Opinion ID: 203894
Heading Depth: 3
Heading Rank: 2

Heading: analysis

Text: Since Plaintiffs challenge the district court's denial of preliminary injunctive relief, `we scrutinize abstract legal matters de novo, findings of fact for clear error, and judgment calls with considerable deference to the trier.' See Waterproofing Sys., Inc. v. Hydro-Stop, Inc., 440 F.3d 24, 28 (1st Cir.2006) (quoting Re-Ace, Inc. v. Wheeled Coach Indus., Inc., 363 F.3d 51, 55 (1st Cir.2004)). Moreover, based on the above, we construe the district court's actions as denying Plaintiffs' due process claim for equitable relief. Thus, we review the denial of declaratory relief for something akin to abuse of discretion. See Rossi v. Gemma, 489 F.3d 26, 38 & n. 21 (1st Cir.2007). Similarly, we review the denial of a permanent injunction for abuse of discretion, with any legal conclusions reviewed de novo and any factual findings reviewed for clear error. See Aponte v. Calderón, 284 F.3d 184, 191 (1st Cir.2002) (Generally, we review a grant of a permanent injunction for abuse of discretion, but we always review questions of law de novo [and] factual findings for clear error. (citations omitted)). To the extent that Plaintiffs are entitled to notice, they clearly lack it here. Due process requires `notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.' Jones v. Flowers, 547 U.S. 220, 226, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006) (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950)); see also Taylor v. Westly, 488 F.3d 1197, 1201 (9th Cir.2007) (same). In other words, when notice is a person's due ... [t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. Jones, 547 U.S. at 229, 126 S.Ct. 1708 (quoting Mullane, 339 U.S. at 315, 70 S.Ct. 652). Here, Plaintiffs do not challenge the adequacy of the notice provided by Law 230. Plaintiffs instead claim that, on its face, Law 230 provides no notice of the transfer of the duplicate premiums from JUA to the Secretary every two years. Based upon our own review of Law 230 and Procedure No. 96, we agree. Law 230 makes no mention of notice. Instead, Law 230 only directs that the funds in the Reserve account be transferred to the Secretary. Procedure No. 96 also fails to provide notice. It provides that a reimbursement claim can be made through the Public Insurance Area through Form SC-4601, Request for Reimbursement of Mandatory Insurance, and that [s]ame shall be available in the Internet or at Collector's Offices. Procedure No. 96 also sets forth the proof necessary to file a successful reimbursement claim. Despite all of these provisions, no mention of notice is made. The closest Procedure No. 96 comes to indicating notice is a direction that, upon transfer, JUA shall forward an electronic file ... which shall contain the information which is indicated in Attachment 1, bearing those insureds that are entitled to such reimbursement. Procedure No. 96, however, does not further direct that those named insureds receive notice of the transfer. In response, Defendants argue, without citing any supporting authority, that Plaintiffs had plenty of notice because they filed this action prior to the enactment of Law 230. However, Plaintiffs' actual notice has no bearing in this case because Plaintiffs assert a facial challenge to Law 230. Plaintiffs argue that Law 230 is unconstitutional on its face because it fails to include a process whereby motor vehicle owners who paid duplicate premiums are provided notice that their premiums are going to be transferred to, and held by, the Secretary. Defendants do not dispute the absence of such a provision. Thus, actual notice cannot defeat Plaintiffs' due process claim. Defendants also argue, again without citing supporting authority, that the mere passage and publication of Law 230 provided notice of the transfers of the duplicate premiums and the mechanism by which the payers of duplicate premiums could seek reimbursement. However, Plaintiffs' argument is not that due process required them to receive notice of the available procedure for obtaining reimbursement. See City of West Covina v. Perkins, 525 U.S. 234, 241, 119 S.Ct. 678, 142 L.Ed.2d 636 (1999) (Once the property owner is informed that his property has been seized, he can turn to [the state statute or case law] to learn about the remedial procedures available to him.). Rather, their claim is that they are entitled to notice that the Commonwealth is about to assert a contrary property interest in their duplicate premiums. In such circumstances, mere publication of the law effectuating a seizure of a property interest does not constitute constitutionally adequate notice. See Mullane, 339 U.S. at 314, 70 S.Ct. 652 (Th[e] right to be heard has little reality or worth unless one is informed that the matter [affecting one's property rights] is pending and can choose for himself whether to appear or default, acquiesce or contest); see also Covina, 525 U.S. at 240, 119 S.Ct. 678 (same, quoting Mullane ). But Plaintiffs must first establish at least two threshold requirements before it is entitled to notice under the Due Process Clause. First, [a] threshold requirement for a successful procedural due process claim is to demonstrate the implication of a constitutionally protected interest in life, liberty, or property. Aponte, 284 F.3d at 191 (citing Romero-Barceló v. Hernández-Agosto, 75 F.3d 23, 32 (1st Cir.1996)). Plaintiffs have demonstrated such an interest. In general, we perform the same analysis in determining whether a property interest is sufficient under both the Takings Clause and the Due Process Clause. See Picard v. Members of Employee Ret. Bd. of Providence, 275 F.3d 139, 144 (1st Cir.2001) (noting that [i]n evaluating whether a purported contract or property right is entitled to constitutional protection under the Takings Clause, Contract Clause, or Due Process Clause, this Court generally looks to state law as interpreted by the state's highest court (citing cases)); cf. Nat'l Educ. Ass'n-R. I. v. Ret. Bd. of the R.I. Employees' Ret. Sys., 172 F.3d 22, 30 (1st Cir. 1999) (An expectation that is not `property' for purposes of the Takings Clause may yet sometimes entitle the citizen to procedural protection ... before the expectation is cut off by government action.). Since we hold that Plaintiffs have a sufficient interest in the duplicate premiums for Takings Clause purposes, we also hold that Plaintiffs have a sufficient interest in the duplicate premiums for Due Process Clause purposes. Once a property interest is established, Plaintiffs must then show that the defendants, acting under color of state law, deprived [them] of that property interest without constitutionally adequate process. See SFW Arecibo, Ltd. v. Rodríguez, 415 F.3d 135, 139 (1st Cir.2005) (quoting PFZ Props., Inc. v. Rodríguez, 928 F.2d 28, 30 (1st Cir.1991)) (emphasis added). In this case, the alleged deprivation caused by Law 230the transfer of the duplicate premiums to the Secretarydoes not cause a permanent escheat. Instead, the funds are to be held in trust by the Secretary until the escheat period set forth under Puerto Rico insurance law passes. The Supreme Court has held that even the temporary or partial impairments to property rights that attachments, liens, and similar encumbrances entail are sufficient to merit due process protection. See Connecticut v. Doehr, 501 U.S. 1, 12, 111 S.Ct. 2105, 115 L.Ed.2d 1 (1991). In Doehr, for example, a Connecticut statute permitted plaintiffs in civil suits to obtain ex parte attachments against defendants with a showing so minimalan averment by the plaintiff that the defendant is liablethat it resulted in a significant risk of erroneous deprivation. Id. at 21, 111 S.Ct. 2105. Following Doehr, in Reardon v. United States, 947 F.2d 1509 (1st Cir. 1991) (en banc), we held that filing a CERCLA lien without notice or a pre-deprivation proceeding constituted a sufficient deprivation of property since [t]he EPA's lien has substantially the same effect... as the attachment had on the [property owner] in Doehr clouding title, limiting alienability, [and] affecting current and potential mortgages. Id. at 1518. The alleged deprivation caused by Law 230 has some similarities to the temporary or partial deprivations in Doehr and Reardon. Like a lien or attachment, the alleged deprivation in this case is temporary or partial, because Law 230 allows payers of the duplicate premiums to receive reimbursement. The deprivation here, like in Doehr and Reardon, only results in a risk of erroneous deprivation. Doehr, 501 U.S. at 21, 111 S.Ct. 2105. Moreover, like a lien or attachment, the Secretary, through operation of Puerto Rico's general escheat statute, has a contingent interest in the duplicate premiums, one that poses a risk of complete deprivation should Plaintiffs fail to obtain reimbursement during the escheat period. But the alleged deprivation in this case differs from the deprivations in Doehr and Reardon in two important respects. First, unlike in Doehr or Reardon, Plaintiffs do not have use of the duplicate premiums prior to the transfer, as they are already held in trust by JUA. The transfers only result in a change of trustees. Second, the laws at issue in Doehr and Reardon created the liens or attachments at issue without adequate due process. In this case, however, the Secretary already has a contingent interest prior to the transfer, insofar as the escheat period had already begun to run prior to the transfer. The only change effected by the transfer, apart from the change in trustee, is the change in procedure to obtain reimbursement. In sum, the alleged deprivation here is not the creation of a lien or attachment without due process, as was the case in Doehr and Reardon, but the transfer of property held by one party to a different party and the imposition of a different (and allegedly more onerous) reimbursement procedure. In their takings claim, Plaintiffs claim that the procedure to obtain reimbursement, Procedure No. 96, is so onerous that the change in procedure is, in effect, a spurious escheat. Here, they also claim that the transfer constitutes a spurious escheat, but provide no briefing on whether the alleged deprivation (change in trustee plus a change in procedure) constitutes a sufficient deprivation for purposes of the Due Process Clause. Defendants also provide no briefing on whether the transfers here result in a deprivation of constitutional significance. They only argue that any notice here was adequate. Finally, as noted above, the district court did not reach the issue. Given the lack of briefing and the district court's silence on this issue, we conclude that the more prudent course is to remand to the district court for further proceedings to determine whether the transfers of the duplicate premiums mandated by Law 230 constitute a sufficient deprivation for purposes of the Due Process Clause.