Universal Insurance Company et al vs Department of Justice, et al

Filing 92

OPINION AND ORDER re 79 Motion for Reconsideration; and 84 Motion for Reconsideration. The Court DENIES defendants' motion to reconsider, (Docket No. 79), and DENIES IN PART plaintiffs' motion to reconsider (Docket No. 84). The motion to dismiss remains DENIED as to plaintiffs' claims for lack of standing and plaintiffs' claims under the Due Process Clause. Plaintiffs' due process claims remain active. The motion to dismiss remains GRANTED as to plaintiffs' claims under the Takings Clause, which are now DISMISSED WITHOUT PREJUDICE. An evidentiary hearing will be held on 7/19/2012 at 9:00 a.m. concerning the remaining issues in the case before Judge Francisco A. Besosa. Signed by Judge Francisco A. Besosa on 06/22/2012. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
UNIVERSAL INSURANCE COMPANY, et
al.,
Plaintiffs,
v.

CIVIL NO. 11-1968 (FAB)

DEPARTMENT OF JUSTICE, et al.,
Defendants.

OPINION AND ORDER
BESOSA, District Judge.
Before the Court is the motion for reconsideration filed by
defendants Commonwealth of Puerto Rico, the Department of Justice
of the Commonwealth of Puerto Rico, and, in his official capacity
as Attorney General, Guillermo Somoza-Colombani (collectively,
“defendants”), (Docket No. 79), and the motion for reconsideration
filed by plaintiffs Universal Insurance Company, MAPFRE PRAICO
Insurance Company, and Cooperativa de Seguros Multiples de Puerto
Rico (collectively, “plaintiffs”), (Docket No. 84).

For the

reasons set forth below, defendants’ motion for reconsideration is
DENIED and plaintiffs’ motion for reconsideration is DENIED in
part.

Civil No. 11-1968 (FAB)

2
DISCUSSION

I.

Background
On July 12, 2011, the Commonwealth of Puerto Rico Legislative

Assembly (“the legislature”) passed Public Law No. 119, known as
the Uniform

Seizure

and

Forfeiture

Act

of 2011

(“Law

119”).

Law 119 establishes the rules that govern all asset forfeiture
procedures in Puerto Rico.

(Docket No. 26-1 at p. 1.)

It repealed

Public Law No. 93 of 1988 (“Law 93”), which “granted certain
Commonwealth instrumentalities the authority to seize assets used
for

illegal

legislature,

purposes.”
the

main

Id.

According

reason

for

to

enacting

the
Law

Puerto
119

was

Rico
that

“multiple amendments and judicial constructions . . . have caused
confusion in the implementation of [Law 93].”

Id.

Therefore,

Law 119 was passed allegedly to “clarif[y] the requirements that
each person must meet to challenge a seizure.”
Notably,

Law

119

changes

the

Id.

requirements

for

who

can

challenge a forfeiture. Id. Its Article 15 provides that “persons
notified as provided in this Act and who demonstrate they are the
owners of the property” may challenge the seizure (emphasis added).
(Docket No. 26-1 at p. 7.)

An owner is “the individual who

exercised dominion and control over the property in question before
it was seized.”

Id. at p. 2.

Article 16 then states that:

Civil No. 11-1968 (FAB)

3

“the plaintiff [who challenges a seizure] shall have the
right to furnish a guaranty in favor of the Commonwealth
of Puerto Rico . . . for the sum of the appraisal of the
seized property within twenty (20) days after the
complaint challenging the seizure is filed.”
Id. at
p. 7-8.
Law 119 also allows insurance companies to challenge automobile
seizures,

but

only

on

behalf

of

the

owners.

Specifically,

Article 16 states that:
“In the case of motor vehicles whose insurance policy
includes a seizure endorsement, the insurance company may
only file a complaint challenging the seizure on behalf
of the owner of the vehicle, for which it shall have to
furnish the guaranty provided in this article (emphasis
added). Id. at p. 8.
Plaintiffs

are

licensed

by

the

Office

of

the

Insurance

Commissioner to operate as insurance carriers in Puerto Rico.
(Docket No. 53 at p. 1.)

They provide insurance coverage to banks

and other financial institutions that finance the purchase of
vehicles.

(Docket No. 10 at ¶ 14.)

Most vehicles purchased in

Puerto Rico are financed; some vehicles are leased. (Docket No. 53
at p. 1.)

When a financial institution finances a vehicle, it may

register its lien on the license and title of the vehicle with the
Department of Transportation and Public Works.

Id.

Financial

institutions may require an insurance policy to finance vehicles.
Id.

Plaintiffs state that they issue those insurance policies to

cover a number of risks, including asset forfeiture.
No. 10 at ¶¶ 9-11, 15.)

(Docket

They also assert that when an insured

Civil No. 11-1968 (FAB)

4

vehicle is seized and then forfeited to the Puerto Rico government,
plaintiffs will pay the financial institutions pursuant to their
insurance contracts. Id. at ¶ 16. Then, plaintiffs allegedly have
the right to subrogation where “the insurer is placed in the same
legal position as the bank or financial institution that financed
the vehicle and is entitled to recover the balance owed to the bank
by the proprietor.”

Id.

On September 30, 2011, plaintiffs filed a complaint for
declaratory judgment and permanent injunction. (Docket No. 1.) On
October 25, 2011, plaintiffs filed a verified amended complaint
against all defendants.
complaint,

plaintiffs

(Docket No. 10.)

seek

Law 119 unconstitutional.
that

Law

119

subgrogation

prevents
pursuant

a

declaratory

In their amended

judgment

Id. at ¶¶ 38 and 49.
them

to

from

their

exercising

insurance

to

declare

Plaintiffs argue
their

policies

right
with

to
the

financial institutions and thus, that Law 119 removes their right
to challenge automobile seizures. Id. at ¶ 36. Plaintiffs request
that defendants be permanently enjoined from enforcing Law 119
because Law 119 violates rights guaranteed by the United States
Constitution.

Id. at ¶ 66.

They assert that Law 119 violates the

Takings Clause and Due Process pursuant to the Fifth and Fourteenth
Amendments,

and

the

Ex

Post

Facto

and

the

Contract

Clauses

Civil No. 11-1968 (FAB)
contained

in

Constitution.

Article

5
I

Section

10

of

the

United

States

Id. at ¶¶ 38 and 49.

On November 22, 2011, defendants filed a motion to dismiss,
(see Docket No. 48), which alleged that plaintiffs failed to state
a claim upon which relief can be granted under Federal Rule of
Civil Procedure 12(b)(6) (“Rule 12(b)(6)”). Defendants argued that
plaintiffs (1) have no property interest in the forfeited vehicles
and no injury - economic or otherwise - and therefore, have no
standing

to

challenge

the

constitutionality

of

the

statute,

(2) fail to state a claim under the Takings Clause, (3) fail to
state a claim for a Due Process violation, (4) fail to state a
claim under the Ex Post Facto Clause, and (5) fail to state a claim
under the Contract Clause.

Id.

On November 25, 2011, plaintiffs filed an opposition to
defendants’ motion to dismiss.
argued

that

defendants

(See Docket No. 52.)

“misinterpret”

plaintiffs’

Plaintiffs
arguments

regarding the Takings Clause and Due Process, id. at p. 2 and 8,
and re-asserted that they have stated a claim for an Ex Post Facto
Clause violation and for a Contract Clause violation, id. at p. 9.
On February 23, 2012, the Court issued an order which denied
in part and granted in part defendants’ motion to dismiss.

The

Court denied defendants’ request to dismiss plaintiffs’ claims for
lack of standing.

(Docket No. 78 at p. 39.)

The Court also denied

Civil No. 11-1968 (FAB)

6

defendants’ request to dismiss plaintiffs’ claims under the Due
Process Clause

and

the

Contract

Clause

of the

United States

Constitution. Id. The Court granted defendants’ motion to dismiss
plaintiffs’ claims under the Takings Clause and the Ex Post Facto
Clause of the United States Constitution.
On

March

8,

2012,

defendants

Id.
filed

a

motion

for

reconsideration and submitted certified English translations of two
cases decided by the Supreme Court of Puerto Rico.1
Nos.

79,

79-2,

79-4.)

Defendants

requested

that

(Docket
the

Court

reconsider their arguments in light of the certified English
translations. (Docket No. 79 at p. 4.)

They also requested that

the Court supplement their original motion to dismiss, (Docket
No. 48), to include the certified translations.

Id.

On March 27, 2012, plaintiffs filed their own motion for
reconsideration.

(Docket No. 84.)

Plaintiffs requested that the

court reconsider their claim under the Takings Clause of the United
States Constitution.
II.

Id. at p. 1.

Motion for Reconsideration
“‘The Federal Rules of Civil Procedure do not specifically

provide for the filing of motions for reconsideration.’”

1

Sanchez-

The Court had not considered the cases previously because they
were submitted only in Spanish and they appeared to be key to the
outcome of the proceedings. 48 U.S.C. § 864; Puerto Ricans for
Puerto Rico Party v. Dalmau, 544 F.3d 58, 67 (1st Cir. 2008).

Civil No. 11-1968 (FAB)

7

Perez v. Sanchez-Gonzalez, 717 F.Supp.2d 187, 193-94 (D.P.R. 2010)
(internal citations omitted).

Any motion for reconsideration is

usually decided pursuant to either Federal Rule of Civil Procedure
59(e) (“Rule 59(e)”)2 or Federal Rule of Civil Procedure 60(b)
(“Rule 60(b)”).3

See In re Spittler, 831 F.2d 22, 24 (1st Cir.

1987) (holding that even though the moving party did not state a
particular rule that permits its motion, “it is settled in this
circuit that a motion which asked the court to modify its earlier
disposition of case because of an allegedly erroneous legal result
is brought under Fed.R.Civ.P. 59(e).”); see also Fisher v. Kadant,
Inc., 589 F.3d 505, 512 (1st Cir. 2009).

A successful Rule 59(e)

motion requires that a party “clearly establish a manifest error of
law or [] present newly discovered evidence.”
v.

Diaz-Santiago,

674

F.3d 21,

32

Markel Am. Ins. Co.

(1st Cir.

2012)

(internal

2

Rule 59(e) provides in pertinent part that: “A motion to alter
or amend a judgment must be filed no later than 28 days after the
entry of the judgment.” Fed.R.Civ.P. 59(e).
3

Rule 60(b) provides in pertinent part that:
“On motion and just terms, the court may relieve a party
or its legal representative from a final judgment, order,
or proceeding for the following reasons: (1) mistake,
inadvertence, surprise, or excusable neglect; (2) newly
discovered evidence that, with reasonable diligence,
could not have been discovered in time to move for a new
trial under Rule 59(b); (3) fraud . . . (4) the judgment
is void; (5) the judgment has been satisfied, released or
discharged; . . . (6) any other reason that justifies
relief.

Civil No. 11-1968 (FAB)

8

quotations and citations omitted).

The motion cannot “raise

arguments which could, and should, have been made before judgment
[was] issued.”

Fed. Deposit Ins. Corp. v. World Univ., Inc., 978

F.2d 10, 16 (1st Cir. 1992) (internal quotations omitted). Motions
filed pursuant to Rule 59 are not “confined to the six specific
grounds for relief found in Rule 60(b).”
Leasing

Rental,

Conversely,

the

Inc.,

993

F.2d

Rule

60(b)

281,

standard

Perez-Perez v. Popular
284

(1st

requires

Cir.

that

a

1993).
party

“demonstrate ‘at a bare minimum, that his motion is timely; that
exceptional circumstances exist, favoring extraordinary relief;
that if the judgment is set aside, he has the [ability] to mount a
potentially meritorious claim or defense; and that no unfair
prejudice will accrue to the opposing parties should the motion be
granted.’”

Fisher, 589 F.3d at 512.

A motion is characterized pursuant to Rule 59(e) or Rule 60(b)
based upon its filing date.

Perez-Perez, 993 F.2d at 284.

“If a

motion is served within [twenty-eight]4 days of the rendition of
judgment, the motion will ordinarily fall under Rule 59(e).”

Id.

Motions served after twenty-eight days are considered pursuant to
Rule 60(b).

Id.

It is important to determine whether the motion

for reconsideration is brought pursuant to Rule 59(e) or Rule 60(b)

4

A 2009 Amendment increased the filing time period from ten to
twenty-eight days. Fed.R.Civ.P. 59(e).

Civil No. 11-1968 (FAB)

9

because a motion “for relief from judgment under Rule 60(b), unlike
a motion to amend a judgment under Rule 59(e), does not toll the
thirty-day appeal period.”

Perez-Perez, 993 F.2d at 283; see also

App.R. 4(a)(4) (stating that if a party files a motion to “alter or
amend the judgment under Civ.R. 59,” or a motion “for relief under
Civ. R. 60 if the motion is filed no later than 28 days after the
judgment is entered,” then “the time to file an appeal runs for all
parties from the entry of the order disposing of the last such
remaining motion”).

The Court will first determine under which

rule the defendants’ motion should be regarded.

Then, the Court

will

arguments

address

defendants’

and

plaintiffs’

for

reconsideration in turn.
III. Legal Analysis
1.

Defendants’ Motion Implicates Rule 59(e)
The defendants fail to state whether they are bringing

their motion pursuant Rule 59(e) or Rule 60(b).
pp. 2-3.)

(Docket No. 79 at

Instead, the defendants simply state that motions for

reconsideration “are generally considered under” Rule 59(e) or
Rule 60(b).

(Docket No. 79 at p. 2.)

The Court issued its Opinion

and Order, (Docket No. 78), on February 23, 2012, and defendants
filed

their

motion

for

reconsideration,

(Docket

No.

79),

on

March 8, 2012. Therefore, the defendants filed their motion within
the

twenty-eight

day

time

period

provided

by

Rule

59.

Civil No. 11-1968 (FAB)

10

Fed.R.Civ.P. 59(e); see also Perez-Perez, 933 F.2d at 284 (“the
litigant who gets his motion in on time enjoys the . . . relief
provided by Rule 59 . . .”).

Because the defendants timely filed

their motion for reconsideration, Rule 59(e) is implicated for the
analysis.

See

id.

The

Court

will

now

address

defendants’

arguments for reconsideration.
2.

Defendants’ Arguments for Reconsideration
The defendants argue that the Court “denied defendants’

request to dismiss plaintiffs’ claim for lack of standing in sum”
because defendants cited Puerto Rico Supreme Court authority but
failed to file any certified English translations pursuant to Local
Rule 5(g).

(Docket No. 79 at p. 2.)

They attach two certified

English translations to their motion to reconsider, (see Docket
Nos. 79, 79-2, and 79-4), and urge the Court to consider the
certified English translations so that it may “properly address
defendants’ argument as to standing and due process.”

Id.

Given

that the defendants have filed the certified English translations,
which, they contend, “could determine whether this Court lacks
jurisdiction to hear the case,” (see Docket No. 79 at p. 3), the
Court has reviewed the materials.

The Court, however, still finds

that defendants’ arguments unavailing.

Civil No. 11-1968 (FAB)
a.

11

Standing
“Article

III

of

the United

States

Constitution

limits the ‘judicial power’ of the United States to the resolution
of ‘cases’ and ‘controversies.’”

Valley Forge Christian Coll. v.

Ams. United for Separation of Church & State, 454 U.S. 464, 471
(1982).

A crucial part of the case and controversy limitation on

the power of federal courts is the requirement that a plaintiff
must have standing to invoke federal jurisdiction.

Id. at 471-73.

“[S]tanding is a threshold issue” and determines “whether the court
has the power to hear the case, and whether the putative plaintiff
is entitled to have the court decide the merits of the case.”
Libertad v. Welch, 53 F.3d 428, 436 (1st Cir. 1995) (internal
citation omitted).

Therefore, if a plaintiff lacks standing to

bring a matter to federal court, the court lacks jurisdiction to
decide the merits of the case and must dismiss the complaint.
United States v. AVX Corp., 962 F.2d 108, 113 (1st Cir. 1992).
To establish Article III standing, plaintiffs must
show that they have a “personal stake in the outcome” of the claim
asserted by meeting a three-part test. Pagan v. Calderon, 448 F.3d
16, 27 (1st Cir. 2006) (citing Baker v. Carr, 369 U.S. 186, 204
(1962)). (internal citations omitted).

Id. They must show (1) “a

concrete and particularized injury in fact, (2) a causal connection
that permits tracing the claimed injury to defendant’s actions, and

Civil No. 11-1968 (FAB)

12

(3) a likelihood that prevailing in the action will afford some
redress for the injury.”

Weaver’s Cover Energy, LLC v. R.I.

Coastal Res. Mgmt. Council, 589 F.3d 458, 467 (1st Cir. 2009)
(internal quotation marks omitted).
The Supreme Court has held that the party invoking
federal

jurisdiction

bears

the

burden

of

establishing

these

elements. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)
(internal citations omitted).

“Since they are not mere pleading

requirements but rather an indispensable part of the plaintiff’s
case, each element must be supported in the same way as any other
matter on which the plaintiff bears the burden of proof, i.e., with
the manner and degree of evidence required at the successive stages
of litigation.”

Id. (internal citations omitted).

Thus, at the

pleading or motion to dismiss stage, “general factual allegations
of injury resulting from the defendant’s conduct may suffice,”
because “[the courts] presum[e] that general allegations embrace
those specific facts that are necessary to support the claim.” Id.
(internal citation omitted).
In its motion to dismiss, defendants first argue
that plaintiffs lack standing to challenge the legislation as
innocent third parties.

(Docket No. 48 at p. 9.)

Second,

defendants argue that plaintiffs have no concrete injury because
they lack a property interest in the motor vehicles; defendants

Civil No. 11-1968 (FAB)
argue that

they

“hold

13
no

property

rights over

the forfeited

vehicles and Act 119 does not affect plaintiffs’ economic interest
over

the

lien

[that]

they

hold

[over

the

vehicles].”

Id.

Therefore, the defendants argue that because the plaintiffs are not
interested

parties,

they

lack

standing

to

challenge

the

legislation. The Court will address each argument in turn in light
of the certified English translations of the Puerto Rico Supreme
Court case law cited by defendants.
i.

Innocent Third Party Defense
The defendants contend that the Puerto Rico

Supreme Court has held that an innocent third party defense is only
available to the owner of the vehicle.

Id. at p. 7 (citing General

Accident Ins. Co. v. Estado Libre Asociado, 137 D.P.R. 466 (1994)).
The Puerto Rico Supreme Court, the defendants argue, has held that
insurance companies are not considered to be owners of vehicles
under Puerto Rico law.

Id. at p. 9 (citing Negron Placer v.

Secretario de Justicia, 154 D.P.R. 79 (2001)).

Thus, even if a

financial institution is notified of a forfeiture, the defendants
argue that it is not entitled to raise an innocent party defense.
Id. at p. 7.

Thus, the defendants contend, Act 119 “does not alter

the fact that neither the insurance companies nor the financial
institutions have standing to raise the innocent owner defense.”
Id. at p. 7.

Civil No. 11-1968 (FAB)
The

14
Court

agrees with

the

defendants

that

plaintiffs are not the owners of the vehicles; owners of vehicles
are defined by Puerto Rico law.

See Negron Placer, 154 D.P.R. at

96 (holding that a financial entity that leased a car to an
individual is not an owner but a conditional creditor). Thus, they
may not bring an innocent third party defense when challenging
forfeitures

because

an

innocent

third

available to the owners of the vehicle.

party

defense

is

only

See General Accident Ins.

Co. v. ELA, 137 D.P.R. at 476-77 (finding that no innocent third
party defense exists for financial entities that lease cars and
their respective insurance companies, and that the defense is only
available by “express legislative mandate.”)

Furthermore, the

United States Supreme Court has stated that the Constitution does
not require an innocent owner defense but if states want to provide

Civil No. 11-1968 (FAB)

15

such protection, they are welcome to do so.5
Michigan, 516 U.S. 442, 456-457.

See Bennis v.

Indeed, most state legislatures

have provided for an innocent owner defense.

Thus, defendants are

correct in stating that Act 119 did not alter plaintiffs’ right to
raise an innocent owner defense and, therefore, the plaintiffs may
not challenge Act 119 as innocent owners.

The mere lack of an

innocent owner defense in Puerto Rico, however, does not speak to
plaintiffs’ property interests in Puerto Rico nor does it speak to
whether Act 119 complies with the Due Process Clause of the United
States Constitution.
ii.

Property Interest
The defendants next argue that the court in

General Accident Ins. Co. “recognized that although insurance

5

The Supreme Court has held that the absence of a statutory
innocent owner defense did not violate the Due Process or Takings
Clauses of the United States Constitution because Mrs. Bennis had
the ability to challenge the trial court’s “remedial discretion.”
See Bennis v. Michigan, 516 U.S. 442, 444-45 (1996). Therefore, “a
key to the avoidance of a violation of the Due Process Clause in
Bennis was Mrs. Bennis’ ability to appeal the trial court’s
discretion.” Ford Motor Credit Co., 394 F. Supp. 2d at 613, n. 4,
aff’d, 503. F.3d 186 (2d Cir. 2007).
The lack of a statutory
innocent owner defense without any opportunity to be heard before
one’s property interests are eliminated, however, may still violate
the Due Process Clause. Id. (discussing how an innocent lienholder
did not have the opportunity to be heard before its property
interests were eliminated and stating that “Nothing in the Due
Process Clause permits an innocent owner’s interest in property to
be forfeited without the provision of any process to the innocent
owner.”)

Civil No. 11-1968 (FAB)

16

companies have [a] property interest in the lien registered over
the motor vehicle, they do not have [a] property interest in the
vehicles they finance, not being owners of said vehicles.” (Docket
No. 48 at pp. 8-9 (citing General Accident Ins. Co. v. ELA, 137
D.P.R. at 477).)

The defendants also argue that “the economic and

legal rights that arise from the lien are not affected” and do not
“disappear[] with the forfeiture of the vehicle” because insurance
companies can opt between “recuperating the vehicle or [] fil[ing]
a judicial proceeding for debt collection” against the owner.

Id.

As the Court mentioned in its first Opinion & Order, defendants
contend that plaintiffs’ economic interests are not at stake and no
real injury is present.

(See Docket No. 78 at pp. 9-10.)

This

“speculative injury,” defendants state, “is not traceable to the
letter of Act 119.”
argue

that

the

(Docket No. 48 at p. 11.)

Puerto

Rico

Supreme

Court

has

In short, they
held

that

the

plaintiffs have no property interest over the vehicles they ensure,
and, therefore, plaintiffs have no standing to pursue a due process
challenge.

The Court finds these arguments unpersuasive.
Defendants

correctly

state

that

property

interests are “not created by the Constitution of the United
States; they are created and their dimensions are defined by . . .
state law.”

(Docket No. 48 at p. 8.)

Furthermore, they admit that

“property interest[s] become[sic] protected for purposes of the due

Civil No. 11-1968 (FAB)
process

clause

contract”

when

17

recognized

(Docket No.

48 at

by

a

p. 8)

state

(citing

statute

or

legal

Marrero-Garcia

v.

Irizarry, 33 F.3d 117, 121 (1st Cir. 1994) (internal citation
omitted)

(emphasis

added).

In

Puerto

Rico,

the

Commercial

Transactions Act, P.R. LAWS ANN. tit. 19 §§ 2201-2207 (1996) creates
the property interest that defendants argue does not exist.

It

provides that “a secured party has on default the right to take
possession of the collateral” provided that it gives the debtor at
least two days written notice.

Id. at § 2203.

Therefore, the

Commercial Transactions Act provides financing institutions with
right to repossess a vehicle if a lessee of the car defaults.

The

defendants do not dispute this; in fact, they cite to this exact
provision in their motion to dismiss.

(Docket No. 48 at p. 9.)

Instead, they argue that even though repossession of the vehicle
may

not

be

available

due

to

forfeiture

to

the

Puerto

Rico

government, plaintiffs still have “the alternative of filing a debt
collection case . . . against the debtor.”
General Accident
support.

Insurance

Co.

v.

ELA

The defendants cite to
and

Negron

Placer

for

The defendants’ reliance on General Accident Insurance

Co. v. ELA and Negron Placer, however, is misplaced.
In General Accident Insurance Co., the court
only addresses whether an innocent owners’ defense exists for
financial institutions and their insurance companies.

137 D.P.R.

Civil No. 11-1968 (FAB)
at 477.
the

18

It holds that they do not have that defense and that only

legislature

may

mandate

otherwise.

Id.

at

477-78.

In

reasoning why Puerto Rico does not have an innocent owners’ defense
for those specific institutions, the Court in General Accident
Insurance

Co.

does

not

interpret

any

statute

about

secured

creditors’ property interest. It does state that the institutions’
“economic interest in the lien does not disappear with” the seizure
of the vehicle and that the conditional creditor “may opt between
the

repossession

of

the

collection of money.”

article

or

Id. at 477.

the

judicial

action

for

The court goes on to say that

“even when the sold unit cannot be recovered, the right of the
seller subsists to the action for collection of money against the
purchaser

for

the

balance

owed.”

Id.

It

engages

in

this

discussion only to explain why an innocent owners’ defense is
unnecessary

in

Puerto

Rico.

The

court

in

General

Accident

Insurance Co. makes no finding about whether these institutions
have a property interest in the vehicles as lienholders.
discussed

above, the

Commercial

Transactions

Act

As

specifically

provides that a secured creditor may collect on the property as
collateral. Because the statute allows the institutions to collect
on the vehicles as collateral, it provides them with a property
interest.

Law 119 would make it impossible for the financial

institutions and their insurance companies to exercise on that

Civil No. 11-1968 (FAB)
property interest.
interest”

in

the

19

Thus, under Law 119, while the “economic
lien

-

the

ability

to

collect

against

the

purchaser - still exists, the property interest in the lien - the
ability to collect the collateral - disappears.
Furthermore, defendants completely misrepresent
the Negron Placer decision.

The defendants state the following in

their motion to dismiss:
“The Supreme Court of Puerto Rico has clearly stated that
financial institutions, and for that matter insurance
companies that subrogate in their place, cannot use the
forfeiture process to avoid going against the real party
responsible for the loss of the vehicle - the owner who
committed an illegal act with the property.
Negron
Placer v. Secretario de Justicia, 154 D.P.R. 79 (2001)”
(emphasis added). (Docket No. 48 at p. 10.)
The Negron Placer decision did not address any
issues with owners who committed illegal acts and were then subject
to a valid legal forfeiture of a vehicle.

Instead, in Negron

Placer, the confiscation of the vehicle was declared invalid and
the Puerto Rico government was required to return the vehicle. 154
D.P.R. at 95.

The issue was whether to return the vehicle to

Negron Placer, the conditional purchaser who was subjected to an
invalid forfeiture, or to Citibank, N.A., the financing institution
who was the conditional creditor that allegedly failed to receive
installments as agreed to in the conditional sales contract.
at 94-96.

Id.

The Negron Placer court held that after an invalid

Civil No. 11-1968 (FAB)

20

forfeiture, the car must be returned to Negron Placer and that “if
there existed any controversy between [her and Citibank, N.A.]
regarding the financing agreement of the purchase, they had to
elucidate

it

through

the

procedure

execution of its guarantee.”

provided

Id. at 96.

by

law

for

the

Therefore, the Negron

Placer decision does not support defendants’ proposition that
financial institutions “cannot use the forfeiture process to void
going against . . . the owner who committed an illegal act with the
property.”

(Docket No. 48 at p. 10.)
After examining the certified translations of

the Puerto Rico Supreme Court cases cited in defendants’ motion to
dismiss,

the

Court

finds

the

defendants’

arguments

regarding

plaintiffs’ alleged lack of property interest and concrete injury,
and,

therefore,

a

lack

challenge unpersuasive.
motion

to

reconsider

of

standing

to

pursue

a

due

process

The Court, therefore, DENIES defendants’
these

arguments.

The

Court’s

previous

analysis regarding plaintiffs’ standing in its February 23, 2012
Opinion and Order, (Docket No. 78 at pp. 10-11), still stands.
b.

Due Process Clause
To

establish

a

procedural

due

process

claim,

plaintiffs must show that (1) they had a liberty or property
interest, and (2) that defendants deprived them of that interest
without a constitutionally adequate process.

Logan v. Zimmerman

Civil No. 11-1968 (FAB)

21

Brush Co., 455 U.S. 422, 428 (1982); Gonzalez-Droz v. GonzalezColon, 660 F.3d 1, 13 (1st Cir. 2011) (internal citation and
quotation marks omitted); PFZ Properties, Inc. v. Rodriguez, 928
F.2d 28, 30 (1st Cir. 1991).

Defendants argue that the certified

English translations they filed will allow the Court to “properly
address defendants’ arguments as to . . . due process.”
No. 79 at p. 3.)

(Docket

Specifically, defendants point to the Court’s

discussion of whether plaintiffs have sufficiently pled the first
requirement to establish a due process claim:

that defendants

deprived them of a liberty or property interest.
at p. 2 and Docket No. 78 at pp. 18-19.)

(Docket No. 79

The certified English

translations of the Puerto Rico case law, however, also raise
issues regarding the second prong of a procedural due process
claim:

whether defendants deprived plaintiffs of constitutionally

adequate process.
defendants’

Therefore, the Court will discuss briefly the

arguments

regarding

property

interest

because

defendants use same argument here as they did for standing.

the

Next,

the Court will address the issues with constitutionally adequate
process.
i.

Property Interest
The

defendants’

argument

regarding

whether

plaintiffs had a property interest is the same argument they used
in discussing whether plaintiffs had a standing to bring the case

Civil No. 11-1968 (FAB)
before the Court.

22

(Docket No. 78 at p. 17.)

The same reasoning,

therefore, applies to whether plaintiffs have a property interest
for purposes of due process. Furthermore, “it is well-settled that
a lien is a constitutionally protectable property interest.”

Ford

Motor Credit Co. v. New York City Police Dep’t., 394 F.Supp.2d 600,
611 (2d Cir. 2005) (citing Mennonite Bd. of Missions v. Adams, 462
U.S. 791, 798; Louisville Joint Stock Land Bank v. Radford, 295
U.S. 555, 594 (1935); United States v. Perry, 360 F.3d 519, 525 &
n. 4 (6th Cir. 2004); Shelden v. United States, 7 F.3d 1022, 1026
(Fed. Cir. 1993).

Therefore, in light of the English translations

of the Puerto Rico Supreme Court cases which are now on the record,
the Court finds that plaintiffs have sufficiently pled facts to
show a constitutionally protected property interest.
ii.

Constitutionally Adequate Process
In addition to showing that they had a liberty

or property interest, plaintiffs must sufficiently plead that the
defendants

deprived

them

of

constitutionally adequate process.

that

interest

without

a

Gonzalez-Droz, 660 F.3d at 13.

With regard to this second prong, plaintiffs must have the “notice
and opportunity for hearing appropriate to the nature of the case.”
Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 541 (1985).
Due process requires an “opportunity to be heard at a meaningful
time and in a meaningful manner.”

Bibiloni del Valle de Puerto

Civil No. 11-1968 (FAB)

23

Rico, 662 F.Supp.2d 155, 182 (D.P.R. 2009) (internal citations and
quotation marks omitted).
As discussed in the Court’s February 23, 2012
Opinion and Order, (see Docket No. 79 at pp. 20-21), defendants
argued

that

Law

119

“provides

a

procedure

in

order

for

the

insurance companies to challenge the forfeiture and recover the
vehicle.”

(Docket No. 48 at p. 18.)

The Court also discussed how

plaintiffs responded that the procedure in Law 119 allows them to
challenge the forfeiture on behalf of others but fails to allow
them to defend their own rights and property interest.
No. 79 at p. 21.)

(Docket

Based on these arguments, the Court found that

plaintiffs sufficiently pled facts to show that they have been
deprived of constitutionally adequate process.
The defendants only request that the Court
reconsider its arguments showing how “the insurance companies
failed to demonstrate a property interest at stake in this case in
order to establish procedural due process claim.”
at p. 3.)
second

(Docket No. 79

They do not mention the Court’s analysis regarding the

prong

of

a

due

process

constitutionally adequate process.

claim,

which

requires

(See Docket No. 79.)

Even if the defendants requested the Court to
reconsider defendants’ arguments about Law 119’s procedure for
insurance

companies

to

challenge

a

forfeiture

and

recover

a

Civil No. 11-1968 (FAB)

24

vehicle, the Court still declines to reconsider its analysis.

As

stated above, see footnote 5, the Supreme Court has held that the
absence of a statutory innocent owner defense did not violate the
Due Process Clause of the United States Constitution where a person
had

the

ability

discretion.”

to

challenge

the

trial

Bennis, 516 U.S. at 444-45.

court’s

“remedial

The lack of a statutory

innocent owner defense without any opportunity to be heard before
the deprivation of one’s property interests, however, may still
violate

the

sufficiently

Due

pled

constitutionally
eliminated.
dismiss

Process

Clause.

that

they

protected

Id.
may

property

The

not

plaintiffs

defend

interest

their

before

it

have
own
is

Therefore, the Court maintains that at this motion to

stage,

without

more

guidance

from

the

parties,

the

plaintiffs have sufficiently pled facts to show that they have been
deprived of constitutionally adequate process, and the Court DENIES
defendants’

motion

to

reconsider

its

arguments

regarding

Due

Process.
3.

Plaintiffs’ Motion Implicated Rule 60(b)
The plaintiffs fail to state whether they are bringing

their motion pursuant to Rule 59(e) or Rule 60(b).
at p. 2.)
motions

(Docket No. 84

Like the defendants, the plaintiffs simply state that

for

reconsideration

Rule 59(e) or Rule 60(b).

“are

generally

considered

(Docket No. 84 at p. 2.)

under”

The Court

Civil No. 11-1968 (FAB)

25

issued its Opinion and Order, (Docket No. 78), on February 23,
2012,

and

plaintiffs

filed

their

(Docket No. 84), on March 27, 2012.

motion

for

reconsideration,

Therefore, they failed to file

their motion within the twenty-eight day time period provided by
Rule 59.
file

Fed.R.Civ.P. 59(e).

their

motion

for

Because the plaintiffs failed to

reconsideration

timely

pursuant

Rule 59(e), Rule 60(b) is implicated for the analysis.
see

also

Fed.R.Civ.P.

60(b).

The

Court

will

to

See id.;

now

address

plaintiffs’ arguments for reconsideration.
4.

Plaintiffs’ Arguments for Reconsideration
Plaintiffs argue that the Court erred in its dismissal of

their

claim

under

Constitution.

the

Takings

Clause

(Docket No. 84 at p. 2.)

of

the

United

States

They do not dispute that

“the State is entitled to forfeit a vehicle that has been used in
the commission of a crime” but they do contend that the cases cited
by the Court it its February 23, 2012 Opinion and Order, (Docket
No. 78), “present different facts and controversies from those
presented

in

the

instant

case.”

(Docket

No.

84

at

p.

3.)

Plaintiffs also state that they did not raise any substantive due
process

claim

because

“the

Takings

Clause

provides

a

more

specifically applicable constitutional framework than the doctrine
of substantive due process” but that they will have to raise
arguments as a substantive due process violation if the Court does

Civil No. 11-1968 (FAB)

26

not allow them to state a claim under the Takings Clause.
p. 9.

Id. at

The Court will address each argument in turn.
a.

Takings Clause
With regard to the Takings Clause, plaintiffs argue

that their case is distinguishable from the cases cited by the
Court.

Specifically, the plaintiffs contend that, unlike in the

cases cited by the Court, the plaintiffs here have a “prior,
legally recognized and perfected lien on the seized property” and
that the government extinguishes these liens with forfeiture.
at p. 3.

Id.

This extinguishing of their lien, the plaintiffs argue,

violates the Takings Clause. Id. In short, the plaintiffs contend
that the government “can only legally obtain an ownership interest
equivalent to that which belongs to the owner at the time of the
seizure.”

Id. at p. 5.

Therefore, the defendants are only able to

seize the vehicle subject to the lien.

Id. at p. 5.

Otherwise,

the government would be able to convert the plaintiffs’ secured
interest to an unsecured one.

Id. at p. 6.

The Court agrees with

the plaintiffs but still finds that their claim under the Takings
Clause is not ripe.
The

doctrine

of

ripeness

comes

from

the

Constitution’s Article III requirement that federal courts may hear
only cases and controversies, and from prudential reasons for
refusing

to

exercise

jurisdiction.

Reno

v.

Catholic

Social

Civil No. 11-1968 (FAB)

27

Services, Inc., 509 U.S. 43, 57 n. 18 (1993).

The Supreme Court

has held that a court must apply a two-part ripeness test when
analyzing a takings claim.

Williamson County Regional Planning

Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985);
see also Pascoag Reservoir & Dam, LLC v. Rhode Island, 337 F.3d 87,
91 (1str Cir. 2003) (discussing the Williamson prerequisites that
a federal court must find before it can engage in a Takings claim
analysis).

First,

a

takings

claim

is

not

ripe

“until

the

government entity charged with implementing the regulations has
reached

a

final

decision

regarding

the

regulations to the property at issue.”

application

Id. at 186.

of

the

Next, a

plaintiff stating a takings claim must have sought “compensation
through the procedures” provided for by the State.

Id. at 194.

The Williamson Court emphasized that “[i]f the [state] government
has provided an adequate process for obtaining compensation,” and
a claimant receives just compensation through that process, then
the property does not have a claim against the government for a
taking.

Id.
In this case, plaintiff clearly fails to satisfy the

second prerequisite: the requirement that it seek compensation via
state procedures for the alleged taking, regardless of whether the
plaintiffs have shown the first prerequisite of the Williamson
test.

The defendants have shown that Article II, section 9 of

Civil No. 11-1968 (FAB)

28

Puerto Rico’s Constitution prohibits the taking of property without
just compensation.

(Docket No. 48 at p. 14.)

Plaintiffs have not

shown that they have sought compensation via state procedures or
remedies and have been denied just compensation. Thus, plaintiffs’
claims under the Takings Clause are unripe.
Therefore, the Court still dismisses the plaintiffs’
claims pursuant to the Takings Clause.

The Court will dismiss the

claim, however, without prejudice as opposed to with prejudice, as
it did in its February 23, 2012 Opinion and Order.
at p. 39.)

(Docket No. 78

Plaintiffs’ motion to reconsider, (Docket No. 84), is

DENIED IN PART.
b.

Substantive Due Process
Plaintiffs argues in a footnote on the last page of

their motion to reconsider that they did not raise any substantive
due process claims because “the Takings Clause provides a more
specifically applicable constitutional framework than the doctrine
of substantive due process.”

They then argue that “if the Court

will not allow Plaintiffs’ claims under the Takings clause,” then
“they would have to raise the argument as a substantive due process
violation.”
their

Id. at p. 9.

original

complaint

Plaintiff do not raise these claims in
and

in

fact,

they

state

in

their

opposition to defendants’ motion to dismiss that “plaintiffs’
complaint

is based

on

lack

of

procedural

due

process

only.”

Civil No. 11-1968 (FAB)
(Docket No. 52 at p. 8.)

29
Plaintiffs have not attempted to develop

their arguments regarding substantive due process and, therefore,
the issues are waived.

United States v. Zannino, 895 F.3d 1, 17

(1st Cir. 1990) (“[I]ssues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed
waived”).
V.

CONCLUSION
For the reasons expressed, the Court DENIES defendants’ motion

to reconsider, (Docket No. 79), and DENIES IN PART plaintiffs’
motion to reconsider (Docket No. 84).

The motion to dismiss

remains DENIED as to plaintiffs’ claims for lack of standing and
plaintiffs’ claims under the Due Process Clause.
process claims remain active.

Plaintiffs’ due

The motion to dismiss remains

GRANTED as to plaintiffs’ claims under the Takings Clause, which
are now DISMISSED WITHOUT PREJUDICE.
An evidentiary hearing will be held on July 19, 2012 at
9:00 a.m. concerning the remaining issues in the case, including
(1) the claims that interested parties (other than owners) have
made during forfeiture proceedings pursuant to the 1988 Asset
Forfeiture Law and Law 119; (2) if an innocent owner’s defense does
not exist in Puerto Rico, the claims that interested parties (other
than owners) make during a forfeiture hearing to obtain possession
of the vehicle; (3) when a vehicle is sold through a forfeiture

Civil No. 11-1968 (FAB)

30

proceeding, whether the vehicle is sold free and clear of a
lienholder’s lien.
IT IS SO ORDERED.
San Juan, Puerto Rico, June 22, 2012.

s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE