PFZ PROPERTIES, INC. v. RENE ALBERTO RODRIGUEZ

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Argument of Thomas Richichi

Chief Justice Rehnquist: We'll hear argument next in No. 91-122, PFZ Properties, Inc. v. Rene Alberto Rodriguez, et al.--

Mr. Richichi.

Am I pronouncing your name correctly?

Mr. Richichi: That's correct, Mr. Chief Justice.

Mr. Chief Justice, and may it please the Court:

The matter before you involves the deprivation of a landowner's right to pursue a use of his property, a use which was approved more than 15 years ago by the Planning Board of Puerto Rico and upheld on the merits by the Puerto Rican courts.

The deprivation occurred in August of 1988 when senior officials of the Puerto Rican Permits Authority, that is the respondent ARPE, denied PFZ a construction permit and dismissed its project.

PFZ alleges that the dismissal is actionable under 42 USC section 1983 and that it deprived PFZ of a protected interest under the due process clause of the Fourteenth Amendment and that it was a result of behavior by officials acting under color of state law which was not rationally leaded to a legitimate state objective.

The conduct which gave rise to PFZ's claim was the deliberate refusal by ARPE to review and process a set of construction drawings which PFZ had submitted to the agency in order to obtain a construction permit.

This was accompanied by the dismissal of ARPE's project based on the deliberate review of another different set of drawings which ARPE knew to be the wrong drawings.

Unknown Speaker: Mr. Richichi, let me make sure I understand where you're drawing your facts from.

The district court granted a motion to dismiss.

Mr. Richichi: That's correct.

We are here under 12(b)(6).

Unknown Speaker: And therefore, ordinarily we would take the well pleaded facts in the complaint.

Mr. Richichi: That's correct, Your Honor.

Unknown Speaker: There was a pretrial order entered, was there not, specifying--

Mr. Richichi: That is correct, Mr. Chief Justice.

Unknown Speaker: --What is your position with respect to whether that order may be relied on or not for facts in deciding the legal questions?

Mr. Richichi: Mr. Chief Justice, it is well settled law that the pretrial order acts as an amendment to the original amended complaint and is in effect a pleading in and of itself.

We raised that issued on a rehearing with the court of appeals.

It said that because that issue had not been raised originally in the briefs before the court that it was not going to consider that in its determination.

However, it said in the alternative that had it looked at the pretrial order that its opinion would not have changed.

I think the Court is free to consider the pretrial order if it deems that it in fact has amended the complaint in connection with the well settled law.

We do not think you need to go that far in order to rule in our favor.

Unknown Speaker: So you are now drawing your statement of facts that you make to us, then, from the pretrial order as well as from the complaint?

Mr. Richichi: Well, the pretrial order... we would rely on the amended complaint, Mr. Chief Justice.

The pretrial order does reflect the state of the record when the case was dismissed, and therefore in drawing reasonable inferences in favor of the plaintiff we believe that it is context and does provide guidance as to what reasonable inferences were appropriate.

Unknown Speaker: That is not to me an entirely satisfactory answer to my question.

You're stating that certain facts happened.

The Planning Board deliberately read the wrong set of plans.

Mr. Richichi: That's correct.

Unknown Speaker: Is all of that derived simply from the amended complaint, or are you relying at least in part on the pretrial order?

Mr. Richichi: Some of the facts that we have relied upon are reflected in the pretrial order.

They are also reflected in the admissions that have been made in the papers before this Court and before the court of appeals, but we believe the amended complaint is sufficient to state a claim.

Unknown Speaker: Well, it may be sufficient to state a claim, but when you give us these statement of facts are you relying on anything that can only be divined from the pretrial order?

Well, don't--

Mr. Richichi: No, I don't believe so.

I believe these facts are reflected in the amended complaint and the reasonable inferences that can be drawn therefrom.

Unknown Speaker: --May I just be sure of one thing?

The amended complaint you're referring to is at page 131 of the Appendix?

There's only one amended complaint, is that right?

Mr. Richichi: That's correct.

Unknown Speaker: And where is the pretrial order?

Mr. Richichi: I do not believe the pretrial order was made part of the Appendix by the parties.

Unknown Speaker: So we really don't want to rely on that, then, if we can't have it before us.

Mr. Richichi: Right.

PFZ had timely filed the required drawings in February of 1982 for ARPE's processing and review.

ARPE did not act on the drawings until 6 years later, and then only after PFZ had sued the agency.

Reviewing the wrong drawings, senior ARPE officials concluded, 6 years after the fact, that PFZ had not submitted any construction drawings in 1982 and having missed the deadline for submission the entire project would be dismissed.

