United Medical Equipment Corp. v. S. Blickman, Inc.

• Decision Date: 07 December 1966
• Docket Number: Civ. No. 483-66.
• Citation: 260 F. Supp. 912
• Parties: UNITED MEDICAL EQUIPMENT CORP., Plaintiff, v. S. BLICKMAN, INC., Defendant.
• Court: U.S. District Court — District of Puerto Rico

260 F. Supp. 912

UNITED MEDICAL EQUIPMENT CORP., Plaintiff, v. S. BLICKMAN, INC., Defendant.

Civ. No. 483-66.

United States District Court D. Puerto Rico.

December 7, 1966.

Baragaño, Trías, Saldaña, Harris, & Francis, San Juan, P. R., for plaintiff.

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

MEMORANDUM AND ORDER

RUIZ-NAZARIO, Chief Judge.

The defendant has moved to dismiss the complaint herein, alleging that:

1. The Court has no jurisdiction over the person of the defendant.

2. The service of process on the Secretary of State of the Commonwealth of Puerto Rico was insufficient to give this Court or the Superior Court of San Juan, whence the action was removed to this court, jurisdiction over the defendant.

3. The complaint fails to state a claim upon which relief can be granted, for the reasons set out in paragraphs (a), i, ii, iii, iv, v, and vi, which are constitutional grounds, vii in which it is alleged that the Act which is being invoked by the plaintiff here in support of its claim for relief "would be given retroactive effect, in violation of section 3 of the Civil Code of Puerto Rico (31 LPRA 3)" and viii in which said Act is assailed as in violation of the provisions of the Federal and the Commonwealth's anti-trust laws.

A hearing on said motion was held on September 30, 1966, argument was had, and counsel for the parties were granted five days alternatively to file memoranda in support of their respective contentions on the matter.

The Memoranda were submitted and each party supplemented its memorandum with letters and other documents which had the effect of converting defendant's motion into a speaking motion to dismiss, the Court being, therefore, required under the last sentence of Rule 12 (b) of the F.R.Civ.P. to treat said motion to dismiss as a motion for summary judgment, inasmuch as I have not excluded the matters outside the pleadings, and the parties have had every opportunity to present all material made pertinent to such a motion.

Passing to consider the different questions on which the motion is based, the Court must, as it does now, deny said motion in reference to Points 1, 2, and paragraphs (a), i, ii, iii, iv, v, vi, and viii of Point 3, for the reasons stated in its order of November 30, 1966 entered in Civil No. 427-66, entitled La Eléctronica, Inc. v. Electric Storage Battery Co., D.C., 260 F.Supp. 915, and on the further holdings of Volkswagen Interamericana S.A. v. Rohlsen, (1 Cir. 1966) 360 F.2d 437.

Now, as regards the only other point of said motion not covered by the above ruling i. e. 3(a) (vii), in which the defendant challenges plaintiff's attempt to give retroactive effect to the amendment to the Act, the Court believes that defendant's objection must prevail.

It appears from the record that pursuant to agreement between plaintiff and defendant, the former was designated, in 1961, exclusive distributor for Puerto Rico of the hospital equipment and furniture manufactured and sold by defendant, and that such agreement remained in effect from 1961 to 1965. (Complaint Par. 3 and 4).

On June 24, 1964, Act No. 75 of the Puerto Rican Legislature became effective. (See Title 10 L.P.R.A., Secs. 278-278d).

This Act is otherwise known as the Dealer's Act. Sec. 278a thereof prohibited the termination by the principal or grantor of the relationship derived from a dealer's contract or the refusal to renew said contract on its normal expiration, except for just cause, this, notwithstanding the existence of a clause in the contract reserving to the parties the unilateral right to terminate the existing relationship.

Sec. 278b of said Act provided that "if no just cause exists for the termination of the dealer's contract or for the refusal to renew same, the principal will have committed a tortious act against the dealer and shall indemnify him to the extent of the damages caused him, the amount of such indemnity to be fixed on the basis of the following factors:

(a) the actual value of the amount expended by the dealer in the acquisition and fitting of premises, equipment, installations, furniture and utensils, to the extent that these are not easily and reasonably useful to any other activity in which the dealer is normally engaged;

(b) the cost of the goods, parts, pieces, accessories and utensils in stock, and from whose sale or exploitation he is unable to benefit;

(c) that part of the good will of the business of the dealer attributable to the sale of the merchandise or service the object of the dealer's contract, to be determined by taking into consideration the following factors:

(1) the number of years the dealer has had charge of the distribution;

(2) the actual volume of the sale of the merchandise or service and the proportion it represents in the dealer's business;

(3) proportion of the Puerto Rican market said volume represents;

(4) any other factor that may help establish equitably the amount of said good will;

(d) the amount of the profit obtained by the dealer in the sale of the merchandise or service during the last five years, or, if less than five, five times the annual average of the amount of the profit obtained during the last years, whatever they be."

Sec. 278d provides:

"Every action arising from this chapter shall prescribe in three years reckoning from the date of the definitive termination of the dealer's contract."

The above quoted provisions of the Act, particularly the language which has been underscored by the Court, leave no doubt whatsoever that what the legislature had in mind, upon its adoption, was to prohibit the termination or refusal to renew the dealer's contract as a whole,...