1 

In the United States Court of Federal Claims

No. 22-725C 

 (Filed: June 5, 2023) 

* * * * * * * * * * * * * * * * * * * * * * 

JONATHAN DINH et al., 

Plaintiffs, 

v. 

THE UNITED STATES, 

Defendant. 

* * * * * * * * * * * * * * * * * * * * * * * 

Roger J. Marzulla, Marzulla Law, LLC, Washington DC, with whom 

was Nancie G. Marzulla, for plaintiffs. Gregory H. Bevel, Rochelle 

McCullough, LLP, Dallas TX, and Rafael Gonzalez, Godreau & Gonzalez 

Law, LLC, San Juan PR, of counsel. 

 

Nathanael B. Yale, Senior Trial Counsel, United States Department of

Justice, Civil Division, Commercial Litigation Branch, Washington, DC, 

with whom were L. Misha Preheim, Assistant Director, Patricia M. 

McCarthy, Director, and Brian M. Boynton, Principal Deputy Assistant 

Attorney General, for defendant. 

 

OPINION 

BRUGGINK, Judge. 

This is an action against the United States, seeking just compensation 

under the Fifth Amendment for the alleged taking of plaintiffs’ private 

property. Plaintiffs in this case are owners of First Subordinated Secured 

Bonds issued by Corporación del Fondo de Interés Apremiante (“COFINA”), 
2 

an instrumentality of the Commonwealth of Puerto Rico.1 Plaintiffs allege 

that their property interests as COFINA bondholders were taken without just 

compensation as a “direct and intended result” of Congress’s enactment of

the Puerto Rico Oversight, Management, and Economic Stability Act 

(“PROMESA”). See Second Am. Compl. (“Compl.”)2 ¶ 31. Pending is 

defendant’s motion to dismiss for lack of jurisdiction, or, in the alternative, 

for failure to state a claim upon which relief can be granted. The motion has 

been fully briefed, and oral argument was held on April 13, 2023. For the 

reasons set out below, we grant defendant’s motion to dismiss under Rule 

12(b)(6) of the Rules of the United States Court of Federal Claims (“RCFC”). 

BACKGROUND 

Enacted on June 30, 2016, PROMESA is a statute that authorizes an 

Oversight Board established under the Act to initiate bankruptcy 

proceedings—also referred to as Title III proceedings—for a territory or 

territorial instrumentality. PROMESA established an Oversight Board for 

Puerto Rico on the same date, created as “an entity within the territorial 

government”; PROMESA expressly states that an Oversight Board “shall not 

be considered to be a department, agency, establishment, or instrumentality 

of the Federal Government.” 48 U.S.C. § 2121(c) (2018). As other COFINArelated cases make clear, the Oversight Board for Puerto Rico then took a 

series of discretionary actions, which resulted in the restructuring of 

COFINA’s debts. Those actions included designating COFINA as an 

instrumentality covered by PROMESA, issuing a restructuring certification 

for COFINA, and then filing a Title III petition on behalf of COFINA in the 

United States District Court for the District of Puerto Rico. The Oversight 

Board also represented COFINA during the Title III case and submitted a 

plan of adjustment for COFINA’s debts, which would allow junior COFINA 

bondholders (such as plaintiffs) to make a 56.41% recovery on the repayment 

of principal and interest on their bonds. See In re Fin. Oversight & Mgmt. 

Bd. for P.R., 361 F. Supp. 3d 203, 233 (D.P.R. 2019), aff’d, 987 F.3d 173, 

177 (1st Cir. 2021). The district court—also referred to as the “Title III 

1 As owners of First Subordinated Secured Bonds issued by COFINA, 

plaintiffs are in effect junior COFINA bondholders. Plaintiffs refer to First 

Subordinated Secured Bonds as “COFINA bonds” throughout their 

complaint. 

2 After filing the original complaint on June 29, 2022, see ECF No. 1, 

plaintiffs amended their complaint twice. Unless otherwise noted, the 

“complaint” from hereon will refer to the second amended complaint filed 

on November 1, 2022. See ECF No. 9. 
3

court”—confirmed the plan of adjustment on February 5, 2019. 

