Welcome to your weekly Title III update for October 15, 2018. This week very little has happened in or outside the Title III cases.
On Tuesday, October 9, 2018, Judge Swain granted the Commonwealth a certification to allow it to appeal her decision about the complaint it filed against the Board pertaining to the budget. That case, 18-AP-80, was not dismissed as was the one filed by the Puerto Rico Legislature. Since the decision on the Commonwealth case was not a final decision, a certification of appealability is required by PROMESA section 306(e)(3), which states:
The court of appeals for the circuit in which a case under this title has venue pursuant to section 307 of this title shall have jurisdiction to hear appeals of interlocutory orders or decrees if—
(A) the district court on its own motion or on the request of a party to the order or decree certifies that—
(i) the order or decree involves a question of law as to which there is no controlling decision of the court of appeals for the circuit or of the Supreme Court of the United States, or involves a matter of public importance;
(ii) the order or decree involves a question of law requiring the resolution of conflicting decisions; or
(iii) an immediate appeal from the order or decree may materially advance the progress of the case or proceeding in which the appeal is taken; and
(B) the court of appeals authorizes the direct appeal of the order or decree.
Judge Swain determined as follows:
Because the question of law for which Plaintiffs seek certification is not one that the Court addressed in its Opinion and Order, the Court denies Plaintiffs’ Motion. However, having found that issues addressed in the Court’s disposition of certain counts in the Opinion and Order involve related questions of law as to which there is no controlling authority, that those aspects of the Opinion and Order involve issues of public importance, and that immediate appeal of those aspects of the Opinion and Order may materially advance the progress of this adversary proceeding and the Title III cases, the Court on its own motion certifies for interlocutory appeal the Opinion and Order to the extent that it dismisses pursuant to Federal Rule of Civil Procedure 12(b)(6) Paragraphs 78 and 79 of Count I of Plaintiffs’ Complaint and Paragraphs 88 and 91 of Count II of Plaintiffs’ Complaint. (See Op. and Ord. at 29-37.)
This is the first step for the Commonwealth to join other appellants questioning Judge Swain’s ruling on the budget. Although the First Circuit still has to give its consent, given the importance of the case and the discussion of the issue in the Legislature’s appeal, it is likely it will be given.
What is amazing to me is the way the media reported the certification of the order. They made it seem as if Judge Swain was requesting an opinion from the First Circuit rather than a routine procedure akin to that of 28 U.S.C. § 1292(b). Seems that the press in the island needs to take a little course on federal jurisdiction and venue.
The second decision was the denial of remand of a case that was removed from state court. Plaintiffs had filed a complaint in state court challenging Governor Rosselló’s Executive Order on PREPA’s retirement fund. It is important to note, that they are seeking a declaration that the utility’s retirement fund is a separate entity from the Commonwealth. The Board removed the case and plaintiffs requested its remand to state court. Judge Swain determined that the dispute over the nature of the retirement fund could affect the Title III of the Commonwealth and PREPA and hence would be decided by the Federal Court rather than the state court. Hence, she retained jurisdiction over the case.
Upon review of the remaining adversary proceedings and other contested matters, there is still much to be resolved in the remaining Title III cases. Judge Swain has dismissed without prejudice a couple of cases dealing with whether certain bondholders have a lien; Judge Dein has recommended that certain claims as to dischargeablity be dismissed until the Plan of Adjustment; and the issues in a couple of the Utier cases are still pending. In addition, there are thousands of cases that were stayed by the Title III filings and are pending discovery, pretrial and trial. The Board mentioned that some discovery and then mediation may be used. All this takes time, hence, the resolution of the Title III cases, except for COFINA, will probably go well into 2021.
Finally, there is a rumor going around that GO’s have reached a deal with the Board for 83% recovery. Technically more that COFINA but seniors are getting 93%. But as I said, it is only rumors, so let’s see what happens.
This summary is merely what I believe are the more salient motions and decisions in the cases. I receive an average of 20 filings each day so it would be impossible to summarize everything. If you have legal interest in these cases, I urge you to hire an attorney to represent you.