Such-Gonzalez v. Administracion

Opinion

USCA1 Opinion

March 6, 1996         [NOT FOR PUBLICATION]



                            United States Court of Appeals

                                For the First Circuit

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No. 95-1892


MIGUEL SUCH-GONZALEZ AND BARBARA TERNOSKY,



                               Plaintiffs, Appellants,



                                          v.



               ADMINISTRACION DE FOMENTO Y DESAROLLO AGRICOLA, ET AL.,



                                Defendants, Appellees.



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APPEAL FROM THE UNITED STATES DISTRICT COURT



                           FOR THE DISTRICT OF PUERTO RICO



                   [Hon. Gilberto Gierbolini, U.S. District Judge]
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                                 ____________________



                                Boudin, Circuit Judge,
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                      Coffin and Rosenn*, Senior Circuit Judges.
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                                 ____________________



               Fernando L. Gallardo for appellants.
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               Ernesto Hernandez  Milan for Commercial and  Farm Credit and
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          Development Corporation of Puerto Rico.

               Wally de la Rosa Vidal for Puerto Rico Land Authority.
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                                 ____________________


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               *Of the Third Circuit, sitting by designation.



COFFIN, Senior Circuit Judge.  This is the culmination of an
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          aging  lawsuit brought by a  pioneer Puerto Rico  rice farmer and



          his  then wife against the Commonwealth  sponsor, the Puerto Rico



          Land Authority (Authority), and financer, the Commercial and Farm



          Credit  Development  Corporation  (CFCDC),  arising  out  of what



          proved to be an ill-fated rice growing program. 



               Appellants,  having  filed   in  bankruptcy,  brought   this



          adversary proceeding  under  11  U.S.C.     1334.    The  amended



          complaint, so  far as we  are presently concerned,  alleged three



          causes  of action:  breach of  contract, defamation,  and "lender



          liability."    The district  court  granted  summary judgment  to



          defendants on all counts.  We affirm.



               In April of  1980, appellants entered into a lease agreement



          with the Authority in which they leased 325.60 cuerdas of land in



          Manati  for rice growing purposes  at an annual  rent, payable in



          advance,  of $40 per cuerda,  less property taxes.   Under clause



          27, the Authority was to deliver the land "duly razed and leveled



          for the harvesting of rice  and with the canals for  flooding and



          draining  said  lands duly  constructed."    Clause 34,  however,



          "expanded"  clause 27 to provide both that the leveling should be



          "precise" and that, if the lessor could not deliver any land with



          precise leveling, "the  parties will renegotiate in order to make



          an adjustment in the lease payments."  



               Clause 32  provided that the lease  agreement contained "all



          covenants  and  stipulations agreed  upon by  the parties."   And


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clause  33  provided  that  the  lease  payment  was  subject  to



          renegotiation after the first year.



               In  September  of  1980,  CFCDC  made  its  first   loan  to



          appellants, in  the amount  of $200,000.    In 1981  there was  a



          refinancing  loan of $285,000; in  1984, one of  $410,000; and in



          1985, one of $457,609.  Appellants made a first payment of $3,300



          for  approximately half of the first semester.  No other payments



          were made.



               While the first  harvest of  rice, in October  of 1980,  was



          excellent, the rest of the story is one of continual problems and



          frustrations.     At   some  point,   two  fields   were  leveled



          "backwards," and had to  be releveled by  the Authority.  A  well



          was  dug too deep, allowing seepage of  salt water.  The solitary



          airplane  available  for seeding  flew too  late  in the  day for



          effective work.   There was trouble in getting equipment released



          and delay in decisions.  Experts were called in but allegedly not



          listened to.  Blast (a disease) afflicted the rice  at one point;



          at another,  the digging of a  ditch across some  of the property



          hindered  operations.  And appellants were moved from one farm to



          another.



               Nevertheless, appellant  Such (his  wife having left  Puerto



          Rico in 1985) continued to farm the  property until July of 1986.



          Indeed, according to his deposition testimony, what  "cut off the



          head  of the  project" was  the coming  to power  of  the Popular



          Democratic Party in 1985. 


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In  September of  1986,  the Authority  brought an  eviction



          proceeding in  superior court,  alleging a delinquency  in rental



          payments of over $120,000.  The court found that appellants, over



          the course of six  years, had not sought renegotiation,  and that



          the amount owed the Authority was $101,714.34.  In March of 1987,



          appellants  were  ordered  to  vacate.    In  February  of  1987,



          appellants filed in bankruptcy  and in December of the  same year



          brought this action.



                                      DISCUSSION



               Breach of Contract.    The  district court properly  invoked
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          the principle that "a party to a  bilateral contract who does not



          perform  his obligations under the contract may not sue the other



          contracting party for breach  of contract."  We quote some of the



          court's discussion: 



               Under the common law doctrine of exceptio non aditempli
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               contractus, a  party to  a bilateral contract  who does
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               not perform his obligations  under the contract may not

               sue the other contracting party for breach of contract.

