American Conveyor Corp. v. Municipality of Guanica

• Decision Date: 18 July 1985
• Docket Number: Civ. No. 84-2621(PG).
• Citation: 614 F. Supp. 922
• Parties: AMERICAN CONVEYOR CORPORATION, Plaintiff, v. MUNICIPALITY OF GUANICA, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

614 F. Supp. 922

AMERICAN CONVEYOR CORPORATION, Plaintiff, v. MUNICIPALITY OF GUANICA, et al., Defendants.

Civ. No. 84-2621(PG).

United States District Court, D. Puerto Rico.

July 18, 1985.

COPYRIGHT MATERIAL OMITTED

Goldman & Antonetti, Santurce, P.R., for plaintiff.

Doris Hernandez Diaz, Dept. of Justice, Federal Litigation Div., San Juan, P.R., for defendants.

OPINION AND ORDER

PEREZ-GIMENEZ, Chief Judge.

Present before the Court is co-defendants Municipal Services Administration (MSA) and Emilio Ortiz Colón's, in his capacity as Administrator of MSA, motion to dismiss for failure to state a claim and for lack of subject matter jurisdiction or in the alternative for summary judgment. Plaintiff filed its opposition thereto.

American Conveyor Corporation (Conveyor) brought this action for declaratory, injunctive relief and money damages for the alleged violation of plaintiff's rights under the Constitution and laws of the United States and Puerto Rico. The plaintiff's claims are brought under the Declaratory Judgment Act, 28 U.S.C. § 2201; the Civil Rights Act, 42 U.S.C. § 1983; and Title I of the Housing and Community Development Act of 1974, 42 U.S.C. § 5301, et seq. Jurisdiction is predicated on 28 U.S.C. § 1331 (federal question); 28 U.S.C. § 1343(a)(3) and (4) (civil rights); and 28 U.S.C. § 1332 (diversity of citizenship).

On or about July 20, 1984, co-defendant Board of Awards of the Municpality of Guánica¹ (Board of Awards) awarded co-defendant Intendance of International Consultants, Inc.,² (Intendance) the construction of a packing house for vegetables and fruits and the construction of an irrigation drip system. The plaintiff alleges that this contract for the construction of the packing house should have been awarded to it and the contract for the construction of the drip irrigation system should have been awarded to Netafin Irrigation, Inc.,³ rather than to Intendance because they submitted lower responsible bids.

The first cause of action of the complaint states that the arbitrary and capricious decision to award the contracts to Intendance violated the due process and equal protection clauses of the United States Constitution and the Constitution of Puerto Rico, as well as the state laws.

In the second cause of action plaintiff prays for injunctive relief because it contends that there is no adequate remedy at law.

As a third cause of action plaintiff alleges that the acts of defendants Municipality of Guánica, (Guánica) the Board of Awards and the Honorable Ludovino Garcia Salcedo, in his capacity as Mayor of Guanica, having taken place under color of law, violated plaintiff's rights under 42 U.S.C. § 1983.

Defendants MSA and its Administrator, Emilio Ortiz Colón, are included as parties in the complaint because "said administrative body is the disbursing agency for federal funds made available under Title I of the Housing and Community Development Act of 1974; and has the responbility to disburse such funds in accordance with said Act and regulations and in the exercise of such functions to protect the interests of the United States in the valid disbursements and utilization of those funds." (Complaint par. 40).

Defendants allege that there is no diversity jurisdiction because co-defendants are really the Commonwealth of Puerto Rico and a state cannot be a citizen for diversity purposes.

If the defendant is a municipality, municipal agent, or an officer thereof, the general rule is that the Eleventh Amendment to the United States Constitution will not bar the action since these entities are not considered arms of the state. 13 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d, § 3524, at 130. Defendants have failed to establish that MSA and its administrator are an alter ego of the Commonwealth of Puerto Rico. The independence or alter ego status of a political subdivision of a state is determined by examining state law. Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d, § 3602, at 369-370. The law that creates a municipality in Puerto Rico provides that it has a legal existence and personality separate and independent from the Government of the Commonwealth of Puerto Rico. 21 L.P. R.A. § 2051. Among the general powers that a municipality shall have is the power to sue and be sued, charge and be charged, file complaints and defend itself in the courts of justice and in the administrative bodies. 21 L.P.R.A. § 2054. A municipality that is independent in character and functions from the state may be considered a "citizen" for purposes of diversity jurisdiction. Reeves v. City of Jackson, 532 F.2d 491 (5th Cir.1976). Thus, MSA and its administrator, Mr. Ortiz Colón, are considered citizens within the meaning of the diversity of citizenship statute. 28 U.S.C. § 1332.

