Marrero-Garcia v. Irizarry

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 93-2098

FRANCISCA MARRERO-GARCIA, THE
OTHER PLAINTIFFS THAT APPEAR
IN ADDENDUM NUMBER I ATTACHED
TO THE COMPLAINT WHICH
NUMBER 367 PERSONS,

Plaintiffs - Appellants,

v.

MARIA MARGARITA IRIZARRY, ENGINEER
AND EXECUTIVE DIRECTOR OF THE
PUERTO RICO ACUEDUCT AND
SEWAGE AUTHORITY IN HER PERSONAL
AND OFFICIAL CAPACITY, ET AL.,

Defendants - Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Jaime Pieras, Jr., Senior U.S. District Judge]

Before

Breyer,* Chief Judge,

Torruella and Selya, Circuit Judges.

Jes s Hern ndez S nchez, with whom Hern ndez S nchez Law

Firm, Ariel O. Caro P rez and Law Offices of Alvaro R. Calder n,

Jr., were on brief for appellants.

* Chief Judge Stephen Breyer heard oral argument in this matter,
but did not participate in the drafting or the issuance of the
panel's opinion. The remaining two panelists therefore issue
this opinion pursuant to 28 U.S.C. 46(d).

Georgiana S. Col n, with whom Edgardo Col n Arrar s, Goldman

Antonetti C rdova & Axtmayer, Enrique J. Mendoza-M ndez, Law

Offices of Enrique J. Mendoza M ndez, Mirta E. Rodr guez Mora,

Department of Justice, Federal Litigation Division, Manuel E.

Izquierdo, Arturo Tr as, and Tr as, Acevedo & D az, were on brief

for appellees.

August 24, 1994

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TORRUELLA, Circuit Judge. Plaintiffs-appellants are a

group of residents of Condominium Bah a-A, located at Calle Las

Palmas in Santurce, Puerto Rico ("the residents"). The residents

brought this 42 U.S.C. 1983 action for injunctive relief and

damages after the defendants-appellees, the Puerto Rico Aqueduct

and Sewer Authority ("PRASA") and its officers, suspended water

services to the Condominium for a period of ten days. Plaintiffs

allege that by suspending water services, PRASA deprived them of

their property without due process of law.

The district court found that under the circumstances

of this case, the residents did not have a protected property

interest in continued water service and, therefore, dismissed the

suit on summary judgment. This appeal followed. We affirm the

district court's decision.

I.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(c) provides for

entry of summary judgment when "the pleadings, depositions,

answers to interrogatories, and admissions on file, together with

the affidavits, if any, show that there is no genuine issue as to

any material fact and that the moving party is entitled to

judgment as a matter of law." A party opposing a motion for

summary judgment "must set forth specific facts showing that

there is a genuine issue for trial." Fed. R. Civ. P. 56(e); Mack

v. Great Atlantic & Pacific Tea Co., 871 F.2d 179, 181 (1st Cir.

1989).

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We review a district court's grant of summary judgment

de novo, viewing the record in the light most favorable to the

nonmoving party and drawing all reasonable inferences in the

nonmoving party's favor. LeBlanc v. Great American Ins. Co., 6

F.3d 836, 841 (1st Cir. 1993). "[W]e must reverse if we find

that issues of fact which were adequately raised below need to be

resolved before the related legal issues can be decided." Mack,

871 F.2d at 181.

II.

BACKGROUND

The facts of this case are set forth in the district

court's opinion, Garc a v. Irizarry, 829 F. Supp. 523, 525

(D.P.R. 1993). Here, we quote only those facts relevant to this

appeal.

Condominium Bah a-A (hereinafter "the
Condominium") is a 234-unit housing
project which was originally owned and
developed by the Corporaci n de
Renovaci n Urbana y Vivienda ("CRUV"), a
now-defunct public housing agency of the
Puerto Rican Government. On November 11,
1972, CRUV opened an account with the
Puerto Rico Aqueduct and Sewer Authority
("PRASA") for water and sewer services
for the Condominium.1 The PRASA account
served all of the units of the
Condominium through a single meter.
PRASA thereafter billed and collected
from CRUV for water and sewer services
provided to the Condominium.

