Culebras Enterprises Corp. v. Rivera Rios

• Decision Date: 11 March 1987
• Docket Number: 86-1011,Nos. 85-1924,s. 85-1924
• Citation: 813 F.2d 506
• Parties: CULEBRAS ENTERPRISES CORP., et al., Plaintiffs, Appellants, v. Miguel A. RIVERA RIOS, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 506

813 F.2d 506

55 USLW 2506

CULEBRAS ENTERPRISES CORP., et al., Plaintiffs, Appellants, v. Miguel A. RIVERA RIOS, et al., Defendants, Appellees.

Nos. 85-1924, 86-1011.

United States Court of Appeals, First Circuit.

Argued Sept. 5, 1986.

Decided March 11, 1987.

Edward M. Borges, Hato Rey, P.R., with whom O'Neill & Borges, Jaime Sifre Rodriguez and Cepeda, Sanchez-Betances & Sifre, Hato Rey, P.R., were on brief, for plaintiffs, appellants.

Isabel Pico-Vidal, Asst. Sol. Gen., with whom Rafael Ortiz Carrion, Sol. Gen., and Reina Colon De Rodriguez, Acting Deputy Sol. Gen., were on brief, for defendants, appellees.

Before CAMPBELL, Chief Judge, BOWNES, Circuit Judge, and WOLF, ^* District Judge.

LEVIN H. CAMPBELL, Chief Judge.

This appeal is from the district court's denial of damages in an action brought under 42 U.S.C. Sec. 1983 (1982) by corporate real estate developers against present and former members of the Puerto Rico Planning Board; against the Culebra Conservation and Development Authority; and against the members of that Authority, who include the Mayor of the Municipality of Culebra, the Secretary of the Puerto Rico Department of Natural Resources, and others.

In their section 1983 action, plaintiffs allege that undeveloped real estate they purchased on the island of Culebra, which they had subdivided into five cuerda (4.86 acres) lots and then proposed to sell as residential properties, was "frozen" in 1975, after they purchased it, by new, unreasonably restrictive zoning regulations promulgated by the defendant Puerto Rico Planning Board. The "freeze" continued until 1984 when, four days before the present case was due to be tried to a jury, the parties stipulated to a partial settlement which allowed plaintiffs to sell their land in lots of five cuerdas as they had earlier proposed. This partial settlement had the effect of mooting their injunctive prayers, but expressly did not affect plaintiffs' claim for damages to compensate them for their inability to make economic use of their property during the nine years that it was subject to the allegedly illegal zoning requirements. The district court accordingly addressed the damages claim. Ruling on the basis of the pleadings and discovery materials before it, the court concluded, as a matter of law, that plaintiffs were not entitled to recover damages. Plaintiffs now appeal from that determination. We affirm.

I.

The island of Culebra, located several miles off the eastern coast of the island of Puerto Rico, is a part of the Commonwealth of Puerto Rico. In 1973 Culebra had about 1,000 inhabitants. Until the mid-70s it was used by the United States Navy for military exercises including gunnery practice; in 1971, such exercises became limited by agreement to the northwest side of the island, and in 1973 the United States Secretary of Defense announced that by July 1, 1975 all naval operations at Culebra would cease. Recognizing the developmental pressures that would result when the Navy left, the United States Secretary of the Interior and the Governor of Puerto Rico issued a joint report on October 29, 1973 containing a timetable for the conveyance of federally owned land on Culebra to the Commonwealth of Puerto Rico, together with assurances by the Governor to the Secretary of the Interior,

that the Commonwealth's concern for the ecological integrity of Culebra will be manifested by strong legislative and executive action to safeguard the environment in the interim.

The report recommended the creation of the defendant Culebra Conservation and Development Authority, whose mission would be to share with the United States Department of the Interior the supervision of the management and conservation of Culebra's "unique natural resources."

