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SX\  `&Times New RomanS7O(X7&  d dM)1dxd'dxd<:zTop of For7Q(X7  ?Y%2A`Arial?  SX\  `&Times New RomanS7O(X7M)2dxd0KS.SampleK<6X9`(Courier NewKSX\  `&Times New RomanS0.Strong 8dl6TypewriterK<6X9`(Courier NewKSX\  `&Times New RomanS42Variable: 8HTML MarkupB      2 0CommentB  \  `&Times New Roman%2A`Arial<6X9`(*Courier 12pt10cpi- - > $  =N,Xdd=    1    _]X1 XXXProduccionesTommyMuniz,Inc.v.ComiteOrganizadordelos  VIIIJuegosPanamericanos,13P.R.Offic.Trans.666,670(1982)#XN,X X]X1# XN,XXXN,;  seealsoConsarcCorp.v.MarineMidlandBank,N.A.,996F.2d568, \ 570(2dCir.1993).;S9Z+Courier  V $  =N,Xdd=    2    _SeegenerallyTommyMuniz,]X1 XXX13P.R.Offic.Trans.#XN,X X]X1# XN,XXXN,Ԁat676;  Torresv.Gracia,19P.R.Offic.Trans742,74649&n.2(1987);  VelazquezCasillasv.ForestLabs.,Inc.,90F.Supp.2d161,166 \ 70(D.P.R.2000);PrimeRetail,L.P.v.CaribbeanAirport 2 Facilities,Inc.,975F.Supp.148,15153(D.P.R.1997);Satellite X Broad.Cable,Inc.v.TelefonicadeEspana,S.A.,807F.Supp.218 . (D.P.R.1992). !  _TRY,3'X3' Letter 3' Letter3'T ? * !XuXXXXXu     UnitedStatesCourtofAppeals  FortheFirstCircuit  ( XN,X (  A') ` dE< ` A    XN,XX XN,No.021625 u  @!YSIEMCORPORATION, ! q @ Plaintiff,Appellant,    @tt)v. y  @ COMMERCIALNETLEASEREALTY,INC., %u  @<< Defendant,Appellee. ! @%__________  @,,"OFFICEMAX,INC., S @%Defendant. O A') ` dE<` A  @ APPEALFROMTHEUNITEDSTATESDISTRICTCOURT  @ FORTHEDISTRICTOFPUERTORICO < @pp[Hon.JayA.GarcaGregory,U.S.DistrictJudge] 8 @*A') ` dE<` A߈  @'Before y!   @@((Boudin,ChiefJudge, %!u# SelyaandLipez,CircuitJudges. "!% A') ` dE<|$` A }$'       EugenioC.RomerowithwhomEugenioC.RomeroLawOfficeswas b% ) onbriefforappellant. 8&!*   Ver;nicaFerraiuoliHornedowithwhomNstorDurnand '^"+ McConnellValdswereonbriefforappellee. '4#, *'ddd Xdd Xdd X(#(#,( dd ,( dd ,( dd +  f*%/f*%  SI*&0 m@37741m@SMay1,2003 +&2  RHCv,'3" m@37741 m@ R(*&4  (  * ! |-(4? Ї  8ZN,ZXXdd8[*,X` XX*   ` BOUDIN,ChiefJudge. YsiemCorporation("Ysiem")isa  PuertoRicocorporationthatownsaparceloflandinRioPiedras, x PuertoRico.Inlate1997,Ysieminquiredthroughabrokerwhether $t theofficesupplychainOfficeMaxwouldbeinterestedinbuilding   astoreonaportionofthesite.OfficeMaxrepliedthatitdoes |  notacquireordeveloppropertyitself;itwillonlylease(or ( x  sublease)sitesthatarefullydeveloped.ThebrokerputYsiemin $  contactwithCommercialNetLeaseRealty,Inc.("CommercialNet"),   acompanythatdevelopscommercialpropertiesthatarethenleased ,|  tomajorretailbusinessesunderlongtermleases.CommercialNet ( haddevelopedsitesforOfficeMaxinthepast.   ` CommercialNetandYsiembegantonegotiateaground 0 leaseagreementinFebruary1998.Duringthesenegotiations, , CommercialNethadnoassurancefromOfficeMaxthatthelatter  wouldbeinterestedinsubleasingthesitefromCommercialNet: 4 OfficeMaxusuallydoesnotnegotiatewiththedeveloperatall 0 untilithasreceivedaproformabudget,forthedeveloperwill   ordinarilyfirstneedatleastatentativeagreementwiththe 8!" landownerastothegroundrent. "4$  ` RepresentativesfromYsiemandCommercialNetmetin $& March1998.YsiemunderstoodthatCommercialNethopedtolease <&!