March 1, 1995 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________
No. 94-1877
EXECUTIVE LEASING CORPORATION, ET AL.,
Appellants,
v.
BANCO POPULAR DE PUERTO RICO, ET AL.,
Appellees.
____________
ERRATA SHEET
The opinion of this court issued on February 27, 1995, is
amended as follows:
On the cover sheet of the opinion strike the line stating:
"[Hon. Hector M. Laffitte, U.S. District Judge]" and insert in ____________________
its place the following:
"[Hon. Justo Arenas, U.S. Magistrate Judge.]" _____________________
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 94-1877
EXECUTIVE LEASING CORPORATION, ET AL.,
Appellants,
v.
BANCO POPULAR DE PUERTO RICO, ET AL.,
Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Justo Arenas, U.S. Magistrate Judge] _____________________
____________________
Before
Selya, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Harold D. Vicente, with whom Vicente & Cuebas were on brief for _________________ _________________
appellant.
Nestor Duran-Gonzalez, with whom Jaime E. Toro-Monserrate and ______________________ __________________________
McConnell Valdez were on brief for appellee. ________________
____________________
February 27, 1995
____________________
BOWNES, Senior Circuit Judge. The plaintiffs, BOWNES, Senior Circuit Judge. _____________________
Executive Leasing Corporation, Manuel Gonzalez Gierbolini and
Luz Iraida Gonzalez (both personally and on behalf of their
conjugal partnership), allege that defendants Banco de Ponce
(now Banco Popular de Puerto Rico, as successor-in-interest)
and BanPonce Corporation (collectively, "Banco") violated
various provisions of the Bank Holding Company Act (BHCA), 12
U.S.C. 1971 et seq., and Puerto Rico law in their loan __ ____
transactions with the plaintiffs. The district court entered
summary judgment for the defendants on the BHCA claim and
dismissed the pendent claims without prejudice. Executive _________
Leasing Corp. v. Banco Popular de Puerto Rico, 1994 WL 448985 _____________ ____________________________
(D.P.R. June 20, 1994). The plaintiffs appeal, and we
affirm.
As a threshold matter, we think that the plaintiffs
seriously misconceive their burden on appeal. The plaintiffs
make little effort to develop either their factual ____________________
1. See, e.g., Plaintiffs' Brief at 29 ("The analysis of the ___ ____ allegations or their claims of error; instead, they offer
extrinsic evidence controversy . . . which was proffered by
Executive to the District Court deals adequately with the conclusory statements, undigested record citations, repeated
matter and it is incorporated by reference."); id. at 35 ___
("Executive explained the civil law methodology [for dealing assurances that the district court was "thoroughly briefed"
with extrinsic evidence in cases alleging illegality or
fraud] to the District Court and Executive's explanation is on various matters, and reminders that in reviewing a grant
incorporated by reference."); id. at 41 ("Executive provided ___
the District Court with Executive's own understanding of . . of summary judgment, we are "free to consider the entire
. the elements of a BHCA claim . . . . Executive
respectfully directs the attention of this Court to the record." The plaintiff's brief is less a brief than an
relevant materials, and incorporates them by reference.")
(there follows a citation to forty pages of the plaintiffs' attempt to incorporate their voluminous district court
brief in opposition to summary judgment). The brief is
littered with many more examples of implicit incorporation in pleadings by reference.1 We have held that attorneys cannot
lieu of factual and legal argument. See, e.g., id. at 31, ___ ____ ___
39, 40-41 (two examples), 43-46 (four examples).
-2- 2
circumvent the page limit of Fed. R. App. P. 28(g) by
incorporating by reference a brief filed in another forum.
Katz v. King, 627 F.2d 568, 575 (1st Cir. 1980). "If counsel ____ ____
desires our consideration of a particular argument, the
argument must appear within the four corners of the brief
filed in this court." Id. See also Hunter v. Allis-Chalmers ___ ___ ____ ______ ______________
Corp., 797 F.2d 1417, 1430 (7th Cir. 1986) (issues cannot be _____
preserved by reference to documents filed in the district
court; issues must be argued to be preserved); Prudential __________
Ins. Co. of Am. v. Sipula, 776 F.2d 157, 161 n.1 (7th Cir. ________________ ______
1985) (practice of incorporation results in a composite brief
of more than fifty pages; "any risk of oversight [by the
court] or of the failure to present properly the arguments on
appeal rests with [appellant]").
