Court Opinion

ID: 2684127
Source: CourtListenerOpinion
Date Created: 2014-07-17 04:00:08.765784+00
Date Added: 2024-06-11T13:13:48.820458
License: Public Domain

United States Court of Appeals
                      For the First Circuit
No. 12-2455

                   UNIVERSAL INSURANCE COMPANY,

                      Plaintiff, Appellant,

                                v.

   OFFICE OF THE INSURANCE COMMISSIONER; RAMÓN L. CRUZ-COLÓN;
                  COMMONWEALTH OF PUERTO RICO,

                      Defendants, Appellees.

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

         [Hon. José Antonio Fusté, U.S. District Judge]

                              Before

                       Lynch, Chief Judge,
                      Lipez, Circuit Judge,
                   and, Lisi,* District Judge.

     Carlo Defendini-Díaz and Pagán, Ortega, & Defendini Law
Offices PSC on brief for appellant.
     Margarita Mercado-Echegaray, Solicitor General, Department
of Justice, on brief for appellees.

                 ______________________________

                         June 19, 2014
                 ______________________________

     Lisi, District Judge.     Appellant Universal Insurance Co.

("Universal") seeks review of a district court order dismissing its

     *
      Of the District of Rhode Island, sitting by designation
federal court action on res judicata grounds.          The district court

determined that the issues raised in the federal court action had

been   previously   litigated   in   an     administrative   action    before

Appellee Office of the Insurance Commissioner ("OIC").                For the

reasons outlined below, we affirm the district court’s decision.

                            I. Background

       On June 20, 2009, a vehicle owned by Mrs. Carmen J. de Jesus

Fonseca ("Fonseca") was involved in an automobile accident with a

vehicle operated by Mrs. Aidita Luciano Munoz ("Munoz").               At the

time of the accident, Munoz was operating the vehicle pursuant to

a rental agreement with Enterprise Rent-A-Car, the owner of the

vehicle. The Munoz vehicle was insured by Universal pursuant to a

commercial   automobile   insurance        policy.   After   the   accident,

Fonseca filed a claim with Universal.          In January 2010, Universal

denied Fonseca’s claim.

       After Universal denied her claim, Fonseca filed a request to

review the denial with the OIC.      On January 30, 2012, the OIC fined

Universal $1,000 and ordered Universal to adjust and resolve the

claim.   In the order, the OIC advised Universal that it had twenty

days to request a hearing and, if it did not request a hearing

within the time constraints, the order would become final and

enforceable.

       Universal timely requested a hearing.         After submitting the

request, however, the parties informed the OIC that there were no

material facts in controversy and, therefore, there was no need to

hold a hearing.     The parties agreed that they would submit the

                                     -2-
matter for adjudication based on the parties’ memoranda of law

supporting   their     respective   positions.         In   its    submission,

Universal argued that the Graves Amendment, 49 U.S.C. § 30106,

insulated it from liability.

     On June 19, 2012, the OIC issued its decision.                    In the

decision, the OIC rejected Universal’s argument and confirmed the

January 2012 order.     The OIC advised Universal that it had twenty

days to file a motion for reconsideration and thirty days to file

an appeal to the Court of Appeals of Puerto Rico.1                The OIC also

informed   Universal    that   if   it    chose   to   file   a    motion   for

reconsideration and that motion was subsequently denied, the thirty

day period to request judicial review would run from the date the

motion for reconsideration was denied.        The OIC decision expressly

warned Universal that if it did not file a timely appeal for

judicial review, the administrative decision would become final and

unappealable.

     Universal filed a timely motion for reconsideration.              The OIC

denied that motion on July 19, 2012. Universal, however, chose not

to file an appeal with the Court of Appeals of Puerto Rico.

Instead, Universal launched an alternative attack, and, on August

7, 2012, filed a complaint for declaratory and injunctive relief in

the United States District Court for the District of Puerto Rico.

The district court, however, inter alia, determined that the

     1
      See P.R. Laws Ann. tit. 3, § 2172 (Puerto Rico Uniform
Administrative Procedure Act providing that parties may appeal
adverse administrative decisions to the Court of Appeals of Puerto
Rico).
                                    -3-
doctrine of res judicata barred the federal court action.2

     Universal now claims that the district court erred when it

dismissed the federal court action on res judicata grounds.     The

OIC submits that the district court correctly determined that res

judicata barred the action.    We review the district court decision

de novo.   R.G. Fin. Corp. v. Vergara-Nuñez, 446 F.3d 178 (1st Cir.

2006).

                         II. Res Judicata

     According to the doctrine of res judicata, a final judgment on

the merits precludes parties from relitigating claims that were or

could have been brought in a prior action.   Haag v. United States,
589 F.3d 43 (1st Cir. 2009).   A federal court must give preclusive

effect to a state-court judgment if the state court would. Atwater

v. Chester, 730 F.3d 58, 63 n.3 (1st Cir. 2013).          Here, the

district court properly applied Puerto Rico law.

     A party asserting res judicata under Puerto Rico law must

establish "(i) the existence of a prior judgment on the merits that

is ‘final and unappealable’; (ii) a perfect identity of thing or

cause between both actions; and (iii) a perfect identity of the

parties and the capacities in which they acted."    R.G. Fin. Corp.,
446 F.3d at 183 (quoting Boateng v. InterAm. Univ., Inc., 210 F.3d
56, 61-62 (1st Cir. 2000)).

