A.M. Capen's Co., Inc. v. American Trading & Prod.

• Decision Date: 11 July 1997
• Docket Number: Civ. No. 94-1483(DRD).,Civ. No. 94-1367(DRD).
• Citation: 973 F.Supp. 247
• Parties: A.M. CAPEN'S CO., INC., Plaintiff, v. AMERICAN TRADING AND PRODUCTION CORPORATION, Defendant. A.M. CAPEN'S CO., INC., Plaintiff, v. BLAS ROSSY-ASENCIO, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

973 F.Supp. 247

A.M. CAPEN'S CO., INC., Plaintiff, v. AMERICAN TRADING AND PRODUCTION CORPORATION, Defendant.

A.M. CAPEN'S CO., INC., Plaintiff, v. BLAS ROSSY-ASENCIO, et al., Defendants.

Civ. No. 94-1367(DRD).

Civ. No. 94-1483(DRD).

United States District Court, D. Puerto Rico.

July 11, 1997.

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Philip E. Roberts, San Juan, PR, for A.M. Capen's Co. Inc., Plaintiff.

Jose E. Colon-Santana, Hato Rey, PR, American Trading and Production Corporation, for Defendants Blas Rossy-Asencio and Rafaela Fulana De Tal.

OPINION AND ORDER

DOMINGUEZ, District Judge.

A.M. Capen's Co. filed the complaint in this diversity case alleging that the American Trading and Production Co. (ATAPCO) violated the Puerto Rico Dealer's Act, Act No. 75 of June 24, 1964, P.R. Laws Ann. tit. 10, §§ 278-278d (Official translation 1976 & Supp.1991). There are three motions pending before the Court. The plaintiff filed a cross motion for partial summary judgment on the issue of liability.¹ The defendant filed a motion for partial summary judgment on the issue of damages.² Finally, the plaintiff filed a motion for reconsideration of the Court's order requiring plaintiff to produce its financial records for the post-impairment period.³

Little need be said regarding the motion for partial summary judgment on the issue of liability. Because the defendant's opposition fails to comply with Local Rule 311.12, the plaintiff's statement of uncontested facts is deemed admitted. See Dominguez v. Eli Lilly & Co., 958 F.Supp. 721, 727 (D.P.R. 1997). The admitted facts establish both that a contract granting A.M. Capen's an exclusive dealership for certain ATAPCO products had existed since June 6, 1978, and that on December 14, 1993, ATAPCO unilaterally withdrew A.M. Capen's' exclusivity, in breach of the 1978 agreement. Furthermore, the defendant has failed to produce any evidence that would justify the finding of "just cause," for purposes of Act No. 75, to impair the distribution relationship. The Court therefore finds that ATAPCO is liable under Act No. 75 for any damages that A.M. Capen's may have suffered as a result of its loss of exclusivity.

The more difficult problem before the Court is determining how to compute damages under Act No. 75 in cases in which the principal has impaired but not terminated the distribution relationship. In its opposition to ATAPCO's motion for partial summary judgment, A.M. Capen's argues that Art. 3 of Act No. 75 requires that damages be granted pursuant to the factors therein enumerated, without exception. For the reasons discussed below, the Court rejects the plaintiff's proffered interpretation and holds instead that under Act No. 75 a plaintiff may only recover actual, proven damages, and therefore that the provisions of Art. 3 are only guides intended to facilitate the Court's task of determining the actual damages suffered by a plaintiff. The court also denies the plaintiff's motion for reconsideration because evidence of the plaintiff's post-impairment sales of ATAPCO products will be relevant to the determination of the damages A.M. Capen's is entitled to receive.

Nevertheless, the Court also denies ATAPCO's motion for partial summary judgment. ATAPCO argued that the plaintiff would not be able to establish having suffered damages, and therefore requested that the complaint be dismissed. The Court finds, however, that the deposition testimony submitted by the plaintiff is sufficient to create a genuine issue of fact as to whether ATAPCO's decision to name a sales agent in A.M. Capen's' exclusive territory entitles A.M. Capen's to compensation under Act No. 75.

I. Background

On June 6, 1978, John F. Cornforth, General Sales and Marketing Manager for Globe-Weis (a division of Sheller-Globe Corp.), sent a letter to Camilo Fernandez, president of A.M. Capen's Co., stating that "[c]onfirming my phone conversation with you [Fernandez] today, effective immediately you will become our exclusive representative for the sales of our standard Globe-Weis products to Puerto Rico, the Caribbean area, Dominican Republic and Central and South America." Docket No. 16, Ex. 1. The letter also contained various terms of agreement, such as prices, commissions, and shipping procedures.

