322 F.Supp.2d 153 (2004) | Cited 5 times | D. Puerto Rico | June 4, 2004


On February 19, 2004, defendants Fermin M. Contreras Gomez("Contreras"), individually and as Insurance Commissioner ofPuerto Rico, his wife Jane Doe, and the Conjugal Partnershipconstituted between them; and the Office of the InsuranceCommissioner ("OIC"), moved pursuant to Fed.R.Civ.P. 12(b)(6) todismiss the complaint filed by plaintiffs AndresGuillemard-Ginorio ("Guillemard"), his wife Maria M.Noble-Fernandez, the Conjugal Partnership constituted betweenthem, and Lone Star Insurance Producers, Inc. ("Lone Star")(collectively the "Lone Star Plaintiffs"); and Jorge R.Urrutia-Valles ("Urrutia"), his wife Carolyne J. Wiewal-Navas,the Conjugal Partnership constituted between, and Urrutia Valles,Inc. ("UVI") (collectively the "UVI Plaintiffs"), allegingpolitical discrimination pursuant to 42 U.S.C. § 1983 (Docket No.38). On March 12, 2004, plaintiffs opposed (Docket No. 41). Forthe reasons discussed below, the Court DENIES defendants'motion to dismiss.


A. The Lone Star Plaintiffs

In 1984, Guillemard and Noble, each of them holding aninsurance agent's license issued in accordance with the InsuranceCode of Puerto Rico, formed Lone Star and assigned to it theirlicenses. They have conducted business through Lone Star eversince, never receiving any complaints regarding their services ortrustworthiness.

Lone Star first did business with a government agency in 1993,when it placed insurance for the Puerto Rico Ports Authority. In1994, the Government of Puerto Rico determined that publicauthorities and government agencies should be represented bylicensed insurance brokers for the purposes of obtaininginsurance. Guillemard met with then Commissioner of InsuranceJuan Garcia, who advised him to affiliate with an insurancebroker and suggested doing so with Urrutia. Lone Star thenentered into a consortium with UVI (the "consortium"), throughwhich they successfully obtained insurance for the Puerto RicoAqueducts and Sewer Authority, the Puerto Rico Electrical PowerAgency, and the Puerto Rico Telephone Company. Lone Star and UVIshared commissions on premiums for insurance of the kind thatplaintiffs were licensed to solicit. The OIC and the governmentalagencies were aware at all times of the arrangement between LoneStar and UVI.

Beginning in late November 2001 and until December 17, 2001,David Castro-Anaya ("Castro"), an auditor for the OIC, reviewedLone Star's transactions for the period between 1997 and 2001,including all documents pertaining to the insurance provided tothe government agencies and the commissions shared with UVI. TheLone Star Plaintiffs gave their full cooperation to Castro,providing him with all the documents he requested and answeringall his questions. Furthermore, Guillemard informed Castro thatLone Star had performed extensive work in connection withsecuring and servicing the government agencies' accounts, andsent him a letter detailing these efforts. On the last day of theaudit, Castro informed Guillemard that he had found noirregularities and that he would send a final report in early2002.

The consortium between Lone Star and UVI ended in 2000. LoneStar continues to serve its business and individual clients, buthas not provided insurance services to any government agencysince. The Lone Star Plaintiffs' licenses have been renewed twicesince the 2001 audit.

In early 2003, Guillemard learned that the OIC had orderedseveral banks to provide financial information pertaining to LoneStar as well as all of Guillemard's and Noble's personal andbusiness affairs. Guillemard also learned that Contreras had madedisparaging remarks regarding his and Noble's politicalaffiliation. On December 10, 2003, the Lone Star Plaintiffs filedthis action. Contreras was served with summons on December 19,2003.

On December 23, 2003, Contreras, without affording them withnotice or an opportunity to be heard, issued an order declaringthe Lone Star Plaintiffs as non-trustworthy and incompetent.Furthermore, the order purported to revoke their insurance agentlicenses for a period of five years, prevent them from applyingfor any other license during the same five-year period, andimpose a fine in the amount of two-million thirty-five thousanddollars ($2,035,000). The order would become effective on January7, 2004. The order also informed the Lone Star Plaintiffs oftheir right to request a hearing within twenty days from theorder, which would stay the imposition of the fine. Therevocation of their licenses, however, would remain in effectpending a hearing and a final decision. The request for a TRO andpreliminary injunctive relief claiming due process violationssoon followed. The Lone Star plaintiffs timely requested ahearing before the OIC, which was to be held on March 2, 2004(Docket No. 21 at 155). Contrary to counsel for defendants'representations at the preliminary injunction hearing, however,no such hearing has been afforded them to this date (Docket No.43).

