USCA1 Opinion
March 6, 1996 [NOT FOR PUBLICATION]
United States Court of Appeals
For the First Circuit
____________________
No. 95-1892
MIGUEL SUCH-GONZALEZ AND BARBARA TERNOSKY,
Plaintiffs, Appellants,
v.
ADMINISTRACION DE FOMENTO Y DESAROLLO AGRICOLA, ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gilberto Gierbolini, U.S. District Judge] ___________________
____________________
Boudin, Circuit Judge, _____________
Coffin and Rosenn*, Senior Circuit Judges. _____________________
____________________
Fernando L. Gallardo for appellants. ____________________
Ernesto Hernandez Milan for Commercial and Farm Credit and ________________________
Development Corporation of Puerto Rico.
Wally de la Rosa Vidal for Puerto Rico Land Authority. ______________________
____________________
____________________
____________________
*Of the Third Circuit, sitting by designation.
COFFIN, Senior Circuit Judge. This is the culmination of an ____________________
aging lawsuit brought by a pioneer Puerto Rico rice farmer and
his then wife against the Commonwealth sponsor, the Puerto Rico
Land Authority (Authority), and financer, the Commercial and Farm
Credit Development Corporation (CFCDC), arising out of what
proved to be an ill-fated rice growing program.
Appellants, having filed in bankruptcy, brought this
adversary proceeding under 11 U.S.C. 1334. The amended
complaint, so far as we are presently concerned, alleged three
causes of action: breach of contract, defamation, and "lender
liability." The district court granted summary judgment to
defendants on all counts. We affirm.
In April of 1980, appellants entered into a lease agreement
with the Authority in which they leased 325.60 cuerdas of land in
Manati for rice growing purposes at an annual rent, payable in
advance, of $40 per cuerda, less property taxes. Under clause
27, the Authority was to deliver the land "duly razed and leveled
for the harvesting of rice and with the canals for flooding and
draining said lands duly constructed." Clause 34, however,
"expanded" clause 27 to provide both that the leveling should be
"precise" and that, if the lessor could not deliver any land with
precise leveling, "the parties will renegotiate in order to make
an adjustment in the lease payments."
Clause 32 provided that the lease agreement contained "all
covenants and stipulations agreed upon by the parties." And
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clause 33 provided that the lease payment was subject to
renegotiation after the first year.
In September of 1980, CFCDC made its first loan to
appellants, in the amount of $200,000. In 1981 there was a
refinancing loan of $285,000; in 1984, one of $410,000; and in
1985, one of $457,609. Appellants made a first payment of $3,300
for approximately half of the first semester. No other payments
were made.
While the first harvest of rice, in October of 1980, was
excellent, the rest of the story is one of continual problems and
frustrations. At some point, two fields were leveled
"backwards," and had to be releveled by the Authority. A well
was dug too deep, allowing seepage of salt water. The solitary
airplane available for seeding flew too late in the day for
effective work. There was trouble in getting equipment released
and delay in decisions. Experts were called in but allegedly not
listened to. Blast (a disease) afflicted the rice at one point;
at another, the digging of a ditch across some of the property
hindered operations. And appellants were moved from one farm to
another.
Nevertheless, appellant Such (his wife having left Puerto
Rico in 1985) continued to farm the property until July of 1986.
Indeed, according to his deposition testimony, what "cut off the
head of the project" was the coming to power of the Popular
Democratic Party in 1985.
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In September of 1986, the Authority brought an eviction
proceeding in superior court, alleging a delinquency in rental
payments of over $120,000. The court found that appellants, over
the course of six years, had not sought renegotiation, and that
the amount owed the Authority was $101,714.34. In March of 1987,
appellants were ordered to vacate. In February of 1987,
appellants filed in bankruptcy and in December of the same year
brought this action.
DISCUSSION
Breach of Contract. The district court properly invoked __________________
the principle that "a party to a bilateral contract who does not
perform his obligations under the contract may not sue the other
contracting party for breach of contract." We quote some of the
court's discussion:
Under the common law doctrine of exceptio non aditempli ______________________
contractus, a party to a bilateral contract who does __________
not perform his obligations under the contract may not
sue the other contracting party for breach of contract.
