Maysonet-Robles v. Cabrero

323 F.3d 43, 2003 U.S. App. LEXIS 4533, 2003 WL 1209694
CourtCourt of Appeals for the First Circuit
DecidedMarch 14, 2003
Docket02-1010
StatusPublished
Cited by70 cases

This text of 323 F.3d 43 (Maysonet-Robles v. Cabrero) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maysonet-Robles v. Cabrero, 323 F.3d 43, 2003 U.S. App. LEXIS 4533, 2003 WL 1209694 (1st Cir. 2003).

Opinion

SHADUR, Senior District Judge.

In January 1997 this action was brought on behalf of a putative class comprising homeowners and tenants of a low income housing complex in Manatí, Puerto Rico, who sued Antonio Cabrero as Trustee for the Urban Renewal Housing Corporation Accounts Liquidation Office of Puerto Rico (the “Office”), an entity created in 1991 to liquidate the proceeds of the extinct Puer-to Rico Urban Renewal and Housing Corporation (“CRUV”)(Act 55, August 9, 1991, 17 P.R. Laws Ann. §§ 27-27t). Plaintiffs sued under 42 U.S.C. §§ 1983 and 1985 and added, under the auspices of 28 U.S.C. § 1367(a), a number of state law claims alleging that CRUV used, and failed to disclose to them the presence of asbestos and lead within, the units.

After two earlier motions to dismiss had been denied, the Office filed a third motion to dismiss — this time informing the district court and Plaintiffs that in the interim the Puerto Rico Legislature had passed Act 106, which had dissolved the Office and transferred CRUV’s assets to the Department of Housing of the Commonwealth of Puerto Rico (“Department”) effective June 30,1998 (17 P.R. Laws Ann. §§ 27aa-27jj). Because the Office said that Department was now the real party in interest, it urged that as such Department was immune from suit under the Eleventh Amendment. Later the Office amended its motion to assert that the Commonwealth of Puerto Rico (“the Commonwealth” or “Puerto Rico”) was the Office’s true successor, coupling that amendment with a reassertion of Eleventh Amendment immunity.

After reviewing the parties’ submissions, the district court 1 issued an October 26, 2001 opinion and order stating that Department should be substituted for the Office as a successor in interest pursuant to Fed.R.Civ.P. (“Rule”) 25(c). In substantive terms that opinion went on to hold *47 the action barred by the Eleventh Amendment because Department, as an arm of the state, enjoyed immunity from suit— and that despite its interjection into the pending litigation as a successor to a party that had not been entitled to immunity under the Eleventh Amendment. Accordingly the district court granted the Office’s amended motion to dismiss, and Plaintiffs now appeal. We affirm the district court’s dismissal of the action on such immunity grounds.

Standard of Review

Whether the district court correctly held that Department enjoyed immunity under the Eleventh Amendment — or more precisely, under the limitation that the States’ sovereign immunity imposes on the federal judicial power established in Article III (see, e.g., Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 98-99, 116-17, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984)) 2 —is a question of law. We therefore review the lower court’s ruling de novo (see Arecibo Cmty. Health Care, Inc. v. Puerto Rico, 270 F.3d 17, 22 (1st Cir.2001)).

Background

Because this appeal presents a pure jurisdictional question, it is unnecessary to recite the facts as they pertain to the merits of Plaintiffs’ allegations. Instead we will review the bidding as to the relevant agency history and the procedural path of this litigation, then turn to the law.

CRUV was created by the Puerto Rico legislature as a public corporation in 1957 to administer and develop low-cost private housing construction in the Commonwealth. In 1991 the legislature dissolved CRUV (by Act 55 of August 9, 1991, 17 P.R. Laws Ann. §§ 27—27t), instead creating the Office and charging it with overseeing the liquidation of CRUV’s accounts and the transfer of records and documents to Department. Among other provisions, the Office was granted the authority to sue and be sued, with the understanding that it would exist only so long as necessary for CRUV’s liquidation (17 P.R. Laws Ann. § 27r).

Plaintiffs’ 1997 Complaint asserted a number of claims against the Office that stemmed from CRUV’s use of asbestos and lead in its public housing units and its failure to disclose that use to Plaintiffs. Plaintiffs then amended their Complaint to clarify that the suit was brought against the Office for its own acts of alleged misconduct as well as in its capacity as the successor to CRUV.

After a first motion to dismiss on grounds unrelated to immunity was denied, the Office filed a second motion to dismiss in August 1997 on the predicate that it was immune from suit under the Eleventh Amendment. While that motion was pending, Plaintiffs sought a preliminary injunction to prevent the Office from reducing its legal claims reserve and transferring its assets to the Commonwealth’s treasury.

On September 3, 1998 the district court ruled on those motions. First it denied the motion to dismiss, ruling that the Of *48 fice was not an arm of the state entitled to immunity under the Eleventh Amendment. Then it denied Plaintiffs’ motion for preliminary injunction, but it ordered the Office to ensure that CRUV’s assets would remain available should they be necessary to satisfy a judgment in this case.

It turned out that two months before the issuance of those rulings Act 106 had dissolved the Office and had effectively transferred CRUV’s millions of dollars in surplus funds, including the millions that had been set up as a reserve fund for its legal liabilities, to Department. Based on that legislation, the Office filed a third motion to dismiss on September 15, 1998 — this time asserting that Department, now the real party in interest, was entitled to Eleventh Amendment immunity. Responding to that motion, Plaintiffs requested that the district court substitute Department for the defunct Office under Rule 25(d)(1) and urged that such substitution did not oust the court of federal jurisdiction or permit Department to reassert Eleventh Amendment immunity. Then the Office amended its motion to assert that the Commonwealth, rather than Department, was the proper defendant under Act 106 and that it was immune from the suit regardless of its successor status.

As stated earlier, the district court bought into the Office’s Eleventh Amendment immunity argument as to Department without having to take that last step of treating the Commonwealth as the proper party defendant. Because the district court concluded that Department had not waived or otherwise forfeited that immunity by its having succeeded the properly sued Office, the court granted the motion to dismiss.

Although Plaintiffs now appeal that involuntary dismissal, certain aspects of the district court’s ruling are not challenged before us. Neither party has appealed the district court’s application of Rule 25(c) to substitute Department for the Office as a successor in interest. Neither do they dispute the conclusion that Department, an executive department of the government of Puerto Rico lacking an independent juridical personality (see Fred Reyes v.

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323 F.3d 43, 2003 U.S. App. LEXIS 4533, 2003 WL 1209694, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maysonet-robles-v-cabrero-ca1-2003.