redondo construction corp. v. izquierdo, 1st cir. (2014)

7/26/2019 Redondo Construction Corp. v. Izquierdo, 1st Cir. (2014)

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United States Court of AppealsFor the First Circuit

No. 13- 1834

REDONDO CONSTRUCTI ON CORPORATI ON,

Pl ai nt i f f , Appel l ant ,

v.

J OS I ZQUI ERDO, i n hi s of f i ci al capaci t y as Secr et ar y of t heDepar t ment of Tr anspor t at i on and Publ i c Works; PUERTO RI COHI GHWAY AND TRANSPORTATI ON AUTHORI TY; PUERTO RI CO PUBLI C

BUI LDI NGS AUTHORI TY; THE GOVERNOR OF THE COMMONWEALTH OF PUERTORI CO, i n hi s of f i ci al capaci t y; FERNANDO FAGUNDO; CONJ UGAL

PARTNERSHI P FAGUNDO- DOE; J OS LLUCH- GARC A; CONJ UGAL PARTNERSHI PLLUCH- DOE; CONJ UGAL PARTNERSHI P I ZQUI ERDO- DOE,

Def endant s, Appel l ees.

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF PUERTO RI CO

[ Hon. Franci sco A. Besosa, U. S. Di st r i ct J udge]

Bef or e

Lynch, Chi ef J udge,Sel ya and Howard, Ci r cui t J udges.

Yol anda Ben t ez de Al egr a, wi t h whomLui s Cot t o- Romn was onbr i ef , f or appel l ant .Ral Cast el l anos- Mal av, wi t h whomDevel opment & Const r uct i on

Law Gr oup, LLC was on br i ef , f or appel l ee Puer t o Ri co Hi ghway andTr anspor t at i on Aut hor i t y.

Susana I . Peagar i cano- Br own, Assi st ant Sol i ci t or Gener al ,wi t h whomMar gar i t a L. Mer cado Echegar ay, Sol i ci t or Gener al , was onbr i ef , f or appel l ees J os I zqui er do, Fer nando Fagundo, J os Ll uch-


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Garc a, and t he Gover nor of Puer t o Ri co.Lui s F. del Val l e- Emmanuel l i f or appel l ee Puer t o Ri co Publ i c

Bui l di ngs Aut hor i t y.

Mar ch 19, 2014


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LYNCH, Chief Judge. Pl ai nt i f f Redondo Const r uct i on

Cor por at i on has been i n l i t i gat i on agai nst t he def endant s - - t he

Puer t o Ri co Hi ghway and Transpor t at i on Aut hor i t y ( PRHTA) , t he

Puer t o Ri co Publ i c Bui l di ngs Aut hor i t y ( PBA) , and sever al of f i ci al s

at bot h agenci es ( t he i ndi vi dual def endant s) - - f or over a decade.

Redondo al l eges that t he def endant s wer e i n br each of cer t ai n

set t l ement agr eement s wi t h Redondo, t hat t hi s caused Redondo' s

bankr upt cy, and t hat t he def endant s ar e l i abl e i n damages. The

di st r i ct cour t gr ant ed t he PRHTA' s and t he i ndi vi dual def endant s'

mot i ons f or summar y j udgment on t he grounds t hat t he r ecord

cont ai ned i nsuf f i ci ent evi dence t o pr ove damages. See Redondo

Const r . Co. v. I zqui er do, 929 F. Supp. 2d 14, 24 ( D. P. R. 2013) . I t

al so di smi ssed Redondo' s cl ai ms agai nst t he PBA sua spont e. See

i d. We af f i r mt he di st r i ct cour t ' s ent r y of summar y j udgment as to

t he PRHTA and t he i ndi vi dual def endant s but vacate the di smi ssal of

t he cl ai m agai nst t he PBA and remand f or f ur t her pr oceedi ngs.

I .

A. Gui l t y Pl ea and I ni t i al Cont r act Cancel l at i ons

The event s l eadi ng t o t hi s case began on Apr i l 15, 1999,

when Redondo ent ered i nto a pl ea agreement wi t h f ederal

pr osecut or s. Under t he agr eement , Redondo pl ed gui l t y t o ai di ng

and abet t i ng t he maki ng of f al se st at ement s t o t he U. S. Depar t ment

of Transpor t at i on and t o Banco Sant ander de Puer t o Ri co i n t he

cour se of i t s wor k on a f eder al hi ghway pr oj ect . See 18 U. S. C.

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2, 1014, 1020. The next day, t he PRHTA i nf or med Redondo t hat ,

i n l i ght of t he gui l t y pl ea, i t was r evoki ng t he bi ds i t had

awar ded Redondo bef or e t he pl ea and was suspendi ng Redondo f r om

bi ddi ng on new cont r act s f or 30 days, wi t h an ext ensi on l i kel y t o

be announced i n t he f uture. I n May 1999, t he PBA di d t he same.

