Rivera Surillo v. Falconer

• Court: Court of Appeals for the First Circuit
• Decided: October 13, 1994
• Docket: 94-1047
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

          No. 94-1047

                          JORGE RIVERA SURILLO & CO., INC.,
                                Plaintiff - Appellant,

                                          v.

                       FALCONER GLASS INDUSTRIES, INC., ET AL.,
                               Defendants - Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF PUERTO RICO

                  [Hon. Carmen Consuelo Cerezo, U.S. District Judge]
                                                ___________________

                                 ____________________

                                        Before

                               Torruella, Chief Judge,
                                          ___________
                                Boudin, Circuit Judge,
                                        _____________
                             and Keeton,* District Judge.
                                          ______________

                                _____________________

               Rafael Baella-Silva, with whom Luis Barcel -Gener and Baella
               ___________________            __________________     ______
          & Barcel , were on brief for appellant.
          _________
               Thomas  W. B. Porter, with whom DyKemata Gossett PLLC was on
               ____________________            _____________________
          brief for appellees.
               Pedro  A. Delgado-Hern ndez,  Solicitor General,  and Carlos
               ___________________________                           ______
          Lugo-Fiol,  Deputy  Solicitor  General,  Department  of  Justice,
          _________
          Commonwealth of Puerto  Rico, were on brief for  the Commonwealth
          of Puerto Rico.

____________________

                                   October 12, 1994
                                 ____________________

____________________

          *  Of the District of Massachusetts, sitting by designation.

TORRUELLA,  Chief  Judge.    Plaintiff-appellant  Jorge
                                ____________

          Rivera-Surillo & Co., Inc.  ("JRS"), appeals the district court's

          grant of  summary judgment  in favor of  the defendants-appellees

          Falconer  Glass Industries,  Inc.  ("Falconer  Glass"),  Falconer

          Lewiston,  Inc.  ("Falconer  Lewiston")  and  Guardian Industries

          Corp. ("Guardian")  on JRS's claims  for breach of  contract, and

          JRS appeals the district court's denial of its motion to alter or

          amend the judgment.  We affirm.

                                      BACKGROUND
                                      BACKGROUND
                                      __________

                    On November  2, 1990, subcontractor JRS  entered into a

          subcontract with contractor G.R.G. Engineering, S.E.  ("GRG"), to

          replace the windows at  Building 31 at the Roosevelt  Roads Naval

          Base in Ceiba, Puerto  Rico.  GRG was the Navy's prime contractor

          for this project.

                    The prime  contract between the Navy  and GRG contained

          various  specifications  for the  new  window glass.    Among the

          specifications were  the requirements that the  glass provide 39%

          visible   light   transmission   and  .005%   ultraviolet   light

          transmission.        Paragraph   1.3   of   the  prime   contract

          specifications provided that the glass was to be delivered to the

          site in unopened containers, stored in a safe, dry place, and was

          not to be unpacked until needed for installation.

                    JRS  ordered the  glass for  the project  from Falconer

          Glass pursuant to a  purchase order dated November 16, 1990.  The

          glass was packed and  shipped by Falconer Lewiston.   Guardian is

          alleged to be the successor in interest to Falconer Glass.

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The glass was delivered to JRS in or about April, 1991.

          JRS stored the glass in  its warehouse.  JRS did not  inspect the

          glass until February  of 1992,  when it began  installation.   In

          February 1992, JRS  noticed defects  in the glass.   Glass  panes

          which had recently been  installed were stained with rainbow-like

          marks, which resulted in  an iridescent effect on their  surface.

          The staining did  not show when  the glass was  taken out of  its

          packaging,  but rather  appeared  two or  three days  thereafter.

          Laboratory  tests performed at the request of JRS showed that the

          glass did  not meet  the  Navy's requirements  for visible  light

          transmission.    JRS  notified  the  defendants  of  the  alleged

          defects,  for the  first  time, in  a  telephone conversation  on

          February 25, 1992, and again, in writing, in a letter dated March

          2, 1992.

