PDCM Assocs. v. Quiñones

PDCM ASSOCIATES, SE, Plaintiff, v. CARLOS RIVAS QUIÑONES, et al., Defendants.

CIVIL NO. 15-1615 (JAG)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

April 1, 2016

OPINION AND ORDER

GARCIA-GREGORY, D.J.

This matter is before the Court on Defendants'¹ Motion to Dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6), (the "Motion"). Docket No. 11. Plaintiff timely opposed. Docket No. 14. Plaintiff filed the instant action pursuant to 42 U.S.C. § 1983 ("Section 1983") for alleged violations of its rights under the Fifth and Fourteenth Amendments of the United States Constitution. Docket No. 1. Plaintiff also seeks pendent jurisdictions under 28 U.S.C. § 1367 alleging violations of Section 7 and 9 of the Constitution of Puerto Rico. Id. For the reasons stated below, Defendants' Motion is GRANTED in Part and DENIED in part.

BACKGROUND

I. Factual Background²

PDCM Associates, SE ("PDCM"), is a corporation in Puerto Rico that leases a commercial building to the Ombudsman of the Disabled of the Commonwealth of Puerto Rico ("Ombudsman"), a state agency created to protect the rights of people with disabilities. Docket No. 1. As of the date the complaint was filed, Ivan Diaz Carrasquillo ("Diaz") is the director of the Ombudsman. Id. The Office of Management and Budget of the Commonwealth of Puerto Rico ("OMB-PR") is a state agency that advises the Governor of Puerto Rico in management and budget matters. Id. From January 2013 to October 2014, Defendant Carlos Rivas Quiñones ("Rivas"), was the director of OMB-PR Id. Since October 2014, Defendant Luis F. Cruz Batista ("Cruz"), has been the director of OMB-PR. Id.

PDCM leased and currently leases a building to the Ombudsman located in Miramar, Puerto Rico. Id. The lease for the 2011 contract expired on February 28, 2013. Several months before the 2011 lease expired, a renewal contract was sent to the Ombudsman. Id. The parties went back and forth with requests, but in the end the new contract was not signed on time and the 2011 lease expired. Id. By August 2013, almost five months after the contract expired, the OMB-PR had not addressed the renewal of the contract for the Ombudsman building. Id. During the contractless period, PDCM was constantly asking the Ombudsman about the renewal of the pending contract and demanding payment for back rent, all while the Ombudsman continued torequest more documents and demand repairs. Id. On November 18, 2013, the Ombudsman sent PDCM an email stating it was waiting approval for the contract from OMB-PR. Id. Meanwhile, PDCM requested a meeting with Diaz to determine the status of the new contract and to address the occupancy of the building. Id. In the meeting, Diaz admitted there was a debt owed to PDCM, but blamed OMB-PR for all the issues regarding the new contract. Id. A new contract for the lease of the building in Miramar was signed in November 2014. Id. Since the government could not pay rent before the new contract was signed, the Ombudsman accumulated $820,035.00 in back rent during the course of twenty-two months. Id. To seek redress, PDCM decided not to seek state law breach of contract remedy, as under Puerto Rico law OMB-PR and/or the Ombudsman do not have an obligation to pay for back rent during a period in which a contract has not been signed. Id.

Before the Court is PDCM's complaint, Docket No.1; Defendants' Motion, Docket No. 11; and PDCM's Opposition to the Motion, Docket No. 14.

STANDARD OF REVIEW

A defendant may move to dismiss an action for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). To survive dismissal under this standard, a complaint must allege "a plausible entitlement to relief." Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1967 (2007). According to Twombly, the complaint must state enough facts to "nudge [the PDCM's] claims across the line from conceivable to plausible." Id. at 1974. Therefore, to preclude dismissal pursuant to Fed. R. Civ. P. 12(b)(6), the complaint must rest on factual allegations sufficient "to raise a right to relief above the speculative level." Id. at 1965.

At the motion to dismiss stage, courts accept all well-pleaded factual allegations as true, and draw all reasonable inferences in the PDCM's favor. See Correa-Martinez v. Arrillaga-Belendez 903 F.2d 49, 51 (1st Cir. 1988). Thus, the PDCM bears the burden of stating factual allegations regarding each element necessary to sustain recovery under some actionable theory. Goolev v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir. 1988). Courts need not address complaints supported only by "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir. 1996).