Plaintiffs’ complaint, however, skips over the actions of the Oversight 

Board and makes only an oblique reference to the Title III court for having 

“rebuffed the COFINA Bondholders’ challenge” to the curtailment of their 

property interests. See Compl. ¶ 30. Pushing both the Oversight Board and 

the Title III court into the barely acknowledged background, plaintiffs take 

aim instead at an act of Congress. The crux of plaintiffs’ claim lies in the 

allegation that the United States is liable for just compensation because 

Congress’s enactment of PROMESA caused the taking of their property. See

Compl. ¶ 31 (“As a direct and intended result of Congress’s enactment of 

[PROMESA], COFINA Bondholders lost a significant portion of the 

principal and interest each COFINA Bondholder was entitled to and the fair 

market value of the pledged revenues, their security interests and liens on 

COFINA funds, as well as other compensable property rights.”); id. at ¶ 35

(“But for Congress’s enactment of [PROMESA], Plaintiffs would have 

received the payments of principal and interest they were entitled to under 

the terms of their COFINA bonds and would have retained a security interest 

. . . that they could have executed in the event of default.”). Plaintiffs 

characterize the alleged taking as a “legislative taking,” which they define as 

“Congress’s enactment of a statute that impairs or destroys the property 

rights of a targeted group of owners.” Pls.’ Resp. at 21. 

As we will see, plaintiffs’ claim cannot succeed on the merits without 

demonstrating sufficient federal action to warrant liability in the United 

States—hence plaintiffs’ consistent assertion that Congress intended 

PROMESA to result in the taking of their property without just 

compensation. And yet, as plaintiffs conceded at oral argument, they suffered 

no actual injury on the day that Congress enacted PROMESA. To be able to 

point to injury, their claim requires moving further along the timeline of 

events. See Oral Arg. at 46:00 to 46:42 (plaintiffs conceding that their claim 

would not have been “ripe” in 2016 because “money hadn’t actually been 

taken yet”). As we explain below, however, the fact that the actual injury 

occurred at a later date is fatal for plaintiffs because it means that the alleged 

taking was completed through the discretionary actions of a non-federal 

entity. Unsurprisingly, this dilemma has left plaintiffs reluctant to place 

precisely the date of taking in either their complaint or their brief; at most, 

they suggest that the alleged taking occurred somewhere during the date 

range of June 30, 2016, to February 5, 2019. See Pls.’ Resp. at 17; id. at 18 

(“But the issue of whether COFINA Bondholders owned their bonds on the 

date of taking—whether that be the date PROMESA was passed or the date 

it was implemented to deprive them of their property or some date in 

between—cannot be used to dismiss this case.”). 
4

In short, plaintiffs’ claim attempts to navigate two opposing currents.

It has to rely on sufficient federal action as the prime motive force, while 

simultaneously incorporating events and actors having nothing to do with the 

United States, an attempted course adjustment which has the potential for 

causing shipwreck. We are satisfied that no degree of navigational skill can 

salvage the effort. 

I. The Creation of COFINA

In 2006, the Commonwealth of Puerto Rico was in the midst of a fiscal

crisis: having consistently spent more than it received in taxes and other 

revenues, Puerto Rico faced decreased direct access to the credit markets

because of the Puerto Rican Constitution’s limits on sovereign debt.

3 In re 

Fin. Oversight & Mgmt. Bd. for P.R., 987 F.3d 173, 177 (1st Cir. 2021). The

Legislative Assembly of Puerto Rico passed Act 91 on May 13, 2006, as a 

response to the crisis. Id. The Act created COFINA, “a public corporation 

and instrumentality of the Commonwealth of Puerto Rico” that was 

“independent and separate” from the Commonwealth. See P.R. Laws Ann. 

tit. 13 § 11(a). The stated purpose of COFINA was to “issue[] bonds and 

utilize[e] other financing mechanisms” to pay the Commonwealth’s 

outstanding debts as well as future operating expenses. See id. § 11(b). 

The bonds that COFINA issued were different in kind from the 

general obligation (“GO”) bonds issued by Puerto Rico. See In re Fin. 

Oversight, 987 F.3d at 177; Am. Jur. 2d Ed. § 295 (“General obligation bonds 

issued by states and governmental units are, by definition, payable from and 

secured by a pledge of the issuer’s taxing power. . . . The full faith and credit 

of the issuer is pledged for repayment of general obligation bonds, and the 

promise to pay is unconditional.”). That is, COFINA bonds were payable 

from and secured by specific collateral, not by a pledge of the full faith, credit 

and taxing power of Puerto Rico. See P.R. Laws Ann. tit. 13 § 13(d) 

(providing that the “full faith, credit and taxing power of the Commonwealth 

of Puerto Rico shall not be pledged” for the COFINA bonds).

