Villa Marina Yacht Sales, Inc. v. Hatteras Yachts

• Decision Date: 06 June 1990
• Docket Number: No. 90-1206,90-1206
• Citation: 915 F.2d 7
• Parties: VILLA MARINA YACHT SALES, INC., et al., Plaintiffs, Appellants, v. HATTERAS YACHTS, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 7

915 F.2d 7

VILLA MARINA YACHT SALES, INC., et al., Plaintiffs, Appellants, v. HATTERAS YACHTS, et al., Defendants, Appellees.

No. 90-1206.

United States Court of Appeals First Circuit.

Heard June 6, 1990.

Decided Sept. 20, 1990.

Michael J. Rovell with whom J. Cunyon Gordon, Jenner & Block, Gerardo A. Carlos, Carlos & Troncoso, Carlos Latimer, Ramirez, Latimer & Biaggi, were on brief, for plaintiffs, appellants.

Rossell Barrios-Amy with whom Samuel T. Cespedes, Ana Matilde Nin, McConnell Valdes Kelley Sifre Griggs & Ruiz-Suria, were on brief, for defendants, appellees.

Before BREYER, Chief Judge, CAMPBELL, Circuit Judge, and COFFIN, Senior Circuit Judge.

COFFIN, Senior Circuit Judge.

Appellants challenge the district court's decision to dismiss this case under the abstention-like doctrine established in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), which permits federal courts to decline jurisdiction in favor of parallel state litigation for reasons of "wise judicial administration," id. at 818, 96 S.Ct. at 1246. Appellants claim further error in the court's decision to dismiss one defendant based on lack of personal jurisdiction. We reverse the personal jurisdiction ruling, but conclude that the Colorado River issue must be remanded for further consideration. This is necessary because, insofar as the district court's recorded reasoning reveals its analysis, the court neglected, in exercising its discretion, to give due weight to the heavy presumption in favor of retaining jurisdiction.

I. Background

This case arises out of a dealership agreement between Hatteras International, a manufacturer of luxury boats, and Villa Marina Yacht Sales, Inc., ¹ Hatteras' longtime exclusive dealer in Puerto Rico and the Caribbean. In September 1988, Hatteras notified Villa Marina by letter that Hatteras was terminating the relationship because of concerns about Villa Marina's business ethics and sales performance.

Through correspondence, Villa Marina strongly objected to the termination and contested the bases for the decision. Nevertheless, in November, Hatteras executed a dealership agreement with Hatteras Yacht Sales of Puerto Rico, Inc. ("Yacht Sales"), naming it Hatteras' new exclusive dealer in Puerto Rico. Yacht Sales is owned by Pedro Rivera Fullana, who left his position as sales manager at Villa Marina to open the new distributorship.

Three different lawsuits followed shortly after these events. On January 9, 1989, Hatteras filed the first action against Villa Marina in Puerto Rico Superior Court. The company sought a declaratory judgment that Commonwealth law permitted termination of the Villa Marina dealership agreement, and injunctive relief barring Villa Marina and its agents from interfering with the sale of Hatteras products by Yacht Sales. On February 7, Villa Marina answered and counterclaimed for damages under the Puerto Rico Dealer's Act, known as Law 75, P.R.Laws Ann. tit. 10, Sec. 278 (1978), which prohibits a manufacturer from terminating a dealer's contract in the absence of "just cause."

Three days later, Villa Marina and its president, Eduardo Ferrer Bolivar, filed a separate action in the local court against Yacht Sales, Yacht Sales' president (Rivera), and the president of Hatteras International, Herbert Pocklington, alleging tortious interference with the dealership agreement between Hatteras and Villa Marina, and damage to reputation. On May 19, however, Villa Marina moved for dismissal without prejudice of the claims against Pocklington, apparently in preparation for the third lawsuit, which it filed a few days later in federal court against Pocklington, Hatteras Yacht, Hatteras International and Hatteras' parent corporation, Genmar Industries, Inc. ² This suit alleges violations of Law 75, breach of contract, tortious interference with prospective business advantage and tortious interference with contracts.

Defendants subsequently moved to dismiss the federal case against Pocklington based on a lack of personal jurisdiction, and later filed a motion to dismiss or stay under the Colorado River doctrine in light of the "substantially similar[ ]" action pending in the Commonwealth court. The district court granted both motions, and ordered that the case be dismissed. On appeal, Villa Marina argues that the court erroneously found that it lacked personal jurisdiction over Pocklington and failed to apply the appropriate standard in considering whether to dismiss the case under Colorado River. We shall discuss each of these issues in turn.

