Asociacion De Suscripcion v. Juarbe-Jimenez
| Decision Date | 27 July 2009 |
| Docket Number | Civil No. 08-2261 (JP). |
| Citation | 642 F.Supp.2d 73 |
| Court | U.S. District Court — District of Puerto Rico |
| Parties | ASOCIACIÓN DE SUSCRIPCIÓN CONJUNTA DEL SEGURO DE RESPONSABILIDAD OBLIGATORIO, Plaintiff v. Dorelisse JUARBE-JIMÉNEZ, in her official capacity as Insurance Commissioner of the Commonwealth of Puerto Rico, Defendant. |
Ruben T. Nigaglioni, Veronica Ferraiuoli-Hornedo, Nigaglioni & Ferraiuoli Law Offices PSC, San Juan, PR, for Plaintiff.
Hector A. Marmol-Lantigua, Departamento de Justicia, San Juan, PR, for Defendant.
Before the Court is a motion to dismiss (No. 11) filed by Defendant Dorelisse Juarbe-Jiménez, in her official capacity as Insurance Commissioner of the Commonwealth of Puerto Rico ("Defendant" or "Commissioner"), and Plaintiff Asociación de Suscripción Conjunta del Seguro de Responsabilidad Obligatorio's (the "JUA") opposition thereto (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 to the United States Constitution. For the reasons stated herein, Defendant's motion is hereby DENIED.
On December 27, 1997, the Commonwealth of Puerto Rico enacted the Compulsory Motor Vehicle Liability Insurance Act, Act No. 253, as amended ("Law 253"), codified at P.R. Laws Ann. tit. 26, §§ 8051-8061, which establishes that liability insurance coverage is required for all motor vehicles in Puerto Rico that travel on public thoroughfares. See Asociación De Subscripción Conjunta Del Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 6 (1st Cir.2007). Accordingly, every vehicle owner in Puerto Rico must either: (1) pay the premium for compulsory liability insurance to the Secretary of the Treasury at the time she acquires or renews a vehicle registration; or (2) opt out of the compulsory liability insurance program by privately purchasing liability insurance with comparable or better coverage.
The Secretary of the Treasury is then supposed to transfer the compulsory insurance premiums to the JUA, minus a fee for the collection service. The JUA is a private corporation whose shareholders are different private insurance companies that sell motor vehicle insurance liability in Puerto Rico. After receiving the premiums from the Secretary of the Treasury, the JUA then distributes the funds collected from the compulsory insurance program among the participating private insurance companies for eventual distribution to the consumers.
On October 18, 1996, Defendant issued Rule LXIX to provide for the structure and operation of the JUA. Said Rule mandated, inter alia, that all members of the JUA shall share in the profits and losses of the [JUA] in the proportional participation of each of the members for the year for which such profits or losses are determined. Regulation No. 5493 of October 18, 1996, Article 8(1)-(2).
On December 28, 2000, Rule LXIX was generally amended and incorporated into Rule LXX. The provision regarding the JUA's profits and losses was amended as well. See Regulation No. 6254 of December 28, 2000; Rule LXX, Article 20(e)(2). The amended Rule states that participation in the profits is not to exceed the maximum percentage established by the Commissioner, which is currently set at five percent. Rule LXX also established a Special Reserve that "shall be used exclusively for the future stabilization of the premiums of the compulsory liability insurance and the future expansion of the benefits provided there under." Regulation No. 6254 of December 28, 2000; Rule LXX, Article 20(e)(2). Rule LXX specifically prohibits the distribution of the accumulated funds as profits to the members of the JUA. Since the enactment of Rule LXX, the JUA has set aside in a Special Reserve all profits in excess of the amounts allowed to be distributed to the JUA and its members. As of December 31, 2007, the Special Reserve totaled $118,776,812.00.
The JUA takes issue with the fact that Rule LXX limits the distribution of profits to five percent of the earned premiums from that year and directs profits in excess of those allowed to be distributed to be placed in a Special Reserve. The JUA claims that Rule LXX provides that the funds accumulated in the Special Reserve are to be used exclusively for a public purpose, and that it is prohibited from using or obtaining any benefit from the monies accumulated therein. Essentially, Plaintiff facially challenges Rule LXX by alleging that the establishment of the Special Reserve violates the Takings Clause of the United States Constitution because: (1) the JUA is being denied any beneficial use of its private property, and (2) the JUA's property is being used exclusively for a public purpose without just compensation to the JUA.
