CA1: Refund contract enforceable

PR Electric Power v. Action Refund,  No. 07-1847.  The defendants are in the business of getting refunds from the Department of Energy (based on a settlement of a large lawsuit involving overcharges for petroleum) in exchange for a commission.  Puerto Rico Electric Power entered into a contract with them, then they decided that the contract was fraudulent, and all those big words they use to get out of contracts and sought a declaratory judgment.  (They seem to also argue that the DOE would have paid them, anyway.) The District Court held on summary judgment that the contract was binding, and that the plaintiffs owed the defendants their commissions. 

The concludes that the plaintiffs were not prejudiced by a sua sponte grant of summary judgment, because they had some other opportunities to show what they could have submitted, but did not.

Apply Puerto Rican law, the First says, that, yes, there was a contract.  That there was consideration (in fact, it was only the filing of a “single piece of paper”).  They also hold that it wasn’t a problem to grant summary judgment on fraud and unconscionability claims because “As PREPA failed to demonstrate that it was procedurally precluded from providing evidence in support of its fraud claims, PREPA is likewise unable to make the same showing for its unconscionability claim.”  The First notes that on the fraud claim, there wasn’t unchallenged evidence of fraud, and there wasn’t any evidence of reasonable reliance on the fraud and it doesn’t really make a difference that the defendants didn’t repeatedly tell the plaintiffs that there was a prior contentious relationship.