faith, Walpex would have to "overcome hurdles of contributory negligence and assumption of the risk." Id.
Having completed discovery on the issues of bad faith, contributory negligence, and assumption of the risk, YPFB again moves for summary judgment. For the reasons set forth below, summary judgment is granted.
II. FACTUAL BACKGROUND
The factual underpinnings of this action are essentially undisputed and have been described in Walpex IV and Walpex II. In February 1982, YPFB publicly invited bids
for the supply of tubing to be used by the Bolivian oil industry. Section 2.3.7 of the List of Specifications, referenced in the invitation, required the successful bidder to submit an irrevocable letter of credit for 10% of the purchase price as performance bond.
Walpex received YPFB's invitation for bids and the requisite Specifications through its Bolivian agent, Compania de Representaciones Internacionales, S.R.L. ("COREIN"). On April 7, 1982, YPFB advised COREIN, in writing, that Walpex had been awarded the bid, and that COREIN should come to YPFB's offices in La Paz to sign the formal contract. See YPFB 3(g) Statement, at P7. On April 12, 1982, COREIN contacted YPFB to complete a purchase order as well as other formalities contemplated by the April 7, 1982, award. See Walpex 3(g) Statement, at P11. YPFB did not issue the purchase order. In fact, neither a purchase order nor a formal written contract was ever executed by YPFB.
On May 10, 1982, Walpex established an irrevocable letter of credit with Chase Manhattan Bank, N.A., in the amount of $ 199,312.15, in YPFB's favor. See Piraino Dep. Exh. 5. It also obtained documents necessary for COREIN to execute the contract on its behalf. On May 18, 1982, without notifying YPFB or COREIN, Walpex entered into an irrevocable contract for the supply of the pipe with Vinson International ("Vinson"). See Piraino Dep. Exh. 6.
YPFB prepared a purchase order, dated June 3, 1982, incorporating the terms proposed by Walpex. Subsequently, however, YPFB informed Walpex that Bolivia was experiencing economic problems and that it was having difficulty obtaining funding from the World Bank to pay for the pipe. See Piraino Dep. at 97-99, Navarro Dep. at 35. Thus, despite requests, the purchase order was not made available to COREIN for signature. See Walpex Memorandum at 8. On June 16, 1982, almost a full month after Walpex had executed the Vinson contract, COREIN advised Walpex not to undertake any commitment until it had received the confirmed purchase order. See Piraino Dep. Exh. 10.
By letter dated June 30, 1982, YPFB stated to COREIN that it could not deliver its letter of credit because of financial restrictions imposed by the Central Bank of Bolivia. See Navarro Dep. Exh. 4. Following repeated requests by YPFB to Walpex for extensions of time for YPFB to perform, on January 11, 1983, YPFB's Director of Materials informed COREIN that YPFB's Procurement Department was suspending acquisition of the pipe because of lack of money. YPFB permanently cancelled acquisition of the pipe on July 28, 1983, stating that it was unable to obtain financing for the project from the World Bank. See Piraino Dep. Exh. 22.
III. SUMMARY JUDGMENT
Summary judgment is appropriate when "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 judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Citizens Bank of Clear Water v. Hunt, 927 F.2d 707, 710 (2d Cir. 1991). The burden is on the moving party to demonstrate that no genuine issue of material fact exists. Gallo v. Prudential Residential Services, 22 F.3d 1219, 1223 (2d Cir. 1994). Consequently, when deciding a motion for summary judgment, a court must "resolve all ambiguities and inferences ... in the light most favorable to the party opposing the motion." Shockley v. Vermont State Colleges, 793 F.2d 478, 481 (2d Cir. 1986).
Summary judgment may be appropriate if the moving party can show that little or no evidence may be found in support of the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Summary judgment may also be appropriate if no rational jury could find in favor of the nonmoving party because the evidence to support its case is so slight that no genuine issue of material fact exists. Gallo, 22 F.3d at 1224.
The issue remaining in this case is whether YPFB incurred liability by its alleged failure to exercise good faith in its pre-contractual negotiations with Walpex. Article 465 of the Bolivian Civil Code, translated into English, provides as follows:
In the preliminary stages of negotiation and in the formation of the contract the parties shall conduct themselves in good faith and shall compensate for harm caused by negligence, imprudence or omission in giving notice of the causes that may void the contract. Bolivian Civil Code Art. 465.
This Article establishes a general duty of good faith and fair dealing in contractual negotiations. See Garro Aff. at P21. Under Bolivian law, however, good faith is presumed in all contracts. See Commercial Code of Bolivia Article 803; Palacios de Vizzio Dec. at P21. Thus, absent factors that may operate to void an otherwise valid contract
, a breach of Article 465 requires a showing of bad faith or dolo. See Walpex IV, at 1275; Palacios de Vizzio Dec. at P16.
Dolo is defined as "any kind of trick, design or artifice used to deceive another [and as] malicious intent to improperly seek a personal benefit or the injury of another by means of any act or contract and by resorting to tricks, artifice or the ignorance of others." See Palacios de Vizzio Dec. at P20, quoting, G. Cabanellas, Diccionario de Derecho Usual 742 (ed. Heliasta S.R.L., Buenos Aires 1976). Similar to fraud under New York law, see Leucadia, Inc. v. Reliance Ins. Co., 864 F.2d 964, 971 (2d Cir. 1988) (plaintiff must prove fraud by clear and convincing evidence), cert. denied, 490 U.S. 1107, 104 L. Ed. 2d 1023, 109 S. Ct. 3160 (1989), a plaintiff attempting to prove dolo under Bolivian law must do so by "convincing the judge". See Palacios de Vizzio Reply Dec. at PP16-17.
Walpex argues that by failing to execute the final contract and by not informing Walpex of the fact that there was no binding agreement at the time the bid was awarded, YPFB breached its obligations under Article 465. Coupled with the fact that YPFB should have known that Walpex would enter into a supply contract in reliance on the bid award, Walpex states that YPFB acted with dolo and thereby exposed itself to pre-contractual liability under Bolivian law. Walpex argues that YPFB should pay its damages, which consist of the amount expended to procure the letter of credit and the amount Walpex is obligated to pay Vinson pursuant to the supply contract entered into on May 18, 1982. There is no evidence in the record, however, that YPFB injured Walpex through actions taken in bad faith or that YPFB intended to deceive Walpex for its own benefit.
To the contrary, YPFB informed Walpex of the economic difficulties Bolivia was facing and that these difficulties were making it impossible for YPFB to execute the purchase order. See Hornsby Dep. at 45. As early as April 12, 1982, nearly one month before Walpex obtaining the letter of credit from Chase and over one month before it signed the contract with Vinson, COREIN had sought and was refused a purchase order by YPFB. Walpex cannot now claim that it was not aware of a delay involved in executing the YPFB contract before it obtained the letter and committed to purchasing the pipe.
Indeed, the evidence presented to the Court suggests that, but for the problems YPFB encountered in obtaining World Bank financing, it would have executed a contract with Walpex. See Navarro Dep. at 37. Walpex's assertion that YPFB's Technical Board decided as early as April 29, 1982 to suspend purchase of the pipe is without merit, as that committee acts only in an advisory capacity. See Rivero Reply Dec. at P5. Thus, YPFB's ultimate failure to enter into a contract with Walpex did not amount to an absence of good faith which would expose it to liability.
Nor did YPFB's purported failure to stop Walpex from contracting with Vinson amount to actionable fraud. At the heart of Walpex's damages claim is the irrevocable supply contract it unilaterally entered into with Vinson. Nowhere in the bid specifications or in any communication between Walpex and either YPFB or COREIN was it stated that an irrevocable supply contract was a condition to YPFB's executing a contract. There is no evidence to suggest that Walpex notified YPFB before it negotiated and entered into the irrevocable contract with Vinson; to the contrary, the evidence suggests that YPFB was not aware of the existence of the Vinson contract until almost one month after it was signed. See Piraino Dep. Exh. 10, 11; Hornsby Dep. at 47-48. Further, Walpex's assertion that the supply contract was a necessary prerequisite to its obtaining a letter of credit is belied by the fact that Walpex obtained the letter prior to the execution of the supply contract. Walpex's claim that YPFB should have known that Walpex would enter into an irrevocable supply contract is neither supported by the evidence nor does it rise to the level of actionable bad faith under Article 465.
Indeed, such a claim places the responsibility for Walpex's current plight on the wrong party entirely. For, in addition to its inability to show bad faith or dolo on the part of YPFB, Walpex is unable "to overcome hurdles of contributory negligence and assumption of risk." Walpex IV, at 1279. Article 348(II) of the Bolivian Civil Code, translated into English, provides that:
There is no recovery for those damages that the plaintiff could have avoided by using ordinary diligence. Bolivian Civil Code Art. 348(II).
This provision in the Bolivian Code operates to bar recovery for a plaintiff whose failure to use ordinary care causes its own damages. See Palacios de Vizzio Dec. at P36.
Walpex did not use ordinary diligence when it, without prior notice to YPFB, executed the irrevocable supply contract with Vinson before obtaining either a purchase order or a finalized contract with YPFB.
Walpex's argument that it was operating under the assumption that a binding contract existed is to no avail. It is charged with knowing that Bolivian law requires that a contract involving an agency of the Bolivian government requires a notarized, witnessed writing recorded as a public deed. See Palacios de Vizzio Reply Dec. at P15, 20. Moreover, Walpex's sole reliance on the April 7, 1982, bid award as the basis for entering into the Vinson contract shows an absence of ordinary diligence. In light of the severe economic problems in Bolivia, YPFB's failure to execute a purchase order, and the fact that the supply contract was not necessary for the finalization of the YPFB contract, Walpex's actions were not reasonable. The Bolivian law equivalent of assumption of the risk and contributory negligence codified in Article 348(II), therefore, operates to bar Walpex from recovery.
For the reasons set forth above, summary judgment is granted.
The Clerk of the Court is hereby ordered to enter judgment for the Defendant.
DEBORAH A. BATTS, U.S.D.J.
Dated: June 22, 1995
New York, New York