                    The defendants  did not  replace the glass  because JRS

          failed  to comply  with  their requirements  for presentation  of

          claims.   These requirements  were set forth  in the  defendants'

          "General Terms and Conditions of Sale" ("General Terms").

                    Falconer  Glass and  Falconer  Lewiston both  sent  JRS

          copies of the General Terms.  The General Terms were set forth on

          the  order form  that  Falconer Glass  sent  JRS along  with  its

          quotation.  Additionally, Falconer Lewiston provided JRS with the

          General Terms when Falconer Lewiston acknowledged the order.

                    Paragraph 16 of the General Terms provided:

                      Presentation  of Claims -- Every claim on
                                                 ______________
                      account  of  defective or  non-conforming
                      _________________________________________
                      material or from any other cause shall be
                      _________________________________________
                      deemed  waived  by  the purchaser  unless
                      _________________________________________

                                         -3-

made in  writing within ten (10)  days of
                      _________________________________________
                      the receipt  of the goods  to which  such
                      _________________________
                      claim  relates for breach  of contract or
                      warranty and any action must be commenced
                      within one year after tender  of goods by
                      the Seller,  or receipt  of goods by  the
                      Purchaser  or after  the cause  of action
                      has    accrued,   whichever    shall   be
                      applicable in the circumstances.

          (emphasis added).

                    JRS  filed  suit for  breach  of  contract against  the

          defendants on May  22, 1992.   The defendants  moved for  summary

          judgment.    The district  court  granted  the motion  and  final

          judgment  was entered on November  18, 1993.   The district court

          found that JRS's  claim was barred by  Section 260 of the  Puerto

          Rico  Commerce Code which establishes a thirty day time limit for

          filing of certain claims.  10 L.P.R.A.   1718 (1989).   The court

          also  indicated that the  10-day presentation-of-claims provision

          in the General Terms may, by itself, determine the outcome of the

          case, but found that issue to be moot in light of Section 260.

                    On December 3,  1993, JRS  filed a motion  to alter  or

          amend the judgment under Fed. R. Civ. P. 59(e).  The court denied

          the motion by order dated March 1, 1994.

                                  STANDARD OF REVIEW
                                  STANDARD OF REVIEW
                                  __________________

                    Entry  of  summary  judgment is  appropriate  when "the

          pleadings,   depositions,   answers   to   interrogatories,   and

          admissions  on file, together  with the affidavits,  if any, show

          that there is  no genuine issue as to any  material fact and that

          the  moving party is  entitled to judgment  as a  matter of law."

          Fed. R.  Civ. P. 56(c); Mack v. Great Atlantic & Pacific Tea Co.,
                                  ____    ________________________________

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871  F.2d 179,  181 (1st Cir.  1989).   Our review  of a district

          court's grant of summary  judgment is plenary.  LeBlanc  v. Great
                                                          _______     _____

          American Ins. Co., 6 F.3d 836, 841 (1st Cir. 1993).   We view the
          _________________

          record in the  light most  favorable to the  nonmoving party  and

          draw all reasonable  inferences  in the nonmoving party's  favor.

          Id.
          ___

                    We review  the trial court's decision  denying a motion

          to  alter or amend a  judgment for manifest  abuse of discretion.

          Appeal of Sun Pipe Line Co.,  831 F.2d 22, 24-25 (1st Cir. 1987),
          ___________________________

          cert. denied, 486 U.S. 1055 (1988).
          ____________

                                      DISCUSSION
                                      DISCUSSION
                                      __________

                    The district court found that this case is  governed by

          the Commerce Code  of Puerto  Rico.  Chapter  51 of the  Commerce

          Code   provides  that   the  Code   applies  to   all  commercial

          transactions,  regardless  of  whether they  are  consummated  by

          merchants.   P.R. Laws Ann. tit  10,   1002.   The district court

          found, and the parties  do not dispute, that they  were merchants

          engaged in a commercial transaction.   The Code contains specific

          provisions governing  commercial purchases  and sales.    Section

          243  defines "commercial  purchase and  sale" to  which the  code

          applies:

                      A  purchase and sale of personal property
                      for the purpose of resale, either in  the
                      form it  was purchased or in  a different
                      form,  for the purpose of deriving profit
                      in  the  resale,   shall  be   considered
                      commercial.--Commerce Code, 1932,   243.

