Opinion
Civil No. 99-1396 (JAG).
February 8, 2005
Ivette De-Luna-Colon, Juan G. Nieves-Cassas, Nieves Cassas, De Luna Feria Cestero, Michelle Feria-Cestero, Michelle Feria Cestero Law Office, San Juan, PR, Attorneys for Plaintiffs.
Alberto G. Estrella, William Estrella Law Offices, San Juan, PR, Attorneys for Defendants.
OPINION AND ORDER
This case was transferred to the undersigned's Docket on April 15, 2004.
Pending before the Court are Plaintiffs' objections (Docket No. 89)to Magistrate-Judge Gustavo A. Gelpi's Report and Recommendation, recommending that Defendants' Motion to Dismiss be granted. After reviewing the Magistrate's findings, as well as Plaintiffs' objections, the Court ADOPTS the Report and Recommendation and DISMISSES the case with prejudice.
PROCEDURAL BACKGROUND
On December 28, 1998, Plaintiffs filed a state claim under the Puerto Rico Dealers' Act, 10 L.P.R.A. § 278 et seq. ("Act 75"). Defendants subsequently removed the lawsuit to this federal district court. On January 24, 2000, Defendants filed a Motion to Dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). On November 03, 2004, the Court referred the Motion to Dismiss to a Magistrate-Judge for a Report and Recommendation.
On November 23, 2004, the Magistrate-Judge entered a Report and Recommendation advising that the complaint should be dismissed as time-barred-. (Docket No. 75). In turn, Plaintiff Lanza and Sons, Inc. filed objections to the Report and Recommendation that the Court will now address.
STANDARD
A District Court may, on its own motion, refer a pending motion to a U.S. Magistrate-Judge for a Report and Recommendation. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b); Local Rule 72(a). Pursuant to Fed.R.Civ.P. 72(b) and Local Rule 72(d), the adversely affected party may contest the Magistrate-Judge's Report and Recommendation by filing written objections "[w]ithin ten days of being served" with a copy of the order. See 28 U.S.C. § 636(b)(1). Since defendants have filed timely objections to the Magistrate-Judge's Report and Recommendation, the Court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which specific objection is made. See United States v. Raddatz, 447 U.S. 667, 673 (1980); Lopez v. Chater, 8 F.Supp.2d 152, 154 (D.P.R. 1998).
DISCUSSION
From the outset of this litigation, the parties have had conflicting theories as to the proper accrual of the statute of limitations under the Puerto Rico's Dealers' Act ("Act 75"). Plaintiffs contend that accrual began upon the termination of the distribution contract in 1996, while Defendants allege that accrual began upon knowledge of detrimental acts. The Magistrate-Judge found that it is settled law that detrimental acts trigger Act 75's statute of limitations. Basic Controlex Corp., Inc. v. Klockner Moeller Corp., 202 F.3d 450, 453 (1st Cir. 2000). Thus, when faced with the question of whether the Plaintiffs' complaint was time barred, the Magistrate-Judge found that the complaint alleged that the detrimental conduct began 1995 and that it was at that point in time that Act 75's three year statute of limitations began to accrue. Therefore, given that the complaint was filed on December 28, 1998, the cause of action was found to be time-barred. (Report and Recommendation at 3).
1. Misuse of the Rule 12(b)(6) standard
In their objection to the Report and Recommendation, Plaintiffs claim that the Magistrate-Judge misapplied Rule 12(b)(6)'s standard because there is a possible set of facts that could allow the cause of action to survive. Plaintiffs do not contest that the complaint simply states that the detrimental conduct began "back in 1995", or that the complaint fails to make any reference to a specific date that would guide the Court in its accrual analysis. In fact, Plaintiffs argue that the Court should have inferred that "back in 1995" meant that the detrimental acts could have occurred at any time between December 29-31, 1995, and that therefore their December 28, 1995 filing was a timely one. The Court must make a de novo determination regarding this matter.