Specifically, Act 91 required a portion of sales and use tax revenues 

(“SUT revenues”) to be deposited directly in the Dedicated Sales Tax Fund

3 Because the allegations in this case almost wholly involve acts of 

legislatures and courts, the factual background blurs into the controlling law. 

We therefore cite cases and statutes where the cited material supplements but 

is not inconsistent with plaintiffs’ statement of facts in the complaint. 
5

(“DSTF”) each year. The DSTF was the “property of COFINA,” which was

“[not] available to the Commonwealth of Puerto Rico.” Id. at § 12. COFINA 

had to use the DSTF exclusively for the purposes specified in § 13, including

the repayment of principal and interest on the COFINA bonds as they became 

due. See id. at § 13(a)(3). Moreover, Act 91 authorized COFINA to “pledge 

and otherwise encumber all or part of [the DSTF]” for the repayment of 

principal and interest on the bonds. Id. at §13(b). That pledge was “valid and 

binding as of the time it is made without the need for a public or notarized 

document.” Id.

COFINA subsequently made such a pledge in the Sales Tax Revenue 

Bond Resolution (“Bond Resolution”), the borrowing contract among 

COFINA, the COFINA bondholders, and the Bank of New York Mellon as 

trustee. The Bond Resolution, as amended and restated on June 10, 2009,

gave the bondholders a security interest in: “(1) the DSTF, (2) all COFINA 

Revenues, as defined in the Bond Resolution, (3) all right, title, and interest 

of COFINA in and to COFINA Revenues, and all rights to receive the same, 

and (4) funds, deposits, accounts, and subaccounts held by the Trustee.” 

Compl. ¶ 15. COFINA bondholders thus had automatically perfected liens 

which they could execute in the event of a default in the payments of 

principal and interest. See id. at ¶ 12. 

Between 2009 and 2011, COFINA issued a series of bonds that bore 

interest rates between 3.63% and 7.48% and matured between August 1, 

2017, and August 1, 2050. Id. at ¶ 13. Although plaintiffs here do not specify 

when they purchased their bonds, they allege that they were “at all material 

times the owners of a substantial quantity of COFINA bonds,” where the 

“material times” refers to the date range from June 30, 2016, to February 5, 

2019. See id. ¶¶ 1-8; Pls.’ Resp. at 17. 

By May 2017, there was $9.81 billion in aggregate principal amount 

of COFINA bonds outstanding, consisting of $7.39 billion principal amount 

of current interest bonds and $1.50 billion principal amount of capital 

appreciation bonds. Compl. ¶ 13. Puerto Rico regularly transferred the 

statutorily required portion of SUT revenues to the DSTF, so that by May 

2017, the DSTF held over $600 million as security for the repayment of 

COFINA bonds’ principal and interest. Id. at ¶ 12; Pls’ Resp. at 3. 

II. The Passage of PROMESA

Despite these new measures, Puerto Rico’s financial crisis worsened 

so that by 2013, Puerto Rico’s three public utility companies (power, water, 

and highways) were more than $20 billion in debt. Compl. ¶ 16; see also
6

Puerto Rico v. Franklin Cal. Tax-Free Tr., 579 U.S. 115, 118 (2016). Puerto 

Rican instrumentalities, however, could not access the federal municipal 

bankruptcy process under Chapter 9 of the Bankruptcy Code. See Franklin 

Cal. at 130. Their exclusion from federal bankruptcy protections dated back 

to 1984, when Congress amended the Bankruptcy Code’s definition of a 

“State” to exclude Puerto Rico “for the purpose of defining who may be a 

debtor under chapter 9 of this title.” See 11 U.S.C. § 101(52) (2018). The 

amendment precluded Puerto Rico—as well as any other United States 

territory—from authorizing its municipalities to file a Chapter 9 petition, 

which effectively barred access to federal bankruptcy proceedings for Puerto 

Rican instrumentalities. See 11 U.S.C. § 109(c)(2) (requiring “States” to 

authorize their municipalities to seek relief before a municipality may file a 

Chapter 9 petition); id. at § 101(40) (defining a “municipality” as a “political 

subdivision or public agency or instrumentality of a State”). 

