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
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.
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,
(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,
(5) PRMSA has the power to acquire any property or interest therein in
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).
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
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.
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.
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).
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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
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.
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,
(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,
(5) PRMSA has the power to acquire any property or interest therein in
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).
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
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.
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.
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).
The Eleventh Amendment may also apply in cases involving diverse governmental entities, including cities, counties, state agencies, multi-state agencies, governors, officers and schools. 13 Charles A. Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice and Procedure
§ 3524 (Civil 2d ed.) (1984).
In order for the Eleventh Amendment to apply as a jurisdictional bar in an action against a state agency or entity, the Court must determine whether the entity is to be treated as “ ‘an arm [or alter ego] of the State partaking of the State’s Eleventh Amendment immunity or is instead to be treated as a municipal corporation or other political subdivision to which the Eleventh Amendment does not extend.’ ”
Rodríguez-García v. Davila,
904 F.2d 90, 98-99 (1st Cir.1990);
Ainsworth Aristocrat Int’l Party, Ltd. v. Tourism, Co. of Puerto Rico,
818 F.2d 1034, 1036 (1st Cir.1987) (quoting
Mount. Healthy City School Dist. Bd. of Educ. v. Doyle,
429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977)). The Court in
Rodrí-guez-García
held that in determining whether the agency is entitled to the immunity, the Court should review and decide:
Rodríguez-García, v. Dávila,
904 F.2d 90, 98 and 99 (1st Cir.1990).
Ainsworth
added that still another factor to be considered is ‘local law and decisions defining the status and nature of the agency involved in its relation to the sovereign’.
Ainsworth Aristocrat Int’l Party, Ltd. v. Tourism Co. of Puerto Rico,
818 F.2d 1034, 1037 (1st Cir.1987). These factors should not be applied mechanically but should instead be used to assist the Court in assessing whether the defendant
“acted more like a private company, or more like the Commonwealth’s government, in conducting the activities relevant to this ... suit.
”
Royal Caribbean Corp. and Caribbean Cruise Line, Ltd. v. Puerto Rico Ports Authority,
973 F.2d 8, 10 (1st Cir.1992) (citing
Puerto Rico Ports Auth. v. M/V MANHATTAN PRINCE,
897 F.2d 1, 10 (1st Cir. 1990);
Jacintopori v. Greater Baton Rouge Port Commission,
762 F.2d 435, 442 (5th Cir.1985),
cert. denied,
474 U.S. 1057, 106 S.Ct. 797, 88 L.Ed.2d 774 (1986)).
‘whether [the entity] performs a governmental function, whether it functions with substantial autonomy, to what extent it is financed independently of the state treasury, and if a judgment sought to be entered against the [entity] will be satisfied out of the state treasury.’
Culebras Enterprises Corp. v. Rivera Rios,
813 F.2d 506, 517 (1st Cir.1987). Other factors relevant to the Eleventh Amendment inquiry include whether the entity ‘has been incorporated; ... whether it has the power to sue and be sued and to enter into contracts; whether its property is immune from state taxation, and whether the sovereign has immunized itself from responsibility for the [entity’s] operations’.
The Courts of this District have on many occasions held that the protections of the Eleventh Amendment extend to various agencies or instrumentalities of the Commonwealth that act as arms of the Commonwealth.
On other occasions we have held that its protections do not extend to various agencies and instrumentalities of the Commonwealth.
We have not had the opportunity in this district to consider whether the protections of the Eleventh Amendment extend to PRMSA. In
Zapata Gulf Marine v. Puerto Rico Maritime Shipping Authority,
682 F.Supp. 1345 (E.D.La.1988), a district court in Louisiana held that PRMSA was entitled to assert Eleventh Amendment immunity in an antitrust action brought against it. However, a prior pronouncement of an agency or instrumentality’s entitlement to Eleventh Amendment immunity, as the one made by the court in
Zapata,
is not necessarily determinative since the Court must consider each claim of sovereign immunity in the context of the particular claim brought by the plaintiff.
Although many factors must be weighed in determining whether an instrumentality is entitled to Eleventh Amendment immunity, two factors predominate. First, whether the funds to satisfy a potential adverse judgment will be drawn from the public treasury or from the independent funds of the agency; and second, whether the agency
exercises a traditional governmental function as opposed to a proprietary function.
See Arroyo Otero v. Hernández Purcell,
804 F.Supp. 418 (D.Puerto Rico 1992).
The application of the
Ainsworth
factors to this ease establishes that PRMSA, in entering into contracts for the performance of the billing and collection of its demurrage charges and the inspection of its equipment pools, is an arm of the Commonwealth which partakes of the Commonwealth’s Eleventh Amendment immunity. First, given PRMSA’s financial dependence on the Commonwealth, the funds to satisfy a potential adverse judgement in this case would have to be drawn from the public treasury. Although PRMSA is authorized by statute to raise its own funds by issuance of bonds, the Commonwealth serves as the agency’s guarantor for the payment of principle and interest of those bonds issued. PRMSA has presented evidence showing that since 1984 the Commonwealth has provided PRMSA with at least ninety-eight million dollars ($98,000,000) to insure PRMSA’s continuing operation.
