Court Opinion

ID: 2657296
Source: CourtListenerOpinion
Date Created: 2014-03-19 21:27:04.599888+00
Date Added: 2024-06-11T12:40:56.129453
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 13-1834

                REDONDO CONSTRUCTION CORPORATION,

                      Plaintiff, Appellant,

                                v.

   JOSÉ IZQUIERDO, in his official capacity as Secretary of the
    Department of Transportation and Public Works; PUERTO RICO
     HIGHWAY AND TRANSPORTATION AUTHORITY; PUERTO RICO PUBLIC
 BUILDINGS AUTHORITY; THE GOVERNOR OF THE COMMONWEALTH OF PUERTO
    RICO, in his official capacity; FERNANDO FAGUNDO; CONJUGAL
PARTNERSHIP FAGUNDO-DOE; JOSÉ LLUCH-GARCÍA; CONJUGAL PARTNERSHIP
          LLUCH-DOE; CONJUGAL PARTNERSHIP IZQUIERDO-DOE,

                      Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

         [Hon. Francisco A. Besosa, U.S. District Judge]

                              Before

                       Lynch, Chief Judge,
                Selya and Howard, Circuit Judges.

     Yolanda Benítez de Alegría, with whom Luis Cotto-Román was on
brief, for appellant.
     Raúl Castellanos-Malavé, with whom Development & Construction
Law Group, LLC was on brief, for appellee Puerto Rico Highway and
Transportation Authority.
     Susana I. Peñagaricano-Brown, Assistant Solicitor General,
with whom Margarita L. Mercado Echegaray, Solicitor General, was on
brief, for appellees José Izquierdo, Fernando Fagundo, José Lluch-
García, and the Governor of Puerto Rico.
     Luis F. del Valle-Emmanuelli for appellee Puerto Rico Public
Buildings Authority.

                         March 19, 2014
          LYNCH, Chief Judge.           Plaintiff Redondo Construction

Corporation has been in litigation against the defendants -- the

Puerto Rico Highway and Transportation Authority (PRHTA), the

Puerto Rico Public Buildings Authority (PBA), and several officials

at both agencies (the individual defendants) -- for over a decade.

Redondo alleges that the defendants were in breach of certain

settlement agreements with Redondo, that this caused Redondo's

bankruptcy, and that the defendants are liable in damages.            The

district court granted the PRHTA's and the individual defendants'

motions for summary judgment on the grounds that the record

contained insufficient evidence to prove damages.            See Redondo

Constr. Co. v. Izquierdo, 929 F. Supp. 2d 14, 24 (D.P.R. 2013).         It

also dismissed Redondo's claims against the PBA sua sponte.           See

id. We affirm the district court's entry of summary judgment as to

the PRHTA and the individual defendants but vacate the dismissal of

the claim against the PBA and remand for further proceedings.

                                   I.

A.        Guilty Plea and Initial Contract Cancellations

          The events leading to this case began on April 15, 1999,

when   Redondo    entered   into   a     plea   agreement   with   federal

prosecutors.     Under the agreement, Redondo pled guilty to aiding

and abetting the making of false statements to the U.S. Department

of Transportation and to Banco Santander de Puerto Rico in the

course of its work on a federal highway project.            See 18 U.S.C.

                                   -2-
§§ 2, 1014, 1020.     The next day, the PRHTA informed Redondo that,

in light of the guilty plea, it was revoking the bids it had

awarded Redondo before the plea and was suspending Redondo from

bidding on new contracts for 30 days, with an extension likely to

be announced in the future.     In May 1999, the PBA did the same.

            Redondo   challenged   both    decisions,     initiating   two

administrative proceedings.     The proceeding against the PBA ended

with a settlement agreement allowing Redondo to resume bidding for

PBA contracts on April 16, 2000.     The proceeding against the PRHTA

ended with a settlement agreement allowing Redondo to resume

bidding for PRHTA contracts on December 11, 2000, subject to the

oversight of a monitoring service for approximately a year and a

half.

B.          Enactment of Law 458

            Redondo's eligibility to bid for Puerto Rico contracts

shortly came into question again, this time under a new Puerto Rico

statute.    On December 29, 2000, Puerto Rico passed Law 458.          See

P.R. Laws Ann. tit. 3, §§ 928-928i.       Law 458 prohibits Puerto Rico

agencies from awarding contracts to any person or corporation

convicted   of   fraud,   embezzlement,    or   other   similar   offenses

involving public funds, for a period of 20 years after a felony

conviction and 8 years after a misdemeanor.             Id. §§ 928, 928b,

928d.   Law 458 included a provision explaining that it "shall not

apply retroactively nor shall [it] . . . interfere with contracts

                                   -3-
in effect."      Id. § 928h.    The law was effective as of the date of

its passage.

