United States Court of Appeals
For the First Circuit
No. 07-1847
PUERTO RICO ELECTRIC POWER AUTHORITY (PREPA),
Plaintiff, Appellant,
v.
ACTION REFUND and STANLEY K. WALLIN,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., U.S. Senior District Judge]
Before
Torruella, Circuit Judge,
Baldock,* Senior Circuit Judge,
and Smith,** District Judge.
Marco A. González, Jr., with whom Gia G. Incardone and Duane
Morris LLP were on brief, for appellant.
David F. Smith, with whom W. Clifton Holmes, Sher & Blackwell
LLP, José E. Alfaro-Delgado, and Brown & Ubarri, P.S.C. were on
brief, for appellees.
February 7, 2008
*
Of the Tenth Circuit, sitting by designation.
**
Of the District of Rhode Island, sitting by designation.
TORRUELLA, Circuit Judge. This is an appeal from the
district court's grant of summary judgment dismissing all of the
plaintiff's claims and allowing, in part, the defendants'
counterclaims. The plaintiff-appellant, Puerto Rico Electric Power
Authority ("PREPA"), is a public utility that generates and sells
electric power to businesses and residents of Puerto Rico. The
defendants-appellees are Action Refund, a North Carolina
corporation engaged in the business of helping qualified entities
obtain refunds from the United States Department of Energy ("DOE"),
and its principal, Stanley K. Wallin.
In September 2004, the parties signed a contract
(hereinafter, "the Contract") which provided that Action Refund
would act as a representative in PREPA's claim for refunds and be
paid twenty percent of the total amount received. PREPA received
a refund of $3 million and refused to pay the twenty percent fee,
asserting that the Contract was invalid. In December 2006, PREPA
filed the instant suit against Wallin and Action Refund, seeking a
declaratory judgment to invalidate the Contract and damages for
fraud, fraudulent inducement, and unconscionability.
Wallin and Action Refund moved for summary judgment on
only the declaratory judgment count. The court granted the motion
and, sua sponte, dismissed the remaining three counts. Upon motion
of the defendants, the court then granted summary judgment on their
counterclaims: the court declared the Contract to be valid and
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binding and that the defendants were entitled to payment of the
twenty percent fee. PREPA appealed. After careful consideration,
we affirm the district court's orders.
I. Background
In 1986, a federal multi-district litigation alleged that
various producers and sellers of domestic crude oil and refined
petroleum products were overcharging customers in violation of DOE
regulations. The litigation resulted in a settlement of
approximately $5 billion in overcharges from the offending parties.
The DOE collected the funds and created a repayment process in
which affected end-use consumers could submit claims to obtain a
share of the overcharges. The refunds were disbursed in three
rounds: the first in the late 1980s, the second in the mid-1990s,
and the third in 2004.
PREPA was among the affected end-use consumers; after
submitting its claims in 1988, it received a refund of nearly $7
million in 1997. In May 2004, the DOE published procedures to
obtain refunds in the third and final round. See Final Procedures
for Distribution of Remaining Crude Oil Overcharge Refunds, 69 Fed.
Reg. 29,300 (May 21, 2004). This round, limited to those
"successful claimants" who had already received refunds, required
claimants to submit the necessary paperwork on or before
December 31, 2004, or otherwise forfeit all rights to the refund.
Id. at 29,304. In addition to the publication in the Federal
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Register, written notice was to be sent to the approximately 3,400
eligible claimants. Id. PREPA asserts that it never received
written notice from the DOE.1
Since 1992, Wallin had assisted claimants in obtaining
petroleum refunds. Through a subcontracting relationship with a
refund claimant company, PBA Tax Accounting, Inc., Wallin contacted
companies that qualified for the DOE refund program and offered to
help prepare and submit the necessary documentation. Sometime in
1993, he learned that PREPA's application was still pending and
offered to help facilitate the refund process. PREPA and PBA
signed a contract providing that PBA would receive a service fee of
ten percent of the total refund amount in return for its services.
The relationship soured in 1997 when PREPA received the nearly $7
million refund check and refused to pay PBA. The parties settled
the dispute for $250,000 in October 1998.
In the summer of 2004, Wallin, now the sole proprietor of
Action Refund, discovered that PREPA had not claimed its third-
round refund. Wallin contacted PREPA and offered to assist in the
refund process. On August 6, 2004, he submitted a written proposal
for services as well as a proposed contract. The proposal
authorized Action Refund to act as PREPA's representative. In
1
It appears that the DOE mailed PREPA's notice to a San Juan Post
Office Box address in the care of the attorney who had filed the
original refund application in 1988; he was no longer associated
with PREPA in 2004.
