Advanced Flexible Circuits, Inc. v. GE Sensing & Inspection Technologies GmBH

United States Court of Appeals
For the First Circuit
No. 12-2007
ADVANCED FLEXIBLE CIRCUITS, INC.,
Plaintiff, Appellant,
v.
GE SENSING & INSPECTION TECHNOLOGIES GMBH; GE SENSING,
DIVISION OF CARIBE GE INTERNATIONAL OF PUERTO RICO, INC.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gustavo A. Gelpí, U.S. District Judge]
Before
Lynch, Chief Judge,
Torruella and Lipez, Circuit Judges.
Wilfredo A. Géigel, Sr., with whom Law Offices of Wilfredo A.
Géigel, was on brief, for appellant.
Michael D. Fisse, with whom Daigle, Fisse & Kessenich, PLC,
was on brief, for appellees.
March 20, 2015
TORRUELLA, Circuit Judge. This case stems from the
termination of precontractual negotiations between two
corporations. Plaintiff-Appellant, Advanced Flexible Circuits
("AFC"), entered into negotiations with Defendants-Appellees, GE
Sensing & Inspection Technologies GmbH and GE Sensing, Division of
Caribe GE International of Puerto Rico, Inc. (collectively, "GE"),
for AFC to manufacture and supply thermal filaments for GE to use
in its production of cardiac catheters. After about two years of
negotiations between the parties, but prior to the execution of a
contract, GE terminated negotiations with AFC. AFC subsequently
filed suit against GE in the United States District Court for the
District of Puerto Rico, alleging that GE was liable for
precontractual damages under the Puerto Rico doctrine of culpa in
contrahendo for arbitrarily and unjustifiably withdrawing from
contractual negotiations with AFC.1 Both parties filed
cross-motions for summary judgment; the district court denied AFC's
motion and granted GE's motion, thus dismissing AFC's claims
against GE.
AFC now appeals that decision, arguing that the district
court erred in finding that there was no genuine dispute as to any
material facts regarding the culpa in contrahendo claim. AFC
1
Under Puerto Rico law, the tort-law doctrine of culpa in
contrahendo "requires parties to negotiate in good faith." Ysiem
Corp. v. Commercial Net Lease Realty, Inc., 328 F.3d 20, 23-24 (1st
Cir. 2003).
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further contends that the district court abused its discretion in
sanctioning AFC for its alleged failure to comply with the district
court's "anti-ferret rule," Local Rule 56, in its opposition to
GE's motion for summary judgment. See D.P.R. Civ. R. 56.2 GE
responds by asserting that: (1) GE was justified in withdrawing
from negotiations due to AFC's failure to produce satisfactory
samples of the filaments; (2) AFC thus could not have had a
reasonable expectation of finalizing a contract with GE; (3) in the
alternative, AFC's alleged damages are not recoverable under culpa
in contrahendo or are otherwise unsupported by the evidence; and
(4) the district court properly applied its anti-ferret rules in
sanctioning AFC for its failure to comply with Local Rule 56.
After reviewing the record and the parties' filings, we
conclude that AFC has offered no competent evidence permitting a
finding of liability on its culpa in contrahendo claim. The two
parties engaged in precontractual negotiations, and after the
initial sample units supplied by AFC failed multiple quality and
performance tests, GE ultimately withdrew from negotiations. Other
2
AFC nominally raises a third issue, "[w]hether the [district
court] erred in finding that plaintiff/appellant had not met the
standard for granting of summary judgment in its favor." However,
this formulation is misleading. Rather than setting out a distinct
issue, the corresponding section of AFC's brief merely continues to
argue that the district court should not have granted GE's motion
for summary judgment and should not have sanctioned AFC under Local
Rule 56. In so doing, AFC does not argue that its own cross-motion
for summary judgment should have been granted, but instead argues
that "it would have been more appropriate . . . to deny both sides'
motions and let the jury decide."
