Guillemard-Ginorio v. Contreras-Gomez , 161 F. App'x 24 ( 2005 )

Not for Publication in West's Federal Reporter
Citation Limited Pursuant to 1st Cir. Loc. R. 32.3
United States Court of Appeals
For the First Circuit
Nos. 04-1331, 04-2045
ANDRES GUILLEMARD-GINORIO; MARIA M. NOBLE-FERNANDEZ;
CONJUGAL PARTNERSHIP GUILLEMARD-NOBLE;
LONE STAR INSURANCE PRODUCERS, INC;
JORGE R. URRUTIA-VALLES; CAROLYNE J. WIEWALL-NAVAS;
CONJUGAL PARTNERSHIP URRUTIA-WIEWALL;
URRUTIA VALLES, INC.,
Plaintiffs, Appellees,
v.
FERMIN M. CONTRERAS GOMEZ, Individually and as Insurance
Commissioner of Puerto Rico;
Defendants, Appellants,
JANE DOE; CONJUGAL PARTNERSHIP CONTRERAS-DOE;
JANE DOE; JOHN DOE,
Defendants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jay A. García-Gregory, U.S. District Judge]
Before
Selya, Circuit Judge,
Baldock,* Senior Circuit Judge,
and Howard, Circuit Judge.
*
Of the Tenth Circuit, sitting by designation.
Luis Rodriguez-Muñoz with whom Eileen Landron Guardiola,
Eduardo A. Vera Ramírez, Ivette M. Berrios Hernandez, and Landrón
& Vera, LLP, were on brief, for appellants.
Joseph D. Steinfield with whom Prince Lobel, Glovsky & Tye,
LLP, Charles A. Cuprill-Hernandez, and Joan S. Peters, were on
brief, for appellees.
December 13, 2005
Per Curiam. We address two interlocutory appeals brought
by Commissioner Fermin M. Contreras Gomez and the Office of the
Insurance Commissioner of Puerto Rico("OIC")1 challenging the
district court's entry of a preliminary injunction and denial of a
motion to dismiss on the basis of sovereign, absolute, and
qualified immunity.
We take the facts from the complaint. Andres Guillemard-
Ginorio and his spouse, Maria Noble-Fernandez, both well-known
members of the New Progressive Party ("NPP"), have held insurance
licenses as insurance agents for approximately 20 years.
Guillemard and Noble have conducted their business through the
entity Lone Star Insurance Producers, Inc. ("Lone Star")
(collectively "Lone Star plaintiffs"). The Lone Star plaintiffs
have never received any complaints regarding their services or
trustworthiness.
In November and December of 2001 (after a change in
government in the 2000 elections), Lone Star was audited by the
OIC. The audit focused on Lone Star's sales to Puerto Rico
governmental entities and sharing of commissions with an affiliated
1
Plaintiffs brought this action against Contreras in both his
official capacity as Commissioner of the OIC and his personal
capacity. Dorelisse Juarbe succeeded Contreras as Commissioner
after this action was filed, and plaintiffs added her as a
defendant shortly after the motions at issue were decided in the
district court.
-3-
insurance broker.2 Lone Star plaintiffs cooperated fully with the
auditor, providing all necessary information and documentation. At
the close of the audit, the auditor informed Lone Star plaintiffs
that he had discovered no irregularities and that his final report
would issue in early 2002. Since the audit, Lone Star's insurance
license has been renewed twice.
In early 2002, Lone Star plaintiffs learned that
Contreras was making disparaging remarks about Guillemard and
Noble's membership in the NPP. They also learned that Contreras
was investigating Guillemard and Noble's personal and business
affairs by ordering several banks to provide financial information
about both Lone Star and its principals. On December 10, 2003, Lone
Star plaintiffs filed this action seeking damages and injunctive
relief against Contreras and OIC, alleging that Contreras's
improper "investigation" was motivated by political animus.
On December 23, 2003, without providing notice or a
hearing, Contreras issued an order that (1) declared Lone Star
plaintiffs non-trustworthy and incompetent; (2) revoked Lone Star
plaintiffs' insurance license for five years; (3) barred Lone Star
2
Lone Star sold insurance to Puerto Rico government agencies from
1994 to 2000 as part of a consortium with licensed insurance broker
Urrutia Valles, Inc.(and its principals Jorge Urrutia Valles and
Carolyne Wiewall Navas)(collectively "Urrutia Valles plaintiffs").
Lone Star plaintiffs' action was consolidated with Urrutia Valles
plaintiffs' similar action in the district court. Urrutia Valles
plaintiffs voluntarily dismissed their action in the district court
on November 12, 2004, and Urrutia Valles plaintiffs were dismissed
from this appeal on February 15, 2005.
-4-
plaintiffs from applying for another license for five years; and
(4) imposed a $2,035,000 fine. The order was scheduled to become
effective on January 7, 2004, but provided that Lone Star
plaintiffs could request an administrative hearing to contest it.3
The order also stated that, while a request for an administrative
hearing would stay the imposition of the fine, the revocation would
remain in effect pending a final administrative decision.
