Lopez v. Motor Plan

Opinion

USCA1 Opinion

          December 6, 199423    [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

____________________

        No. 94-1257

                 ANASTACIO LOPEZ, RAMONITA MIRANDA DE LOPEZ, ET AL.,

                               Plaintiffs, Appellants,

                                          v.

                               MOTOR PLAN INC., 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,
                                           ___________

                          Boudin and Stahl, Circuit Judges.
                                            ______________

                                 ____________________

            Jose Antonio Pagan Nieves for appellants.
            _________________________
            Jose  L.  Gandara  with whom  Bauza  &  Davila  was  on  brief for
            _________________             ________________
        appellees.

____________________

____________________



BOUDIN, Circuit Judge.  On December  8, 1988, Wanda Soto
                         _____________

            Nieves,  a Puerto Rico  resident and employee  of Motor Plan,

            Inc.,  was  returning from  a  Motor  Plan company  Christmas

            party.  Motor Plan  was a car rental agency,  incorporated in

            Puerto Rico and a franchisee of Budget Rent a Car, a separate

            corporation  headquartered  in  Illinois.    Motor  Plan  did

            business under the Budget name.  Soto was driving a car owned

            and provided to her by  Motor Plan as a fringe benefit.   The

            car collided  with another car  driven by Anastacio  Lopez, a

            resident  of Florida.  Lopez's  left arm and  hand were badly

            injured.

                 On December 7, 1989,  Lopez sued Soto and Motor  Plan in

            federal district court claiming  that Soto had been negligent

            when  operating  the  car  and   that  Motor  Plan  was  also

            responsible.   "Budget"  was  named as  a  defendant but  not

            served.   Jurisdiction was based  on diversity.  Lopez's wife

            and children,  who were not  in the  car at the  time of  the

            accident,  sued for  mental suffering  and other  damages. By

            amendments, the  Lopezes specified  as defendants both  Motor

            Plan's insurer, Corporacion Insular de Seguros, and Budget as

            a corporation distinct from Motor Plan.

                 After  Budget had  been  named as  a separate  corporate

            defendant and served with  the amended complaint, it answered

            and denied  liability.  The  Lopezes served  interrogatories,

            document  requests and  requests for  admission on  Budget in

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December 1992.  Shortly thereafter, a stay of proceedings was

            entered  because of the insolvency of the insurer; but Budget

            proceeded to answer the  discovery requests in February 1993,

            and the stay was eventually lifted.  

                 In  September 1993,  Budget  filed a  motion to  dismiss

            pursuant to Fed. R. Civ. P. 12(b)(6), attaching to its motion

            both  a copy of its  franchise agreement with  Motor Plan and

            copies of  Motor Plan's  answers to interrogatories  posed by

            the Lopezes.   Budget  averred  that  it was  neither  Soto's

            employer nor  the owner of  the car, and  it denied that  its

            mere  receipt of  benefits from  its relationship  with Motor

            Plan was grounds for imposing liability of Budget.  T   w   o

            months later,  on November  17,  1993, the  Lopezes filed  an

            opposition  to  the  motion   to  dismiss  that  included  no

            affidavit material and explicitly accepted Budget's statement

            of undisputed facts (with one irrelevant exception).  

                 The gist of the opposition was an  argument that "Budget

            and Motor Plan have a partnership which has earned monies for

            both  of  them."   The  partnership  allegation was  repeated

            several  times--although without any  further detail--and was

            the only  explicit theory  offered for imposing  liability on

            Budget.  The  opposition also said  that the agreement  under

            which Motor  Plan operated  had been  prepared by  Budget and

            permitted Budget to regulate "most of the phases of the Motor

            Planoperation,"andthatMotorPlanwasnotanindependentcontractor.

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In  a decision  dated  December 21,  1993, the  district

            court granted Budget's motion to dismiss.  Because Budget had

            attached  documents  to its  motion,  the  court treated  the

            motion to  dismiss as one for summary  judgment.  See Fed. R.
                                                              ___

            Civ. P. 12(b)(6),  56(c).  On the merits, the court said that

            there was no basis in Puerto Rico  law for holding Budget and

            Motor  Plan to  be  partners and  that  the Lopezes  had  not

            presented any genuine issue of material fact that, if decided

            in their  favor, would provide  any other basis  for imposing

            liability on Budget.

                 Judgment  in favor  of  Budget was  formally entered  on

            January  20, 1994, and on the following day the Lopezes filed

            a  motion under  Fed. R. Civ.  P. 59 or,  in the alternative,

            Fed.   R.  Civ.   P.  60.     In   addition  to   asking  for

            reconsideration of the summary judgment,  the motion asserted

            that new evidence  had been discovered:   first, that  Budget

            had  previously settled a  similar suit in  the same district

            court  with a large payment and, second, that Budget had been

            listed  as  an  additional   insured  under  the  Motor  Plan

            insurance  policy.  For the  first time, the  Lopezes cited a

            number  of cases  on franchisor  liability.   The motion  was

            denied and this appeal followed.