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than speculative, conclusory allegations, AFC has offered no
evidence that GE's termination of those negotiations was arbitrary,
unjustified, or otherwise wrongful. Accordingly, we affirm the
district court's grant of summary judgment in favor of
Defendants-Appellees. Secondly, we conclude that the district
court did not abuse its discretion in sanctioning AFC for failing
to comply with the court's local rules.
I. Background
We begin with an overview of the factual background,
drawn from the summary judgment record and viewed in the light most
favorable to Plaintiff-Appellant AFC. See Tobin v. Fed. Express
Corp., 775 F.3d 448, 449 (1st Cir. 2014).
A. The Negotiations
GE is in the business of manufacturing and assembling
various products, including component parts of medical catheter
devices, which are assembled at a facility in Añasco, Puerto Rico
("Añasco Facility"), and then distributed to its customers. One of
the pieces of a medical catheter component part assembled at the
Añasco Facility is a "thermal filament" (otherwise known as a
"heater filament"). GE purchases these heater filaments from
suppliers before incorporating them into the assembled catheter
components which it then, in turn, sells to its customers.
AFC is a Minnesota corporation. During the negotiations
between GE and AFC, AFC had one employee: Theresa Bailey, who
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served as AFC's president, secretary, and treasurer. In the summer
of 2006, Manuel Hidalgo, a sales representative for an organization
called "Yes America," approached Maritza Cedó, the Material Leader
for GE at the Añasco Facility. Hidalgo told Cedó that he was a
sales agent for a company, AFC, that was capable of engineering and
manufacturing the heater filament used in the catheter component
assembled by GE at the Añasco Facility; Hidalgo proposed to Cedó
that AFC could supply the heater filament for GE. Cedó told
Hidalgo that GE currently purchased the heater filaments from
another supplier, that GE had incomplete information about the
filament, and that GE did not know how to manufacture the filament
itself.
Hidalgo informed Cedó that AFC: (1) was experienced in
manufacturing heater filaments; (2) had expertise in the
engineering and manufacturing of heater filaments; and (3) was
capable of determining, without further information, how the heater
filament manufactured by GE's then-current supplier was engineered
and constructed. Cedó explained to Hidalgo that AFC would have to
submit samples of the heater filaments to GE for quality testing.
Cedó further explained that the decision to purchase the filaments
was contingent upon the samples passing GE's quality tests. If
AFC's sample heater filaments passed the quality inspection and
tests by GE, then AFC's filaments could be approved for supply. GE
did not provide specific technical specifications, schematics, or
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engineering drawings to AFC, but rather gave AFC two physical
samples of the heater filament it needed.
AFC and GE began negotiations on a "proposed contract" in
January of 2007, and the negotiations continued for two years. AFC
acknowledges that the negotiations from 2007 until March of 2009
"comprise[d] the technical period," during which information was
exchanged and tests were conducted, and that if either party
withdrew during this period, there would be no repercussions.
In 2009, Ulrich Angeli, the Senior Manager and Global
Commodity Leader for GE, became personally involved in negotiations
with Bailey regarding AFC's proposed supply of the heater
filaments. During the spring and summer of 2009, the two parties
exchanged drafts of a purchase agreement. They negotiated via
email regarding the terms of the agreement, including the duration
of the contract, the applicable law that would govern the
agreement, and the price per unit. Angeli informed Bailey that AFC
would need to produce sample heater filaments that could pass the
requisite quality tests before the final contract terms could be
settled.
According to GE, AFC submitted a total of four groups of
sample heater filaments during the two years of negotiation, and
all of them failed quality testing "because they did not satisfy
the specified dimensional, mechanical, or electrical parameters
that were required before the heater filaments could be used in
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medical catheter devices." AFC, for its part, maintains that the
delays and test failures were not the result of AFC's shortcomings
or improper manufacturing but rather "were due to improper, wrong
and misguided information provided by GE."
