USCA1 Opinion
April 26, 1993
[NOT FOR PUBLICATION]
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-2372
CONSULTANTS IN TECHNOLOGY, INC.,
FERNANDO SULSONA-NIEVES,
ROSA MERCEDES RAMIREZ-FREYRE AND THE
CONJUGAL PARTNERSHIP COMPOSED BY THEM,
Plaintiffs, Appellants,
v.
ELIAS CRUZ-FERNANDEZ,
FLORENCIO BRITO-MONTERO, AND JANE DOE
AND THE CONJUGAL PARTNERSHIP COMPOSED BY THEM,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., U.S. District Judge]
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Before
Breyer, Chief Judge,
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Bownes, Senior Circuit Judge,
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and Boudin, Circuit Judge.
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Wallace Vazquez Sanabria, on brief for appellants.
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Enrique G. Figueroa Llinas, Jos F. Cardona Jimenez and
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Rivera Iturbe & Cardona Jimenez, on brief for appellee Elias
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Cruz-Fernandez.
Manuel Moreda-Toledo, Marisa Rivera-Barrera and Sweeting
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Gonzalez Cestero & Bruno, on brief for appellee Florencio Brito-
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Montero.
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BOWNES, Senior Circuit Judge. Plaintiffs,
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Consultants in Technology, Inc. ("CTI"), Fernando Sulsona
Nieves ("Sulsona") and Rosa Mercedes Ramirez Freyre
("Ramirez"), appeal the district court's order of summary
judgment entered against them in their suit against
defendants Elias Cruz Fernandez ("Cruz") and Florencio Brito
Montero ("Brito") for violations of federal securities laws
and various laws of Puerto Rico. Defendants' summary
judgment motion was unopposed. We affirm.
I.
I.
Background
Background
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CTI, a Puerto Rico corporation controlled by
Sulsona and Ramirez, acquired the stock of Libreria Alma
Mater, Inc. ("Alma Mater"), a corporation engaged in the
wholesale and retail distribution of textbooks. Plaintiffs
also engaged in negotiations with defendants for the purchase
of two other corporations engaged in the publication and sale
of textbooks, Librotex, Inc. ("Librotex") and Editorial
Librotex, Inc. ("Editorial Librotex"). When the sale of
Librotex and Editorial Librotex fell through, plaintiffs
brought suit for alleged violations of "the Securities Act,"
"the Securities and Exchange Act," and "the Uniform
Security's [sic] Laws of Puerto Rico," and sought further
relief under Puerto Rico tort and contract laws. Plaintiffs
alleged that they were fraudulently induced to purchase Alma
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Mater's stock by defendants' promise to sell plaintiffs the
stock of the other two publishing companies.
Plaintiffs moved for partial summary judgment,
which motion was opposed by defendants on the grounds that
plaintiffs' motion failed to: (1) "present an adequate
statement of the relevant substantive law to be applied to
the facts of this case;" and (2) "comply with Local Rule
311.2 which in its pertinent portion establishes that
`motions shall be accompanied by a brief which shall contain
a concise statement of reasons in support of the motion, and
citations of authorities upon which the movant relies.'" The
district court agreed and struck plaintiffs' motion for
summary judgment from the record.
Defendants moved for summary judgment on the
grounds that: (1) "the Security Act, 15 USCA 77[q](a), does
not provide a private cause of action for fraud in the sale
of securities;" (2) "the Security Exchange Act, 15 USCA
78(j)(b), [17] CFR [240], Rule 10[]b[][-][]5, fraud action
is limited to the actual sale or purchase of securities. No
private action is provided in cases where an offer to sale
[sic] stocks is not consummated. In this case, the offer to
sell Librotex and Editorial [Librotex] was not consummated;"
and (3) there were, in any event, no facts that a reasonable
jury could find to support the contention that the sale of
Alma Mater was fraudulently induced by promises that the sale
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of Librotex and Editorial Librotex would closely follow
plaintiffs' purchase of Alma Mater.
