United States Court of Appeals For the First Circuit

No. 20-1841

DISASTER SOLUTIONS, LLC,

Plaintiff, Appellant,

v.

CITY OF SANTA ISABEL, PUERTO RICO,

Defendant, Appellee.

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

[Hon. Raúl M. Arias-Marxuach, U.S. District Judge]

Before

Lynch and Selya, Circuit Judges, and McCafferty,* District Judge.

Rafael Baella-Silva and B&B Law Firm, PSC on brief for appellant. Johanna Emmanuelli Huertas and Pedro E. Ortiz-Alvarez, LLC on brief for appellee.

December 17, 2021

* Of the District of New Hampshire, sitting by designation. MCCAFFERTY, District Judge. Disaster Solutions, LLC

appeals the district court's dismissal of its breach of contract

lawsuit against the City of Santa Isabel, a Puerto Rico

municipality. On appeal, Disaster Solutions contends that the

district court erred by granting the City's motion to dismiss based

on the court's conclusion that Disaster Solutions did not allege

facts from which an enforceable contract against the City could be

found under Puerto Rico law and that the district court abused its

discretion in denying a motion to alter or amend the judgment. We

affirm.

BACKGROUND

I. Services that Disaster Solutions Provided to the City after Hurricane Maria

The following facts, which we accept as true for purposes

of our decision, are drawn from Disaster Solutions' amended

complaint and the documents attached to it. Disaster Solutions

provides emergency services, such as damage assessments and food

and water distributions, to local governments after natural

disasters. This case arises from services that Disaster Solutions

provided to the City of Santa Isabel following Hurricane Maria,

which hit Puerto Rico in late September 2017. In its amended

complaint, Disaster Solutions alleged that it performed these

services pursuant to various documents: a "Purchase Order," three

"Resource Request Forms," and a "Letter of Authorization." It

- 2 - alleged that these documents, together, are an enforceable

contract and that the City breached this contract when it failed

to pay invoices from Disaster Solutions.

Specifically, in late September 2017 soon after

Hurricane Maria hit, the City sent Disaster Solutions a "Purchase

Order." The Purchase Order listed assorted job titles (e.g., "Task

Force Leaders" and "Finance Section Chief") and their associated

hourly labor rates. The total amount to be paid is listed as

"$TBD."

Next, during the first week of October, the City issued

"Resource Request Forms" to Disaster Solutions, which provided

additional, but still limited, details about the services that

Disaster Solutions would provide. Finally, the City sent a "Letter

of Authorization," which provided a summarized list of duties to

be undertaken by Disaster Solutions, but contained no information

about how much Disaster Solutions would be paid for providing these

services.

Between October 2 and October 12, Disaster Solutions

performed services for the City. On October 12, however, the City

directed Disaster Solutions to stop operating in the City.

Disaster Solutions complied and stopped all operations.

On October 22, 2017, Disaster Solutions invoiced the

City. The City did not make any payment on the invoice, so Disaster

Solutions sent a second invoice in November 2017. Disaster

- 3 - Solutions began charging the City past-due interest in January

2018. The City has not paid Disaster Solutions. In its amended

complaint, Disaster Solutions alleged that the total amount owed

by the City at the time was $368,879.89.

II. Disaster Solutions' Lawsuit Against the City

Disaster Solutions filed this breach of contract action

in the District of Puerto Rico in November 2018. The City moved

to dismiss the action under Federal Rule of Civil Procedure

12(b)(6). The City asserted that Disaster Solutions failed to

plead facts showing that, under Puerto Rico law, it and the City

had formed an enforceable contract. Disaster Solutions filed a

memorandum of law in opposition, arguing that the contract was

enforceable. It also asserted that Puerto Rico's governor could

suspend Puerto Rico's requirements for contracting with

municipalities during a state of emergency and referenced

emergency procurement procedures implemented by Executive Order

2017-047, which was issued by Puerto Rico's governor just prior to

Hurricane Maria's landfall.

While considering the City's motion, the district court

directed the parties to file a copy of the emergency procurement

procedures that were referenced in but not provided with Disaster

Solutions' objection. The district court also requested

supplemental briefing from the parties about whether any federal

- 4 - laws or regulations preempted Puerto Rico's requirements limiting

how contracts can be formed with municipalities.

Both the City and Disaster Solutions filed briefs in

response to the district court's direction. Disaster Solutions,

however, did not present any argument about federal preemption of

Puerto Rico's laws, and it stated that it did not have a copy of

the emergency procurement procedures requested by the court

because Disaster Solutions had not had an opportunity to conduct

discovery due to the City's motion to dismiss.

