Celta Const. v. Dept. of Housing and Urban Devel.

• Decision Date: 23 September 2004
• Docket Number: Civil No. 03-1539 (JAG).
• Parties: CELTA CONSTRUCTION, et al., Plaintiffs v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

337 F.Supp.2d 396

CELTA CONSTRUCTION, et al., Plaintiffs v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, et al., Defendants.

Civil No. 03-1539 (JAG).

United States District Court, D. Puerto Rico.

September 23, 2004.

Miguel Redondo-Borges, Rio Piedras, PR, pro se.

Veronica Cordero-Candelaria, San Juan, PR, for Plaintiffs.

Agnes I. Cordero, Ana M. Margarida-Julia, San Juan, PR, for Defendants.

OPINION AND ORDER

GARCIA-GREGORY, District Judge.

On May 19, 2003, Plaintiffs Celta Construction, Inc. ("Celta"), Miguel Redondo Borges ("Redondo"), Carmen Rafuls Fernandez, and the conjugal partnership constituted between them (collectively "plaintiffs"), filed suit against the United States Department of Housing and Urban Development ("HUD"), HUD Secretary Mel Martinez ("Matinez"), HUD Grant Manager Thomas Teresi ("Teresi"), and HUD Caribbean Director Michael Colon ("Colon")(collectively the "federal defendants"); and Secretary of the Puerto Rico Public Housing Authority ("PRPHA") Ileana Echegoyen ("Echegoyen"), President of the PRPHA's Public Auctions Board Jorge Rivera ("Rivera"), and PRPHA Administrator Carlos Laboy Diaz ("Laboy")(collectively the "state defendants"),¹ alleging claims of due process violations and breach of contract (Docket No. 21). On December 1, 2003, HUD moved for dismissal of plaintiffs' claims against it for lack of jurisdiction (Docket No. 22). On December 5, 2003, defendant state officers Echegoyen, Rivera, and Laboy moved for dismissal of the claims against them (Docket No. 23). On December 24, 2003, HUD and defendant federal officers Teresi, Martinez, and Colon moved for dismissal for lack of in personam jurisdiction (Docket No. 28).

On March 27, 2004, the motions were referred to Magistrate-Judge Gustavo A. Gelpi for a Report and Recommendation (Docket Nos. 32, 33). On June 23, 2004, Magistrate-Judge Gelpi recommended that the Court grant the federal defendants' motion to dismiss (Docket Nos. 22), stating that the Court lacked jurisdiction to entertain the claims against them (Docket No. 40). On that same date and on a separate Report and Recommendation, Magistrate-Judge Gelpi also recommended the Court grant the state defendants' motion to dismiss based on its previous recommendation (Docket No. 41). For the reasons discussed below, the Court MODIFIES and ADOPTS the Report and Recommendations.

FACTUAL BACKGROUND²

Redondo is the president of Celta. On December 4, 2001, the PRPHA awarded Celta a contract for the restoration of the Lirios del Sur Housing Project in Ponce, Puerto Rico. The funds for the contract were assigned by HUD to the Commonwealth of Puerto Rico as part of HUD's Drug Elimination Program. By letter dated May 21, 2002, PRPHA informed Redondo that it was canceling the contract awarded to Celta following its determination that Redondo was a "nonresponsible bidder". The determination was based on Redondo's participation as the principal of another PRPHA contractor allegedly in breach of its obligations.³ Following the classification as a "nonresponsible bidder", Redondo has found himself disqualified from bidding on any other government projects. Because the determination was published in a local newspaper, Redondo claims that he has also been prevented from being awarded contracts in the private sector.

DISCUSSION

A. Standard for Reviewing a Magistrate-Judge's Report and Recommendation

A District Court may, on its own motion, refer a pending motion to a U.S. Magistrate-Judge for a Report and Recommendation. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b); Local Rule 72(a). Pursuant to Fed.R.Civ.P. 72(b) and Local Rule 72(d), the adversely affected party may contest the Magistrate-Judge's Report and Recommendation by filing written objections "[w]ithin ten days of being served" with a copy of the order. See 28 U.S.C. § 636(b)(1). Since defendants have filed timely objections to the Magistrate-Judge's Report and Recommendation, the Court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which specific objection is made. See United States v. Raddatz, 447 U.S. 667, 673, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980); Lopez v. Chater, 8 F.Supp.2d 152, 154 (D.P.R.1998).