            As to the PBA, between April 16 and December 29, 2000,

Redondo had placed fourteen bids for PBA projects and had been

awarded one contract.          After Law 458 became effective, the PBA

cancelled ten of Redondo's fourteen bids, as well as the contract

which it had already executed with Redondo.          At the time, the PBA

stated    that   it   lacked   sufficient   funds   to   proceed   with   the

projects.

            As to the PRHTA, between December 11 and December 29,

2000, Redondo did not place any bids for PRHTA contracts.           Shortly

after Law 458 became effective, however, on February 14, 2001, the

PRHTA informed Redondo that it was withdrawing from the settlement

it had reached with Redondo, citing Redondo's failure to comply

with a settlement term requiring it to deposit $25,000 into escrow

to fund the monitoring service.        Later deposition evidence tended

to show that the PRHTA was motivated by the policy of Law 458

regardless of the Law's non-retroactivity provision.                Redondo

deposited the funds into escrow.        The PRHTA then sought to reopen

administrative proceedings against Redondo to determine the length

of Redondo's suspension.        As described later, the PRHTA eventually

prevailed at the administrative level, and Redondo later sought

judicial review of the administrative decision in the Puerto Rico

courts.

                                     -4-
C.         Procedural History

           While the Puerto Rico administrative proceedings between

Redondo and the PRHTA were pending, in December 2001, Redondo filed

a complaint in federal court, alleging that the PRHTA, the PBA, and

the   individual   defendants       had    unlawfully    applied      Law   458    to

Redondo,   putting    the    agencies      in   breach   of   their     respective

settlement    agreements.         Redondo's     complaint     alleged    that     the

application of Law 458 violated various provisions of the U.S.

Constitution, including its Due Process and Ex Post Facto Clauses.

The complaint also stated supplemental claims under Puerto Rico law

for damages arising out of the alleged breach of contract. Shortly

after filing the complaint, Redondo filed for bankruptcy.

           The defendants in the federal action filed a motion to

dismiss.     In response, in October 2002, the district court held

that Redondo had failed to state a federal claim with respect to

the Ex Post Facto, Double Jeopardy, and Due Process clauses.                      See

Redondo Constr. Corp. v. Izquierdo (Redondo I), No. 01-2690, slip

op. at 6-23 (D.P.R. Oct. 30, 2002).             In reaching that conclusion,

the district court explicitly considered Redondo's argument that

Law 458 "runs afoul of the presumption against retroactivity

inherent in the common law tradition."             Id. at 27.        The district

court explained that although the law takes into account past

behavior   in   the   form   of    past    convictions,       it   operates     only

prospectively:     "In   essence,     no   bid   or   public       contract   after

                                      -5-
December 2000 shall be awarded to anyone convicted of the crimes

listed in the debarment statute."         Id. at 23.

              While providing that construction of the statute, the

district court did not dismiss the case outright. Instead, it held

that some of Redondo's claims could be "re-characterized" as a

Contracts Clause challenge, which could survive the motion to

dismiss.    Id.   Thus, the remaining claims after Redondo I were the

Contracts Clause claim and the supplemental claims under Puerto

Rico law.

              Following the ruling on the motion to dismiss, the

federal proceedings were stayed on the PRHTA's motion until the

Puerto Rico administrative proceedings concluded.

              Redondo's administrative hearing occurred in 2003.        The

hearing examiner concluded that the PRHTA could not withdraw from

the settlement based on Redondo's failure to place the funds into

escrow promptly, concluding that this failure was not a material

breach   of    the   settlement   agreement.     The   Secretary   of   the

Department of Transportation and Public Works initially adopted the

examiner's report but, on the PRHTA's motion, later reversed his

decision and ruled in favor of the PRHTA in October 2004.          Redondo

sought judicial review of the agency decision in the Puerto Rico

Court of Appeals.       On May 31, 2005, the Puerto Rico Court of

Appeals ruled that, even if Redondo was in breach of the settlement

agreement, the breach was not sufficient to excuse the PRHTA from

                                    -6-
its obligations.   The court held that the PRHTA had to comply with

the settlement agreement and ordered specific performance.           See

App. 863 (certified translation of Redondo Constr. Corp. v. P.R.

