Hernandez-Montanez v. FOMB

• Court: Court of Appeals for the First Circuit
• Decided: January 27, 2023
• Docket: 21-1581P
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

No. 21-1581

IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO SALES TAX FINANCING CORPORATION, a/k/a COFINA; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE EMPLOYEES RETIREMENT SYSTEM OF THE GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC POWER AUTHORITY(PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE OF THE PUERTO RICO PUBLIC BUILDINGS AUTHORITY, DEBTORS,

RAFAEL HERNÁNDEZ-MONTAÑEZ, Plaintiff, Appellant, JAVIER APONTE-DALMAU; CARLOS BIANCHI-ANGLERO; RAMÓN CRUZ-BURGOS; MARCOS CRUZ-MOLINA; CARLOS O. DELGADO-ALTIERI; JOSÉ DÍAZ-COLLAZO; PEDRO J. GARCÍA-FIGUEROA; ÁNGEL GONZÁLEZ-DAMUDT; JORGE L. GONZÁLEZ-OTERO; RAMÓN HERNANDEZ-TORRES; ROSSANA LÓPEZ-LEÓN; BRENDA LÓPEZ-DE-ARRARÁS; CARMEN MALDONADO; JESÚS MÁRQUEZ-RODRÍGUEZ; ÁNGEL MATOS-GARCÍA; LYDIA MÉNDEZ-SILVA; MANUEL NATAL-ALBELO; JULIA M. NAZARIO-FUENTES; ISIDRO NEGRÓN-IRIZARRY; LUIS ORTIZ-LUGO; MIGUEL A. PEREIRA-CASTILLO; ROBERTO RAMÍREZ-KURTZ; ROBERTO RIVERA-RUIZ DE PORRAS; JESÚS SANTA-RODRÍGUEZ; JOSÉ A. SANTIAGO RIVERA; OSCAR SANTIAGO; CIRILO TIRADO-RIVERA; LUIS TORRES-CRUZ; SERGIO TORRES-TORRES; JOSÉ VARELA-FERNÁNDEZ; LUIS VEGA-RAMOS; HERIBERTO VÉLEZ-VÉLEZ, Plaintiffs, v. THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO;UNITED STATES, Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Laura Taylor Swain, U.S. District Judge]

Before

Barron, Chief Judge, Lipez and Howard, Circuit Judges.

Jorge Martínez-Luciano, with whom Emil Rodríguez-Escudero and M.L. & R.E. Law Firm were on brief, for appellant. Dietrich L. Snell, with whom Timothy W. Mungovan, John E. Roberts, Laura E. Stafford, Lary Alan Rappaport, Michelle M. Ovanesian, Martin J. Bienenstock, Mark D. Harris, Paul V. Possinger, and Proskauer Rose LLP, were on brief, for appellee the Financial Oversight and Management Board of Puerto Rico. Christopher Connolly, Assistant United States Attorney, with whom Damian Williams, United States Attorney, and Benjamin H. Torrance, Assistant United States Attorney, were on brief, for appellee United States.

January 27, 2023

- 2 - BARRON, Chief Judge. This appeal arises in connection

with Rafael Hernández-Montañez's suit in the District of Puerto

Rico in 2018 against the Financial Oversight and Management Board

for Puerto Rico (the "FOMB"). He brings the suit in his official

capacity as both a member and the minority leader of the Puerto

Rico House of Representatives (the "House"), and he alleges in it

that the FOMB acted in violation of the Territories Clause of the

United States Constitution by nullifying a Puerto Rico law that

established the Commonwealth's budget and replacing it with a

budget for the Commonwealth of the FOMB's own making. The District

Court dismissed the suit on jurisdictional grounds pursuant to

Article III of the United States Constitution. We affirm.

I.

The Puerto Rico Oversight, Management, and Economic

Stability Act ("PROMESA"), 48 U.S.C. § 2101 et seq, in 2016

established the FOMB as a part of Puerto Rico's territorial

government to address the Commonwealth's debt crisis. Fin.

Oversight and Mgmt. Bd. for P.R. v. Aurelius Inv., LLC, 140 S. Ct.

1649, 1655 (2020). PROMESA authorizes the FOMB to wield broad

powers, which include the authority to develop and certify budgets

for Puerto Rico. 48 U.S.C. § 2142. The FOMB has employed this

power to impose multiple budgets on Puerto Rico.

In 2018, Hernández-Montañez, seventeen other members of

the Puerto Rico Legislature, and fifteen Puerto Rico mayors brought

- 3 - this suit in their official capacities in the District of Puerto

Rico. The suit took aim at the FOMB's action in that same year,

in which the FOMB both nullified the budget for the 2018-2019

fiscal year that the Puerto Rico legislature had passed and the

governor of Puerto Rico had signed into law, and imposed a budget

of the FOMB’s own design. The suit alleged that the FOMB's

challenged actions violated the United States Constitution's

Territories Clause, U.S. Const. art. IV, § 3, cl. 2,1 and

Appointments Clause, U.S. Const. art. II, § 2, cl. 2.2

The District Court stayed the litigation pending the

resolution of Aurelius, which raised the same Appointments Clause

issue as the plaintiffs' suit raised. 140 S. Ct. at 1655-56. But,

after the Supreme Court of the United States rejected the

Appointments Clause challenge raised in Aurelius, see id. at 1665-

66, the plaintiffs in this case agreed to dismiss their

Appointments Clause claim, and litigation then resumed concerning

their Territories Clause claim.