These appellate rules are wholly consistent with
our de novo review of summary judgments.2 While we view the __ ____
summary judgment record in the light most favorable to the
nonmoving party, and indulge all reasonable inferences in
that party's favor, see, e.g., Vasapolli v. Rostoff, 39 F.3d ___ ____ _________ _______
27, 32 (1st Cir. 1994), appellants are not excused from
arguing the issues being appealed. We will not rely upon
____________________
2. Summary judgment is appropriate when the record reflects
"no genuine issue as to any material fact and . . . the
moving party is entitled to judgment as a matter of law."
Fed. R. Civ. P. 56(c).
-3- 3
arguments and allegations that are developed only in the
district court pleadings.
In light of these principles, most of the
plaintiffs' appellate arguments must be deemed waived for
lack of developed argumentation. See United States v. ___ ______________
Zannino, 895 F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. _______ _____ ______
1082 (1990). We address only those arguments that have
arguably been preserved.3
I. FACTS I. FACTS _____
In May, 1983, Executive Leasing Corporation
("Executive") entered a loan agreement with Banco, whereby
Executive obtained a line of credit for its principal
business, long-term vehicle leasing. As collateral,
Executive assigned to Banco the accounts receivable generated
by its lease contracts. Part of the loan was to be used to
discharge Executive's debt to another bank.
____________________
3. Alerted by Banco's brief to their possible waiver, the
plaintiffs use their reply brief to "set forth a succinct and
veridic version of the facts . . . with limited references to
the documents which are part of the record." Arguments not
made in the appellant's opening brief, however, are deemed
waived. See, e.g., Sandstrom v. Chemlawn Corp., 904 F.2d 83, ___ ____ _________ ______________
86 (1st Cir. 1990). Moreover, the plaintiffs have not cured
the defects of their opening brief. Although Banco's alleged
loan agreement violations, use of "disinformation," and other
anti-competitive practices may be highly relevant to the
plaintiffs' claims under Puerto Rico law, the reply brief
also fails to raise a genuine issue of material fact with
respect to the BHCA claims.
-4- 4
As a condition for the loan, Banco allegedly
prohibited Executive from financing its leasing business with
any other bank. This claimed exclusive dealing condition
does not appear in the loan agreement. In fact, the
agreement has an integration clause that provides:
[This agreement] constitutes the entire
agreement among the parties . . . . No
covenant or condition not expressed in
this agreement shall affect or be
effective to interpret, change or
restrict this agreement. No change,
termination or attempted waiver shall be
binding unless in writing.
The exclusive dealing condition was allegedly part
of Banco's scheme to drive Executive out of business and to
take over its vehicle leasing operation for the benefit of
Banco's corporate affiliate, Velco, which happened to be
Executive's main competitor. To that end, Banco allegedly
structured Executive's line of credit to create an inherent
liquidity shortage; made premature and improper charges
against Executive's account; and improperly refused to extend
new credit to Executive when it was not in default.
Executive eventually fell behind in its loan
payments. In December, 1987, Banco called the loan.
Plaintiffs claim that it did so without granting Executive a
meaningful opportunity to obtain alternative financing, or
placing Executive on default status as required by the loan
agreement. In March, 1988, the parties entered an agreement
to terminate the loan agreement. Executive agreed to
-5- 5
transfer its main assets and all of its lease contracts --
even those in which Banco had no previous interest -- to
Banco, allegedly for the benefit of Velco.
The plaintiffs claim that under the Bank Holding
Company Act, both the initial loan agreement and the 1988
termination agreement were extensions of credit conditioned
upon a prohibited tying arrangement.
