Guillemard Gionorio v. Contreras Gomez
| Decision Date | 04 February 2004 |
| Docket Number | Nos. CIV. 03-2317(JAG), CIV. 03-2390(JAG).,s. CIV. 03-2317(JAG), CIV. 03-2390(JAG). |
| Parties | Andres GUILLEMARD GIONORIO, Plaintiff(s) v. Fermin M. CONTRERAS GOMEZ, et al., Defendant(s). Jorge R. Urrutia Valles, et al., Plaintiff(s) v. Fermin M. Contreras Gomez, et al., Defendant(s). |
| Court | U.S. District Court — District of Puerto Rico |
Joan Schlump-Peters, Harvey B. Nachman Law Offices, San Juan, PR, Joseph D. Steinfield, Prince, Lobel, Glovsky & Tye LLP, Hill & Barlow, Boston, MA, Charles A. Cuprill-Hernandez, San Juan, PR, for Plaintiffs.
Eduardo A. Vera-Ramirez, Landron & Vera LLP, Guaynabo, PR, Ivonne Palerm-Cruz, Commonwealth Department of Justice, Federal Litigation Division, San Juan, PR, for Defendants.
On December 10, 2003, Lone Star Insurance Producers, Inc. ("Lone Star"), and its shareholders Andres Guillemard Ginorio ("Guillemard"), his wife Maria M. Noble Fernandez ("Noble"), and the conjugal partnership constituted between them (collectively the "Lone Star Plaintiffs"), filed suit seeking redress for violations to their civil rights and a declaratory judgment, pursuant to 28 U.S.C. § 2201 and 42 U.S.C. § 1983, against Fermin M. Contreras ("Contreras"), for damages in his individual capacity and for injunctive relief in his official capacity as the Insurance Commissioner of Puerto Rico, his wife Jane Doe, the Office of the Insurance Commissioner (the "OIC"), and various John Doe and Jane Doe defendants (collectively "defendants")(Civ.No.03-2317 (JAG), Docket No. 1). On December 30, 2003, the Lone Star plaintiffs filed a verified amended complaint (Civ. No. 03-2317(JAG), Docket No. 7) and moved the Court for the issuance of a Temporary Restraining Order ("TRO") enjoining defendants from revoking the Lone Star Plaintiffs' insurance agent licences pending a pre-deprivation hearing (Civ. No. 03-2317(JAG), Docket No. 8). On December 31, 2003, the Court granted their request and issued a TRO enjoining defendants from revoking the Lone Star plaintiffs' insurance agent licences, ordering defendants to file a brief stating their position on the deprivation of plaintiffs' due process rights by 4:00 p.m. on January 16, 2004, and setting a hearing on January 20, 2004 on plaintiffs' request for the entry of preliminary injunctive relief (Civ. No. 03-2317(JAG), Docket No. 9).
On December 31, 2003, Jorge R. Urrutia Valles ("Urrutia"), his wife Carolyne J. Wiewall Navas ("Wiewall"), the conjugal partnership constituted between them, and Urrutia Valles, Inc. ("UVI")(collectively the "UVI Plaintiffs"), filed a similar suit against the defendants (Civ. No. 03-2390 (JAG), Docket No. 1), and moved for the issuance of a TRO enjoining defendants from revoking their insurance broker licenses pending a pre-deprivation hearing (Civ. No. 03-2390(JAG), Docket No. 2). Simultaneously, the UVI Plaintiffs requested that the case, initially assigned to U.S. District Judge Carmen C. Cerezo, be transferred to the undersigned because of the common nucleus of operative facts underlying their complaint and the Lone Star Plaintiffs' complaint (Civ. No. 03-2390(JAG), Docket No. 3). On January 2, 2004, the Court granted the UVI Plaintiffs' requests and issued the TRO with similar terms to the Lone Star Plaintiffs' TRO and consolidated both cases for purposes of the preliminary injunctive relief requested (Civ. No. 03-2390 (JAG), Docket Nos. 4 & 5).
On January 20, 2004, the Court held a hearing where both parties presented their arguments Plaintiffs presented the testimony of Guillemard and Urrutia as well as certain documents which the Court received into evidence as exhibits (Civ. No. 03-2317(JAG), Docket Nos. 20 & 21). Defendants opted not to present any witnesses or documents. At the conclusion of the hearing, the Court extended the TRO until February 4, 2004, and ordered both parties to file simultaneous briefs on the arguments raised during the hearing. Having received and reviewed the parties' briefs (Civ. No. 03-2317(JAG), Docket Nos. 23 & 26), as well as the testimony and exhibits received into evidence, and for the reasons discussed below, the Court hereby GRANTS the Lone Star and UVI Plaintiffs' request for preliminary injunctive relief.