After receiving that briefing, the district court

granted the City's motion to dismiss and entered judgment against

Disaster Solutions. It reasoned that Disaster Solutions failed to

show that it met the requirements under Puerto Rico law for forming

an enforceable contract with a Puerto Rico municipality such as

the City. The court found that the Purchase Order, Resource

Request Forms, and Letter of Authorization did not constitute a

written contract, which, the district court stated, is a

requirement to form an enforceable contract between a private party

and a Puerto Rico municipality. The district court noted that

Executive Order 2017-047 did not modify these requirements.

Accordingly, the district court dismissed Disaster Solutions'

suit.

About a month after the district court's decision,

Disaster Solutions moved under Federal Rule of Civil Procedure

- 5 - 59(e) for reconsideration of the district court's judgment,

offering two new arguments. First, Disaster Solutions argued that

two letters from the Puerto Rico comptroller and two different

executive orders issued by the Puerto Rico governor modified Puerto

Rico's requirements for forming contracts with municipalities,

namely, as to when those contracts must be registered with the

comptroller. In support of that argument, Disaster Solutions

attached to its motion the comptroller's letters and Puerto Rico

Executive Orders 2017-053 and 2017-072. Second, Disaster

Solutions argued that a presidential emergency declaration, the

Robert T. Stafford Disaster Relief and Emergency Assistance Act,

et seq., and the General Service Administration's

("GSA") Disaster Purchasing Program and the Local Preparedness

Acquisition Act, see

(c), preempted Puerto Rico's

requirement that contracts be in written form and be submitted to

the comptroller.

The district court denied Disaster Solutions' motion for

reconsideration. First, the district court observed that Disaster

Solutions had failed to present its argument that Puerto Rico law

had been modified by Executive Orders 2017-053 and 2017-072 and

the comptroller's letters in any prior pleading or filing. The

district court also noted that Disaster Solutions did not argue

that these documents were unavailable earlier. Thus, the district

court found that the argument was not appropriately raised in

- 6 - Disaster Solutions' motion. The district court also rejected the

argument on its merits, reasoning that even considering the

executive orders and the comptroller's letters, a written contract

registered with the comptroller was still necessary to create an

enforceable contract. The court found that Disaster Solutions'

documents still failed to meet those requirements.

Second, the district court found that Disaster

Solutions' argument that federal law preempted Puerto Rico's

requirements for forming contracts with municipalities was

likewise waived because it was not raised in response to the City's

motion to dismiss or in response to the court's request that the

parties brief whether any federal laws or regulations preempted

Puerto Rico's requirements for forming contracts with

municipalities. The district court also rejected Disaster

Solutions' preemption argument on the merits, finding that the GSA

guidelines identified by Disaster Solutions as preempting Puerto

Rico's rules in fact expressly assert that state and local

procurement regulations must be followed even when using the

Disaster Purchasing Program.

DISCUSSION

Disaster Solutions argues that the district court erred

by granting the City's Rule 12(b)(6) motion to dismiss and by

denying its Rule 59(e) motion for reconsideration. It contends

that it had a written contract with the City, that Puerto Rico's

- 7 - rules on creating enforceable contracts with municipalities are

preempted by federal law, and that Puerto Rico Executive Order

2017-053 extended the time to comply with Puerto Rico's rules on

creating enforceable contracts with municipalities after Hurricane

Maria.

I. Subject Matter Jurisdiction

As an initial matter, we briefly address the district

court's jurisdiction to hear this case by virtue of the parties'

diversity of citizenship,

(a).1 Prior to issuing

this opinion, we directed counsel for Disaster Solutions to file

an affidavit of jurisdictional facts about the citizenships of

Disaster Solutions' members, which were not pleaded in its amended

complaint. See D.B. Zwirn Special Opportunities Fund, L.P. v.

Mehrotra,

(1st Cir. 2011) (per curiam)

(observing that, for purposes of diversity jurisdiction, limited

liability companies are citizens of every state of which any of

its members is a citizen). Disaster Solutions timely responded to

the court's inquiry, and its response demonstrates that its two

members are Florida citizens. Therefore, the facts submitted by

Disaster Solutions are sufficient to demonstrate that complete

diversity exists in this lawsuit -- both Disaster Solutions'

1 This court has an obligation "to satisfy itself both of its own subject-matter jurisdiction and of the subject-matter jurisdiction of the trial court . . . ." Royal Siam Corp. v. Chertoff,

(1st Cir. 2007). - 8 - members are citizens of Florida and the City is a Puerto Rico

municipality. Accordingly, we turn to the substance of Disaster

Solutions' appeal.