PFZ submits that this deliberate action cannot be construed to be rationally related to a legitimate state purpose.

Unknown Speaker: Well now, you're relying here on a substantive due process violation?

Mr. Richichi: That's correct, Justice O'Connor.

Unknown Speaker: We didn't grant cert, I guess, on any procedural due process issue.

Mr. Richichi: We requested that the Court review this case because of the procedural due process violations that we have alleged below.

The Court declined to accept that issue, so we are here on the substantive due process issues.

But yes, we alleged procedural--

Unknown Speaker: Well, on the substantive due process issue do you have to allege a property right in receiving the permit, the construction permit?

Mr. Richichi: --We believe that there is a property right that is protected and falls within the due process component--

Unknown Speaker: To receive the construction permit?

Mr. Richichi: --The property--

Unknown Speaker: A right to receive the construction permit?

Mr. Richichi: --I would articulate it differently, Justice O'Connor.

Unknown Speaker: Well, would you answer my question and then you can articular whatever you want?

Is there a right to receive a construction permit under Puerto Rico law?

Mr. Richichi: Yes, there is.

Unknown Speaker: And what is that law?

Could I have the citation, please?

Mr. Richichi: That was cite... the law that was cited was in our reply brief at Note 5, page 4, and it indicates that when the Planning Board has acted and approved a project there is a vested right that accrues, that's 23 Laws of Puerto Rico Annotated, section 71.

I believe the full citation is in our brief at Note 5, page 4.

The Planning Board, having made the policy determination that the use was approved, the ministerial function of the permitting agency was to issue the permit and effectuate that use.

If the permit was not issued, then the rights that were granted by the Planning Board had no effect.

Therefore, in answer to your question, in this particular circumstance we would say that there is a property right.

We would also--

Unknown Speaker: And you say that the law that you cite makes clear that there is no discretion at that stage in granting the permit?

That you have a right to receive the construction permit?

Mr. Richichi: --Yes.

The... if the required drawings are--

Unknown Speaker: That it's ministerial only.

Mr. Richichi: --That is correct.

In fact I would point out that under the current regulations and current law, as the respondents point out in their brief, these drawings are not even reviewed before a permit is issued by the agency, although the agency does reserve that right to do it on a spot basis.

But the task is such that the agency no longer even reviews these drawings.

The engineer just certifies that they are appropriate.

Unknown Speaker: And I take it this substantive due process inquiry does not depend upon any showing that there was a taking of property?

And by that I mean a taking of the real property that is in question.

Mr. Richichi: Justice O'Connor, if we're talking about a taking within the meaning of the Fifth Amendment--

Unknown Speaker: No, that's Justice Kennedy.

Mr. Richichi: --I'm sorry.

I apologize to the Court.

Justice Kennedy, I was thinking of my answer.

The due process clause is distinct from the takings clause and we would submit that in this particular instance there are two different potential claims.

The one that has been asserted is the due process claim, the difference being that as the Court pointed out in the first English opinion, takings involves otherwise proper conduct by the government which interferes with property.

Here we are talking about misconduct, and in that sense we do not believe that the complaint that we have alleged involves a takings claim.

Not that one couldn't be presented, but under these circumstances we are talking about misconduct and that implicates the due process clause.

Unknown Speaker: I take it inverse condemnation can sometime arise from improper governmental action, under the takings clause?

Mr. Richichi: The Court has said that, in the takings context, that sometimes regulation can go too far if there is an improper exercise of the police power.

But I think the Court has also made clear that there can be an improper exercise of the police power with respect to a substantive due process claim, and in this particular instance we believe that there was an improper exercise of the police power in an adjudicatory setting and that implicates the due process clause.

Unknown Speaker: As I recall the court of appeals' opinion in this case, they did not agree with you as to your submission as to the law of Puerto Rico, that that law was so flat out ministerial that it would, that you had a substantive right to a permit once your development project had gotten to the stage it did.

Mr. Richichi: I think the... as I recall the opinion, Mr. Chief Justice, what the court of appeals said was they were assuming the existence of the property right, and even assuming the existence of the property right under Puerto Rican law that they did not feel that there was a claim that had been stated.

So as far as the court below was concerned, both the district court and the court of appeals assumed the existence of a property right.

Unknown Speaker: Of the type of property right which Justice O'Connor questioned you about, do you think?

Mr. Richichi: That is... well, I don't think the court was that specific, but I have to assume that that's what they're referring to when they said we assume the existence of a property right.

Unknown Speaker: Well, the court of appeals actually said more than that.

