Trans America Recovery Services, Inc. v. Puerto Rico Maritime Shipping Authority

820 F. Supp. 38, 1993 WL 138299
CourtDistrict Court, D. Puerto Rico
DecidedApril 21, 1993
DocketCiv. 92-1733 (JP)
StatusPublished
Cited by5 cases

This text of 820 F. Supp. 38 (Trans America Recovery Services, Inc. v. Puerto Rico Maritime Shipping Authority) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Trans America Recovery Services, Inc. v. Puerto Rico Maritime Shipping Authority, 820 F. Supp. 38, 1993 WL 138299 (prd 1993).

Opinion

OPINION AND ORDER

PIERAS, District Judge.

This is an action for breach of contract filed by Trans America Recovery Services, Inc. against Puerto Rico Maritime Shipping Authority (hereinafter “PRMSA”) to recover *39 damages suffered as the result of PRMSA’s alleged unjustified cancellation of a contract (hereinafter the “contract”) which appointed plaintiff as PRMSA’s demurrage billing and collection contractor. 1 The Court has before it defendant’s Motion to Dismiss on Eleventh Amendment grounds (docket No. 4) filed on July 15, 1992. On August 24, 1992, plaintiff filed an Opposition to defendant’s Motion to Dismiss (docket No. 7). A document titled Supplemental Authorities to Opposition to Motion to Dismiss (docket No. 10) was filed by the plaintiff on September 11, 1992. For the reasons set forth below, the Motion to Dismiss is hereby GRANTED.

I. Background

PRMSA, which is also known as “Autori-dad de las Navieras”, is a government agency created by the Puerto Rico legislature on June 10, 1974. 23 L.P.R.A. § 3051. It was created as a nonstock corporation by the legislature of the Commonwealth of Puerto Rico (hereinafter the “Commonwealth”) to insure “that the citizens of the Commonwealth” have an adequate and inexpensive supply of basic commodities, and to foster the development and expansion of trade and industry.” 23 L.P.R.A. § 3054. PRMSA was created “... for the benefit of the people of the Commonwealth and for the protection of their health and welfare.” PRMSA operates as a maritime transportation system for cargo and passengers between Puerto Rico and abroad and is run by a seven-member governing board. 23 L.P.R.A. § 3054. Ml board members are appointed by the Governor of the Commonwealth and serve four year terms. Id. The governing board appoints an executive director, a secretary and such officers as it deems necessary. Id. PRSMA’s powers include, but are not limited, to the following: (1) PRMSA may sue and be sued, (2) PRMSA has complete control and supervision of all undertakings acquired or constructed by PRMSA, or by any company in which the PRMSA may acquire stock, 2 (3) PRMSA may enter into contracts and other arrangements with any natural or legal person, who is a citizen of the United States, for the management of operations of any or all the undertakings subject to the control of PRMSA or for consulting or advisory services related to the operation of such undertakings, (4) PRMSA has the power to determine, fix, impose, charge, alter and collect reasonable rates, fees and charges and other service .terms and conditions for the use of any undertakings or the services rendered thereby, 3 (5) PRMSA has the power to acquire any property or interest therein in *40 any lawful manner including, but without limitation, the acquisition by purchase, whether by agreement or by exercising the power of eminent domain, (6) PRMSA may borrow money for any of its corporate purposes and to issue bonds in evidence of such indebtedness, and to secure the payment of such bonds and the interest thereon by pledge of, or other lien on any or all of its undertakings and the revenues derived therefrom, (7) PRMSA has the power to issue bonds for the purposes of finance, refinance, purchase, or to redeem any of its outstanding bonds, (8) PRMSA has the power to enter into lands, bodies of water or premises, after notice to the owners of occupants thereof, in order to make examinations, soundings or surveys. 23 L.P.R.A. § 3055.

PRMSA has no authority to pledge the credit of the Commonwealth; however, the Commonwealth guarantees the payment of the principal of and interest on bonds issued by PRMSA, in an aggregate principal amount not exceeding sixty million dollars ($60,000,000). 4 23 L.P.R.A. § 3068. On July 21, 1988, the Puerto Rico legislature enacted a Joint Resolution allocating sixty million dollars ($60,000,000) to PRMSA for the fiscal years of 1988-1989 through 1993-1994 “to continue the due capitalization of [PRMSA] this public instrumentality in order to guarantee the functional and economic stability in its operations ...” S.J.R. 156 of July 21, 1988. Another Joint Resolution enacted on the same day recognized and expressed concern for the agency’s millionaire deficit 5 and authorized the Secretary of the Treasury to convert a fifteen million dollar ($15,000,000) loan, advanced by the Secretary of the Treasury to PRMSA in 1980, into a capital contribution. S.J.R. 161 of July 21, 1988.

PRMSA is required to submit to the legislature and to the Governor of Puerto Rico, prior to the end of each calendar year, a financial statement and complete report of its business for the preceding fiscal year. 23 L.P.R.A. § 3073. At the close of its fiscal year, PRMSA is required to pay over to the Commonwealth Treasury its total net income, if any, after establishing adequate reserves for the uninterrupted modernization and improvement of service achieved during such fiscal year. 23 L.P.R.A. § 3072.

The parties entered into the contract for the billing and collection of demurrage charges and inspection of equipment pools on October 24, 1991. 6 Plaintiff filed the present action on May 29, 1992. On July 15, 1992, the defendant filed its motion to dismiss on the grounds that PRMSA is entitled to immunity from suit in federal court pursuant to the Eleventh Amendment to the United States Constitution and, in addition, that plaintiff is precluded by a clause in the contract from filing any action arising out of the contract in controversy in federal court. 7 *41 Plaintiff opposes the motion alleging that PRMSA is not entitled to immunity.

II. Discussion

A. Eleventh Amendment Immunity

The Eleventh Amendment acts as a jurisdictional bar, and defense, to all suits claiming money damages brought in a federal court against a state, including Puerto Rico, without its consent. Metcalf & Eddy v. Puerto Rico Aqueduct & Sewer, 945 F.2d 10, 11 (1st Cir.1991); Accord In re San Juan Dupont Plaza Hotel Fire Litigation, 888 F.2d 940, 942 (1st Cir.1989); (“The Commonwealth of Puerto Rico is treated as a state for Eleventh Amendment purposes.”); see Ramirez v. Puerto Rico Fire Service, 715 F.2d 694, 697 (1st Cir.1983); Fernández v. Chardón, 681 F.2d 42, 59 n. 13 (1st Cir.1982), aff'd, 462 U.S. 650, 103 S.Ct. 2611, 77 L.Ed.2d 74. (1983). 8

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820 F. Supp. 38, 1993 WL 138299, Counsel Stack Legal Research, https://law.counselstack.com/opinion/trans-america-recovery-services-inc-v-puerto-rico-maritime-shipping-prd-1993.