II. District Court's Orders Granting Motion to Dismiss & Denying Motion for Reconsideration

We review the grant of a motion to dismiss de novo.

Harry v. Countrywide Home Loans, Inc.,

(1st Cir.

2018). In doing so, "we accept as true all well-pleaded facts

alleged in the complaint and draw all reasonable inferences

therefrom in the pleader's favor." Alston v. Spiegel,

, 571 (1st Cir. 2021) (quoting Santiago v. Puerto Rico,

(1st Cir. 2011)). We review for abuse of discretion

the denial of a motion to alter or amend judgment -- i.e., for

reconsideration -- under Rule 59(e). Negrón-Almeda v. Santiago,

(1st Cir. 2008). In short, the district court (A)

did not err in finding that Disaster Solutions failed to plead

facts sufficient to demonstrate the existence of an enforceable

contract against the City, and (B) did not abuse its discretion by

declining to revisit its decision in light of Disaster Solutions'

Rule 59(e) motion.

- 9 - A. Motion to Dismiss: Existence of Written Contract

Under Puerto Rico law,2 to establish that an enforceable

contract exists, a plaintiff must show (1) that the contracting

parties consented to enter the contract; (2) "[a] definite object

which may be the subject of the contract"; and (3) "[t]he cause

for the obligation which may be established." See

.

Contracts between private parties and Puerto Rico

municipalities, however, are not enforceable unless additional

requirements are met. See Las Marías Reference Lab'y Corp. v.

Mun. of San Juan,

,

, at *6

(2003). As relevant here, a contract between a Puerto Rico

municipality and a private party must be in writing and must be

sent to Puerto Rico's comptroller within 15 days of the contract's

execution. See

;

("No disbursement whatsoever shall be authorized with

2 Both parties present their arguments on the assumption that Puerto Rico law on contract formation in general applies to this case. We likewise assume that Puerto Rico's law on contract formation, in general, applies in this case. See New Ponce Shopping Ctr., S.E. v. Integrand Assurance Co.,

(1st Cir. 1996) ("Generally, where the parties ignore choice of law issues on appeal, we indulge their assumption that a particular jurisdiction's law applies."). Additionally, Puerto Rico enacted a new Civil Code that became effective November 28, 2020. Because the alleged contract was formed prior to the effective date of the new Civil Code, we apply, as the parties have, Puerto Rico law as it was under the 1930 Civil Code. - 10 - regard to contracts without the evidence that the contract was

sent to the Office of the Comptroller of Puerto Rico as provided

in 97 et seq. of Title 2 and its regulations."); Ocasio

Carrasquillo v. Rosa Berríos,

, 47 (1988).

"[M]unicipal contracts that are not sent to the [Puerto Rico

comptroller] are not enforceable because these are not deemed

legally perfected." Las Marías,

, at *8.

These rules are "rigorously applied," and "it is presumed that the

parties that contract with a municipality know that they need to

conduct themselves in keeping with these specifications."

There are no exceptions, and equitable remedies are inapplicable.

See

.

The district court correctly found that the documents

Disaster Solutions filed do not constitute a written contract. As

the district court explained in its order dismissing Disaster

Solutions' suit, the documents do not establish a complete contract

reducing agreed-upon terms between the City and Disaster Solutions

into writing. See

. In particular,

Disaster Solutions asserts that the documents, read together,

contain all the terms necessary to form a valid written contract,

but it did not plead facts showing an agreement between it and the

City to treat the documents in that manner. For example, the

Letter of Authorization, which was signed by the City's mayor but

by no one representing Disaster Solutions, does not indicate that

- 11 - the incomplete terms from the Purchase Order and Resource Request

Forms were accepted by the City and supplemented by the Letter of

Authorization. Likewise, neither the Purchase Order nor the

Resource Request Forms reference the Letter of Authorization.

B. Motion for Reconsideration: Federal Preemption & Modification of Rules by Puerto Rico Executive Order

To evade the fact that it had no written contract with

the City, Disaster Solutions argues that the declaration of a

natural disaster under the Stafford Act and the consequently-

invoked Disaster Purchasing Program preempt Puerto Rico's contract

law. Similarly, it contends that Executive Order 2017-053, issued

by the governor of Puerto Rico, and an associated letter from the

comptroller modified Puerto Rico's rules on contracting with

municipalities. Disaster Solutions, however, concedes that it

invoked these arguments for the first time in a post-judgment

motion for reconsideration under Rule 59(e).