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return for providing information and services about refunds, Action
Refund was to receive twenty percent of the money. Various
employees at PREPA, including its legal department, reviewed the
proposed contract. They asked for, and received, additional
information about Wallin and Action Refund. At no time did either
party discuss the prior relationship between PREPA and PBA. PREPA
proposed the addition of a paragraph limiting Action Refund's
authorization to one year. Wallin agreed and the Contract was
executed by the parties on September 20 and 21, 2004.
On October 4, 2004, Wallin submitted PREPA's verification
documentation to the DOE and made various follow-up communications.
In January 2005, the DOE contacted PREPA and requested that it
submit a verification form which was identical to the one submitted
by Wallin in October. On March 28, 2006, PREPA received a refund
check for $3 million. Wallin demanded the twenty percent fee
described in the contract and PREPA refused.
PREPA filed the instant suit in the United States
District Court for the District of Puerto Rico against Wallin and
Action Refund on December 16, 2005 on the basis of federal
diversity jurisdiction, seeking: a declaratory judgment
establishing that the Contract is void and invalid (Count One) and
damages for fraud in the inducement, fraud, and unconscionability
(Counts Two, Three, and Four, respectively). The defendants
answered and filed a counterclaim seeking their own declaratory
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judgment establishing the validity of the Contract, by which Action
Refund is entitled to twenty percent of the refund, and damages for
the breach. Following discovery, the defendants filed a motion for
summary judgment with respect to Count One only. PREPA opposed the
motion. On December 29, 2006, the district court allowed the
defendants' motion for summary judgment on Count One and sua sponte
dismissed PREPA's remaining three counts, leaving only the
defendants' counterclaims.
Two months later, the defendants moved for summary
judgment on their counterclaims. PREPA opposed the motion and
asserted that the district court's sua sponte dismissal of Counts
Two, Three, and Four of its complaint was improper. On March 15,
2007, the district court issued an order giving PREPA "ten days to
oppose the summary disposition of its claims, and said response
must be filed with the Court on or before March 29, 2007." PREPA
v. Action Refund, No. 05-2302 (D.P.R. Mar. 15, 2007) (order giving
PREPA ten days to oppose disposition). In response, PREPA filed a
motion to vacate the December 29 dismissal of its complaint. On
March 30, 2007, the district court entered an order and final
judgment allowing, in part,2 the defendants' motion for summary
judgment on its counterclaims and denying PREPA's motion to vacate
the December judgment.
2
The district court's order denied the defendants' motion seeking
pre-judgment interest and attorneys' fees.
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II. Discussion
A. Standard of Review
We review a district court's grant of summary judgment de
novo, and the record is evaluated in the light most favorable to
the nonmoving party, indulging all reasonable inferences in that
party's favor. See Chao v. Hotel Oasis, Inc., 493 F.3d 26, 33 (1st
Cir. 2007); Fed. R. Civ. P. 56.
On appeal, PREPA challenges the district court's decision
on procedural and substantive grounds. It asserts that the
district court erred in entering summary judgment sua sponte on
Counts Two, Three, and Four, without providing sufficient notice.
It also contends that, irrespective of the notice issue, the
evidence on the record demonstrates that there are genuine issues
of material fact with respect to all counts as well as the
counterclaims.
B. Count One: Declaratory Judgment
Count One of the complaint seeks a declaratory judgment
establishing that the Contract is void and invalid for lack of
consideration. Specifically, PREPA asserts that the DOE refund was
not obtained through "any information or work by Action Refund."
The district court allowed the defendants' motion for summary
judgment.
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We begin with the requirements for a valid contract under
Puerto Rico law:3 (1) consent of the parties, (2) a definite object
of the contract, and (3) consideration. See P.R. Laws Ann. tit.
31, § 3391 (2004). PREPA alleges that the contract lacked
consideration because it was already entitled to the refund without
any further action on the part of the defendants.4 The allegation
stems from PREPA's realization that Action Refund had only
completed a simple, one-page form to obtain the refund. PREPA
contends that the form is one that could easily have been completed
without Action Refund and, therefore, there was no consideration.
We disagree.
3
Because this case is brought under diversity jurisdiction, we
consider all of PREPA's claims under Puerto Rico contract law.