On June 25, 2009, before the testing of the fourth and
final group of sample elements, AFC sent GE two signed copies of a
negotiated purchase agreement between the two companies; GE never
executed this contract. The fourth and final sample was rejected
by GE in August 2009 due to problems with its dimensions, among
other reasons. By September 2009, GE had withdrawn from the
negotiations.
On September 21, 2009, after the negotiations between AFC
and GE had been terminated by GE, Bailey sent an e-mail to Angeli
with a final invoice of $183,232.00 for "the development costs and
total hours spent by all the participants in the supply chain who
contributed to the development and successful outcome of this
project." In the same e-mail, Bailey also mentioned that AFC
thought the "project was near the production phase," and that AFC
had tried to get in contact with GE to find out "why the project
was abruptly cancelled." GE refused to pay, and AFC subsequently
filed this lawsuit.
B. Procedural Background
On January 29, 2010, AFC filed suit against GE in the
district court, claiming that GE had wrongfully withdrawn from
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contractual negotiations with AFC. On that basis, under the
doctrine of culpa in contrahendo, AFC sought recovery of
precontractual damages allegedly incurred by AFC during its
attempts to manufacture the heater filaments to supply to GE.
After discovery, GE filed a motion for summary judgment
to dismiss AFC's claim because AFC had failed to produce any
evidence in support of its culpa in contrahendo claim. In the
alternative, GE also moved for partial summary judgment to dismiss
AFC's claims for the following damages "not recoverable under a
culpa in contrahendo claim: (1) damages allegedly incurred by
parties other than AFC; (2) 'hourly' charges of third parties and
unsupported by evidence; and (3) incidental and consequential
damages." In response to GE, AFC filed its own motion for partial
summary judgment; this motion was denied (without prejudice)
because AFC failed to comply with the relevant rules, but the
district court allowed AFC to file a renewed motion for partial
summary judgment.
In ruling on these motions, the district court determined
that AFC's counterstatement of material facts in opposition to GE's
motion for summary judgment failed to comply with Local Rule 56 for
two reasons. First, the district court stated that AFC had failed
to properly controvert the statement of undisputed facts supporting
GE's motion for summary judgment, because AFC's opposing statement
"d[id] not admit, deny, or qualify any fact, nor d[id] it use the
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words admit, deny or qualify or any synonym thereof to describe its
stance regarding each fact." The district court noted that it did
not know whether AFC's "disputed" facts were meant to deny or
qualify GE's statement of undisputed facts.
Second, the district court held that, regardless of
whether AFC meant to deny or qualify given facts, AFC violated
Local Rule 56 by "fail[ing] to provide any required record
references in its opposing statement of material facts."
Consequently, the district court "only consider[ed] those parts of
AFC's opposition to GE Sensing's statement of uncontested facts
that compl[ied] with Local Rule 56 -- i.e., the facts deemed
admitted." However, the district court explicitly stated that, in
ruling on GE's motion for summary judgment, the court considered
AFC's statement of facts that accompanied its own cross-motion for
partial summary judgment.
Evaluating the merits of the competing summary judgment
motions, the district court held that GE did not violate the
doctrine of culpa in contrahendo. The court reasoned that the
evidence did not establish that GE had failed to act in good faith
or was unjustified in withdrawing from the contractual negotiations
with AFC. Furthermore, the evidence did not show that AFC could
have had a reasonable expectation of entering into a contract with
GE, because AFC admitted that it never provided a sample group of
heater filaments that passed GE's quality testing. In rejecting
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AFC's argument that GE did not negotiate in good faith, the
district court highlighted that AFC was aware that GE "did not
manufacture the heater filament, did not know how to manufacture
the heater filament, and did not have all the information regarding
the heater filament." Therefore, AFC could not have reasonably
expected GE to have provided them with exact specifications for the
heater filament. The district court further emphasized that AFC
was at fault for failing to provide heater filaments that met
quality standards, as GE relied on AFC's representation that it was
an experienced expert in engineering and manufacturing quality
heater filaments.