II. DISCUSSION II. DISCUSSION __________
A. The loan agreement A. The loan agreement
The plaintiffs argue that Banco violated the BHCA
by extending credit to Executive on condition that it "not
obtain some other credit, property, or service from a
competitor of such bank . . . ." 12 U.S.C. 1972(1)(E).4
Because no such restriction appears in the agreement itself,
and the loan agreement, by its clear language, "constitutes
the entire agreement among the parties," the district court
rejected the plaintiffs' extrinsic evidence of the exclusive
dealing condition, including their own sworn affidavits. See ___
Executive Leasing, 1994 WL 448985, at *7 (citing P.R. Laws _________________
Ann. tit. 32, App. IV, R. 69(B) (1983) (Parol Evidence Rule)
(evidence extrinsic to an oral or written agreement is
____________________
4. Under 12 U.S.C. 1972(1)(E), a bank may not, among other
things, extend credit on the condition or requirement that
"the customer shall not obtain some other credit, property,
or service from a competitor of such bank . . . other than a
condition or requirement that such bank shall reasonably
impose in a credit transaction to assure the soundness of the
credit."
-6- 6
inadmissible where "all the terms and conditions constituting
the true and final intention of the parties have been
included"); P.R. Laws Ann. tit. 31, 3471 (1991) (Article
1233 of the Civil Code) ("If the terms of a contract are
clear and leave no doubt as to the intentions of the
contracting parties, the literal sense of its stipulations
shall be observed. . . ."); Vulcan Tools of Puerto Rico v. ____________________________
Makita USA, Inc., 23 F.3d 564, 567 (1st Cir. 1994) (applying _________________
Puerto Rico law; "[w]hen an agreement leaves no doubt as to
the intent of the parties, a court should not look beyond the
literal terms of the contract.")).
Under Puerto Rico law, an agreement is "clear" when
it can "'be understood in one sense alone, without leaving
any room for doubt, controversies or difference of
interpretation . . . .'" Catullo v. Metzner, 834 F.2d 1075, _______ _______
1079 (1st Cir. 1987) (quoting Heirs of Ramirez v. Superior _________________ ________
Court, 81 P.R.R. 347, 351 (1959)). The plaintiffs concede _____
that the loan agreement is clear. They argue, however, that
the written agreement was not in fact the entire agreement,
and that we must consider extrinsic evidence of the parties'
intent with respect to integration. This argument is
supported by a selective reading of Article 1233 of Puerto
Rico's Civil Code, P.R. Laws Ann. tit. 31, 3471:
If the terms of a contract are clear
and leave no doubt as to the intentions
of the contracting parties, the literal
-7- 7
sense of its stipulations shall be
observed.
If the words should appear contrary to
the evident intention of the contracting
parties, the intention shall prevail.
Relying exclusively on the second sentence quoted, the
plaintiffs argue that the words of the integration clause are
in fact "contrary to the evident intention of the contracting
parties." Yet to consider the extrinsic evidence at all, the
court must first find the relevant terms of the agreement
unclear. That requirement not being met, the district court
correctly went no further. See Vulcan, 23 F.3d at 564 ___ ______
(because the contractual term "non-exclusive" is clear and
unambiguous, there is "no need to dwell on" extrinsic
evidence of the supplier's alleged promise to limit the
number of its distributors); Ballester Hermanos, Inc. v. _________________________
Campbell Soup Co., 797 F. Supp. 103, 108 n.4 (D.P.R. 1992) __________________
(under Puerto Rico's Civil Code and parol evidence rule,
parties may resort to extrinsic evidence of circumstances
surrounding the document "to assist in the interpretation of
an apparent conflict in the written text") (emphasis added); __ ___ _______ ____
Nike Int'l Ltd. v. Athletic Sales, Inc., 689 F. Supp. 1235 ________________ _____________________
(D.P.R. 1988) (under Article 1233 of the Civil Code, intent
of the parties "is to be gleaned first from the literal terms
-8- 8
of the contract and then, if necessary, from the ______________
circumstances surrounding its execution") (emphasis added).5
The plaintiffs attempt to distinguish our decision
in Vulcan Tools, 23 F.3d at 567-68, where we excluded _____________
extrinsic evidence that was offered to vary a clear and
unambiguous term of the contract, on the ground that fraud
and illegality were not alleged. This argument is made only
____________________
5. The plaintiffs cite several civil law treatises for the
proposition that the correct methodology for determining the
intention of contracting parties is "to consider, not only
the written contract itself, but all other evidence which
would otherwise be admissible." The admissibility of the
"other evidence" under Puerto Rico law, however, depends in
the first instance on the clarity of the written contract.
