Redondo Construction Corp. v. Izquierdo
2011 U.S. App. LEXIS 21493
| 1st Cir. | 2011Background
- Redondo entered a 1999 plea in US v. Redondo Construction, admitting false statements and agreeing to a one-year debarment from FHWA-funded contracts and two-year monitor supervision.
- Highway Authority notified Redondo of bid suspensions and later Buildings Authority barred Redondo from bidding; settlements and a Monitoring Plan followed with conditions.
- Law 458 (Dec 29, 2000) prohibited contracting with convicted fraudsters and allowed rescission, but expressly stated it did not retroactively apply to contracts in effect.
- Redondo bid on Buildings Authority projects post-Settlement; ten bids were canceled after Law 458; one contract had already been signed.
- Highway Authority withdrew consent to the Settlement and Monitoring Plan in Feb 2001; Puerto Rico courts later held the withdrawal invalid, but the federal action challenging the Authorities’ conduct proceeded.
- District court granted summary judgment on the Contracts Clause claim in Feb 2008 and dismissed Puerto Rico-law claims without prejudice; the case was remanded for consideration of remaining claims
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Contracts Clause was violated by the authorities' actions | Redondo claims actions impaired contract obligations by retroactively applying Law 458. | Authorities argue no impairment of the contract rights occurred since damages remain available. | No Contracts Clause violation; no impairment of the contract obligation shown. |
| Whether district court erred in declining supplemental jurisdiction over Puerto Rico law claims | Claims under Puerto Rico law should be adjudicated in federal court. | Court may decline supplemental jurisdiction after federal claims are resolved. | Court should exercise supplemental jurisdiction; remand of local-law claims warranted. |
| Whether Law 458 could retroactively affect settlement agreements | Law 458 retroactively targeted settlement terms and enforcement. | Law 458 does not apply retroactively to existing contracts; damages rule remains intact. | Law 458 cannot retroactively undermine contract remedies; no retroactive impairment. |
Key Cases Cited
- Crosby v. City of Gastonia, 635 F.3d 634 (4th Cir. 2011) (Contracts Clause impairment requires an adequate remedy for established impairment)
- Roche v. John Hancock Mutual Life Ins. Co., 81 F.3d 249 (1st Cir. 1996) (Gibbs-informed discretionary analysis for supplemental jurisdiction)
- Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343 (1988) (requires informed, case-specific discretion in supplemental jurisdiction)
- United Mine Workers v. Gibbs, 383 U.S. 715 (1966) (established presumption to decline or exercise supplemental jurisdiction based on Gibbs factors)
- Tomaiolo v. Mallinoff, 281 F.3d 1 (1st Cir. 2002) (illustrates judicial economy in exercising supplemental jurisdiction)