Excellence Mgmt. Audits & Realty Corp. v. United States
| Decision Date | 22 September 2011 |
| Docket Number | Civil No. 10–1564 (DRD). |
| Citation | 812 F.Supp.2d 126 |
| Court | U.S. District Court — District of Puerto Rico |
| Parties | EXCELLENCE MANAGEMENT AUDITS & REALTY CORP., et al., Plaintiff(s), v. UNITED STATES of America, et al., Defendant(s). |
OPINION TEXT STARTS HERE
Evelyn Aimee de Jesus–Rodriguez, Evelyn A. de Jesus Rodriguez Law Office, Caguas, PR, for Plaintiff(s).
Agnes I. Cordero, United States Attorneys Office, Vanessa D. Bonano–Rodriguez, Department of Justice, Luis F. Colon, Luis F. Colon, Colon Gonzalez Law Office, San Juan, PR, for Defendant(s).
Pending before this Court is a Motion to Dismiss and memorandum in support, filed by the United States of America,1 Docket entries No. 20 and 21. The United States specifically moves the Court to dismiss the present case due to: (a) lack of jurisdiction; (b) lack of personal jurisdiction, and (c) the Amended Complaint fails to state a claim upon which relief can be granted. As of this date, the dismissal request stands unopposed. For the reasons set forth bellow, the Motion to Dismiss is granted, and consequently, the complaint as to the United States is to be dismissed with prejudice.
However, the Court as explained below has other jurisdictional grounds to dismiss the instant case for lack of jurisdiction of constitutional dimensions, which also warrant the federal court not entering into a controversy involving the state tax system.
On June 21, 2010, plaintiff Excellence Management, Audits & Realty Corp. (hereinafter “EMARCO”), in its capacity of managing agent for VDJ Limited Partnership, S.E., who owns the housing project known as V & B Apartments, filed a Complaint against the United States, which was later amended, see Docket No. 5, ¶ 8. Plaintiff also included co-defendants Hon. Luis Fortuño Burset; the Commonwealth of Puerto Rico; Hon. Yessef Cordero, in his capacity as Secretary of the Puerto Rico Department of Housing; the Municipal Collections Center, collecting Municipal property taxes (hereinafter “CRIM”), Hon. Sol Luis Fontánez, in his capacity as Mayor for the Municipality of Barceloneta. See Docket No. 1. However, on December 10, 2010, an Amended Complaint was filed adding co-defendants Commonwealth of Puerto Rico Department of Justice and Hon. Guillermo Somoza Colombani, in his capacity as Secretary of Justice; the Puerto Rico Public Authority and Hon. Miguel Hernández Vivoni in his capacity as Secretary of Housing (collectively “state defendants”). See Docket No. 5. All of these co-defendants are also dismissed under the Eleventh Amendment enjoyed by a State, the arms of the State, as well as officers in their official capacity and in their individual capacity, as briefly explained infra.
In the Amended Complaint plaintiff states that EMARCO serves as the managing agent for VDJ Limited Partnership, S.E., who owns V & B Apartments, a social welfare housing project that is allegedly exempt from paying property taxes. See Docket No. 5 ¶¶ 8, 10 and 13–14. EMARCO further argues that, notwithstanding the Puerto Rico tax exemption, V & B Apartments has received invoices for property taxes, late fees and interest from the CRIM. See Docket No. 5 ¶ 13. EMARCO further alleges that in order to clarify this matter, the CRIM requires a certification from the Puerto Rico Housing Administration stating that the V & B Apartments is a public welfare housing project, hence, eligible for an exemption to pay municipal property taxes. 2 EMARCO moves the Court to issue a declaratory judgement declaring that V & B Apartments are a public welfare project exempted from paying property taxes. See Docket No. 5.3 In essence, the issue constitutes a breach of contract asking the federal court to stop the collection of municipal property taxes established by state law.
On February 16, 2011, the United States filed a Motion to Dismiss and memorandum in support, requesting the dismissal of the Amended Complaint, on the following grounds: (a) lack of subject matter jurisdiction; (b) lack of personal jurisdiction; (c) failure to state a claim upon which relief can be granted against the United States, as there is no applicable waiver of sovereign immunity. See generally, Docket entries No. 20 and 21.
The United States set forth in its memorandum the applicable law, both federal and state law, as well as the procedure to be followed, as provided in 7 C.F.R. §§ 3560.102 and 3560.105. In a nutshell, plaintiff has failed to follow the applicable administrative procedure established by the federal agency to obtain the required certification, which in turn is to be provided to the Puerto Rico Housing Administration for the issuance of the necessary certification to proceed with the process to claim an exemption with the CRIM. Therefore, the United States is also challenging that plaintiff blatantly failed to exhaust administrative remedies that potentially provides plaintiff the requested remedy of exemption to pay the Municipal property taxes.