According to the Supreme Court, "once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007). As such, in order to survive a motion to dismiss, a complaint must state a claim to relief that is plausible on its face, not merely conceivable. Id. at 1974. The First Circuit has interpreted Twombly as sounding the death knell for the oft-quoted language of Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Rodriguez-Ortiz v. Margo Caribe, Inc., 490 F.3d 92, 94-95 (1st Cir.2007), quoting Twombly, 127 S.Ct. at 1969. Still, a court must "treat all allegations in the Complaint as true and draw all reasonable inferences therefrom in favor of the plaintiff." Rumford Pharmacy, Inc. v. City of East Providence, 970 F.2d 996, 997 (1st Cir.1992).
Defendant moves to dismiss the complaint for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted. Specifically, Defendant argues that: (1) Plaintiff's claims are not ripe for review since state remedies have not been exhausted, and (2) the Younger abstention doctrine applies. The Court will now consider Defendant's arguments in turn.
Defendant argues that the Court lacks subject matter jurisdiction over Plaintiff's claims because Plaintiff seeks federal judicial remedies without having first sought state relief through the Commonwealth's inverse condemnation procedures. It is well-established that a plaintiff is not required to exhaust administrative remedies prior to bringing a Section 1983 action. Asociación De Subscripción Conjunta Del Seguro De Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 14 (1st Cir.2007). However, the United States Supreme Court has adopted a set of ripeness requirements specifically applicable to Takings Clause actions. See Williamson County Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 194-196, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985). Williamson provides, in relevant part:
The Fifth Amendment does not proscribe the taking of property; it proscribes the taking of property without just compensation. Nor does the Fifth Amendment require that just compensation be paid in advance of, or contemporaneously with, the taking; all that is required is that a "reasonable, certain, and adequate provision for obtaining compensation" exist at the time of the taking.
Id. at 194, citations omitted. A takings claim is generally considered unripe if the claimant comes directly to a federal court without first seeking reimbursement through state procedures. Id. at 194-195.
Like in Williamson County, the case at bar involves a regulatory taking. In order to prevail on this type of takings claim, plaintiff must satisfy two independent prudential hurdles and show that he has: (1) received a final decision from the state on the use of his property, and (2) sought compensation through the procedures the state has provided for doing so (e.g. inverse condemnation). Williamson County, 473 U.S. at 194-195, 105 S.Ct. 3108.
The first prong of the Williamson County test asks whether a final and authoritative decision has been issued by the body responsible for applying the challenged regulations regarding how the regulations will be applied to the property in question. See Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 735, 738, 117 S.Ct. 1659, 137 L.Ed.2d 980 (1997); see also Flores Galarza, 484 F.3d at 15. The United States Court of Appeals for the First Circuit has stated that the main inquiry regarding the just compensation prong is whether the state makes available a process that is "particularly aimed at providing compensation when government action effects a taking." See Flores Galarza, 484 F.3d at 16.
A plaintiff in a takings case may be excused for failing to seek recourse from the state courts if all potential state remedies are unavailable or inadequate, but this exception is narrowly construed, and the claimant must carry the heavy burden of showing unavailability or inadequacy. Deniz v. Municipality of Guaynabo, 285 F.3d 142, 146 (1st Cir.2002). Any doubts must be resolved in favor of exhaustion; meaning that if a potential state law remedy exists, the plaintiff must at least attempt to pursue it. Id. In the instant case, Defendant claims that the Commonwealth's inverse condemnation remedy is available and adequate and Plaintiff failed to seek compensation through this state court remedy. The First Circuit has noted that "adequate procedures for seeking just compensation are available under Puerto Rico law" (referring specifically to an inverse condemnation remedy). SFW Arecibo, Ltd. v. Rodríguez, 415 F.3d 135, 139 (1st Cir.2005)....
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