The Lone Star Plaintiffs are active members of the NewProgressive Party, and have contributed their time and giventheir financial support to its candidates.

B. The UVI Plaintiffs

Urrutia has been involved in the insurance business in PuertoRico since June 1974 and obtained his insurance broker license onOctober 27, 1980. In October 1983, Urrutia organized andincorporated UVI. On January 1984, UVI obtained licenses as aninsurance broker and a broker for excess lines. On July 1, 2002,UVI sold its insurance portfolio to AON B & C, Inc. UVI'slicenses remained in effect until August 12, 2002. Since July2002, Urrutia holds the position of Executive Vice-President incharge of marketing for AON Risk Services of P.R., Inc. At thistime, UVI is an inactive corporation.

Between 1984 and 2002, UVI provided insurance products andservices to numerous clients, establishing an excellentreputation in the process. Urrutia has been recognized as anoutstanding insurance broker with an excellent reputation, andwas selected as insurance broker of the year in 1985 and 1994 byProfessional Insurance Agents of Puerto Rico and the Caribbean,Inc.

In 1993, following a directive from the Secretary of theTreasury of Puerto Rico requiring all government agencies toengage brokers for the purpose of acquiring insurance, UVIsubmitted its qualifications and was selected as one of eightfirms certified to provide such services. In 1994, UVI and LoneStar entered into a consortium (the "consortium"), which wasfully disclosed to the Secretary of the Treasury and the OIC.From 1994 to approximately April 2001, Urrutia, acting on behalfof the consortium, negotiated insurance policies and providedrelated insurance services to several government agencies andpublic corporations.

In May 2001, after a change in government following the 2000general elections, then Secretary of the Treasury Juan FloresGalarza ("Flores") announced an investigation of all insuranceentities which had been providing insurance services togovernment agencies during the previous administration. Floresspecifically named UVI as a target of the investigation foralleged favoritism in the awarding of insurance business. On orabout November 2001, Contreras ordered an investigation of LoneStar's and UVI's operations and transactions from January 1997through September 30, 2001. Specifically, the investigationtargeted the consortium's transactions with government agenciesand the revenues received by Lone Star as a result of thosetransactions. This was the first time UVI had been investigatedsince its inception in 1984. The investigation was conducted byAngela Rivera Soto, who received the full cooperation of the UVIPlaintiffs. The investigation ended on or about the last week ofJanuary 2002. The investigator stated that she did not find whatshe was looking for (Docket No. 21 at 142).

On December 23, 2003, Contreras, without affording them noticeor a hearing, issued an order declaring the UVI Plaintiffsunreliable and incompetent to participate in the insurancebusiness in Puerto Rico. Furthermore, the order purported torevoke their insurance broker licenses for a period of fiveyears, prevent them from applying for any other license duringthe same five-year period, and impose a fine in the amount oftwo-million five-hundred sixty-seven thousand nine-hundreddollars ($2,567,900). The order would become effective on January7, 2004. The order also informed the UVI Plaintiffs of theirright to request a hearing within twenty days from the order,which would stay the imposition of the fine. The revocation oftheir licenses, however, would remain in effect pending a hearingand a final decision. Their complaint and request for a TRO andpreliminary injunctive relief claiming due process violationssoon followed. The UVI plaintiffs timely requested a hearingbefore the OIC, which was to be held on February 24, 2004 (DocketNo. 21 at 155). Contrary to counsel for defendants'representations at the preliminary injunction hearing, however,no such hearing has been afforded them to this date (Docket No.43).

The UVI Plaintiffs are active members of the New ProgressiveParty, and have contributed their time and given their financialsupport to its candidates.