( thelandfromYsiemandbuildaretailstoretoOfficeMax '8#* specificationsthatOfficeMaxwouldthensubleasefromCommercial )$, Net.OnMarch26,1998,CommercialNetandYsiemsignedaletter @+&. ofintentspecifyingtheleaseterm,annualgroundrent,andother  contemplatedprovisionsincludingastatementthattheeffective \ dateofthegroundleasewouldbethedatethatOfficeMaxopened X itsdoorsorsixmonthsafterthestartofconstruction,whichever   camelater.Theletteralsostated:"Thepartiesshallenterinto `  negotiationsforthecompletionofdocumentationincorporatingthe  \  above.Thistransactionshallnotbebindinguntilfinalexecution   anddeliveryofsuchmutuallyagreeabledocumentation." d   ` Aftersigningtheletterofintent,CommercialNetand `  Ysiembegantonegotiatethegroundleaseagreementand,inMay   1998,thepartiessettleduponfinallanguageincorporatingmanyof h thetermslaidoutintheletterofintent.Butunlikethe d deferredeffectivedatefortheleasecontemplatedintheletterof  intent,thegroundleasestated(conventionally)thattheleasewas l "made,enteredintoandeffectiveasof"aspecificdatewhichwas h leftblankinthedraft.Section7.6ofthegroundleasegave  CommercialNettherighttoterminatetheagreementifitwasnot p  abletoenterintoasubleaseagreementwithOfficeMaxwithin60 !l" days: "$ 8 ` Withinsixty(60)daysoftheEffectiveDate, t$& Tenantshallhaveobtainedasubleasewith J% ' OfficeMax,Inc.,anOhiocorporation  &p!( ("OfficeMax"),inaformsatisfactoryto &F") Tenantinitssoleandabsolutediscretion.If '#* Tenantdoesnotobtainthesubleasewithin (#+ such60dayperiod,Tenant,atTenant's x)$, option,bywrittennoticetoLandlordwithin N*%- five(5)daysaftertheexpirationofsuch60 $+t&. dayperiod,mayterminatethisLease._If +J'/ Tenantdoesnotgivetheaforesaidnoticeto  Landlordpriortotheexpirationofthe  applicable5dayperiod,Tenantshallbe \ deemedtohavewaivedthiscondition.If 2 TenantterminatesthisLeaseunderthis X Section7.6,thisLeaseshallbecomenulland . void,andneitherpartyshallhaveanyfurther   obligationshereunder. ` x` x / ` OnMay6,1998,CommercialNetsent_Ysiem_Ԁfourcopiesof 6   thegroundleaseagreementforexecution.Theaccompanyingletter  2  instructed_Ysiem_'srepresentativetoexecutethefourcopiesand   returnthemtoCommercialNetforCommercialNet'sexecution. :  _Ysiem_Ԁsignedthecopies,leavingtheexecutiondateblank,and 6 returnedthemtoCommercialNetonMay12.InearlyJune,  CommercialNetasked_Ysiem_Ԁforaresolutionfrom_Ysiem_'sboardof > directorsstatingthatthe_Ysiem_Ԁemployeewhohadsignedtheground : leasehadauthoritytodoso;CommercialNetsaidthiswas  necessaryforthegroundlease"tobeeffectiveandbindingagainst B thelandlordandinordertorecordtheLease."_Ysiem_'sboard > quicklypassedthisresolution.   ` CommercialNetdidnotexecutetheleaseafterit F ! receivednoticeofthisresolution;insteaditbegannegotiating !B# thesubleaseagreementwith_OfficeMax_.AttheendofJune, #% CommercialNetsubmittedto_OfficeMax_Ԁaproformabudgetstating J% ' that_OfficeMax's_Ԁrentwouldbe$23.09persquarefoot._OfficeMax_ &F") saidthisfigurewastoohigh,soCommercialNetasked_Ysiem_Ԁfora (#+ reductionintherent,explaining_OfficeMax_'sposition._Ysiem_ N*%- refused.CommercialNetattemptedtosalvagethedealbylowering +J'/ itsownreturnrateandreducingtheannualrentincreases,thereby  reducing_OfficeMax_'sannualrentto$22.42persquarefoot. \ _OfficeMax_Ԁstillfoundtherenttoohigh. X  ` Ysiem'sownbrokerthensentalettertoanOfficeMax   representativejustifyingthegroundleaserentascomparableto `  otherrentsinthearea.Mentioningvariouspossibletenants,the  \  letteralsosaidthatYsiemhadinstructedthebrokerforthe   propertytofindanalternatelesseebuttoholdoffdoingsountil d  YsiemreachedafinalresolutionwithCommercialNetandOfficeMax. `  InlateJuly1998,CommercialNetmadeonelastefforttomakea   dealwithOfficeMax,whichthelatterrejectedbecauseitstill h foundtherenttoohigh. d  ` AttheendofAugust,YsiemrequestedfromCommercialNet  anexecutedcopyofthegroundlease.Ysiem'sletter,plainlya l predicatetolitigation,statedthat"[a]lthoughsuchformal h requirementisnotstrictlynecessaryunderPuertoRicocontract  law,itwouldseemcompellingtohaveanoriginalcopyofthe p  Agreementavailableinourfiles."Theletterendedbynoting, !l" "[i]nviewoftheforegoing,weherebyreiterateYSIEM'semphatic "$ positionthattheGroundLeaseAgreementisavalid,effective,and t$& enforceablecontractwith[CommercialNet]."CommercialNet  &p!