Obligatorio v. Juarbe–jimÉnez

Decision Date29 September 2011
Docket NumberNo. 10–2167.,10–2167.
PartiesASOCIACIÓN DE SUSCRIPCIÓN CONJUNTA DEL SEGURO DE RESPONSABILIDAD OBLIGATORIO, Plaintiff, Appellant,v.Dorelisse JUARBE–JIMÉNEZ, in her official capacity as the Insurance Commissioner of the Commonwealth of Puerto Rico, Defendant, Appellee.
CourtU.S. Court of Appeals — First Circuit

OPINION TEXT STARTS HERE

Veronica Ferraiuoli Hornedo, with whom Nigaglioni and Ferraiuoli were on brief, for appellant.Susana I. Peñagaricano–Brown, Assistant Solicitor General, with whom Irene S. Soroeta–Kodesh, Solicitor General, Leticia Casalduc–Rabell, Acting Deputy Solicitor General, and Zaira Z. Girón–Anadón, Acting Deputy Solicitor General, were on brief, for appellee.

Before Lynch, Chief Judge, Boudin and Thompson, Circuit Judges.LYNCH, Chief Judge.

At issue is when a facial Takings Clause claim attacking a statute and regulations accrues for statute of limitations purposes. The district court concluded that the claim here was untimely. Asociación de Suscripción Conjunta del Seguro de Responsabilidad Obligatorio v. Juarbe–Jiménez, 720 F.Supp.2d 152 (D.P.R.2010). We agree and affirm the dismissal of this case.

I.

This case arises out of Puerto Rico's compulsory automobile liability insurance scheme. In December of 1995 the Commonwealth of Puerto Rico enacted Act 253, which required all motor vehicles to be covered by certain minimum automobile liability insurance. The purpose of the insurance is to cover “damages caused to motor vehicles of third parties as a result of a traffic accident, for which the owner of the vehicle covered by this insurance is legally liable and which, through its use, has caused said damages.” P.R. Laws Ann. tit. 26, § 8051.

At the same time, the Commonwealth created the Asociación de Suscripción Conjunta del Seguro de Responsabilidad Obligatorio (the Association) to provide compulsory liability insurance to those vehicle owners rejected by private insurers or who have opted out of purchasing liability insurance. We have held that the Association, while it was created “under some direction by the commonwealth,” is “private in nature.” Asociación De Suscripción Conjunta Del Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 20 (1st Cir.2007) (quoting Arroyo–Melecio v. P.R. Am. Ins. Co., 398 F.3d 56, 62 (1st Cir.2005)) (internal quotation marks omitted). This conclusion has since been reinforced by the passage of Act 201, in December 2009, which amends Act 253 and defines the Association as a “private Association.” P.R. Laws Ann. tit. 26, §§ 8052(c), 8055(a), amended by Act 201 of Dec. 29, 2009, arts. 3(c), 6(a). At present, the Association provides compulsory insurance for over 80 percent of the vehicles in Puerto Rico.1

The legislation which created the Association also gave the defendant Insurance Commissioner the power to regulate it. See P.R. Laws Ann. tit. 26, § 8055(c), (f). In 1996, through Regulation 5493, called Rule LXIX, the Commissioner set up a scheme which required the Association to annually determine its profits and losses in the same manner as in the Annual Statement required by the Insurance Code. More pertinently, that Rule also provided:

The Members shall share in the annual profits and losses of the Association in the proportional participation of each of the Members for the year for which such profit or losses are determined.

The “members” are all of the insurance carriers who are licensed to offer automobile insurance in Puerto Rico and underwrite more than one percent of the total volume of such premiums in Puerto Rico. P.R. Laws Ann. tit. 26, §§ 8052(b), 8055(a).

That allocation of profit was changed by the Commissioner in December 2000, by revisions contained in Regulation 6254, Rule LXX, as follows:

The members shall share in the annual profits or losses of the Association in the proportional participation of each of the members for the year for which such profits or losses are determined. With regards to the participation in the profits, the same shall not exceed the maximum percentage established in the premium dollar for the profit, applying the earned premiums for said year.

The profit for each year in excess of the amounts distributed due to the participation provided for in this paragraph shall be accumulated in a special reserve that shall be exclusively used for the future stabilization of the premiums of the compulsory liability insurance and the future expansion of the benefits provided there under. Under no circumstance shall the excess accumulated in this reserve be used for the distribution of profits provided for in the previous paragraph.