The United States provided an official document stating that “Rural Development hereby also certifies that it has searched it case files, and no evidence has been found showing that the borrower or its management agent has requested this certification letter to our Agency in the past.” See Docket No. 21, page 5. Hence, the Amended Complaint, Docket No. 5, fails to state a cause of action due to lack of exhaustion of administrative remedies against the United States setting forth any obligation to the plaintiff and/or breach any contract between the parties. Hence, the Amended Complaint shall also be dismissed for failure to state a claim for which a relief can be granted against the United States. See Docket No. 21, pages 7–10. As stated above, the motion to dismiss stands unopposed. The Court agrees with the United States' request to dismiss and briefly explains.
When the Court is presented with a motion to dismiss for lack of subject matter jurisdiction under Rule12(b)(1) of the Federal Rules of Civil Procedure, (“Fed.R.Civ.P.”), and a motion to dismiss under Fed.R.Civ.P. 12(b)(6), failure to state a claim upon which relief can be granted, the Court should address the jurisdictional matter prior to determining whether the complaint of that case “states a cause of action on which relief could be granted.” Sanchez v. United States, 707 F.Supp.2d 216, 225 (D.P.R.2010), citing Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946). “After all, if the court lacks subject matter jurisdiction, assessment of the merits becomes a matter of purely academic interest.” Deniz v. Municipality of Guaynabo, 285 F.3d 142, 150 (1st Cir.2002).
Additionally, in order to rule upon a motion to dismiss under Fed.R.Civ.P. 12(b)(1), the court must apply the same standard applicable to motions under Fed.R.Civ.P. 12(b)(6). Sanchez, 707 F.Supp.2d at 225; see also Negron–Gaztambide v. Hernandez–Torres, 35 F.3d 25, 27 (1st Cir.1994); Caraballo–Melia v. Suarez–Dominguez, Civ. 08–2205, 2010 WL 830958 at *1 (D.P.R. March 4, 2010).
Fed.R.Civ.P. 8(a) requires plaintiff to provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Under Bell Atlantic v. Twombly, a plaintiff must “provide the grounds of his entitlement [with] more than labels and conclusions.” 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Thus, a plaintiff must under current United States procedural law present allegations that “nudge [his] claims across the line from conceivable to plausible” in order to comply with the requirements of Fed.R.Civ.P. 8(a). Id. at 570, 127 S.Ct. 1955; see, e.g. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
When considering a motion to dismiss, the Court's inquiry occurs in a two-step process under the current context-based “plausibility” standard established by Twombly, 550 U.S. 544, 127 S.Ct. 1955, and Iqbal, 556 U.S. 662, 129 S.Ct. 1937. First, the Court must “accept as true all of the allegations contained in a complaint[,]” discarding legal conclusions, conclusory statements and factual threadbare recitals stating the elements of a cause of action. Maldonado v. Fontanes, 568 F.3d 263, 268 (1st Cir.2009) (quoting Iqbal, 556 U.S. 662, 129 S.Ct. 1937) (internal quotation omitted). Second, the Court must determine whether, based upon all assertions that were not discarded under the first step of the inquiry, the complaint must “stat[e] a plausible claim for relief.” Id. This second step is “context-specific” and requires that the Court draw from its own “judicial experience and common sense” to decide whether a plaintiff has stated a claim upon which relief may be granted, or, conversely, whether dismissal under Fed.R.Civ.P. 12(b)(6) is appropriate. Id. Thus, “[i]n order to survive a motion to dismiss, [a] plaintiff must allege sufficient facts to show that he has a plausible entitlement to relief.” Sanchez v. Pereira–Castillo, 590 F.3d 31, 41 (1st Cir.2009). (Emphasis ours). The Court interprets that “context specific” means that plaintiff must provide sufficient facts adorning the elements of the complaint, see Iqbal, dismissing the complaint, because plaintiff failed to provide facts relating to the elements of a Bivens claim. See Iqbal, 129 S.Ct. at 1949–1950.
In the instant case, the United States alleges that the Court lacks personal jurisdiction over the United States on several grounds: (a) failure to effect proper service upon the United States; (b) the United States has not waived its sovereignty, as the United States has not consented to be sued; and (c) the complaint fails to state a claim upon which a relief can be granted against the United States.
The United States argues that in order for service of process be perfected, plaintiff had to...
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