Dismissing AFC's contention that it reasonably expected
the contract to be completed, the district court found that the
evidence showed that AFC knew it had to produce a sample group of
heater filaments that met all the relevant quality standards before
an agreement could be reached, and AFC never produced a sample
group that passed the quality testing and validation process.
Accordingly, the district court granted summary judgment in favor
of GE, dismissed AFC's culpa in contrahendo claims, and denied
AFC's renewed motion for summary judgment. The district court did
not address GE's alternative motion for partial summary judgment,
as that motion was thus moot.
With the foregoing background in mind, we examine the
principal issue presented in this appeal: whether the district
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court, in granting summary judgment in favor of GE, correctly
concluded that there was no genuine dispute regarding facts
material to whether GE is liable to AFC under a theory of culpa in
contrahendo.
II. Summary Judgment on AFC's Culpa in Contrahendo Claim
We review the district court's decision to grant summary
judgment de novo, viewing the facts in the light most favorable to
AFC, the non-movant. See Klunder v. Brown Univ., 778 F.3d 24, 30
(1st Cir. 2015). Summary judgment is properly granted when the
movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56(a). We are not to make "credibility
determinations or weigh the evidence" in determining whether
summary judgment should be granted. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986).
In order to defeat a motion for summary judgment, the
nonmovant may not rest upon some combination of conclusory
allegations, improbable inferences, and unsupported speculation,
but must instead present definite, competent evidence to rebut the
motion. See Ahern v. Shinseki, 629 F.3d 49, 54 (1st Cir. 2010);
Maldonado-Denis v. Castillo-Rodríguez, 23 F.3d 576, 581-83 (1st
Cir. 1994).
Parties involved in contract negotiations are generally
"free to contract or to withdraw as it best suits their interests."
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Producciones Tommy Muñiz, Inc. v. COPAN, 113 P.R. Dec. 517, 526, 13
P.R. Offic. Trans. 664, 676 (P.R. 1982) ("COPAN"). However, under
the Puerto Rico doctrine of culpa in contrahendo, "precontractual
negotiations trigger a social relationship which imposes on the
parties the duty to act in good faith." Torres v. Gracía, 119 P.R.
Dec. 698, 703 (P.R. 1987).3
"Under this doctrine, negotiations toward an agreement
can -- even without a letter of intent -- readily give rise to
mutual expectations that the parties will bargain in good faith and
refrain from misconduct." Ysiem Corp. v. Commercial Net Lease
Realty, Inc., 328 F.3d 20, 24 (1st Cir. 2003). The doctrine "is
designed primarily to protect reliance rather than expectation
interests." Id.; see also Velázquez Casillas v. Forest Labs.,
Inc., 90 F. Supp. 2d 161, 166 (D.P.R. 2000) (observing that culpa
in contrahendo is generally "used to compensate a party for the
expenses it incurred in reliance on the other party's offer to form
a contract when the contract negotiations break down" (citing
3
Culpa in contrahendo is a claim sounding in tort, not in
contract. See Ysiem, 328 F.3d at 24; Shelley v. Trafalgar House
Pub. Co., 987 F. Supp. 84, 86 (D.P.R. 1997) ("characteriz[ing] the
culpa in contrahendo action as a legal action in torts"); COPAN, 13
P.R. Offic. Trans. at 679 (explaining that the doctrine arises from
Article 1802 of the Civil Code, which imposes extracontractual
liability for acting in a tortious or wrongful manner during
preliminary negotiations). The two leading cases from the Supreme
Court of Puerto Rico examining the culpa in contrahendo doctrine
are COPAN, 13 P.R. Offic. Trans. 664, and Colón v. Glamorous Nails,
167 P.R. Dec. 33 (P.R. 2006).
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Snyder v. Champion Realty Corp., 631 F.2d 1253, 1255–56 (5th Cir.
1980))).
A party's withdrawal from contractual negotiations may be
considered to be a violation of the duty of good faith if: (1) the
withdrawal was arbitrary or without justification; and (2) the
other party had a reasonable expectation that a contractual
agreement would be consummated. See, e.g., COPAN, 13 P.R. Offic.
