[NOT FOR PUBLICATION]
United States Court of Appeals For the First Circuit
No. 96-1888
GRAPHICS SUPPLY, INC.,
Plaintiff, Appellant,
v.
POLYCHROME CORPORATION, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge]
Before
Torruella, Chief Judge,
Coffin, Senior Circuit Judge,
and Stahl, Circuit Judge.
Francisco M. Troncoso for appellant.
Carlos M. Sanchez La Costa with whom Pedro J. Santa-Sanchez
was on brief for appellees.
June 23, 1997
COFFIN, Senior Circuit Judge. This appeal concerns the
nature of the relationship between two corporate entities.
Appellant Graphics Supply contends that an exclusive
principal/dealer relationship existed between it and Polychrome
Corporation, which was impaired by Polychrome's actions,
allegedly in violation of Puerto Rico's Dealer Act. The district
court granted summary judgment for Polychrome. We affirm.
FACTS
The two parties in the instant appeal are a manufacturer of
lithographic supplies, Polychrome Corporation ("Polychrome"), and
a Puerto Rico dealer of these supplies, Graphics Supply, Inc.
("Graphics"). Graphics contends that an exclusive dealer
relationship existed between the two entities, and that
Polychrome took a series of actions that impaired the
relationship, thereby violating Puerto Rico's Law 75, "the
Dealer's Act," 10 L.R.P.A. 278. We review the pertinent facts
in the light most favorable to Graphics. See Grenier v. Cyanamid
Plastics, Inc., 70 F.3d 667, 671 (1st Cir. 1995).
Graphics has served as a dealer for Polychrome in the Puerto
Rico market since 1975. On January 1, 1989, a new Dealer
Agreement was executed between the two (the "Dealer Agreement"),
defining their arrangement as a standard dealer relationship.
While Graphics initially protested signing this new Agreement,
contending that it wished to continue the exclusive relationship
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it maintained existed between the two, Graphics eventually
capitulated, at least partially in response to a letter from
Polychrome's vice president for legal affairs, Barbara Cane,
indicating that the two companies had never had an exclusive
relationship and that Graphics' failure to sign the standard
dealership agreement might result in a termination of the
relationship altogether.1 Graphics asserted that it was assured
by individuals at Polychrome that an exclusive relationship would
continue to exist, the new Agreement notwithstanding; Polychrome
disagrees with this assertion. However, as of April 26, 1996,
Graphics concedes that this is a non-exclusive agreement, and
does not contend there were private assurances.
The dealings between the two companies apparently
deteriorated over the following years, with Graphics contending
that Polychrome improperly approached clients directly, and that
Polychrome failed to keep Graphics adequately supplied, leading
to losses by Graphics. Graphics eventually filed suit against
Polychrome, alleging violation of the Puerto Rico Dealer's Act,
breach of contract, and tortious interference with the
1 Graphics cites as support for its contention that an exclusive relationship had previously existed a 1980 letter from James M. Graves, executive vice president of Polychrome, to Peter Javier, president of Graphics. This letter (which confirmed the substance of a meeting between Graves and Javier in New York) stated that Polychrome would not actively pursue additional distributors in Puerto Rico, and that Polychrome could continue to sell its products to another Puerto Rico company. It did not, however, state that the relationship between the two would be exclusive.
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contractual relationship between Graphics and two of its
employees.
The district court initially granted Polychrome's Motion for
Summary Judgment on four of the six counts brought by Graphics,2
but refused to grant summary judgment on the remaining two
counts, stating that there was a genuine issue of material fact
on Count IV, and that Count VI could not be dismissed where Count
IV survived.3 However, the district court, on Polychrome's
motion for reconsideration, with little explanation for its
actions, subsequently granted summary judgment on these counts as
well. This appeal by Graphics followed.
DISCUSSION
1. Standard of Review.
Our review of the district court's grant of summary judgment
is de novo. See Hachikian v. FDIC, 96 F.3d 502, 504 (1st Cir.
2 These four counts were as follows: Count I: tortious interference by Polychrome with Graphics' contractual relationship with two of its employees; Count II: tortious interference by Polychrome with Graphics' business operations through a series of actions; Count III: violation of Law 75 by Polychrome by selling its products directly to several of its customers in Puerto Rico; and Count V: violation by Polychrome of Law 75 by negotiating with potential distributors in the Dominican Republic.