Redondo chal l enged bot h deci si ons, i ni t i at i ng t wo

admi ni st r at i ve pr oceedi ngs. The pr oceedi ng agai nst t he PBA ended

wi t h a set t l ement agr eement al l owi ng Redondo t o r esume bi ddi ng f or

PBA cont r act s on Apr i l 16, 2000. The pr oceedi ng agai nst t he PRHTA

ended wi t h a set t l ement agr eement al l owi ng Redondo t o r esume

bi ddi ng f or PRHTA cont r act s on December 11, 2000, subj ect t o t he

over si ght of a moni t or i ng servi ce f or appr oxi mat el y a year and a

hal f .

B. Enact ment of Law 458

Redondo' s el i gi bi l i t y t o bi d f or Puer t o Ri co cont r act s

shor t l y came i nt o quest i on agai n, t hi s t i me under a new Puer t o Ri co

st at ute. On December 29, 2000, Puer t o Ri co passed Law 458. See

P. R. Laws Ann. t i t . 3, 928- 928i . Law 458 pr ohi bi t s Puer t o Ri co

agenci es f r om awar di ng cont r act s t o any per son or cor por at i on

convi ct ed of f r aud, embezzl ement , or ot her si mi l ar of f enses

i nvol vi ng publ i c f unds, f or a per i od of 20 year s af t er a f el ony

convi ct i on and 8 years af t er a mi sdemeanor . I d. 928, 928b,

928d. Law 458 i ncl uded a pr ovi si on expl ai ni ng t hat i t "shal l not

appl y r et r oact i vel y nor shal l [ i t ] . . . i nt er f er e wi t h cont r act s

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i n ef f ect . " I d. 928h. The l aw was ef f ect i ve as of t he dat e of

i t s passage.

As t o t he PBA, bet ween Apr i l 16 and December 29, 2000,

Redondo had pl aced f our t een bi ds f or PBA pr oj ect s and had been

awarded one cont r act . Af t er Law 458 became ef f ect i ve, t he PBA

cancel l ed ten of Redondo' s f our t een bi ds, as wel l as t he cont r act

whi ch i t had al r eady execut ed wi t h Redondo. At t he t i me, t he PBA

st at ed t hat i t l acked suf f i ci ent f unds t o pr oceed wi t h t he

pr oj ect s.

As t o t he PRHTA, bet ween December 11 and December 29,

2000, Redondo di d not pl ace any bi ds f or PRHTA cont r act s. Shor t l y

af t er Law 458 became ef f ect i ve, however , on Febr uary 14, 2001, t he

PRHTA i nf ormed Redondo t hat i t was wi t hdr awi ng f r omt he set t l ement

i t had r eached wi t h Redondo, ci t i ng Redondo' s f ai l ur e t o compl y

wi t h a set t l ement t er m r equi r i ng i t t o deposi t $25, 000 i nt o escr ow

t o f und t he moni t or i ng servi ce. Lat er deposi t i on evi dence t ended

t o show t hat t he PRHTA was mot i vated by the pol i cy of Law 458

r egar dl ess of t he Law' s non- r et r oact i vi t y pr ovi si on. Redondo

deposi t ed t he f unds i nt o escr ow. The PRHTA t hen sought t o r eopen

admi ni st r at i ve pr oceedi ngs agai nst Redondo t o det er mi ne t he l engt h

of Redondo' s suspensi on. As descr i bed l at er , t he PRHTA event ual l y

pr evai l ed at t he admi ni st r at i ve l evel , and Redondo l at er sought

j udi ci al r evi ew of t he admi ni st r at i ve deci si on i n t he Puer t o Ri co

courts.

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C. Pr ocedur al Hi st or y

Whi l e t he Puer t o Ri co admi ni st r at i ve pr oceedi ngs bet ween

Redondo and t he PRHTA wer e pendi ng, i n December 2001, Redondo f i l ed

a compl ai nt i n f eder al cour t , al l egi ng t hat t he PRHTA, t he PBA, and

t he i ndi vi dual def endant s had unl awf ul l y appl i ed Law 458 t o

Redondo, put t i ng t he agenci es i n br each of t hei r r espect i ve

set t l ement agr eement s. Redondo' s compl ai nt al l eged t hat t he

appl i cat i on of Law 458 vi ol at ed var i ous pr ovi si ons of t he U. S.

Const i t ut i on, i ncl udi ng i t s Due Pr ocess and Ex Post Fact o Cl auses.

The compl ai nt al so st at ed suppl emental cl ai ms under Puer t o Ri co l aw

f or damages ar i si ng out of t he al l eged br each of cont r act . Shor t l y

af t er f i l i ng t he compl ai nt , Redondo f i l ed f or bankrupt cy.