Trans. at 678-79; see also WHTV Broad. Corp. v. Centennial Commc'ns
Corp., 460 F. Supp. 2d 297, 306 (D.P.R. 2006) (stating that the
doctrine of culpa in contrahendo allows for precontractual
liability of a party who "fails to negotiate in good faith when the
other party had reasonable expectations that an agreement would
finally be reached among the parties" (citing Glamorous Nails, 167
P.R. Dec. at 45-47)).
To determine liability under culpa in contrahendo, courts
have evaluated the circumstances of the withdrawal from
negotiations by considering certain factors, including:
(1) the development of the negotiations, (2)
how did [the negotiations] begin, (3) their
course, (4) the conduct of the parties
throughout [the negotiations], (5) the stage
at which the interruption took place, [and]
(6) the parties' reasonable expectations to
form a contract, as well as any other relevant
circumstance under the facts of the
case . . . .
Torres, 19 P.R. Offic. Trans. at 749. Accordingly, applying the
doctrine involves a context-dependent and fact-intensive inquiry.
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We have previously noted that "[t]he culpa in contrahendo test is
not very precise and the courts appear reasonably cautious in
applying a doctrine that could, if applied too freely, chill
negotiations rather than facilitate them." Ysiem, 328 F.3d at 24.
Importantly, the doctrine of culpa in contrahendo "should be
applied restrictively." Velázquez Casillas, 90 F. Supp. 2d at 167
(citing Torres, 19 P.R. Offic. Trans. at 754).
The mere "breaking off of negotiations is not sufficient
in and of itself to create liability," id., but rather it is the
"unjustified withdrawal or termination of precontractual
negotiations" that results in liability. See Satellite Broad.
Cable, Inc. v. Telefónica de España, S.A., 807 F. Supp. 218, 219
(D.P.R. 1992) (emphasis added). Thus, "[a] negotiating party may
incur culpa in contrahendo liability if its conduct is wrongful,
fraudulent, or dolose." Velázquez Casillas, 90 F. Supp. 2d at 167;
see also WHTV, 460 F. Supp. 2d at 306 ("[I]n order to impose
liability under this doctrine, there must be a finding of bad faith
or fault on the part of the party who terminated the negotiations."
(citing COPAN, 13 P.R. Offic. Trans. at 678)); Torres, 19 P.R.
Offic. Trans. at 744 ("[T]he action for damages based on culpa in
contrahendo was not established since it was not proved that the
defendants' conduct was wrongful, deceitful or fraudulent.").
This "doctrine applies even if the Defendant's conduct
was not intentional, but merely negligent." WHTV, 460 F. Supp. 2d
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at 306; see also Glamorous Nails, 167 P.R. Dec. at 46 (stating
that the Supreme Court of Puerto Rico "has acknowledged culpa in
contrahendo not only when one of the parties participating in the
formation of a contract acts intentionally through dolus [deceit],
fraud or abuse of rights, but also when that party causes harm by
acting negligently").4 Indeed, the Supreme Court of Puerto Rico
has observed that "the wide spectrum of grounds upon which
precontractual liability may rest" include "fault, dolus, fraud,
good faith, abuse of law, or other general principle[s] of law."
COPAN, 13 P.R. Offic. Trans. at 679. Examples of wrongful conduct
that can give rise to culpa in contrahendo liability include the
following:
a party's failure to disclose its lack of
legal capacity to enter into a contract; a
party's negotiating without any intent of
entering into a contract but with the intent
of obtaining confidential business information
from the other side; a party's using the
negotiations not in order to finalize an
agreement but to obtain some advantage in its
dealings with a third party; or a party's
fault causing the business transaction to be
ineffective.
Velázquez Casillas, 90 F. Supp. 2d at 167 (citing COPAN, 13 P.R.
Offic. Trans. at 679).
4
"Dolus or dolo is a form of contractual deceit that can serve to
invalidate consent to an otherwise valid contract or compromise."