See, e.g., Cabán Hernández v. Philip Morris USA, Inc., 486 F.3d 1,
11 (1st Cir. 2007).
4
Count One alleges invalidity of the Contract for lack of
consideration. However, in its opposition to summary judgment on
this count (as well as in its brief on appeal), PREPA contends that
the Contract is also invalid for lack of consent because of fraud
or "dolo." Given the complaint's failure to make this allegation
in Count One, much less meet the Rule 9(b) particularity
requirement for allegations of "dolo" involving fraud, see
Generadora De Electricidad Del Caribe, Inc. v. Foster Wheeler
Corp., 92 F. Supp. 2d 8, 20 (D.P.R. 2000), we will discuss fraud
only within Counts Two and Three. We note, however, that the lack
of consent argument is unpersuasive. It is hard to see how PREPA,
a sophisticated and experienced corporation with a legal department
who reviewed the Contract, was a victim of deceit in this case.
See Raytheon-Catalytic, Inc. v. Gulf Chem. Corp., 959 F. Supp. 100,
109 (D.P.R. 1997) (finding that a "person's education, his social
and economic status, his relations, and the type of business in
which he is engaged are significant when trying to determine the
existence of 'dolus' that would void his consent").
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The Contract, signed by both parties, provided as
follows:
1. I hereby authorize Action Refund to act as
our representative in the claim for Petroleum
Refunds.
2. Action Refund will provide information and
services about refunds regarding petroleum and
petroleum product overcharges.
3. All refunds and interest realized in our
favor as a result of the information and work
performed by Action Refund will be sent
directly to [PREPA].
4. All refunds realized will be shared as
follows: Action Refund will receive 20% of an
amount equal to the total amount received and
it is understood no other cost or fees will be
paid to Action Refund.
5. Upon receipt of the refund check [PREPA]
will remit the appropriate amount of refund
due to Action Refund within seven working
days.
6. This authorization is effective for one
year commencing on the date of September 21,
2004.
The Contract thus specified that in return for successfully
obtaining a crude oil refund on behalf of PREPA, Action Refund
would receive twenty percent of the refund.5 Action Refund's
5
While PREPA automatically qualified for the refund, the Federal
Register Notice makes clear that without further proactive steps by
PREPA before the December 2004 deadline, it would not have been
eligible to obtain the final refund. In September 2004, when the
parties signed the Contract, no submission to the DOE entitled
PREPA to a third-round refund. In fact, the record indicates that
as of the December 31, 2004 deadline, no forms were filed by or on
behalf of PREPA other than that submitted by Wallin and Action
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promise to act on behalf of PREPA and render services necessary to
obtain the refund is consideration for the Contract. See P.R. Laws
Ann. tit. 31, § 3431 ("[the] promise of a thing or services by the
other party is understood as a consideration").
PREPA's related argument –- that the consideration is
inadequate because those services amounted only to the filing of a
single piece of paper -- is similarly unavailing. A general
principle of contract law provides that "courts will not inquire
into the adequacy of consideration in an agreed-upon exchange,"
unless that consideration is "'so grossly inadequate as to shock
the conscience of the court.'" Kenda Corp., Inc. v. Pot O'Gold
Money Leagues, Inc., 329 F.3d 216, 229 (1st Cir. 2003) (citation
omitted). We do not believe, taking into account the facts of this
case, that the promise of services to obtain a $3 million refund in
return for a twenty percent fee can be considered so grossly
inadequate as to shock the conscience of the court. Moreover, the
parties in this case are sophisticated business entities who
engaged in arms-length negotiations. Given that they bargained and
contracted for consideration terms which they deemed to be
sufficient (and are sufficient under the law), we are loathe, on
appeal, to "evaluate the relative adequacy of the consideration or
to reweigh the soundness of the parties' judgments." In re Newport
Plaza Assocs., L.P., 985 F.2d 640, 647 (1st Cir. 1993).
Refund.
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Accordingly, the district court appropriately entered summary
judgment in favor of the defendants on Count One of the complaint.
C. Counts Two Through Four: Fraud and Unconscionability
1. Procedural Issues
After its summary dismissal of Count One, the district
court went on to dismiss the remaining three claims without
providing prior notice to the parties. The district court
explained:
Though Count [One] is titled and focuses on
seeking a declaratory judgment from the Court
due to lack of consideration, [PREPA] also
draws from its other counts, namely its fraud
and fraud in the inducement counts, to support
its arguments. Consequently, the Court here
evaluates whether summary judgment is
appropriate for each of Plaintiff's claims.