II. Personal Jurisdiction

Villa Marina alleged in its federal complaint that Herbert Pocklington, president of Hatteras International, deliberately made false statements to Hatteras and another yacht manufacturer for the purpose of, and with the result of, inducing the companies to breach their contracts with Villa Marina. The complaint specifically alleges that Pocklington provided Hatteras with false information concerning Villa Marina's finances, told Hatteras that Villa Marina "had either committed crimes or acted unethically," and made false statements to Bertram-Trojan, Inc. ("Bertram"), the other yacht manufacturer, about Hatteras' reasons for terminating Villa Marina as its dealer. Pocklington's actions, according to the complaint, constituted tortious interference with contracts and tortious interference with prospective business advantage.

In a sworn statement attached to his motion to dismiss, ³ Pocklington admitted that, as the Hatteras officer in charge of the distribution and marketing of Hatteras products in Puerto Rico, he had executed the dealership agreement between Hatteras and Villa Marina and later signed the letter terminating Villa Marina as a Hatteras dealer. He further acknowledged that he had executed the dealership agreement with Yacht Sales, the dealership that replaced Villa Marina as Hatteras' representative in Puerto Rico. Pocklington stated that he traveled to Puerto Rico in his corporate capacity "to discuss and take measures with respect to the distribution and service of Hatteras products in Puerto Rico." He denied, however, that he had committed any tortious acts in Puerto Rico, asserting that he had never acted with malice or bad faith toward Villa Marina, or made any false statements to Hatteras or Bertram about Villa Marina.

The district court held that personal jurisdiction over Pocklington had not been accomplished because Villa Marina failed to rebut Pocklington's sworn statements that he had not made false statements or committed tortious acts in Puerto Rico. The court relied on Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 906, 907 (1st Cir.1980), in which we held that jurisdiction over a corporate officer may not be based merely on jurisdiction over the corporation but must rest on a "showing of direct personal involvement by the corporate officer in some decision or action which is causally related to plaintiff's injury." Six of the seven individual defendants in Escude Cruz filed unrebutted affidavits denying any involvement with the subsidiary corporation in Puerto Rico for which the plaintiff worked.

The district court erred in two respects in relying on Escude Cruz. First, this is not a case in which a plaintiff seeks to establish jurisdiction over a corporate officer based solely on his corporate status. Pocklington admits that he played a direct role in the "distribution and service of Hatteras products in Puerto Rico," and Villa Marina's complaint points to specific actions by Pocklington that caused it financial harm. ⁴ This is in direct contrast to Escude Cruz, where neither the complaint nor the defendants' affidavits showed any link between the defendants--officers and directors of a New Jersey corporation--and the Puerto Rico company that employed the plaintiff. ⁵ Cf. Alvarado-Morales v. Digital Equipment Corp., 843 F.2d 613, 617 (1st Cir.1988) (no personal jurisdiction where parent company and corporate officers had no involvement in decisions of Puerto Rican subsidiary).

Second, the district court erroneously believed that plaintiff's failure to rebut Pocklington's affidavit was equivalent to the failure of the plaintiff in Escude Cruz to counter the affidavits filed by the defendants there. In Escude Cruz, the plaintiff failed to rebut the defendants' assertions that they were uninvolved with the subsidiary company and therefore had no connection with Puerto Rico. In this case, however, Pocklington admitted in his affidavit that he had substantial involvement with Hatteras' operations in Puerto Rico. Indeed, Pocklington confirmed plaintiff's claim that he played a prominent role in deciding Villa Marina's fate. Moreover, Pocklington did not deny making statements about Villa Marina to Hatteras and Bertram, but denied only that he had made false statements.

Thus, there was no need for Villa Marina to respond to Pocklington's affidavit; personal jurisdiction does not depend upon whether the statements Pocklington made were false and actionable, but only on whether Pocklington took some action that, if wrongful (a matter for later proof), could subject him to liability in Puerto Rico. Under Rule 4.7(a)(2) of P.R.Laws Ann. tit. 32, App. III (1984), an individual is subject to suit in Puerto Rico if he "[e]xecutes by himself or through his agent tortious acts within Puerto Rico." Requiring proof of the tortious nature of acts in order to assert jurisdiction would make the jurisdictional determination identical to the merits. To establish jurisdiction, therefore, Villa Marina needed only to assert facts showing that Pocklington committed sufficient acts within Puerto Rico, the tortious nature of which would be the issue on the merits.

The facts alleged in the complaint, taken together with Pocklington's affidavit, clearly establish sufficient action to meet the requirements of Puerto Rico's long-arm s...