The def endant s i n t he f eder al act i on f i l ed a mot i on t o

di smi ss. I n r esponse, i n Oct ober 2002, t he di st r i ct cour t hel d

t hat Redondo had f ai l ed t o st at e a f eder al cl ai m wi t h r espect t o

t he Ex Post Fact o, Doubl e J eopardy, and Due Process cl auses. See

Redondo Const r . Cor p. v. I zqui er do (Redondo I ) , No. 01- 2690, sl i p

op. at 6- 23 ( D. P. R. Oct . 30, 2002) . I n r eachi ng t hat concl usi on,

t he di st r i ct cour t expl i ci t l y consi der ed Redondo' s ar gument t hat

Law 458 " r uns af oul of t he pr esumpt i on agai nst r et r oact i vi t y

i nher ent i n t he common l aw t r adi t i on. " I d. at 27. The di st r i ct

cour t expl ai ned t hat al t hough t he l aw t akes i nt o account past

behavi or i n t he f or m of past convi cti ons, i t oper at es onl y

pr ospect i vel y: "I n essence, no bi d or publ i c cont r act af t er

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December 2000 shal l be awar ded t o anyone convi ct ed of t he cr i mes

l i st ed i n t he debar ment st at ut e. " I d. at 23.

Whi l e pr ovi di ng t hat const r uct i on of t he st at ut e, t he

di st r i ct cour t di d not di smi ss t he case out r i ght . I nst ead, i t hel d

t hat some of Redondo' s cl ai ms coul d be "r e- char act er i zed" as a

Cont r act s Cl ause chal l enge, whi ch coul d sur vi ve t he mot i on t o

di smi ss. I d. Thus, t he r emai ni ng cl ai ms af t er Redondo I wer e t he

Cont r act s Cl ause cl ai m and t he suppl ement al cl ai ms under Puer t o

Ri co l aw.

Fol l owi ng t he r ul i ng on t he mot i on t o di smi ss, t he

f ederal pr oceedi ngs wer e st ayed on t he PRHTA' s mot i on unt i l t he

Puer t o Ri co admi ni st r at i ve pr oceedi ngs concl uded.

Redondo' s admi ni st r at i ve hear i ng occur r ed i n 2003. The

hear i ng exami ner concl uded t hat t he PRHTA coul d not wi t hdr aw f r om

t he set t l ement based on Redondo' s f ai l ur e t o pl ace t he f unds i nt o

escr ow pr ompt l y, concl udi ng t hat t hi s f ai l ur e was not a mat er i al

br each of t he set t l ement agr eement . The Secret ary of t he

Depar t ment of Tr anspor t at i on and Publ i c Wor ks i ni t i al l y adopt ed t he

exami ner ' s r epor t but , on t he PRHTA' s mot i on, l at er r ever sed hi s

deci si on and r ul ed i n f avor of t he PRHTA i n Oct ober 2004. Redondo

sought j udi ci al r evi ew of t he agency deci si on i n t he Puer t o Ri co

Cour t of Appeal s. On May 31, 2005, t he Puer t o Ri co Cour t of

Appeal s r ul ed t hat , even i f Redondo was i n br each of t he set t l ement

agr eement , t he br each was not suf f i ci ent t o excuse t he PRHTA f r om

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i t s obl i gat i ons. The cour t hel d t hat t he PRHTA had t o compl y wi t h

t he set t l ement agr eement and ordered speci f i c per f ormance. See

App. 863 ( cer t i f i ed t r ansl at i on of Redondo Const r . Cor p. v. P. R.

Hwy. & Tr ansp. Aut h. ( Redondo I I ) , No. KLRA0400982, 2005 WL 1475931

( P. R. Ci r . May 31, 2005) ) . The Puer t o Ri co Supr eme Cour t deni ed

t he PRHTA' s pet i t i on f or cer t i or ar i and i t s t wo mot i ons f or

r econsi der at i on. The Puer t o Ri co Cour t of Appeal s di d not di scuss

t he i mpact of Law 458, whi ch was not br i ef ed or argued bef ore i t .

The f eder al pr oceedi ngs r esumed af t er Redondo I I , but no

si gni f i cant act i on occur r ed f or over a year and a hal f as t he case

was t r ansf er r ed t o t hr ee successi ve j udges. Event ual l y, t he

di st r i ct cour t set a deadl i ne of Apr i l 30, 2007 f or al l di sposi t i ve

mot i ons. On t hat date, t he PRHTA and t he PBA each moved f or

summary j udgment on t he Cont r act s Cl ause cl ai m and ar gued t hat ,

af t er summary j udgment was gr ant ed on t hat cl ai m, t he di st r i ct

cour t shoul d decl i ne t o exer ci se suppl ement al j ur i sdi ct i on over t he

r emai ni ng Puer t o Ri co l aw cl ai ms. Over t he next f ew mont hs,

sever al ot her pr et r i al mot i ons wer e f i l ed, and t r i al was set f or

Febr uar y 11, 2008.

On Februar y 7, 2008, about ni ne mont hs af t er t he summar y

j udgment mot i ons wer e f i l ed and j ust f our days bef or e t he schedul ed

t r i al dat e, t he di st r i ct cour t gr ant ed summar y j udgment i n f avor of

t he def endant s and di smi ssed t he suppl ement al Puer t o Ri co l aw

cl ai ms wi t hout pr ej udi ce i n accor dance wi t h t he def endant s'

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mot i ons. Redondo Const r . Cor p. v. I zqui er do ( Redondo I I I ) , 550 F.

Supp. 2d 257, 268 ( D. P. R. 2008) .

