Re-Ace, Inc. v. Wheeled Coach Industries, Inc., Civil No. 03-1285 (CCC/GAG).
| Decision Date | 04 November 2004 |
| Docket Number | Civil No. 03-1285 (CCC/GAG). |
| Parties | RE-ACE, INC., Plaintiff, v. WHEELED COACH INDUSTRIES, INC., Defendant. |
| Court | U.S. District Court — District of Puerto Rico |
Alfredo Fernandez-Martinez, Jose A. Fernandez-Paoli, Delgado & Fernandez Union Plaza, Patricia Lorenzi, Delgado & Fernandez, San Juan, PR, for Plaintiff.
Graciela J. Belaval-Bruno, Martinez, Odell & Calabria, San Juan, PR, Jorge Bermudez-Torregrosa, Cuevas, Kuinlam & Bermudez, Hato Rey, PR, Mirta E. Rodriguez-Mora, Latimer, Biaggi, Rachid & Godreau, Carmen P. Figueroa, San Juan, PR, Antonio Vergne-Mirabal, Guaynabo, PR, for Defendant.
Eyck O. Lugo-Rivera, Martinez Odell & Calabria, San Juan, PR, for Plaintiff/Defendant.
Before the Court is defendant Wheeled Coach Industries, Inc.'s ("Wheeled Coach") Motion for Summary Judgment (Docket No. 187), in which it requests dismissal of the claims brought forth against it by Re-Ace, Inc. ("Re-Ace"), alleging Re-Ace is not a protected dealer under Puerto Rico's Dealer's Act ("Dealer's Act", "Law 75"). P.R. Laws Ann. Tit. 10 § 278 ss.
After careful review of all the evidence and material facts, the Court finds that sufficient issues of material fact exist to warrant the DENIAL of Wheeled Coach's Motion for Summary Judgment.
Rule 56(c) of the Federal Rules of Civil Procedure provides for the entry of summary judgment in a case where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Pagano v. Frank, 983 F.2d 343, 347 (1st Cir.1993); Lipsett v. University of Puerto Rico, 864 F.2d 881, 894 (1st Cir.1988). See also Velázquez Hernández, Jorge, The Federal Rules of Evidence, Civil and Criminal Procedure, As Interpreted by the First Circuit Court of Appeals and the U.S. District Court of Puerto Rico, p. 202-212 (2000).
Summary judgment is appropriate where, after drawing all reasonable inferences in favor of the party against whom summary judgment is sought, there is not the slightest doubt as to whether a genuine issue of material fact exists. Kennedy v. Josephthal & Co., Inc., 814 F.2d 798, 804 (1st Cir.1987). A "genuine" issue is one that is dispositive, and which consequently must be decided at trial. Mack v. Great Atlantic and Pacific Tea Co., 871 F.2d 179, 181 (1st Cir.1989); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A material fact, which is defined by the substantive law, is one which affects the outcome of the suit and which must be resolved before attending to related legal issues. Mack, 871 F.2d at 181.
The party filing a motion for summary judgment bears the initial burden of proof to show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Thereafter, the burden shifts to the non-movant to provide the Court, through the filing of supporting affidavits or otherwise, with "some indication that he can produce the quantum of evidence [necessary] to enable him to reach the jury with his claim." Hahn v. Sargent, 523 F.2d 461, 468 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). The non-movant cannot rest upon mere allegations or denial of the pleadings. Fed.R.Civ.P. 56(e). Indeed, the non-movant must affirmatively show that "sufficient evidence supporting the claimed factual dispute [exists] to require a jury or judge to resolve the parties' differing versions of truth at trial." First Nat. Bank of Ariz. v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968), reh'g denied, 393 U.S. 901, 89 S.Ct. 63, 21 L.Ed.2d 188 (1968).
Puerto Rico's Law 751 governs the business relationship between "principals" and the locally appointed "distributors" who market their product. See Caribe Industrial Systems, Inc. v. National Starch and Chemical Co., 212 F.3d 26, 29 (1st Cir.2000). The Dealer's Act, as Law 75 is commonly referred to, was enacted to avoid the arbitrary termination of distribution relationships once the designated dealer had successfully developed a local market for the principal's product or services. Re-Ace, Inc. v. Wheeled Coach Industries, Inc., 363 F.3d 51, 54 (1ST Cir.2004).
In the case at bar, the Court must determine whether the relationship between Re-Ace and Wheeled Coach constitutes a dealer contract, therefore entitling Re-Ace to the benefits of Law 75. Specifically, Wheeled Coach claims that Carlos Leal ("Leal"), Re-Ace's chief executive officer, was merely a broker who acted as a middleman between Wheeled Coach and Ford motor vehicle distributors in Puerto Rico, and whose lone role was to quote prices for said distributors. Memorandum of Law in Support of Summary Judgment, p. 2, 19 (Docket No. 192).
