Kali Seafood, Inc. v. Howe Corp.

Citation887 F.2d 7
Decision Date11 September 1989
Docket NumberNo. 89-1420,89-1420
PartiesProd.Liab.Rep.(CCH)P 12,475 KALI SEAFOOD, INC., Plaintiff, Appellant, v. HOWE CORPORATION, Defendant, Appellee. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Zaida Prieto Rivera, San Juan, P.R., with whom Ledesma, Palou & Miranda, Hato Rey, P.R. was on brief, for plaintiff, appellant.

Luis Sanchez-Betances, with whom Sanchez-Betances & Sifre, Hato Rey, P.R., was on brief, for defendant, appellee.

Before SELYA, Circuit Judge, COFFIN and FAIRCHILD *, Senior Circuit Judges.

SELYA, Circuit Judge.

Plaintiff-appellant Kali Seafood, Inc. (Kali) is a Puerto Rico corporation engaged in commercial fishing activities. While outfitting a vessel for service in the Caribbean, Kali perhaps recalled the apothegm often attributed to no less a luminary than Benjamin Franklin 1: "Fish and visitors stink in three days." At any rate, Kali ordered a seawater icemaking machine designed and manufactured by defendant-appellee Howe Corporation (Howe). The apparatus, intended to preserve the freshness of the catch, was delivered in July 1980, and installed in October, with distressing consequences: according to appellant, the machine was incapable of producing ice at sea.

An ice-maker not disposed to making ice can nevertheless make an inordinate share of trouble. For some time, Howe attempted to rectify the situation and satisfy Kali's complaints. By mid-1983, however, the parties' relations (if not the daily catch) had gone from cool to frigid. Thoroughly disgusted, appellant called a halt to all remedial efforts, scuttled its piscatorial plans, sold the vessel, and embarked on a rather odd voyage through the courts.

Procedural Background

In September 1984, Kali sued Howe in an Illinois state court for breach of warranty (Suit No. 1), alleging that the icemaker "did not function properly, in that it would make salt-water ice only infrequently, and in port." While Suit No. 1 was still pending, Kali sued Howe again (Suit No. 2), this time in the United States District Court for the District of Puerto Rico, making substantially the same allegations. For reasons which are obscure on the present record, appellant voluntarily discontinued Suit No. 1 on October 29, 1985 and Suit No. 2 on March 6, 1987.

In July 1987, Kali struck again; it brought the instant action in Puerto Rico's federal district court. Kali's complaint alleged that it purchased the ice-maker for a particular purpose; that defendant knew of the purpose, represented that the machine (a) was "designed to produce ... at least one ton of salt water ice per day," and (b) "would enable plaintiff to operate in the ocean ... having sufficient ice to preserve the [catch]"; that the ice-maker never performed "as designed or as expected" despite representations that it would do so; that the fundamental cause of the difficulty was "the fact that the machine was defectively designed and had manufacturing defects," or, put another way, that the ice-maker "was defective and was not appropriate for the use [that] was intended"; that Howe "was negligent" in designing, manufacturing, and modifying the ice-maker; and that, because of Howe's "breaches of its warranty" and "negligence," plaintiff incurred loss, cost, damage, and expense of varying kinds and amounts.

After allowing full discovery, the district court granted summary judgment, finding plaintiff's suit to be time barred. Kali Seafood, Inc. v. Howe Corp., 709 F.Supp. 285 (D.P.R.1989). This appeal ensued.

Framing The Issue

We approach this case cognizant that "[w]here the parties agree what substantive law controls in a diversity case, we can--and ordinarily should--accept such a concession." Moores v. Greenberg, 834 F.2d 1105, 1107 n. 2 (1st Cir.1987). Both parties to this case urge us to apply Puerto Rico law to the timeliness question. We shall do so.

Of course, summary judgment may stand only if the record demonstrates conclusively "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law," Fed.R.Civ.P. 56(c). Here, while disputes concerning the ice-maker's alleged shortcomings are rife, the items which bear importantly on timeliness are rather clearcut. They include:

1. Howe knew of plaintiff's requirements and represented that the ice-maker would work satisfactorily. Kali had no notice of any defect in, or problem with, the equipment until it was delivered and installed. Kali promptly complained.

2. From November 1980 through August 1, 1983, the parties were in steady communication "regarding the functioning warranty replacements and repairs of the ice maker." Kali Seafood, 709 F.Supp. at 286.

3. The parties' abortive efforts at amelioration ended on August 1, 1983 (the "trigger date") and the limitation period began to run no later than that date. See Casa Jaime Corp. v. Castro, 89 P.R.R. 686, 688 (1963) (in contract cases involving defective wares, prescriptive period is counted not from date contract perfected, but from date efforts to reach an understanding were interrupted).