Redondo appeal ed. On appeal , t hi s cour t uphel d t he

di st r i ct cour t ' s r ul i ng on t he Cont r act s Cl ause cl ai m but r ever sed

i t s deci si on t o di smi ss t he suppl ement al cl ai ms. Redondo Const r .

Cor p. v. I zqui er do ( Redondo I V) , 662 F. 3d 42 ( 1st Ci r . 2011) . We

r easoned t hat consi der at i ons of equi t y demanded t hat t he cour t

r et ai n j ur i sdi ct i on over t he suppl ement al cl ai ms because t he

par t i es had dedi cat ed subst ant i al r esour ces t o t he case and t he

summar y j udgment deci si on had come j ust f our days bef or e t he

schedul ed t r i al dat e. I d. at 48- 50. I n doi ng so, we obser ved t hat

t he Cont r act s Cl ause cl ai m f ai l ed i n par t because "[ n] ei t her

Aut hor i t y has asser t ed as an af f i r mat i ve def ense t hat i t i s excused

by Law 458 . . . f r om compensat i ng Redondo i n damages i f Redondo

est abl i shes a br each of cont r act , " meani ng t hat Law 458 di d not

i mper mi ssi bl y ext i ngui sh Redondo' s r emedi es f or br each of cont r act .

I d. at 48.

Our hol di ng meant t hat t he onl y remai ni ng cl ai ms i n t he

case wer e Redondo' s breach of cont r act cl ai ms agai nst t he var i ous

def endant s under Puer t o Ri co l aw. See i d. at 50. We f ur t her not ed

t hat t he Puer t o Ri co cour t s had al r eady resol ved t he quest i on of

whet her t he PRHTA was i n br each, meani ng t hat t he onl y r emai ni ng

i ssue as agai nst t he PRHTA on remand was "whether Redondo was

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ent i t l ed t o damages f or t he Hi ghway Aut hor i t y' s br each, and i f so,

how much. " I d. at 50.

On r emand, t he di st r i ct cour t i nvi t ed addi t i onal br i ef i ng

on t he r emai ni ng i ssues. The i ndi vi dual def endant s f i l ed a mot i on

f or j udgment on t he pl eadi ngs, whi ch was deni ed. Lat er , t he PRHTA

and the i ndi vi dual def endant s, but not t he PBA, moved f or summary

j udgment . On May 28, 2013, t he di st r i ct cour t gr ant ed t he PRHTA' s

and i ndi vi dual def endant s' mot i ons f or summary j udgment . See

Redondo Const r . Co. v. I zqui er do ( Redondo V) , 929 F. Supp. 2d 14,

24 ( D. P. R. 2013) . I t went on t o di smi ss t he ent i r e case, i ncl udi ng

t he cl ai ms agai nst t he PBA, sua spont e. See i d. The di st r i ct

cour t r easoned t hat , af t er our deci si on i n Redondo I V, t he onl y

r emai ni ng i ssue was whet her Redondo was ent i t l ed t o damages and, i f

so, what amount . I t t hen surveyed t he pl eadi ngs, obser vi ng t hat

none i ncl uded any pr eci se st at ement of damages, or even of t he

gener al nat ure of damages beyond br oad st at ement s such as

"f i nanci al col l apse. " I d. at 18. I t concl uded t hat t he onl y

r ecor d evi dence on t hi s poi nt was a pai r of exper t r epor t s ( one

f r om 2010 and one f r om 2007) f r om Redondo' s exper t , CPA Raf ael

Per ez Vi l l ar i ni , and Vi l l ar i ni ' s r el at ed deposi t i on t est i mony. I d.

at 19.

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Turni ng t o t he evi dence, t he cour t excl uded t he 2010

exper t r epor t as i nadmi ssi bl e hearsay because i t was unsworn. 1 I d .

I t t hen exami ned t he exper t ' s deposi t i on t est i mony, r ef er r i ng t o

t he t wo r epor t s wher e necessar y t o i l l umi nat e t he t est i mony. Af t er

est abl i shi ng t he f r amewor k of t he Dauber t i nqui r y, see Dauber t v.

Mer r el l Dow Phar m. , I nc. , 509 U. S. 579, 592 ( 1993) , t he di st r i ct

cour t det er mi ned t hat Vi l l ar i ni ' s t est i mony was "unr el i abl e"

because i t depended on t he f aul t y assumpt i on t hat Redondo coul d

have bi d f or cont r act s f r om t he t i me i t s t wo debar ment per i ods

ended, i n Apr i l and December 2000, t hr ough t he pr esent . See

Redondo V, 929 F. Supp. 2d at 20- 21. That was because Law 458

bar r ed Redondo f r ombi ddi ng on cont r act s af t er December 2000. The

di st r i ct cour t expl ai ned t hat t he l aw of t he case est abl i shed t hat

poi nt . I d. at 21- 22. The cour t went on t o r ej ect Redondo' s

counterar gument t hat Redondo I V had r equi r ed t hat Law 458 not appl y

r et r oact i vel y, di st i ngui shi ng bet ween Redondo' s f ut ur e abi l i t y t o

pur sue bi ds af t er December 29, 2000, whi ch t he l aw val i dl y

ext i ngui shed, and i t s r emedy f or any br each of t he set t l ement

agr eement , whi ch t he l aw di d not and coul d not af f ect under Redondo

I V. See i d. at 22. There was no evi dence of damages segr egat ed

out f or t he per i od bef ore December 29, 2000 as t o t he PRHTA.