In early 1973, ownership of the
Condominium was passed to its residents.

1 PRASA is the sole provider of water services within Puerto
Rico. It is a public corporation created by virtue of Law No.
33, of June 27, 1985, P.R. Laws Ann. tit. 27, 262 et seq.

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A Council of Owners of the Condominium
Bah a-A ("the Council") was constituted
to, among other things, "administer all
phases and aspects" of the Condominium
including "contract[ing] all necessary
services." On February 14, 1973, the
Council and the Board of Directors of the
Condominium notified Banco de Vivienda,
the mortgagor of the property, that they
had taken over the administration of the
Condominium.

[The residents] have alleged that
when they purchased their properties from
CRUV they were told, as an incentive,
that CRUV would continue to pay for all
water and sewer services. CRUV in fact
continued to be billed and to pay for
these services until October 1, 1981, at
which time CRUV requested to [sic] PRASA
that it cancel the account for the
Condominium.

For almost four years after the CRUV
account for the Condominium was canceled,
PRASA made no effort to collect from the
Condominium's residents for water and
sewer services provided. No explanation
has been provided for this situation. On
July 12, 1985, PRASA requested in writing
that the Condominium, through its Board
of Directors, place a bond with PRASA to
register an account in its name. PRASA
warned that the failure to register an
account could lead to suspension of water
services. On July 22, 1985, the Council
answered PRASA's request by refusing to
pay for any water and sewer services
unless individual meters were installed
for each of the apartments." (citations
omitted).

829 F. Supp. at 524-25.

Between September of 1985 and December of 1989, PRASA

officials had several meetings with representatives of the

Council and at least one meeting with the residents of the

Condominium to discuss the situation. See id. at 525. PRASA

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repeatedly "requested that the Condominium register an account

and place the required bond for the water and sewer services.

PRASA proposed a plan whereby the pending debt could be paid in

installments. The residents rejected PRASA's proposals and again

insisted on the installation of individual meters, to be paid for

by PRASA or CRUV." Id.

On July 24, 1990, PRASA unilaterally
opened an account on behalf of the
Condominium and began issuing monthly
bills. The account was not requested by
the Condominium and the Condominium did
not place a bond with PRASA. None of
these bills were paid or responded to in
any fashion by the Condominium. On
April 3, 1991, through a letter
personally delivered to Francisca
Marrero, the new President of the Board
of Directors of the Condominium, PRASA
requested a payment in the amount of
$448,872.08 for services rendered under
the account. PRASA stated that the
failure to pay or submit a proposal for
payment would result in the suspension of
the water services after 20 days. A copy
of the letter to Marrero was delivered to
each unit along with another letter
urging the residents to take action to
avoid suspension of services.

[The residents] have alleged that
Marrero requested on several occasions
that a meeting be arranged with the
Executive Director of PRASA, defendant
Mar a Margarita Irizarry, to discuss the
situation and that her requests were
refused. [The residents] charge that the
failure to grant the requests for such a
hearing violated their due process rights
as established under Puerto Rico law.2

2 Under the Act to Establish Procedural Requirements for the
Suspension of Essential Public Services, P.R. Laws Ann. tit. 27,
262, all public agencies providing essential services must have
an administrative procedure for the suspension of such services
for nonpayment. PRASA is one of the agencies which must comply

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On April 24, 1991, 21 days after the
delivery of the Marrero letter, water
service to the Condominium was suspended.
On May 3, 1991, after the Condominium
agreed to place a bond in the amount of
$5,000.00 to cover current monthly bills,
the service was reinstated. Two months
later, PRASA filed a complaint in the
Superior Court of Puerto Rico for the
collection of the amounts owed for water
and sewer services since 1981. This
complaint was thereafter filed seeking
relief based on the allegedly
unconstitutional 10-day deprivation of
water and sewer services.

Id. at 525-26.

