemnified pursuant to the Act. Service of process upon the defendant was executed in accordance with Rule 4.7 of the Rules of Civil Procedure of Puerto Rico, 32 LPRA, App. II, R. 4.7, the Commonwealth's so-called "long-arm" statute.

An Order to show cause was signed by the Court on December 15, 1967, and issue was joined as to the injunction on January 12, 1968. During the pendency of this question the letter of notice of termination was amended so that the termination is to become effective as of February 14, 1968.

At the outset, the Court must deal with the question of its jurisdiction over the person of the defendant. The defendant, a foreign corporation not qualified to do business within the Commonwealth, has questioned jurisdiction based upon the claim that it does not "carry out business transactions within Puerto Rico" and that it has not executed a tortious act within Puerto Rico, within the meaning of the "long-arm" statute. It relies heavily upon certain cases from other jurisdictions, e. g., Kramer v. Vogl, 17 N.Y.2d 27, 267 N.Y.S.2d 900, 215 N.E. 2d 159 (1966); Standard Wine & Liquor Co. v. Bombay Spirits Co., 20 N.Y.2d 13, 281 N.Y.S.2d 299, 228 N.E.2d 367 (1967); Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 458, 261 N.Y.S.2d 8, 19, 209 N.E.2d 68 (1965). It appears that the procedural requirements of Rule 4.7 have been met by plaintiff, so we may proceed to an examination of its substantive provisions, where relevant:

"4.7 Substitute service.

(a) Where the person to be served is not within Puerto Rico, the General Court of Justice of Puerto Rico shall have personal jurisdiction over said non-resident as if he were a resident of the Commonwealth of Puerto Rico, if the action or claim arises as a result of the following:

(1) Such person or his agent carries out business transactions within Puerto Rico; or

(2) Executes by himself or through his agent, tortious acts within Puerto Rico; * * *"

The Court is satisfied that jurisdiction over the defendant has been adequately established, in accordance with prior decisions of this Court. Executive Air Services, Inc. v. Beech Aircraft Corp., 254 F.Supp. 415 (D.C.P.R. 1966); La Electronica, Inc. v. Electric Storage Battery Co., 260 F.Supp. 915 (D.C.P.R. 1966); Caribbean Sales Associates, Inc. v. Hayes Industries, Inc., 273 F.Supp. 598 (D.C.P.R. 1967)¹; Coletti v. Ovaltine Food Products, 274 F.Supp. 719 (D. C.P.R. 1967). Subject matter jurisdiction is had under the provisions of 48 U.S.C. § 863, the special diversity jurisdiction statute applicable to this Court. See Ritchie v. Heftler Construction Co. of Puerto Rico, Inc., 367 F.2d 358 (1st Cir. 1966); Luce & Co. v. Alimentos Borinqueños, 276 F.Supp. 94, Order of November 3, 1967 (D.C.P.R).

The issue posed by plaintiff's prayer for preliminary injunction in aid of its action based upon the Act is not easily answered. There can be no questioning of this Court's inherent equity power to make such relief available under proper circumstances, (Bateman v. Ford Motor Co., 302 F.2d 63 3rd Cir. 1962), but it is equally clear that the power to grant the extraordinary remedy of injunction should be exercised with great caution. Barker Painting Co. v. Brotherhood of Painters, etc., 15 F.2d 16, 18 (3rd Cir. 1926); Goldammer v. Fay, 326 F.2d 268, 270 (10th Cir. 1964). Applicable principles of law and their relationship to the particular fact situation must be shown to coincide, particularly where a mandatory injunction is sought. O'Malley v. Chrysler Corp., 160 F.2d 35, 36 (7th Cir. 1947).

The Commonwealth of Puerto Rico combines in its juridical system the Civil Law tradition of the continent and elements of the Anglo-Saxon Common Law. There is no doubt that the former is still the predominant force, and this Court has always striven to be guided by its principles. This is particularly true in those cases where subject matter jurisdiction is based upon diversity of citizenship. It thus is appropriate to examine and review the laws of Puerto Rico in this regard.

Section 3524 of Title 32, LPRA, reads in part as follows:

"An injunction or restraining order cannot be granted:

(1) * * *

(2) * * *

(3) * * *

(4) to restrain the breach of a contract a compliance with which would not be specifically required."

This section of Title 32 is presently in force. (See Rule 72(1) of the Rules of Civil Procedure of 1958 for the General Court of Justice, 32 LPRA, App. II, R. 72).

The question presented by plaintiff's request for an injunction to restrain the termination can thus be considered to present a second and more fundamental issue: Can specific performance of the distribution contract here in issue be required? See San Juan Racing & Sporting Club v. Foote, 31 P.R.R. 154, 158 (1922).

Article 1077 of the Civil Code of Puerto Rico, 1930 ed., 31 LPRA 3052, provides in part as follows:

"The right to rescind the obligations is considered as implied in mutual ones, in case one of the obligated persons does not comply with what is incumbent upon him.

The person prejudiced may choose between exacting the fulfilment of the obligation or its recission, with indemnity for damages and payment of interest in either case. He may also demand the recission, even after having requested its fulfilment, should the latter appear impossible."

This Article aptly evidences one of the fundamental differences in approach between the Civil Law and the Common Law. See Szladits, The Concept of Specific Performance in Civil Law, 4 American Journal of Comparative Law, 208 (1955). At Common Law, as was succinctly put by Judge Will in a case involving the Federal Automobile Dealers-Day-in-Court Act, 15 U.S.C. §§ 1221-1225:

"(7) Two elemental propositions of law are here involved, first, that courts will not enjoin a breach of contract if money damages can adequately compensate the injured party; second, that a court of equity has power to enjoin such a breach if money damages will be impossible to calculate or will not constitute adequate compensation. The applicable criterion then is: can money damages which would adequately compensate plaintiffs be here computed?" Madsen v. Chrysler Corp., 261 F.Supp. 488, 507 (N.D.Ill. 1966); vac. as moot, 375 F.2d 773 7th Cir. 1967).

The Supreme Court of Puerto Rico, in applying and discussing the above quoted Article 1077, has summarized the Civil Law approach as follows:

"Under the civil law — contrary to the common law — the fact that a plaintiff who alleges a breach of contract has an adequate remedy by way of damages does not bar him from seeking performance of the contract. The plaintiff `* * * may choose between exacting and fulfilment of the obligation or its rescission, with indemnity for damages * * *'. Section 1077, Civil Code, 1930 ed., 31 LPRA § 3052; § 1340 of the Civil Code, 31 LPRA § 3747; * * * But although the adequacy of the remedy of damages plays no role under our law, §§ 1077 and 1340 of the Civil Code do not create an automatic and absolute right to performance of a contract in all cases." Vázquez v. Superior Court, 78 P.R.R. 707, 712 (1955).

The Civil Law thus contains the general rule that specific performance of contracts will be granted:

"It is a basic principle of modern civil law systems that the promissor is obligated to perform his duty under the contractual obligation and, in the case of a breach, the promisee has the right to enforce this duty, while it is possible and conscionable. The idea that in the case of breach the promissor's primary obligation of performance is transformed into a secondary obligation to compensate the promisee by payment of damages is absent from civil law." Szladits, supra, at 212-213.

It would therefore appear that unless an applicable exception is found to this rule, the restriction imposed upon the issuance of an injunction by Section 3524 of Title 32, L.P.R.A., supra, is not an impediment to plaintiff's prayer.

The Civil Law generally divides obligations into two main groups: Obligations to give (in Spanish "dar" or "entregar", in French "de donner") and obligations to do or to...