Puerto Rico Electric Power Auth. v. Action Refund, 472 F. Supp. 2d
133, 135 n.1 (D.P.R. 2006) ("PREPA I").
It is without question that district courts, in
appropriate circumstances, are entitled to enter summary judgment
sua sponte. See Celotex Corp. v. Catrett, 477 U.S. 317, 326
(1986); accord Berkovitz v. Home Box Office, Inc., 89 F.3d 24, 29
(1st Cir. 1996). In an effort to limit "the unfairness lurking in
this approach," Sánchez v. Triple-S Mgmt. Corp., 492 F.3d 1, 7 (1st
Cir. 2007), we have required two conditions prior to the district
court's exercise of such a right:
First, the discovery process "must be
sufficiently advanced that the parties have
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enjoyed a reasonable opportunity to glean the
material facts." Second, the district court
must provide "the targeted party appropriate
notice and a chance to present its evidence on
the essential elements of the claim or
defense."
Id. (quoting Berkovitz, 89 F.3d at 29). There is no dispute that
the first Berkovitz requirement is satisfied: the parties had
completed discovery and had even filed pretrial memoranda when the
district court ruled on the defendants' motion for summary judgment
as to Count One. The district court, however, failed to give any
notice of its intention to enter summary judgment on the other
three counts of the complaint.
We have previously observed that a failure to provide
adequate notice is not necessarily reversible error requiring a
remand to the district court. See Vives v. Fajardo, 472 F.3d 19,
22 (1st Cir. 2007) (finding that lack of notice was not reversible
error where appealing party could not demonstrate prejudice)
(citing Ward v. Utah, 398 F.3d 1239, 1245-46 (10th Cir. 2005);
Bridgeway Corp. v. Citibank, 201 F.3d 134, 139-40 (2d Cir. 2000);
Yashon v. Gregory, 737 F.2d 547, 552 (6th Cir. 1984)); see also
O'Hara v. Gen. Motors Corp., 508 F.3d 753, 763-64 (5th Cir. 2007)
(applying a harmless error exception to the notice requirement);
Gibson v. Mayor & Council of the City of Wilmington, 355 F.3d 215,
219 (3d Cir. 2004) (recognizing a narrow exception to the notice
requirement where the record is fully developed, the issue is
purely legal, and there is no prejudice to the parties). Evidence
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that the appealing party was procedurally prejudiced as a result of
the failure to provide notice before sua sponte dismissal requires
reversal. If, however, the appellant cannot demonstrate such
prejudice -- by establishing that it was unable to present evidence
in support of its position as a result of the unfair surprise –-
the failure to provide notice is harmless error and a remand would
be futile.6 See Vives, 472 F.3d at 22.
Our inquiry is focused on whether PREPA was procedurally
prejudiced by the lack of notice. In the summary judgment order,
the district court explained the appropriateness of summary
judgment for all of the counts in the complaint because PREPA drew
from those other counts to support its arguments. PREPA I, 472 F.
Supp. 2d at 135 n.1. Specifically, PREPA presented arguments and
supporting evidence in support of its fraud claims in its
opposition to the defendants' motion for summary judgment on the
declaratory judgment count. Even on appeal, PREPA fuses the counts
together and alleges that the district court improperly granted
summary judgment on Count One because the defendants acted
fraudulently.7
6
Given the risk of unfairness and the low cost of providing
notice, we do not encourage the practice of sua sponte summary
dismissal. See, e.g., Bridgeway Corp. v. Citibank, 201 F.3d 134,
139 (2d Cir. 2000).
7
In its brief, PREPA asserts that the contract is invalid because
the defendants "misrepresented and omitted material facts that
illicitly induced PREPA officials to agree to the 2004 Contract."
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The procedural posture of this case is further
complicated by subsequent orders by the district court. Following
the court's dismissal of the complaint, the defendants moved for
summary judgment on their counterclaim. As part of its opposition
to the motion, PREPA argued that the court's sua sponte summary
dismissal of its entire complaint, without proper notice, was
contrary to Rule 56 and a violation of due process. In response,
on March 15, 2007, the district court ordered PREPA to file an
opposition to the summary disposition of the claims within ten
days. On March 29, 2007, PREPA filed a motion to set aside
judgment in which it asserted that genuine issues of material fact
preclude the entry of summary judgment on all counts.
