Appeals court reverses and rejects Forrajera's damages claim for improper procedural track and unfulfilled condition
Jun 6 2017
Court of Appeals
The First Chamber of the Court of Appeals for Civil and Commercial Matters, by order of June 6, 2017, resolved cross-appeals against the order of September 27, 2016, issued by the First Civil Court of First Instance of Guatemala in the ordinary damages proceeding (Expediente 01045-2012-00242) brought by Industria Forrajera de Mazatenango, S.A. against Lisa, S.A. The court partially revoked the first-instance ruling: it upheld the preliminary objections of defective claim and unfulfilled legal condition while overturning those of lack of standing (falta de personalidad) and prescription. The net result favored Lisa, S.A., as the damages claim was rejected for having been filed through an improper procedural track and for failure to satisfy the condition precedent to its exercise.
Industria Forrajera de Mazatenango, S.A. filed an ordinary lawsuit against Lisa, S.A. on March 29, 2012, seeking damages allegedly caused by acts that led to Lisa's exclusion as a shareholder. Lisa raised preliminary objections of lack of jurisdiction, defective claim, unfulfilled condition, lack of standing, prescription, and expiration (caducidad).
The first-instance court granted the jurisdictional objection on March 4, 2013. The First Chamber reversed that decision on February 25, 2016, and ordered the lower court to rule on the remaining objections. The order of September 27, 2016 denied the objections of defective claim and expiration, granted those of unfulfilled condition, lack of standing, and prescription, and imposed no costs. Both parties appealed.
Forrajera argued that the finality of the exclusion resolution is not a condition for claiming damages under Article 228 of the Commercial Code, that Lisa has passive standing because the harmful acts are directly attributable to it, that Lisa's prescription argument was deficiently pleaded by conflating it with expiration, and that the lawsuit was filed within the one-year limitation period. Forrajera also identified a logical contradiction in the lower court's ruling: a claim cannot be simultaneously premature and time-barred.
Lisa appealed on three points: the defective claim objection should have been granted because the proper procedural track was the summary proceeding (juicio sumario) under Clause Twenty-Fifth of Forrajera's articles of incorporation and Article 1039 of the Commercial Code; the expiration objection was meritorious because Article 230 of the Commercial Code sets a three-month deadline for exclusion and the damages claim is accessory to it; and the lower court was required to impose costs on the plaintiff under Article 576 of the Civil Procedure Code.
Defective claim. The court accepted Lisa's argument. Forrajera's articles of incorporation (Clause Twenty-Fifth) require disputes between the company and its shareholders to be resolved through summary proceedings, and Article 1039 of the Commercial Code mandates the summary track for actions arising under that code. Because the controversy involved a commercial company and one of its shareholders regarding damages derived from shareholder exclusion, the ordinary track was improper. The claim was declared defective.
The court rejected Lisa's other arguments supporting the defective claim objection. Failure to attach supporting documents results in their later inadmissibility under Article 108 of the Civil Procedure Code, not in a defective claim. The factual statement in the complaint met the requisite clarity, consistent with the pro actione principle.
Expiration. The court upheld the first-instance decision and rejected Lisa's argument. The three-month expiration period under Article 230 of the Commercial Code applies exclusively to exclusion and withdrawal actions and cannot be extended to damages claims, as expiration periods may only be established by express statutory provision.
Unfulfilled condition. The court upheld this objection in Lisa's favor. Article 228 of the Commercial Code establishes the excluded shareholder's liability for acts that motivated the exclusion, but this liability is contingent on the exclusion resolution becoming final. The court cited Civil Chamber of the Supreme Court jurisprudence (Expediente 0002-2015-00083) and the Amparo Chamber (Amparo 908-2015), both confirming that while the summary opposition proceeding (Expediente 01045-2011-00112) remains pending, damages cannot be pursued against the shareholder whose exclusion is being challenged.
Lack of standing. The court reversed the first-instance decision and denied this objection, accepting Forrajera's argument. Although the lower court found that the harmful acts were committed by third parties rather than Lisa, the appellate court held that a preliminary standing objection cannot resolve the merits. The complaint attributes both direct and indirect participation to Lisa, which suffices to establish passive standing. Whether Lisa actually participated is a merits question for trial.
Prescription. The court reversed the first-instance decision and denied the prescription objection, consistent with its analysis of the condition precedent. The limitation period for damages against an excluded shareholder runs from the moment the exclusion resolution takes effect, per Article 1506(1) of the Civil Code. Because the exclusion resolution is not yet final (a summary opposition proceeding is pending), the prescription period has not begun.
Logical contradiction. The court acknowledged that the first-instance ruling contained a logical inconsistency in simultaneously finding the condition unfulfilled (premature action) and the claim prescribed (time-barred action). The appellate ruling corrected this by reversing the prescription finding.
Costs. The court accepted Lisa's argument regarding first-instance costs: Article 576 of the Civil Procedure Code mandates cost awards in incidental proceedings, and the lower court failed to justify its omission. Forrajera was ordered to pay first-instance costs. On appeal, both parties were exempted from costs due to reciprocal partial success.
Industria Forrajera de Mazatenango, S.A. filed a constitutional amparo against this ruling. The Supreme Court of Justice denied the amparo on August 2, 2018, definitively confirming the dismissal of the damages claim.