Draft-Line, Corp. v. The Hon Company
This text of Draft-Line, Corp. v. The Hon Company (Draft-Line, Corp. v. The Hon Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Bluebook
Draft-Line, Corp. v. The Hon Company, (1st Cir. 1993).
Opinion
USCA1 Opinion
January 6, 1993
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1076
DRAFT-LINE CORP.,
Plaintiff, Appellant,
v.
THE HON COMPANY,
Defendant, Appellee.
____________________
No. 92-1173
DRAFT-LINE CORP.,
Plaintiff, Appellee,
v.
THE HON COMPANY,
Defendant, Appellant.
____________________
No. 92-1653
DRAFT-LINE CORP.,
Plaintiff, Appellant,
v.
THE HON COMPANY,
Defendant, Appellee.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jose Antonio Fuste, U.S. District Judge]
___________________
____________________
Before
Selya, Circuit Judge,
_____________
Coffin, Senior Circuit Judge,
____________________
and Cyr, Circuit Judge.
_____________
____________________
Thomas Lincoln with whom Jose A. Feliciano was on brief for
______________ ___________________
Draft-Line Corp.
John F. Malley, III for The Hon Company.
___________________
____________________
____________________
COFFIN, Senior Circuit Judge. These are cross-appeals
______________________
arising out of a diversity suit based on the Puerto Rico Dealers'
Act, Act No. 75 of June 24, 1964, as amended, 10 L.P.R.A. 278-
278d. Plaintiff, Draft-Line Corp., is a retail dealer in office
furniture; defendant, The Hon Company, is a stateside
manufacturer and supplier. After a ten year relationship, during
which time Draft-Line was Hon's sole distributor in Puerto Rico,
Hon entered into sales distribution relationships with four other
Puerto Rico dealers. Draft-Line filed a lawsuit charging that
Hon illegally terminated an exclusive dealership, i.e., without
"just cause." The company claimed $248,604 for statutory damages
measured by five years of past profits, $500,000 for loss of
investment and good will, $500,000 for loss of future profits,
and $500,000 for "[l]oss of the business which was devoted solely
to the distributorship of defendant's products."
The relevant history of the parties' relationship can be
briefly stated. In 1977 Hon began a six month trial period,
treating Draft-Line as an exclusive dealer. When the period had
expired, there was no further discussion of exclusivity, but in
fact Draft-Line was Hon's only Puerto Rico dealer for ten years.
Credit terms were the ultimate cause of the rift between supplier
and dealer. They started out at net 30 days, then liberalized to
net 60 days, until 1981. By this time Draft-Line was finding it
difficult to make payments, since the shipments from Hon often
did not arrive until after payments were due. In 1981 Hon
decided to require cash in advance of shipment. Draft-Line was
-3-
unable to expand its sales of Hon products because of its
inability to obtain financing that would allow the handling of
larger volume. In 1987 Hon announced that it was taking on four
other dealers, none of whom were given any better terms than were
given to Draft-Line.
Over the decade from 1977 to 1987, Draft-Line's orders from
Hon (and Hon's total sales in Puerto Rico) averaged some $60,000
a year. Between the end of 1987 and 1989, after the
establishment of the four new dealerships, Hon's sales in Puerto
Rico multiplied ten-fold to $669,490 in 1989. Draft-Line, on the
other hand, after a two year hiatus in which it practically
ceased selling Hon products, resumed selling at its former rate
of $60,000 in 1990. It remains a Hon dealer.
On this record, defendant moved for summary judgment on the
grounds that, as a matter of law, it had established "just cause"
for terminating Draft-Line's exclusive relationship and that
Draft-Line had failed to identify any genuine issue of material
fact as to damages. The court's grant of summary judgment rested
solely on the complete absence of any factual showing of damages.
The court observed, moreover, that it was unlikely that Draft-
Line had been damaged. Its own sales had held up well, showing
that its customers had not been taken by the new dealers, and it
was even likely that Draft-Line would be helped by the new and
expanded exposure of Hon's products.
The court addressed what it perceived to be plaintiff's
basic position -- that Law 75 authorizes automatic damages in
-4-
case of any violation. The provision invoked, 10 L.P.R.A.
278b(d), states that in the event of a violation, a dealer may be
indemnified "to the extent of the damages caused him . . . on the
basis of the following factors:" investment in plant and
inventory, good will (listing such determinants as age of
dealership, volume of sales, proportion of dealer's business and
of Puerto Rican market), and profits realized over the past five
years.
The court reasoned that if any part of this statute were to
be read as justifying the automatic grant of damages, the result
would be tantamount to awarding punitive damages, contrary to
Puerto Rico policy. It cited the Puerto Rico Supreme Court's
pronouncement in Marina Industrial, Inc. v. Brown Boveri Corp.,
_______________________ __________________
114 D.P.R. 64, 90 (1983), that the factors above noted are "only
Free access — add to your briefcase to read the full text and ask questions with AI
Related
Anderson v. Liberty Lobby, Inc.
477 U.S. 242 (Supreme Court, 1986)
Celotex Corp. v. Catrett, Administratrix of the Estate of Catrett
477 U.S. 317 (Supreme Court, 1986)
Computec Systems Corp. v. General Automation, Inc.
599 F. Supp. 819 (D. Puerto Rico, 1984)
Marina Industrial, Inc. v. Brown Boveri Corp.
114 P.R. Dec. 64 (Supreme Court of Puerto Rico, 1983)
Cite This Page — Counsel Stack
Bluebook (online)
Draft-Line, Corp. v. The Hon Company, Counsel Stack Legal Research, https://law.counselstack.com/opinion/draft-line-corp-v-the-hon-company-ca1-1993.