          P.R. Laws Ann. tit. 10,   1701.

                    The  district court  determined  that the  30 day  time

                                         -5-

limitation  of Section 260 applied  to JRS's claim.   Section 260

          provides:

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Failure to file a claim on account of defects.

                      A purchaser  who has  not made  any claim
                      based  on the  inherent  defects  in  the
                      article  sold,  within  the  thirty  days
                      following  its  delivery, shall  lose all
                      rights of action  against the vendor  for
                      such  defects.--Commerce  Code,  1932,   
                      260.

          P.R. Laws Ann. tit. 10,   1718.

                    Because JRS failed  to claim any  defects in the  glass

          within  30 days  of delivery,  the court  found that  Section 260

          barred its suit against the defendants.

                    On appeal,  JRS contends that the  district court erred

          in applying Section  260 to  this case.   JRS  contends that  the

          present  case is  an  action  for  breach  of  contract  and  the

          applicable  statute of limitations is  fifteen years.  Camacho v.
                                                                 _______

          Iglesia Cat lica, 72 P.R.R. 332, 340 (1951);  Saavedra v. Central
          ________________                              ________    _______

          Coloso,  Inc., 85  P.R.R.  404,  405  (1962).    The  statute  of
          _____________

          limitations for actions for  breach of contract is  determined by

          Section  1864  of the  Puerto Rico  Civil  Code which  provides a

          fifteen  year  statute  of  limitations for  actions  "which  are

          personal and for which  no special term of proscription  has been

          fixed."  P.R. Laws Ann. tit. 31,   5294.  Hence, the fifteen year

          statute of  limitations  period  would  apply only  if  no  other

          proscription,  including  that provided  by  Section  260 of  the

          Commerce Code, were applicable to this case.

                    In order  to determine  whether Section 260  applies to

          this  case we  are  guided by  the  Puerto Rico  Supreme  Court's

          decision  in Julsrud v. Peche de Puerto Rico, Inc., 115 P.R.R. 23
                       _______    __________________________

-7-

(1983).  In Julsrud,  the court distinguished circumstances under
                      _______

          which the statute  of limitations for breach  of contract applies

          from circumstances to which claims of defects apply:

                      The first distinction we must consider is
                      that   existing  between   another  thing
                      (aliud)  and  defective  thing.    When a
                       _____
                      specific  thing  different  from the  one
                      agreed upon  is delivered, the  figure of
                      another  thing or  aliud pro  alio, comes
                                         _______________
                      into  play, which  allows  the  buyer  to
                      bring  an action  for breach  of contract
                      within   the   corresponding  period   of
                      limitation.  When the very thing required
                      is  delivered, even  if it  is defective,
                      the   seller   has   complied  with   his
                      obligation to furnish the thing required.
                      What we  have then  is the delivery  of a
                      defective   thing,    and   the   actions
                      available are the aedilitian actions--the
                      redhibitory  or quanti  minoris actions--
                                      _______________
                      whose  life  is  much  shorter  than  the
                      action for breach of contract.

          115 P.R.R. at 28-29 (footnote and internal citation omitted).

                    Equating "inherent defect" to a "hidden defect," id. at
                                                                     ___

          31, the court  defined a "hidden defect" to which  the thirty day

          limitation of Section 260 applies:

                      A hidden defect is that which escapes the
                      eye of an ordinarily diligent person, the
                      defect  that is inherent to the imperfect
                      way   in   which   the  merchandise   was
                      manufactured, packed, handled, or stored,
                      and  which  renders the  thing inadequate
                      for the use for which it is destined.