1Though this claim was phrased in a manner semantically similar to a claim brought under the Constitution's Guarantee Clause, U.S. Const. art. IV, § 4, plaintiffs have disclaimed any reliance on that provision. 2Plaintiffs also brought a claim that the FOMB's budget- related actions had violated the Puerto Rico Legislature's common law right to legislative independence but voluntarily dismissed that claim prior to the District Court's decision on the motion to dismiss.

- 4 - Thereafter, the defendants moved to dismiss the

plaintiffs' Territories Clause claim both due to a lack of standing

under Article III and on the merits. The District Court held that,

although the mayors who had brought the suit had Article III

standing to pursue their Territories Clause claim, the individual

members of the Puerto Rico legislature (including Hernández-

Montañez) did not. The District Court therefore ordered that the

legislators' Territories Clause claim be dismissed on that

jurisdictional basis. The District Court then also dismissed the

mayors' claim under the Territories Clause for failure to state a

claim on which relief could be granted.

The plaintiffs appealed the District Court's rulings.

But, we then granted the motions made by all of the plaintiffs

except for Hernández-Montañez to dismiss their pending appeals,3

leaving only Hernández-Montañez's appeal before us.

II.

Under Article III, an individual legislator has no

"standing to assert the institutional interests of a legislature,"

Va. House of Delegates v. Bethune-Hill, 139 S. Ct. 1945, 1953

3 Because the mayoral plaintiffs are no longer party to this appeal, and because we agree with the District Court that Hernández-Montañez has no standing to bring his constitutional claim on behalf of the House, we need address neither the standing nor the merits decisions that the District Court made regarding the mayoral plaintiffs' identical claim. We likewise need not address the standing of the House, as one chamber of a bicameral legislature, to bring this suit.

- 5 - (2019), because an individual legislator who presses a claim based

on an "institutional injury . . . which necessarily damages all"

legislators equally has suffered no personal injury, Raines v.

Byrd, 521 U.S. 811, 821 (1997). Moreover, Hernández-Montañez

provides us with no reason to conclude that the analysis regarding

an individual legislator's standing is any different when the

claimed injury is to one legislative body within a bicameral

legislature, such as the Puerto Rico House of Representatives. Cf.

Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 544 (1986)

("Generally speaking, members of collegial bodies do not have

standing [under Article III] to perfect an appeal the body itself

has declined to take."). That being so, Hernández-Montañez lacks

Article III standing to bring his Territories Clause claim, because

he concedes that, "from the very beginning" of this action, he

intended to "appear[] on behalf of the House," and his complaint

alleges only injuries to the House as a whole.

Hernández-Montañez does arguably assert on appeal that

his position as the minority leader of the House at the inception

of this suit somehow changes the calculus. But, we cannot see how

it would, and, in any event, he develops no argument for our

concluding that he has standing on the basis of his having held

that position at the time of his suit. Cf. United States v.

Zannino, 895 F.2d 1, 17 (1st Cir. 1990).

- 6 - Hernández-Montañez also contends on appeal that he

became Speaker of the House while the suit was pending below and

that he thereby acquired the authority to litigate on behalf of

the House. Thus, he contends, even if he lacked standing at the

inception of this suit, he has it now because he is authorized as

Speaker to represent the House in litigation under "Section 5.2(p)

of the current House General Regulation." But, "the party seeking

to avail [himself] of federal jurisdiction" has "the

responsibility . . . clearly to allege facts demonstrating that he

is a proper party to invoke judicial resolution of the dispute and

the exercise of the court's remedial powers." United States v.

AVX Corp., 962 F.2d 108, 114 (1st Cir. 1992) (quoting Warth v.

Seldin, 422 U.S. 490, 518 (1975)). And, the complaint fails to

allege that the Territories Clause claim is being brought by the

Speaker on behalf of the House, let alone that the Speaker has the

authority to litigate such a claim on the House's behalf. We

therefore see no error in the District Court's conclusion that

"the [c]omplaint lacks any plausible allegations showing that

[Hernández-Montañez] had authorization -- through legislation,

resolution, or otherwise -- to commence this suit on behalf of"

the House.

Finally, we see no merit to Hernández-Montañez's

contention on appeal that the District Court's ruling must be

vacated so that his complaint may be amended to account for

- 7 - Hernández-Montañez having become the Speaker. He is right that

"court[s] should freely give leave [to amend] when justice so

requires," Fed. R. Civ. P. 15(a)(2), but he did not request leave

to amend the complaint in the District Court and so cannot complain

on appeal that he was improperly denied a chance to do so. See

Rinsky v. Cushman & Wakefield, Inc., 918 F.3d 8, 17 (1st Cir. 2019)

("We have 'repeatedly warned litigants that arguments not made

initially to the district court cannot be raised on appeal.'"

(quoting DiMarco-Zappa v. Cabanillas, 238 F.3d 25, 34 (1st Cir.

2001) (cleaned up))).

III.

The judgment of the District Court is affirmed.

- 8 -