SFW Arecibo Limited v. Rodriguez

United States Court of Appeals
For the First Circuit

No. 04-2587

SFW ARECIBO, LTD. and FW ASSOCIATES, LTD.,

Plaintiffs, Appellants,

v.

ANGEL D. RODRÍGUEZ; WANDA CAPÓ; WANDA MARRERO; FREDERICK MUHLACH,
in his personal and official capacity as a member of the Planning
Board of Puerto Rico; FERNANDO FÉLIX, in his personal and
official capacity as a member of the Planning Board of Puerto
Rico; and NELSON VÉLEZ, in his personal and official capacity as
a member of the Planning Board of Puerto Rico,

Defendants, Appellees.

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

[Hon. Salvador E. Casellas, U.S. District Judge]

Before

Boudin, Chief Judge,
Lynch and Lipez, Circuit Judges.

Rubén T. Nigaglioni, with whom Nigaglioni & Ferraiuoli Law
Offices, PSC was on brief, for appellants.
Irene S. Soroeta-Kodesh, Assistant Solicitor General, with
whom Salvador J. Antonetti Stutts, Solicitor General, and Mariana
D. Negrón Vargas, Deputy Solicitor General, were on brief, for
appellees.

July 14, 2005
 LIPEZ, Circuit Judge. This appeal arose from a dispute

over a land use permit for the development of a shopping center in

Arecibo, Puerto Rico. Two real estate developers sued members of

the Puerto Rico Planning Board in the United States District Court

for the District of Puerto Rico pursuant to 42 U.S.C. § 1983,

alleging that the Planning Board, which reviews proposed

development projects throughout the Commonwealth, violated various

provisions of the United State Constitution when it erroneously

determined that the developers' land use permit had expired without

the commencement of "actual and effective construction."1 The

district court dismissed the complaint pursuant to Fed. R. Civ. P.

12(b)(6) for failure to state a claim. The developers filed a

timely appeal. Seeing "nothing in the present case to distinguish

it sufficiently from the usual land developer's claim under state

law to warrant recognition of a federal constitutional question,"

Creative Env'ts, Inc. v. Estabrook, 680 F.2d 822, 833 (1st Cir.

1982), we affirm.

I.

The appellants, real estate developers SFW Arecibo Ltd.

Partnership and FW Associates Ltd. Partnership ("Developers"), are

1
Puerto Rico law defines "actual and effective construction"
-- or, as the parties refer to it, "real and effective
construction" -- as "the commencement of the works of urbanization
and the construction of a permanent structure on the land, that is
to say, any work done beyond the stage of excavation." 23 P.R.
Laws Ann. § 62o.

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constructing a shopping center in Arecibo, Puerto Rico. The

Planning Board approved a preliminary development plan for the

project on August 26, 1996, and issued a land use permit that

required the Developers to begin actual and effective construction

by December 16, 1998. Once the permit was issued, the Developers

had to apply to the Puerto Rico Permits and Regulations

Administration ("ARPE") for specific construction permits.

On November 16, 1998, the Developers requested that the

Planning Board extend the deadline by which actual and effective

construction had to begin. The request was denied on December 9,

1998. Nevertheless, the Developers obtained the relevant permits

from the ARPE and began to excavate and lay foundations before the

December 16, 1998 deadline for commencement of actual and effective

construction. The ARPE agreed that the Developers had met the

deadline and continued to issue permits for the project.

On January 27, 2003, the Developers requested that the

Planning Board clarify whether the original land use permit would

allow for the building of a Home Depot store in the shopping

center. The Planning Board denied the request for clarification on

February 21, 2003, explaining that the land use permit had expired

on December 16, 1998 because the Developers had not commenced

actual and effective construction by that deadline. The Planning

Board also informed the ARPE that the underlying land use permit

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had expired, and thus that it could no longer issue construction

permits for the Developers' project.