It said it isn't all that clear whether there's a property right or not under Puerto Rican law.

Mr. Richichi: I believe that's correct.

Unknown Speaker: And do you suppose that, do you suppose the... is it open in this Court?

Is the question open in this Court as to whether there is a property right under Puerto Rican law in the construction permit, or do we have to... is the only issue before us is if there is a property right, was it taken?

Mr. Richichi: I think the only issue is the latter, if there was a property right, was it taken.

This Court has said in the State of Washington v. Roberge that the right to devote one's land to a legitimate use is property within the protection of the Constitution.

The Court has more recently said in the Nollan case that the right to build on one's property is not even remotely something along the lines of a government benefit, that there is a right to build on one's property.

And that one arose in the constitutional context.

Unknown Speaker: Well, stated that flatly, that there is a right to build on one's property, I mean you have to add any number of qualifications to that.

There is not a right to build an 8-story office building on property that's zoned for a single-family residence.

Mr. Richichi: That is exactly correct, Mr. Chief Justice.

The protected right here at issue derives from the ownership of the land since the right to use the land is one of the most basic sticks in the bundle of land ownership.

The... Puerto Rico, in the statutes that we have cited, recognizes the right to build on one's property and recognizes the right to make use of one's property.

Unknown Speaker: Well, Mr. Richichi, I'm having trouble seeing where you draw the line between the property right that you are now describing, I think you're describing, and the property right which you described in answer to Justice O'Connor's question, because I understood your answer to her question to be that the property right you claimed, the denial of which you claim was the property in the permit, you had a right to get that permit and that was denied.

And yet as I read your allegations, principally those sort of 36 through 40 in the complaint, I read them as referring to an underlying or antecedent right that I think you are talking about now the right to use one's land.

And in answer to Justice O'Connor's question I thought you were narrowing the inquiry and saying no, the right here is just the right to get the permit, having fulfilled certain conditions under Puerto Rico law.

But now it seems to me that you're arguing what I thought your complaint argued, an underlying right to use one's property, permit system or no permit system.

Which is it?

Mr. Richichi: It is the right that you have described, the underlying right to use one's property.

What I was pointing out in response to Justice O'Connor's inquiry was that there is also a property right under Puerto Rican law.

But the right upon which we rely is the underlying right to use one's land--

Unknown Speaker: Okay.

Mr. Richichi: --and we believe that the Court has indicated that is within the protection due process clause.

Unknown Speaker: And you, would you... I think you agree but I want to be sure, that your complaint does not set out allegations from which on its face, if we accept them, one could say that you had claimed a substantive entitlement to this particular permit.

Your claim rather is they just didn't process it right.

They delayed and therefore they denied me the underlying right.

Is that a fair characterization?

Mr. Richichi: I think it goes to more than delay, because there was a denial of the permit after a legitimate use had been recognized.

Unknown Speaker: But you don't, you don't claim in express terms in your complaint that you had on the merits met every condition necessary to get that permit.

That's not what you're relying on.

Mr. Richichi: I believe we do indicate, if the Court needs to go that far we did indicate that the required drawings had been submitted such that a permit could issue.

So to the extent--

Unknown Speaker: Then I guess you're claiming both kinds of rights.

Mr. Richichi: --We believe we should prevail on both rights, that's correct.

If it's the right that you have identified or if it's the right that Justice O'Connor has identified, be believe they are both present in this instance.

And we would submit that in using or making use of the land that Puerto Rico can subject us to legitimate restrictions under the police power, but that police power is in and of itself subject to legitimate restrictions that have been recognized under the due process clause, and that in fact is where we believe the right has arisen, and we believe--

Unknown Speaker: May I ask this question?

Mr. Richichi: --Yes.

Unknown Speaker: To the extent that you're relying on your response to Justice O'Connor, the specific right to have specific drawings of the project approved, why isn't a state law remedy an adequate protection for that?

Why do you have to come into Federal court to get that right protected?

Mr. Richichi: Well, in response to that question we believe that this Court has indicated under Zinermon that the Federal remedy is supplementary so that we are not required in the substantive due process context to first make use of state remedies, and we would submit that that is the appropriate rule.

I believe one circuit has--

Unknown Speaker: But you did resort to state remedies, didn't you?

Mr. Richichi: --Yes, we did, Justice White.

Unknown Speaker: And you were turned down.

Mr. Richichi: We sought reconsideration before the agency advising them, as the court below said unequivocally, that they had reviewed the wrong drawings.

The agency proceeded to review the exact same wrong drawings and affirm its opinion.

We then sought discretionary review before the Puerto Rican courts of that administrative decision, and the Puerto Rican courts declined to exercise their discretionary review.

