Velazquez Casillas v. Forest Laboratories, Inc.

• Citation: 90 F.Supp.2d 161
• Decision Date: 26 January 2000
• Docket Number: No. Civ 98-1076(HL).,Civ 98-1076(HL).
• Parties: Domingo VELAZQUEZ CASILLAS, et al, Plaintiffs, v. FOREST LABORATORIES, INC., Defendant.
• Court: U.S. District Court — District of Puerto Rico

90 F.Supp.2d 161

Domingo VELAZQUEZ CASILLAS, et al, Plaintiffs, v. FOREST LABORATORIES, INC., Defendant.

No. Civ 98-1076(HL).

United States District Court, D. Puerto Rico.

January 26, 2000.

Ivan Vega-Lassalle, Hatillo, PR, for plaintiffs.

Michelle M. Garcia-Perez, Arturo Diaz-Angueira, Cancio, Nadal, Rivera & Diaz, San Juan, PR, Peter J. Venaglia, Dornbush, Mensch, Mandelstam, Mandelstam & Schaeffer, New York City, for Forest Laboratories, Inc., defendant.

Hector F. Oliveras-Delgado, Pinto-Lugo & Rivera, San Juan, PR, Francisco E. Colon-Ramirez, Colon, Colon & Martinez, San Juan, PR, for AIU Insurance Co., defendant.

Virgilio Mendez-Cuesta, Rio Piedras, PR, Davis M. Gische, Paul C. Vitrano, Ross, Dixon & Bell, L.L.P., Washington, DC, for Federal Insurance Company, defendant.

OPINION AND ORDER

LAFFITTE, Chief Judge.

Before the Court is Defendant Forest Laboratories, Inc.'s motion for summary judgment. Forest is a Delaware corporation engaged in the manufacturing of pharmaceutical products. Up until 1997 it owned a facility in Puerto Rico known as Sein Mendez Laboratories. Plaintiffs Domingo Velázquez Casillas ("Velázquez"), Carlos Matías Maldonado, Luis Pérez Aviles, Rafael Rodríguez Rivera, and Gumercinda Santiago Maceda are former employees of Sein Mendez.¹ This dispute arises out of negotiations between the parties to sell Sein Mendez to Plaintiffs. The sale was not consummated, and Plaintiffs brought this action, claiming that Forest is liable under the culpa in contrahendo doctrine.² The Court has jurisdiction based on diversity of the parties.³

In ruling on a motion for summary judgment, a court reviews the record in the light most favorable to the plaintiff and draws all reasonable inferences in his favor. LeBlanc v. Great American Ins. Co., 6 F.3d 836, 841 (1st Cir.1993). Before proceeding to view the record through this plaintiff-friendly prism, however, it is necessary to provide some exposition on the procedural requirements for motions supporting and opposing summary judgment. A court reviewing a motion for summary judgment should consider the parties' filings to the extent that they comply with the district's local rules. Camilo-Robles v. Hoyos, 151 F.3d 1, 9 n. 7 (1st Cir.1998). Puerto Rico's Local Rules require that a motion for summary judgment be accompanied by a statement of material facts "to which the moving party contends there is no genuine issue to be tried ... properly supported by specific reference to the record." Local Rule 311(12). These facts will be deemed admitted unless the nonmovant properly opposes them. Id. In order to demonstrate that there is indeed a genuine issue of material fact, the nonmovant's opposition must also include a statement of material facts to which it contends that there are genuine issues and which are "properly supported by specific reference to the record." Id. Thus, the opposing party must make specific references to the record which establish a genuine issue of fact; the opposing party cannot expect the court to ferret through the record to find evidence favorable to his case. Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 930-31 (1st Cir.1983); Dominguez v. Eli Lilly and Co., 958 F.Supp. 721, 727 (D.P.R.1997), aff'd, 141 F.3d 1149 (1st Cir.1998) (Table case).

With these strictures in mind, the Court turns its attention to Plaintiffs' opposition to the motion for summary judgment. Their opposition contains a statement of contested facts. Of these contested facts, numbers 4, 8, and 13 admit certain allegations in Forest's statement of facts. Only Plaintiffs' numbers 1, 2, 4, 6, and 10 contain citations to the record. The remaining contested facts — numbers 3, 5, 7, 9, 11, and 12 — suffer from defects. They either make allegations of fact without citation to evidence, refer only to Plaintiffs' memorandum of law for support, or merely deny Forest's statement of fact based on a lack of information to form an opinion or belief. A party opposing summary judgment may not rely on unsubstantiated denials or conclusory allegations. Magee v. United States, 121 F.3d 1, 3 (1st Cir.1997). Nor can a party stop summary judgment merely by insisting that the other side's evidence should not be believed. Abbott v. Bragdon, 107 F.3d 934, 942 (1st Cir.1997), vacated on other grounds, 524 U.S. 624, 118 S.Ct. 2196, 141 L.Ed.2d 540 (1998). Moreover, the allegations or arguments of counsel are not competent to oppose summary judgment. Nieves v. University of Puerto Rico, 7 F.3d 270, 276 n. 9 (1st Cir.1993); Lopez v. Corporacion Azucarera de Puerto Rico, 938 F.2d 1510, 1515-16 n. 11 (1st Cir.1991). These defects in Plaintiffs' statement of contested facts have the effect of admitting as true a number of the assertions in Forest's statement of facts. Therefore, the only statements of facts by Plaintiffs which the Court will consider are numbers 1, 2, 4, 6, 8, 10, and 13.

