Construction Aggregates Corp. v. Rivera De Vicenty, No. 77-1399

CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)
Writing for the CourtBefore COFFIN, Chief Judge, CAMPBELL and BOWNES; LEVIN H. CAMPBELL; The rules of a Burford abstention are perhaps best understood by reference to the facts of the various decisions in which they have been applied. The earliest, Hawks v. Hamill, supra
Citation573 F.2d 86
PartiesCONSTRUCTION AGGREGATES CORP., Plaintiff, Appellant, v. Julia RIVERA de VICENTY et al., Defendants, Appellees.
Decision Date14 March 1978
Docket NumberNo. 77-1399

Page 86

573 F.2d 86
CONSTRUCTION AGGREGATES CORP., Plaintiff, Appellant,
v.
Julia RIVERA de VICENTY et al., Defendants, Appellees.
No. 77-1399.
United States Court of Appeals,
First Circuit.
Argued Dec. 8, 1977.
Decided March 14, 1978.

Page 88

Jay A. Garcia Gregory, with whom Fiddler, Gonzalez & Rodriguez, San Juan, P.R., was on brief, for plaintiff, appellant.

Reina Colon de Rodriguez, Asst. Sol. Gen., Dept. of Justice, and Fidel A. Sevillano Del Rio, San Juan, P.R., with whom Hector A. Colon Cruz and Ronaldo Rodriguez Ossorio, San Juan, P.R., were on brief, for defendants, appellees.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

This appeal concerns the limits of Puerto Rico's authority to apply its workmen's compensation law to various categories of seamen, a question already addressed in many previous decisions. 1 Beyond that it also raises complicated federal abstention questions.

Construction Aggregates Corp. ("Construction") brought suit in the United States District Court for the District of Puerto Rico in January, 1975, alleging both federal question and diversity jurisdiction and seeking a declaratory judgment and an injunction against the manager of the State Insurance Fund of the Commonwealth, the Puerto Rico Ports Authority, and the Commonwealth. Construction then moved for summary judgment after submitting certain documents. The defendants responded with motions to dismiss. The district court heard argument on the motions in August, 1975, and in April, 1977. In June, 1977 the district court ruled that no material facts were in dispute, that the eleventh amendment required dismissal of the Commonwealth as a defendant, and that principles of abstention required dismissal against all other defendants. Construction appeals from the judgment that followed.

The dispute was a consequence of the hiring of Construction by the Puerto Rico Ports Authority to dredge San Juan harbor. The parties contracted in August, 1970, and work progressed until completion. Before beginning operations Construction took out a workmen's compensation policy with the State Insurance Fund of the Commonwealth to cover the payroll period between January 1, 1971, and December 31, 1973. On January 14, 1974, Construction notified the Ports Authority that work had been completed and requested its final payment. The Ports Authority asked for several supporting documents from Construction which were required by the contract, including a letter of release from the State Insurance Fund. Construction was unable to obtain this letter, as the Insurance Fund was in the process of recalculating Construction's liability under its policy. In order to expedite the release of the final payment, Construction agreed to give the Ports Authority an irrevocable letter of credit, permitting it to draw up to $380,000 from Construction's account upon presentation of final notice of collection by the Insurance Fund for premiums owed. On December 10, 1974, the manager of the Insurance Fund notified Construction that its obligations under the policy had been recalculated and increased from $40,332 to $419,037.14, creating a deficiency of $378,705.14. Construction filed a petition for review of this assessment with the Industrial Commission of Puerto Rico on January 8, 1975. It brought this suit nine days later, and on July 14, 1975, the Industrial Commission granted Construction's motion to stay its proceedings until the district court had determined whether it would assume jurisdiction over the dispute. 2

Page 89

The core of the present controversy is the amount Construction owes on its workmen's compensation policy. An important aspect of the question is which of Construction's employees are subject to Puerto Rican workmen's compensation coverage, and which are exempt. Of the total sum claimed by the Insurance Fund, Construction alleges $109,800.51 is attributable to the payroll of seamen who were hired in the continental United States; $92,771.27 to the payroll of seamen who were hired in Puerto Rico; and $45,808.56 to technical personnel allegedly exempted from Puerto Rico's workmen's compensation statute through a provision in that enactment. Duplicate insurance coverage obtained from private carriers applied to all of the above employees. Construction contends the above assessments are illegal. It further argues, in the alternative, that the assessment for locally hired seamen should in no event exceed $20,808.51. It also asserts that excessive rates were applied to the balance of its payroll and proposes a substantial reduction. According to Construction, its total deficiency should not exceed $56,733.74, not including the cost of covering locally hired seamen.

