IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative of the Commonwealth of Puerto Rico; THEFINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative for the Puerto Rico Sales Tax Financing Corporation, a/k/a Cofina, Depository Trust Company; THEFINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative for the Puerto Rico Highways and Transportation Authority; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative for the Puerto Rico Electric Power Authority (PREPA), Debtors.
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD, as representative of the Commonwealth of Puerto Rico, Debtor, Appellee, SAMUEL GRACIA-GRACIA, individually and as representative of the certified class; JORGE PLARD, individually and as representative of the certified class, Movants, Appellants, PUERTO RICO SALES TAX FINANCING CORPORATION, a/k/a Cofina; PUERTO RICO HIGHWAYS AND TRANSPORTATIONAUTHORITY; PUERTO RICOELECTRIC POWER AUTHORITY (PREPA), Debtors.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
PUERTO RICO [Hon. Laura Taylor Swain, U.S. District Judge
Antonio J. Amadeo Murga for appellants.
Barak, with whom Timothy W. Mungovan, John E. Roberts, Martin
J. Bienenstock, Stephen L. Ratner, Mark D. Harris, Jeffrey W.
Levitan, and Proskauer Rose LLP were on brief, for debtor
Torruella, Lynch, and Kayatta, Circuit Judges.
KAYATTA, Circuit Judge.
plaintiffs in this case are motor-vehicle owners and
operators who paid duplicate premiums to the Commonwealth of
Puerto Rico in accordance with the Commonwealth's
compulsory automobile-insurance law, P.R. Laws Ann. tit. 26,
§ 8053. The plaintiffs have waged a decades-long
campaign to retrieve the funds that they overpaid to the
Commonwealth. After we issued several opinions favorable to
the plaintiffs' claims, the parties eventually entered
into a settlement agreement in which the Commonwealth agreed
to establish a notice and claim-resolution process for
motorists who paid duplicate premiums from 1998 to 2010.
Shortly thereafter, the Financial Oversight and Management
Board for Puerto Rico initiated Title III debt-adjustment
proceedings on behalf of the Commonwealth pursuant to the
Puerto Rico Oversight, Management, and Economic Stability Act
(PROMESA), 48 U.S.C. §§ 2101–2241, which
triggered an automatic stay of collection actions against the
Commonwealth. The Commonwealth, citing the automatic stay,
then halted its implementation of the settlement
agreement's notice and claim-resolution process. Never
relenting, the plaintiffs petitioned the Title III court for
relief from the automatic stay to allow them to bring an
enforcement action against the Commonwealth in a separate
proceeding. The Title III court largely denied that petition.
We now affirm in part and vacate in part that decision.
in December 1995, Puerto Rico's Compulsory Motor Vehicle
Liability Act ("Law 253") requires all motorists in
Puerto Rico to obtain liability insurance either through the
Commonwealth or through a private insurer. P.R. Laws Ann.
tit. 26, § 8053. Though the Commonwealth adopted
procedures to enable motorists who opted for private
insurance to avoid paying the Commonwealth premiums, many of
those motorists nevertheless paid annual premiums to the
Commonwealth. García-Rubiera v.
Fortuño (García-Rubiera II), 665
F.3d 261, 264–65 (1st Cir. 2011). Pursuant to Law 253,
the Puerto Rico Secretary of Treasury transfers those
premiums (referred to here as "duplicate premiums")
to the Compulsory Liability Joint Underwriting Association of
Puerto Rico (JUA). See P.R. Laws Ann. tit. 26,
§ 8055(c). In accordance with the general scheme that
Law 253 initially established, the JUA kept those duplicate
premiums that it received from the Secretary in a separate
"Reserve" account, where they were subject to
reimbursement upon request by the motorists who had paid the
duplicate premiums. P.R. Laws Ann. tit. 26, § 8055(j);
García-Rubiera II, 665 F.3d at 266. And,
pursuant to Puerto Rico's default general-insurance law,
unclaimed duplicate premiums escheated to the Commonwealth
after seven years. García-Rubiera v.
Calderón (García-Rubiera I),
570 F.3d 443, 449 (1st Cir. 2009).
2002, the Puerto Rico legislature passed Law 230, which
modified this general scheme in a few notable ways. First,
Law 230 directed the JUA to transfer accumulated duplicate
premiums from the Reserve account to the Secretary of
Treasury every two years. P.R. Laws Ann. tit. 26, §
8055(j). Second, Law 230 provided that the Secretary of
Treasury will "retain the funds transferred by the [JUA]
in its fiduciary capacity for a five (5)-year term."
Id. Once that five-year term "elapse[s] without
the consumer claiming the retained funds, said funds [will]
become property of the Government of Puerto Rico and [will]
be transferred to the General Fund of the State's
Law 230's passage, the JUA transferred $73 million from
the Reserve account to the Secretary of Treasury. After the
Commonwealth used a large portion of those funds to balance
its budget, a class of motorists who had paid duplicate
premiums filed suit in district court, asserting that the
Commonwealth's transfer of funds from the Reserve account
to the Secretary of Treasury amounted to a violation of the
Takings Clause and was executed without the notice and
process required by the Due Process Clause.