3 Count IV alleged that Polychrome breached their contract by purposely failing to supply ordered merchandise; Count VI alleged that Polychrome failed to honor debit notes submitted by Graphics to Polychrome.
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1996). We may affirm on the grounds cited by the district court,
or on any independently sufficient ground. See Garside v. Osco
Drugs, Inc., 895 F.2d 46, 49 (1st Cir. 1990).
Graphics appeals three issues: first, the district court's
determination that a non-exclusive relationship existed between
Polychrome and Graphics;4 second, the grant of summary judgment
on Count IV; and finally, the grant of summary judgment on Count
VI. We address each in turn.
2. Nature of the Dealer Agreement.
As noted above, Graphics contends that the district court
erred in concluding that the parties did not have an exclusive
relationship. Our starting point in reviewing this determination
must be the language of the Dealer Agreement between Graphics and
Polychrome, as it is well established that the interpretation of
such a contract under Puerto Rico law is limited to the terms of
the Agreement, barring ambiguities in those terms or apparent
inconsistency with the contracting parties' intent. See Borschow
Hosp. & Medical v. Cesar Castillo, 96 F.3d 10, 15 (1st Cir.
1996); see also Vulcan Tools of Puerto Rico v. Makita USA, Inc.,
23 F.3d 564, 567 (1st Cir. 1994); Marina Ind. Inc. v. Brown
4 Graphics casts this issue as an appeal on Counts III & V; Polychrome, on the other hand, addresses this issue as relating to Counts II and III. The district court, for its part, primarily addressed this issue in its discussion of Count III.
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Boveri Corp., 114 P.R. Offic. Trans. 64, 72 (1983). Indeed
Article 1233 of the Puerto Rico Civil Code provides:
If the terms of a contract are clear and leave no doubt as to the intentions of the contracting parties, the literal sense of its stipulations shall be observed. If the words should appear contrary to the evident intention of the contracting parties, the intention shall prevail. 31 L.R.P.A. 3471 (1991).
The 1989 Dealer Agreement between Graphics and Polychrome states
in section 1, "Purpose of Agreement":
The purpose of this Agreement is to set forth the relationship of Polychrome and dealer and to reduce to writing their entire Agreement. Polychrome agrees to sell to dealer, on a
non-exclusive basis, such of the Polychrome
Products of the Printing Division (Polychrome Products) that from time to time Polychrome may elect to make available to the Dealer (emphasis added).
The language of the Agreement unambiguously states that the
relationship established is a non-exclusive one. Furthermore,
the Agreement stipulates that it constitutes the full Agreement
between the parties. See Borschow, 96 F.3d at 16 (integration
clause nullifies any other oral or written understandings reached
between the two parties).5 In addition to these terms, the
5 We note that the conduct in Borschow was much more
egregious than that alleged here. Here, there is a dispute as to whether Polychrome ever made representations to Graphics that an exclusive relationship between the two was either intended or contemplated. In Borschow, the manufacturer's representative
explicitly assured the dealer that an exclusive relationship was intended, notwithstanding the non-exclusive language in the contract between the two, and the representative subsequently sent the dealer a document to that effect. See Borschow Hosp. &
Medical v. Cesar Castillo, 96 F.3d 10, 12-13 (1st Cir. 1996).
However, even in that situation, the court adhered to the
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Agreement contains other terms indicating that a non-exclusive
relationship is contemplated. For example, it explicitly
reserves to Polychrome the right to sell directly to any class of
customers and to appoint other dealers.
Graphics offers several theories as to why we should
disregard the Dealer Agreement's clear terms and find instead
that an exclusive relationship existed: the company alleges that
an earlier, 1980 agreement established an exclusive arrangement;
it claims that the new Agreement was signed under duress; and
most importantly, it alleges that the non-exclusive agreement was
either altered or replaced by a new one reflected in a January 1,
1992 letter from a Polychrome official to Graphics.
We note at the outset that much of the information upon
which Graphics hangs its hat is patently inadmissible since the
language of the Agreement is clear. See Borschow, 96 F.3d at
15-16 (Puerto Rico Civil Code and parol evidence rule both
preclude reference to extrinsic evidence where contract terms are
clear). It is therefore unnecessary to dwell on these
allegations; however, we choose to dispose of them briefly.6
The January 1, 1992 letter, which Graphics suggests is
either a novation or a substitution of an exclusive Agreement for
the non-exclusive one created by the Dealer Agreement, does not
language of the contract and found that the relationship between the two was a non-exclusive one. See id.