Pursuant to Fed.R.Civ.P. Rule 12(b)(6), a complaint may not be dismissed unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief. See Brown v. Hot, Sexy, and Safer Prods., Inc., 68 F.3d 525, 530 (1st Cir. 1995). The Court accepts all well-pleaded factual allegations as true, and draws all reasonable inferences in plaintiff's favor. See Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir. 1990) (emphasis added). The fate of a motion to dismiss under Rule 12(b)(6) ordinarily depends on the allegations contained within the four corners of the plaintiff's complaint. Young v. Lepone, 305 F.3d 1, 10 (1st Cir. 2002). When opposing a Rule 12(b)(6) motion, "a plaintiff cannot expect a trial court to do his homework for him." McCoy v. Massachusetts Institute of Tech., 950 F.2d 13, 22 (1st Cir. 1991). Thus, plaintiffs are responsible for putting their best foot forward in an effort to present a legal theory that will support their claim. Id. at 23 (citing Correa Martinez, 903 F.2d at 52).
Granting a motion to dismiss based on a limitations defense is entirely appropriate when the pleader's allegations leave no doubt that an asserted claim is time-barred. La Chapelle v. Berkshire Life Ins. Co., 142 F.3d 507, 509 (1st Cir. 1998). Furthermore, upon reviewing the complaint under a Rule 12(b)(6) standard, the Court may also engage in a sufficiency analysis under Rule 9(f). Since Rule 9(f) makes averments of time material, the inclusion of dates in the complaint indicating that the action is untimely renders it subject to dismissal for failure to state a claim. See Wright and Miller, 5B Federal Practice and Procedure § 1357 (3rd ed. 2004).
The case before this Court was brought under Act 75, which specifies that actions under the statute must be brought within the three year limitation. P.R. Laws Ann. Tit. 10 § 278(d). As did the Magistrate-Judge, the Court finds that Act 75's accrual of the statute of limitations begins either when a dealer's contract is definitely terminated or if the principal or grantor performs acts detrimental to said relationship. See Basic Controlex Corp., 202 F.3d at 453 (where the First Circuit held that under the unambiguous statutory language of Act 75 a detrimental act is sufficient to trigger the statute of limitations).
Act 75 specifies that "every action arising from this chapter shall prescribe in three years reckoning from the date of the definite termination of the dealer's contract, or of the performing of detrimental acts, as the case may be." P.R. Laws Ann. Tit. 10 § 278(d). (emphasis added).
Upon a de novo review of the issue, the Court finds that Plaintiffs filed their complaint on December 28, 1998 and alleged that the detrimental conduct began "back in 1995." (Docket No. 2 at ¶ 4). Thus, the only possible set of facts that could make the complaint sufficient and timely is that the conduct began during the last three days of the year 1995. Given that Plaintiffs insufficiently alleged the date when the detrimental conduct began, the Court may not indulge in the type inference that Plaintiffs seek. The Rule 12(b)(6) standard of review compels the Court to draw reasonable inferences from well-pleaded factual averments. However, these conclusions must be logically compelled, or at least supported by the stated facts, "that is, when the suggested inference rises to what experience indicates is an acceptable level of probability, the conclusions become facts for pleading purposes". Correa Martinez, 903 F.2d at 53.
Plaintiffs have had ample time to amend their pleadings or make showings that would have allowed their claim to survive. Had Plaintiffs set their best foot forward in their factual averments, the Court would have entertained a different approach towards this matter. However, the Court is bound by the allegations set forth in the complaint and given their insufficiency the Court may not reasonably conclude that the complaint was timely filed.
Although extrinsic to our Rule 12(b)(6) assay, a review of the record shows that by August 11, 1995 Plaintiffs had knowledge of Defendants' detrimental conduct. Plaintiffs letter requesting Defendants to reconsider the new pricing policy and the decision to exclude product Anablam from their line (Docket No. 36) sheds some light as to exactly when the detrimental conduct began.
CONCLUSION
In light of the foregoing, the Court DISMISSES the complaint as time-barred. All pending matters are MOOT. Judgment shall follow accordingly.IT IS SO ORDERED.