As a matter collateral to the primary dispute, Construction seeks to have its letter of credit declared a nullity and to obtain an injunction against any collection on it by the Ports Authority. According to Construction, the Ports Authority cannot under Puerto Rican law be liable for any injuries suffered by employees of Construction, and as a result there was no consideration for the letter of credit. Inasmuch as Construction does not contest all of the deficiency assessed by the State Insurance Fund, the enforceability of this agreement will not be mooted by the outcome of proceedings before the Industrial Commission.

Abstention

In dismissing this suit, the district court stated that "(m)ost of the matters brought forth in the complaint are totally lacking in federal aspects" and that those federal claims presented could be resolved either by the Industrial Commission or the Puerto Rico Courts. Relying on Alabama Public Service Commission v. Southern Ry. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951); Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943); and Hawks v. Hamill, 288 U.S. 52, 53 S.Ct. 240, 77 L.Ed. 610 (1933), the district court held it inappropriate for a federal court to be involved at all.

The branch of the abstention doctrine relied upon by a district court called by some a "Burford " abstention is particularly difficult to define and apply. Unlike abstention in cases originating with Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), this type of abstention calls for the surrender of federal jurisdiction, not its mere postponement; and there need be present neither a constitutional issue nor a difficult and unresolved question of state law. See generally Field, Abstention in Constitutional Cases: The Scope of the Pullman Abstention Doctrine, 122 U.Pa.L.Rev. 1071, 1153-63 (1974). It is not necessary that there be a collateral ongoing proceeding in the state court. Compare Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 97 S.Ct. 2881, 53 L.Ed.2d 1009 (1977); Trainor v. Hernandez, 431 U.S. 434, 97 S.Ct. 1911, 52 L.Ed.2d 486 (1977); Juidice v. Vail, 430 U.S. 327, 97 S.Ct. 1211, 51 L.Ed.2d 376 (1977); Huffman v. Pursue, Ltd., 420 U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975); Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971); cf. Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236,

Page 90

47 L.Ed.2d 483 (1976). See generally Fiss, Dombrowski, 86 Yale L.J. 1103 (1977); Field, supra at 1163-87. Rather, under the Burford -type abstention, the federal courts defer primarily because of the nature of the state regulatory interest in a particular subject matter and the potential for disruption engendered by federal intervention. Hence the doctrine may at times entirely displace the general rule that exhaustion of state administrative remedies is not a prerequisite to assertion of federal civil rights claims against state officials. 3

The rules of a Burford abstention are perhaps best understood by reference to the facts of the various decisions in which they have been applied. The earliest, Hawks v. Hamill, supra, involved an impairment of contracts claim based on an alleged perpetual franchise for a toll bridge. The state supreme court had held perpetual grants to be prohibited by the state constitution. In refusing to place a different construction on the state constitution, the Supreme Court, per Cardozo, J., buttressed its decision by reference to equitable principles of abstention:

"Caution and reluctance there must be in any case where there is the threat of opposition, in respect of local controversies, between state and federal courts. Caution and reluctance there must be in special measure where relief, if granted, is an interference by the process of injunction with the activities of state officers discharging in good faith their supposed official duties. . . . Reluctance there has been to use the process of federal courts in restraint of state officials though the rights asserted by the complainants are strictly federal in origin. . . . There must be reluctance even greater when the rights are strictly local, jurisdiction having no other basis than the accidents of residence. The need is clamant in such circumstances for cautious hesitation."

