
USCA1 Opinion

	




          September 9, 1993     [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ___________________          No. 93-1202                                              MARSHALL J. KAGAN,                                      Appellant,                                          v.                         EL SAN JUAN HOTEL & CASINO, ET AL.,                                      Appellees.                                  __________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                    [Hon. Jose Antonio Fuste, U.S. District Judge]                                              ___________________                                 ___________________                                        Before                                Cyr, Boudin and Stahl,                                   Circuit Judges.                                   ______________                                 ___________________               Marshall J. Kagan on brief pro se.               _________________               Daniel R.  Dominguez, Marie E. Lopez-Adames  and Dominguez &               ____________________  _____________________      ___________          Totti on brief for appellees El San Juan Hotel Corp. & Hans Lopez          _____          Stubbe.               Carlos A.  Quilichini and Ramon Lloveras Otero  on brief for               _____________________     ____________________          appellee Rodrigo Otero Bigles.                                  __________________                                  _________________                 Per Curiam.    Appellant Marshall J.  Kagan appeals  the                 __________            district  court order  affirming an  order of  the bankruptcy            court.  The district court found that Kagan's sole remedy for            alleged harm  following upon his dismissal  from his position            as comptroller of the El San  Juan Hotel was pursuant to  the            Puerto Rico wrongful termination statute, 29 L.P.R.A.   185a.            The court dismissed his other claims for relief.  We affirm.                 The factual as well as the procedural background to this            case are complex.   We summarize from the facts  found below.            See  Kagan  v. San  Juan Hotel  Corp.,  149 B.R.  263 (D.P.R.            ___  _____    ______________________            1992).                 Kagan was comptroller of  the El San Juan Hotel  when it            filed  for  bankruptcy  under  Chapter 11  in  1980.    Kagan            continued  in  his   position  under   the  court   appointed            bankruptcy trustee, Hector Rodriguez Estrada.  After frequent            disagreements  between  Kagan and  Rodriguez  as  to how  the            estate   should  be  managed,  appellant  was  dismissed  for            unsatisfactory performance in December  1982.  Kagan  asserts            that he was  dismissed in retaliation for attempting  to have            the trusteeship of Rodriguez investigated.                 In March  1983, the Chapter 11  proceeding was converted            to  a Chapter 7 proceeding.  In September 1983, Rodriguez was            removed  from the  trusteeship  by a  unanimous  vote of  the            creditors and replaced  by appellee Lopez.  Kagan urged Lopez                                         -2-            and  Otero,  the  estate's  attorney, to  file  suit  against            Rodriguez  for abuse of his  position.  When  they refused to            file  suit  alleging  that  there  was  insufficient evidence            against Rodriguez, Kagan accused  Lopez and Otero of covering            for Rodriguez.  In  1985 suit was filed against  Rodriguez by            the  United   States  as  one  of   the  estate's  creditors.            Rodriguez  was found  to have  abused his  trusteeship  and a            judgment of over 2 million  dollars was imposed on  Rodriguez            on behalf of the estate.  In Re San Juan Hotel Corp., 71 B.R.                                      _________________________            413  (D.P.R. 1987), aff'd in part and rev'd in part, 847 F.2d                                _______________________________            931 (1st  Cir. 1988).   Subsequently Rodriguez  was convicted            and sentenced for fraud.                 Kagan commenced suit against the estate and Rodriguez in            March  1983.   Kagan  sought both  compensation for  wrongful            termination  and the  removal  from his  personnel file  of a            letter  indicating  that  he  had been  terminated  for  poor            performance.   When Lopez replaced  Rodriguez, Kagan  amended            his  suit and  sought compensation,  removal of  the negative            letter  and a new letter  of reference from  Lopez and Otero.            Although   Lopez   agreed   to   compensation   for  wrongful            termination, he refused to  remove the old letter or  write a            new one.   Kagan asserts that  the failure to remove  the old            letter  from his file and to provide a new "corrected" letter            prevented him from obtaining new employment for several years                                         -3-            and then resulted in his being compelled to accept a position            at lower wages than he had previously earned.                 Kagan's  suit "wend[ed]  a  torturous path  through  the            judicial  system."   Kagan, 149 B.R.  at 268.   Trial  in the                                 _____            bankruptcy  court  did  not  commence until  May  1988.    In            September  1990 the  bankruptcy  court  dismissed all  claims            against Lopez and Otero and allowed Kagan damages against the            estate pursuant to   185a.  The final order of the bankruptcy            court did not issue until March 23, 1992.  Kagan appealed the            dismissal  of his claims other than that under  185(a) to the            district court which affirmed.                 On  appeal to  this court,  Kagan seeks  damages against            Lopez  and Otero  for the failure  to provide him  with a new            letter of reference.   He also seeks  additional damages from            the estate for his wrongful dismissal.1            Claims Against Lopez and Otero            ______________________________                                            ____________________            1.    In  his prayer  for relief,  Kagan  asks this  court to            "[r]emand to  the Bankruptcy Court for  appropriate action on            the  pending motion for Otero  to disgorge his  fees, and for            Lopez to be removed from office and [to] forfeit[] his fees."            The  district court dismissed the  claim against Otero on the            ground  that Kagan lacked standing to raise this claim in the            context of a  wrongful discharge  suit.  Kagan,  149 B.R.  at                                                     _____            270-72.  We agree.  Moreover, although the district court did            not address  the claim against Lopez, that claim would suffer            the same defect.  In any  event, since Kagan has presented no            argument  to support this prayer  in his brief,  the issue is            waived.  Ryan v. Royal Ins.  Co., 916 F.2d 731, 734 (1st Cir.                     ____    _______________            1990) (issues adverted  to on appeal in a  perfunctory matter            are deemed waived).                                         -4-                 Kagan  concedes  that 29  L.P.R.A.    185a  is  the sole            remedy  for his claim of wrongful dismissal under Puerto Rico            law.  Weatherly v. International  Paper Co., 648 F.Supp. 872,                  _________    _______________________            878 (D.P.R. 1986) (citing  cases).  However, he notes  that              185a  does  not  prohibit  recovery  when  an  employee  "can            establish that the employer committed an independent tortious            act in the course of terminating employment."  Id. at 877-78.                                                           __            Kagan asserts that in this case Lopez and Otero committed the            "independent  tortious act  of not  correcting the  record of            dismissal  and  giving false  bad  references."2     He seeks            recovery under 31 L.P.R.A.   5141 which provides that                    A  person who  by an  act or  omission causes                    damage to another through fault or negligence                    shall  be obliged  to  repair  the damage  so                    done.                 To state a claim  for damages under   5141,  a plaintiff            must  show (1) that the defendants owed him a duty to prevent            the  harm  suffered;  (2)   that  the  duty  was  negligently            breached; and (3) that the breach caused the plaintiff  harm.            Tokio Marine  & Fire  Ins. Co.  v. Grove Mfg.  Co., 958  F.2d            ______________________________     ______________            1169, 1171 (1st  Cir. 1992)  (citing cases).   In this  case,            Kagan has shown no  basis for inferring that either  Lopez or            Otero  had a legal duty  to correct his  references which had            been  given  by the  previous  trustee  Rodriguez ten  months                                            ____________________            2.   We assume, without deciding, that the failure to provide            corrected references and the supplying of false ones would be            within "the course of terminating employment."                                         -5-            before Lopez and Otero  arrived on the scene.   Even assuming            that Lopez and Otero were employers of Kagan, they were under            no  obligation  to provide  any references  to  him.   See 48                                                                   ___            Am.Jur.2d. Labor  and Labor  Relations    43  (in absence  of            statute "employer who discharges an employee is not liable to            the  employee  for  his  refusal  to  give  the   employee  a            'character' or  recommendation").3  Therefore, we  cannot see            why  they would be required to provide "corrected" ones.  "It            is axiomatic that the  failure to perform an act  cannot give            rise to  a cause of action  unless there was a  legal duty to            act."   Torres v. United  States, 621  F.2d 30, 33  (1st Cir.                    ______    ______________            1980) (applying Puerto Rico law).  Nor would it be reasonable            to require Lopez and  Otero to provide "corrected" references            for  an   employee  whom   they  never  employed   and  whose            performance they  were therefore in no  position to evaluate.            Finally, while Lopez  and Otero owe  fiduciary duties to  the            bankrupt estate, see In Re Thompson, 965 F.2d 1136, 1145 (1st                             ___ ______________            Cir.  1992), and to its  creditors, In Re  Consupak, Inc., 87                                                ____________________            B.R.  529,  539  (Bankr.N.D.Ill.  1988);  Bankruptcy  Code               704(1), 11  U.S.C.    704(a) (duties of  trustee), this  duty                                            ____________________            3.   Kagan's reliance  on Ackerman v. Thompson,  356 Mo. 558,                                      ________    ________            202  S.W.2d 795 (1947),  is in  vain.   In Ackerman,  a state                                                       ________            statute compelled the employer  to provide a "service letter"            upon  terminating  an employee.    Puerto  Rico  has no  such            statute.                                          -6-            does not  extend to Kagan  who is  seeking damages  not as  a            creditor of the estate but as a former employee of it.4                 On  appeal,  Kagan also  asserts  that  Lopez and  Otero            harmed  him by  providing  false references.   However,  this            claim  was not  raised below  and therefore  is not  properly            before  us. Johnston v. Holiday Inns, Inc., 595 F.2d 890, 894                        ________    _________________            (1st Cir. 1979).   In any event,  Kagan admits that he  never            actually  sought  any references  for a  prospective employer            from Lopez or Otero and that the uncorrected letter was never            disseminated.  His  claim to  have been  harmed by  receiving            false references is devoid of merit.                 Similarly without  merit is Kagan's reliance  on    107,            704  and 1106(a)  of the Bankruptcy  Code.   Section 1106(a),            through incorporation of    704, provides that "[t]he trustee            shall . . .  unless the court orders otherwise,  furnish such            information   concerning  the   estate   and   the   estate's            administration  as is requested  by a party  in interest." 11            U.S.C.    704(7).   Section 107 provides that "the bankruptcy            court shall . . . protect a person with respect to scandalous            or defamatory matter  contained in  a paper filed  in a  case                                            ____________________            4.     The district court  found that Otero,  as the estate's            attorney,  owed no  duty  to  the  employees of  the  estate.            Kagan,  149 B.R.  at 273.   However,  the district  court did            _____            state that  Lopez owed a duty to Kagan to act as a reasonable            employer. Id.  Since we find that Lopez owed no duty to Kagan                      __            to  provide  corrected  references, Kagan's  claim  would  be            subject to dismissal under the "reasonable employer" standard            as well.                                         -7-            under  this title." 11 U.S.C.   107(b)(2).  Alleging that the            uncorrected reference was defamatory,  Kagan seeks to find in            these provisions a duty on the part of the trustee to provide            proper  references and to revise false ones.  However (1) any            duty under  the Bankruptcy Code to  prevent the dissemination            of defamatory  material  is  imposed  on the  court  not  the            trustee; (2) the  allegedly defamatory letter is not a "paper            filed"  in a bankruptcy case;  and (3) as  noted above, Kagan            concedes that the letter was never disseminated.            Claim Against the Estate            ________________________                 Kagan asserts  that he is  entitled to relief  under the            federal common law for his wrongful dismissal.  According  to            Kagan,  he  was  dismissed  because  he  tried  to  stop  the            bankruptcy trustee from violating  federal law.  Moreover, he            alleges  that  the  Puerto  Rico  wrongful dismissal  statute            provides  insufficient  protection  because  of  the  limited            amount  of compensation  the  statute provides.   Citing  the            federal interest in seeing that federal  law is not violated,            Kagan asks this  court to formulate federal common  law based            on analogous state court decisions which have found a "public            policy" exception to the employment-at-will doctrine where an            employee is terminated for refusing to participate in illegal            acts.                                         -8-                 The instances in which a federal court has the authority            to formulate  a  federal  common  law  remedy  are  "few  and            restricted."  Wheeldin v. Wheeler,  373 U.S. 647, 651 (1963).                          ________    _______            Absent  some statutory authorization to formulate substantive            rules  of decision, and none  is alleged here,  the court has            authority  to create a federal common law remedy only when it            is "necessary to protect  uniquely federal interests."  Texas                                                                    _____            Industries, Inc.  v. Radcliff Materials, Inc.,  451 U.S. 630,            _______________      _______________________            640 (1981)  (quoting Banco Nacional de Cuba v. Sabbatino, 376                                 ______________________    _________            U.S.  398, 426  (1964)).   It  is  not enough  that  a remedy            "supplements federal enforcement  and fulfills the  object of            the statutory  scheme."  Id.  at 642.  Federal  common law is                                     __            appropriate  only  where "the  authority  and  duties of  the            United States as sovereign are intimately involved or because            the  interstate  or international  nature of  the controversy            makes it inappropriate  for state  law to control."   Id.  at                                                                  __            641.    Moreover, "[i]n  deciding  whether  rules of  federal            common  law  should   be  fashioned,  normally   the  guiding            principle is that a significant conflict between some federal            policy or interest and the  use of state law . . . must first            be  specifically shown."   Wallis  v. Pan  American Petroleum                                       ______     _______________________            Corp., 384 U.S 63, 68 (1966).            ____                 We  find no  such "uniquely  federal interests"  in this            case which  would warrant  the formulation of  federal common            law.    Furthermore,  no  conflict exists  here  between  the                                         -9-            federal policy to  be promoted and  the application of  state            law.   The  Commonwealth of  Puerto  Rico, like  most states,            already provides protection for those dismissed for acting in            accordance with  law.  Finally, the rationale  on which Kagan            relies--i.e.,  that the  court ought  to formulate  a federal            common law  remedy to  protect those dismissed  for upholding            federal law--would  apply to all federal  regulatory schemes.            Yet, Congress  has chosen  to enact specific  protections for            "whistle-blowers" where  it  has thought  appropriate.    See                                                                      ___            Note,   Protecting   Employees  at   Will   Against  Wrongful                    _____________________________________________________            Discharge:  the Public Policy Exception, 96 Harv.L.Rev. 1931,            _______________________________________            1934 (1983) (listing federal  statutes).  In adopting Kagan's            rationale,  we would  not only  be extending  this protection            into areas where Congress has  not thought appropriate but we            would  be  ignoring the  Supreme  Court's  advisory that  the            appropriate  occasions for the  formulation of federal common            law are "few and restricted."  Wheeldin, 373 U.S. at 651.  We                                           ________            decline to do so.                 Kagan calls our attention to Barany  v. Buller, 670 F.2d                                              ______     ______            726  (7th  Cir. 1982).   In  Barany,  the court  formulated a                                         ______            federal common law remedy for reinstatement of federal credit            union employees allegedly  dismissed in violation of  federal            laws.   This case is distinguishable from Barany in two ways.                                                      ______            First,  the decision  in  Barany was  based  in part  on  the                                      ______            congressional desire to "insure uniform development in credit                                         -10-            unions."   Id. at 733.   In contrast,  no similar  desire for                       __            national  uniformity is found  in congressional  control over            bankruptcy law.  Butner v. United States, 440 U.S. 48, 54 n.9                             ______    _____________            (1979)   (bankruptcy   law   frequently    recognizes   state            substantive law).  Second,  the rationale of Barany--that the                                                         ______            federalization of  the governance of an  institution makes it            of "uniquely federal interest"--was limited to federal credit            unions and similar federal institutions.  Barany, 670 F.2d at                                                      ______            734.  We see no principled way to limit the rationale for the            remedy sought in the present case.5                   The opinion of the district court is affirmed.                                                      ________                                            ____________________            5.    We also note that the Fourth Circuit has disagreed with            the  Barany  holding.   Ridenour  v.  Andrews Federal  Credit                 ______             ________      _______________________            Union, 897 F.2d  715, 721-22  (4th Cir.  1990) (declining  to            _____            fashion federal remedy as  a matter of federal common  law to            create  cause of  action for  federal credit  union employees            challenging adverse employment actions).                                         -11-