( respondedthattherewasnocontractbecauseCommercialNethad '#* neverexecutedthegroundleaseagreement.Italsoreturnedthe x)$, originalfourcopieswithoutitsownsignature. $+t&.  ` YsiemfiledthisdiversityactionagainstCommercialNet  andOfficeMaxinfederaldistrictcourtinPuertoRicoinDecember \ 1998,seekingspecificperformanceordamages.Ysiemallegedthat X thedefendantshadbreachedthegroundleaseagreementandthat   theiractionshadbeenwrongful.Afterdiscovery,Ysiem `  voluntarilydismissedtheclaimsagainstOfficeMax.Theremaining  \  partiesthencrossmovedforsummaryjudgment.Afterreceivinga   recommendationfromthemagistratejudge,thedistrictcourt d  dismissedtheremainingclaims,andYsiemhasappealed.Wereview `  agrantofsummaryjudgmentdenovo,construingtherecordinthe   lightmostfavorabletothenonmovingparty.MotorsportEng'g, h Inc.v.MaseratiS.p.A.,316F.3d26,28(1stCir.2002). d  ` ThedistrictcourtgavetwobasesforrejectingYsiem's  contractclaimthatthegroundleasebetweenitandCommercialNet l isbinding.Itsfirstreasonwasthatthegroundleaseagreement h wasnotbindingbecauseCommercialNetneversignedasublease  agreementwithOfficeMax.ThecourtstatedthatOfficeMaxwas"the p  linchpinoftheproposedtransaction"and"withoutOfficeMax's !l" executionandsubleasedocumentation,theproposedtransactionwas "$ notbinding."Thiseffectivelyreadsthefinalversionasifit t$& retainedtheeffectivedatelanguageproposedintheletterof  &p!( intent. '#*  ` Underthislineofreasoning,thegroundleaseagreement x)$, wouldnotbeanenforceablecontractattheoutsetevenifboth $+t&. partieshadsignedanddatedthefinalcopiesunlessanduntil  OfficeMaxexecutedasublease.Yetthiswouldbecontrarytothe \ expliciteffectivedatelanguageinthefinalversionoftheground X leaseagreement,anditwouldmakeredundantthe60daybackout   clausequotedabove.Tous,thechangefromtheletterofintent `  languagetothefinalgroundleaselanguagewasselfevidently  \  meanttogive_Ysiem_Ԁameasureoflimitedprotectiononcetheground   leaseagreementwasexecutedbybothsides. d   ` Thedistrictcourt'ssecondreasonwasthattheground `  leaseagreementneverbecameanenforceablecontractbecauseitwas   neverexecutedbyCommercial_Net._Ԁ_Ysiem_ԀanswersthatunderPuerto h Ricolawanagreementcanbebindingwithoutexecuteddocumentation d if,interalia,thepartieshavea"meetingofthemindsexpressed  throughtheofferandtheacceptance."\ #  1      ׀Thereisnothingwrong l withthisabstractproposition;and(statuteoffraudsorlike h requirementsaside)thepropositionmightapplyifthepartieshad  merelyagreedtoasetoffinaltermswithoutanyunderstanding p  thatexecuteddocumentationwasessentialtotheformationofthe !l" groundleaseagreement.See_Consarc_ԀCorp.,996F.2dat570. "$ _Ԁ ` However,inthepresentcase,theframeworkforthe t$& negotiationswascreatedbytheletterofintentwhichspecified  &p!( thatthenegotiationsweretobeconductedfor"thecompletionof  documentation"andsaidthatthetransactionwasnot"binding" \ thatis,didnotcreateaneffectivecontract"untilfinal X executionanddeliveryofsuchmutuallyagreeabledocumentation."   Althoughthepartieswerestillfreetoalterthefinaltermsand `  omitthisrequirement,thegroundleaseagreementitself_explicitly  \  providedthatitwouldbeeffectiveonlywhenexecuted,and,in   context,thisobviouslymeansbybothsides. d   ` Ysiemhasanalternativeclaimforreliefthatdoesnot `  dependontheexistenceofabindinggroundleaseagreement.This   argumentrestsonthecivillawdoctrineofculpaincontrahendo, h whichrequirespartiestonegotiateingoodfaith.Kessler&Fine, d CulpainContrahendo,BargaininginGoodFaith,andFreedomof  Contract:AComparativeStudy,77Harv.L.Rev.401(1964)The l argumentwasnotwelldevelopedinthedistrictcourt,butafter h reviewingthecomplaintandmotionpapers,wethinktheargument  wasjustbarelypresentedandpreservedforthisappeal,where p  somewhatmoreemphasisisplaceduponit. !l"  ` Atcommonlaw,liabilityforbadfaithbargaining,inthe "$ absenceofafinalcontract,isfairlylimitedalthoughclaims t$& basedonfraudorestoppelarepossible;anddependingupon  &p!