PREPA's motion to set aside judgment provides us with a
unique opportunity to review what, if any, additional information
PREPA was prevented from presenting to the court as a result of the
lack of notice.8 A comparison between PREPA's filings on
November 22 (opposition to summary judgment) and March 29 (motion
to set aside judgment) reveals indistinguishable arguments
regarding numerous allegedly fraudulent misrepresentations by
Wallin, accompanied by several exhibits and deposition excerpts in
support of those allegations. PREPA points to no additional
8
We need not determine whether a district court can cure
procedural prejudice resulting from lack of notice through this
kind of post-dismissal order because no prejudice occurred in this
case.
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material evidence that it would otherwise have presented to the
court had it been given notice that the court was considering its
fraud and fraudulent inducement claims. Therefore, with respect to
Counts Two and Three (fraudulent inducement and fraud,
respectively), PREPA is unable to demonstrate procedural prejudice
as a result of the lack of notice.
PREPA also fails to show prejudice with respect to Count
Four, unconscionability. According to both the complaint and
PREPA's motion to vacate judgment, this count is based on Wallin's
allegedly "unreasonable coerc[ion of PREPA] into agreeing to the
20% commission fee," based on Wallin's alleged misrepresentations
about the length and complexity of the process. The arguments and
evidence PREPA would have proffered in support of its arguments are
the same as those submitted to the court in its November opposition
filings. As PREPA failed to demonstrate that it was procedurally
precluded from providing evidence in support of its fraud claims,
PREPA is likewise unable to make the same showing for its
unconscionability claim.
Any error by the district court in considering PREPA's
additional claims on summary judgment was harmless. PREPA placed
those claims at issue by raising them in its November reply brief
to the defendants' motion for summary judgment, to which they
attached numerous exhibits. When given the opportunity to
demonstrate prejudice for the sua sponte dismissal, PREPA
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reasserted the same arguments and failed to identify evidence which
it was precluded from presenting in support of its claims. Under
these unique circumstances, PREPA was afforded an adequate
opportunity to present the evidence in support of its claim.
2. Substantive Issues
On summary disposition, we take the facts as they appear
in the record and draw inferences in favor of the nonmoving party.
Ortiz-Piñero v. Rivera-Arroyo, 84 F.3d 7, 11 (1st Cir. 1996).
Under Puerto Rico law, the party alleging fraud has the burden of
demonstrating: (1) a false representation by the defendant; (2) the
plaintiff's reasonable and foreseeable reliance thereon; (3) injury
to the plaintiff as a result of the reliance; and (4) an intent to
defraud. See Microsoft Corp. v. Computer Warehouse, 83 F. Supp. 2d
256, 262 (D.P.R. 2000); see also 31 L.P.R.A. § 3408. The applicable
Puerto Rico contract law regarding fraud has a strong underlying
presumption in favor of good faith and honesty; the party alleging
fraud has the burden of presenting evidence which is "strong,
clear, unchallengeable, convincing, and conclusive, since a mere
preponderance of the evidence is not sufficient to establish the
existence of fraud in [Puerto Rico]." Prado Álvarez v. R.J.
Reynolds Tobacco Co., 313 F. Supp. 2d 61, 77 (D.P.R. 2004) (quoting
F.C. Imports, Inc. v. First Nat'l Bank of Boston, N.A., 816 F.
Supp. 78, 87 (D.P.R. 1993)), aff'd, 405 F.3d 36 (1st Cir. 2005).
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In Counts Two and Three, PREPA alleges that Wallin, on
behalf of Action Refund, made various misrepresentations regarding
the necessity of retaining Action Refund's services. In its
filings, PREPA elaborates on those allegations: (1) Wallin
fraudulently represented that the process was complex and tedious
despite knowing that it involved only a one-page verification
document; and (2) Wallin failed to notify PREPA of their prior
business relationship.9
After review of the record, we conclude that PREPA cannot
present strong and unchallenged evidence which establishes the
existence of fraud. On the contrary, the evidence demonstrates
that the allegations of fraudulent misrepresentation are challenged
vigorously by the defendants. Moreover, PREPA's fraud claims fail
for lack of reasonable reliance. See Wadsworth Inc., v. Schwarz-
Nin, 951 F. Supp. 314, 323 (D.P.R. 1996) ("[T]he unreasonableness
of the plaintiff's reliance may be regarded as sufficient evidence
that he did not in fact rely upon the claimed false
representation." (citing F.C. Imports, 816 F. Supp. at 87)).