Defendants also contend that plaintiff is barred from seeking injunctive relief because it did not exhaust the state's administrative and judicial remedies.

A court will generally refuse to grant injunctive relief unless plaintiff shows that he does not have an adequate legal remedy⁴ or that he has exhausted any available administrative remedies. 11 Wright & Miller, Federal Practice and Procedure: Civil § 2944. Before challenging a state action in federal court a litigant must normally exhaust "legislative" or "administrative" remedies. 17 Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 4233, at 371. However, said litigant need not normally exhaust state "judicial" remedies. Id., at 371-372.

Section 3402(a) of Title 21, L.P.R.A., confers on any aggrieved party the right within 20 days to bring an action in the Superior Court of Puerto Rico against the Assembly, the Board of Awards, the Mayor or any municipal official to review or annul any legislative or administrative action which infringes the constitutional rights of the complainants or which is contrary to the laws of Puerto Rico. Section 3402(b) confers on any party aggrieved the right to bring a judicial action to stay the execution of any resolution or order of the Assembly, the Board of Awards, the Mayor, or any municipal official within 20 days from the date when it has been promulgated or communicated to the complainant. The function of the Superior Court of Puerto Rico under the statutory mandate is judicial, to stay the execution of any ordinance or decision, resolution or order of the Assembly, the Board of Awards, the Mayor or any municipal officer, or to review or annul any legislative or administrative action if violative of rights guaranteed by the Constitution or bylaws of the Commonwealth of Puerto Rico. See, e.g., Porter v. Investors Syndicate, 286 U.S. 461, 468, 52 S.Ct. 617, 619, 76 L.Ed. 1226 (1931).

Furthermore, when federal claims are premised on 42 U.S.C. § 1983 and 28 U.S.C. § 1343(a)(3) there is no need to exhaust state judicial or administrative remedies. Steffel v. Thompson, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974).

Plaintiff's opposition to MSA and Ortiz Colón's motion to dismiss or in the alternative for summary judgment, filed on January 8, 1985, is almost identical to plaintiff's opposition to co-defendants Guánica, Intendance, Garcia Salcedo and the Board of Awards' motion for summary judgment.

In view that the same legal issues are raised in both motions and oppositions they will be decided in one opinion and order.

Co-defendants Guánica, Intendance, Ludovino Garcia Salcedo, in his capacity of Mayor of Guánica, and the Board of Awards filed on December 13, 1984, a motion for summary judgment. Co-defendants request the Court to dismiss the complaint because it is time barred. Plaintiff filed its opposition thereto on January 8, 1985.

After examining the pleadings, their annexed exhibits and supporting affidavits, in the light most favorable to plaintiff, the record in this case now reveals no genuine issue of material fact and that defendants are entitled to judgment as a matter of law.

Findings of Fact

1. On June 1984 co-defendant Guánica let out an invitation to bid on certain contracts for the construction of a packing plant for vegetables and fruits and for the construction of an irrigation drip system.

2. Plaintiff, Conveyor, bid only with respect to the packing plant.

3. Co-defendant Intendance made a combined bid on both projects.

4. Guánica awarded a contract for both projects to Intendance on July 30, 1984. Conveyor was notified on August 8th of Guánica's decision.

5. On August 13th Conveyor sent a letter to Guánica protesting the award to Intendance.

6. Guánica never answered the letter and Conveyor did nothing else relative to its protest until filing the present complaint on October 18, 1984. (See affidavit of Mr. Ludovino Garcia Salcedo, former Mayor of Guánica and former member of the Board of Awards of Guánica.)

Conclusions of Law

Co-defendants, assuming that plaintiff pled the first two causes of action under the diversity statute, contend that the Puerto Rico substantive law prevails and, thus, the first two causes of action are barred by the statute of limitations contained in 21 L.P.R.A. § 3402. They further contend that the third cause of action, which relies on 42 U.S.C. § 1983, is also time barred because it incorporates by reference all material paragraphs of the first cause of action; and, therefore, the "most analogous" statute to the third cause of action is 21 L.P.R.A. § 3402.

Plaintiff alleges that its claims for monetary, declaratory and injunctive relief are based principally on 42 U.S.C. § 5301, et seq. (Title I of the Housing and Community Development Act of 1974), 42 U.S.C. § 1983 (Civil Rights Act) and the due process clause of the 5th and 14th Amendments to the United States Constitution. Jurisdiction is invoked pursuant to 28 U.S.C. § 1331 (Federal Question), 28 U.S.C. § 1343(a)(3), (4) (Civil Rights and Elective Franchise), and 28 U.S.C. § 1332 (Diversity of Citizenship).

Plaintiff argues that...