USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1047
JORGE RIVERA SURILLO & CO., INC.,
Plaintiff - Appellant,
v.
FALCONER GLASS INDUSTRIES, INC., ET AL.,
Defendants - Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen Consuelo Cerezo, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Boudin, Circuit Judge,
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and Keeton,* District Judge.
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Rafael Baella-Silva, with whom Luis Barcel -Gener and Baella
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& Barcel , were on brief for appellant.
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Thomas W. B. Porter, with whom DyKemata Gossett PLLC was on
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brief for appellees.
Pedro A. Delgado-Hern ndez, Solicitor General, and Carlos
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Lugo-Fiol, Deputy Solicitor General, Department of Justice,
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Commonwealth of Puerto Rico, were on brief for the Commonwealth
of Puerto Rico.
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October 12, 1994
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* Of the District of Massachusetts, sitting by designation.
TORRUELLA, Chief Judge. Plaintiff-appellant Jorge
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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
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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
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account of defective or non-conforming
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material or from any other cause shall be
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deemed waived by the purchaser unless
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made in writing within ten (10) days of
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the receipt of the goods to which such
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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
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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
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American Ins. Co., 6 F.3d 836, 841 (1st Cir. 1993). We view the
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record in the light most favorable to the nonmoving party and
draw all reasonable inferences in the nonmoving party's favor.
Id.
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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),
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cert. denied, 486 U.S. 1055 (1988).
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DISCUSSION
DISCUSSION
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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
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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.
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Iglesia Cat lica, 72 P.R.R. 332, 340 (1951); Saavedra v. Central
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Coloso, Inc., 85 P.R.R. 404, 405 (1962). The statute of
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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
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(1983). In Julsrud, the court distinguished circumstances under
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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
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specific thing different from the one
agreed upon is delivered, the figure of
another thing or aliud pro alio, comes
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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--
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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
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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).
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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
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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.
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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
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Cir. 1989); Betancourt v. W.D. Schock Corp., 907 F.2d 1251 (1st
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Cir. 1990).
In Kali, we determined that litigants who had a claim
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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.
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887 F.2d at 11-12. See also M rquez v. Torres Campo, 111 P.R.
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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
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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.
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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
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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
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(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.
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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
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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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