Pursuant to this December 2000 regulation, which is located in Article 20(e) of Rule LXX, the Commissioner established that the Association's members may receive a distribution of up to a maximum of five percent of the annual premium profits.2 The remaining 95 percent of the profits must be placed in the Special Reserve, where they must remain until the Association chooses to use them to stabilize premiums or expand benefits. Neither the Association, nor its members, challenged this rule when it was enacted.

Eventually, the Commissioner required an audit of these distributions and the Special Reserve fund. On June 12, 2008, the Commissioner issued a resolution resulting from an audit of the Association for the period from July 1, 2001 to December 31, 2004. In the resolution, the Commissioner stated that distributions to members were capped at five percent of the annual premium profits and could not include any distribution of investment income 3 or “other” income.4 All investment and “other” income must be placed in the Special Reserve.

The resolution also indicated that distributions to members in any given year could not exceed the net underwriting gain for that year. Based on the audit findings, the resolution ordered the Association to recover $8,266,767 in non-complying distributions issued to members for the 20012004 audit period. Additionally, because the Association realized a net underwriting loss in 2005, the Association was directed to recover the full distribution to members in that year, amounting to $7,593,556.5

The Puerto Rico Court of Appeals upheld these portions of the audit against claims by the Association that the Commissioner lacked statutory authority to impose restrictions on the distribution of investment and other income. 6 Comm'r of Ins. v. Compulsory Liab. Ins. Joint Underwriting Ass'n, No. E–2005–62, KLRA200801403, 2009 WL 2419983 (P.R.Cir. May 19, 2009).7

The Association asserts that it has complied with these requirements in the sense that it has put into the Special Reserve all income in excess of the amount it was allowed to distribute to its members. It is unclear whether the Association has complied with the audit resolution. As of December 31, 2008, the Special Reserve contained $159,267,250 in undistributed profits.

The Association protests that it cannot be made to place all of the profits (aside from the five percent distribution to its members) into the Special Reserve fund, to be used only for the benefit of the consumer insureds, because these restrictions amount to an unconstitutional taking. It also makes on appeal a related argument that it cannot be forced to include in this Reserve its investment income and its other income, as is required by the 2008 audit resolution.

II.

On November 4, 2008, the Association brought suit against Puerto Rico Insurance Commissioner Dorelisse Juarbe–Jiménez pursuant to 42 U.S.C. § 1983, arguing that the Insurance Commissioner's limitation on the distribution of profits to the Association's members, in conjunction with the restrictions placed on the use of the Special Reserve funds, constituted a taking without just compensation in violation of the Fifth Amendment's Takings Clause. The complaint requested a declaration that Article 20(e)(2) of Rule LXX was unconstitutional under the Takings Clause and that the Commissioner be enjoined from enforcing that provision.

The Commissioner filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) on the basis that the Association's claim was unripe because the Association had failed to seek compensation through Puerto Rico's inverse condemnation procedures. See Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985); Downing/Salt Pond Partners, L.P. v. Rhode Island, 643 F.3d 16 (1st Cir.2011).

Attempting to avoid this ripeness problem, the Association conceded, in its “Opposition to Motion to Dismiss,” that its claim “would be unripe” if the claim were an as-applied claim, but asserted that because what it had “mount [ed] [was] a facial challenge to the regulation,” its claim was ripe the moment that Rule LXX was issued.

On November 16, 2009, the Association and the Commissioner filed cross-motions for summary judgment. On June 25, 2010, the district court granted the Commissioner's motion for summary judgment and denied the Association's motion because it determined that the Association's facial challenge to Rule LXX was time-barred by the statute of limitations. Asociación de Suscripción, 720 F.Supp.2d at 159. The district court reasoned that because the Association was bringing a facial challenge to Rule LXX, the statute of limitations accrued when Rule LXX was enacted on December 28, 2000. Id. at 157. Further, the district court explained, § 1983 claims in Puerto Rico carry a one-year statute of limitations. Id. (citing Morán Vega v. Cruz Burgos, 537 F.3d 14, 20 (1st Cir.2008)). Because the Association did not file its complaint until November 4, 2008, the district court determined that its claim was time-barred. Id. at 157, 159.

III.

“Our review of the grant of summary judgment is de novo, taking all facts and reasonable inferences in the light most favorable to [the Association], the nonmoving party.” Sterling Merch., Inc. v. Nestlé, S.A., 656...

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