6 The parties' intent is not an issue here, as no evidence has been presented suggesting that Polychrome intended an exclusive relationship other than Graphics' obviously self- serving statements to this effect.
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support Graphics' position.7 The letter nowhere says that it
establishes an exclusive relationship. Graphics contends that,
because the letter sets out the terms of compensation Graphics
was to receive for accounts pursued directly by Polychrome, it
establishes that an exclusive relationship already existed
between the two. In fact, the letter merely specifies
compensation rates for services to be rendered by Graphics to
accounts pursued directly by Polychrome, in exact accordance with
the terms stipulated in the Dealer Agreement, 7.8
Under Law 75, where the conduct of the parties indicates an
intent to continue operating according to the terms of an
Agreement, this Agreement remains in continuing force between
7 Paragraph six of the letter states as follows:
6. Graphics Supply and Polychrome will prepare a joint target account list* [sic] (film and plates)
of accounts $50,000 or larger in annual volume. In situations where competitive prices are not acceptable to Graphics Supply, Polychrome will pursue the business on a direct basis. Where Polychrome direct business is obtained, Polychrome will compensate Graphics Supply based upon annual account volume. This compensation is for equipment maintenance and emergency inventory fulfillment services (emphasis in original).
8 Section 7 of the Dealer Agreement states as follows:
It is agreed that the execution of this Agreement shall not limit in anyway [sic] Polychrome's right to sell any Polychrome Products directly to any class of customers, in any geographical location. However, Polychrome, at its discretion, may elect to compensate Dealer for services performed by Dealer for accounts sold directly to Polychrome.
The letter states: "This compensation is for equipment maintenance and emergency inventory fulfillment services."
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them, despite any expiration date contained in the Agreement.9
See Gemco Latinoamerica, Inc. v. Seiko Time Corp., 623 F. Supp.
912, 918 (D.P.R. 1985). We discern nothing in the record
indicating that the parties intended anything other than to
continue the relationship as set out in the Dealer Agreement.
Graphics contends that the 1992 letter reveals a new exclusive
relationship, formed because Polychrome wished Graphics to
transfer to it business that Graphics handled for a competitor;
in return for doing so, Graphics alleges that Polychrome agreed
to reappoint Graphics as its sole distributor within Puerto Rico.
In order for an Agreement to be novated, either the new agreement
must expressly declare that it replaces the old agreement, or the
old and the new agreements must be incompatible in all points.
See id. at 919 (citing Article 1158 of the Civil Code of Puerto
Rico, 31 L.R.P.A. 3242). However, as noted above, the letter
mirrors the terms of the continuing non-exclusive Dealer
Agreement. Additionally, it defies credulity to view the letter
as a replacement for the five page extremely detailed non-
exclusive Agreement of January 1, 1989, impliedly -- but without
explicitly saying so -- instituting an exclusive dealership.
Furthermore, it is logically impossible for Graphics to be
"reappointed" to a status which the prior Agreement did not
9 We note that this also counters Graphics' assertion that the non-exclusive Dealer Agreement had expired.
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confer. The letter is therefore neither a novation nor the
substitution of an exclusive relationship for the existing one.10
The district court summarily dismissed the duress claim,
stating that Graphics had failed to provide sufficient evidence
to support it. Our review of the record supports this
conclusion, as the only evidence presented was Javier's statement
to this effect in his Declaration. As for the purported 1980
Agreement (as reflected in the 1980 Graves letter, see supra note
1), even were this to be seen as an exclusive relationship, which
we doubt, it is clearly superseded by the 1989 non-exclusive
Dealer Agreement.
3. Summary Judgment on Count IV.
Count IV alleged that Polychrome breached the Dealer
Agreement by purposefully failing to supply merchandise ordered
by Graphics. Law 75 specifically provides that "when the
principal or grantor unjustifiably refuses or fails to fill the
order for merchandise sent to him by the dealer in reasonable
amounts and within a reasonable time," this shall be presumed to
10 We also note that the novation theory may be waived as it was not presented below. See Teamsters, Chauffeurs,
Warehousemen & Helpers Union, Local No. 59 v. Superline Transp.
Co., 953 F.3d 17, 21 (1st Cir. 1992).
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have impaired the relationship, in contravention of the law. 10
L.R.P.A. 278a-1(b)(3) (1991).11
The district court, in its April 1, 1996 Opinion and Order,
originally denied summary judgment on Count IV, saying there was
a genuine issue of material fact regarding Graphics' allegation
that Polychrome had breached the Dealer Agreement by purposely
failing to supply ordered merchandise. However, in its April 25,
1996 Order, the court stated only that it found that Polychrome
was entitled to judgment as a matter of law on all counts
(including Count IV) on the ground that Graphics had not provided
any evidence suggesting the existence of any issues of material
fact. The court therefore issued an order on that same day
dismissing the complaint, and later denied Graphics' motion for
reconsideration.
We note again that in the summary judgment context, the
party seeking to avoid summary disposition must bring forth
specific, material facts showing a genuine issue for trial. See
Garside, 895 F.2d at 48 (a fact is material if it could
potentially affect the suit's outcome); see also Nat'l
Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.
1995) (an issue concerning such a fact is genuine if a reasonable
factfinder, examining all the evidence and drawing all reasonable
11 Law 75 applies to both non-exclusive and exclusive agreements; the central focus is whether the terms of an agreement between two parties have been breached. See Vulcan
Tools v. Makita USA, Inc., 23 F.3d 564, 569 (1st Cir. 1994).
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inferences helpful to the party resisting summary judgment could
resolve the dispute in this party's favor).
Graphics' complaint listed two items of support for its
allegation of unfilled orders: first, that Polychrome failed to
supply Graphics with lithographic film for more than nine months
(para 36); and second, that Polychrome failed to supply Graphics
with all the merchandise it had ordered, including lithographic
plates, and to supply Graphics on time with ordered merchandise.
These failures, Graphics maintains, establish that Polychrome
intentionally impaired the relationship. Graphics' president,
Peter Javier, notes in his Declaration several occasions on which
orders were shipped via air freight rather than via the normal
methods; he maintains this expedited shipping was utilized by
Polychrome because it was not filling orders in a timely manner.
Polychrome counters by referring to a 1994 sworn statement
(the Colon declaration) indicating that the delays Graphics
experienced were due to a number of factors, none of which was
motivated by an intent to not fully supply Graphics. These
included problems arising from special pricing accorded to
Graphics (which slowed the approval process), and lack of
inventory available for shipment due to the shutdown and
renovation of one of Polychrome's plants. Indeed, Polychrome
points to the air shipments as evidence of its attempt to keep
Graphics as fully supplied as possible in the circumstances.
Graphics makes no effort to refute the detailed explanations
in the Colon declaration. We are left with no evidence that the
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alleged delays were unjustifiable. Moreover, many of the
documents submitted by the parties that bear on this issue and
might elucidate it are in Spanish, without English
translations.12 Where the existing record is inconclusive, it is
the appellant who must bear the brunt of the insufficient record
on appeal. See Donovan v. Ritchie, 68 F.3d 14, 17 (1st Cir.
1995); see also Real v. Hogan, 828 F.2d 58, 60 (1st Cir. 1987).
We are therefore compelled to affirm the district court's
dismissal of this claim, as without further assistance, we are
unable to discern support for Graphics' position in the record.
4. Count VI: Jurisdictional Minimum.
Graphics' original Count VI was a claim for debit notes
allegedly due in the amount of $9,500 (see Para 41 of Amended
Complaint). On appeal, Graphics maintains that the allegation
contained in Count VI was that Polychrome refused to honor debit
notes and intentionally and maliciously withheld sums of money
due to Graphics, specifically $5,522.46 in commissions for
services provided to accounts to which Polychrome had sold
directly.13 However, there is no mention in the original Count
12 Furthermore, the district court supplied minimal reasoning for its volte face on this issue.
13 This amount is undisputed by the parties, although they differ as to when payment for this amount was actually issued. Graphics alleges that the check was issued on March 3, 1995, whereas Polychrome says it was paid on December 19, 1994. The photocopy of the check contained in the record bears the date "03 03 95."
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VI of allegedly withheld commissions. We have repeatedly noted
that, absent extraordinary circumstances, a legal theory not
raised squarely in the lower court cannot be broached for the
first time on appeal. See Superline, 953 F.3d at 21. However,
whether this claim is seen as for $9,500 in debit notes or
$5,522.46 in withheld commissions, the amount falls below the
jurisdictional minimum, and we therefore affirm its dismissal on
this ground.
Affirmed.
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