On July 3, 2003, the Developers appealed to the Puerto

Rico Court of Appeals for administrative review of the Planning

Board's decision. The Puerto Rico appellate court sided with the

Developers, ruling on August 25, 2004 that the Planning Board's

decision was erroneous and that the Board's actions violated the

Developers' ownership rights as set forth in the Puerto Rico

Constitution. FW Assocs. v. Junta de Planificación, No. KLRA-03-

00476 (P.R. Ct. App. Aug. 25, 2004). The Puerto Rico appellate

court's decision is currently pending before the Puerto Rico

Supreme Court.

Not content to limit their claims to the courts of Puerto

Rico, the Developers also filed a § 1983 action against members of

the Planning Board in federal district court on September 5, 2003.

In their federal complaint, the Developers alleged that the

Planning Board's erroneous revocation of the land use permit

violated their rights under the Takings, Due Process, and Equal

Protection Clauses of the federal Constitution.2 The Planning

2
The Fifth Amendment Takings Clause provides that "private
property [shall not] be taken for public use, without just
compensation." U.S. Const. amend. V. This clause applies to the
states under the Fourteenth Amendment. See Pascoag Reservoir &
Dam, LLC v. Rhode Island, 337 F.3d 87, 92 n.4 (1st Cir. 2003),
cert. denied, 540 U.S. 1090 (2003). The Fourteenth Amendment Due
Process and Equal Protection Clauses provide that "[no] State
[shall] deprive any person of life, liberty, or property, without
due process of law; nor deny to any person within its jurisdiction

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Board responded by filing a motion to dismiss the complaint for

failure to state a claim. See Fed. R. Civ. P. 12(b)(6).

The Developers failed to reply to the 12(b)(6) motion

within the time allotted. Several days after the deadline had

passed, the Developers requested an extension of time to file their

opposition. On January 12, 2004, the district court denied the

request for an extension and deemed the motion to dismiss

unopposed. The district court subsequently issued an opinion and

order dismissing the case pursuant to Rule 12(b)(6). The court's

ruling rested solely on our precedent in PFZ Properties, Inc. v.

Rodriguez, 928 F.2d 28 (1st Cir. 1991), because that case, in the

court's view, "resolved a controversy nearly identical to the one

present in the instant case." SFW Arecibo, Ltd. v. Rodriguez, No.

03-1970 (D.P.R. Sept. 22, 2004).

II.

We review a district court's grant of a motion to dismiss

de novo. Greene v. Rhode Island, 398 F.3d 45, 48 (1st Cir. 2005).3

the equal protection of the laws." U.S. Const. amend. XIV, §1.
3
Emphasizing that the Developers failed to oppose the motion
to dismiss in the district court, the appellees assert that the
Developers have waived their substantive claims on appeal. The
Developers respond that the district court granted the motion to
dismiss based substantially on arguments not raised in the motion
itself, and therefore that they could not have been expected to
raise the claims in the district court that they advance on appeal.
While it is true that the Developers could have raised these claims
in a post-judgment motion, we will not treat their failure to do so
as a waiver in this case. See United States v. LaGuardia, 902 F.2d
1010, 1013 (1st Cir. 1990) (explaining that an appellate court may

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In so doing, we accept as true the well-pleaded factual allegations

of the complaint, drawing all reasonable inferences in the non-

movants' favor. Id.

A. Takings Claim

The Developers assert that the Planning Board's erroneous

determination that their permit expired without the commencement of

actual and effective construction amounted to a taking of private

property without just compensation, thereby violating the Fifth and

Fourteenth Amendments to the United States Constitution. This

claim is premature. It is well-settled that "if a State provides

an adequate procedure for seeking just compensation, the property

owner cannot claim a violation of the Just Compensation Clause

until it has used the procedure and been denied just compensation."

Williamson Cty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson

City, 473 U.S. 172, 195 (1985). Adequate procedures for seeking

just compensation are available under Puerto Rico law. See Deniz

v. Mun. of Guaynabo, 285 F.3d 142, 146-47 (1st Cir. 2002)

(concluding that Puerto Rico case law recognizes an inverse

condemnation remedy by which property owners can seek just

compensation). Because the Developers have not sought just

compensation through those state law procedures, their complaint

does not state a valid federal takings claim. See id. at 149 ("A

relax the raise-or-waive rule under certain circumstances).
Instead, we will follow the lead of the district court and address
the Developers' claims on their merits.