García-Rubiera I, 570 F.3d at 450. In a
series of opinions, this court held that those plaintiffs had
a property interest in these duplicate premiums for purposes
of their procedural Due Process Clause claim, id. at
457, and instructed the Commonwealth "to give individual
notice to insureds owed reimbursement to the maximum extent
feasible, " García-Rubiera II, 665 F.3d
satisfied with the Commonwealth's initial efforts to
notify potential claimants on remand, a subsequent panel of
this court ordered in 2013 that the Commonwealth afford
plaintiffs at least one year to file reimbursement claims.
See García-Rubiera v. Fortuño
(García-Rubiera III), 727 F.3d 102, 105, 110
(1st Cir. 2013). "In the meantime, " we added,
"no duplicate premiums shall escheat to the Commonwealth
until it has established and complied with a reimbursement
procedure which meets the basic requirements of
constitutional due process." Id. at 105.
Important to the immediate appeal, this latter injunction on
further escheatment to the Commonwealth effectively created
two separate pools of duplicate premiums. Those funds that
had not yet escheated to the Commonwealth, i.e.,
funds the JUA received during or after 2006 and transferred
to the Secretary of Treasury after July 2008, remain in a
segregated account. These funds -- referred to here as the
"segregated funds" -- amounted to roughly $76.1
million as of March 2018. All other funds, the
"non-segregated funds, " had previously escheated
to the Commonwealth and had already been intermixed with the
general Commonwealth coffers.
2016, the parties entered into a settlement agreement whereby
the Commonwealth agreed to (1) establish a notice and
claim-resolution process for motorists who paid duplicate
premiums from 1998 to 2010, (2) refund claimants who
demonstrate entitlement to reimbursement, and (3) pay, out of
the funds due to the motorists, attorneys' fees amounting
to twenty percent of the total reimbursement claims paid
under the settlement. Later that year, Congress passed
PROMESA and the Commonwealth made an initial installment
payment to the class attorneys. And on May 3, 2017, the
Financial Oversight and Management Board for Puerto Rico
initiated Title III debt-adjustment proceedings on behalf of
the Commonwealth, triggering an automatic stay of collection
actions against the Commonwealth. See 11 U.S.C.
§ 362(a); 48 U.S.C. § 2161(a) (incorporating 11
U.S.C. § 362 into PROMESA). The Commonwealth
subsequently halted its implementation of the reimbursement
procedures set forth in the settlement agreement and stopped
payments to the plaintiffs' attorneys.
February 2018, the plaintiffs filed a motion in the Title III
debt-adjustment proceeding, seeking relief from the automatic
stay to allow them to enforce the terms of the settlement
agreement in a separate action. The Title III court denied
most of the plaintiffs' requested relief but lifted the
stay "solely to the extent of permitting implementation
of the notice and insurance premium claim submission and
review process." Memorandum Order Granting in Part and
Denying in Part Motion Requesting Relief from Stay at 8, No.
17 BK 3283-LTS (D.P.R. Apr. 6, 2018) [hereinafter Order
Denying Stay Relief]. In other words, the relief ordered by
the Title III court permits the plaintiffs' claims to be
processed (and also presumably allows the plaintiffs to
pursue a separate action to enforce the implementation and
execution of that claims-resolution process), but it does not
allow the plaintiffs to actually obtain reimbursement from
the Commonwealth. This appeal followed.
law stands in seven circuits, there would be no question that
we have appellate jurisdiction over an appeal like this one
because denials of motions for relief from an automatic stay
are categorically deemed final and appealable in those
circuits. See Pinpoint IT Servs., LLCv.Rivera (In re Atlas IT Export Corp.), 761
F.3d 177, 182 n.8 (1st Cir. 2014) (collecting cases). In this
circuit though, we need do some more work because our
decision in In re Atlas rejected that categorical
approach, requiring us "to scout for finality
indicators, like whether the disputed order conclusively
decided a discrete, fully-developed issue -- an order that,
at the time of appeal, will not be changed or be mooted and
is not reviewable elsewhere." Id. at 184. We
find plenty of such indicators. Unlike in In re
Atlas, there is no suggestion here that "the
bankruptcy court will get to decide the stay-relief question
again . . . on a better-developed record." Id.
at 186. To the contrary, confronted with an extraordinary
docket and an equally extraordinary workload, the Title III
court appears to have no intention to reconsider the
plaintiffs' denied motion for relief from stay, instead
relegating the resolution of their claims to the "debt
adjustment phases of the Title III proceeding." Order
Denying Stay Relief, supra, at 8. Nor is any other
court in a position to resolve the parties' dispute. We
are therefore most comfortable concluding that we have
appellate jurisdiction pursuant to 28 U.S.C. § 1291.
See Peaje Invs. ...