Citibank Global Markets, Inc. v. Rodríguez Santana, 573 F.3d 17, 29
(1st Cir. 2009) (citing P.R. Laws. Ann. tit. 31, § 4828).
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Here, AFC has failed to present definite, competent
evidence showing such wrongful conduct on behalf of GE. AFC has
not presented specific facts suggesting that GE's conduct in the
negotiations was "wrongful, fraudulent, or dolose." See id.; see
also Ahern, 629 F.3d at 54 (stating that where nonmovants bear the
burden of proof on an issue, they must point to specific facts to
defeat summary judgment, and they cannot "rely[] upon conclusory
allegations, improbable inferences, acrimonious invective, or rank
speculation"). To the contrary, AFC has either admitted or failed
to contest facts that show that GE had valid reasons for
withdrawing from negotiations and for choosing not to execute a
contract with AFC.
AFC explicitly admitted that it represented to GE that it
was capable of engineering and manufacturing quality heater
filaments. AFC further represented that it had experience with the
manufacture of the same type of heater filaments sought by GE, and
it conceded that GE relied on these representations of expertise.
AFC also admitted that, under the agreement contemplated by the
parties, it had to first produce "sample" filaments for "inspection
and testing evaluation." Only if the samples passed this process
could the filaments then be approved for later supply in quantities
required by GE.
Additionally, AFC conceded that the first sample "failed
the test" because it was not a heater filament, although AFC
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maintains that this failure was because GE had not provided the
required specifications. Furthermore, AFC "was still having
difficulties" manufacturing sample filaments as of March 2, 2009,
and June 24, 2009.
AFC also failed to contest certain other facts alleged by
GE.5 Accordingly, as relevant here, the following additional facts
are not in dispute. First, it took AFC a period of more than two
years to produce multiple filament samples, including a delay of
one year to determine the correct material to use. Four different
lots of sample components were provided from 2008 to 2009, and at
least three of those lots failed qualification testing.6 Although
AFC alleges that these failures "were due to improper, wrong and
misguided information provided by GE," there is no dispute that
three of the four sample lots provided by AFC failed GE's quality
tests -- including the fourth and final sample lot. Regarding the
5
The district court considered whether facts contained in AFC's
statement of facts in support of its own cross-motion for summary
judgment contradicted any of the facts asserted by GE. See, e.g.,
Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 249
F.3d 1132, 1137 (9th Cir. 2001) (holding that when a court
disregards a party's motion in opposition to summary judgment for
failure to comply with a local rule, the court still has a duty "to
review the evidence properly submitted in support of cross-motions
for summary judgment to determine whether that evidence
demonstrates a genuine issue of material fact"); see also P.R. Am.
Ins. Co. v. Rivera-Vázquez, 603 F.3d 125, 133 (1st Cir. 2010)
(stating that when "cross-motions for summary judgment are filed
simultaneously, or nearly so, the district court ordinarily should
consider the two motions at the same time").
6
GE maintains that all four sample lots failed the qualification
testing.
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first two of the four sample lots, AFC has further admitted that it
was reasonable for GE to reject the samples due to their poor
quality.7 Moreover, AFC has presented no evidence nor argument
showing that GE was obligated or expected to enter into a contract
with AFC if just some of the samples passed the quality testing.
Additionally, in August 2009, following the testing
failure of the fourth lot of sample filaments, AFC was planning to
advise GE that unless different arrangements were made -- including
GE paying AFC for the production of additional samples -- AFC would
not go forward with the project. For its part, GE's decision to
withdraw from negotiations with AFC was based primarily on AFC's
multiple failed attempts to produce quality samples, but also other
factors such as: AFC's delays in production, its failure to
participate in weekly status meetings, and its reliance on third
parties for production. On the basis of the foregoing, the summary
judgment record contains evidence of undisputed facts showing that
GE's withdrawal from negotiations was justified and was not
arbitrary or otherwise wrongful. See WHTV, 460 F. Supp. 2d at 306
(observing that the mere withdrawal from precontractual
negotiations does not -- in and of itself -- give rise to liability
under culpa in contrahendo); see also Satellite Broad. Cable, Inc.,
7
Even in AFC's (properly disregarded and stricken) opposition to
GE's motion for summary judgment, AFC only disputed this fact to
the extent that "the rejection was not due to improper
manufacturing but to improper, wrong and misguided information
provided by GE."