See Vulcan Tools, 23 F.3d at 567-68; Mercado-Garcia v. Ponce ___ ____________ ______________ _____
Fed. Bank, 979 F.2d 890, 894 (1st Cir. 1992) (where both __________
parties offered extrinsic evidence contradicting the clear
terms of a promissory note, court is nonetheless "bound to
look no further than the note itself").
We note, too, that the plaintiffs' extrinsic evidence of
the actual practice of the parties would not have blocked
summary judgment on their 1972(1)(E) claim. For example,
Banco tolerated Executive's repeated overdrafts and delays in
payment, even though the loan agreement required Executive to
pay on time. The practice of permitting late payments and
overdrafts strikes us as a reasonable accommodation to
Executive; it raises no genuine question regarding the
integration of the agreement. As for Banco's other alleged
deviations from the loan agreement, the integration clause
provides that "no change . . . shall be binding unless in _______
writing" (emphasis added). This is not a representation that
there would never be any variance, however small, from the
agreement. With respect to terms that the parties intended
to be binding and enforceable, nothing plaintiffs have
articulated on appeal leads us to doubt that the loan
agreement should "be deemed as complete" under Puerto Rico's
parol evidence rule. P.R. Laws Ann. tit. 32, App. IV, R.
69(B). In fact, on several occasions when Banco renewed
Executive's line of credit or adjusted the terms of the loan,
it did so in writing as required by the loan agreement.
-9- 9
by the attempted incorporation of a surreply filed with the ________
district court; accordingly, it has been waived. In their
original complaint, the plaintiffs made no allegation
regarding exclusive dealing, let alone fraud. Fraud was not
alleged in the amended complaint, or even in the tendered,
but rejected, second amended complaint.
Even were we to reach the argument of illegality,
we would reject it on the merits. The plaintiffs' extrinsic
evidence was offered not to illuminate (for example) the
circumstances under which the agreement was made, see R. ___
69(B), but to contravene an express term of the agreement.
The plaintiffs have cited no authority to suggest that the
illegality exception to Puerto Rico's parol evidence rule
sweeps this far. The district court correctly excluded any
evidence of the exclusive dealing condition.
B. The termination agreement B. The termination agreement
Under the BHCA, banks may not require, as a
condition for extending credit, that "the customer provide
some additional credit, property, or service to a bank
holding company of such bank, or to any other subsidiary of
such bank holding company." 12 U.S.C. 1972(1)(D). The
plaintiffs allege that Banco violated 1972(1)(D) by forcing
-10- 10
Executive to surrender its vehicle leasing business to Banco
for the benefit of its leasing affiliate, Velco.6
The plaintiffs make only a cursory argument that
Executive was in fact required to provide "additional . . .
property" (as opposed to the collateral for the loan) within
the meaning of the BHCA. For a "detailed exposition of the
facts" and the plaintiffs' legal theories, we are directed to
their pleadings below. We rule that the plaintiffs' argument
under 1972(1)(D) has been waived.7
We turn now to two claims of procedural error,
which we assess in light of their effect (if any) upon the
summary judgment proceedings.
C. The second amended complaint C. The second amended complaint
The plaintiffs argue that the district court abused
its discretion by denying them leave to file a second amended
complaint. On January 18, 1994, the district court heard
arguments on the need for a stay of discovery pending Banco's
motion for summary judgment on the BHCA claims. The
plaintiffs gave no hint that a second amended complaint was
in the offing. By order of the court, Banco was to move for
____________________
6. Banco incorrectly asserts that the plaintiffs never
invoked 1972(1)(D) before the district court. In fact,
references to that section appear in the plaintiffs'
opposition to summary judgment.