          Id. at 30 (internal citation omitted).
          ___

                    JRS has  not claimed that defendants  failed to deliver

          the  glass.   Rather,  they claim  that  the glass  delivered was

          inadequate  for its  intended use.   JRS  has indicated  that the

          staining of  the glass did not  start to show when  the glass was

-8-

taken  out  of  its packaging,  but  rather,  two  or three  days

          thereafter,  and JRS contends that  the source of  the defect was

          the  glass manufacturing  process.   JRS's claims  falls squarely

          into the definition of "inherent" or "hidden" defect set forth in

          Julsrud.
          _______

                    Furthermore,  this Court has held that litigants cannot

          circumvent  a  specific  provision of  the  Puerto  Rico Code  by

          characterizing their  claims generally as a  "breach of contract"

          in order to obtain the benefit of a longer statute of limitations

          period.  Kali  Seafood, Inc. v.  Howe Corp., 887  F.2d 7, 9  (1st
                   ___________________     __________

          Cir. 1989); Betancourt v.  W.D. Schock Corp., 907 F.2d  1251 (1st
                      __________     _________________

          Cir. 1990).

                    In  Kali, we determined that  litigants who had a claim
                        ____

          for hidden defects, to which the six month statute of limitations

          period of  P.R. Laws  Ann. tit.  31,    3847  applied, could  not

          circumvent that limitations period  by characterizing their claim

          as one for breach of contract:

                      Because virtually every sale results from
                      a  contract  (express   or  implied),   a
                      disappointed  vendee could  always bypass
                      the    statute's    narrow   window    of
                      opportunity in favor of the thirty-times-
                      wider window afforded  by P.R. Laws  Ann.
                      tit. 31,   5294.   Unrestrained access to
                      such an end run would serve completely to
                      eviscerate   the   special   statute   of
                      limitations which the legislature thought
                      should  apply to product  sales in Puerto
                      Rico.     We  do  not  believe  that  the
                      legislative will can be flouted with such
                      ease, or that Commonwealth law is so one-
                      sided   as   to   make  the   appropriate
                      limitation  period  depend  strictly  and
                      solely  on  how  a  plaintiff  chooses to
                      costume its complaint.

                                         -9-

887 F.2d  at 11-12.  See  also M rquez v. Torres  Campo, 111 P.R.
                               _________ _______    _____________

          Dec. 854 (1982) (official English translation: No. R-79-101, slip

          op. at 1103 (P.R. Jan. 18, 1982) (affected  purchaser may not use

          a general action to  evade applicable rules related to  a special

          action that are incompatible with  the provisions of the  general

          action).  We therefore  conclude that the district court  did not

          err in applying Section 260 to this case.1

                    JRS's  remaining arguments  were raised  for the  first

          time in its  motion to alter or amend the  judgment under Fed. R.

          Civ. P. 59(e) which the district court denied.    JRS raised four

          arguments  in its  Rule  59(e) motion  which  it now  pursues  on

          appeal: 1) when the defendants agreed to the Navy specifications,

          they  superseded the  10-day term  contained in  their  order and

          waived  the 30-day term prescribed  by Article 260  of the Puerto

          Rico Commerce Code; 2)  defendants somehow acted in bad  faith by

          failing  to make clear at  the time of  contracting that, despite

          Navy  specifications, defendants would limit the time in which to

          notify claims to the 10 or  30 day notice periods provided in the

          "General Terms" and Section 30 respectively; 3) the inclusion  by

          the defendants in  the "General Terms" of  a different limitation

          period  from   the  one  implied  by   the  Navy  Specifications,

          constitutes an act contrary to good faith  and as such, should be

          rendered  invalid and  illegal; and  4)   insofar as  Section 260

____________________

          1   JRS contends  that Section  260 does  not apply  to specially
          manufactured products.  However, JRS has failed to cite any legal
          authority in support of  this contention.  We have  not found any
          such authority and decline their invitation to create new law.

                                         -10-

requires  a purchaser to make a claim for inherent defects before

          obtaining  knowledge   of  their  existence,  the   provision  is

          unconstitutional  because it  violates  the purchaser's  property

          rights without due process of law.

