Reply Brief — Entec Corp. Corp. v. Centro de de Recaudadacion de de Ingresosos Municipales Municipales (No. 08-1137)

us Supreme Court, U.S.

FILED

No. 08-1137

IN THE

Supreme Court of the United States

EN'TEC CORPORATION, ET AL.,

Petitioners

We.

CENTRO DE RECAUDACION DE INGRESOS MUNICIPALES,

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE SUPREME COURT

OF THE COMMONWEALTH OF PUERTO RICO

PETITIONERS’ REPLY BRIEF

RAMON E. DAPENA

Counsel of Record

KH DGARDO CARTAGENA

VICTOR J. QUINONES

USERA MORELL BAUZA

DAPENA & CARTAGENA LLP

P.O. Box 13399

San Juan, P.R. 00908

(787) 725-8080

Attorneys for Petitioners

TABLE OF CONTENTS

"TABLE OF AUTHORITIBVS............ ... cs ce--

ARGUMENT............ 2255:

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TABLE OF AUTHORITIES

Page

Cases

AMERICAN Ry. EXPRESS Co. V. LEVEE, 263

U.S. 19, 44S. Cr. 11, 68 L. Ep. 140 (1923)............. 4

AVERY V. MIDLAND COUNTY, TEX., 390 U.S.

474,88S. CT. 1114, 20 L. ED. 2D 45 (1968) ............ 3

BACON V. STATE OF TEXAS, 163 U.S. 207, 16

S. Cr. 1023, 45 a. ae, eee ee... .................4

BERGEMANN V. BACKER, 157 U.S. 655, 15

S. Cr. 727, ie ac Se es ss... «s,s. -s......4

BUCKEYE CHECK CASHING, INC. V. CARDEGNA,

546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed:2d

LO3S (OCG. vic ccs ccc ee ee een ws sss s.. .... POT

COHEN V. CALIFORNIA, 403 U.S. 15, 91S. CT.

1780, 29 L.. Bp. Be eee OF wns - cs-s....................4

Cox BROADCASTING CORP. V. COHN, 420 U.S.

469, 95 S. CT. 1029, 43 L. ED. 2D 328 (1975) ........... 3

JEFFERSON V. CITY OF TARRANT, ALA., 522 U.S.

75, 118 S. CT. 481, 139 L. ED. 2D 433 (1997) ...........

MEDINA V. CHASE MANHATTAN BANK, N.A.,

137 F.2D 140 Ger Cae tee ......-«......... ae

ul

MELLON V. O'NEIL, 275 U.S. 212, 48S. CT. 62,

ak: Se Ee IR esi 0s ns oh Ag a Ke te eee

PRIMA PAINT CORP. V. FLOOD & CONKLIN MFG.

Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d

ep At Yi ee nae

VIRGINIAN Ry. Co. V. MULLENS, 271 U.S. 220,

46S. Cr. 526, 70 L. ED. 915 C29ZG) .... ...... 0.2 ..0..000004

WESTERN UNION TELEGRAPH Co. V. CROVO, 220

US. 364, 31S. CT. 399, 55 L. ED. 498 (1911) ......... 4

Statutes

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Rs ee ie he vas Aonat ade manson cde ea LANNE

Supreme Court Rule 13................ ee

P.R Stat. Ann. Tit. 31 App. III R. 49.2........ an

Pt Stat. Ann. Tit. 31 App. Ili R. 53.1............ 2.0...

bo

ARGUMENT

Rather than addressing the merits of Petitioners’

petition for a writ of certiorari, Respondent chose to

request dismissal on procedural grounds.

Specifically, Respondent invokes the _ alleged

preclusive effects of the decision of the Puerto Rico

Court of First Instance (the “CFI”) entered on

December 13, 2005. Unfortunately for Respondent,

this challenge is fundamentally flawed because (i)

Petitioners raised the jurisdictional issue under § 2

of the Federal Arbitration Act since day one, and, (ii)

Petitioners seek review of the CFI’s decision entered

on July 24, 2007.

With respect to the timely objection to the

commonwealth courts’ lack of jurisdiction to

intervene with an on-going arbitration proceeding,

see the “Memorandum Opposing [Injunction Request

and Motion to Order the CRIM to Proceed to

Arbitration” and the “Answer to Second Amended

Complaint”. Vol. B of the Appendix to the Petition at

pp. 134B-255B, 379B-446B.

Concerning the proper subject of review, it is the

July 24, 2007 decision which denied Petitioners’

motion of May 30, 2006 insisting on dismissal of the

litigation for lack of jurisdiction and the remand to

the constituted AAA. arbitration panel where the

parties were already engaged. Petitioners’ motion

placed this Court’s ruling in Buckeye Check Cashing,

Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct. 1204, 163

L.Ed.2d 1038 (2006), before the CFT. It is in the July

24, 2007 decision that the CFI rejected the merits of

Petitioners’ argumentation renewing the argument

under § 2 of the FAA as interpreted in Prima Paint

Corp. v.. Flood & Conklin Mfg. Co., 388 U.S. 395, 87

S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and clarified in

Buckeye, by invoking an erroneous interpretation of

the doctrine of the “law of the case.” As indicated in

the jurisdiction section of the petition to this Court

(p. 1), the CFI’s decision rejecting Buckeye was

properly appealed through the applicable appellate

levels within the time periods specified in P.R Stat.

Ann. Tit. 31 App. III R. 53.1 and Supreme Court

Rule 13 until it reached this Court. Clearly, the July

24, 2007 decision of the CFI has not become.a final or

binding decision and thus has no preclusive effect to

this date.