The only issue before the district court was "whether

[the residents] suffered a deprivation of their procedural due

process rights resulting from PRASA's 10-day suspension of water

service to the Condominium Bah a-A." Id. at 527. The district

court stated that "[t]he procedural due process clause of the

Fourteenth Amendment guarantees citizens with a protected

property interest the right to notice and an opportunity to be

heard prior to a deprivation of such a property interest by the

government" and that "[a] threshold issue in this case is whether

[the residents] enjoyed a protectable 'property' interest in the

water service which was suspended." Id. The district court

with this statute. P.R. Laws Ann. tit. 2, 262a. The statute
requires that the agency allow a consumer, upon receiving an
adverse decision by a regional official within the agency, the
opportunity to have a hearing before the executive director of
the agency. P.R. Laws Ann. tit. 27, 262b(c); see also P.R.

Laws Ann. tit. 27, 262b(e)(if such a hearing is requested, the
consumer must pay an amount equal to his average monthly bill
before the hearing is held). In addition, at no time while such
administrative procedures are being developed may the agency
suspend the service. P.R. Laws Ann. tit. 27, 262b(d).

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indicated that "if such a property interest does not exist, the

due process clause provides no protection." Id. Finding that

"plaintiffs had no property interest in the continued receipt of

water services for which they never contracted," the district

court dismissed the case. Id. at 529.

III.

DISCUSSION

A. Issues of Material Fact

The residents first argue that this case presented

unresolved issues of material fact, which rendered the district

court's grant of summary judgment erroneous. A fact is

"material" when it has "the potential to affect the outcome of

the suit under the applicable law." Nereida-Gonz lez v. Tirado-

Delgado, 990 F.2d 701, 703 (1st Cir. 1993). While this case may

present unresolved issues of fact, we disagree with the

residents' contention that these disputes are material to the

resolution of this action. In particular, the residents contend

that a determination of whether CRUV owed the residents a

contractual duty to pay the water services is material to this

dispute. The residents also contend that the issue of whether

the residents were "clandestine users" of the water services was

an unresolved issue of material fact.

We disagree with the residents' conclusion that these

matters are material to the resolution of this dispute. The

existence of any contractual agreement between CRUV and the

residents is irrelevant to the issue before us, that is, whether

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at the time PRASA disconnected the water service, the residents

had a protected property interest in the continued receipt of

water services. A determination of whether the residents were

"clandestine users" is also unnecessary to the resolution of this

case as regardless of whether or not they were "clandestine

users," they still have not claimed any facts that, if taken as

true, would establish that they had a property interest in the

continued service of water. Other allegedly unresolved issues of

fact raised by the residents are equally immaterial to this

dispute.

B. Protected Property Interest

"The Fourteenth Amendment places procedural constraints

on the actions of government that work a deprivation of interests

enjoying the stature of 'property' within the meaning of the Due

Process Clause." Memphis Light Gas & Water Division v. Craft,

436 U.S. 1, 9 (1978). In Board of Regents, the Supreme Court of

the United States held that:

To have a property interest in a benefit,
a person clearly must have more than an
abstract need for it. He must have more
than a unilateral expectation of it. He
must, instead, have a legitimate claim of
entitlement to it. . . . Property
interests . . . are not created by the
Constitution. Rather they are created
and their dimensions are defined by
existing rules or understanding that stem
from an independent source such as state-
law rules or understandings that secure
certain benefits and that support claims
of entitlement to those benefits.

Board of Regents v. Roth, 408 U.S. 564, 577 (1972).

An interest becomes a protected property interest when

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recognized by state statute or a legal contract, express or

implied, between the state agency and the individual. Id. The

residents contend that the district court erred in concluding

that they "never entered into a contract with PRASA, for the

provision of water and sewer services." They argue that an

implied contractual arrangement existed between PRASA and the

residents by virtue of PRASA's action of opening an account on

behalf of the residents, or in the alternative, as a consequence

of the provision of water services by PRASA to plaintiffs for

more than 20 years. Plaintiffs do not cite any provisions of

Puerto Rico law nor any cases to support their position.3

Applying basic principles of contract law, we find their position

untenable. Because Puerto Rico is a civil law jurisdiction we

also look to its substantive law to determine whether a different

outcome is forthcoming.