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807 F. Supp. at 219 (establishing that it is only the unjustified
termination of precontractual negotiations that results in
liability under the doctrine). By contrast, AFC failed to properly
point the court to any evidence in the summary judgment record
showing wrongful conduct on behalf of GE. See WHTV, 460 F. Supp.
2d at 306 (citing COPAN, 113 P.R. Dec. at 529).8
AFC argues that GE was also engaging in negotiations with
an alternative supplier: a Chinese company that offered better
pricing. However, AFC failed to properly support this argument
with a citation to a specific place in the record. Moreover, even
assuming that GE was indeed negotiating with another supplier, AFC
has put forth no evidence –- and indeed, has not even made a
specific allegation –- showing why such conduct would be wrongful
under these circumstances. Nor has AFC provided us with legal
authority establishing that engaging in simultaneous precontractual
8
Given that the application of culpa in contrahendo depends
heavily on the facts and context of each case, we do not opine here
on the types of conduct that would be either necessary or
sufficient to establish liability in every hypothetical case. We
nonetheless note that AFC has failed to adduce any evidence that
might suggest wrongful conduct on behalf of GE. Aside from
unsupported, conclusory allegations, AFC has submitted no evidence
showing, for example: that GE never had any intention of executing
a contract; that GE undertook the negotiations with the sole intent
of obtaining confidential business information from AFC; that GE
used the negotiations not in order to finalize an agreement but
only to obtain some advantage in its dealings with a third party;
or that GE was at fault in causing the business transaction to be
ineffective. See Velázquez Casillas, 90 F. Supp. 2d at 167 (citing
COPAN, 13 P.R. Offic. Trans. at 679) (listing these as examples of
wrongful conduct potentially giving rise to precontractual
liability).
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negotiations with two alternative suppliers is wrongful. There is
nothing inherently nefarious about engaging in simultaneous
negotiations with competing suppliers. Surely many businesses must
do so regularly. Aside from vague, unsupported allegations and
speculation, AFC failed to present any evidence of conduct by GE
that was "wrongful, fraudulent, or dolose." See Velázquez
Casillas, 90 F. Supp. 2d at 167; see also Ahern, 629 F.3d at 54;
Maldonado-Denis, 23 F.3d at 581.
AFC further argues that GE was at "fault" in "causing the
business transaction to be ineffective," because GE failed to
provide the necessary technical information to AFC. See Velázquez
Casillas, 90 F. Supp. 2d at 167 (citing COPAN, 13 P.R. Offic.
Trans. at 679). This argument fails for at least two reasons.
First, AFC has not provided us any legal authority establishing
that such a failure, without more, would give rise to culpa in
contrahendo liability. Second, the undisputed evidence regarding
the technical specifications shows that neither GE nor AFC knew how
to manufacture the heating filaments, that AFC was aware of GE's
lack of knowledge, that AFC held itself out as an expert capable of
reverse-engineering the filaments, and that GE did not falsely
represent to AFC that it would provide the necessary technical
blueprints. In light of this evidence, it is clear that GE was not
at fault, nor did it cause the transaction to be ineffective.
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Rather than citing "definite, competent" record evidence
that shows specific facts establishing a genuine dispute as to any
wrongful conduct by GE, AFC has instead relied upon a combination
of conclusory allegations, improbable inferences, and unsupported
speculations. See Ahern, 629 F.3d at 54; Maldonado-Denis, 23 F.3d
at 581-83. Given the foregoing, AFC has failed to effectively
rebut the evidence and arguments presented by GE in its motion for
summary judgment. On the basis of the undisputed facts, GE was
entitled to judgment as a matter of law, and its motion was
properly granted.