As a result, Puerto Rico passed the Puerto Rico Corporation Debt 

Enforcement and Recovery Act (“Recovery Act”) in 2014, providing a nonfederal path for its instrumentalities to restructure their debts. The Recovery 

Act could not be enforced, however, because it was pre-empted by federal 

law. Franklin Cal., 549 U.S. at 125 (“[The Bankruptcy Code] precludes 

Puerto Rico from authorizing its municipalities to seek relief under Chapter 

9, but it does not remove Puerto Rico from the reach of Chapter 9’s preemption provision.”).

Ultimately, on June 30, 2016, Congress enacted PROMESA pursuant 

to its plenary power over the territories, see 48 U.S.C. § 2121(b)(2), making 

it possible for territories and their instrumentalities to adjust their debts in 

bankruptcy proceedings.

4 PROMESA, however, is not simply an extension 

of the Bankruptcy Code to the territories. The implementation of PROMESA 

first of all requires the establishment of an Oversight Board, the purpose of 

which is to “provide a method for a covered territory to achieve fiscal 

responsibility and access to the capital markets.” See § 2121(a). Title I thus 

sets out the organization of an Oversight Board, while Title II and Title III 

outline its responsibilities—which include the approval of fiscal plans and 

budgets for a territory or territorial instrumentality, as well as duties related 

4 PROMESA specifically established an Oversight Board for Puerto Rico on 

the date of its enactment. See § 2121(b)(1). Nevertheless, the language of 

PROMESA is general and also applies to territories other than Puerto Rico 

once an Oversight Board is established for such a territory. See § 2121(c)(1) 

(“An Oversight Board established under this section shall be created as an 

entity within the territorial government for which it is established in 

accordance with this title . . . .”). 
7

to the adjustment of debts. See §§ 2141, 2142, 2146.

As the portion of PROMESA that deals specifically with the 

adjustment of debts, Title III incorporates many sections of the Bankruptcy 

Code. See § 2161(a). But differences exist. For instance, the Bankruptcy 

Code requires a municipality to be insolvent to qualify as a debtor. See 11 

U.S.C. § 109(c)(3). Title III, however, does not require a debtor to be 

insolvent. See 48 U.S.C. § 2162. Where the entity in question is a territorial 

instrumentality rather than a territory, all that Title III requires is that it: (1) 

be “covered” under PROMESA; (2) have a restructuring certification issued 

by an Oversight Board; and (3) desire to effect a plan to adjust its debts. See 

id. Indeed, the first two requirements are unique to Title III since they cannot 

be met unless the Oversight Board chooses to act, a determination it makes 

“in its sole discretion.” See §§ 2121(d)(1)(A), 2146(a). Title III, moreover,

does not authorize a debtor to directly file a petition for bankruptcy, unlike 

the Bankruptcy Code—the Oversight Board must file a petition on behalf of 

a debtor. See 48 U.S.C. § 2164(a); 11 U.S.C. §§ 301, 901. The filing of the 

petition by the Oversight Board commences a voluntary case under Title III, 

after which the Oversight Board continues to serve as the “representative of 

the debtor” and submits or modifies any plans of adjustment for the debtor. 

See 48 U.S.C. § 2175.

Title III also has its own provisions with respect to jurisdiction and 

venue. First, Title III provides district courts with “original and exclusive 

jurisdiction of all cases under [Title III],” and “original but not exclusive 

jurisdiction of all civil proceedings arising under [Title III], or arising in or 

related to cases under [Title III].” § 2166(a). Where a covered territorial 

instrumentality is the debtor, venue is proper in the district court for the 

territory in which the instrumentality is located. § 2167(a)(2). However, only 

the designated district court judge may conduct a Title III case, see § 2168, 

so that the district court hearing a Title III case is also referred to as the “Title 

III court” in judicial opinions. 

To confirm a plan of adjustment submitted by an Oversight Board, the 

Title III court must determine if the plan meets the requirements of § 2174(b). 

Among other requirements, the plan must comply with applicable provisions 

of the Bankruptcy Code and with Title III of PROMESA, and the debtor must 

not be “prohibited by law from taking any action necessary to carry out the 

plan.” See § 2174(b). An appeal of the Title III court’s decision is taken “in 

the same manner as appeals in civil proceedings generally are taken to the 

courts of appeals from the district court.” § 2166(e). 

III. The Adjustment of COFINA’s Debts Under Title III 
8

On September 30, 2016, the Oversight Board for Puerto Rico 

designated COFINA as a “covered entity” subject to the requirements of 

PROMESA and eligible to qualify as a debtor under Title III. In re Fin. 