Assuming, for purposes of this appeal, that PRASA's

action of opening an account and its continued rendition of water

services to the residents were valid offers to contract, the

residents would still be unable to establish the existence of a

contract. See Farnsworth at 135-136 ("One who begins to perform

3 In many jurisdictions an offer does not require formalities
and can be made by either written words or other conduct. E.
Allen Farnsworth, Contracts 3.10, at 135 (2d ed. 1990). A

contract "implied in fact" is one that results from conduct alone
and is distinguished from an "express" contract which results
from words. Id. 3.10, at 135. The residents in the present

case have cited to no authority establishing that contracts
"implied in fact" are valid and binding under Puerto Rico law.
See infra note 4.

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services for another in apparent expectation of payment may be

taken to be offering to furnish them for reasonable

compensation."). Under Puerto Rico law, the consent of the

contracting parties is an essential element of a contract.4

P.R. Laws Ann., tit. 31, 3391. "Consent is shown by the

concurrence of the offer and acceptance of the thing and the

cause which are to constitute the contract." P.R. Laws Ann. tit.

31, 3401. Hence, an offer standing by itself will not

establish the presence of a binding contract. Gonz lez Rodr guez

v. Fumero, 38 P.R.R. 497, 504, 507-08 (1928). Rather, in order

to have a contract, acceptance must be made of that offer. P.R.

Laws Ann. tit. 31, 3401; see also Jos R. V lez-Torres, Los

Contratos at 45-47 (1986). PRASA repeatedly requested the

Condominium to place a bond and to register an account. PRASA

also made it clear to the residents that in order to be

considered "registered users" with PRASA, they had to apply for

water service and place a bond in accordance with the

requirements set forth in PRASA's rules and regulations. The

4 Puerto Rico law establishes that:

There is no contract unless the following requisites
exist:

(1) The consent of the contracting
parties.
(2) A definite object which may be the
subject of the contract.
(3) The cause for the obligation which
may be established.

P.R. Laws Ann. tit. 31, 3391.

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residents refused to do so, thereby rejecting PRASA's offer. See

V lez-Torres at 48-49 (an acceptance should be immediate and

definitive, should coincide in all its terms with the offer, and

should be made in the manner required by the offerer). An

offeree's inaction or "silence in the face of the offer to sell

goods is not ordinarily an acceptance, because the offeror has no

reason to believe from the offeree's silence that the offeree

promises to buy." Farnsworth 3.15, at 155; see also V lez-

Torres at 56-57 (silence ordinarily cannot constitute acceptance

of an offer); Coghlan v. Starkey, 845 F.2d 566, 570 (5th Cir.

1988) (neither the mere receipt of water nor the carrying of

plaintiff's name on waterworks rolls as user created a

contractual relationship, either express or implied, where

plaintiff refused to apply for water service).

The residents also argue that the fact that PRASA was

having meetings and conversations with the residents in relation

to the water and sewer services being rendered evidences an

implied contract. We disagree with plaintiffs' contention that

those meetings suggested the existence of such a contract. These

meetings were merely discussions or negotiations regarding who

should pay for the installation of individual water meters in the

Condominium, whether the residents were required to pay for past

services rendered, and conditions for future water service. See

Coghlan at 570 (negotiations over backbill and billing errors

alone could not establish the type of property interests required

to raise disconnection of water service to a deprivation of a

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valuable property right).

The residents next contend that the district court

erred in concluding that Puerto Rico law did not confer on the

residents a property interest in continued water service.

We look to Puerto Rico statutes to determine whether

Puerto Rico law conferred such a property interest. See Coghlan,

845 F.2d at 569. Plaintiffs argue that Section 159 of the

Aqueduct and Sewer Act of Puerto Rico, P.R. Laws Ann. tit. 22,

141 et seq., establishes a property interest in continued water

services. Section 159 authorizes PRASA to establish rules and

regulations concerning the use and conservation of water and

provides, in relevant part, that the purpose for which PRASA is

created is:

that the health of the inhabitants of the
Island of Puerto Rico shall be attained,
that the health of the inhabitants of the
Island shall be protected, that the
water available shall be utilized in the
fullest measure possible and that it
shall be made available to the consumers
with the greatest possible regularity and
continuity.

