FRANCISCO JOSE MASSO-TORRELLAS; CONJUGAL PARTNERSHIP MASSO-ESTEVEZ; JOSE; FRANCISCO MASSO-TORRELLAS; CONJUGAL PARTNERSHIP MASSO-MALDONADO; OSSAM CONSTRUCTION, INC., Plaintiffs, Appellants,
MUNICIPALITY OF TOA ALTA; CLEMENTE AGOSTO-LUGARDO, in his official capacity as Mayor of the Municipality of Toa Alta and in his individual capacity; YARITZA ROSARIO-SOTO; CONJUGAL PARTNERSHIP AGOSTO-ROSARIO, Defendants, Appellees, INDETERMINED NUMBER OF UNNAMED MUNICIPAL POLICE OFFICERS; INDETERMINED NUMBER OF JANE DOES; CONJUGAL PARTNERSHIP; RICHARD DOE; JOHN DOE; ABC INSURANCE COMPANY, Defendants.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
PUERTO RICO [Hon. Pedro A. Delgado-Hernández, U.S.
Roberto Busó-Aboy, for appellants.
Eduardo A. Vera Ramírez, with whom Landrón
Vera, LLC., Eileen Landron Guardiola, and Luis A.
Rodríguez Muñoz were on brief for appellees
Municipality of Toa Alta and Clemente Agosto-Lugardo, in his
official capacity as Mayor.
Margarita Mercado-Echegaray, Solicitor General, with whom
Susana I. Peñagarícano-Brown, Assistant
Solicitor General, was on brief for appellee Clemente
Agosto-Lugardo, in his individual capacity.
Howard, Chief Judge, Torruella and Dyk, [*] Circuit
appeal from a district court order dismissing their 42 U.S.C.
§ 1983 claim for lack of subject matter jurisdiction,
and declining to exercise supplemental jurisdiction over
related state law claims. We affirm the district court's
dismissal. The district court found that it lacked subject
matter jurisdiction because the parties had failed to comply
with the mediation/arbitration clause in their contract.
Although we conclude that the district court erred by holding
that the mediation/arbitration clause applied to the §
1983 claim, we conclude that the § 1983 claim should be
dismissed pursuant to Fed.R.Civ.P. 12(b)(6) for failure to
state a claim. Accordingly, there is also no supplemental
jurisdiction over the state law claims.
dispute relates to contracts for the construction of a
municipal transportation terminal. On May 7, 2010, defendant,
the Municipality of Toa Alta ("Municipality"),
awarded a construction project to plaintiff, OSSAM
Construction Inc. ("OSSAM"), to build the terminal
on land owned by the Municipality. The parties contemplated
that the construction project would be undertaken in two
phases, with two separately executed contracts. The Phase I
contract was executed on September 10, 2010, and the work was
apparently completed without incident within the 120 days
provided in the contract. The Phase II contract was executed
on September 4, 2012. From September of 2014 and continuing
through December of 2014, disputes arose regarding payments
for the work performed in connection with the Phase II
contract. On January 20, 2015, OSSAM issued a notice of
default against the Municipality due to its alleged
nonpayment for the completed construction work. On February
4, 2015, the Municipality notified OSSAM by letter that the
contract between OSSAM and the Municipality was being
terminated effective immediately "[d]ue to reasons of
public policy in connection with the sound administration of
[municipal] funds." JA 122. This letter was signed by
Mayor Clemente Agosto-Lugardo ("Agosto") on behalf
of the Municipality. On the same day, municipal officials and
police officers took control of the construction site, which
was on municipal property.
taking control of the site, the Municipality initially barred
OSSAM from removing any property from the construction site.
The Municipality alleges that this was necessary to fully
inventory the on-site property and determine the correct
ownership pursuant to the contract. On February 5th and 14th,
OSSAM was permitted to retrieve some of its property from the
site. And on February 18th, OSSAM was finally permitted
access to the site to retrieve "most" of its
property. Appellants allege that at the time of filing the
Complaint, the Municipality still retained security barriers
and fences belonging to OSSAM.
4, 2015, OSSAM, its president José Francisco
Massó-Torrellas and his wife Sarina
Maldonado-Alfandari, and OSSAM's vice-president Francisco
José Massó-Torrellas and his wife Rosa Julia
Estévez-Datiz, filed a complaint in the District Court
of Puerto Rico, against the Municipality, Agosto in his
official capacity as mayor, Agosto and his wife Yaritza
Rosario-Soto in their personal capacities, an indeterminate
number of unnamed Municipality police officers and officials
in their official and personal capacities, along with their
spouses, and any "insurance compan[ies] that may be
responsible to [the] Plaintiffs." JA 12. The plaintiffs
claimed that the defendants violated 42 U.S.C. § 1983
when the defendants acted under color of law to interfere
with the plaintiffs' Fourth, Fifth, and Fourteenth
Amendment rights during the construction site takeover in
February of 2014. The plaintiffs also claimed that these
actions constituted a breach of contract and "a
violation of the Constitution and laws of the Commonwealth of
Puerto Rico." JA 23.
defendants moved to dismiss the § 1983 claim for failure
to state a claim, and also argued that "OSSAM has not
complied with the mandatory arbitration clause in the
contract." JA 41.
Phase II construction contract between OSSAM and the
Municipality included clause 35, which we refer to as the
mediation/arbitration clause. It provided that
[i]n the event that any controversy arises from the
interpretation or of any other class among the parties with
respect to any matter related to this contract, it shall
be previously be [sic] required that before resorting to a
judicial forum for the adjudication of their rights, that the
parties exhaust a mediation procedure. The Municipality
and [OSSAM] will at all times attempt to resolve their claims
and disputes among themselves in [good] faith and if unable
to arrive at an agreement[, ] they bind themselves to
resolving the controversy or dispute through mediation.
JA 117-18 (emphases added). The Phase I contract included the
same clause with an additional final sentence stating that
"[t]he mediator's decision will be final and
firm." Add. 2. This sentence was not included in the
Phase II contract.
usual meaning of arbitration is that the dispute resolution
is binding and final. See Fit Tech, Inc. v. Bally Total
Fitness Holding Corp., 374 F.3d 1, 7 (1st Cir. 2004).
Conversely, the usual meaning of mediation is that the
dispute resolution is non-binding. See In re Atlantic
Pipe Corp., 304 F.3d 135, 141 (1st Cir. 2002). For
purposes of resolving this ...