On February 4, 2004, the Court issued an Opinion & Orderwhereby it granted plaintiffs' request for preliminary injunctiverelief preventing defendants from revoking their licenses pendinga hearing (Docket No. 31). See Guillemard Ginorio v. ContrerasGomez, 301 F. Supp.2d 122 (D.P.R. 2004) ("Guillemard I").Defendants have filed an appeal from that Opinion and Order(Docket No. 33), which is still pending resolution before theFirst Circuit. A motion to stay the proceedings pendingresolution of the appeal has been denied by this Court (DocketNo. 45).

Prior to reaching the merits of the injunction request,however, the Court had to entertain arguments of abstention underthe Younger2 and Burford3 doctrines, as wellas an argument of absolute immunity. These were discussed atlength and found to be inapplicable to the current controversy.Failing to grasp the concept, defendants have again raised theseissues in their motion to dismiss. Accordingly, the Court refusesto repeat its discussion of these matters and denies them for thesame reasons expressed in the Opinion and Order of February 4,2004 (Docket No. 21).4 See Guillemard I,301 F. Supp.2d at 128-132. Defendants are bound by the Court'sprevious rulings. See Ellis v. United States, 313 F.3d 636,646 (1st Cir. 2002) ("court ordinarily ought to respect andfollow its own rulings, made earlier in the same case.")

Furthermore, the Court refused to entertain defendants'arguments of Eleventh Amendment and qualified immunity, findingboth inapplicable to the preliminary injunction setting. SeeGuillemard I, 301 F. Supp.2d at 128. Defendants again raisethese defenses. The Court must, now for a third time, reject thesovereign immunity defense because it protects the OIC fromdamages, but not from injunctive relief, which is what plaintiffsseek here. "[S]overeign immunity shields the Government of PuertoRico from monetary damages and does not inhibit this Court'sdiscretion to issue injunctive relief against it's officials."Guillemard I, 301 F. Supp.2d at 128. "The plaintiffs in thiscase are seeking an injunction, not money damages. Regardless ofany congressional abrogation or state waiver of immunity, federalcourts have the power to enjoin state officials to conform theirconduct to the requirements of federal law." New ProgressiveParty v. Hernandez Colon, 779 F. Supp. 646, 652 (D.P.R. 1991)(citing Ex parte Young, 209 U.S. 123, 155-6 (1908)). Seealso Ramirez v. Puerto Rico Fire Service, 715 F.2d 694, 697(1st Cir. 1983)).

As to the qualified immunity defense, the Court finds that,taking the facts alleged in the complaint as true, Contreras isnot entitled to its protection, as will be fully discussed below.


A. Motion to Dismiss Standard.

Pursuant to Fed.R.Civ.P. Rule 12(b)(6), a complaint may not bedismissed unless it appears beyond doubt that plaintiff can proveno set of facts in support of his claim which would entitle himto relief. See Brown v. Hot, Sexy, and Safer Prods., Inc.,68 F.3d 525, 530 (1st Cir. 1995). The Court accepts all well-pleadedfactual allegations as true, and draws all reasonable inferencesin plaintiff's favor. See Correa-Martinez v.Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir. 1990). The Courtneed not credit, however, "bald assertions, unsupportableconclusions, periphrastic circumlocutions, and the like" whenevaluating the Complaint's allegations. Aulson v. Blanchard,83 F.3d 1, 3 (1st Cir. 1996). When opposing a Rule 12(b)(6) motion,"a plaintiff cannot expect a trial court to do his homework forhim." McCoy v. Massachusetts Institute of Tech., 950 F.2d 13,22 (1st Cir. 1991). Plaintiffs are responsible for putting theirbest foot forward in an effort to present a legal theory thatwill support their claim. Id. at 23 (citing CorreaMartinez, 903 F.2d at 52). Plaintiffs must set forth "factualallegations, either direct or inferential, regarding eachmaterial element necessary to sustain recovery under someactionable theory." Goolev v. Mobil Oil Corp., 851 F.2d 513,514 (1st Cir. 1988).