P.R. Laws Ann. tit. 22, 159 (1989).

The residents contend that they are "consumers" within

the meaning of Section 159 and as such have a state created

property interest in regular and continuous water services. We

need not determine whether Section 159 creates a property

interest in consumers because we do not believe that plaintiffs

are "consumers." The Aqueduct and Sewer Act does not define the

term "consumer." Neither do the Regulations issued by PRASA

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provide a definition of the term. The residents have not

proffered any other authoritative interpretation of the term

"consumer" which would indicate they were included within the

meaning of the word. We interpret the term "consumer" in this

context to be limited to persons who pay or otherwise give

consideration for goods or services rendered. We believe this

interpretation is consistent with the common understanding of the

term. It is also consistent with a basic tenet of the Aqueduct

and Sewer Authority, namely that "[t]he Authority shall render no

free Services." P.R. Laws Ann. tit. 22, 158. In the present

case, the residents refused to comply with the procedures

established by PRASA that would give them consumer status with

respect to PRASA. They refused to register an account, place a

bond or pay for water services. Therefore, they were not

"consumers" as we interpret that term under Section 159.

In the alternative, the residents contend that they are

"users"5 of the aqueduct and sewer services, as that term is

5 In its definition section, the Regulations for Administrative-
Legal Procedures of PRASA provides the following definitions of
"users":

User - Person who enjoys the services of
User
aqueducts and/or sewer including any
person or entity who discharges in the
sanitary system, whether said person is a
subscriber or not.

(a) Subscriber user - Person who enjoys the aqueduct
Subscriber user
and sewer services registered in the name of the
Authority.
(b) Non-subscriber user - Person who enjoys the
Non-subscriber user
aqueduct and sewer services registered in the name of
another person.
(c) Clandestine user - Person who enjoys
Clandestine user

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defined in PRASA regulations and as such, have a property

interest in continued services. The residents have not pointed

to any legal authority which indicates that "users" have a

property interest in water services. Rather,the residents merely

argue that somehow PRASA's regulations defining "user" to include

"non-subscriber-users" and "clandestine-users" give them a

property interest in water services. They rely on the regulatory

definition of "Aqueduct Service" as "water supply for the benefit

of a subscriber or user" as a basis for this proposition.

Regulation for Administrative-Legal Procedures of the Puerto Rico

Aqueducts and Sewer Authority, Chap. II (emphasis added).

The residents have cited no authority, and we are

unable to find any, indicating that regulatory definitions alone

are sufficient to establish a property interest. The relevant

case-law is to the contrary and suggests that these regulatory

definitions cannot establish a constitutional right to receive

water services. See Coghlan, 845 F.2d at 570 n.3 (examination of

charter creating waterworks and other sub-statutory sources

including regulatory statements, for a provision establishing a

right to water services is unnecessary and improper); Gorham v.

Hutto, 667 F.2d 1146 (4th Cir. 1981) (administrative guidelines

are not a sufficient basis for the creation of a due process

interest); Bills v. Henderson, 631 F.2d 1287 (6th Cir. 1980)

the aqueduct and/or sewer services
without being authorized for it.

Regulation for Administrative-Legal Procedures of the Puerto Rico
Aqueducts and Sewer Authority, Chap. II (1989).

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(procedural rules created by state administrative bodies cannot

serve as a basis for a separate protected liberty interest);

Sterling v. Maywood, 579 F.2d 1350, 1354 (7th Cir. 1978) (where

"plaintiff has neither a contractual nor a statutory basis to

support her claim, . . . [she] was not deprived of a due process

right by defendants [sic] termination of her water service"). We

therefore conclude that the regulatory definitions on which the

residents rely do not provide a sufficient basis for finding a

property interest.

