USCA1 Opinion
December 6, 199423 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1257
ANASTACIO LOPEZ, RAMONITA MIRANDA DE LOPEZ, ET AL.,
Plaintiffs, Appellants,
v.
MOTOR PLAN INC., ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Boudin and Stahl, Circuit Judges.
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Jose Antonio Pagan Nieves for appellants.
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Jose L. Gandara with whom Bauza & Davila was on brief for
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appellees.
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BOUDIN, Circuit Judge. On December 8, 1988, Wanda Soto
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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.
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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.
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Gregory, Agency and Partnership 175 (1990). The Lopezes
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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,
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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.,
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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
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Bank, 108 P.R. Dec. 515 (1979), the court held a bank liable
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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
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(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
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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
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as the employer of Soto, see P.R. Laws Ann. tit. 31, 5142.
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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.,
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Inc., 978 F.2d 10, 16 (1st Cir. 1992). Motions for such a
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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
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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,
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e.g., Drexel v. Union Prescription Ctrs. Inc., 582 F.2d 781,
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790-97 (3d Cir. 1978) (discussing franchisor's liability for
franchisee's torts based on apparent authority); Singleton v.
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Int'l Dairy Queen, Inc., 332 A.2d 160, 161-62 (Del. Super.
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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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