Hwy. & Transp. Auth. (Redondo II), No. KLRA0400982, 2005 WL 1475931

(P.R. Cir. May 31, 2005)).     The Puerto Rico Supreme Court denied

the PRHTA's petition for certiorari and its two motions for

reconsideration.    The Puerto Rico Court of Appeals did not discuss

the impact of Law 458, which was not briefed or argued before it.

           The federal proceedings resumed after Redondo II, but no

significant action occurred for over a year and a half as the case

was transferred to three successive judges.             Eventually, the

district court set a deadline of April 30, 2007 for all dispositive

motions.   On that date, the PRHTA and the PBA each moved for

summary judgment on the Contracts Clause claim and argued that,

after summary judgment was granted on that claim, the district

court should decline to exercise supplemental jurisdiction over the

remaining Puerto Rico law claims.         Over the next few months,

several other pretrial motions were filed, and trial was set for

February 11, 2008.

           On February 7, 2008, about nine months after the summary

judgment motions were filed and just four days before the scheduled

trial date, the district court granted summary judgment in favor of

the defendants and dismissed the supplemental Puerto Rico law

claims   without   prejudice   in   accordance   with   the   defendants'

                                    -7-
motions.   Redondo Constr. Corp. v. Izquierdo (Redondo III), 550 F.

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

             Redondo appealed.       On appeal, this court upheld the

district court's ruling on the Contracts Clause claim but reversed

its decision to dismiss the supplemental claims.            Redondo Constr.

Corp. v. Izquierdo (Redondo IV), 662 F.3d 42 (1st Cir. 2011).             We

reasoned that considerations of equity demanded that the court

retain   jurisdiction   over   the    supplemental    claims    because   the

parties had dedicated substantial resources to the case and the

summary judgment decision had come just four days before the

scheduled trial date.    Id. at 48-50.       In doing so, we observed that

the Contracts Clause claim failed in part because "[n]either

Authority has asserted as an affirmative defense that it is excused

by Law 458 . . . from compensating Redondo in damages if Redondo

establishes a breach of contract," meaning that Law 458 did not

impermissibly extinguish Redondo's remedies for breach of contract.

Id. at 48.

             Our holding meant that the only remaining claims in the

case were Redondo's breach of contract claims against the various

defendants under Puerto Rico law.          See id. at 50.   We further noted

that the Puerto Rico courts had already resolved the question of

whether the PRHTA was in breach, meaning that the only remaining

issue as against the PRHTA on remand was "whether Redondo was

                                     -8-
entitled to damages for the Highway Authority's breach, and if so,

how much."     Id. at 50.

             On remand, the district court invited additional briefing

on the remaining issues.     The individual defendants filed a motion

for judgment on the pleadings, which was denied.        Later, the PRHTA

and the individual defendants, but not the PBA, moved for summary

judgment.    On May 28, 2013, the district court granted the PRHTA's

and individual defendants' motions for summary judgment.                See

Redondo Constr. Co. v. Izquierdo (Redondo V), 929 F. Supp. 2d 14,

24 (D.P.R. 2013). It went on to dismiss the entire case, including

the claims against the PBA, sua sponte.          See id.   The district

court reasoned that, after our decision in Redondo IV, the only

remaining issue was whether Redondo was entitled to damages and, if

so, what amount.     It then surveyed the pleadings, observing that

none included any precise statement of damages, or even of the

general   nature    of   damages   beyond   broad   statements   such    as

"financial collapse."       Id. at 18.      It concluded that the only

record evidence on this point was a pair of expert reports (one

from 2010 and one from 2007) from Redondo's expert, CPA Rafael

Perez Villarini, and Villarini's related deposition testimony. Id.

at 19.

                                    -9-
               Turning to the evidence, the court excluded the 2010

expert report as inadmissible hearsay because it was unsworn.1 Id.

It then examined the expert's deposition testimony, referring to

the two reports where necessary to illuminate the testimony. After

establishing the framework of the Daubert inquiry, see Daubert v.