                 Although  summary  judgment  was  entered  in  favor  of

            Budget,  there was in fact no appealable judgment at the time

            because claims  against Motor  Plan and the  insurer remained

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pending.   The Lopezes'  appeal was nevertheless  briefed and

            argued  in   this  court   before  this  defect   was  noted.

            Thereafter, Motor Plan settled; the claim against the insurer

            was  disposed of in some  fashion not disclosed;  and a final

            disposition  of all claims has now occurred.  Within the time

            for filing an appeal from this final disposition, the Lopezes

            filed a new notice  of appeal from  the decision in favor  of

            Budget,  and we resolve the  case on the  existing briefs and

            argument.

                 On appeal, the Lopezes first argue  that it was improper

            for the district  court to grant summary judgment  when there

            had been  only one  round of  discovery and  when depositions

            would  have been crucial in  showing "the real  nature of the

            relationship"  between Budget  and Motor  Plan.   In opposing

            Budget's  motion to dismiss, the Lopezes  did not assert that

            they  needed  additional discovery.    Further,  there is  no

            indication  that further  discovery  could help  the  Lopezes

            establish  their  partnership  theory,  which  was  the  only

            argument it made in opposing summary judgment.

                 Turning  to the merits, we think that the district court

            correctly  resolved  the  issue  presented to  it.    Nothing

            suggests that Budget and Motor Plan were partners, that is to

            say,  the co-owners of a single business.  The common indicia

            of  partnership--such   as    expressed  intent   to  form  a

            partnership, contribution to a common fund to provide capital

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for a partnership, the holding of assets in partnership name-

            -are  not even  alleged.   See generally  H. Reuschlein  & W.
                                       ___ _________

            Gregory, Agency  and Partnership    175 (1990).   The Lopezes
                     _______________________

            dwell  on the  payments  from Motor  Plan  to Budget;  but  a

            licensing  fee based  on a  percentage of  gross income  is a

            common feature  of many licenses between  non-partners, not a

            hallmark of partnership.

                 Although the franchise agreement says  that Illinois law

            governs the relationship, the outcome is no different even if

            a  local Puerto Rico court would have applied Puerto Rico law

            to determine  Budget's responsibility.    The district  court

            ruled  that  under Puerto  Rico law  an  enterprise is  not a

            partnership  in the absence of  a "common fund"  to which the

            partners contribute and from  which the partners' profits are

            divided.  See 31 P.R. Laws Ann.  tit. 31,   4311.  On appeal,
                      ___

            the Lopezes do not challenge this assertion nor do they point

            us  to any other authority under Puerto Rico law for invoking

            the partnership label.

                 In their  post-judgment motion  and on this  appeal, the

            Lopezes  largely shifted  their emphasis  and now  claim that

            Budget so dominated Motor Plan  that it is vicariously liable

            for Motor Plan's negligence.  Puerto  Rico's Civil  Code does

            establish  vicarious  liability  for  the  negligence of  "an

            employee, agent,  pupil, or apprentice." P.R.  Laws Ann. tit.

            31   5142.  This provision parallels, and as to non-employees

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goes  somewhat  beyond,  the  widely  prevailing  "respondeat

            superior" rule  that an  employer or "master"  is vicariously

            liable  for the  negligence  of an  employee  or a  "servant"

            acting  within   the  scope   of  employment.     See,  e.g.,
                                                              ___________

            Restatement (Second) of Agency   210 (1958).

                 At  one time,  it  appeared that  the  Supreme Court  of

            Puerto Rico was  moving toward an even more expansive concept

            of vicarious liability.  In Martinez-Gomez v. Chase Manhattan
                                        ______________    _______________

            Bank, 108 P.R. Dec. 515 (1979), the court  held a bank liable
            ____

            for a  tort committed by an  otherwise independent contractor

            hired to repossess vehicles  for the bank.  The  court relied

            in part on the substantial and foreseeable hazards created by

            this  activity and  also noted the  benefits received  by the

            bank,  a  notion  that  could be  used  to  extend  vicarious

            liability   almost   without  limit   to  those   who  engage

            independent contractors.  