     A prior and current action will share a perfect identity

     2
      In the alternative, the district court also denied the
request for declaratory relief. Because we dispose of this matter
on res judicata grounds we need not address the district court’s
declaratory relief decision.
                                 -4-
     of thing if they involve the same object or matter and
     will share a perfect identity of cause if they flow from
     the same principal ground or origin or, put another way,
     if they derive from a common nucleus of operative facts.

García-Monagas v. De Arellano, 674 F.3d 45, 51 (1st Cir. 2012)

(citations omitted) (internal quotation marks omitted).                           Perfect

identity of parties exists when parties in the current action were

also parties in the prior action.              Id.

     The   Supreme      Court    of    Puerto        Rico    recognizes       a    "great

flexibility on the application of the doctrine of res judicata . .

. in the administrative sphere so that justice may be done."

Negrón v. C.I.T. Fin. Servs. Corp., 11 P.R. Offic. Trans. 828, 833
n.2 (1981).       In "proper cases" res judicata is applicable to

administrative decisions. Pagán Hernández v. Univ. of P.R., 7 P.R.

Offic. Trans 795, 804 (1978).               "When an administrative agency is

acting in a judicial capacity and resolves disputed issues of fact

properly   before      it   which     the    parties        have   had   an   adequate

opportunity to litigate, the courts have not hesitated to apply res

judicata to enforce repose." Id.; see also Aunyx Corp. v. Cannon
U.S.A., Inc., 978 F.2d 3, 7 (1st Cir. 1992) ("Normally, decisions

of administrative agencies are entitled to res judicata effect when

the agency acted in a judicial capacity.").                   The OIC decision was

a prior judgment on the merits that is final and unappealable.

     The   crux   of    both    the    administrative          proceeding         and   the

district court complaint is whether the Graves Amendment shielded

Universal from liability arising from a third party claim.                          Thus,

both the administrative proceeding and the district court action

                                        -5-
share a perfect identity of "thing."            See García-Monogas, 674 F.3d

at 51.    Here, the "perfect identity of the parties" prong is also

satisfied; the parties in the administrative proceeding are the

same as the parties in the district court proceeding.                 Id.

     We next turn to Universal’s contention that the district court

erred (1) by ignoring Universal’s "reservation of rights," and (2)

by   failing   to   recognize    a    public     policy    exception        to   the

application of res judicata.

     Universal      argues    that    the       district     court    "dismissed

Universal’s    complaint     based   on   res    judicata,    but    it   did    not

considered [sic] Universal’s timely reserve of rights.                App. 15 at

p.358. The [d]istrict [c]ourt should have considered Universal[’s]

reserve of rights to deny the application of res judicata in this

case."    Appellant’s "Opening Brief" at 10.          The reference to "App.

15 at p.358" refers this Court to Universal’s brief filed before

the district court.

     Universal’s reservation of rights "argument" consists of a

cross-reference to a page in a memorandum filed before the district

court.    "[C]laims made to this court must be presented fully in an

appellate brief and not by cross-reference to claims made in the

district court." Lawrence v. Gonzales, 446 F.3d 221, 226 (1st Cir.
2006).    This Court is not obligated to sift through district court

filings to discern arguments that Universal fails to develop on

appeal.

     Filing a brief that merely adopts by reference a
     memorandum previously filed in the district court does
     not comply with the Federal Rules of Appellate Procedure.

                                      -6-
     See Fed. R. App. P. 28(a)(6) (providing that argument
     must contain appellant’s contentions and reasons
     therefor, with citations to authorities). Moreover, it
     is a practice that has been consistently and roundly
     condemned by the Courts of Appeals . . . .

R. I. Dep’t. of Envtl. Mgmt. v. United States, 304 F.3d 31, 47 n.6

(1st Cir. 2002)(internal quotation marks omitted).     By failing to

develop its reservation of rights argument, Universal has waived

its claim.    United States v. Zannino, 895 F.2d 1, 17 (1st Cir.

1990); see also Giragosian v. Bettencourt, 614 F.3d 25, 30 (1st

Cir. 2010).

     Universal next claims that the district court erred by failing

to apply the public policy exception to res judicata.      Universal

alleges that this matter concerns an important issue of public

policy –- a disregard of Congressional intent evidenced by the

OIC’s misapplication of Graves Amendment immunity.

     Under Puerto Rico law, res judicata may not apply if "public

policy demands an exception."    Barreto-Rosa v. Varona-Mendez, 470
F.3d 42, 48 (1st Cir. 2006).    The public policy exception has been

applied by Puerto Rico courts where the "potentially preclusive

prior judgment (1) affected the rights of a minor, (2) was moot, .

. . (3) involved a dismissal for lack of prosecution[,]" or (4)

stemmed from a tainted proceeding.     Núñez Colón v. Toledo-Dávila,
648 F.3d 15, 20 (1st Cir. 2011).

     The record reflects that the parties participated fully in a

proceeding before an administrative agency and that the parties had

an adequate and fair opportunity to litigate the matter. "[P]ublic

policy also includes an interest in finality and efficiency."   Id.

                                 -7-
at 21 (internal quotation marks omitted).           The public policy

exception     to   res   judicata    must   be   limited   to   "special

circumstances, lest they invite such frequent second actions as to

weaken the repose and reliance values of res judicata in all

cases."     García-Monagas, 674 F.3d at 56 (internal quotation mark

omitted).    We find no such special circumstances in this case.

                            III. Conclusion

     Discerning no error in the district court’s dismissal on res

judicata grounds, we affirm.

AFFIRMED.

                                    -8-