Guillemard Ginorio v. Contreras
| Decision Date | 10 January 2006 |
| Docket Number | Civil No. 03-2317 (JAG). |
| Citation | 409 F.Supp.2d 101 |
| Parties | Andres GUILLEMARD GINORIO, et at., Plaintiffs, v. Fermin CONTRERAS, et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Joan Schlump-Peters, Nachman & Guillemard, San Juan, PR, Jeffrey J. Pyle (PHV), Joseph D. Steinfield (PHV), Prince Lobel Glovsky & Tye LLP, Boston, MA, for Plaintiffs.
Eduardo A. Vera-Ramirez, Eileen Landron-Guardiola, Landron & Vera LLP, Guaynabo, PR, Ivette M. Berrios, Luis A. Rodriguez Muñoz, Landron & Vera LLP, Guaynabo, PR, for Defendants.
On December 10, 2003 plaintiffs Lone Star Insurance Producers, Inc. ("Lone Star") and its shareholders Andres Guillemard Ginorio ("Guillemard") and his wife Maria Noble Fernandez (collectively the "plaintiffs") filed this action against the Office of the Insurance Commissioner ("OIC") and Fermin Contreras ("Contreras"), in his individual and official capacity as the former Insurance Commissioner of Puerto Rico, alleging civil rights violations pursuant to 42 U.S.C. § 1983 (Docket No. 1). On June 6, 2004, the plaintiffs amended the complaint to include Dorelisse Juarbe ("Juarbe") in her individual and official capacity as the current Insurance Commissioner (Docket No. 58). On May 20, 2005 plaintiffs moved for the entry of partial summary judgment on their due process claims (Docket Nos. 204-207). On June 7, 2005 the defendants opposed the motion and cross-moved for summary judgment, seeking dismissal of the complaint (Docket Nos. 216, 218, 220, 221). On July 7, 2005, plaintiffs opposed (Docket Nos. 231-238). On August 31, 2005, the Court referred the motions to Magistrate-Judge Camille Velez-Rive for a Report and Recommendation (Docket No. 261). On November 17, 2005, the Magistrate-Judge recommended that the Court deny plaintiffs' motion for summary judgment and grant in part and deny in part the defendants' (Docket No. 287). On December 2, 2005, the parties filed objections to the Report and Recommendation (Docket Nos. 294, 296). For the reasons discussed below, the Court ADOPTS in part and REJECTS in part the Magistrate-Judge's Report and Recommendation. Accordingly, the Court GRANTS plaintiffs' motion for summary judgment and DENIES the defendants' motion.
Plaintiff Guillemard is the President and fifty percent (50%) stockholder of Lone Star. Contreras was the Insurance Commissioner of Puerto Rico until his resignation became effective on December 31 2003. On January 7, 2004, Juarbe was appointed as the Puerto Rico Insurance Commissioner.
On November 20, 2001, Contreras ordered an audit as to Lone Star's operations and transactions from January 1, 1997 through September 30, 2001. On November 26, 2001, David Castro Anaya ("Castro-Anaya") initiated the audit. Plaintiffs submit that Castro-Anaya's sole purpose was to determine whether improper payments had been made to third parties (Exhibit 5, Castro-Anaya's Deposition at p. 71). Plaintiffs made available to Castro-Anaya two (2) Certified Public Accountants to fully cooperate with the audit and provide all relevant documents (Exhibit 1, Guillemard's Deposition at pp. 74, 52-54).
By December 17, 2001, the audit had concluded and one hundred percent (100%) of the documents pertaining to governmental agency insurance had been examined. (Castro-Anaya's Deposition at p. 98; Guillemard's Deposition at pp. 98-101). Castro-Anaya informed Guillemard and Miguel Carbonell, Lone Star's CPA, that he found no irregularities or improprieties and that he would prepare a draft of his final report within the next few months and send them a copy (Castro-Anaya's Deposition at pp. 99-100).
