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Redondo Construction Corp. v. Izquierdo

United States Court of Appeals, First Circuit

March 19, 2014

REDONDO CONSTRUCTION CORPORATION, Plaintiff, Appellant,
v.
JOSÉ IZQUIERDO, in his official capacity as Secretary of the Department of Transportation and Public Works; PUERTO RICO HIGHWAY AND TRANSPORTATION AUTHORITY; PUERTO RICO PUBLIC BUILDINGS AUTHORITY; THE GOVERNOR OF THE COMMONWEALTH OF PUERTO RICO, in his official capacity; FERNANDO FAGUNDO; CONJUGAL PARTNERSHIP FAGUNDO-DOE; JOSÉ LLUCH-GARCÍA; CONJUGAL PARTNERSHIP LLUCH-DOE; CONJUGAL PARTNERSHIP IZQUIERDO-DOE, Defendants, Appellees

Petition for certiorari filed at, 07/14/2014

Page 22

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO. Hon. Francisco A. Besosa, U.S. District Judge.

Yolanda Benítez de Alegría, with whom Luis Cotto-Román was on brief, for appellant.

Raúl Castellanos-Malavé, with whom Development & Construction Law Group, LLC was on brief, for appellee Puerto Rico Highway and Transportation Authority.

Susana I. Peñagaricano-Brown, Assistant Solicitor General, with whom Margarita L. Mercado Echegaray, Solicitor General, was on brief, for appellees José Izquierdo, Fernando Fagundo, José Lluch-García, and the Governor of Puerto Rico.

Luis F. del Valle-Emmanuelli for appellee Puerto Rico Public Buildings Authority.

Before Lynch, Chief Judge, Selya and Howard, Circuit Judges.

OPINION

Page 23

LYNCH, Chief Judge.

Plaintiff Redondo Construction Corporation has been in litigation against the defendants -- the Puerto Rico Highway and Transportation Authority (PRHTA), the Puerto Rico Public Buildings Authority (PBA), and several officials at both agencies (the individual defendants) -- for over a decade. Redondo alleges that the defendants were in breach of certain settlement agreements with Redondo, that this caused Redondo's bankruptcy, and that the defendants are liable in damages. The district court granted the PRHTA's and the individual defendants' motions for summary judgment on the grounds that the record contained insufficient evidence to prove damages. See Redondo Constr. Co. v. Izquierdo, 929 F.Supp.2d 14, 24 (D.P.R. 2013). It also dismissed Redondo's claims against the PBA sua sponte. See id. We affirm the district court's entry of summary judgment as to the PRHTA and the individual defendants but vacate the dismissal of the claim against the PBA and remand for further proceedings.

I.

A. Guilty Plea and Initial Contract Cancellations

The events leading to this case began on April 15, 1999, when Redondo entered into a plea agreement with federal prosecutors. Under the agreement, Redondo pled guilty to aiding and abetting the making of false statements to the U.S. Department of Transportation and to Banco Santander de Puerto Rico in the course of its work on a federal highway project. See 18 U.S.C. § § 2, 1014, 1020. The next day, the PRHTA informed Redondo that, in light of the guilty plea, it was revoking the bids it had awarded Redondo before the plea and was suspending Redondo from bidding on new contracts for 30 days, with an extension likely to be announced in the future. In May 1999, the PBA did the same.

Redondo challenged both decisions, initiating two administrative proceedings. The proceeding against the PBA ended with a settlement agreement allowing Redondo to resume bidding for PBA contracts on April 16, 2000. The proceeding against the PRHTA ended with a settlement agreement allowing Redondo to resume bidding for PRHTA contracts on December 11, 2000, subject to the oversight of a monitoring service for approximately a year and a half.

B. Enactment of Law 458

Redondo's eligibility to bid for Puerto Rico contracts shortly came into question again, this time under a new Puerto Rico statute. On December 29, 2000, Puerto Rico passed Law 458. See P.R. Laws Ann. tit. 3, § § 928-928i. Law 458 prohibits Puerto Rico agencies from awarding contracts to any person or corporation convicted of fraud, embezzlement, or other similar offenses involving public funds, for a period of 20 years after a felony conviction and 8 years after a misdemeanor. Id. § § 928, 928b, 928d. Law 458 included a provision explaining that it " shall not apply retroactively nor shall [it] . . . interfere with contracts in effect." Id. § 928h. The law was effective as of the date of its passage.

As to the PBA, between April 16 and December 29, 2000, Redondo had placed fourteen bids for PBA projects and had been awarded one contract. After Law 458 became effective, the PBA cancelled ten of Redondo's fourteen bids, as well as the contract which it had already executed with Redondo. At the time, the PBA stated that it lacked sufficient funds to proceed with the projects.

Page 24

As to the PRHTA, between December 11 and December 29, 2000, Redondo did not place any bids for PRHTA contracts. Shortly after Law 458 became effective, however, on February 14, 2001, the PRHTA informed Redondo that it was withdrawing from the settlement it had reached with Redondo, citing Redondo's failure to comply with a settlement term requiring it to deposit $25,000 into escrow to fund the monitoring service. Later deposition evidence tended to show that the PRHTA was motivated by the policy of Law 458 regardless of the Law's non-retroactivity provision. Redondo deposited the funds into escrow. The PRHTA then sought to reopen administrative proceedings against Redondo to determine the length of Redondo's suspension. As described later, the PRHTA eventually prevailed at the administrative level, and Redondo later sought judicial review of the administrative decision in the Puerto Rico courts.

C. Procedural History

While the Puerto Rico administrative proceedings between Redondo and the PRHTA were pending, in December 2001, Redondo filed a complaint in federal court, alleging that the PRHTA, the PBA, and the individual defendants had unlawfully applied Law 458 to Redondo, putting the agencies in breach of their respective settlement agreements. Redondo's complaint alleged that the application of Law 458 violated various provisions of the U.S. Constitution, including its Due Process and Ex Post Facto Clauses. The complaint also stated supplemental claims ...


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