Following receipt of the order, Lone Star plaintiffs filed an
amended complaint adding claims of retaliation and violation of due
process. Lone Star plaintiffs also requested a temporary
restraining order to prevent the revocation from taking effect, and
moved for a preliminary injunction. The district court granted the
temporary restraining order and scheduled a hearing on the motion
for a preliminary injunction.
After a hearing, at which only Lone Star plaintiffs chose
to present evidence, the district court entered an injunction
restraining Contreras and other officials at OIC from revoking Lone
Star plaintiffs' license pending completion of a full and fair
hearing and decision on Lone Star plaintiffs' challenge to the
revocation order. In its order, the district court concluded that
abstention under the Younger or Burford doctrines4 was unwarranted
3
Lone Star promptly requested this administrative hearing.
4
As developed by the Supreme Court in Younger v. Harris, 401 U.S.
37 (1971), and Burford v. Sun Oil Co., 319 U.S. 315 (1943).
-5-
and that Contreras was not entitled to absolute immunity because
his conduct was neither quasi-judicial nor quasi-prosecutorial.
Contreras filed an interlocutory appeal challenging the preliminary
injunction ("injunction appeal").
Shortly thereafter, Contreras filed in the district court
a motion to dismiss, raising abstention and immunity issues. The
court denied the motion, reaffirmed its prior conclusions regarding
abstention and absolute immunity, held that Contreras was not
entitled to qualified immunity, and concluded that sovereign
immunity was no bar to Lone Star plaintiffs' request for injunctive
relief. Contreras filed a second interlocutory appeal challenging
this decision ("immunity appeal"). The appeals were consolidated
for briefing and argument.
Contreras's challenge to the preliminary injunction
stumbles over a fundamental issue – the existence of a live
controversy. At argument, the panel inquired of both parties
whether the administrative hearing that Lone Star plaintiffs
requested had been held. Both sides agreed that the hearing had
been held two months before argument, that the sanction had been
reduced to a six-month suspension and a $200,000 fine, and that
Lone Star plaintiffs had appealed the decision in the Puerto Rico
court system. As the preliminary injunction's function was purely
to prevent the revocation of Lone Star plaintiffs' license pending
the administrative hearing and decision, the appeal therefore is
-6-
moot. See generally Matos v. Clinton School District, 367 F.3d 68,
71-72 (1st Cir. 2004); CMM Cable Rep., Inc. v. Ocean Coast
Properties, Inc., 48 F.3d 618, 620-21 (1st Cir. 1995); Oakville
Development Corp. v. FDIC, 986 F.2d 611, 613 (1st Cir. 1993).5 We
proceed to the immunity appeal.
We note at the outset that this appeal is narrower than
appellants have suggested, as only the immunity claims are properly
before us.6 Moreover, only Contreras's claim that qualified
immunity bars the claims against him in his personal capacity
merits significant discussion.7
5
Both sides essentially conceded that the injunction appeal was
moot at argument, but we gave Contreras the opportunity to file a
supplemental statement if he disagreed after further consideration
of the issue. No such filing has been made.
6
There is no jurisdiction for reaching the abstention claims
because the preliminary injunction appeal has been dismissed as
moot and the immunity appeal does not properly extend to the
abstention claims. See generally Limone v. Condon, 372 F.3d 39, 50
(1st Cir. 2004)(interlocutory review of qualified immunity issue
does not confer jurisdiction over other issues in the case).
7
Contreras also claims that sovereign immunity and absolute
immunity shield him. Contreras is correct that sovereign immunity
shields an officer in his official capacity from monetary damages,
see Nieves-Marquez v. Commonwealth of Puerto-Rico, 353 F.3d 108,
123 (1st Cir. 2003), but the Lone Star plaintiffs' complaint also
seeks declaratory and prospective injunctive relief against him and
such claims are not barred by sovereign immunity. We note that
Contreras's argument on this issue has lumped the claims against
the OIC and those against Contreras together. This is
inappropriate, as Contreras may properly be subject to prospective
injunctive relief but not so the agency. See id. at 114 n. 1.
Lone Star plaintiffs have acknowledged as much in their brief,
noting that dismissal of the OIC would not impact upon their case.
With respect to absolute immunity, Contreras argues that his
-7-
To determine whether a government official is entitled to
qualified immunity we consider: "(1) whether plaintiff's
allegations, if true establish a constitutional violation; (2)