Perhaps foreseeing the Navy's departure, plaintiff corporations, beginning in 1966, purchased various geographically contiguous plots of land on Culebra. By 1970 they had assembled a parcel some 406 cuerdas in size (a cuerda is 0.97 acre). This land was undeveloped property; it bordered Puerto del Manglar, a bioluminescent bay forming a natural harbor on the southeastern side of the island. In the late 1960s plaintiffs obtained from the Planning Board permission to build a very high intensity development which, for reasons not apparent, plaintiffs never thereafter proceeded to construct. Then, in 1973 and 1974, plaintiffs took steps to lay out their property in five cuerda lots, intending to sell the lots to persons who would build their own residences thereon. To effect the subdivision, plaintiffs spent around $35,000 for surveying, erecting monuments, constructing roads, etc. A regulation of the Puerto Rico Planning Board then in effect, Art. 3 of Planning Regulation No. 3, adopted January 26, 1949, and applicable throughout Puerto Rico, ¹ exempted from subdivision regulation "in the rural zone for agricultural purposes" lots of five cuerdas or more. Plaintiffs contend that this exemption meant that they were free to sell off their property in lots of this size without Planning Board approval. In their arguments, defendants have equivocated on whether or not this was so. They seem now to argue that the Art. 3 exemption did not apply, as plaintiffs' proposed "second home" use was non-agricultural. In any case, both sides agree that the property was not subject to zoning restrictions, as such, in 1973 and 1974.

The regulatory picture changed radically for the worse, from plaintiffs' viewpoint, late in 1974 and in 1975. Implementing plans to regulate development in Culebra that were first announced on May 15, 1971, the Planning Board in 1975 issued a special land use plan for Culebra, together with a zoning map and regulations. The declared purpose of these was to conserve and protect from deterioration Culebra's "valuable natural resources." All land on the island was divided and classified into zoning districts. Of the 406 cuerdas belonging to plaintiffs, around 60 percent was classified "P," which is a form of zoning that prevents property from being used other than for public use purposes. ² Virtually all of the remaining property was zoned "RO-25-C," a classification unlike any found elsewhere in Puerto Rico, which limited lots to 25 cuerdas or greater, and also restricted uses to agriculture and small tourist hotels.

Faced with the new land use and zoning provisions, plaintiffs were unable to proceed with their plan to sell off their land in five cuerda lots. In 1977, plaintiffs requested from the Planning Board a so-called location and land use consultation, to enable them to sell in five cuerda parcels. This request was denied early in 1978 because of non-compliance with the population density requirements of the land use plan for Culebra. A letter from plaintiffs' counsel requesting reconsideration was denied later in 1978. Plaintiffs brought this suit in 1979.

Thereafter, in 1983, the Planning Board rezoned the parts of plaintiffs' property that had been zoned "P" (substantially all of plaintiffs' land) to "RO-25-C" (which limited development to 25 cuerdas, agricultural lots, supra ). A year later, on the eve of the trial of this case, a partial settlement stipulation was entered into and approved by the district court which allowed plaintiffs to sell off their lots in five cuerda sizes as they had originally desired, notwithstanding the RO-25-C zoning. Plaintiffs reserved their right to claim damages for the period of time that, allegedly, they were deprived of the use of their property, together with attorneys' fees. The district court subsequently ruled, as a matter of law, that damages could not be obtained; however, it awarded plaintiffs their attorneys' fees on the ground that they were the prevailing party. In this appeal plaintiffs challenge the denial of their damages claim.

II.

Were it not for three recent Supreme Court opinions discussed below, it would be an easy matter, based on this circuit's precedents, to dispose of this appeal.

In Pamel Corp. v. Puerto Rico Highway Authority, 621 F.2d 33 (1st Cir.1980), we held that a federal court could not award damages in a case such as the present. Pamel had complained that when the Puerto Rico Highway Authority reclassified Pamel's two parcels of land as "P" (the same public use classification in issue here), it unconstitutionally deprived Pamel of the land's entire value. We acknowledged that,

Regulation of property use may be so oppressive or arbitrary that it crosses the wavering line separating a valid exercise of the police power from an exercise of the eminent domain power, which would be invalid without payment of the just compensation mandated by the due process clauses of the Fifth and Fourteenth Amendments.

621 F.2d at 35.

Nonetheless, citing what we believed to be the weight of authority, we also declared,

The remedy awarded in such cases, however, has not been the awarding of the value of the diminished property right, but a declaration of the invalidity of the purported exercise of the police power.... [C]onfusion about this issue has been sown by loose language about excessive land use regulation effectuating a "taking." A zoning regulation that exceeds the permissible bounds of the police power does not in reality confiscate the property, but regulates with excessive or arbitrary severeity.... A court does not declare that an offensive zoning regulation has taken the property, but that the government cannot impose the restriction without formally paying [i.e., where it has not paid] for it.

621 F.2d at 35-36. In Pamel, therefore, we reversed the district court's ruling that--but for the bar of the eleventh amendment--plaintiff could recover damages for the lost value of its property during the period of the oppressive regulation. Instead of reaching the eleventh amendment question, we held that there was no damages remedy in any event in a federal court.

Two years later, in Citadel Corp. v. Puerto Rico...