Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 1 of 7 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO MUNICIPALITY OF CABO ROJO CIVIL NO. Plaintiff V.S. POWERSECURE, INC.; THOMPSON CONSULTING SERVICES, LLC; JOHN DOE DECLARATORY JUDGMENT; COLLECTION OF TAXES Defendants COMPLAINT TO THE HONORABLE COURT: COMES NOW plaintiff, through the undersigned attorneys and very respectfully SETS FORTH and PRAYS: I. JURISDICTION AND VENUE 1.1. This Honorable Court has jurisdiction over the instant action pursuant to 28 U.S.C. 1332 for 28 U.S.C. 2201-2202 for an entry of a declaratory judgment and a decree for the collection of overdue municipal taxes payable under 21 P.R. Laws Ann. 651-652y; 4057, as complete diversity exists among the parties and the amount in controversy in this case exceeds the statutory jurisdictional minimum of $75,000.00. 1.2. The District of Puerto Rico is the proper venue to hear this case, as per 28 U.S.C. 1391(b)(2), as all of the relevant events occurred within the territorial limits of the Commonwealth of Puerto Rico, and, more specifically, within the territorial limits of the Municipality of Cabo Rojo.
Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 2 of 7 II. THE PARTIES 2.1. Plaintiff Municipality of Cabo Rojo is a political subdivision of the Commonwealth of Puerto Rico, the extent of its authority and prerogatives being defined by the Autonomous Municipalities Act, 21 P.R. Laws Ann. 4001, et seq. and applicable special legislation. 2.2. Co-defendant Powersecure, Inc. (hereinafter referred to as Powersecure ) is a for-profit corporation registered that has its principal offices 1 in the City of Wake Forest, North Carolina. 2.3. Co-defendant Thompson Consulting Services, LLC (hereinafter referred to as Thompson ) is a limited liability company with its main offices in the City of Lake Mary, Florida. 2.4. Co-defendant John Doe is a natural person or a legal entity whose name is not known at this time but that may be liable for the payment of municipal taxes for work performed in the City of Cabo Rojo in the aftermath of Hurricane María. III. THE FACTS 3.1. It is a sad set of facts of which this Honorable Court can take judicial knowledge that on September 20, 2017, the Commonwealth of Puerto Rico was pummeled by a major hurricane that was christened as Hurricane María, which caused substantial harm to the Island s general infrastructure. 1 According to the Supreme Court s landmark decision in Hertz Corp. v. Friend, 559 U.S. 57 (2010), a corporation s principal place of business and thus its domicile for diversity purposes is where its nerve center is located, which in turn usually means, where the main offices of the corporation are established. 2
Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 3 of 7 3.2. Among the most damaging effects of the aforementioned storm s path through Puerto Rico are the complete destruction of the electrical generation/transmission system and the accumulation of debris, specially on public roads. 3.3. In response to the Hurricane María emergency the Commonwealth of Puerto Rico and the United States Government (mostly through the Federal Emergency Management Agency and the Army Corps of Engineers) entered into contracts with many service providers from different states, as well as with local entities and individuals. 3.4. Of particular relevance to the instant action are contracts granted for the restoration of the electrical service and for the collection/disposition of debris. 3.5. Powersecure obtained a federal contract or contracts or was otherwise subcontracted by a large federal contractor to perform construction and reconstruction work to repair the electrical system in several regions of Puerto Rico, including Cabo Rojo. 3.6. Through information and/or belief, plaintiff avers that Powersecure included the payment of local taxes as part of the projected expenses set forth in its proposal to the federal government (which were included in the ensuing contract(s)) and, during the time that it performed work in Cabo Rojo, said entity established small, temporary offices in said municipality from which it managed its local operations. 3.7. Thompson obtained a federal contract or contracts or was otherwise subcontracted by a large federal contractor to perform construction work consistent, 3
Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 4 of 7 inter alia, of the collection and disposition of debris in several regions of Puerto Rico, including Cabo Rojo. 3.8. Through information and/or belief, plaintiff avers that Thompson included the payment of local taxes as part of the projected expenses set forth in its proposal to the federal government (which were included in the ensuing contract(s)) and, during the time that it performed work in Cabo Rojo, said entity established small, temporary offices in said municipality from which it managed its local operations. 3.9. Under Puerto Rico law, all non-exempted business activities undertaken in Puerto Rico are subject to the payment of a municipal tax determined on the basis of the volume of business called patente municipal or municipal license tax, which every municipality establishes via municipal ordinance. 21 P.R. Laws Ann. 651c. 3.10. In the Municipality of Cabo Rojo, a 0.5% license tax (assessed using the taxpayer s declared business volume for any particular tax year) has been established through Ordinance Number 34 (Series 2000-2001). 3.11. All defendants failed to comply with the statutory requirement set forth in 21 P.R. Laws Ann. 651l of declaring its volume of business in Cabo Rojo to the City s Director of Finance. 3.12. Needless to say, because of their failure to declare their business volume, defendants have not been able to pay the license tax due for the substantial business that said parties engaged in the months following the path of Hurricane María, nonetheless, based upon information and belief regarding the license taxes owed by said parties is of $125,000.00 for Powersecure and $90,000.00 for Thompson, the precise 4
Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 5 of 7 amount will be determine once we learn through discovery what the actual relevant figures of volume of business. 3.13. Puerto Rico law further provides that no construction project may be commenced until a municipal construction excise tax is paid. 21 P.R. Laws Ann. 4057. 3.14. Failure to declare proposed construction work or to pay the corresponding excise tax may be subject to the imposition of administrative penalties and constitutes a misdemeanor. 21 P.R. Laws Ann. 4507(g). 3.15. Pursuant to Ordinance 49 (Series 2008-2009) imposes excise tax of 1.8% of the total project cost for projects exceeding $100,000.00 and $2.4% of the total project costs for projects exceeding $100,000.00. 3.16. Powersecure performed considerable construction work within the Municipality of Cabo Rojo including, inter alia, the replacement of different components of the electrical transmission system. 3.17. Similarly, Thompson performed considerable recollection and disposition of debris work in Cabo Rojo, which is considered construction work subject to excise taxation. 3.18. Just as was the case with license taxes, because of their failure to declare the costs of their construction projects in Cabo Rojo, defendants have not been able to pay the excise tax due for the construction activities that said parties engaged in the months following the path of Hurricane María, nonetheless, based upon information and belief regarding the excise taxes owed by said parties is of $500,000.00 for 5
Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 6 of 7 Powersecure and $200,000.00 for Thompson, the precise amount will be determine once we learn through discovery what the actual relevant figures of project costs. 3.19. Defendants are also liable to interests and late payment penalties, to be assessed at the time when payment is made. 3.20. To the extent that defendants may understand that they are no subject to municipal taxation as set forth in the preceding paragraphs, plaintiff is entitled to a declaratory judgment establishing the taxable nature of defendants activities in Puerto Rico. 3.21. Moreover, once the precise amount of the taxes due is determined, plaintiff is entitled to a judgment against the defendants for the principal amounts owed. 3.22. The tax liabilities that we previously describe are well established, for which reason defendants have been extremely obstinate in neglecting their legal duties to declare taxable activity so that the corresponding taxes may be assessed, which entitled plaintiff to recover a reasonable amount in attorney s fees to be determined by the Court under Puerto Rico Rule of Civil Procedure 44.1(d), 32 P.R. Laws Ann. Ap. V, R. 44.1(d). WHEREFORE it is respectfully requested from this Honorable Court that the relief requested in the foregoing action be hereby GRANTED. In San Juan, Puerto Rico this 22 nd day of October, 2018. RESPECTFULLY SUBMITTED, M.L. & R.E. LAW FIRM 513 Juan J. Jiménez St. 6
Case 3:18-cv-01797-FAB Document 1 Filed 10/23/18 Page 7 of 7 San Juan, Puerto Rico 00918 Tel (787) 999-2979 Fax (787) 758-2221 S/Jorge Martínez Luciano JORGE MARTINEZ LUCIANO USDC-PR Number 216312 e-mail: jorge@mlrelaw.com S/Emil Rodríguez Escudero EMIL RODRÍGUEZ ESCUDERO USDC-PR Number 224312 e-mail: emil@mlrelaw.com 7