whether that right was clearly established at the time of the
alleged violation; and (3) whether a similarly situated reasonable
official would have understood that the challenged action violated
the constitutional right at issue." Mihos v. Swift, 358 F.3d 91,
102 (1st Cir. 2004). As the case comes to us in the context of a
motion to dismiss, we must ask "whether the facts alleged, viewed
in the light most favorable to the complaining party, show that the
[defendant's] conduct violated some constitutional right." Limone,
372 F.3d at 44.
As to the first prong, Contreras argues, with little
explanation, that Lone Star's complaint fails because the district
court is required to abstain under Younger or Burford and that the
actions in investigating insurers and suspending their licenses
were essentially judicial or quasi-judicial. See Destek Group,
Inc. v. New Hampshire Public Utilities Commission, 318 F.3d 32, 41
(1st Cir. 2003)("Absolute immunity is available to certain 'quasi
judicial' agency officials who, irrespective of their title,
perform functions essentially similar to those of judges . . . in
a setting similar to that of a court")(internal quotation and
citation omitted). However, Lone Star plaintiffs allege that
Contreras suspended their insurance license, essentially by fiat,
without notice or a hearing. Contreras's activities, as pleaded,
bear no resemblance to what one normally considers "judicial"
functions. See generally Diblasio v. Novello, 344 F.3d 292, 296-
302 (2d Cir. 2003)(summary suspension process too dissimilar to
judicial process to warrant absolute immunity). Thus, at least for
purposes of a motion to dismiss, Contreras is not entitled to
absolute immunity.
-8-
complaint fails to adequately plead a due process violation.8 The
abstention issue is not relevant in a qualified immunity analysis.
As to the unexplained inadequacy of the due process allegations,
Contreras appears to be trying to enforce a heightened pleading
requirement. No such requirement exists. See, e.g., Centro Medico
Del Turabo, Inc. v. Feliciano De Melecio, 406 F.3d 1, 5 (1st Cir.
2005). Our review of the complaint reveals that the district court
correctly determined that the complaint alleges at least three
constitutional violations, one of procedural due process
(deprivation of property without a hearing) and two under the First
Amendment (political discrimination and retaliation).
As to the second prong, Contreras concedes that Lone Star
plaintiffs have a property interest in the license and that a
hearing is typically required before the State may deprive an
individual of his property. Given the weight of authority, it
would be hard to suggest otherwise. See, e.g., Bell v. Burson, 402
U.S. 535, 542 (1971)("except in emergency situations . . . due
process requires that when a State seeks to terminate an interest
such as that here involved, it must afford notice and opportunity
for hearing appropriate to the nature of the case before the
termination becomes effective")(internal quotation and citation
omitted); Mard v. Town of Amherst, 350 F.3d 184, 192 (1st Cir.
8
Contreras only challenges the due process portion of Lone Star
plaintiffs' complaint.
-9-
2003)( "[i]n general, the state must provide some kind of hearing
before depriving an individual of a protected property
interest")(internal quotation and citation omitted); Beauchamp v.
Abadia, 779 F.2d 773, 775 (1st Cir. 1985)(physician entitled to
hearing before license could be revoked). Nonetheless, Contreras
argues the rule is not clearly established, pointing to authority
allowing prehearing suspensions of certain property rights in
certain circumstances. See Gilbert v. Homar, 520 U.S. 924 (1997);
FDIC v. Mallen, 486 U.S. 230 (1988).
Both Gilbert and Mallen acknowledge that due process can
sometimes be satisfied by a post-deprivation hearing. However,
the circumstances in which a post-deprivation hearing is adequate
are narrow:
An important government interest, accompanied
by a substantial assurance that the
deprivation is not baseless or unwarranted,
may in limited cases demanding prompt action
justify postponing the opportunity to be heard
until after the initial deprivation.
Mallen, 486 U.S. at 240; see also Gilbert, 520 U.S. at 930-31.
Contreras claims that his actions meet this standard.
This argument cannot succeed at the motion to dismiss
stage because the argument requires the development of the factual
record. See Mihos, 358 F.3d at 99 ("[w]hen motion to dismiss is
based on the complaint . . . the facts alleged in the complaint
control"). There is nothing in the pleading record establishing
urgency, a special government interest, or "substantial assurance"
-10-
that the deprivation was not baseless. Indeed, the only
"substantial assurance" Contreras refers to is his two-year
investigation, which the Lone Star plaintiffs allege was wrongful
and motivated by political animus. This is in marked contrast to
the situations described in Mallen and Gilbert, where the
"substantial assurance" that the deprivation was warranted came in
the form of the initiation of a criminal prosecution by independent
third parties. See 486 U.S. at 241; 520 U.S. at 934.
As to the third prong of the qualified immunity test,
given the facts alleged in the complaint, we have no difficulty
concluding that a reasonable official in Contreras's position would
have known that instigating an investigation to punish Lone Star
plaintiffs for their political beliefs, and terminating their
insurance license without notice or a hearing in retaliation for
their filing of a legal action would violate their constitutional
rights. See generally Mihos, 358 F.3d at 110. Contreras's
argument -- that his two-year investigation gave him sufficient
information of wrongdoing on the part of Lone Star plaintiffs to
give rise to a reasonable belief that a pre-hearing suspension was
justified -- is directly contrary to Lone Star plaintiffs'
allegations, which must be accepted as true for purposes of the
motion to dismiss. Contreras will have the opportunity to develop
these arguments during discovery. See id. at 98-9 (denial of
qualified immunity simply means that the case may go forward).
-11-
For the reasons stated above, the appeal of the district
court's order granting a preliminary injunction is dismissed as
moot, and the decision of the district court denying the motion to
dismiss on the grounds of immunity is affirmed.
So ordered.
-12-