Once again Petitioners note that a court's lack of

jurisdiction is a matter that can be raised at any

stage during judicial proceedings, even at the highest

appellate level. See Petition at p. 4 n.1. In fact, and

notwithstanding Respondent’s assertion to the

contrary, the CFI itself understood that it-was within

its purview to ascertain its jurisdiction in view of § 2

of the FAA as interpreted in Prima Paint, even after

Petitioners’ final challenge in the wake of Buckeye.

This is readily ascertained through a reading of

section III of the July 24, 2007 decision of the CFI

(Vol. A of the App. at pp. 89A-97A) which addressed

the merits of Petitioners contention rather than

dismissing the matter as moot as suggested by

Respondent.!

' It is also worth noting that the Puerto Rico Rules of Civil

Procedure, P.R Stat. Ann. Tit. 31 App. II] R. 49.2, allow parties

to contest judgments as null and void within 6 months of their

issuance based on the issuing court’s lack of jurisdiction. Such

judgments are not afforded preclusive effects. See Medina v.

Moreover the July 24, 2007 CFI decision, as

upheld sub silentio by the Puerto Rico Court of

Appeals and the Puerto Rico Supreme Court,

represents a final judgment or decree rendered by

the highest court of a state in which a decision could

be had, which may be reviewed by this Court.? In the

first place, the July 24, 2007 decision ended

Petitioners’ challenge to jurisdiction on the basis of §

2 of the FAA as interpreted in Prima Paint and

Buckeye. Furthermore, because the CFI has already

adjudged the underlying controversy in favor of

Respondent, the denial of Petitioners’ challenge to

jurisdiction puts an end to the case for all practical

purposes since no additional substantive proceedings

are contemplated. See Jefferson v. City of Tarrant,

Ala., 522 U.S. 75, 118 S. Ct. 481, 139 L. Ed. 2d 433

(1997). As a general rule, a state court judgment is

considered final for the purpose of further review in

this Court when the judgment contemplates no

further proceedings on the relevant issue in the state

courts. See Cox Broadcasting Corp. v. Cohn, 420 U.S.

469, 95 S. Ct. 1029, 43 L. Ed. 2d 328 (1975); Avery v.

Chase Manhattan Bank, N.A., 737 F.2d 140 (1st Cir. 1984). To

the extent that Petitioners motion to dismiss pursuant to

Buckeye could also be considered a challenge under P.R Stat.

Ann. Tit. 31 App. III R. 49.2, that is also the case with the

December 13, 2005 decision.

2 While 28 U.S.C. § 1258 is the applicable jurisdictional statute

with regards to judgments arising from the Puerto Rico

Commonwealth Courts, it is analogous and does not differ

significantly from 28 U.S.C. § 1257, the jurisdictional statute

governing review of decisions arising from the courts of the

States.

Midland County, Tex., 390 U.S. 474, 88 S. Ct. 1114,

20 L. Ed. 2d 45 (1968).

Secondly, a case may be brought to this Court

after the highest court in the state has refused to

hear an appeal or has denied a petition for leave to

appeal or for a writ of certiorari, as the Puerto Rico

Court of Appeals and Puerto Rico Supreme Court

acted respectively. In such a case, the last court to

hear the matter is considered the highest state court

in which a decision could be had. See Cohen v.

California, 403 U.S. 15, 91 S. Ct. 1780, 29 L. Ed. 2d

284 (1971); Mellon v. O'Neil, 275 U.S. 212, 48 S. Ct.

62, 72 L. Ed. 245 (1927); American Ry. Express Co. v.

Levee, 263 U.S. 19, 44S. Ct. 11, 68 L. Ed. 140 (1923);

Bacon v. State of Texas, 163 U.S. 207, 16 S. Ct. 1023,

41 L. Ed. 132 (1896). This is the case even with trial

courts such as the CFI. See Virginian Ry. Co. v.

Mullens, 271 U.S. 220, 46 S. Ct. 526, 70 L. Ed. 915

(1926); Western Union Telegraph Co. v. Crovo, 220

U.S. 364, 31 S. Ct. 399, 55 L. Ed. 498 (1911);

Bergemann v. Backer, 157 U.S. 655, 15 S. Ct. 727, 39

L. Ed. 845 (1895). Otherwise, all that a_ state

appellate or supreme court would need to do, to avoid

this Court’s review of jurisdiction in FAA matters, is

to look the other way when an inconvenient FAA

issue is brought to its attention.

Finally, the cases cited by Respondent in Section

B of the argument in the brief in opposition (pp. 13-

14) do not apply to the present situation. As

Petitioners have indicated, the July 24, 2007 decision

of the CF has been properly appealed.

CONCLUSION

_ The issue remains one of policy and jurisdiction

under the FAA, Prima Paint and Buckeye. Should

the law of the land weigh in differently in an

unincorporated territory? Having jurisdiction to

review the decision of the CFI contested by

Petitioners, this Court should grant certiorari to

reverse it along with the subsequent decisions of the

Puerto Rico Court of Appeals and the Puerto Rico

Supreme Court. Consequently this case should be

returned to the constituted arbitration panel that

had initially entertained the controversy between the

parties for’ more than aé_e year before’ the

Commonwealth’s court system intervened without

jurisdiction.

Respectfully submitted,

RAMON E. DAPENA

EDGARDO CARTAGENA

VicToR J. QUINONES

USERA MORELL BAUZA

DAPENA & CARTAGENA LIP

P.O. Box 13399

San Juan, P.R. 00908

(787) 725-8080