Universal Insurance Company v. Office of the Insurance Commis , 755 F.3d 34 ( 2014 )

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
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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).
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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.
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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
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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.
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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.
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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.
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