So we did have a final decision.

We sought administrative reconsideration, that was denied--

Unknown Speaker: You even, you went to the supreme court too, didn't you?

Mr. Richichi: --That was a different circumstance.

Yes, we did.

Previously we had been to the supreme court with respect to the Planning Board approval and the supreme court approved the Planning Board's approval, and that was some 10 years before.

This matter has been, we have been seeking to develop and pursue this property for almost 30 years now.

Unknown Speaker: But maybe you're not required to exhaust.

I understand your argument there, but are you in effect saying to us that your right is so clear that if we had gone into state court we clearly would have won?

Mr. Richichi: No.

We could not have won because the record was corrupted.

The Puerto Rican courts exercise discretionary review which only looks to issues of law, excepting the administrative record, on the basis of what has been presented by the agency.

In that particular circumstance the agency looked at the wrong drawings and said these are the correct drawings.

It is undisputed that they cannot be--

Unknown Speaker: But then you filed an action in the Puerto Rican circuit court, or whatever the name of the tribunal is, making these allegations, didn't you, that they had looked at the wrong drawings?

Mr. Richichi: --We did bring an action in the Puerto Rican court asking them to exercise their discretionary review.

Unknown Speaker: And they just didn't give you any judicial relief at all, or did they rule on the merits that they had looked at the right drawings?

Mr. Richichi: The, it is... I would compare the procedure to petitioning for certiorari before this Court and it being denied.

There is nothing indicated, just the case is not going to be heard.

That's its discretionary review, and that is my understanding of the decision that was rendered.

We believe that, as I have mentioned, that the Court in the land use context, going back as far as the seminal decision in Euclid and related cases, Nectow and the State of Washington v. Roberge which we have cited, has recognized that the use of one's property, one's land specifically in this instance, is something which falls within the protection of the Constitution.

We believe it is--

Unknown Speaker: It sounds like you're trying to make a takings claim dressed up as a due process claim.

I'm still confused about what it is you're claiming.

It's just, it is totally unclear to me what it is you're really claiming here and what property you say has been taken, and what is the nature of the claim.

Mr. Richichi: --Justice O'Connor, we do not allege that any property has been taken.

We have alleged that a property right protected by the due process clause has been deprived.

Again I would draw the distinction between the taking and the deprivation, I think--

Unknown Speaker: Is absolute the right to develop the property as proposed by your clients?

Mr. Richichi: --No, it is not an absolute right.

It is a right to pursue a legitimate use which is subject to reasonable restrictions under the police power.

When the Planning Board exercised its discretion--

Unknown Speaker: Well, what you really quarrel with is that you didn't get adequate procedural due process.

That's what really sounds to me like you're saying, that Puerto Rico, the Constitution requires Puerto Rico if they are going to deny you a permit to review it and have some reason for the denial.

Mr. Richichi: --I would respectfully disagree.

We could have... in this particular instance we could have had all the due process, procedural due process we wanted.

If they continued to look at the wrong drawings and decided to act as arbitrarily as they did and to say we're looking at this and it is something other than what it is, all the procedural due process, all the hearings in the world ultimately would not have helped us.

What we're complaining about here is an act of deprivation.

We had a right which had been recognized by the Planning Board to develop that property.

It was upheld by the Puerto Rican courts on the merits, and the Puerto Rican supreme court.

When we went to the ministerial agency and said here are the required drawings and we, that's as we have alleged in the complaint, the agency, under its directive, was to review those and if they were the required drawings it was to issue the permit.

Unknown Speaker: Well, was it still open under Puerto Rican law to Puerto Rico to set aside this area for some kind of wildlife preserve or something of the sort?

Mr. Richichi: Puerto Rico certainly could have enacted legislation to do that.

The governor is empowered under certain circumstances to exercise his emergency powers if he thinks there is a danger to the public.

And in this particular instance the legislature neither acted nor did the governor exercise his emergency powers.

Unknown Speaker: That would have required a taking of, a condemnation of your land if they're going to turn it into a wildlife reserve.

Mr. Richichi: That would have required otherwise proper conduct, Mr. Chief Justice, as this Court said, and that is not what was present here.

If Puerto Rico wants to take that property they certainly can do it by legitimate means.

However, what happened here were that senior officials acted arbitrarily and in violation of the law, and with what can only be believed to be bad faith, and denied us a permit.

Unknown Speaker: What is your best case for the proposition that the bad faith manipulation of procedural processes constitutes a substantive violation?