( languageandinclination,courtssometimesconstruelettersof '#* intentasthemselvescreatingacontractualorquasicontractual x)$, obligationtonegotiateingoodfaithtowardafinalcontract. $+t&. See,e.g.,Venture_Assocs_.Corp.v.ZenithDataSys.Corp.,96F.3d  275,27778(7thCir.1996);Farnsworth,Contracts3.26(2ded. \ 2001).ButthegoverninglawinthiscaseisthatofPuertoRico X wherethesomewhatbroaderdoctrineofculpaincontrahendo   governs.^ #  2       `  _ ` Underthisdoctrine,negotiationstowardanagreement  \  canevenwithoutaletterofintentreadilygiverisetomutual   expectationsthatthepartieswillbargainingoodfaithand d  refrainfrommisconduct.Thedoctrinelookstocommonlaweyes `  closertoatortthanacontractclaimandisdesignedprimarilyto   protectrelianceratherthanexpectationinterests.Satellite h Broad.,807F.Supp.at21922.Theculpaincontrahendotestis d notverypreciseandthecourtsappearreasonablycautiousin  applyingadoctrinethatcould,ifappliedtoofreely,chill l negotiationsratherthanfacilitatethem.SatelliteBroad.,807F. h Supp.at222;Farnsworth,supra,3.26.   ` TheleadingcaseinPuertoRicoistheTommyMuniz p  decisionalreadycited.There,theplaintiffwasthehighest !l" biddertobroadcastthePanAmericangamesinPuertoRico,andthe "$ committeeawardingthecontracttoldtheplaintiffthatitsbidhad t$& beenacceptedsubjecttonegotiationofthedetailedcontract.  TommyMuniz,]X1 XX XN,13P.R.Offic.Trans.# XN,X X]X1'N#Ԁat66667.Inthemidstof \ negotiations,thecommitteedecidedtobroadcastthegamesover X governmentstationsandendeditsnegotiationswiththeplaintiff.   Id.at66869.Holdingthatthecommitteehadviolateditsdutyof `  goodfaith,thecourtadoptedarathergeneraltestdependentupon  \  thecircumstances,includingconduct,reasonableexpectationsand   virtuallyanyotherrelevantcircumstance.Id.at680._ d   ` ItispossibletocriticizeCommercialNet'sactionin `  sittingonthegroundleaseagreementsignedbyYsieminsteadof   executingandreturningtheleasepromptlyor,inthealternative, h sayingforthrightlythatitwasnotpreparedtosignuntilitsown d negotiationswithOfficeMaxbegantobearfruit.Onthisrecordwe  cannotknowwhetherthiswasadeliberateefforttomislead,oran l oversight,orneither:obviouslyYsiemknewthatithadnot h receivedinreturnasignedcopyofthelease.Howmuchscienter  matterstoculpaincontrahendodoctrineunderPuertoRicolawis p  alsounclear.   !l"  ` BycontrasttotheTommyMunizcase,CommercialNet's "$ delayinsigningthegroundleasewaspartofanefforttoachieve t$& asubleasewithOfficeMaxintheinterestofbothCommercialNet  &p!( andYsiem.ThenegotiationswithOfficeMaxwereprotractedbecause '#* ofdisagreementastorent;Ysiemwasawareoftheproblemandthe x)$, delay:ititselfurgedOfficeMaxtoreconsider.Accordingly,even $+t&. ifCommercialNetweretreatedasmodestlyblameworthy,thefault  wasalimitedoneandoccurredinthecourseofanefforttosave \ theprojectasawhole. X  ` Inallevents,Ysiemwouldnothavebeenanybetteroff   ifthegroundleaseagreementhadbeensignedbyCommercialNetand `  returnedtoYsieminearlyJune.Hadthisoccurred,Commercial  \  Netastheendofthe_60day_Ԁperiodapproachedwithoutasublease   fromOfficeMaxwouldsurelyhaveexercisedtheoptionclauseto d  terminatetheagreementunlessYsiemextendedthe60dayperiod. `  Ysiem,infailingtopressforreturnofasignedcopymore   quickly,maywellhaveunderstoodthesituation. h  ` Affirmed. d