Oversight, 361 F. Supp. 3d at 219. For the Oversight Board to even begin 

formulating a Title III plan, however, there was an important threshold 

question that had to be resolved: whether COFINA or the Commonwealth 

had superior rights to the SUT revenues transferred to the DSTF. Id. at 220.

The answer would determine which entity had possession of funds allegedly 

exceeding $600 million by May 2017 to pay its debts. 

A dispute over the DSTF was set off in the lawsuit that GO 

bondholders filed on July 20, 2016, shortly after the Commonwealth

defaulted on payments to GO bondholders pursuant to Executive Order 30. 

See Lex Claims, LLC v. Garcia-Padilla, 236 F. Supp. 3d 504, 512 (D.P.R. 

2017), rev’d in part, 853 F.3d 549 (1st Cir. 2017) (holding that PROMESA’s 

stay applies to litigation seeking declaratory and injunctive relief). In their 

complaint—amended in November 2016 to include new causes of action 

relating to COFINA—GO bondholders asked the court to declare the default

unlawful and grant injunctive relief, including an order that COFINA transfer 

the SUT revenues it held to the Commonwealth. Id. Specifically, they alleged 

that the Commonwealth’s obligation to pay GO bondholders was a 

“constitutional debt,” and that the Puerto Rican constitution required using 

SUT revenues first to satisfy GO bond obligations, not COFINA bond 

obligations. Id. at 509-510. Because the First Circuit held that PROMESA’s 

automatic stay provision applied, however, the constitutional issue that the 

GO bondholders raised was not resolved by the First Circuit’s decision in 

April 2017.5 See Lex Claims, LLC v. Fin. Oversight & Mgmt. Bd., 853 F.3d

549, 551 (1st Cir. 2017). 

Against this backdrop, the Oversight Board determined that the best 

way to resolve the dispute over the allocation of the DSTF was for it to file 

5 On April 29, 2017, the fate of the DSTF became more uncertain with the 

Puerto Rico Legislative Assembly’s enactment of Act No. 246, which 

allowed COFINA’s SUT revenues to be used to pay Puerto Rico’s general 

debts under certain circumstances. See Compl. ¶ 29; Fiscal Plan Compliance 

Act, Act 26-2017 (Apr. 29, 2017) (“[T]he Executive Branch is hereby 

empowered to use COFINA funds occasionally, only as the last resort, and 

subject to the filing of a sworn certification with the Legislative Assembly.”).

Although unclear on the details, plaintiffs allege that on May 3, 2017, 

“[w]ithin days” of the enactment of Act No. 246, COFINA defaulted on its 

obligations to COFINA bondholders. See Compl. ¶ 29.
9

a Title III petition for both the Commonwealth and COFINA and afford the 

parties “additional time and breathing room to seek to resolve the impasse 

under the supervision of the Title III court.” In re Fin. Oversight, 361 F. 

Supp. 3d at 223. Thus, on May 3, 2017, the Oversight Board issued a 

restructuring certificate and filed a Title III petition on behalf of the 

Commonwealth. Id. at 220. Likewise, on May 5, 2017, the Oversight Board 

issued a restructuring certification and filed a Title III petition on behalf of 

COFINA. Id. The two Title III cases were then combined for procedural 

purposes only. 

Upon the commencement of these cases, the Title III court requested 

that the Oversight Board work with interested creditor parties to formulate a 

procedure for resolving the Commonwealth-COFINA dispute. Id. at 224.

The Title III court approved such a procedure on August 10, 2017, which 

provided for the appointment of agents independent from the Oversight 

Board to litigate, mediate, and/or settle the dispute. Id. Then, on June 7, 2018, 

agents appointed to represent the Commonwealth and COFINA announced 

the terms of an “Agreement in Principle” at the end of arm’s-length 

negotiations. Id. at 225. The central component of the Agreement divided the 

disputed SUT revenues by allocating 53.65% to COFINA and 46.35% to the 

Commonwealth.6 Id. 

In July 2018, the Oversight Board began working on a plan of 

adjustment for COFINA’s debts using the framework of the Agreement. Id.

at 225-26. The Oversight Board first certified the “Title III Plan of 

Adjustment of Puerto Rico Sales Tax Corporation” on October 19, 2018, 

which it then amended three times. Id. at 228-29. After the Oversight Board 

certified the Third Amended Plan (“the Plan”), the Title III court heard 

arguments on all objections to the Plan and confirmed it on February 5, 2019. 