                 In Lopez v. Cruz Ruiz, 132 P.R. Dec. ____, No. CE-86-744
                    _____    _________

            (October  5,   1992),  the  Supreme  Court   of  Puerto  Rico

            retrenched.  There, the  court held that a  municipality that

            hired  another company to engage in construction work was not

            liable for a motor vehicle accident that occurred when in the

            course  of  the work  a driver  for  the contractor  struck a

            child.  The court said that 

                 the  injuries caused  by the  contractor's employee
                 resulted  from   his   failure  to   take   routine
                 precautions  people  normally take  when  driving a
                 motor vehicle.  This is  the type of negligence for

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which the employer of an  independent contractor is
                 not liable.  
            Id.  In light of Lopez, we think that Martinez-Gomez is of no
            ___              _____                ______________

            help to the Lopezes in this case.

                 What remains  is an  argument  first made  in the  post-

            judgment motion that Budget is  liable for the tort liability

            incurred  by Motor Plan because Budget  is the franchisor and

            Motor  Plan  the franchisee.    This would  comprise,  in all

            likelihood,  a  double layer  of  vicarious  liability: Motor

            Plan, if  liable itself to the Lopezes, incurs this liability

            not because of its own negligence but as the owner of the car

            that Soto was driving, see  P.R. Laws Ann. tit. 9,    1751 or
                                   ___

            as the employer of Soto, see P.R. Laws Ann. tit. 31,   5142.
                                     ___

                 The  state of  the law on  franchisor liability  for the

            wrongdoing  of a  franchisee (or  the latter's  employees) is

            remarkably  unsettled.   Annot., 59  A.L.R. 4th  1142 (1988).

            This is not altogether surprising.  Franchise agreements vary

            in many ways, and different types of claims present different

            problems.    Further, even  a  fairly conventional  franchise

            agreement does not fit easily into the traditional categories

            for  determining respondeat  superior liability.   Underlying

            the range of different  decisions on franchisor liability are

            policy questions about  enterprise liability that are  rarely

            articulated.

                 In opposing summary judgment, the Lopezes did not invoke

            these franchise  cases or  the theories they  have developed.

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On  the contrary,  the Lopezes  persistently pressed  a quite

            different theory--partnership--that  turned  out to  have  no

            basis  in  the  facts.   While  the  franchise  case law  was

            developed  in  some  detail  in  the  Lopezes'  post-judgment

            motion, no explanation was provided to the district court why

            the  arguments were not made  in timely fashion,  nor has any

            explanation been offered to us.

                 In general, a litigant who does not offer a legal theory

            at the  time the  matter is  decided  cannot complain  later.

            Ordinarily "[m]otions  under Rule 59(e) .  . . .   may not be

            used to  argue a  new legal  theory."   FDIC v.  World Univ.,
                                                    ____     ____________

            Inc., 978  F.2d 10, 16 (1st  Cir. 1992).  Motions  for such a
            ____

            purpose  to  reopen a  judgment  under Rule  60(b)  face even

            greater   hurdles.     Of  course,   a  district   court  has

            considerable  discretion  in these  areas,  but  the test  on

            appeal  is normally  whether  the district  court abused  its

            discretion.  Cotto v.  United States, 993 F.2d 274,  277 (1st
                         _____     _____________

            Cir. 1993).  We see no such abuse here.

                 If we thought that there was  clear-cut or even probable

            liability under Puerto  Rico law on the Lopezes'  new theory,

            we  might hesitate  in  the interests  of  justice to  affirm

            outright.  But  no pertinent  local Puerto Rico  case law  is

            cited to  us, and we  have very little  idea how  Puerto Rico

            courts would  decide the issues.   In  addition, the  Lopezes

            have  no likely  claim under  several of  the  more plausible

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"sub-theories" used to impose liability on franchisors.  See,
                                                                     ____

            e.g.,  Drexel v. Union Prescription Ctrs. Inc., 582 F.2d 781,
            ____   ______    _____________________________

            790-97 (3d Cir. 1978) (discussing franchisor's liability  for

            franchisee's torts based on apparent authority); Singleton v.
                                                             _________

            Int'l Dairy  Queen, Inc., 332  A.2d 160, 161-62  (Del. Super.
            ________________________

            Ct. 1975) (discussing  franchisor's liability when franchisor

            requires the franchisee's injurious conduct).      

                      Nothing  in our  appraisal is  affected by  the new

            evidence  proffered by  the  Lopezes in  their post  judgment

            motion.   Budget's  liability cannot  be enlarged  because it

            chose  to  settle rather  than  litigate  another case,  even

            assuming it  to be an analogous  one.  Nor does  it matter if

            Budget insisted that Motor Plan take out insurance to include

            Budget  as a  protected  party, a  precaution  that could  be

            justified  by  many potential  liabilities.   Accordingly, we

            need  not concern ourselves  with whether  these contentions,

            first made by motion after the judgment, came too late.

                 Affirmed.
                 ________

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