Because t he exper t t est i mony was unr el i abl e, t he cour t r easoned,

1 The di st r i ct cour t di d not ment i on whet her t he 2007 exper tr epor t was l i kewi se excl uded.

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Redondo coul d poi nt t o no evi dence of damages agai nst t he PRHTA,

meani ng t hat i t had f ai l ed t o make out a necessary el ement of i t s

case and coul d not sur vi ve summary j udgment . I d. at 23.

The di st r i ct cour t concl uded by obser vi ng t hat t he onl y

cl ai ms agai nst t he i ndi vi dual def endant s wer e f or damages under t he

same t heor y, whi ch meant t hat summar y j udgment was al so proper

t her e because t her e was l i kewi se no pr oof of damages. See i d. at

23- 24.

Fi nal l y, act i ng sua spont e, t he cour t "di smi ssed" t he

case "wi t h pr ej udi ce, " t her eby t er mi nat i ng t he cl ai m agai nst t he

PBA even t hough t he PBA had not moved f or summar y j udgment . See

i d. at 24. Redondo appeal s.

I I .

We r evi ew t he di st r i ct cour t ' s gr ant of summary j udgment

de novo. See Bi sbano v. St r i ne Pr i nt i ng Co. , 737 F. 3d 104, 107

( 1st Ci r . 2013) . We f i r st exami ne whet her t he l aw of t he case

pl aces any l i mi t s on Redondo' s br each of cont r act cl ai m, t hen t ur n

t o whet her Redondo has pr esent ed evi dence suf f i ci ent t o car r y a

pr oper l y l i mi t ed cl ai m t hr ough summary j udgment .

A.

The l aw of t he case doct r i ne est abl i shes t hat "when a

cour t deci des upon a r ul e of l aw, t hat deci si on shoul d cont i nue t o

govern the same i ssues i n subsequent st ages i n the same case. "

Uni t ed St at es v. Mat t hews, 643 F. 3d 9, 12 ( 1st Ci r . 2011) ( quot i ng

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Ar i zona v. Cal i f or ni a, 460 U. S. 605, 618 ( 1983) ) ( i nt er nal

quot at i on mar k omi t t ed) . " [ A] l egal deci si on made at one st age of

a ci vi l or cr i mi nal case, unchal l enged i n a subsequent appeal

despi t e the exi st ence of ampl e oppor t uni t y t o do so, becomes t he

l aw of t he case f or f ut ur e st ages of t he same l i t i gat i on. " I d.

( quot i ng Uni t ed St at es v. Bel l , 988 F. 2d 247, 250 ( 1st Ci r . 1993) )

( i nt er nal quot at i on mar ks omi t t ed) .

I n Redondo I , t he di st r i ct cour t consi der ed Redondo' s

cl ai m t hat Law 458 had an i mpr oper r et r oact i ve ef f ect . I n doi ng

so, i t gave a st at ement of t he l aw' s const r uct i on, expl ai ni ng:

[ Law 458] t akes account of past behavi or i nor der t o i nst i t ut e ci vi l debar mentpr oceedi ngs. The st atut e, however , does notoper at e t o regul at e past behavi or but f ut ur ebehavi or . I n essence, no bi d or publ i ccont r act af t er December 2000 shal l be awardedt o anyone convi ct ed of t he cr i mes l i st ed i nt he debar ment st at ut e. Ther ef or e, t he st at ut ecannot be sai d t o appl y r et r oact i vel y becausei t t akes i nt o account past admi ssi ons ofgui l t .

Redondo I , sl i p op. at 27 ( emphasi s added) . Under t hi s

const r uct i on, Redondo woul d not be el i gi bl e to ear n publ i c

cont r act s af t er December 2000. 2

2 Thi s const r uct i on was suppor t ed by ot her st at ement s i nRedondo I . For exampl e, t he cour t al so expl ai ned t hat , under Law

458, Puer t o Ri co "si mpl y ref uses t o do busi ness wi t h" Redondo, andt hat t hi s ref usal was not i mpr oper . Redondo I , sl i p op. at 23.Si mi l ar l y, i n al l owi ng a Cont r act s Cl ause cl ai m t o pr oceed, t hedi st r i ct cour t l i mi t ed i t s di scussi on t o a pr ovi si on of Law 458t hat cal l ed f or t he "aut omat i c r esci ssi on of al l cont r acts i nef f ect , " i d. ; i t di d not di scuss the possi bi l i t y of a Cont r act sCl ause cl ai mwi t h r espect t o t he f ai l ur e t o awar d f ut ur e cont r act s.