Its upshot was that senior COFINA bondholders would make a 93.01% 

recovery on their bonds while junior COFINA bondholders would make a 

56.41% recovery, or about fifty-five cents on the dollar in new COFINA 

bonds relative to the par value of their original bonds. Id. at 233; see also In 

re Fin. Oversight, 987 F.3d at 179. 

6 Plaintiffs allege in their complaint that they were “not parties [to the 

agreement that resolved the Commonwealth-COFINA dispute]” and that 

they were “unaware of this agreement until it was submitted to the federal 

district court for approval.” Compl. ¶ 30. Nevertheless, they acknowledge

that “some COFINA Bondholders challenged this secret agreement that 

drastically curtailed their bond rights and security for repayment,” and that

the Title III court “rebuffed the COFINA Bondholders’ challenge to this 

agreement.” See id. 
10

The Title III court made the following conclusions of law as it 

confirmed the Plan. First, the Plan fully complied with applicable provisions 

of the Bankruptcy Code, including the provision about creditors voting to 

accept or reject the plan. The court found that “[a]ll classes of creditors 

entitled to vote to accept or reject the Plan have voted to accept the Plan in 

accordance with the requirements set forth . . . .” Id. at 240. Second, the Plan 

fully complied with Title III of PROMESA. Id. at 240. Third, COFINA, the 

debtor, was not prohibited by law from taking any action necessary to carry 

out the plan. Id.

Addressing junior COFINA bondholders’ argument that the Plan and 

Settlement Agreement effected a taking without just compensation in 

violation of the Fifth Amendment, the Title III court applied the three-factor 

test for regulatory takings under Penn Central Transp. Co. v. City of New 

York, 438 U.S. 104 (1978) and rejected the challenge.7 Id. at 244. First, the 

court held that the Plan would not result in the total destruction of the value 

of bondholders’ property. Id. at 244. Second, the court held that the Plan 

would interfere only with “bondholders’ subjective investment 

expectations,” rather than “reasonable expectations”—which must take 

account of the claims in the Commonwealth-COFINA dispute that the Plan 

proposed to resolve. Id. Third, the court held that Plan was a “quintessential 

example” of a “public program adjusting the benefits and burdens of 

economic life to promote the common good.” Id. Moreover, even in the event 

that the Plan resulted in a taking, the court was “satisfied that the value to be 

received by bondholders as a result of the settlement of the CommonwealthCOFINA dispute and under the Plan constitutes just compensation.” Id. As 

the court noted, the alternative to the Plan was “protracted litigation in the 

Adversary Proceeding, which could lead to an all-or-nothing recovery for 

either the Commonwealth or COFINA.” Id. at 246.

7 The test for regulatory takings under Penn Central is “an essentially ad hoc, 

factual” inquiry that looks to the following three factors as having particular 

significance: (1) “[t]he economic impact of the regulation on the claimant”; 

(2) “the extent to which the regulation has interfered with distinct 

investment-backed expectations”; (3) “the character of the governmental 

action.” Penn Central, 438 U.S. at 124. The Court held in Penn Central that 

a taking is more readily found “when the interference with property can be 

characterized as a physical invasion by government than when interference 

arises from some public program adjusting the benefits and burdens of 

economic life to promote the common good.” Id. (internal citation omitted). 
11 

Once confirmed, the Plan was implemented on February 12, 2019,

and an appeal followed. In re Fin. Oversight, 987 F.3d at 180. The First

Circuit affirmed the confirmation of the plan, dismissing the appeal as 

equitably moot. Id. at 177 (“No party sought to stay the Title III court’s order 

approving the Plan, which has been fully implemented for nearly two years 

and given rise to transactions involving billions of dollars and likely tens of 

thousands of individuals.”). 

Plaintiffs filed the present suit as a class action8

 on June 29, 2022, 

naming Jonathan Dinh and Dwight Jereczek as Representative Plaintiffs

whose claims are “typical of the claims of all other members of the COFINA 

Bondholders class as described in this Complaint.” ECF No. 1. They 

amended the complaint twice, first on October 31, 2022, and again on 

November 1, 2022, adding eight named Representative Plaintiffs to the 

original complaint. See ECF No. 8, 9. The descriptions of all Representative 

Plaintiffs are identical; they assert the same takings claim “on behalf of all 

persons and entities that owned [First Subordinated Secured] COFINA bonds 

between June 30, 2016, and February 5, 2019, excluding persons or entities 

that voted for or consented to the alteration of their COFINA bond rights.” 