288 U.S. at 60-61, 53 S.Ct. at 243.

The principles espoused in Hawks ripened into a holding in Burford. Sun Oil Co. attacked on due process and state law grounds the validity of a Texas Railroad Commission Order permitting Burford to drill certain wells in the East Texas oil fields. The Court began by noting:

"Although a federal equity court does have jurisdiction of a particular proceeding, it may, in its sound discretion, whether its jurisdiction is invoked on the ground of diversity of citizenship or otherwise, 'refuse to enforce or protect legal rights, the exercise of which may be prejudicial to the public interest'; for it 'is in the public interest that federal courts of equity should exercise their discretionary power with proper regard for the rightful independence of state governments in carrying out their domestic policy.' "

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  • Carico Investments v. Texas' Alcoholic Beverage, Civil Action 11-03-5532.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • July 24, 2006
    ...and most difficult to apply, of the various types of abstention doctrines. See, e.g., Construction Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 89-90 (1st Cir.1978); Bally Mfg. Corp. v. Casino Control Comm'n of New Jersey, 534 F.Supp. 1213, 1221 There are several factors relevant to ......
  • NAACP v. State of Cal., Civ.No. S-79-857 MLS.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • April 3, 1981
    ...Tahoe Regional Planning Agcy., supra; Whitner v. Davis, 410 F.2d 24 (9th Cir. 1969); Construction Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86 (1st Cir. 1978); Rochester v. White, 503 F.2d 263 (3d Cir. 1974); Ad Hoc Committee on Jud. Admin. v. Commonwealth of Mass., 448 F.2d 1241 (1st......
  • Romero-Barcelo v. Brown, ROMERO-BARCEL
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • January 26, 1981
    ...not part of the record and we therefore disregard it in our decision of this case. See Construction Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 95 n.7 (1st Cir. 1978); Rosen v. Lawson-Hemphill, Inc., 549 F.2d 205, 206 (1st Cir. 1976). To do otherwise would be contrary to Federal Rul......
  • Bally Mfg. Corp. v. CASINO CONTROL COM'N, Civ. A. No. 81-450
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 9, 1982
    ...at 768. Burford-type abstention is the least well-defined and most difficult to apply. Constr. Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 89 (1st Cir. 1978). The Supreme Court has used sweeping language to summarize its range. It has been said to apply "where exercise of jurisdicti......
  • Request a trial to view additional results
30 cases
  • Carico Investments v. Texas' Alcoholic Beverage, Civil Action 11-03-5532.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • July 24, 2006
    ...and most difficult to apply, of the various types of abstention doctrines. See, e.g., Construction Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 89-90 (1st Cir.1978); Bally Mfg. Corp. v. Casino Control Comm'n of New Jersey, 534 F.Supp. 1213, 1221 There are several factors relevant to ......
  • NAACP v. State of Cal., Civ.No. S-79-857 MLS.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • April 3, 1981
    ...Tahoe Regional Planning Agcy., supra; Whitner v. Davis, 410 F.2d 24 (9th Cir. 1969); Construction Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86 (1st Cir. 1978); Rochester v. White, 503 F.2d 263 (3d Cir. 1974); Ad Hoc Committee on Jud. Admin. v. Commonwealth of Mass., 448 F.2d 1241 (1st......
  • Romero-Barcelo v. Brown, ROMERO-BARCEL
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • January 26, 1981
    ...not part of the record and we therefore disregard it in our decision of this case. See Construction Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 95 n.7 (1st Cir. 1978); Rosen v. Lawson-Hemphill, Inc., 549 F.2d 205, 206 (1st Cir. 1976). To do otherwise would be contrary to Federal Rul......
  • Bally Mfg. Corp. v. CASINO CONTROL COM'N, Civ. A. No. 81-450
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 9, 1982
    ...at 768. Burford-type abstention is the least well-defined and most difficult to apply. Constr. Aggregates Corp. v. Rivera de Vicenty, 573 F.2d 86, 89 (1st Cir. 1978). The Supreme Court has used sweeping language to summarize its range. It has been said to apply "where exercise of jurisdicti......
  • Request a trial to view additional results

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