Merrell Dow Pharm., Inc., 509 U.S. 579, 592 (1993), the district

court       determined     that   Villarini's    testimony      was   "unreliable"

because it depended on the faulty assumption that Redondo could

have bid for contracts from the time its two debarment periods

ended, in April and December 2000, through the present.                        See

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

barred Redondo from bidding on contracts after December 2000.                  The

district court explained that the law of the case established that

point.       Id. at 21-22.         The court went on to reject Redondo's

counterargument that Redondo IV had required that Law 458 not apply

retroactively, distinguishing between Redondo's future ability to

pursue      bids   after    December   29,     2000,    which   the   law   validly

extinguished, and its remedy for any breach of the settlement

agreement, which the law did not and could not affect under Redondo

IV.     See id. at 22.       There was no evidence of damages segregated

out for the period before December 29, 2000 as to the PRHTA.

Because the expert testimony was unreliable, the court reasoned,

        1
       The district court did not mention whether the 2007 expert
report was likewise excluded.

                                        -10-
Redondo could point to no evidence of damages against the PRHTA,

meaning that it had failed to make out a necessary element of its

case and could not survive summary judgment.     Id. at 23.

             The district court concluded by observing that the only

claims against the individual defendants were for damages under the

same theory, which meant that summary judgment was also proper

there because there was likewise no proof of damages.     See id. at

23-24.

             Finally, acting sua sponte, the court "dismissed" the

case "with prejudice," thereby terminating the claim against the

PBA even though the PBA had not moved for summary judgment.      See

id. at 24.     Redondo appeals.

                                  II.

             We review the district court's grant of summary judgment

de novo.     See Bisbano v. Strine Printing Co., 737 F.3d 104, 107

(1st Cir. 2013).      We first examine whether the law of the case

places any limits on Redondo's breach of contract claim, then turn

to whether Redondo has presented evidence sufficient to carry a

properly limited claim through summary judgment.

                                  A.

             The law of the case doctrine establishes that "when a

court decides upon a rule of law, that decision should continue to

govern the same issues in subsequent stages in the same case."

United States v. Matthews, 643 F.3d 9, 12 (1st Cir. 2011) (quoting

                                  -11-
Arizona   v.   California,    460 U.S. 605,   618   (1983))   (internal

quotation mark omitted).      "[A] legal decision made at one stage of

a civil or criminal case, unchallenged in a subsequent appeal

despite the existence of ample opportunity to do so, becomes the

law of the case for future stages of the same litigation."                  Id.

(quoting United States v. Bell, 988 F.2d 247, 250 (1st Cir. 1993))

(internal quotation marks omitted).

           In Redondo I, the district court considered Redondo's

claim that Law 458 had an improper retroactive effect.                In doing

so, it gave a statement of the law's construction, explaining:

           [Law 458] takes account of past behavior in
           order    to    institute   civil    debarment
           proceedings. The statute, however, does not
           operate to regulate past behavior but future
           behavior.    In essence, no bid or public
           contract after December 2000 shall be awarded
           to anyone convicted of the crimes listed in
           the debarment statute. Therefore, the statute
           cannot be said to apply retroactively because
           it takes into account past admissions of
           guilt.

Redondo   I,    slip   op.   at   27    (emphasis     added).      Under    this

construction,    Redondo     would     not    be   eligible   to   earn   public

contracts after December 2000.2

     2
         This construction was supported by other statements in
Redondo I. For example, the court also explained that, under Law
458, Puerto Rico "simply refuses to do business with" Redondo, and
that this refusal was not improper. Redondo I, slip op. at 23.
Similarly, in allowing a Contracts Clause claim to proceed, the
district court limited its discussion to a provision of Law 458
that called for the "automatic rescission of all contracts in
effect," id.; it did not discuss the possibility of a Contracts
Clause claim with respect to the failure to award future contracts.

                                       -12-
            This statement in Redondo I is a legal decision governing

the application of Law 458. Redondo did not challenge it on appeal

despite an ample opportunity to do so.         Consequently, the district

court's 2002 interpretation of Law 458 in Redondo I is law of the

case.   Redondo cannot now challenge the conclusion that Law 458

validly prevented it from bidding for public contracts after

December 29, 2000.    Nor can it argue that Law 458 did not apply to

it at all; its entire federal case was premised on the notion that

Law 458 did apply.

            Redondo argues that even if Redondo I established this

principle, it is no longer law of the case because of intervening

decisions in Redondo II and Redondo IV.         In Redondo II, plaintiff

observes,   the   Puerto   Rico   Court   of   Appeals   ordered   specific

performance, more than four years after Law 458 took effect.           See

Redondo II, App. 900.      Redondo argues that this order implicitly

assumes that Law 458 does not apply to it, since otherwise specific

performance would be impossible.           It also argues that legal

impossibility is an affirmative defense that the PRHTA had to, but

did not, raise.