In 1984, Guillemard and Noble, each of them holding an insurance agent's license issued in accordance with the Insurance Code of Puerto Rico, formed Lone Star and assigned to it their licenses. They have conducted business through Lone Star ever since, never receiving any complaints regarding their services or trustworthiness.
Lone Star first did business with a government agency in 1993, when it placed insurance for the Puerto Rico Ports Authority. In 1994, the Government of Puerto Rico determined that public authorities and government agencies should be represented by licensed insurance brokers for the purposes of obtaining insurance. Guillemard met with then Commissioner of Insurance Juan Garcia, who advised him to affiliate with an insurance broker and suggested doing so with Urrutia. Lone Star then entered into a consortium with UVI (the "consortium"), through which they successfully obtained insurance for the Puerto Rico Aqueducts and Sewer Authority, the Puerto Rico Electrical Power Agency, and the Puerto Rico Telephone Company. Lone Star and UVI shared commissions on premiums for insurance of the kind that plaintiffs were licensed to solicit. The OIC and the governmental agencies were aware at all times of the arrangement between Lone Star and UVI.
Beginning in late November 2001 and until December 17, 2001, David Castro-Anaya ("Castro"), an auditor for the OIC, reviewed Lone Star's transactions for the period between 1997 and 2001, including all documents pertaining to the insurance provided to the government agencies and the commissions shared with UVI. The Lone Star Plaintiffs gave their full cooperation to Castro, providing him with all the documents he requested and answering all his questions. Furthermore, Guillemard informed Castro that Lone Star had performed extensive work in connection with securing and servicing the government agencies' accounts, and sent him a letter detailing these efforts. On the last day of the audit, Castro informed Guillemard that he had found no irregularities and that he would send a final report in early 2002.
The consortium between Lone Star and UVI ended in 2000. Lone Star continues to serve its business and individual clients, but has not provided insurance services to any government agency since. The Lone Star Plaintiffs' licenses have been renewed twice since the 2001 audit.
In early 2002, Guillemard learned that the OIC had ordered several banks to provide financial information pertaining to Lone Star as well as all of Guillemard's and Noble's personal and business affairs. Guillemard also learned that Contreras had made disparaging remarks regarding his and Noble's political affiliation. On December 10, 2003, the Lone Star Plaintiffs filed this action. Contreras was served with summons on December 19, 2003.
On December 23, 2003, Contreras, without affording them with notice or an opportunity to be heard, issued an order declaring the Lone Star Plaintiffs as non-trustworthy and incompetent. Furthermore, the order purported to revoke their insurance agent licenses for a period of five years, prevent them from applying for any other license during the same five-year period, and impose a fine in the amount of two-million thirty-five thousand dollars ($2,035,000). The order would become effective on January 7, 2004. The order also informed the Lone Star Plaintiffs of their right to request a hearing within twenty days from the order, which would stay the imposition of the fine. The revocation of their licenses, however, would remain in effect pending a hearing and a final decision. The request for a TRO and preliminary injunctive relief claiming due process violations soon followed. The Lone Star plaintiffs timely requested a hearing before the OIC, which will be held on March 2, 2004 (Tr. at 155).
The Lone Star Plaintiffs are active members of the New Progressive Party, and have contributed their time and given their financial support to its candidates.
Urrutia has been involved in the insurance business in Puerto Rico since June 1974 and obtained his insurance broker license on October 27, 1980. In October 1983, Urrutia organized and incorporated UVI. On January 1984, UVI obtained licenses as an insurance broker and a broker for excess lines. On July 1, 2002, UVI sold its insurance portfolio AON B & C, Inc. UVI's licenses remained in effect until August 12, 2002. Since July 2002, Urrutia holds the position of Executive Vice-President in charge of marketing for AON Risk Services of P.R., Inc. At this time, UVI is an inactive corporation.
Between 1984 and 2002, UVI provided insurance products and services to numerous clients, establishing an excellent reputation in the process. Urrutia has been recognized as an outstanding insurance broker with an excellent reputation, and was selected as insurance broker of the year in 1985 and 1994 by Professional Insurance Agents of Puerto Rico and the Caribbean, Inc.
In 1993, following a directive from the Secretary of the Treasury of Puerto Rico requiring all government agencies to engage brokers for the purpose of acquiring insurance, UVI submitted its qualifications and was selected as one of eight firms certified to provide such services. In 1994, UVI and Lone Star entered into a consortium (the "consortium"), which was fully disclosed to the Secretary of the Treasury and the OIC. From 1994 to approximately April 2001, Urrutia, acting on behalf of the consortium, negotiated insurance policies and provided related insurance services to several government agencies and public corporations.
In May 2001, after a change in...
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