On June 16, 1992, when plaintiffs failed to respond
to defendants' summary judgment motion, after having been
granted two extensions of time in which to do so, the court
deemed defendants' motion to be unopposed. Despite that
ruling, plaintiffs filed a response on July 10 in which they
claimed that their complaint relied not only on section 17 of
the Securities Act of 1933, but also on sections 12 and 15.
The district court disregarded the plaintiffs' untimely
response.
The district court agreed with defendants'
characterization of the complaint, and, in an order issued on
July 31, held that: (1) there is no implied private right of
action in section 17(a) of the Securities Act of 1933, 15
U.S.C. 77q(a); and (2) plaintiffs lacked standing to sue
under Rule 10b-5 because plaintiffs were not "purchasers" of
either Librotex or Editorial Librotex. After granting
summary judgment, the court dismissed the pendent Puerto Rico
law claims, and awarded costs and attorney's fees on the
ground that plaintiffs had failed to file a timely response
to defendants' summary judgment motion.
The court subsequently ordered plaintiffs to pay
costs in the amount of $3,425.01, but denied defendants'
motion for attorney's fees in the amount of $28,745 because
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the submitted bill was neither sufficiently detailed nor was
it prepared contemporaneously with the work performed.
Defendants filed a motion for reconsideration of the order
denying the award of attorney's fees and to amend the motion
for attorney's fees. The record does not indicate whether,
when or how the district court disposed of that motion.
Plaintiffs appeal the district court's grant of
summary judgment, dismissal of pendent Puerto Rico law
claims, and the award of attorney's fees.
II.
II.
Standard of Review
Standard of Review
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Review of a summary judgment order places this
court on a well-worn and familiar path. Rule 56(c) of the
Federal Rules of Civil Procedure provides that summary
judgment is appropriate "if 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 a judgment as a matter of law." Fed. R. Civ. P.
56(c). Interpreting this rule, the Supreme Court held that
the plain language of Rule 56(c) mandates
the entry of summary judgment, after
adequate time for discovery and upon
motion, against a party who fails to make
a showing sufficient to establish the
existence of an element essential to that
party's case, and on which that party
will bear the burden of proof at trial.
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Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Rule
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56(e) provides that
[w]hen a motion for summary judgment is
made and supported as provided in this
rule, an adverse party may not rest upon
the mere allegations or denials of the
adverse party's pleadings, but the
adverse party's response must set forth
specific facts showing that there is a
genuine issue for trial. If the adverse
party does not so respond, summary
judgment, if appropriate, shall be
entered against the adverse party.
Fed. R. Civ. P. 56(e).
Review of a district court's summary judgment order
is plenary, and we review the entire record in the light most
favorable to the nonmoving party. Fragoso v. Lopez, No. 92-
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2046, slip op. at 18 (1st Cir. April 5, 1993); Mesnick v.
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General Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991), cert.
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denied, 112 S. Ct. 2965 (1992); Griggs-Ryan v. Smith, 904
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F.2d 112, 115 (1st Cir. 1990); Garside v. Osco Drug, Inc.,
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895 F.2d 46, 48 (1st Cir. 1990).
In this case, we are faced with the somewhat
unusual circumstance of an appeal of a summary judgment by a
nonmoving party who failed to oppose the summary judgment
motion. Local Rule 311.12 of the United States District
Court for the District of Puerto Rico provides, in relevant
part:
Upon any motion for summary judgment,
there shall be served and filed annexed
to the motion a separate, short, and
concise statement of the material facts
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as to which the moving party contends
there is no genuine issue to be tried and
the basis of such contention as to each
material fact, properly supported by
specific reference to the record.
All material facts set forth in the
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statement required to be served by the
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moving party will be deemed to be
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admitted unless controverted by the
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statement required to be served by the
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opposing party.
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(Emphasis supplied.) This court has consistently upheld
Local Rule 311.12. Rivas v. Federacion de Associaciones
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Pecurias, 929 F.2d 814, 816 n.2 (1st Cir. 1991); Laracuente
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v. Chase Manhattan Bank, 891 F.2d 17, 19 (1st Cir. 1989);
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Alvarado-Morales v. Digital Equip. Corp., 843 F.2d 613, 615
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(1st Cir. 1988).