Finally, even if the residents were able to establish

that they had a protected property interest in continued water

service, they were not deprived of due process. The question of

what process is due is a question of federal constitutional law.

Cleveland Brd. of Educ. v. Loudermill, 470 U.S. 532, 541 (1985).

Due process generally requires "that a deprivation of life,

liberty, or property be preceded by notice and opportunity for

hearing appropriate to the nature of the case." Id. at 542

(internal citation and quotations omitted). "[T]o determine

whether a constitutional violation has occurred, it is necessary

to ask what process the State provided, and whether it was

constitutionally adequate." Zinermon v. Burch, 494 U.S. 113, 126

(1990).

First, we summarize the procedures provided. In 1986,

PRASA began sending the Board of Directors of the Condominium

notices warning that failure to place a bond and to register an

account on behalf of the Condominium could lead to the suspension

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of water services. PRASA officials also met with the Board of

Directors and with the residents of the Condominium to discuss

the situation and proposed a plan whereby the Condominium could

pay the pending debt in installments. The residents rejected

the proposed plan. In 1990, PRASA unilaterally opened an account

on behalf of the Condominium and began issuing monthly bills.

The Condominium neither paid these bills nor responded to them in

any fashion. On April 3, 1991, PRASA delivered a letter to the

President of the Board of Directors of the Condominium requesting

a payment in the amount of $448,872.08 for services rendered

under the account. PRASA stated that the failure to pay or

submit a proposal for payments would result in the suspension of

water services after twenty days. A copy of the letter was

delivered to each unit along with another letter urging the

residents to take action to avoid the suspension of services.

In determining the adequacy of the procedures afforded

the residents we balance the competing interests at stake. Id.

These are the residents' private interest in continued water

service, PRASA's interest in receiving payment for its services

and the avoidance of administrative burdens, and the risk of an

erroneous deprivation of water services. See Mathews v.

Eldridge, 424 U.S. 319, 335 (1976). The receipt of utility

services is a necessity of modern day life and undoubtedly an

important interest, however, PRASA's interest in receiving

payment for its services is also significant. It would be

unreasonable to expect PRASA to continue providing free services

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to the residents indefinitely. PRASA gave the residents notice

on several occasions of its intention to discontinue services if

the residents did not comply with PRASA's administrative

requirements. PRASA officials also held meetings with the

residents and the Board of Directors of the Condominium and

discussed with them alternative solutions to the problem. Thus,

the residents were given notice of PRASA's intended action, they

were informed of how to resolve the situation and given several

opportunities to be heard on the matter. We do not see how any

additional procedures could better safeguard the residents'

interests so as to justify the additional administrative burden

of such procedures. We have no doubt that the residents were

given more than adequate due process.

The residents were not entitled to additional

procedures set forth in the Puerto Rico Act to Establish Minimum

Procedural Requirements for the Suspension of Essential Public

Services because this Act affords such protections only to

"subscribers" of utility services. See P.R. Laws Ann. tit. 27,

262b(a), 262b(b), 262b(c), 262b(e), 262b(g) and 262b(h); see

also infra note 2. By failing to contract with PRASA for the

provision of water and sewer services, the residents failed to

achieve subscriber status. The residents' failure to comply with

PRASA's administrative requirements prevents them from now

claiming an entitlement to PRASA's administrative procedures.

See United States v. Charles George Trucking Co., 823 F.2d 685,

690-91 (1st Cir. 1987) ("A party who is aware of, and chooses to

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ignore, an available avenue for redress cannot later be allowed

to characterize his refusal to travel the road as tantamount to

the road being closed -- or to no road being in existence");

Coghlan, 845 F.2d at 569 (there is no support for the proposition

that there is a constitutional right to receive utilities when

the applicant refuses to comply with reasonable administrative

procedures) (internal quotation and citation omitted).

C. Motion for Sanctions

Defendants have asked this court to impose double costs

and attorney's fees as a sanction for pursuing this action and

further filing this appeal. Their request is denied.

Affirmed.

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