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plaintiff's failure to exhaust the inverse condemnation remedy

renders premature a section 1983 damages action predicated upon an

alleged takings violation.").

B. Procedural Due Process Claim

To establish a procedural due process claim under § 1983,

a plaintiff "must allege first that it has a property interest as

defined by state law and, second, that the defendants, acting under

color of state law, deprived it of that property interest without

constitutionally adequate process." PFZ Prop., 928 F.2d at 30.

Here, the Developers assert that the Planning Board violated their

procedural due process rights when it determined that the land use

permit had expired and revoked it without notice or a hearing.

That assertion is misguided. If the Developers have a

property interest in the land use permit (we assume arguendo that

they do), the post-deprivation process available to them under

Puerto Rico law is a constitutionally adequate protection for that

interest.

The Developers do not challenge the adequacy of the

permitting procedures established by Puerto Rico law. Instead,

they allege that the Planning Board illegally revoked their land

use permit without jurisdiction to do so. We rejected an analogous

due process claim in PFZ Properties, explaining that in this

context, our focus is on the availability of post-deprivation,

rather than pre-deprivation, process:

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 When a deprivation of property results from conduct of
state officials violative of state law, the Supreme Court
has held that failure to provide pre-deprivation process
does not violate the Equal Protection Clause. . . . The
state is not required to anticipate such violations of
its own constitutionally adequate procedures. To hold
otherwise would convert every departure from established
administrative procedures into a violation of the
Fourteenth Amendment, cognizable under § 1983. . . .
[T]he only question is whether the post-deprivation
process available to [the plaintiff] is adequate.

Id. at 31 (internal citations omitted). We went on to hold that

"the combination of administrative and judicial remedies provided

by Puerto Rico law is sufficient to meet the requirements of due

process." Id.

The post-deprivation process that we found adequate in

PFZ Properties included the right to petition the administrative

agency for reconsideration and to seek judicial review in the

courts of Puerto Rico. Id. The same procedures for review were

available in this case. The Developers petitioned the Planning

Board to reconsider its ruling. It then sought judicial review

before the Puerto Rico Court of Appeals, which ruled in its favor.

That ruling is now pending before the Puerto Rico Supreme Court.

A holding that the Developers had a federal procedural due process

claim on these facts would contravene our case law. See id. at 31;

see also Nestor Colon Medina & Sucesores, Inc. v. Custodio, 964

F.2d 32, 40 (1st Cir. 1992).

The Developers nevertheless attempt to distinguish PFZ

Properties on several grounds, none of which is persuasive. First,

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they contend that "the plaintiff in [PFZ Properties] claimed an

entitlement to a construction permit that was never issued and over

which the plaintiff never acquired a vested property interest

[while] this case deals with permits that were issued and revoked

after the Developers had effectively acquired a vested right."

This point is inapposite. Although the PFZ Properties court was

skeptical of the plaintiff's claimed property interest, it assumed

arguendo that the plaintiffs did have such an interest and that the

agency's actions had deprived it of that interest. See 928 F.2d at

31. PFZ Properties turned not on the nature of the developer's

property right, but on the availability of post-deprivation

process. Id. Nowhere in the opinion did we suggest that the

constitutional standard by which we judge the adequacy of post-

deprivation relief varies with the strength of the plaintiff's

claimed property interest.

The Developers also assert that PFZ Properties is

distinguishable because here, "the Planning Board could have,

should have, and must have provided the Developers with a hearing

prior to revoking the land use permit over which they had a vested

property right." The logic of this claim is not clear. Even if

the Planning Board should have provided the Developers with a

hearing in this case (a judgment we do not make), the alleged

deprivation of property, as in PFZ Properties, "results from

conduct of state officials violative of state law." Id. The

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Developers concede as much elsewhere in their brief, acknowledging

that "since . . . the Planning Board acted ultra vires [when it

revoked the permit], there really is no process that could have

been afforded to safeguard the Developers' constitutional rights."