Mr. Richichi: I think there is bad faith manipulation of procedures in this case because Puerto Rico did not--

Unknown Speaker: But what's your best case from this Court, if there is one, indicating that that kind of manipulation constitutes not a procedural due process violation but a substantive due process violation?

Mr. Richichi: --I would return to my response to Justice O'Connor's inquiry which I think was the same.

No matter what procedures were provided, in this particular circumstance we were not going to get a permit because they were going to look at the wrong drawings and say that you had never submitted the correct drawings.

So it's not a matter of procedure.

The, this is perhaps the easiest case and the most blatant case of arbitrary conduct to understand.

They simply refused to look at what was in front of them and called it something else.

Unknown Speaker: Well, based on that statement, what is your, what's the clearest authority from this Court that supports your position?

Mr. Richichi: I think this Court has laid out the standard for evaluating that quite clearly in Ewing.

Unknown Speaker: But Mr. Richichi, you have been asked to cite a particular case, what is your best case.

You have been asked three times now.

Mr. Richichi: I think Ewing lays out the standard to be applied in that particular instance, and the Euclid, Nectow, and State of Washington cases all, State of Washington v. Roberge, all recognize that there is a protected interest within the due process clause.

Ewing was an 8 to 1 decision by this Court in which it laid out the standards, and it indicated that bad faith, the lack of a genuine decision I think was at the heart of the Court's decision there, and I think that is present here without a doubt.

There was not a genuine decision--

Unknown Speaker: Weren't those all cases where the allegation was that there was a taking under the takings clause?

Mr. Richichi: --No, Ewing was a, specifically a case in which this Court assumed that there was a substantive due process protected property interest, and in that case what the Court said was there is, if there is a question as to whether the decision, the adjudicatory decision was genuine, if there is a question as to whether it's in good faith, if there is a question as to whether judgment was in fact exercised by the decision-makers, then you would have, you would meet the test for a due process violation.

Unknown Speaker: What's the name of the other party in the Ewing case?

Mr. Richichi: I'm sorry, it's the Board of Regents of the University of Michigan v. Ewing.

I apologize,--

Unknown Speaker: It's a case in which we rejected the substantive due process--

Mr. Richichi: --That's correct.

Unknown Speaker: --It isn't cited in the Table of Authorities.

Mr. Richichi: I'm looking in the brief.

Unknown Speaker: I don't see it here.

Mr. Richichi: It is a case which--

Unknown Speaker: This is your best case and it's not cited?

Mr. Richichi: --With the Court's indulgence.

I am sorry.

It's principally... I apologize to the Court.

It's Regents of the University of Michigan--

Unknown Speaker: Oh, regents.

Mr. Richichi: --and it is a principally relied upon case we have cited passim throughout the brief.

Unknown Speaker: Thank you.

Mr. Richichi: That is the case that we would point out, we would point to which establishes the standard.

Just briefly, if I can describe Ewing, there the Court assumed the existence of a property interest.

It was a claim that there was a right to university enrollment, and I think what the Court says, we don't know if that rises to the level of due process, but we will present the standard.

And we think we fit within that standard.

Unknown Speaker: Mr. Richichi, who are the senior officials that you, that are involved here that you claim acted arbitrarily or in bad faith?

Mr. Richichi: This is the administrator of the agency who is no longer there, there is a gentleman also who was the regional administrator who is now the deputy administrator, and certain other assistant administrators, all senior officials of ARPE.

Unknown Speaker: Mr. Richichi, if instead of having the equivalent of cert denied when you went into the Puerto Rican courts the court had taken the case, it considered your claim that they looked at the wrong drawings and had rejected you in bad faith for that reason and had said no.

They looked at the right drawings.

We find that as a fact, and based on the right drawings they had a right to reject the permit that you were asking for, deny the permit that you were asking for.

And you leave the court saying the court got it wrong, the drawings were the wrong ones and if they had looked at the right ones we would have been entitled to the permit.

Would you have a substantive due process claim to bring here or to bring into a Federal court?

Mr. Richichi: If I understand the hypothetical correctly, I believe we would, because the remedy under the due, under section 1983 is supplementary, it is not derivative, and therefore if in fact there has been misconduct, and this is just the sort of thing that 1983 was intended to prevent, if there has been misconduct by the state and you can't get a fair hearing within the state, then you have access to the Federal remedy.

So--

Unknown Speaker: But you're calling a fair hearing an unfair hearing, what could also and I think would normally be described as a claimed erroneous hearing.

Most people who get turned down think there is something wrong, and that does not make it an unfair hearing.

