Madelux Intern., Inc. v. Barama Co. Ltd.

• Decision Date: 15 February 2005
• Docket Number: No. CIV.01-1862(HL).,CIV.01-1862(HL).
• Citation: 364 F.Supp.2d 68
• Parties: MADELUX INTERNATIONAL, INC., Plaintiff, v. BARAMA CO. LTD., et al., Defendants
• Court: U.S. District Court — District of Puerto Rico

364 F.Supp.2d 68

MADELUX INTERNATIONAL, INC., Plaintiff, v. BARAMA CO. LTD., et al., Defendants

No. CIV.01-1862(HL).

United States District Court, D. Puerto Rico.

February 15, 2005.

Freddie Perez-Gonzalez, Freddie Perez Gonzalez & Assoc. PSC, Luis A. Vargas-Lopez, Freddie Perez Gonzalez & Assoc. PSC, San Juan, PR, for Madelux International, Plaintiff.

Alberto G. Estrella, William Estrella Law Offices, Kenneth C. Suria-Rivera, William Estrella Law Offices, San Juan, PR, for Barama Co. Ltd., Defendant.

OPINION AND ORDER

LAFFITTE, District Judge.

Plaintiff Madelux International Inc. (hereinafter "Madelux"), filed an amended complaint against defendants Barama Co. Ltd. (hereinafter "Barama"), Sterling Wood Products, Inc. ("Sterling"), and Aljoma Lumber Inc. ("Aljoma"), alleging that Barama and Sterling terminated Madelux's exclusive sales agreement to distribute plywood in Puerto Rico without just cause in violation of Puerto Rico's Act 75, 10 L.P.R.A. § 278 et seq. ("Law 75"). (Docket No. 32, amended complaint.) Defendant Barama, in turn, argues that there was no "dealer's contract" between them and Madelux, and as such Madelux is not a "dealer" under Law 75.

Plaintiff Madelux also brought forth a claim for tortious interference with a contractual relationship against co-defendant Aljoma. Defendant Barama, in turn, filed a counterclaim against Madelux for tortious interference with commerce in violation of Article 1802 of the Puerto Rico civil code.¹

A bench trial on this matter was held from December 6 through December 8, 2004. At the conclusion of plaintiff Madelux's case, the court granted defendant Aljoma's Rule 50 motion, and entered judgment on December 9, 2004, dismissing all claims against co-defendant Aljoma. (Docket No. 184.)

FINDINGS OF FACT

Based on all the evidence and testimony presented at trial, as well as the parties' stipulations in the pretrial order, the Court makes the following findings of fact:

1. Madelux International Inc. ("Madelux"), is a corporation organized under the laws of the Commonwealth of Puerto Rico, with principal offices at route 864, Km. 2.1, Hato Tejas Ward in the city of Bayamón.

2. Madelux C.A., is a separate legal entity organized under the laws of Venezuela, with principal offices in Venezuela. Madelux C.A. is not a party to this action.

3. Madelux's owners and/or principals are Tomi Revai, Jozsef Revai, and Enrique Jordan.

4. Tomi Revai, a U.S. citizen, resident of Caracas, Venezuela, conducted almost all of the negotiations on behalf of Madelux with Barama's and Sterling's representatives. Tomi Revai also negotiated the orders on behalf of the Venezuelan corporation, Madelux, C.A.

5. Barama Co. Ltd. ("Barama"), is a foreign corporation duly organized under the laws of the sovereign Republic of Guyana with principal offices in Land of Canaan, East Bank, Demarara, in the Republic of Guyana.

6. Barama operates a wood mill in Guyana and manufactures lumber and wood related products. Barama began selling plywood to Madelux sometime in 1994.

7. In December 11, 1995, Barama mailed a letter to Mr. Tomi Revai at Madelux C.A.'s address in Venezuela, stating: "We wish to confirm that `Madelux' and `Castel' are the only buyers for our plywood in Puerto Rico." (Exhibit 2). The letter was signed by K.T.Chung, Barama's Managing Director. The letter was the result of negotiations between Tomi Revai and K.T. Chung. (Testimony Tomi Revai.)

8. Madelux was incorporated in Puerto Rico in March of 1996, after Tomi Revai received the December 11, 1995 letter from Barama to Madelux, C.A. in Venezuela. Thereafter, Madelux made a significant money investment and built a warehouse in Hato Tejas, Bayamón. (Testimony Enrique Roldán.)

9. Castell, who was one of Madelux's competitors in the Puerto Rico market, did not receive a copy of the December 11, 1995 letter from Barama. A copy of the letter was sent by fax to Mr. Carlos Castell by Mr. Roldán from Madelux. Barama did not require that Castell buy a certain amount of plywood, nor that it maintain an inventory. (Testimony Carlos Castell.)

10. Castell purchased plywood from Barama from 1992 until sometime in 1996 or 1997. Carlos Castell decided not to continue doing business with Barama since he experienced some quality problems with the product. (Testimony Carlos Castell.)

11. From 1995 through May of 1999, Tomi Revai conducted business with Barama, mostly through letters and/or e-mails, with several of the managers at Barama, who were of Korean descent. (See Exhibits 3-9; Exhibits 11-13).