B. Defendants' Motion to Dismiss

1. Failure to state a claim for which relief can be granted

Defendants' argue that plaintiffs' § 1983 claims should bedismissed because they fail to adequately state a claim underthis circuit's heightened pleading standard for such actions.More specifically, they argue that plaintiffs must "show that thespecific instances that they characterize as a violation have acausal connection with the allegedly deprived constitutionalright." (Docket No. 38 at 27) (citing Morton v. Becker,793 F.2d 182, 187 (8th Cir. 1986)). "Plaintiffs must not onlydemonstrate that defendants, acting under color of law, deprivedthem of a federally protected right but must also prove that thenamed defendants were personally involved in such violation."(Id.) (citing Reyes Vargas v. Rosello Gonzalez,135 F.2d 305, 310 (1st Cir. 2001). Reason, however, escapes them.

Recently, in Educadores Puertorriqueños en Accion v. ReyHernandez, 367 F.3d 61 (1st Cir. 2004), the First Circuit didaway with the heightened pleading standard for civil rightscases; its viability as good law being questionable since theSupreme Court's decision in Swierkiewicz v. Sorema N.A.,534 U.S. 506 (2002). "[T]he [Supreme] Court has signaled itsdisapproval of all heightened pleading standards except thosethat emanate from either congressional or Rule-based authority.Strong language in Swierkiewicz makes plain that federal courtsshould refrain from crafting heightened pleading standards,regardless of the special circumstances those standards areintended to address." Educadores Puertorriqueños, 367 F.3d at66 (emphasis in the original).

The handwriting is on the wall. Swierkiewicz has sounded the death knell for the imposition of a heightened pleading standard except in cases in which either a federal statute or specific Civil Rule requires that result. In all other cases, courts faced with the task of adjudicating motions to dismiss under Rule 12(b)(6) must apply the notice pleading requirements of Rule 8(a)(2).Id. Accordingly, a complaint need only include "a short plainstatement of the claim showing that the pleader is entitled torelief," Fed.R.Civ.P. 8(a)(2), in order to "give the defendantfair notice of what the plaintiff's claim is and the grounds uponwhich it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957).

In sum, the Lone Star Plaintiffs allege in their First AmendedComplaint (Docket No. 7), first, that defendants subjected themto a retaliatory investigation and a punitive order because oftheir protected political speech and affiliation. And Second,that Contreras issued his order in retaliation for the filing ofthis action, in violation of their First Amendment right topetition the courts for redress of grievances. The UVI Plaintiffsallege in their complaint (Civ. No. 03-2390, Docket No. 1) thatthe defendants subjected them to a politically motivated andgroundless public investigation and punitive order due to theirprotected political activities and affiliations. A reading ofboth complaints satisfies the Court that plaintiffs have morethan adequately "raise[d] a plausible inference that [they] weresubjected to discrimination based on [their] politicalaffiliation or views." Correa Martinez v. Arrillaga Belendez,903 F.2d 49, 58 (1st Cir. 1990). Moreover, the Court has alreadyimplied that the timing of Contreras' order by itself couldsupport a finding of improper retaliation following the filing ofthe Lone Star Plaintiffs' complaint. See Guillemard I,301 F. Supp.2d at 130, n. 5. Therefore, the Court finds thatplaintiffs have complied with the notice pleading requirements ofFed.R.Civ.P. 8(a)(2) and their claims survive defendants motionto dismiss.

2. Declaratory Judgment

From what the Court can gather from defendants' arguments, theyallege that plaintiffs are not entitled to a judgment declaringthat 26 P.R. Laws Ann. § 947, which grants the InsuranceCommissioner the authority to revoke licenses, isunconstitutional. The basis for their argument seems to be thatthe statute sufficiently guarantees plaintiffs' due process oflaw. Their own actions, however, betray their words.

During the preliminary injunction hearing, defendants, throughcounsel, assured this Court that plaintiffs would be afforded ahearing and that they were prepared to provide any necessarydiscovery before the dates set for the hearings. The Court is onnotice, however, that, contrary to those representations bycounsel, neither the Lone Star nor the UVI plaintiffs have beenafforded with a hearing or with any discovery material for thatmatter. In fact, it seems defendants have done everything intheir power to stall any and all proceedings at theadministrative level (Docket Nos. 32, 43).5 The Courtcannot comprehend how defendants can then argue that plaintiffs'due process rights can be guaranteed by the administrativeprocess.