Mr. Richichi: --I understand--

Unknown Speaker: And it seems to me in my hypo the State of Puerto Rico, the Commonwealth of Puerto Rico is assuming that you have a property interest there subject to adjudication, and it is giving you process to adjudicate it.

You are dissatisfied with the result, and you may even be right that they are wrong, but would that state a substantive due process violation simply to say they got it wrong?

Mr. Richichi: --No.

Mere mistakes, errors in judgment, or where there is not some deliberate attempt to deprive us of the right through an arbitrary, through arbitrary means not rationally related to a legitimate purpose--

Unknown Speaker: Then... I'm sorry.

Mr. Richichi: --Under those circumstances, if it's a mistake or a good faith error or some misjudgment, then I don't think we would have stated a due process claim.

Unknown Speaker: Then does your claim therefore here boil down to the fact that they did not give you any process at all and instead simply denied your opportunity to appeal on the merits?

Mr. Richichi: That would be part of it, but we were denied... there was a decision by the agency denying us a use.

I don't know if I would look to the appeal as where the action, the complained of action occurred.

Unknown Speaker: Thank you, Mr. Richichi.

Ms. Ramirez, we'll hear from you.

Argument of Vanessa Ramirez

Mr. Ramirez: Thank you, Mr. Chief Justice, and may it please the Court:

I would like to start my exposition going back to what Justice Souter was asking Mr. Richichi.

This case from the very beginning has dealt with his claim, with petitioner's claim that he has a property interest in a construction permit.

It has... if we look at the record of the case all throughout the briefings, from the district court on to the court of appeals, never ever did petitioner rely on these zoning cases from the beginning of the century.

There is no mention of Nectow, no mention of the Roberge case, no mention of Village of Euclid.

This has always been considered by both courts below as a claim that the denial of a construction permit violated both his due process right, procedural due process right, his rights to substantive due process, and his equal protection rights.

So I don't think there is anything in the amended complaint that would lead us to believe that he is arguing anything other than he has a right to a construction permit.

And our position is that he has not cited to any statute or any regulation or any provision in Puerto Rico law to demonstrate, that is he has not pressed the argument that because he did as the statute provided he was anywhere near the moment where he could get a permit.

Unknown Speaker: Well, Ms. Ramirez, I asked this question and was referred, I believe, to Note 5 on page 4 of the reply brief and the citation to certain laws and regulations in Puerto Rico that the petitioner says make clear that ARPE, if that's what we're calling it, lacked any discretion other than to determine whether the construction drawings had been assembled and submitted, and that they were required by Puerto Rican law to grant the permit.

Mr. Ramirez: Well, it is not correct as a matter of law, Your Honor.

The only... I don't have it in my memory what issue he was citing in the reply brief.

Of course this is after we made a comment in our respondents' brief that he had not pressed an argument that he could derive the property interest from state law.

And he is citing to what he calls history, history of the statute.

But the only, conceivably the only statute in Puerto Rico, the only disposition of positive law that he could rely on is the one that was examined by the district court in opinion and order, it is page 481 in the Joint Appendix.

It says ARPE shall issue the corresponding permit based on the compliance with the regulation provided in this section, and that is 23 Puerto Rico Laws Annotated, section 42c.

Again our argument is we have to indulge the petitioner with all favorable inferences that will derive, reasonably derive from his pleadings, because the procedural stance of the case will be on a motion to dismiss.

He, the petitioner has studiously avoided to recite the facts of what happened after he made an original submission of plans to ARPE.

The complaint has a chronological recitation of facts coming from the Planning Board, which is a different agency, but when he goes to ARPE and he gets preliminary approval for effect of construction drawings he does not, there are no allegations from which we could derive the idea that the permit process was somehow so far along or he has progressed through the progressive steps so that ARPE would have no discretion to withhold the permit.

Unknown Speaker: Well, is it your view that ARPE has a wide range of discretion in reviewing construction drawings whether to grant the permit or not, even when the Planning Board has issued its approval?

Mr. Ramirez: Yes, Your Honor, that is our position and in our brief in response, respondents' brief, this is, we cited to the precise statutory provisions that should indicate to the Court that ARPE is a separate agency.

The Planning Board will approve the use of land for, of undeveloped land for certain purposes.

It gives out the site permits.

But ARPE has been delegated with all the powers to decide how you are going to subdivide your land, the subdivision part, which is where construction drawings get into.

You have to subdivide your lands in such a way, and this is why you require ARPE to require the endorsements of so many public bodies, so many commonwealth agencies.

And the reason this project has not gotten off the ground is because the petitioner refuses to comply with ARPE manual of procedures which says you must bring construction drawings approved by all the, endorsed by all the pertinent agencies.