The relationship between Globe-Weis and A.M. Capen's Co. continued over the next fifteen years; although the Globe-Weis division was purchased by ATAPCO from Sheller-Globe Corporation in 1987, A.M. Capen's' distribution of Globe-Weis and Steelmaster products continued as before. Indeed, an ATAPCO officer, Mr. Dan Hirshhorn, sent A.M. Capen's a letter dated January 7, 1992, stating that it was ATAPCO's intention to take measures to "strengthen this relationship" and "protect the exclusivity of your [A.M. Capen's'] territory." Docket No. 16, Exhibit 7. There is also evidence that A.M. Capen's' annual sales of ATAPCO products were substantial; for example, such sales exceeded $1,000,000.00 for two consecutive years (1992 — 1993). Docket No. 16, Exs. 10-11.

In July, 1992, Mr. Hirshhorn was replaced by Mr. Michael McNamara as Director of International Markets. A year and a half later, on December 14, 1993, Mr. McNamara wrote Mr. Fernandez to inform him that A.M. Capen's' exclusivity was being withdrawn. The letter, in pertinent part, states that:

While we feel very good about what your organization has been able to accomplish over the years in these markets [Caribbean and Central America], we also are convinced that the way we have structured our business relationship has served as a restriction to growth and a self-imposed limit to access of important markets. Your business is valuable to us and we want our good relationship to continue. At the same time, it is necessary to change our non-contractual arrangement for exclusive market access. Effective January 1, 1994, the Caribbean and Central American Territories will become non-exclusive territories for A.M. Capens [sic].

Docket No. 16, Ex. 9. The Court notes that neither this letter nor, indeed, any other item in evidence, indicates that ATAPCO considered A.M. Capen's to have failed to hold up its end of the bargain. The battle of the labels began then, with Mr. McNamara referring to A.M. Capen's as a "U.S. based Exporter" and "a top-notch consolidator of branded products," and to the agreement between ATAPCO and A.M. Capen's as a "non-contractual arrangement." Docket Nos. 9, 12, and 16. A flurry of letter-writing ensued, with A.M. Capen's protesting at its deprivation of exclusivity and requesting negotiations, and ATAPCO insisting that the loss of exclusivity would not be damaging to A.M. Capen's. Some attempts were made to settle the dispute, but the parties failed to reach an agreement.

A.M. Capen's then filed the instant diversity⁴ suit against ATAPCO under Act No. 75, seeking compensation for the losses it incurred as a result of ATAPCO's unilateral action. Civil No. 94-1367(DRD). When it was later discovered that ATAPCO had named Mr. Blás Rossy-Asencio as its direct sales representative in Puerto Rico, A.M. Capen's filed a second suit, this one against Mr. Rossy-Asencio under Puerto Rico's tort statute, for tortious interference with contract. Civil No. 94-1483(DRD). The two cases were later consolidated.

II. Personal Jurisdiction

The Court originally harbored some doubts as to the propriety of exercising personal jurisdiction over ATAPCO. As noted above, ATAPCO is based in Missouri and A.M. Capen's is based in New Jersey. Neither one is incorporated, has offices, nor is authorized to conduct business in Puerto Rico.⁵ Furthermore, although there is some controversy as to whether ATAPCO had knowledge that some shipments were eventually destined for Puerto Rico, it is undisputed that all shipments from ATAPCO to A.M. Capen's were delivered to locations in New Jersey or Miami, not in Puerto Rico. It was therefore not clear that ATAPCO had "transacted business" in Puerto Rico for purposes of Puerto Rico's long-arm statute, nor did it otherwise seem to have minimum contacts with Puerto Rico.

To the contrary, it appeared that the only way that the Court could conclude that ATAPCO had sufficient contacts with Puerto Rico to justify the exercise of personal jurisdiction was by finding that Act No. 75 applied to the parties' relationship. That was because Art. 3 of the Dealers' Act declares that a violation of the Act is a tort. P.R. Laws Ann. tit. 10, § 278b. Pursuant to Puerto Rico's long-arm statute, P.R. R. Civ. P. 4.7(a)(2), personal jurisdiction may be exercised over a nonresident tortfeasor who has committed a tort in Puerto Rico. P.R. Laws Ann. tit. 32, App. III, R. 4.7(a)(2) (Official translation 1983).⁶

The problem was that the argument for jurisdiction suffered from logical circularity, because while the very applicability of Act No. 75 to the parties' relationship depended on the fact that a tort had been committed in Puerto Rico,⁷ the determination that the breach of the parties' agreement should be analyzed as a tort, rather than as a breach of contract, depended on the applicability of Art. 3 of the Dealers' Act. Admittedly, the U.S. Court of Appeals for the First Circuit, on appeal from an order of this court issuing a preliminary injunction, declared that in view of the evidence available at that time, weighed according to the choice of law principles of the Restatement (Second) of Conflicts of Law, "the law of Puerto Rico most probably applies to this hybrid contract/tort action." A.M. Capen's Co. v. American Trading & Prod. Corp., 74 F.3d 317, 323 (1st Cir.1996) (emphasis added). But the Court notes that the court of appeals' choice-of-law determination was explicitly made provisional, and could have been modified in view of later evidentiary developments in this case.

It is undisputed that pursuant to the exclusive distribution agreement between A.M. Capen's...