Neither during the year 2002 nor during the first half of the year 2003, did the plaintiffs receive a report from Castro-Anaya. On July 10, 2003, Castro-Anaya submitted a report to his supervisor entitled "Final Investigation Findings Report", but he did not send a copy to Guillemard. The report found no improper payments to third parties (Exhibit 7). The report, however, raised other issues not given as reasons for the initial investigation; in particular, that Lone Star had entered into a commission-sharing arrangement with an insurance broker, Urrutia Valles, Inc ("UVI"). The report concluded that the sharing of commissions is a violation to Section 939(2) of the Puerto Rico Insurance Code. Plaintiffs, not being informed of this report, had no opportunity to object or present evidence on their behalf.
On December 10, 2003, plaintiffs filed this federal lawsuit against Contreras for violations to their First and Fourteenth Amendment rights, alleging that defendants engaged in political discrimination by singling them out in an investigation not carried out in good faith and seeking to punish plaintiffs' business because of Guillemard's political activities. By that time, no order or draft on the audit report had been prepared. Contreras learned of plaintiffs' lawsuit by December 11, 2003 (Exhibit 2, Contreras's Deposition at pp. 112-113). On December 23, 2003, Contreras issued an order revoking plaintiffs' insurance license for a period of five (5) years; denying any license in any capacity for a period of five (5) years; and imposing a fine of $2,035,000. The order included wording to the effect that plaintiffs had been "incompetent" and "untrustworthy" (Exhibit 11). The order further notified to plaintiffs of their right to request a hearing to review its findings, but stated that the revocation of their insurance agent's license would remain in effect while the administrative proceedings were ongoing (Id. ¶ 8-9).
An administrative hearing was held on March 4, 2005.3 Soon thereafter, Insurance Commissioner Juarbe issued a resolution which still found violations to the Insurance Code and which imposed sanctions on Lone Star, but drastically reduced those sanctions that had been imposed by Contreras. The fine of over $2,035,000 was reduced to $208,000; the five (5) year license suspension was reduced to three (3) months; the prohibition of filing for a license within five (5) years was eliminated, and the references within Contreras' order as to plaintiffs' "untrustworthiness" and "incompetence" were left without effect (Exhibit 12, Resolution ¶ 24-25).
The court's discretion to grant summary judgment is governed by Rule 56 of the Federal Rules of Civil Procedure. Rule 56 states, in pertinent part, that the court may grant summary judgment only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P.56(c); See also Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir.2000).
Summary judgment is appropriate if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." See Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the burden of showing the absence of a genuine issue of a material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Once a properly supported motion has been presented before the court, the opposing party has the burden of demonstrating that a trial-worthy issue exists that would warrant the court's denial of the motion for summary judgment. For issues where the opposing party bears the ultimate burden of proof, that party cannot merely rely on the absence of competent evidence, but must affirmatively point to specific facts that demonstrate the existence of an authentic dispute. See Suarez v. Pueblo Int'l, Inc., 229 F.3d 49 (1st Cir. 2000).
In order for a factual controversy to prevent summary judgment, the contested facts must be "material" and the dispute must be "genuine". "Material" means that a contested fact has the potential to change the outcome of the suit under governing law. The issue is "genuine" when a reasonable jury could return a verdict for the nonmoving party based on the evidence. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). It is well settled that "[t]he mere existence of a scintilla of evidence" is insufficient to defeat a properly supported motion for summary judgment. Id. at 252, 106 S.Ct. 2505. It is therefore necessary that "a party opposing summary judgment must present definite, competent evidence to rebut the motion." Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994).
In making this assessment, the court "must view the entire record in the light most hospitable to the party opposing summary judgment, indulging in all reasonable inferences in that party's favor." Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990). The court may safely ignore "conclusory allegations, improbable inferences, and unsupported speculation." Medina-Muñoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990).
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....
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