And one of these agencies is the Environmental Quality Board who has been asking since 1974 for the filing of an environmental impact statement.

And petitioner refuses to do it because he believes that once he got approval to develop the land in that site among the manuals he does not have to comply with that.

Unknown Speaker: The court of appeals didn't decide the case on the basis of an argument that you're making now.

The court of appeals said well, let's just, we'll just assume that there is a property interest--

Mr. Ramirez: That is correct, Your Honor.

Unknown Speaker: --in this construction permit.

Nevertheless, there is no denial of, there is no substantive due, no violation of substantive due process because just refusing to live up to state law doesn't state a claim.

Mr. Ramirez: That's correct, Your Honor.

Unknown Speaker: Now, are you defending the court of appeals' basis for denying the substantive due process claim or not?

Mr. Ramirez: I agree that the court below, although it was very skeptical that the petitioner had acquired an entitlement to the permit protected under the due process clause, they assumed for all purposes of the argument that--

Unknown Speaker: All right, now let's assume there is a property right in the construction permit--

Mr. Ramirez: --What the court of appeals--

Unknown Speaker: --Now, do you defend the court of appeals' decision that nevertheless there is no valid substantive due process claim?

Mr. Ramirez: --I defend it, Your Honor, because something more than an allegation of a 5-year delay must be shown, must be shown, because otherwise this is how a substantive due process is so marvelous--

Unknown Speaker: Well, the court of appeals--

Mr. Ramirez: --Everything becomes constitutional.

Unknown Speaker: --The court of appeals said well, even if ARPE, or whoever it was, even if there was a violation of state law--

Mr. Ramirez: State law, yes.

Unknown Speaker: --state law, Puerto Rican law, that doesn't necessarily entitle this developer to relief.

Mr. Ramirez: The standard which the first circuit was using is one that this is not enough.

Something more is needed than merely an allegation that they have illegally departed from state law or state procedures.

And I defend that standard.

Unknown Speaker: You defend that, but you also say that you have another ground, namely that there wasn't any property interest at all.

Mr. Ramirez: Oh, yes, but this is because they assume the property interest.

The opinion from the court below also did the same.

Unknown Speaker: I take it as a respondent you are saying you can affirm based on the fact, based on the fact that there is no property interest at all in the construction permit.

Mr. Ramirez: The court could do it as a matter of law, but the problem is that when this case comes to this Court it is different.

It is no longer the construction permit itself, although that is the precise question in which this Court has granted certiorari.

It comes now with a claimed right recognized by this Court in early zoning decisions that says that the landowner has a right to develop his land to any legitimate use.

Now, our view now is that as far as petitioner is relying on those zoning cases for that proposition, it is because he is trying to supply the deficiencies in the pleading which should have been where are the statutory provisions in Puerto Rico or the positive law from where I can show the Court that I derived a right to a construction permit.

Unknown Speaker: Ms. Ramirez, this perhaps follows up on Justice White's... the sentence, the last sentence in the court of appeals' treatment of the substantive due process claim says even assuming that ARPE engaged in delaying tactics and refused to issue permits for the Vacia Talega project based on considerations outside the scope of its jurisdiction under Puerto Rico law, such practices without more do not raise to the level of violations of the Federal Constitution under a substantive due process label.

So, if we're going to review that judgment we have to make the same assumptions that the court of appeals did, I think.

Mr. Ramirez: That is correct, Your Honor, and that... yes, we are defending the standard from the policy of U.S. courts, but this is because they assumed the existence of the property interest.

It is correct.

The thing is--

Unknown Speaker: May I just raise a question here?

They not only assumed the existence of a property interest, but they also assumed, I guess this is what paragraph 38 of the amended complaint says, they assumed that there were deliberate, totally unjustified delays in processing.

It was an arbitrary refusal to process.

Didn't they make that assumption too?

Mr. Ramirez: --I think the court of appeals did not go beyond the pleadings.

It limited itself to the allegations in the amended complaint, and it, there's a footnote on page 1 of the court of appeals' opinion that says we know that the district court went beyond the pleadings and got into the pretrial facts, but we are not going to go beyond that.

So the claim that is here before the Court arises from paragraph 37 in the amended complaint, and that's page 1137 in the Joint Appendix, and to that effect both courts assumed that there had been what could be called an undue delay because the plans had been filed 6 years ago.

But there is nothing about pretextual review, nothing about political considerations or improper motives.

None of that is pleaded in the amended complaint.

And if we're going to use the standard of review that requires us to look at the proprietary of the granting of a motion in our favor under 12(b)(6), we are asking the Court to limit itself to the amended complaint, the allegations.