Furthermore, the Court has already established that due processmandates a pre-revocation hearing in this case. See GuillemardI, 301 F. Supp.2d at 132-133; see also Cleveland Board ofEducation v. Loudermill, 470 U.S. 532, 542 (1985) ("An essentialprinciple of due process is that a deprivation of life, liberty,and property `be preceded by notice and an opportunity forhearing appropriate to the nature of the case.'"); Bodie v.Connecticut, 401 U.S. 371, 379 (1971) ("The `root requirement'is `that an individual be given an opportunity for a hearingbefore he is deprived of any significant property interest.'");Bell v. Burson, 402 U.S. 535, 539 (1971) ("licenses are not tobe taken away without that procedural due process required by theFourteenth Amendment."). The Court has already found that thepost-deprivation hearing argued by defendants would not satisfydue process concerns and would be insufficient to adequatelyprotect plaintiffs' property rights. See Guillemard I,301 F. Supp.2d at 133. And that determination was made at a time whenthe Court believed that the defendants would act in good faithand afford the plaintiffs a hearing as had been represented bytheir counsel during the preliminary injunction proceedings. Fivemonths have passed since Contreras' orders issued and plaintiffshave not been given an opportunity to be heard. It is onlybecause of this Court's intervention that plaintiffs licensesremain in effect. Therefore, the Court finds defendants' argumentis without merit.

3. Qualified Immunity

"[G]overnment officials performing discretionary functionsgenerally are shielded from liability for civil damages insofaras their conduct does not violate clearly established statutoryor constitutional rights of which a reasonable person would haveknown." Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982). TheFirst Circuit employs a three-part test when determining if apublic official is entitled to qualified immunity: "(1) whetherplaintiff's allegations, if true, establish a constitutionalviolation; (2) whether that right was clearly established at thetime of the alleged violation; and (3) whether a similarlysituated reasonable official would have understood that thechallenged action violated the constitutional right at issue."Mihos v. Swift, 358 F.3d 91, 102 (1st Cir. 2004) (citingSuboh v. District Attorney's Office of Suffolk Dist.,298 F.3d 81, 90 (1st Cir. 2002); Harlow, 457 U.S. at 818-819).

a. Whether the allegations establish a constitutionalviolation

The Court finds that plaintiffs' allegations, if true,establish not one, but two constitutional violations. First,plaintiffs allege that Contreras and the OIC began aninvestigation into their business dealings because of theirpolitical affiliation to the NPP and their support of itsgubernatorial candidates. If it is true that Contreras'motivation to launch an investigation into plaintiffs' businessdealings was their affiliation to an opposing political party,then a violation of their First Amendment rights has beenestablished.

Second, plaintiffs allege that Contreras' orders, which imposedmulti-million dollar fines and revoked their licenses for fiveyears, were issued in retaliation for the Lone Star Plaintiffs'filing of their complaint. If true, then Contreras' motivationfor issuing the orders is a violation of plaintiffs' FirstAmendment rights. Furthermore, the summary revocation without ahearing of plaintiffs' licenses, had it come to fruition, wouldhave been a violation of their due process rights. Accordingly,the first prong is met.

b. Whether that right was clearly established

"A right is `clearly established' if, at the time of thealleged violation, `[t]he contours of the right [are]sufficiently clear that a reasonable official would understandthat what he is doing violates that right.'" Brown, 68 F.3d at531 (quoting Anderson v. Creighton, 483 U.S. 635, 640(1987)).

There can be no question that plaintiffs' First Amendmentrights to be free from any sort of political discrimination wereclearly established both when Contreras began his investigationinto plaintiffs' affairs in November of 2001 and when he issuedhis orders in December of 2003. See generally Branti v.Finkel, 445 U.S. 507 (1980); Elrod v. Burns, 427 U.S. 347(1976). See also Acevedo Garcia v. Vera-Monroig,213 F. Supp.2d 42, 52 (D.P.R. 2002) ("For the record, the prohibitionagainst political discrimination was clearly established in 1997when Defendants acted to violate Plaintiffs' constitutionallyprotected rights."); Orraca Figueroa v. Torres Torres,288 F. Supp.2d 176, 187 (D.P.R. 2003) ("the general prohibitionagainst political discrimination was clearly established whenDefendants acted. . . ."); Rodriguez Vazquez v. Lopez Martinez,253 F. Supp.2d 164, 166 (D.P.R. 2003) ("the law prohibitingpolitical discrimination was clearly established. . . ."). Cf.Board of County Com'rs, Wabaunsee County, Kan. v. Umbehr,518 U.S. 668 (1996) (holding that First Amendment protectsindependent contractors from termination or prevention ofautomatic renewal of at-will government contracts in retaliationfor their exercise of freedom of speech); O'Hare Truck Service,Inc. v. City of Northlake, 518 U.S. 712 (1996) (protectionsgenerally afforded to public employees against being dischargedfor refusing to support political party or its candidates alsoextend to independent contractors); Nestor Colon Medina &Sucesores, Inc. v. Custodio, 964 F.2d 32, 40-1 (1st Cir. 1992)(holding that the denial of a land use permit in unjustifiableretaliation for the applicant's expressions of his politicalviews is a First Amendment violation). Thus, the First Amendmentclaims meet the second prong.