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Thi s st at ement i n Redondo I i s a l egal deci si on gover ni ng

t he appl i cat i on of Law 458. Redondo di d not chal l enge i t on appeal

despi t e an ampl e oppor t uni t y t o do so. Consequent l y, t he di st r i ct

cour t ' s 2002 i nt er pr et at i on of Law 458 i n Redondo I i s l aw of t he

case. Redondo cannot now chal l enge t he concl usi on t hat Law 458

val i dl y pr event ed i t f r om bi ddi ng f or publ i c cont r acts af t er

December 29, 2000. Nor can i t ar gue t hat Law 458 di d not appl y t o

i t at al l ; i t s ent i r e f eder al case was pr emi sed on t he not i on t hat

Law 458 di d appl y.

Redondo argues t hat even i f Redondo I est abl i shed t hi s

pr i nci pl e, i t i s no l onger l aw of t he case because of i nt er veni ng

deci si ons i n Redondo I I and Redondo I V. I n Redondo I I , pl ai nt i f f

obser ves, t he Puer t o Ri co Cour t of Appeal s or der ed speci f i c

per f ormance, more t han f our years af t er Law 458 t ook ef f ect . See

Redondo I I , App. 900. Redondo ar gues that t hi s or der i mpl i ci t l y

assumes t hat Law 458 does not appl y t o i t , si nce ot her wi se speci f i c

per f or mance woul d be i mpossi bl e. I t al so ar gues t hat l egal

i mpossi bi l i t y i s an af f i r mat i ve def ense that t he PRHTA had t o, but

di d not , r ai se.

Redondo' s ar gument f ai l s t o acknowl edge that t he i mpact

of Law 458 was not bef ore t he cour t i n Redondo I I . Nei t her par t y

di scussed Law 458 i n t he br i ef s, and the cour t di d not ment i on the

l aw even a si ngl e t i me. Because t he Puer t o Ri co Cour t of Appeal s

di d not consi der t he ef f ect of Law 458 at al l , we do not r ead i t s

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or der of speci f i c per f or mance as an i mpl i ci t endor sement of

Redondo' s posi t i on. Li kewi se, we do not consi der t he PRHTA' s

f ai l ur e t o br i ef t he i ssue of Law 458 bef or e t he Puer t o Ri co Cour t

of Appeal s t o wai ve any argument r egardi ng t he l aw' s ef f ect ,

because the i ssue of whet her speci f i c per f ormance was possi bl e di d

not ar i se unt i l t he cour t i ssued i t s opi ni on or der i ng speci f i c

per f or mance. 3

Redondo goes on t o ar gue t hat our opi ni on i n Redondo I V

r esol ves t he l aw of t he case i ssue i n i t s f avor . I t ar gues t hat

our Cont r act s Cl ause hol di ng depended on an "underst andi ng" t hat

Redondo "had an avai l abl e r emedy i n damages. " Thi s argument i s

cor r ect on i t s own t er ms; we di d expl ai n t hat t he f act t hat Redondo

st i l l had a remedy i n damages meant t her e was no Cont r act s Cl ause

vi ol at i on. See Redondo I V, 662 F. 3d at 48 ( " I f a st at e br eaches a

cont r act but does not i mpai r t he count er par t y' s r i ght t o r ecover

damages f or t he br each, t he st at e has not i mpai r ed t he obl i gat i on

of t he cont r act . ") . But t hat concl usi on does not l ead as f ar as

Redondo bel i eves. We hel d onl y t hat Law 458 was not avai l abl e as

an af f i r mat i ve def ense t o excuse the def endant s " f r omcompensat i ng

Redondo i n damages i f Redondo est abl i shes a breach of cont r act . "

I d. We di d not cal l i nt o quest i on t he di st r i ct cour t ' s pr i or

3 Addi t i onal l y, Redondo has not f i l ed sui t t o compel t heenf or cement of t he speci f i c per f or mance or der f r om Redondo I I , sot he PRHTA st i l l , ni ne year s af t er Redondo I I , has had no need t or ai se Law 458 as an af f i r mat i ve def ense.

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deci si on i n Redondo I t hat Law 458 val i dl y bar r ed Redondo f r om

bi ddi ng af t er December 2000. Nor di d we hol d, ei t her expr essl y or

i mpl i ci t l y, t hat t he agenci es had wai ved t he use of Law 458 as an

af f i r mat i ve def ense agai nst any chal l enge t o t hei r deci si ons

bar r i ng Redondo f r om bi ddi ng af t er December 2000. 4

Because nei t her t he Puer t o Ri co cour t ' s deci si on i n

Redondo I I nor our deci si on i n Redondo I V cal l ed Redondo I ' s

const r uct i on of Law 458 i nt o quest i on, t hat const r uct i on st i l l

gover ns her e. Redondo' s damages on i t s br each of cont r act cl ai ms

cannot be pr emi sed on t he pr oposi t i on t hat , absent any br each by

t he PRHTA, Redondo woul d have had an unf et t ered r i ght t o bi d on and

wi n PRHTA cont r act s af t er December 29, 2000.

B.