III. Local Rule 56
AFC further argues that the district court abused its
discretion in applying the court's anti-ferret rule under Local
Rule 56 to disregard AFC's counterstatement of facts in its
opposition to GE's motion for summary judgment. Rejecting this
argument, we find no such abuse of discretion.
Local Rule 56 "requires a party moving for summary
judgment to submit a 'separate, short, and concise statement of
material facts, set forth in numbered paragraphs, as to which the
moving party contends there is no genuine issue of material fact.'"
P.R. Am. Ins. Co., 603 F.3d at 130 (quoting D.P.R. Civ. R. 56(b)).
"Each fact must be supported by a citation to a specific paragraph
or page of the summary judgment record." Id. (citing D.P.R. Civ.
R. 56(e)). A party opposing a motion for summary judgment must
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submit a statement countering the movant's statement of undisputed
facts; this counter-statement "'shall admit, deny or qualify the
facts by reference to each numbered paragraph of the moving party's
statement of material facts and unless a fact is admitted, shall
support each denial or qualification by a record citation.'" Id.
at 131 (quoting D.P.R. Civ. R. 56(c)). "Properly supported facts
contained in a[] [statement of undisputed facts] shall be deemed
admitted unless controverted in the manner prescribed by the local
rule." Id. (citing D.P.R. Civ. R. 56(e)).
Anti-ferret rules are intended to reduce the burden on
trial courts and "prevent parties from unfairly shifting the
burdens of litigation to the court." Cabán Hernández v. Philip
Morris USA, Inc., 486 F.3d 1, 8 (1st Cir. 2007). When the
nonmovant fails to comply with the standards of Local Rule 56, "a
district court is free, in the exercise of its sound discretion, to
accept the moving party's facts as stated." Id. at 7. In such a
situation, "the district court must still apply the standard
articulated in Federal Rule of Civil Procedure 56." P.R. Am. Ins.
Co., 603 F.3d at 130. We then review the district court's order
applying Local Rule 56 for an abuse of discretion, giving a
"special degree of deference" to the district court's
interpretation of its own local rules. Id.
At the outset, we note that this issue is moot with
respect to many, if not all, of the facts proposed by AFC in its
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opposition to GE's motion for summary judgment, because the
district court actually considered those same proposed facts.
Indeed, in ruling on both parties' cross-motions for summary
judgment, the district court explicitly stated that it considered
the statement of facts in AFC's own motion for partial summary
judgment, and there was significant overlap between AFC's two
statements of facts (one of which was disregarded, and the other of
which was duly considered). Thus, although the court stated that
it would disregard portions of AFC's opposing statement of material
facts, it nonetheless considered those same facts as they were
presented in AFC's own motion for summary judgment. Arguably, the
district court considered most, if not all, of the facts that AFC
now complains were erroneously stricken. AFC has failed on appeal
to point us to a single fact that was actually not considered by
the district court and that would be material to a question
necessary for the resolution of this matter.
Reviewing the record and the parties' submissions, and
giving a "special degree of deference" to the district court's
interpretation of its own rules, we find no abuse of discretion in
the district court's application of Local Rule 56. See P.R. Am.
Ins. Co., 603 F.3d at 130. Therefore, we find AFC's arguments
regarding the district court's application of Local Rule 56 to be
unavailing.
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IV. Conclusion
For the foregoing reasons, we conclude that AFC has
presented no competent evidence showing a genuine issue of material
fact as to any wrongful conduct on the part of GE in negotiating.
It was neither "arbitrary" nor "unjustified" for GE to withdraw
from precontractual negotiations after the sample parts provided by
AFC failed multiple quality evaluations and tests. Furthermore,
the district court did not abuse its discretion in sanctioning AFC
for failing to comply with the court's local rules. Accordingly,
summary judgment in favor of Defendants-Appellees was proper, and
the district court's decision is affirmed.
AFFIRMED.
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