                    This court has explained that a motion under Rule 59(e)

          is not appropriately used to present new issues or evidence:

                      Rule   59(e)   motions   are   aimed   at
                      reconsideration,        not       initial
                      __
                      consideration.  Thus, parties  should not
                      use  them to raise arguments which could,
                      and   should,   have  been   made  before
                      judgment  issued.    Motions  under  Rule
                      59(e)  must  either  clearly establish  a
                      manifest  error of  law  or must  present
                      newly discovered evidence.  They  may not
                      be used to argue a new legal theory.

          Federal Deposit  Ins. Corp. v. World Univ., Inc., 978 F.2d 10, 16
          ___________________________    _________________

          (1st Cir. 1992) (internal citations and  quotations omitted).

                    Because the  first  of these  arguments  raises  issues

          addressed by the  district court  in its opinion,  we address  it

          below.  The remaining  three arguments, however, neither "clearly

          establish a manifest  error of law" nor "present newly discovered

          evidence" and are therefore not properly before us.  Id.
                                                               ___

                    Paragraph 1.3  of the prime contract  specifications in

          the contract between the Navy and GRG provided:

                         1.3 DELIVERY, STORAGE, AND HANDLING

                        Deliver   products   to  the   site  in
                      unopened containers, labeled plainly with
                      manufacturers' names and  brands.   Store
                      glass and setting  materials in safe, dry
                      locations and do not unpack  until needed
                      for  installation.    Handle and  install
                      materials in  a manner that  will protect
                      them from damage.

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Throughout this litigation, JRS has contended that they

          were  bound  by these  specifications  and  therefore, could  not

          inspect  the glass  when it  was delivered.   The  district court

          found  that this argument was  irrelevant to the issues presented

          in this case because the contracts between the Navy, GRG, and JRS

          in  no  way  involve or  bind  Falconer,  Lewiston,  or Guardian.

          Furthermore, the district court noted that the Navy specification

          referred  to "delivery" and "unpacking" and that neither of these

          terms prohibits inspecting the product to insure its safe arrival

          and conformance to contract specifications.

                    JRS concedes that  the defendants did not  enter into a

          direct  contractual relationship  with  either the  Navy or  GRG.

          However, because  the Navy  specifications were forwarded  to the

          defendants for  their acceptance before contracting, JRS contends

          that  the   specifications  became   a  medullary  part   of  the

          contractual relationship between JRS and the defendants.

                    We find several problems with JRS's argument.  Like the

          district court,  we do not  believe that the  Navy specifications

          prevented JRS  from inspecting the glass.   Not only do  the Navy

          specifications say  nothing about  inspection,  but the  "General

          Terms" provided to JRS by the defendants contained  the following

          provision:

                      6. INSPECTION--The Buyer  may inspect  or
                      provide for inspections  at the place  of
                      manufacture.  Such  inspections shall  be
                      conducted    as    not    to    interfere
                      unreasonably   with   the  manufacturer's
                      operations,  and  consequent approval  or
                      rejection shall be  made before  shipment
                      of  the  material.   Notwithstanding  the

                                         -12-

foregoing  the  Buyer  shall inspect  the
                      material upon his receipt of same, and if
                      the same  shall appear not to  conform to
                      the  contract between  the Buyer  and the
                      Seller,   the  Buyer   shall  immediately
                      notify  the Seller of  such condition and
                      afford    the    Seller   a    reasonable
                      opportunity to inspect  the material.  No
                      material  shall  be returned  without the
                      Seller's consent.

                    If  JRS  felt that  it should  not  open the  goods for

          inspection  on arrival,  it  could have  arranged to  inspect the

          goods at the  place of the manufacturer's operations.  Otherwise,

          it  could have arranged to  delay delivery until  it was ready to

          use the  materials.  JRS could  have also removed samples  of the

          glass  and   subjected  them   to  whatever  testing   it  deemed

          appropriate.   Finally,  the  "General Terms"  clearly show  that

          defendants did not intend to incorporate into their contract with

          JRS any limitation on the inspection of goods but rather required

          inspection  and  immediate  notification  to the  Seller  of  any

          nonconformity of the goods.

                    Affirmed.
                    ________

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