Because Redondo bear s t he burden of pr oof , i t must poi nt

t o af f i r mat i ve, admi ssi bl e evi dence suppor t i ng i t s cl ai m f or

damages t o sur vi ve t he PRHTA' s and t he i ndi vi dual def endant s'

mot i ons f or summary j udgment . See FDI C v. El der Care Ser vs. , I nc. ,

82 F. 3d 524, 526 ( 1st Ci r . 1996) ; Gar si de v. Osco Dr ug, I nc. , 895

F. 2d 46, 49 ( 1st Ci r . 1990) . We r evi ew t he di st r i ct cour t ' s

excl usi on of evi dence on Dauber t gr ounds f or abuse of di scr et i on.

See Smi t h v. J enki ns, 732 F. 3d 51, 64 ( 1st Ci r . 2013) .

4 Redondo al so of f er s argument s based on t he doct r i nes of r esj udi cat a and j udi ci al est oppel . These ar gument s f ai l f or t he samer easons det ai l ed above.

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The onl y r ecor d evi dence r egardi ng damages caused by t he

PRHTA and t he i ndi vi dual def endant s was t he deposi t i on t est i mony of

CPA Vi l l ar i ni and hi s t wo exper t r epor t s. 5 Even assumi ng t he

r epor t s wer e admi ssi bl e, 6 t hi s evi dence was pr oper l y excl uded as

unr el i abl e. Vi l l ar i ni ' s r epor t s and deposi t i on r el y on t he

assumpt i on t hat "Redondo coul d have submi t t ed bi ds f or cont r act s

f r om December 11, 2000 t o t he pr esent , wi t hout i nt er r upt i ons, f or

const r uct i on pr oj ect s car r i ed out by t he [ PRHTA] . " But as

descr i bed above, t he l aw of t he case est abl i shes t hat Redondo coul d

not have bi d f or cont r act s f r omt he PRHTA af t er December 29, 2000.

The assumpt i on i s f l awed, and t he di st r i ct cour t di d not abuse i t s

di screti on i n concl udi ng t hat t hi s makes Vi l l ar i ni ' s evi dence

unr el i abl e.

Vi l l ar i ni ' s evi dence cannot be sal vaged by t r yi ng t o

ext r act f r omi t t he amount of damages, i f any, cor r espondi ng to t he

pr oper t i me per i od. The exper t r epor t s cal cul at ed t ot al damages

between 2000 and 2010 but di d not br eak down t he damages f or

i ndi vi dual year s wi t hi n t hat per i od. The r epor t s show no pl ausi bl e

5 The cont ent of t he r epor t s i s essent i al l y t he same as t hedeposi t i on t est i mony. Our anal ysi s appl i es equal l y t o t he r epor t sand t he t est i mony, and we consi der t hem as a si ngl e uni t f or

pur poses of si mpl i ci t y i n addr essi ng Redondo' s ar gument s.6 Redondo asser t s, wi t hout ci t at i on t o t he r ecor d, t hat t he

r epor t s wer e "aut hent i cat ed" dur i ng Vi l l ar i ni ' s deposi t i on, andt hat t hi s woul d be enough t o r ender t he r epor t s admi ssi bl e, ci t i ng11- 56 Moor e' s Federal Pract i ce 56. 94[ 4] [ b] . We assume t hi spoi nt , wi t hout deci di ng, i n Redondo' s f avor .

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way, and Redondo suggest s none, t o di st i ngui sh t he damages premi sed

on t he f aul t y assumpt i on t hat Redondo coul d wi n PRHTA cont r act s

af t er December 29, 2000 f r om t hose t hat do not r el y on t hat

assumpt i on. That probl em i s compounded wi t h r espect t o t he

i ndi vi dual def endant s, f or whom t her e i s no r el i abl e way t o

separate ei t her t he pr oper t i me per i od or t he pr opor t i on of damages

at t r i but abl e t o t he i ndi vi dual def endant s.

Wi t hout Vi l l ar i ni ' s evi dence, Redondo has no r ecor d

evi dence of damages agai nst t he PRHTA or t he i ndi vi dual def endant s.

The di st r i ct cour t cor r ect l y enter ed summar y j udgment accor di ngl y.

I I I .

We next consi der t he di st r i ct cour t ' s sua spont e

di smi ssal 7 of t he br each of cont r act cl ai ms agai nst t he PBA. We

appl y "especi al l y r i gor ous appel l at e r evi ew" t o t he di st r i ct

cour t ' s sua spont e di smi ssal , al t hough t he ul t i mat e de novo

st andard of r evi ew does not var y. Sant i ago v. Puer t o Ri co, 655

7 The di st r i ct cour t di d not expl i ci t l y di scuss t he cl ai msagai nst t he PBA. I nst ead, i t addr essed t hem af t er gr ant i ng t hePRHTA' s and i ndi vi dual def endant s' mot i ons f or summary j udgmentsi mpl y by st at i ng " [ t ] hi s case i s DI SMI SSED, wi t h pr ej udi ce. " Wewi l l r ef er t o t he "di smi ssal " as a pr oxy f or ent r y of summar y

j udgment agai nst Redondo on t he cl ai ms agai nst t he PBA. The l abeldoes not change our anal ysi s, because t he st andards f or r evi ewi ngsua sponte di smi ssal s and sua sponte ent r y of summar y j udgment ar el ar gel y i dent i cal . Compar e, e. g. , Chut e v. Wal ker , 281 F. 3d 314,319 ( 1st Ci r . 2002) ( st andar d f or sua spont e di smi ssal ) , wi t hBer kovi t z v. Home Box Of f i ce, I nc. , 89 F. 3d 24, 29 ( 1st Ci r . 1996)( st andar d f or sua sponte summar y j udgment ) .