The Court in
Zapata
recognized, by giving credit to an audited financial statement performed by Deloitte, Haskins, & Sells for 1983-1984, that PRMSA has been financially dependent on the Commonwealth since its creation and that such dependency would continue in the future:
Since its inception [PRMSA] has not been provided equity capital, and has been primarily dependent upon government support through direct loans and loans guarantees [sic] to finance its operations. Such continued support will be necessary in the future to ensure the continuity of operations of [PRMSA],
Zapata,
682 F.Supp. at 1353.
Thus, it cannot be disputed that PRMSA’s is financially dependent on the Commonwealth. Furthermore, the fact that PRMSA is obligated by statute to return, at the end of every fiscal year, any and all profits gained, during that year to the Treasury of the Commonwealth
supports a conclusion that the legislature of the Commonwealth never intended for PRMSA’s finances to be completely separate from those of the Commonwealth. In addition, PRMSA is required to submit annual reports on the financial status of the agency for the preceding fiscal year. This report is to be submitted to the Governor and the legislature of Puerto Rico. 23 L.P.R.A. § 3073.
Second, PRMSA performs a vital governmental function. PRMSA was created to facilitate maritime transportation of cargo and passengers to and from Puerto Rico. 23 L.P.R.A. § 3051,
et seq.
PRMSA performs functions that the legislature finds “essential to the economic growth of the Commonwealth, and to the full employment and prosperity of its citizens ...” 1974 L.P.R. p. 255 (statement of motives);
see also
23 L.P.R.A. § 3052. Thus, PRMSA performs an important role in the formulation and implementation of the Commonwealth’s public policy regarding the economic growth of Puerto Rico. In addition, the Supreme Court of Puerto Rico has recognized PRMSA’s public function. In
McCrillis v. Autoridad de las Navieras de Puerto Rico,
89 J.T.S. 6, the Supreme Court of Puerto Rico acknowledged that PRMSA provides maritime transportation as a public service and that PRMSA was created to resolve the state of impairment of the then existing service.
Plaintiff argues that in entering into contract for the performance of the billing and collection of demurrage charges and the inspection of equipment pools PRMSA is performing activities that are not alien to a proprietary function. However, plaintiff
does not develop its argument or provide any evidence supporting its contention. It is not clear that in entering into a contract for the performance of the billing and collection of demurrage charges PRMSA is exercising a proprietary function. Moreover, the Court believes that in contracting for the inspection of equipment pools PRMSA is performing a governmental regulatory function. Most important, the Court agrees with the court’s finding in
Zapata
that, “[although PRMSA performs functions which are traditionally performed by private parties, its creation and operation was necessitated by the inability of the private sector to meet the public’s need.”
Zapata,
682 F.Supp. at 1351. Thus, the Court finds that in performing the activities which gave rise to this action PRMSA was performing a governmental function as opposed to a proprietary function.
Other factors also militate in favor of Eleventh Amendment immunity. It is significant that all of PRMSA’s board members, who exercise all the powers delegated to PRMSA, are appointed by the governor. In
Pérez v. Rodriguez Bou, 575
F.2d 21 (1st Cir.1978), the court held that the University of Puerto Rico was entitled to Eleventh Amendment immunity because the Commonwealth’s financial support to the University of Puerto Rico, added to the fact that the members of the governing board of the university were appointed by the governor, rendered the university not sufficiently autonomous. The same is true in this case: PRMSA is financially dependent on the Commonwealth and all its board members are appointed by the governor.
The fact that PRMSA has the express authority to sue and be sued in its own name and the right to hold and use property weight against a finding of immunity. However, the fact that PRMSA, like the University of Puerto Rico, is a corporation of the Commonwealth, empowered by statute to sue and be sued
,
to issue bonds, and to enter into contracts, is not inconsistent with a finding that PRMSA is sufficiently an “arm” of the Commonwealth. In
Culebras Enterprises Corp. v. Rivera Rios,
813 F.2d 506 (1st Cir.1987), the court held that although the Culebra Conservation and Development Authority could, like PRMSA, be sued and be sued, raise its own funds, and control its own properties, it was still an “arm” of the Commonwealth for Eleventh Amendment purposes.
Overall, the factors militating towards immunity predominate over those factors weighing against immunity. Therefore, because the application of the factors in this case indicate that PRMSA is an entity which is financially dependent on the Commonwealth, performs a vital governmental function, and does not enjoy a significant amount of autonomy, the Court finds that PRMSA is entitled to Eleventh Amendment immunity. Thus, PRMSA’s motion to dismiss is hereby GRANTED.
IT IS SO ORDERED.