Defendants argue that plaintiffs' due process rights, however,were not clearly established when Contreras issued his orders.The basis for their argument is that the cases of F.D.I.C. v.Mallen, 486 U.S. 230 (1988), and Gilbert v. Homar,520 U.S. 924 (1997),6 "clearly establish that pre-hearingsuspensions are constitutional as long as the procedures employedto take the decision to suspend allow sufficient factual basisfor taking it and the risk of an erroneous deprivation issubstantially depleted." (Docket No. 38 at 44). Defendants donot, however, even attempt to illustrate which were theprocedures employed to make the decision and how they work tosubstantially deplete the risk for an erroneous deprivation. Andas the Court has found above, their actions throughout thisprocess have demonstrated that they in fact do not intend torespect plaintiffs' rights.

Furthermore, the Court has already determined, and clearprecedent dictates, that plaintiffs are entitled to a hearingbefore their licenses were revoked or suspended. To holdotherwise would be an exercise of blatantly ignoring over thirtyyears worth of Supreme and Circuit Court precedent. SeeCleveland Board of Education, 470 U.S. at 542 ("An essentialprinciple of due process is that a deprivation of life, liberty,or property `be preceded by notice and opportunity for hearingappropriate to the nature of the case.'"); Fuentes v. Shevin,407 U.S. 67, 81-2 (1972) ("If the right to notice and a hearingis to serve its full purpose, then, it is clear that it must begranted at a time when the deprivation can still be prevented. . . .The right to a prior hearing has long been recognized by thisCourt under the Fourteenth and Fifth Amendments."); Boddie, 401U.S. at 379 (The "root requirement" is "that an individual begiven an opportunity for a hearing before he is deprived of anysignificant property interest."); Bell, 402 U.S. at 542 ("dueprocess requires that when a State seeks to terminate an interestsuch as that here involved, it must afford `notice andopportunity for hearing appropriate to the nature of the case'before the termination becomes effective."); Opp Cotton Mills v.Administrator, 312 U.S. 126, 152-3 (1941) (Due process demands"the requisite hearing is held before the final order becomeseffective."); Beauchamp v. De Abadia, 779 F.2d 773, 775 (1stCir. 1985) ("The district court's holding that [plaintiff] had aright to a hearing before his [medical] license could be revokedwas correct.").

It is only in emergency situations, and defendants have beenunable to show that this is one, that a post-deprivation hearingmay satisfy due process concerns. See Bell, 402 U.S. at 542(Except in emergency situations, State must afford notice andopportunity for hearing appropriate to the nature of the casebefore termination becomes effective.); Fuentes, 407 U.S. at 82("no later hearing and no damage award can undo the fact that thearbitrary taking that was subject to the right of procedural dueprocess has already occurred."); Wayfield v. Town of Tisbury,925 F. Supp. 880, 886 (D. Mass. 1996) ("Postdeprivation" dueprocess "is an exception, and not the rule"). The Court need notgo further.

c. Whether a reasonable official would have understood thatthe challenged action violated the constitutional right at issue

"[T]he relevant question is whether a reasonable official couldhave believed his actions were lawful in light of clearlyestablished law and the information the official possessed at thetime of his allegedly unlawful conduct." Singer v. Maine,49 F.3d 837, 844 (1st Cir. 1995) (citations omitted).