As in PFZ Properties, then, the only question is whether adequate

post-deprivation process was available to the plaintiffs. We agree

with the district court that adequate post-deprivation process was

available here in the form of administrative and judicial review of

the Planning Board's decision. The plaintiffs have not stated a

procedural due process claim upon which relief can be granted.

C. Substantive Due Process

Asserting that the Planning Board acted without

jurisdiction when it revoked the permit and that it improperly

usurped ARPE's jurisdiction by restraining that agency from

granting any additional permits,4 the Developers also claim a

violation of their substantive due process rights. This claim,

too, is foreclosed by PFZ Properties and subsequent case law.

In PFZ Properties, we explained the standard for

establishing a substantive due process violation in the land use

permitting context:

4
According to the Developers, "the Planning Board warned ARPE
that it could proceed no further, i.e., that it could not issue
further permits, since the Land Use Permit expired on December 16,
1998 without the Developers having engaged in '[actual] and
effective' construction."

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 This Court has repeatedly held . . . that rejections of
development projects and refusals to issue building
permits do not ordinarily implicate substantive due
process. Even where state law officials have allegedly
violated state law or administrative procedures, such
violations do not ordinarily rise to the level of a
constitutional deprivation. The doctrine of substantive
due process does not protect individuals from all
[governmental] actions that infringe liberty or injure
property in violation of some law. Rather, substantive
due process prevents governmental power from being used
for purposes of oppression, or abuse of government power
that shocks the conscience, or action that is legally
irrational in that it is not sufficiently keyed to any
legitimate state interests.

Id. at 31-32 (internal citations and quotation marks omitted)

(brackets in original). Although "[w]e have left the door slightly

ajar for federal relief in truly horrendous situations, . . . . the

threshold for establishing the requisite 'abuse of government

power' is a high one indeed." Colon, 964 F.2d at 45.

The Developers' allegations concerning the Planning

Board's determination that the permit expired without the

commencement of actual and effective construction do not state a

substantive due process violation under this standard. In its

strongest form, the Developers' claim is essentially that the

Planning Board made an erroneous decision in violation of state

law. This claim is indistinguishable from the one we rejected in

PFZ Properties. See 928 F.2d at 32 (holding that "PFZ's

allegations that ARPE officials failed to comply with agency

regulations or practices in the review and approval process for the

construction drawings are not sufficient to support a substantive

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due process claim"); see also Licari v. Ferruzzi, 22 F.3d 344, 349

(1st Cir. 1994) (rejecting a substantive due process claim based on

allegations that a town planning board improperly revoked the

developer's building permits and delayed processing and approval of

an application for an amended permit). We agree with the district

court that the plaintiffs have not stated a substantive due process

claim upon which relief can be granted.

D. Equal Protection

Finally, the Developers recast the permit revocation as

an equal protection violation. Emphasizing that laying a

foundation ordinarily qualifies as actual and effective

construction, the Developers point out that the Planning Board

determined in this case that the Developers had not commenced

actual and effective construction by December 16, 1998 despite the

fact that they had begun laying a foundation. The Developers

reason that by determining that laying a foundation did not

constitute actual and effective construction, the Planning Board

"treated them differently than all others who are similarly

situated" in contravention of the Fourteenth Amendment Equal

Protection Clause. We disagree.

Although a land use dispute may give rise to an equal

protection claim in extreme circumstances, see Colon, 964 F.2d at

44, such circumstances are not present here. The Developers allege

no facts that suggest invidious discrimination based on a

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prohibited category such as race or sex, nor have they pointed to

an egregious procedural irregularity or abuse of power that might

constitute a federal equal protection violation. See id. They

assert only that they were treated differently from other

individuals who lay a foundation before a permit deadline for the

commencement of actual and effective construction. That

allegation, however, "represents nothing more than a claim that

[the permitting agency] departed from its own procedures or those

provided by Puerto Rico law." PFZ Props., 928 F.2d at 32. Absent

facts reflecting more fundamental discrimination, the plaintiffs

have not stated a claim under the Equal Protection Clause of the

Fourteenth Amendment.

Affirmed.

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