And finally as a matter of law they raise the substantive due process claim.

Unknown Speaker: But may I interrupt again?

Supposing it's a fair reading of the complaint to say (a) we had a property interest here, and (b) we had an application that was on file in 1982 and they, for no reason at all, refused to process it for 6 years.

They weren't corrupt, they weren't, whatever it was, they just arbitrarily said we are not going to process this.

Isn't that, on that state of facts does that violate substantive due process?

Mr. Ramirez: Your Honor, substantive due process, if it is conduct that shocks the conscience, a 5-year delay I would say does not shock the conscience.

It is so open.

It is so--

Unknown Speaker: Is that the question as you see it, then, whether a government agency can sit on its hands for 5 or 6 years without any reason at all, they just aren't going to do their work, whether that shocks the conscience or not?

Mr. Ramirez: --Well, Your Honor--

Unknown Speaker: Is that the issue?

Mr. Ramirez: --within the substantive due process context, but the petitioner was mentioning the Ewing case, Regents of University v. Ewing, and this is the case that most closely resembles our case in the sense that because we're not dealing here with application of a means-ends analysis to a piece of legislation, which was what was involved in the zoning cases, what do you have?

You have somebody who is unsatisfied with an adjudication, and the only case that comes to my memory is this Regents case, the Ewing case, where this Court, and I believe the decision was unanimous, the Court unanimously assumed the property interest in the continued enrollment in the medical program, then went on to assume that there was a substantive due process claim, that that kind of property qualified for protection under the substantive compartment of the due process clause, and they turned the case into a procedural one.

It is judicial review to see whether there are facts that would reasonably support the decision that was made so that it cannot be called arbitrary.

So if there is a case where substantive due process and procedural due process overlap, this will be the case.

This will be the case.

He would need an adjudication to be satisfied that what happened was not arbitrary, that there was some grounds for the decision, and the problem is that he did not get an adjudication on the merits.

So they deprived, the courts of Puerto Rico did not give him a change to appeal on the merits because they denied discretionary review, which does not mean that he doesn't have other adequate state remedies.

Unknown Speaker: He says he has no other state remedy, and you say he does have a state remedy?

Mr. Ramirez: Well, he does.

He can go into court--

Unknown Speaker: An action to make them look at the right drawings?

Mr. Ramirez: --he has tort damages, and accuse Mr. Rodriguez.

The only person here, the only respondent here is Mr. Rodriguez.

The allegations have been going on that there is this conspiracy at ARPE, that high level officials were involved.

The only respondent here is Mr. Rodriguez.

And all of the pleadings in the complaint even sound like respondent superior, that he should answer because he was ARPE's chief, which is a defense that we promoted in the courts below.

We really don't... what he, what petitioner is proposing now would throw away what we understand has been the analysis that this Court does when it is presented with a substantive due process claim.

You need to find a fundamental interest, you need to allege an interest that is fundamental in the sense that it is a liberty interest either deeply rooted in the nation's history or tradition or because it is implied in the concept of order liberty.

Petitioner is admitting that it does not have a fundamental interest.

This he admitted in his brief.

Now in his reply brief at page 11, Note 19 he admits that he does not have a liberty interest.

So what do we have?

Is this the kind of property interest that qualifies for substantive due process protection?

Why should he rely on the Court's early zoning decisions?

It would be axiomatic to say that a landowner has a right to use his land or devote it to any legitimate use.

That's only axiomatic.

The Court did say, though, they say that, but it was said in another context when you were, when the Court was examining, according to the economic due process substantive theories, the substance of legislation, the substance of an ordnance, the substance of a piece of legislation, and saying well, it is or not arbitrary and capricious.

So he has the Court already doing a referendum for his property right.

The Court has already said it, and I would be in an awful position if I would have to argue to Your Honors that the Court has never recognized a property interest in a landowner's desire or wish to devote his land to any legitimate use.

So there must be something else involved here.

And if we don't have a fundamental interest and if he doesn't have a liberty interest which has been qualifying for protection under the due process clause, then I don't know what he has unless it is a claim that there has been a wrongful adjudication of his claim, which sounds to me like procedural due process.

If there are no more questions.

Unknown Speaker: Thank you, Ms. Ramirez.

Mr. Ramirez: Thank you, Your Honors.

Chief Justice Rehnquist: The case is submitted.

Unknown Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

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Argument of Speaker

Mr. Speaker: In the second case, No. 91-122, PFZ Properties, Inc. versus Rene Alberto Rodriguez, the writ of certiorari is dismissed as improvidently granted.