Defendants argue that, in making this determination, the Courtmust consider that plaintiffs' affairs had been underinvestigation for two years, thus, allowing Contreras todetermine that the plaintiffs had incurred in serious violationsthat would justify a suspension without a hearing. They do not,however, even attempt to delineate what constituted such seriousviolations as to warrant emergency action.7 Plaintiffs'allegedly serious violations occurred over three years before theorders issued, thus negating any grounds for arguing thatimmediate action was necessary. There is also unrebuttedtestimony on the record that the OIC's investigation intoplaintiffs' affairs yielded no evidence of wrongdoing. (See,e.g., Docket No. 21 at 142). Therefore, if the Court were totake into consideration the OIC's investigation, it wouldactually hurt the defendants more that it would help them.

In relation to the First Amendment claims, defendants do noteven try to argue that it was reasonable for them to believetheir actions would not violate plaintiffs' rights. In any event,Contreras' motivation for ordering the investigation and forissuing the orders, although sufficiently alleged so that itsurvives defendants' motion to dismiss, has not been establishedthrough a proffer of evidence that would allow the Court to makea definitive ruling at this time. In other words, there areissues of material fact which preclude the granting of qualifiedimmunity to Contreras at this time. Defendants' may, upon theconclusion of discovery, resubmit the question at the summaryjudgment or trial stage.

In relation to the due process claims, defendants only hint atan argument that the Insurance Code allowed Contreras to revokeplaintiffs' licenses without a previous hearing. Their contentionis, however, without merit.

First, the Court has already implied that 26 P.R. Laws Ann. §947 suffers from a constitutional infirmity insofar as itauthorizes the suspension or revocation of plaintiffs' licenseswithout a hearing. See Guillemard I, 301 F. Supp.2d at 130, n.5. Second, with all the precedent cited above, the Court is hardpressed to understand how Contreras, who is a practicingattorney, could reasonably have believed that his orders wouldnot violate plaintiffs' due process rights. The notion isuntenable.

Moreover, [a] statute cannot support objectively reasonable reliance if, in passing the statute, the legislature wholly abandoned its responsibility to enact constitutional laws. Nor can a law enforcement officer [or public official] be said to have acted in good-faith reliance upon a statute if its provisions are such that a reasonable officer should have known that the statute was unconstitutional.Illinois v. Krull, 480 U.S. 340, 355 (1987). On this questionthe Court can confidently state that, absent exigentcircumstances, no reasonable official could have believed thatrevoking plaintiffs' licenses without a prior hearing, even ifallowed by state law, would not violate their constitutionallyguaranteed due process rights. Therefore, Qualified immunity mustalso be denied to Contreras on plaintiffs' due process claims.


For the foregoing reasons, the Court DENIES defendants'motion to dismiss.


1. Because there is no dispute as to the facts leading up tothe complaint, the relevant facts are taken from the Opinion andOrder granting preliminary injunctive relief (Docket No. 31, pp.4-10), unless otherwise noted.

2. Younger v. Harris, 401 U.S. 37 (1971).

3. Burford v. Sun Oil Co., 319 U.S. 315 (1943).

4. The Court will only add that, for Younger to apply, "thestate proceedings must afford an adequate opportunity to raisethe constitutional challenges." Middlesex County EthicsCommittee v. Garden State Bar Ass'n., 457 U.S. 423, 432 (1982).The fact that plaintiffs have not yet been afforded a hearing, oreven discovery materials, at the OIC provides the Court with yetanother reason to deny Younger's applicability.

5. Although defendants represented that the UVI Plaintiffs'hearing was postponed at their own request (Docket No. 36 at3-4), they have not denied any of plaintiffs' assertionsregarding the OIC's delay in providing them with discoverymaterials or affording them a hearing, nor have they opposedplaintiffs' informative motion (Docket No. 43), which gives adetailed account of defendants' pattern of delay.

6. Mallen and Homar are inapplicable to this case andcreate no controversy as to the state of law at the time of thealleged violation. There, an independent third party had foundprobable cause to believe the plaintiffs had committed a seriouscrime before the challenged action occurred. No such independentdetermination is present here. The only determination as to anywrongdoing on the part of plaintiffs was made by Contreras.

7. The Court notes that even Contreras' orders themselvesobviate this information.

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