9
The defendants also contend that the allegations of fraud were
not asserted with sufficient particularity in the complaint. At
oral argument, PREPA informed the court that it had sought to amend
its complaint, but the district court denied the request and
ordered the parties to submit statements describing the parties'
prior relationship. In light of our conclusion that the district
court properly dismissed the claims, we need not reach the issue of
sufficiency of the allegations under the Federal Rule of Civil
Procedure Rule 9(b) heightened pleading standard.
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Puerto Rico law places little weight on a sophisticated and
experienced business party's assertion of unknowing reliance. See
Ramírez, Segal & Látimer v. Rigual, 23 P.R. Offic. Trans. 156, 166
(1989) (finding that the parties were "savvy businessmen" and
"persons well versed in business and financial matters" and
concluding that they must have been aware of the possible outcome
of the contract's terms); Planned Credit of Puerto Rico, Inc. v.
Page, 3 P.R. Offic. Trans. 341, 355 (1975) (looking at the
plaintiff's education and business experience in rejecting the
claim that he was deceived and induced into the transaction), cited
with approval in Wadsworth, 951 F. Supp. at 325. Given the
business sophistication of PREPA and the review of the Contract by
its own legal department, the publicly available information
regarding the claim application process, and PREPA's decision not
to add specific contractual terms regarding the amount or type of
work expected from Action Refund, any reliance upon the alleged
misrepresentation is not reasonable.
Furthermore, we reject PREPA's argument that the
defendants committed fraud by failing to inform PREPA of Wallin's
prior relationship with PREPA. This makes little sense from either
a legal or business perspective. Wallin's allegedly "prior
contentious relationship" was not hidden from PREPA; in fact, that
relationship had been with PREPA itself. Cf. United States v.
Josleyn, 206 F.3d 144, 159 (1st Cir. 2000) (explaining that
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knowledge obtained by an employee in the course of his work and
within his scope of authority is imputed to the employer company).
To impose a duty on the defendants to disclose information known to
PREPA through its employees would effectively fault them for
PREPA's own deficiencies in institutional knowledge. Thus, as a
matter of law, PREPA fails to meet the standard for fraud under
Puerto Rico law.
Given the facts of this case, PREPA's fourth claim,
unconscionability, is disposed of quickly. Unconscionability is a
traditional, equitable remedy which will void an otherwise legally
valid contract. See 8 Williston on Contracts, § 18:1 (4th ed.
2007). Puerto Rico law recognizes such judicial intervention where
a contract exhibits an "excessively onerous quality that reaches
the point of bad faith, and defeats those rules of collective
conduct that must be observed by every honest and loyal
conscience." López de Victoria v. Rodríguez, 13 P.R. Offic. Trans.
341, 349 (1982); see also Casera Foods, Inc. v. Puerto Rico, 8 P.R.
Offic. Trans. 914 (1979) (applying an equitable remedy when an
unforeseeable change of circumstances alters the contract into an
objectively unfair one). This is not such a case. PREPA, a
billion-dollar utility freely signed the Contract after several
weeks of review by its own legal department. Cf. Riesett v. W.B.
Doner & Co., 293 F.3d 164, 173 (4th Cir. 2002) ("The
unconscionability doctrine has no application to contracts . . .
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which were entered into by sophisticated parties who bargained at
arms' length."). Therefore, the district court properly concluded
that the defendants were entitled to judgment as a matter of law.
D. Defendants' Counterclaims
Lastly, PREPA contends that the district court erred in
granting the defendants' motion for summary judgment on its
counterclaims. The defendants sought a declaratory judgment
establishing the validity of the contract and an award of interest,
fees, and costs. The district court concluded that the Contract
was valid and that Action Refund was entitled to payment pursuant
to the Contract's terms, but denied the request for interest, fees,
and costs. The court concluded that the Contract made no
stipulation or reference to interest and there was no evidence of
unreasonable litigiousness to justify the imposition of fees and
costs.10
The defendants' counterclaim for declaratory judgment is
effectively the reverse of the plaintiff's claim in Count One.
Thus, for all of the reasons outlined above, we affirm the district
court's determination that the Contract is valid and binding, and
in accordance with its terms, Action Refund is entitled to twenty
percent of the refund received.
10
The defendants do not appeal this issue.
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III. Conclusion
For the foregoing reasons, we affirm the orders of the
district court dismissing the complaint and allowing, in part, the
defendants' motion for summary judgment on their counterclaim.
Affirmed.
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