See Compl. ¶ 8. Plaintiffs allege that “[a]s a direct and intended result of 

Congress’s enactment of [PROMESA], COFINA Bondholders lost a 

significant portion of the principal and interest each COFINA Bondholder 

was entitled to and the fair market value of the pledged revenues, their

security interests and liens on COFINA funds, as well as other compensable 

property rights.” Id. at ¶ 31. 

Defendant filed its motion to dismiss on December 7, 2022. It makes 

four arguments regarding this court’s asserted lack of subject matter 

jurisdiction and five arguments asserting plaintiffs’ failure to state a claim 

upon which relief may be granted. 

DISCUSSION 

I. This Court Has Subject Matter Jurisdiction over Plaintiffs’ 

Takings Claim Under the Tucker Act.

Because subject matter jurisdiction is a “threshold requirement for a 

court’s power to exercise jurisdiction over a case,” Dow Jones & Co., Inc. v. 

Ablaise Ltd., 606 F.3d 1338, 1348 (Fed. Cir. 2010), we first determine 

8 Plaintiffs’ motion to certify the class under RCFC 23(c) was filed on May 

1, 2023. Consideration of the motion was stayed until resolution of the 

pending motion to dismiss. 
12

whether we have subject matter jurisdiction to hear plaintiffs’ takings claim. 

In doing so, we “accept as true all undisputed facts asserted in the plaintiff’s 

complaint and draw all reasonable inferences in favor of the plaintiff.”

Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 

2011).

The subject matter jurisdiction of this court is defined by the Tucker 

Act, which grants jurisdiction to this court to “render judgment upon any 

claim against the United States founded either upon the Constitution, or any 

act of Congress or any regulation of an executive department.” 28 U.S.C. 

§1491(a)(1) (2018). Although the Tucker Act constitutes an unequivocal 

waiver of sovereign immunity, it does not create a substantive right for 

monetary relief against the United States. See United States v. White 

Mountain Apache Tribe, 537 U.S. 465, 472 (2003). Thus, to support this 

court’s subject matter jurisdiction, there must be a separate source of law that 

“can fairly be interpreted as mandating compensation by the Federal 

Government for the damage sustained.” Id. (quoting United States v. Testan, 

424 U.S. 392, 400 (1976)). Where a money-mandating source exists, this 

court has exclusive jurisdiction to award compensation in excess of $10,000, 

because concurrent jurisdiction of district courts under the Little Tucker Act 

is limited to claims “not exceeding $10,000 in amount.” See 28 U.S.C. § 

1346(a)(2).

Here, a money-mandating source undoubtedly exists: the text of the 

Fifth Amendment mandates just compensation when the government takes 

private property for public use. U.S. Const. amend. V (“[N]or shall property 

be taken for public use, without just compensation.”). Notwithstanding the 

presumption of Tucker Act jurisdiction under the Takings Clause, however, 

defendant asserts that this court lacks subject matter jurisdiction over 

plaintiffs’ takings claim for four reasons. We reject all four. 

A. Plaintiffs Allege a Taking Effected by an Act of Congress, 

Which This Court Has Jurisdiction to Hear Under the Tucker 

Act. 

Defendant’s first argument is based on what it takes to be the “true 

nature” of plaintiffs’ takings claim as opposed to what plaintiffs have pleaded

in their complaint. That is, defendant argues that this court lacks jurisdiction 

because “properly framed, the acts that purportedly took plaintiffs’ property 

interests include a series of discretionary decisions by the Oversight Board, 

which the Supreme Court unanimously held does not constitute the United 

States for statutory and constitutional purposes.” Def.’s Reply at 2. 
13

The basic premise behind defendant’s argument is correct: this court 

lacks jurisdiction over claims against a party other than the United States.

United States v. Sherwood, 312 U.S. 584, 588 (1941). Thus, to establish 

jurisdiction, a plaintiff claiming a taking in this court must allege that their 

property was taken by federal action. See Altair Global Credit Opportunities 

Fund (A), LLC v. United States, 151 Fed. Cl. 276, 285 (2020) (Altair II). To 

be sure, defendant does not deny that plaintiffs have made such allegations: 

here, plaintiffs clearly allege a taking by federal legislation. Nor does 

defendant argue that plaintiffs’ allegations are frivolous. Instead, defendant 

objects to the “true nature” of plaintiffs’ claim, arguing that the alleged taking 

is “necessarily predicated” on the actions of a non-federal entity. See Def.’s 

Mot. to Dismiss at 11. Such an argument, however, goes to the merits of 

plaintiffs’ claim rather than our jurisdiction, because it concerns whether 

plaintiffs can actually establish sufficient federal action to create a takings 

liability for the United States. 