            Redondo's argument fails to acknowledge that the impact

of Law 458 was not before the court in Redondo II.          Neither party

discussed Law 458 in the briefs, and the court did not mention the

law even a single time.     Because the Puerto Rico Court of Appeals

did not consider the effect of Law 458 at all, we do not read its

                                   -13-
order       of   specific    performance   as   an   implicit    endorsement   of

Redondo's position.            Likewise, we do not consider the PRHTA's

failure to brief the issue of Law 458 before the Puerto Rico Court

of Appeals to waive any argument regarding the law's effect,

because the issue of whether specific performance was possible did

not arise until the court issued its opinion ordering specific

performance.3

                 Redondo goes on to argue that our opinion in Redondo IV

resolves the law of the case issue in its favor.                  It argues that

our Contracts Clause holding depended on an "understanding" that

Redondo "had an available remedy in damages."                   This argument is

correct on its own terms; we did explain that the fact that Redondo

still had a remedy in damages meant there was no Contracts Clause

violation.        See Redondo IV, 662 F.3d at 48 ("If a state breaches a

contract but does not impair the counterparty's right to recover

damages for the breach, the state has not impaired the obligation

of the contract.").           But that conclusion does not lead as far as

Redondo believes.           We held only that Law 458 was not available as

an affirmative defense to excuse the defendants "from compensating

Redondo in damages if Redondo establishes a breach of contract."

Id.         We did not call into question the district court's prior

        3
        Additionally, Redondo has not filed suit to compel the
enforcement of the specific performance order from Redondo II, so
the PRHTA still, nine years after Redondo II, has had no need to
raise Law 458 as an affirmative defense.

                                       -14-
decision in Redondo I that Law 458 validly barred Redondo from

bidding after December 2000.      Nor did we hold, either expressly or

implicitly, that the agencies had waived the use of Law 458 as an

affirmative   defense   against   any     challenge   to   their   decisions

barring Redondo from bidding after December 2000.4

           Because neither the Puerto Rico court's decision in

Redondo II nor our decision in Redondo IV called Redondo I's

construction of Law 458 into question, that construction still

governs here.   Redondo's damages on its breach of contract claims

cannot be premised on the proposition that, absent any breach by

the PRHTA, Redondo would have had an unfettered right to bid on and

win PRHTA contracts after December 29, 2000.

                                    B.

           Because Redondo bears the burden of proof, it must point

to   affirmative,   admissible    evidence    supporting    its    claim   for

damages to survive the PRHTA's and the individual defendants'

motions for summary judgment. See FDIC v. Elder Care Servs., Inc.,

82 F.3d 524, 526 (1st Cir. 1996); Garside v. Osco Drug, Inc., 895
F.2d 46, 49 (1st Cir. 1990).            We review the district court's

exclusion of evidence on Daubert grounds for abuse of discretion.

See Smith v. Jenkins, 732 F.3d 51, 64 (1st Cir. 2013).

      4
       Redondo also offers arguments based on the doctrines of res
judicata and judicial estoppel. These arguments fail for the same
reasons detailed above.

                                   -15-
          The only record evidence regarding damages caused by the

PRHTA and the individual defendants was the deposition testimony of

CPA Villarini and his two expert reports.5             Even assuming the

reports were admissible,6 this evidence was properly excluded as

unreliable.    Villarini's   reports      and   deposition   rely   on    the

assumption that "Redondo could have submitted bids for contracts

from December 11, 2000 to the present, without interruptions, for

construction   projects   carried   out    by   the   [PRHTA]."     But   as

described above, the law of the case establishes that Redondo could

not have bid for contracts from the PRHTA after December 29, 2000.

The assumption is flawed, and the district court did not abuse its

discretion in concluding that this makes Villarini's evidence

unreliable.

          Villarini's evidence cannot be salvaged by trying to

extract from it the amount of damages, if any, corresponding to the

proper time period.   The expert reports calculated total damages

between 2000 and 2010 but did not break down the damages for

individual years within that period. The reports show no plausible

     5
        The content of the reports is essentially the same as the
deposition testimony. Our analysis applies equally to the reports
and the testimony, and we consider them as a single unit for
purposes of simplicity in addressing Redondo's arguments.
     6
        Redondo asserts, without citation to the record, that the
reports were "authenticated" during Villarini's deposition, and
that this would be enough to render the reports admissible, citing
11-56 Moore's Federal Practice § 56.94[4][b].      We assume this
point, without deciding, in Redondo's favor.

                                -16-
way, and Redondo suggests none, to distinguish the damages premised

on the faulty assumption that Redondo could win PRHTA contracts

after December 29, 2000 from those that do not rely on that

assumption.      That problem is compounded with respect to the

individual defendants, for whom there is no reliable way to

separate either the proper time period or the proportion of damages

attributable to the individual defendants.

            Without Villarini's evidence, Redondo has no record

evidence of damages against the PRHTA or the individual defendants.

The district court correctly entered summary judgment accordingly.

                                      III.

            We   next     consider   the     district   court's    sua    sponte

dismissal7 of the breach of contract claims against the PBA.                    We

apply    "especially    rigorous     appellate   review"    to    the   district

court's    sua   sponte    dismissal,   although    the    ultimate      de   novo

standard of review does not vary.             Santiago v. Puerto Rico, 655

     7
        The district court did not explicitly discuss the claims
against the PBA. Instead, it addressed them after granting the
PRHTA's and individual defendants' motions for summary judgment
simply by stating "[t]his case is DISMISSED, with prejudice." We
will refer to the "dismissal" as a proxy for entry of summary
judgment against Redondo on the claims against the PBA. The label
does not change our analysis, because the standards for reviewing
sua sponte dismissals and sua sponte entry of summary judgment are
largely identical. Compare, e.g., Chute v. Walker, 281 F.3d 314,
319 (1st Cir. 2002) (standard for sua sponte dismissal), with
Berkovitz v. Home Box Office, Inc., 89 F.3d 24, 29 (1st Cir. 1996)
(standard for sua sponte summary judgment).

                                      -17-
F.3d 61, 72 (1st Cir. 2011); N.H. Right to Life Political Action

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

          There are two important limits on a district court's

authority to enter judgment sua sponte at the summary judgment

stage:

          First, a district court ordinarily may order
          summary judgment on its own initiative only
          when discovery is sufficiently advanced that
          the   parties   have  enjoyed   a   reasonable
          opportunity to glean the material facts.
          Second, the court may enter summary judgment
          sua sponte only if it first gives the targeted
          party appropriate notice and a chance to
          present its evidence on the essential elements
          of the claim or defense.

Berkovitz v. Home Box Office, Inc., 89 F.3d 24, 29 (1st Cir. 1996)

(citations omitted).

          We are satisfied that the first condition was met here.

The district court entered judgment on the claims against the PBA

well after the close of discovery, and no party has argued that

additional time for discovery was needed.   However, the sua sponte

entry of summary judgment fails on the second condition. Since the

PBA did not seek summary judgment or dismissal, Redondo was never

put on notice that entry of judgment was a possibility, nor was it

given the opportunity to present its evidence to avoid that result.

          The district court explained that one defendant's motion

for summary judgment may be sufficient to put the plaintiff on

notice of the need to identify proof as to the other defendants.

That may be true when the same proof applies to both defendants.

                               -18-
Here, however, the claim against the PBA is differently situated

than the claims against the PRHTA and the individual defendants.

Under the law of the case, Redondo was eligible to bid for PBA

contracts between April 16 and December 29, 2000.          It actually did

place several bids during that period and was awarded a PBA

contract for one project, the Van Scoy school project.            The PBA

later cancelled the Van Scoy contract after Law 458 was passed.

This contrasts with Redondo's relationship with the PRHTA for

several   reasons,   including   that   the   Van   Scoy    contract   was

terminated8 and that Redondo had not placed any bids with the PRHTA

during that time.

           The district court's failure to provide Redondo notice

and the opportunity to put forward that different evidence was

error.    Because the court did not meet the second necessary

condition for entering judgment sua sponte at this stage, its sua

sponte dismissal of the claims against the PBA cannot stand.

                                  IV.

           For the reasons stated above, the district court's entry

of summary judgment in favor of the PRHTA and the individual

defendants is affirmed.    The dismissal of the claims against the

     8
        Without in any way indicating a view on its admissibility
as part of Redondo's case, we note that the PBA's expert report
states that, if the PBA owes damages at all, the sum of damages for
the cancelled contract is $190,088.

                                 -19-
PBA is vacated and the case remanded for further proceedings

consistent with this opinion.

          Costs are awarded to the PRHTA and individual defendants.

No costs are awarded with respect to the PBA.

                                -20-