Gracia-Gracia v. Commonwealth of Puerto Rico, No. 18-1463 (1st Cir. 2019)Annotate this Case
In this PROMESA action the First Circuit affirmed in part and vacated in part the decision of the the lower court denying Plaintiffs' petition for relief from an automatic stay of collection actions against the Commonwealth of Puerto Rico to allow them to bring an enforcement action against the Commonwealth, holding that remand was required to determine whether the contested funds were Plaintiffs'.
Plaintiffs, motor vehicle owners and operators who paid duplicate premiums to the Commonwealth in accordance with the Commonwealth's compulsory automobile-insurance law, entered into a settlement agreement pursuant to which the Commonwealth agreed to establish a notice and claim-resolution process for the motorists. 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), triggering an automatic stay of collection actions against the Commonwealth. The Commonwealth subsequently halted its implementation of the settlement agreement's notice and claim resolution process. Plaintiffs unsuccessfully petitioned the Title III court for relief from the automatic stay. The First Circuit remanded the case, holding that the Title III court abused its discretion by not first addressing Plaintiffs' claim that the contested funds were their personal property and were merely being held in trust by the Commonwealth.