ANALYSIS

I. Eleventh Amendment Immunity

The Eleventh Amendment bars suits seeking monetary damages against a State in federal court, unless the State has waived its sovereign immunity, or Congress has expressly overridden it. See Will v. Michigan Dep't of State Police, 491 U.S. 58, 66 (1989); see also O'Neill v. Baker, 210 F.3d 41 (1st Cir. 2000). It is also well settled law that the Eleventh Amendment has been interpreted to bar suits for monetary relief against the instrumentalities, agencies, or "alter egos" of a state and against its officers in their official capacities.³ Kentucky v. Graham, 473 U.S. 159, 169, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985); Culebras Enterprises Corp. v. Rivera Ríos, 813 F.2d 506, 516 (1st Cir.1987).The First Circuit has consistently held that the government of Puerto Rico is considered a state for purposes of the Eleventh Amendment. Metcalf & Eddy, Inc. v. Puerto Rico Aqueduct & Sewer Authority, 991 F.2d 935, 939 n.3 (1st Cir. 1993); De León López v. Corporatión Insular de Seguros, 931 F.2d 116, 121 (1st Cir. 1991); Puerto Rico Ports Auth. v. M/V Manhattan Prince, 897 F.2d 1, 9 (1st Cir. 1990).

Accordingly, all monetary claims against the state agencies and individually named Defendant in their official capacity are DISMISSED with prejudice.⁴

It is unclear how PDCM seeks redress for its state law claims. Docket No. 1. Although under 28 U.S.C. § 1367, the Court has jurisdiction to hear state law claims that arise from a "common nucleus of operative facts," that statute does not override a state's Eleventh Amendment immunity. Pagan v. Puerto Rico, 991 F. Supp. 2d 343, 346 (D.P.R. 2014). Nonetheless, any claims that depend on monetary recovery from the government are barred.

II. Declaratory Judgment

Although, the Eleventh Amendment bars suits for monetary damages against a state and its officers, it does not preclude claims for prospective equitable relief. See Ex Parte Young, 209 U.S. 123, 155-56 (1908); Nieves-Márquez v. Commonwealth of Puerto Rico, 353 F.3d 108, 123 (1st Cir. 2003). "The Ex Parte Young doctrine permits suits to proceed against state officers in their official capacities to compel them to comply with federal law." Vaqueria Tres Monjitas, Inc. v. Irizarry, 587 F.3d 464, 477-478 (1st Cir. 2009) (citing Ex Parte Young, 209 U.S. at 123). The FirstCircuit explained that such suits "may only seek prospective injunctive or declaratory relief; they may not seek retroactive monetary damages or equitable restitution." Id. (citing Edelman v. Jordan, 415 U.S. 651, 664-65 (1974)).

In this case, PDCM seeks a permanent injunction to ensure that the government does not violate PDCM's rights by delaying a future contract and then not paying rent. Docket No. 1. Because Defendants do not argue against the declaratory relief claim, and the Court takes all allegations in the complaint as true, the claim survives the motion to dismiss stage against Defendants.

Now that Plaintiff's claims against Defendants in their official capacity are dealt with, the Court turns to the individually named Defendant's in their personal capacities.

III. Section 1983 Action

In order to establish liability under § 1983, plaintiffs "must show by a preponderance of the evidence that: (1) the challenged conduct was attributable to a person acting under color of state law; and (2) the conduct deprived the plaintiffs of rights secured by the Constitution or laws of the United States." Velez-Rivera v. Agosto-Alicea, 437 F.3d 145, 151-52 (1st Cir. 2006) (quoting Johnson v. Mahoney, 424 F.3d 83, 89 (1st Cir. 2005)). "Section 1983 only applies to persons acting under color of state law." Rehberg v. Paulk, 132 S. Ct. 1497, 1505 (2012). To determine whether a state actor was engaged in personal pursuits or acting under the color of state law, the Court must assess the state actor's conduct in light of the totality of the circumstances. Martínez v. Colón, 54 F.3d 980, 987 (1st Cir. 1995). "The key determinant is whether the actor, at the time in question, purports to act in an official capacity or to exercise official responsibilities pursuant to state law." Id. at 986 (citing West v. Atkins, 487 U.S. 42, 49 (1988)).

1. Takings Clause

The Fifth Amendment provides that "[n]o person shall . . . be deprived of life, liberty, or property, without due process of law . . . ." U.S. Const. amend. V; see also Gerena v. Puerto Rico Legal Services, 697 F.2d 447, 449 (1st Cir. 1983). The Takings Clause is applied to the states through the Fourteenth Amendment. Garcia-Rubiera v. Fortuño, 752 F. Supp. 2d 180, 188 (D.P.R. 2010) (citing Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 175 n.1 (1985)). The U.S. Supreme Court has recognized that most cases arising under the Takings Clause fall into one of two categories: where the government authorizes a physical occupation of property or actually takes title ("physical taking"), or where government regulation of the property's use unfairly singles out the property owner to bear a burden that should be borne by the public as a whole ("regulatory taking"). Yee v. City of Escondido, 503 U.S. 519, 522-23 (1992); see also Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982) ...