Having laid out this groundwork, the Court proceeds to a review of the record. From 1981 to 1997, Forest owned and operated Sein Mendez Laboratories as a manufacturing facility.⁴ This facility was not a profitable one; it had been losing money for most or all of the ten years leading up to 1996.⁵ Accordingly, Forest decided in 1996 to sell Sein Mendez. As part of this decision, it began negotiations in October 1996 with Francisco Santos and Velázquez to sell them the facility. At the time, Santos was Sein Mendez' senior manager, and Velázquez was its controller.⁶ The price for the facility was to be $2,000,000. The transaction was tentatively structured so that Santos and Velázquez would pay $500,000 at the closing and then repay the balance of $1,500,000 over ten years.⁷ Thus, Forest would in effect be financing the purchase of the plant.

Shortly after negotiations began, Santos and Velázquez brought the other Plaintiffs into the group to facilitate the raising of the $500,000 for the down payment.⁸ Plaintiffs then began to visit government agencies and banks in order to obtain financing for the down payment and permits for operating the plant.⁹ Plaintiffs and Forest continued to engage in discussions, and a draft agreement was prepared. However, by the end of February 1997, a final agreement had not been reached by the parties.¹⁰

In February, Santos withdrew from the group of potential purchasers.¹¹ He informed Forest that he dropped out because he was concerned with the financial viability of Sein Mendez operations and because he did not want to risk his own personal assets in the purchase and operation of the plant. Forest had considered Santos to be a key participant in this group of potential buyers because he was knowledgeable on Sein Mendez' operations and because he was the member of the group with the most financial resources.¹² Forest did not, however, have any objection to proceeding to deal with this group which was now being headed up by Velázquez.¹³ Forest did inform Velázquez that it would consider selling Sein Mendez to him and his group provided that they could demonstrate that their operation would be profitable and would generate sufficient income to pay off the balance of the purchase price.¹⁴ Velázquez asked Forest to reduce the required up-front payment from $500,000 to $250,000, but Forest did not agree to this request.¹⁵ In a letter dated March 14, 1997, Velázquez wrote to Kenneth Goodman, Forest's vice president of finance, informing him that his group had raised $300,000, but that they would need an extension of time to be able to successfully close negotiations.¹⁶ Plaintiffs and Forest, however, had not reached a final agreement on all terms and conditions of a possible sale.¹⁷

After Santos withdrew from Plaintiffs' group, Forest began to discuss the sale of Sein Mendez with other parties. By April 1997, Forest was negotiating with Saleh Yassin of Creative Medical Corporation.¹⁸ Forest had not agreed to refrain from negotiating with other parties.¹⁹ Plaintiffs were aware that they were not the only potential buyers of Sein Mendez.²⁰ Forest had never provided Plaintiffs with a first option, exclusive right, or right of first refusal to purchase Sein Mendez.²¹

In their statement of fact number 12, Plaintiffs contest Forest's assertion that it never gave Plaintiffs a first option, exclusive right, or right of first refusal to purchase. Plaintiffs' statement of facts, however, cites to no evidence on this issue; it states only, "See Memorandum of Law submitted by plaintiffs." As discussed above, such allegations or arguments by counsel are not sufficient, by themselves, to defeat summary judgment. Nieves, 7 F.3d at 276 n. 9; Lopez, 938 F.2d at 1515-16 n. 11. Moreover, Plaintiffs' allegation on this issue in their statement of fact is belied by the record. Velázquez, Carlos Matías, and Rafael Rodríguez admitted in their depositions that no one at Forest ever stated that Plaintiffs had any exclusive or first right to purchase Sein Mendez.²² Moreover, all Plaintiffs in their response to Forest's requests for admissions admitted that there were no written documents or oral statements from Forest providing Plaintiffs with a first option, exclusive right, or right of first refusal.²³

In a letter of March 14, 1997, to Kenneth Goodman, Velázquez confirms a telephone conversation he had with Goodman and states that during the conversation it was discussed that "we continue to have the first option to buy Sein Mendez."²⁴ In his deposition, however, Velázquez admitted that these were his words, not Goodman's, and that Goodman did not tell him they had the first option.²⁵ Because of this admission in his testimony and because of the Plaintiffs' responses to Forest's request for admissions, the Court concludes that this letter is not sufficient to create a genuine issue as to whether Forest gave Plaintiffs a first option to purchase Sein Mendez.

Thus, there were other parties negotiating with Forest to buy Sein Mendez and Plaintiffs were aware of this...