4. Kali first sued more than a year after the trigger date.

5. By operation of law, voluntary dismissal of a timely-instituted suit has the effect of revivifying the statute of limitations. See Silva-Wiscovich v. Weber Dental Mfg. Co., 835 F.2d 409, 410 (1st Cir.1987) (discussing tolling of statute of limitations under Puerto Rico law); Burke v. Compagnie Nationale Air France, 699 F.Supp. 1016, 1017 (D.P.R.1988). Thus, if the original suits were seasonably brought, 2 the present action--commenced within five months of the discontinuance of Suit No. 2--survives.

We have noted before that "[p]reclusory time bars are appropriately examined under Rule 56 if the relevant facts are sufficiently clear." Mack v. Great Atlantic and Pacific Tea Co., 871 F.2d 179, 181 (1st Cir.1989). This is such a case. Accordingly, our inquiry reduces to whether the district court, given the lack of any genuine, material dispute touching upon timeliness, wielded the proper legal yardstick in ascertaining that the action was time barred.

The Choices

The parties nominated three candidates and asked the lower court to elect which candidate governed the timeliness question. Alluding to the general statutory provision applicable to contracts and other personal claims "for which no special term of prescription is fixed ...," P.R. Laws Ann. tit. 31, Sec. 5294, appellant contended that it had fifteen years within which to sue. Appellee eschewed the general in favor of the specific, exhorting that the controlling statute was either P.R. Laws Ann. tit. 31, Sec. 3847 (actions for hidden defects "shall be extinguished after six months, counted from the delivery of the thing sold") or P.R. Laws Ann. tit. 31, Sec. 5298(2) (actions for negligence prescribe in one year "from the time the aggrieved person had knowledge thereof").

The district court characterized plaintiff's claim as sounding in "breach of warranty for alleged defects and faults in the design and manufacturing of the ice maker by defendant." Kali Seafood, 709 F.Supp. at 287. For that reason, the court applied section 3847 and ruled "plaintiff's cause of action had prescribed" before Suit No. 1 was filed, the critical fact being that "more than six months had elapsed" between the trigger date and the institution of legal action. Id. 3

The contestants hawk the same array of choices on appeal. If appellant is correct, it had fifteen years within which to file, and its suits (including this one) were timely. If, however, either of defendant's theories hold water, the trail has grown too cold and the ruling below must be affirmed.

Discussion

The leading case in Puerto Rico concerning a vendor's liability for hidden defects is Ferrer v. General Motors Corp., 100 P.R.R. 244 (1971). In Ferrer, the Puerto Rico Supreme Court elucidated four requirements which underlie such an action:

[I]n order to be subject to warranty the hidden defects (1) should be unknown to the vendee, (2) the defect should be serious or very important for it to render the thing unfit for the use to which it was destined or which diminishes said use in such manner that had the vendee had knowledge thereof he would not have acquired it or would have given a lower price for it, (3) that [the defect] is pre-existent to the sale and (4) that the action be brought in the legal period, which is of six months counted from the delivery of the thing sold.

Id. at 254; see also In re Bird Copying Machines, Inc., 618 F.2d 883, 885 (1st Cir.1980) (same; citing and quoting Ferrer ); P.R. Laws Ann. tit. 31, Secs. 3841-3843 (containing substantive statutory provisions anent hidden-defect warranty).

To all appearances, this case slips snugly within the hidden-defect integument. The complaint paints a vivid portrait of a good-faith purchase of sophisticated machinery, festooned with a cornucopia of seller's representations and warranted for a highly specialized purpose. When delivered and installed, the equipment proved to contain "faults or hidden defects," P.R. Laws Ann. tit. 31, Sec. 3842, which "render[ed] it unfit for the use to which it was destined...." Tit. 31, Sec. 3841. The defects were "unknown to the vendee," "very important," and "pre-exist[ed] ... the sale...." See Ferrer, 100 P.R.R. at 254. The dysfunctional ice-maker was worse than useless, a circumstance which leaves room for only one inference: had Kali possessed advance knowledge of the defects, it "would not have acquired" the product. See id. The case, then, as plaintiff pleaded it, was plainly one for breach of the statutory hidden-defect warranty. Cf., e.g., Carroll v. Capalbo, 563 F.Supp. 1053, 1058 (D.R.I.1983) ("if it walks like a duck, and it squawks like a duck, it must be a duck").

Kali concedes in its brief that "[t]he complaint alleged breach of warranty," but asserts that Puerto Rico law gives a claimant "the prerogative...

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