Rios-Velez v. Baraka Ltd.

148 F. Supp. 2d 124, 2001 U.S. Dist. LEXIS 8268, 2001 WL 690442
CourtDistrict Court, D. Puerto Rico
DecidedJune 15, 2001
DocketCiv. 99-2420(SEC)
StatusPublished
Cited by1 cases

This text of 148 F. Supp. 2d 124 (Rios-Velez v. Baraka Ltd.) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rios-Velez v. Baraka Ltd., 148 F. Supp. 2d 124, 2001 U.S. Dist. LEXIS 8268, 2001 WL 690442 (prd 2001).

Opinion

OPINION AND ORDER

CASELLAS, District Judge.

Before the Court is Defendants’ motion for judgment on the pleadings, (Docket #22), and Plaintiffs’ opposition. (Docket # 25). For the reasons stated below, Defendants’ motion is GRANTED.

Background

This action comes before the Court pursuant to its diversity jurisdiction. Plaintiffs’ cause of action against the Defendants is brought under the Puerto Rico Sales Representative Act of 1990, Act 21 of December 5, 1990, 10 P.R.Laws Ann. §§ 279 et. seq. (1997) (hereinafter “Act 21”). Act 21 is a law designed to protect sales representatives — who “assume all the operational costs which such representation entails, such as the cost of maintaining an office, exhibition rooms, cars, office personnel, phones, electricity, water, insurance, travel costs, representation costs, office supplies, and municipal patents”— from termination without just cause by the principals. See Statement of Motives, Laws of Puerto Rico (December 5, 1990).

Defendants’ motion for judgment on the pleadings argues that Plaintiffs complaint is time-barred under Act 21 and article 941 of the Commerce Code, 10 P.R.Laws Ann. § 1903 (1997). Article 9 of Act 21 specifically provides that actions filed pursuant to it “prescribe three (3) years from the definitive date of termination of the sales representation contract or of the impairing acts, as the case may be.” 10 P.R.Laws Ann. § 279h (1997). In this case, Plaintiffs’ complaint, filed on December 29, 1999, claims damages for impairing acts occurring from late 1994 to May 31, 1996, date on which the sales representation contract was unilaterally terminated by the Defendant “without just cause and in bad faith,” (Docket #1 ¶ 11). From May 31, 1996 — the termination date of the contract — to December 29, 1999 — the date the complaint was filed — three years and seven months elapsed. Thus, Plaintiffs’ complaint falls outside the three year statute of limitations, exceeding it by seven months.

In his opposition to Defendants’ motion, Plaintiffs argue that they tolled the statute of limitations by timely filing a complaint in the Commonwealth Court of First Instance. That complaint was timely filed on October 20, 1998, although it was subsequently dismissed without prejudice at Plaintiffs request. Plaintiffs notice of voluntary dismissal was filed on December 13, 1999, and the court’s judgment was entered on January 5, 2000. The issue before the Court is whether Plaintiffs pri- or complaint effectively tolled the statute of limitations so that the present complaint is not barred by article 9 of Act 21, 10 P.R.Laws Ann. § 279h (1997).

Legal Analysis

The tolling of the statute of limitations established by Act 21 is governed by article 941 of the Puerto Rico Commerce Code, 10 P.R.Laws Ann. § 1903 (1997), which provides:

Prescription shall be interrupted by suit or any judicial proceeding brought against the debtor, by the acknowledgment of the obligations, or by the renew *126 al of the instrument on which the right of the creditor is based.
Prescription shall be considered uninterrupted by a judicial proceeding if the plaintiff should withdraw it, or the case should go by default or the complaint be dismissed.... 1

This provision, like others governing the prescription of mercantile actions, is more restrictive than its counterpart in the Civil Code. In fact, this is a distinct characteristic of the commercial code regulation in the area of prescription. The Puerto Rico Supreme Court has noted: “[T]he provisions of the Commerce Code in the area of the statute of limitations prescribe shorter periods of limitation than those established under the Civil Code ... [and] given then-precise and binding nature — absent specific regulations, do not admit commercial customs generally observed in each place ...” Pacheco v. National Western Life Insurance Company, 122 P.R.Offic.Trans. 49, 58 (1988) (internal citations and quotation marks omitted). The purpose behind that strict regulation, is to “encourage[ ] diligence and speed in commercial transactions and expedite[ ] mercantile traffic.” Id. at 60.

In Pacheco, the Puerto Rico Supreme Court held that article 941 of the Commerce Code governs the tolling of the statute of limitations provided by the Puerto Rico Dealer’s Contract Act, Act 75 of June 24, 1964, 10 P.R.Laws Ann. §§ 278-278d (1997), (hereinafter “Act 75”). The court based its ruling on a finding that the dealer’s contract — which Act 75 regulates — “is a new form of atypical contract, ... mercantile in nature and governed by the rules of the Commerce Code ...” 122 P.R.Offic.Trans. at 53 (internal quotation marks omitted). And where there is a gap in Act 75, it is to be filled by the applicable supplemental provisions of the Commercial Code. 122 P.R.Offic.Trans. at 57.

Act 21, governing the sales representation contract “is modeled after the [Dealer’s Act], also known as Law 75, and it is well settled that applicable jurisprudence to Law 75 is also of application in controversies as per Law 21.” Innovation Marketing v. Tuffcare Incorporated, 31 F.Supp.2d 218, 220 (D.P.R.1998). In particular, “the statement of motives of [Act 21] clearly state that the motive of the law is to protect sales representatives who fell short of compliance with dealership status under local law as defined by the Supreme Court in the case of Roberto Inc. and Roberto Colon v. Oxford Industries, 122 P.R.D. 115 (1988).” Innovation Marketing, 31 F.Supp.2d at 220 n. 1. Act 21 has a similar provision governing the prescription of actions brought under it, than Act 75. In addition, the sales representation contract can also be considered a mercantile contract using the standards established by the Puerto Rico Supreme Court in Pacheco. That is because the sales representation contract, like the contract for distribution, is “an activity closely related to a typically mercantile transaction: operation of a business through a dealer’s [or sales representation] contract.” Pacheco, 122 P.R.Offic.Trans. at 56.

*127 Having found that article 941 of the Commerce Code, 10 P.R.Laws Ann. § 1903 (1997), governs the tolling of the statute of limitations provided by article 9 of Act 21, 10 P.R.Laws Ann. § 279h (1997), the Court will now decide how that provision applies to the facts of this case. Article 941 of the Commerce Code, unlike the provisions of the Civil Code governing the prescription of civil actions, is “more restrictive as to the way of tolling.” Pacheco, 122 P.R.Offic.Trans. at 57. In particular, it does not recognize extrajudicial claims as a way of tolling the statute of limitations. Id. In addition, while it recognizes a civil complaint as a way of tolling the statute of limitations, it specifically provides that if the complaint is voluntarily withdrawn by the plaintiff, or dismissed by the court, the statute of limitations shall be considered unmt&n'wpted. 10 P.R.Laws Ann. § 1903 cl. 2 (1997). The language used by the statute is unqualified in this area and it speaks in absolute terms.

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148 F. Supp. 2d 124, 2001 U.S. Dist. LEXIS 8268, 2001 WL 690442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rios-velez-v-baraka-ltd-prd-2001.