B. Motion to Dismiss Standard.

In a jurisdictional challenge, "the standard applied to a 12(b)(1) motion is similar to the standard applied to a 12(b)(6) motion, namely, the Court must take all of plaintiff's allegations as true and must view them, along with all reasonable inferences therefrom, in the light most favorable to plaintiff." Pejepscot Indus. Park v. Maine Cent. R.R., 215 F.3d 195, 197 (1st Cir.2000); see also Freiburger v. Emery Air Charter, Inc., 795 F.Supp. 253, 257 (N.D.Ill.1992); Hart v. Mazur, 903 F.Supp. 277, 279 (D.R.I.1995). Once the challenge has been raised, however, the plaintiff carries the burden of demonstrating the existence of the Court's jurisdiction. See Puerto Rico Tel. Co. v. Telecom. Regulatory Bd., 189 F.3d 1, 7 (1st Cir.1999).

Pursuant to Fed.R.Civ.P. Rule 12(b)(6), a complaint may not be dismissed unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief. See Brown v. Hot, Sexy, and Safer Prods., Inc., 68 F.3d 525, 530 (1st Cir.1995). The Court accepts all well-pleaded factual allegations as true, and draws all reasonable inferences in plaintiff's favor. See Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir.1990). The Court need not credit, however, "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like" when evaluating the Complaint's allegations. Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir.1996). When opposing a Rule 12(b)(6) motion, "a plaintiff cannot expect a trial court to do his homework for him." McCoy v. Massachusetts Institute of Tech., 950 F.2d 13, 22 (1st Cir.1991). Plaintiffs are responsible for putting their best foot forward in an effort to present a legal theory that will support their claim. Id. at 23 (citing Correa-Martinez, 903 F.2d at 52). Plaintiffs must set forth "factual allegations, either direct or inferential, regarding each material element necessary to sustain recovery under some actionable theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir.1988).

C. The Federal Defendants' Motions to Dismiss

Magistrate-Judge Gelpi recommended that the Court grant the federal defendants' motions to dismiss because (1) the Tucker Act grants exclusive jurisdiction to the Court of Federal Claims over claims against the United States exceeding $10,000 and plaintiffs seek an excess of $4,000,000 in damages; (2) Celta failed to indicate the provisions of the Privacy Act allegedly violated by the PRPHA's release of the responsibility assessment; and (3) plaintiffs' request for equitable relief is incidental to their Tucker Act claim for breach of contract and, thus, the Court of Federal Claims is authorized to grant such equitable relief.

Plaintiffs object, arguing (1) that HUD has waived its sovereign immunity through the National Housing Act; (2) that the Administrative Procedures Act and the Administrative Dispute Resolution Act also amount to waivers of immunity which allow the District Courts to afford remedies to plaintiffs if they prevail; (3) that the Tucker Act is inapplicable to this case; (4) that it is the monetary relief requested which is incidental to the equitable and declaratory relief requested; and (5) that they have validly stated a Privacy Act claim.

Upon de novo review of the objections, the Court finds it unnecessary to reach the question of sovereign immunity inasmuch as it finds that plaintiffs have failed to state a valid claim against the federal defendants, and will dismiss on those grounds.⁴ The amended complaint alleges a number of actions and alleged violations performed by the PRPHA and the state defendants. The only basis of HUD's liability, however, is that it "was fully aware of the [PRPHA]'s absolute disregard of award procedures, and did not correct nor adequately supervise the wrongdoing of the Contracting Officer that it was funding." (Docket No. 21 at 6, ¶ 21).

Plaintiffs argue, without citing any authority, statutory or otherwise, that "HUD forms, regulations, and opinions guided the entire contracting process between bidders and the local agency. Furthermore, HUD retained control over all the process and had the faculty of terminating and contracts [sic] if its conditions ... were not fulfilled to its satisfaction." (Docket No 26 at 12, ¶ 44). Moreover, they argue that HUD had knowledge of irregularities in PRPHA's procurement processes because it periodically conducted "Limited Procurement Management System Reviews" to monitor PRPHA's bidding process "and the performance of the employees acting as its Contracting Officers." (Id. at ¶ 45). They also claim that Redondo himself notified HUD of irregularities in the procurement process. Plaintiffs only proffer as evidence in of support their contention a report of one of those reviews sent by an officer from HUD's Caribbean Office of Public Housing listing certain deficiencies in PRPHA's procurement process found during an audit by the Office of the Inspector General. (Docket No. 12, Exh. 2).⁵

But while plaintiffs may have established that HUD has some overview of PRPHA's procurement process, albeit limited to ensuring compliance with federal regulations, they fail to demonstrate how that limited overview extends over PRPHA's decision to terminate a contract with a contractor it deems "nonresponsible" or that HUD has some control over how PRPHA determines who is or is not a "responsible" bidder. They fail to establish what duty, if any, HUD owed them. Without this showing, and without any authority to support their contention, plaintiffs' arguments amount to bald assertions or unsupportable conclusions, that need not be credited by the Court when evaluating...