A motion for reconsideration under Rule 59(e) should be

granted only if the district court's decision "evidenced a manifest

error of law, if there is newly discovered evidence, or in certain

other narrow situations." Biltcliffe v. CitiMortgage, Inc.,

(1st Cir. 2014). However, such a motion is not a

place "for a party to undo its own procedural failures" and a party

should not be allowed to "advance arguments that could and should

have been presented to the district court prior to judgment."

- 12 - Iverson v. City of Bos.,

(1st Cir. 2006) (quoting

Aybar v. Crispin-Reyes,

(1st Cir. 1997)).

Accordingly, arguments that could have been but were not presented

to the district court prior to judgment are not preserved for

appeal.

.

As noted, Disaster Solutions does not dispute that it

failed to raise its preemption argument before the district court

prior to its motion to alter or amend judgment. Moreover, the

district court directed the parties to submit arguments about

whether federal law and regulations preempt Puerto Rico's laws on

contracts with municipalities. Even with that additional

opportunity, Disaster Solutions failed to present its preemption

argument prior to its post-judgment motion under Rule 59(e).

Disaster Solutions, therefore, waived the preemption argument it

presents to this court on appeal. See Biltcliffe,

; Iverson,

.

Disaster Solutions also argues that Executive Order

2017-053 and the associated comptroller's letter operate to extend

the time to comply with the requirement that contracts be submitted

to the comptroller. This argument too was first presented in the

post-judgment Rule 59(e) motion.3 Disaster Solutions attached to

3 Disaster Solutions referenced Executive Order 2017-053 in passing in its response to the district court's request for supplemental briefing, but Disaster Solutions did not develop the argument as presented in its motion for reconsideration, did not - 13 - its Rule 59(e) motion the executive order and letter that

ostensibly support this argument, but Disaster Solutions does not

explain why it could not have submitted these public documents

earlier. Disaster Solutions had two opportunities to do so: in

its objection to the City's motion to dismiss and in its response

to the district court's directive that the parties supplement their

briefing with the emergency procurement procedures. Thus, as with

its preemption argument, Disaster Solutions waived this argument

by failing to present it prior to its motion for reconsideration.

See Biltcliffe,

; Iverson,

.

Finally, Disaster Solutions contends that we should

overlook its waivers because neither the district court nor this

court may ignore clear errors. In exceptional circumstances, a

party's failure to timely offer a meritorious argument in a civil

suit can be excused if the district court's error was plain --

that is, the error was "clear or obvious," the error affected the

appellant's "substantial rights," and the error "seriously

impaired the fairness, integrity, or public reputation of judicial

proceedings." Fothergill v. United States,

, 251-52

attach a translated copy of Executive Order 2017-053, and did not reference the comptroller's letters. In any event, Disaster Solutions acknowledged in its response to the supplemental briefing request that Executive Order 2017-053 required contracts to be in writing notwithstanding any other putative modification to Puerto Rico's requirements for forming contracts.

- 14 - (1st Cir. 2009); see also Acevedo-Garcia v. Monroig,

,

570 (1st Cir. 2003).4 Disaster Solutions, however, does not show

that the district court clearly or obviously erred in granting the

City's motion to dismiss. See Town of Norwood v. New Eng. Power

Co.,

(1st Cir. 2000) ("[I]t is normally not error

at all, let alone plain error, for a court to ignore a possible

claim or defense that a party fails to proffer and pursue."); cf.

Amcel Corp. v. Int'l Exec. Sales, Inc.,

(1st Cir.

1999) (indicating that the plain error doctrine should generally

not be applied when the party with the burden of proof fails to

pursue a pertinent argument that would advance their cause). And,

the district court's denial of Disaster Solutions' Rule 59(e)

motion on waiver grounds was, as discussed above, consistent with

First Circuit caselaw and thus well within the district court's

discretion. See Biltcliffe,

; Iverson,

.

CONCLUSION

For the foregoing reasons, we affirm the district

court's dismissal of Disaster Solutions' suit under Rule 12(b)(6)

and its denial of Disaster Solutions' post-judgment motion for

reconsideration under Rule 59(e).

Disaster Solutions incorrectly points to Federal Rule of 4

Civil Procedure 54 as the source of the plain error doctrine. - 15 -