12. During 1999 there was a change in management at Barama, and as such Mr. James C. Keylon became Managing Director for Barama in May of 1999.

13. On May 31, 1999, Barama announced the appointment of Michael Richardson as its General Sales Manager for the United States market and the Caribbean. (Exhibit 14). Mr. Richardson worked for Sterling Wood Products, a United States corporation, with offices in Phoenix, Arizona. (Exhibit 15.)

14. In a fax/letter by Mr. Richardson dated June 19, 1999, Richardson expressed his concern that: "...purchases from Madelux have all but disappeared." Richardson also stated that the parties' original intent was to have "monthly minimum contract[s] ... established and consummated." In closing, Mr. Richardson stated: "Barama would like to keep our supply channels with Madelux. Other importers in Puerto Rico whom have expressed interest in Baromally Plywood have approached us. We have advised them that Madelux is currently our distributor and we are staying with that decision until further notice." In addition, Mr. Richardson mentioned that Barama expected Madelux to make a commitment to purchase a monthly minimum of plywood materials in order for the business relationship to continue. (Exhibit 19).

15. Tomi Revai responded to Mr. Richardson's communication by letter/fax on June 21, 1999. In said letter, Revai admits that Madelux had ceased placing orders from Madelux, and blames the higher costs of importing baromally in relation to other kinds of plywood from Brazil, Peru and Ecuador. Revai further stated: "In summary I believe we could restart some reasonable volume orders if baromally would cost C & F our ports 8-10% less than Brazilian plywood ...". The letter further reads: "Please keep also in mind that another reason our orders from Barama became nil, is because from Barama we had to order larger volumes & pay in advance," as opposed to other sources. Revai ends his letter by stating that he hoped they could come up with a workable price that would enable Madelux to resume its regular purchases from Barama. (Exhibit 20).

16. Throughout most of 2000, Madelux and Barama continued their business relationship without significant problems.

17. The business relationship between Barama and Madelux began deteriorating during the last few months of 2000, when Barama failed to fulfill several orders placed by Madelux.² In December 7, 2000, Revai e-mailed Lalaram asking him to let him know if Barama could or would ship additional orders to Madelux in Venezuela and Puerto Rico. Revai stated: "Our communications are erratic at best and sometimes I feel that Barama is not interested in our business.... Please confirm if we can depend on regular supplies from you or not." (Exhibit 56).

18. Early in 2001, Barama commenced selling baromally plywood to Aljoma for its resale or distribution in Puerto Rico.

19. The first and only time that the word `exclusive' is utilized to describe the relationship between Barama and Madelux, is in self-serving letter dated April 20, 2001 written by Revai prior to the filing of this complaint. (Exhibit 57).

20. Barama's sales summaries for the years 1994-2003 details Barama's sales of plywood in the Puerto Rico market. During 1994, Barama sold plywood for distribution in Puerto Rico, to both, "Castell Export Corp." and "Martinez Arias Her, Inc." During 1995, Barama sold plywood to Castell Export Corp., Martinez Arias, Inc., Maderas Tratadas, Inc., and Madelux. (Exhibit 62.)

21. From 1996 through 2000, Barama's only purchaser of plywood in Puerto Rico was Madelux. From 2001 through 2003, Barama sold plywood to Aljoma. (Exhibit 62.)

22. In 2003 Aljoma's warehouse facilities in Puerto Rico caught fire. Aljoma ceased operations in Puerto Rico. (Testimony of Enrique Roldán.)

23. Mr. Girwar Lalaram became the Managing Director for Barama sometime in 2000.

DISCUSSION

The Court needs to determine whether or not Maledux can be considered a "dealer" for purposes of Law 75. The statute itself does not resolve the matter. See Triangle Trading Co., Inc. v. Robroy Industries, Inc., 200 F.3d 1 (1st Cir.1999). Law 75 defines a dealer as a "person actually interested in a dealer's contract because of his having effectively in his charge in Puerto Rico the distribution, agency, concession or representation of a given merchandise or service." 10 P.R.Laws Ann. § 278(a). The statute expands on this definition by explaining that a dealer's contract is a

relationship established between a dealer and a principal or grantor whereby and irrespectively of the manner in which the parties may call, characterize or execute such relationship, the former actually and effectively takes charge of the distribution of merchandise, or of the rendering of a service, by concession or franchise, on the market of Puerto Rico.

Id. at § 278(b).

Law 75 was enacted "to remedy the abusive practices of suppliers who arbitrarily eliminated distributors after they had invested in the business and had successfully established a market in Puerto Rico for the supplier's product or service." Re-Ace, Inc. v. Wheeled Coach Industries, Inc., 363 F.3d 51, 54 (1st Cir.2004)(citing Triangle Trading Co., Inc. v. Robroy Indus., Inc., 200 F.3d at 2 (internal quotations omitted)); see also, V. Suarez & Co., Inc. v. Dow Brands, Inc., 337 F.3d 1, 4 (1st Cir.2003); Irvine v. Murad Skin Research Labs., Inc., 194 F.3d 313, 317 (1st...