Among the duties Wheeled Coach alleges Re-Ace failed to perform are the purchase of ambulances and parts for re-sale, the purchase and maintenance of demonstrator vehicles, advertising and marketing the ambulances and products, and the maintenance of a sales and service organization. In addition, Wheeled Coach claims that Re-Ace made no investment in advertising and/or marketing, that it failed to successfully bid for General Service Administration contracts, and that it lacked any administrative structure. The preceding factors, Wheeled Coach alleges, evidences the fact that Re-Ace was not a distributor protected under the Dealer's Act. Memorandum of Law in Support of Summary Judgment, p. 6, 10, 13 (Docket No. 192).
At the outset the Court notes that the parties place extreme emphasis on the labels used to identify Re-Ace in its relationship with Wheeled Coach. Law 75 defines a dealer's contract as the "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 a merchandise, or of the rendering of a service, by concession or franchise, on the market of Puerto Rico." P.R. Laws Ann. Tit. 10 § 278(b) (emphasis added). Consequently, whether or not Re-Ace was ever referred to as a dealer or distributor is inconsequential. What matters is the actual functions performed by Re-Ace during its relationship with Wheeled Coach, and whether those actions warrant Law 75 protection. Re-Ace, 363 F.3d at 54.
Under Law 75, a dealer is defined 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." P.R. Laws Ann. Tit. 10 § 278(a). Pursuant to the Puerto Rico Supreme Court's ruling in Roberco, Inc. & Roberto Colon v. Oxford Industries, Inc., 122 D.P.R. 115, 131-32 (1988), the Court must determine if Re-Ace has the requisite autonomy to be a dealer under the Dealer's Act. In doing so, the Court must view Re-Ace's claim in light of the factors set forth in Roberco: promotion of the product, keeping an inventory, fixing prices, delivery and billing responsibilities, authority to extend credit, advertising campaigns, assumption of risk, purchasing the product, maintaining facilities, and offering product-related services to clients. See Triangle Trading Co., Inc. v. Robroy Industries, Inc., 200 F.3d 1, 4-5 (1ST Cir.1999); Oliveras v. Universal, 141 D.P.R. 900, 915 (1996).
It is undisputed that Re-Ace has not invested any money in advertising campaigns aimed at promoting Wheeled Coach products. Wheeled Coach's Uncontested Material Fact No. 28 (Docket No. 188). While Leal alleges he personally marketed Wheeled Coach products to buyers and clients,2 he admits to failing to submit a marketing plan requested by Wheeled Coach. Re-Ace Exhibit C, Deposition of Carlos Leal, p. 138. Re-Ace's marketing efforts are, thus, limited to handing out literature on the product. Re-Ace Exhibit B, Carlos Leal's Preliminary Injunction Hearing Testimony, p. 34.
Leal also testified to the effect that Re-Ace was not responsible for receiving and transporting the vehicles once they arrived at the local port. According to Leal's testimony, the Ford dealers who purchased the ambulances were the ones responsible for that. Id., 101.
In addition, Re-Ace does not keep an inventory, acquire title to the vehicles, nor pay excise tax. Id., 25, 101.
Some of the above facts, are certainly probative of a "just cause"3 defense.4 While the performance of Re-Ace as a dealer is surely in doubt, the structure under which both parties did business during their relationship sets forth sufficient facts at this, the summary judgment crossroad, for the Court to conclude that Re-Ace is protected under Law 75. Re-Ace, 363 F.3d at 53-55.
In the case at bar, there exists a "distributor's contract" between Wheeled Coach and Re-Ace, dated January 1, 1989, which is signed by then Wheeled Coach president Ronald Cartwright. Re-Ace Exhibit 1. While the copy submitted to the Court lacks any Re-Ace representative's signature, Leal testified that the contract was executed by Re-Ace and returned to Wheeled Coach, and that it governed the parties relationship from that date on. Re-Ace Exhibit B, Carlos Leal's Preliminary Injunction Hearing Testimony, p. 20-22. Said agreement set forth a series of continuing obligations on the part of Re-Ace, including maintaining sales and service facilities and personnel, investing in working capital, maintaining lines of credit, and the delivery of numerous accounting and administrative information. Re-Ace Exhibit 1. Such a relationship varies from the agreements Wheeled Coach adopts with its brokers and agents, which do...
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...is inconsequential in determining whether a dealer's contract under Law 75 has been established. See Re–Ace, Inc. v. Wheeled Coach Industries, Inc., 343 F.Supp.2d 97, 100 (D.P.R. 2004). It is also irrelevant whether the relationship is "committed to writing", because a dealer's contract may......