Constructora Bauza, Inc. v. Garcia Lopez, 91 JTS 99, p. ________________________________________
9077 (1991); Martinez v. Colon Franco, 89 JTS 109, p. _________________________
7291 (1989); Heirs of Escalera v. Barreto, 81 P.R.R. _____________________________
580, 591 (1959). This doctrine provides a defense to
breach of contract derived from the Puerto Rico Civil
Code. [footnote and citation omitted] If a leasee
[sic] breaches a material clause of the lease, the
defense of exceptio non aditempli contractus clearly ___________________________________
applies to shelter the lessor from liability for his
own failure to perform.
Appellants challenge the application of this principle,
claiming that the Authority early and often breached the
contract, citing the incidents we have summarized. They also
sketchily claim in their brief that they requested renegotiation.
But we have read their ill-assorted appendix and have
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meticulously reviewed the excerpts furnished us from the three
depositions they have included. There is no hint of any request
for renegotiation or of any indication that any of the trials and
tribulations which they faced were considered as breaches. Non-
payment of rent for six years, during which CFCDC disbursed some
$800,000 on appellants' account, under a lease which specifically
allowed the possibility of change in rent if renegotiation were
requested, and the total absence of any request for renegotiation
dictate our affirmance of summary judgment on the breach of
contract claim.
Lender Liability. While the complaint refers to actions _________________
generally of both the Authority and CFCDC as supporting this
claim, paragraph 47 makes clear that only Credito Agricola (the
predecessor of CFCDC) is being charged. Appellants' brief on
appeal also confines this issue to CFCDC.
Appellants aver that, in addition to tort bases for lender
liability, breach of contract, with its fifteen year period of
limitations, may also serve as a basis. Our discussion and
ruling on the breach of contract issue disposes of any claim of
such support for lender liability here.
The district court summarized appellants' tort based lender
liability claims as intentional or negligent failure to comply
with obligations under the contract, "complete control" over rice
operations, pressure exerted because of such control, breach of
fiduciary duties, and bad faith. The court looked in vain for
specific information about actions under these headings and times
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when they were allegedly committed. It ruled that the only
allegation approaching specificity, notice of a three month delay
in furnishing equipment, occurred in 1984, far exceeding a year
before filing of the complaint. It held the claim time barred.
The only specific conduct pointed to by appellants in their
brief as evidence of tortious overreaching was the deposition
testimony of one former project supervisor, Barbosa, that
financial aid was "always a problem because they wanted to know
everything that was going to be done." Appellants complain in
their brief that CFCDC's predecessor "went as far as to condition
their financing to their adhering strictly to the conditions and
methods established by the Rice Project . . . ." But the lease
agreement itself provided, in clause 29: "'The lessee' binds
itself to conduct the seeding and harvesting of rice in
accordance with the provisions of [the Rice Project]."
We find no suggestion of a genuine issue of material fact
relevant to the lender liability claim, and certainly none within
the one year limitations period.
Defamation. As for the defamation cause of action, it __________
simply is not supported by anything in the record. The
allegations are phrased in the most general terms: "false and
defamatory statements during the periods of 1983 and 1984 and
continuing in 1987, among various persons of the public, and of
the business community, and of the press . . . that coplaintiff
Miguel Such was deceitful, fraudulent and made false
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representations of payment of his obligations and . . . was in
breach of his agreements with all the defendants . . . ."
The only documentation in support of these allegations
furnished to us was an excerpt from the deposition of co-
appellant Barbara Ternosky. Her testimony is exceedingly frail.
She left Puerto Rico in 1985. As concerns any statements in 1983
and 1984, she thought "there were, like, negative things going
on, being said about the rice project . . . ." She later
confessed that she did not recall anything that was said.
Appellant Such, in his deposition, said that he recalled one
article in some unmentioned publication in which a director of
the Authority said some things damaging to him. But, when asked,
he could not recall what had been said.
Such threads are not even gossamer. We see nothing that
happened in 1983 and 1984 that rises to, or sinks to the depth
of, defamation. And of course there is no indication that
anything was said within the one year limitations period.
This has been a history inhospitable to all parties
concerned. But they must be left where they are. We have not
been able to discern the faintest glimmer of a genuine issue of
material fact.
Affirmed. ________
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