It is firmly established that after movants aver
pursuant to Fed. R. Civ. P. 56(c) that there is "an absence
of evidence to support the nonmoving party's case," Celotex,
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477 U.S. at 325, the burden shifts to the nonmovants to
establish the existence of at least one genuine issue of
material fact. Garside, 895 F.2d at 48. On this appeal, we
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read the record in the light most favorable to the
plaintiffs, with the exception of those material facts
asserted by defendants in support of their summary judgment
motion which facts were admitted by plaintiffs when they
failed to timely respond to defendants' motion for summary
judgment.
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III.
III.
Discussion
Discussion
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Based on defendants' recitation of material facts
which accompanied their motion for summary judgment, and the
rest of the record before it, the district court properly
granted summary judgment as to plaintiffs' claims of
securities fraud. The district court found that the
following evidence was uncontested:
1. The offer to sell the stock of
Librotex and Editorial Librotex was
limited to those two companies and was
independent of the sale of Alma Mater.
2. Plaintiffs have admitted on
several different occasions that the
purchase of Librotex and Editorial
Librotex was not consummated because
plaintiffs lacked the financing to
purchase the two companies.
3. In the agreement which consummated
the sale of Alma Mater to plaintiffs, no
representation was made by defendants
regarding the future sale of Librotex and
Editorial Librotex; in fact, in clause 17
of the agreement, the parties stated
without limitation that no other
agreements existed between them as of
that date.
The court reached these conclusions based on
documentary evidence provided by defendants in support of
their motion for summary judgment. That evidence
demonstrated that the Alma Mater transaction was completely
independent of any contemplated sale of Librotex or Editorial
Librotex. Defendants' statement of undisputed material facts
was adequately supported by defendants' sworn statements and
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deposition testimony. Indeed, at the initial scheduling
conference, the parties stipulated that the Alma Mater
agreement "embodied the entire understanding of the parties
and that there were no further or other agreements or
understandings written or oral in effect between the
parties." The Alma Mater agreement contained no mention of
the prospective sale of Librotex or Editorial Librotex.
Plaintiffs offered no facts to support their claim
that defendants falsely represented to plaintiffs that the
Alma Mater sale was linked to the sales of Librotex and
Editorial Librotex. Therefore plaintiffs failed to meet
their burden to support their claim as required by Fed. R.
Civ. P. 56(e). We see no reason to disturb the district
court's findings of undisputed facts, and therefore affirm
the district court's grant of summary judgment. We note,
however, that our decision should not be taken as an
affirmance of the district court's holding regarding private
rights of action under section 17(a) of the Securities Act of
1933, 15 U.S.C. 77q(a). That issue has not yet been
decided by either the Supreme Court or the First Circuit.
See Eichler v. Berner, 472 U.S. 299, 304 n.9 (1985); Cleary
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v. Perfecture, Inc., 700 F.2d 774, 779 (1st Cir. 1983). The
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district court need not have reached that question in this
case, especially when plaintiffs failed to identify the
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specific sections of the federal securities laws on which
they based their claims.
The district court appropriately dismissed the
pendent state law claims. As the Supreme Court has held,
"when the federal-law claims have dropped out of the lawsuit
in its early stages, and only state-law claims remain, the
federal court should decline the exercise of jurisdiction by
dismissing the case without prejudice." Carnegie-Mellon
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Univ. v. Cohill, 484 U.S. 343, 350 (1987); see also United
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Mine Workers v. Gibbs, 383 U.S. 715 (1966).
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We decline to discuss plaintiffs' claim that the
court's award of attorney's fees was improper. Under Local
Rule 11 of the First Circuit Court of Appeals, "[i]n addition
to an appellant's duties under FRAP 11(a), it is appellants
responsibility to see that the record, as certified, is
complete." In the absence of a complete record, we lack any
basis to set aside the district court's order awarding
attorney's fees, assuming such an order was entered.
Affirmed.
Affirmed.
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