7. We therefore need not decide whether the workout of the
loan constituted an "exten[sion of] credit" within the
meaning of the BHCA.
-11- 11
summary judgment by February 7, 1994, and the trial was
scheduled for April 18, 1994. On February 1, 1994, the
plaintiffs unexpectedly moved for leave to file a second
amended complaint. The motion remained pending when the
district court entered summary judgment for Banco.
Rule 15(a) of the Federal Rules of Civil Procedure
provides in part that leave to amend pleadings "shall be
freely given when justice so requires." Absent factors such
as undue delay, bad faith or dilatory motive, repeated
failure to cure deficiencies by previous amendments, undue
prejudice to the opposing party, or "futility of amendment,"
the leave sought should be granted. Foman v. Davis, 371 U.S. _____ _____
178, 182 (1962).
We are confident that the district court did not
abuse its "considerable discretion" by implicitly rejecting
the second amended complaint. Rodriguez v. Banco Central _________ _____________
Corp., 990 F.2d 7, 14 (1st Cir. 1993). This was the second _____
time that the plaintiffs had attempted to amend their
complaint to forestall a dispositive motion (in this
instance, Banco's summary judgment motion). The first motion
for leave to file an amended complaint came after the _____
original complaint was dismissed. Moreover, after nearly
five years of litigation and a prior amendment of the
complaint, and with the trial less than three months away,
the plaintiffs made allegations for the first time against
-12- 12
Banco Popular, the successor-in-interest to defendant Banco
de Ponce, based on conduct that took place after the _____
termination of the loan agreement -- conduct that "has
continued to this date." "The further along a case is toward
trial, the greater the threat of prejudice and delay when new
claims are belatedly added." Rodriguez, 990 F.2d at 14. _________
Although the district court should have "state[d] explicitly
its reasons for den[ying]" leave to amend, Kay v. New ___ ___
Hampshire Democratic Party, 821 F.2d 31, 34-35 (1st Cir. ___________________________
1987), this reason for the denial is plain from the
procedural history of the case: the plaintiffs were trying
to prolong discovery and postpone a ruling on the summary
judgment motion in the hope that "something concrete will
eventually materialize . . . ." Dow v. United Bhd. of ___ _______________
Carpenters & Joiners of Am., 1 F.3d 56, 58 (1st Cir. 1993). ___________________________
The tendered complaint would have been futile in
any event because it could not have blocked summary judgment
on the jurisdictional BHCA claims. See Kay, 821 F.2d at 34 ___ ___
("for the sole reason that [the proposed] amendment would
have been futile, it was properly denied") (citing Foman, 371 _____
U.S. at 182). On appeal, the plaintiffs point to no
particular amendment that might with appropriate discovery
have raised a genuine issue of material fact.
-13- 13
For all of these reasons, we reject the argument
that the plaintiffs should have been allowed to file a second
amended complaint.
D. The stay of discovery D. The stay of discovery
The plaintiffs argue that the district court abused
its discretion by staying discovery during the summary
judgment proceedings, and by denying their Fed. R. Civ. P.
56(f) motion for additional discovery. This argument has not
been adequately developed on appeal and must be deemed
waived. See, e.g., Plaintiffs' Brief at 26 ("Executive also ___ ____
showed, with great particularity, where discovery stood at
the time. [That discussion is incorporated by reference[.] .
. . ]") (citing two district court pleadings). We have
searched the plaintiffs' brief in vain for a showing that
their discovery requests, whether those pending at the time
of the stay or those made pursuant to Rule 56(f), were
necessary or even relevant to their opposition to summary
judgment on the BHCA claims. Again, the plaintiffs fail to
address the specific manner in which they were allegedly
prejudiced by the claimed error.
Double costs are assessed against plaintiffs'
attorneys pursuant to Fed. R. App. P. 38. and 28 U.S.C.
1927.
Affirmed. Affirmed. _________
-14- 14