               Constructora Bauza, Inc. v. Garcia Lopez, 91 JTS 99, p.
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               9077  (1991); Martinez v. Colon  Franco, 89 JTS 109, p.
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               7291 (1989);  Heirs of  Escalera v. Barreto,  81 P.R.R.
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               580, 591 (1959).  This  doctrine provides a defense  to

               breach of  contract derived from the  Puerto Rico Civil

               Code.  [footnote and  citation  omitted]   If a  leasee

               [sic]  breaches a  material  clause of  the lease,  the

               defense  of exceptio  non aditempli  contractus clearly
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               applies to  shelter the  lessor from liability  for his

               own failure to perform.



               Appellants  challenge  the  application of  this  principle,



          claiming  that  the  Authority   early  and  often  breached  the



          contract, citing  the incidents  we have  summarized.   They also



          sketchily claim in their brief that they requested renegotiation.



          But   we  have   read  their   ill-assorted  appendix   and  have



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meticulously reviewed  the excerpts  furnished us from  the three



          depositions they have included.   There is no hint of any request



          for renegotiation or of any indication that any of the trials and



          tribulations which they  faced were considered as breaches.  Non-



          payment  of rent for six years, during which CFCDC disbursed some



          $800,000 on appellants' account, under a lease which specifically



          allowed the possibility of  change in rent if  renegotiation were



          requested, and the total absence of any request for renegotiation



          dictate  our affirmance  of  summary judgment  on  the breach  of



          contract claim.



               Lender  Liability.   While the  complaint refers  to actions
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          generally  of both  the  Authority and  CFCDC as  supporting this



          claim,  paragraph 47 makes clear  that only Credito Agricola (the



          predecessor  of CFCDC) is  being charged.   Appellants'  brief on



          appeal also confines this issue to CFCDC.



               Appellants aver that, in  addition to tort bases  for lender



          liability,  breach of contract,  with its fifteen  year period of



          limitations,  may  also serve  as a  basis.   Our  discussion and



          ruling on the  breach of contract issue disposes of  any claim of



          such support for lender liability here.



               The district  court summarized appellants' tort based lender



          liability claims  as intentional  or negligent failure  to comply



          with obligations under the contract, "complete control" over rice



          operations, pressure  exerted because of such  control, breach of



          fiduciary  duties, and bad faith.    The court looked in vain for



          specific information about actions under these headings and times


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when  they  were allegedly  committed.   It  ruled that  the only



          allegation approaching specificity, notice of a three month delay



          in  furnishing equipment, occurred in 1984,  far exceeding a year



          before filing of the complaint.  It held the claim time barred.



               The only specific conduct pointed to by  appellants in their



          brief  as evidence  of tortious  overreaching was  the deposition



          testimony  of   one  former  project  supervisor,  Barbosa,  that



          financial aid was "always  a problem because they wanted  to know



          everything  that was going to  be done."   Appellants complain in



          their brief that CFCDC's predecessor "went as far as to condition



          their financing to their adhering  strictly to the conditions and



          methods established by the Rice Project .  . . ."  But the  lease



          agreement itself  provided, in  clause 29:   "'The lessee'  binds



          itself  to  conduct  the  seeding  and  harvesting   of  rice  in



          accordance with the provisions of [the Rice Project]."



               We  find no suggestion of  a genuine issue  of material fact



          relevant to the lender liability claim, and certainly none within



          the one year limitations period.



               Defamation.    As for  the  defamation cause  of  action, it
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          simply  is  not  supported  by  anything  in  the  record.    The



          allegations are  phrased in the  most general  terms: "false  and



          defamatory statements  during the  periods of  1983 and 1984  and



          continuing in 1987, among  various persons of the public,  and of



          the  business community, and of the press  . . . that coplaintiff



          Miguel   Such   was   deceitful,   fraudulent   and  made   false


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representations of payment of  his obligations and  . . . was  in



          breach of his agreements with all the defendants . . . ."



               The  only  documentation  in  support of  these  allegations



          furnished  to  us  was an  excerpt  from  the  deposition of  co-



          appellant Barbara Ternosky.   Her testimony is exceedingly frail.



          She left Puerto Rico in 1985.  As concerns any statements in 1983



          and 1984, she  thought "there were,  like, negative things  going



          on, being  said  about the  rice project  .  . .  ."   She  later



          confessed that she did not recall anything that was said. 



               Appellant Such, in his deposition, said that he recalled one



          article in  some unmentioned publication  in which a  director of



          the Authority said some things damaging to him.  But, when asked,



          he could not recall what had been said.



               Such threads are  not even  gossamer.  We  see nothing  that



          happened in  1983 and 1984 that  rises to, or sinks  to the depth



          of,  defamation.   And  of course  there  is no  indication  that



          anything was said within the one year limitations period.



               This  has  been  a   history  inhospitable  to  all  parties



          concerned.   But they must be  left where they are.   We have not



          been able  to discern the faintest glimmer  of a genuine issue of



          material fact.



               Affirmed.  
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