Although difficult to maintain at times, the distinction between a 

jurisdictional question and a question on the merits of a claim is not a 

meaningless one. The Federal Circuit has repeatedly held that once the 

plaintiff identifies a money-mandating source to establish Tucker Act 

jurisdiction, whether the plaintiff is entitled to relief under that source is a 

question on the merits of the claim. See Greenlee Cnty., Ariz. v. United 

States, 487 F.3d 871, 876 (Fed. Cir. 2007); Doe v. United States, 463 F.3d 

1314, 1325 (Fed. Cir. 2006). There is, in short, “no further jurisdictional 

requirement that the court determine whether the additional allegations of the 

complaint state a nonfrivolous claim on the merits.” See Jan’s Helicopter 

Serv., Inc. v. Fed. Aviation Admin., 525 F.3d 1299, 1309 (Fed. Cir. 2008).

Thus, whether a particular government action is sufficient to create a takings 

liability is a question that we address when we evaluate a motion to dismiss 

for failure to state a claim. See Del-Rio Drilling Programs, Inc. v. United 

States, 146 F.3d 1358, 1362 (Fed. Cir. 1998). 

Because plaintiffs’ complaint unambiguously alleges that federal 

action took their property without just compensation, we have subject matter 

jurisdiction under the Tucker Act. See Altair II, 151 Fed. Cl. at 288 (assuming

jurisdiction over claims alleging that Congress’s enactment of PROMESA

effected a taking). 

B. PROMESA Does Not Displace This Court’s Tucker Act

Jurisdiction over Plaintiffs’ Takings Claim. 

Defendant also argues that this court lacks subject matter jurisdiction 

because PROMESA mandates that this action be brought in the district court 
14

for the District of Puerto Rico:

Except as provided in . . . title III (relating to adjustments of debts), 

any action against the Oversight Board, and any action otherwise 

arising out of this Act, in whole or in part, shall be brought in a United 

States district court for the covered territory. . . . 48 U.S.C. § 2126(a).

Defendant asserts as a threshold matter that this action “‘arises out of’ 

PROMESA, if not ‘in whole’ then certainly at least ‘in part,’ because 

[plaintiffs’] takings claim is explicitly based on Congress’s enactment of 

PROMESA.” Def.’s Mot. to Dismiss at 14. Defendant then argues that the 

broad and mandatory language of § 2126(a)—as seen in the use of “any” and 

“shall”—is sufficient indication of Congress’s intent to displace Tucker Act 

jurisdiction over plaintiffs’ takings claim. It maintains that “[i]f a statute is 

clear enough in making another forum exclusive, it does not need to 

‘mention’ the Tucker Act by name, refer to the Fifth Amendment or 

constitutional claims, nor does it need to use any other magic words to 

exclude this Court from its application.” Def.’s Reply at 5. 

Assuming for now that plaintiffs’ takings claim arises out of 

PROMESA, in whole or in part, we do not find in PROMESA the kind of

clear congressional intent required to displace this court’s jurisdiction under 

the Tucker Act. Although Congress has the power to withdraw Tucker Act 

jurisdiction, including jurisdiction over takings claims, see Horne v. Dep’t of 

Agric., 569 U.S. 513, 527 (2013), a withdrawal of Tucker Act jurisdiction by 

implication is disfavored. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1017 

(1984). Thus, Tucker Act jurisdiction is not displaced unless another 

remedial scheme reflects Congress’s “unambiguous intention to withdraw 

the Tucker Act remedy” otherwise available to the plaintiff. See Acceptance 

Ins. Cos. Inc. v. United States, 503 F.3d 1328, 1336 (Fed. Cir. 2007). In 

undertaking this analysis, courts must examine “the purpose of the [statute 

alleged to displace the Tucker Act], the entirety of its text, and the structure 

of review that it establishes.” Horne, 569 U.S. at 527. 

Examining the entirety of PROMESA shows, first of all, that 

requiring plaintiffs to bring their takings claim in district court amounts to 

limiting the remedies they may seek. Because PROMESA does not itself 

waive sovereign immunity,9 a plaintiff suing the United States for monetary 

9 There is no provision of PROMESA that may be read as an unequivocal 

waiver of sovereign immunity. