
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.                                         -2-                    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.,                                  ____    ________________________________                                         -4-          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:                                         -6-                    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.                                         -11-                    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.                    ________                                         -13-