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F. 3d 61, 72 ( 1st Ci r . 2011) ; N. H. Ri ght t o Li f e Pol i t i cal Acti on

Comm. v. Gardner , 99 F. 3d 8, 12 ( 1st Ci r . 1996) .

Ther e ar e t wo i mpor t ant l i mi t s on a di st r i ct cour t ' s

aut hor i t y t o enter j udgment sua spont e at t he summar y j udgment

st age:

Fi r st , a di st r i ct cour t or di nar i l y may or dersummary j udgment on i t s own i ni t i at i ve onl ywhen di scover y i s suf f i ci ent l y advanced thatt he par t i es have enj oyed a r easonabl eoppor t uni t y t o gl ean t he mat er i al f act s.Second, t he cour t may ent er summar y j udgmentsua spont e onl y i f i t f i r st gi ves t he t ar get edpar t y appr opr i at e not i ce and a chance t opr esent i t s evi dence on t he essent i al el ement sof t he cl ai m or def ense.

Ber kovi t z v. Home Box Of f i ce, I nc. , 89 F. 3d 24, 29 ( 1st Ci r . 1996)

( ci t at i ons omi t t ed) .

We ar e sat i sf i ed t hat t he f i r st condi t i on was met her e.

The di st r i ct cour t enter ed j udgment on t he cl ai ms agai nst t he PBA

wel l af t er t he cl ose of di scover y, and no par t y has ar gued t hat

addi t i onal t i me f or di scovery was needed. However , t he sua spont e

ent r y of summary j udgment f ai l s on t he second condi t i on. Si nce t he

PBA di d not seek summar y j udgment or di smi ssal , Redondo was never

put on not i ce t hat ent r y of j udgment was a possi bi l i t y, nor was i t

gi ven t he oppor t uni t y t o pr esent i t s evi dence t o avoi d t hat r esul t .

The di st r i ct cour t expl ai ned t hat one def endant ' s mot i onf or summar y j udgment may be suf f i ci ent t o put t he pl ai nt i f f on

not i ce of t he need t o i dent i f y pr oof as t o t he ot her def endant s.

That may be t r ue when t he same pr oof appl i es t o bot h def endant s.

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Her e, however , t he cl ai m agai nst t he PBA i s di f f er ent l y si t uat ed

t han t he cl ai ms agai nst t he PRHTA and t he i ndi vi dual def endant s.

Under t he l aw of t he case, Redondo was el i gi bl e t o bi d f or PBA

cont r act s bet ween Apr i l 16 and December 29, 2000. I t actual l y di d

pl ace sever al bi ds dur i ng t hat per i od and was awarded a PBA

cont r act f or one pr oj ect , t he Van Scoy school pr oj ect . The PBA

l at er cancel l ed t he Van Scoy cont r act af t er Law 458 was passed.

Thi s cont r ast s wi t h Redondo' s r el at i onshi p wi t h t he PRHTA f or

sever al r easons, i ncl udi ng t hat t he Van Scoy cont r act was

t er mi nated8 and t hat Redondo had not pl aced any bi ds wi t h t he PRHTA

dur i ng t hat t i me.

The di st r i ct cour t ' s f ai l ur e t o pr ovi de Redondo not i ce

and t he oppor t uni t y to put f or war d t hat di f f er ent evi dence was

er r or . Because t he cour t di d not meet t he second necessary

condi t i on f or ent er i ng j udgment sua spont e at t hi s st age, i t s sua

spont e di smi ssal of t he cl ai ms agai nst t he PBA cannot st and.

I V.

For t he r easons st at ed above, t he di st r i ct cour t ' s ent r y

of summar y j udgment i n f avor of t he PRHTA and t he i ndi vi dual

def endant s i s af f i r med. The di smi ssal of t he cl ai ms agai nst t he

8 Wi t hout i n any way i ndi cat i ng a vi ew on i t s admi ssi bi l i t yas par t of Redondo' s case, we note t hat t he PBA' s exper t r epor tst ates t hat , i f t he PBA owes damages at al l , t he sumof damages f ort he cancel l ed cont r act i s $190, 088.

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PBA i s vacat ed and t he case remanded f or f ur t her pr oceedi ngs

consi st ent wi t h t hi s opi ni on.

Cost s ar e awarded t o t he PRHTA and i ndi vi dual def endant s.

No cost s are awarded wi t h respect t o t he PBA.

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redondo construction corp. v. izquierdo, 1st cir. (2014)

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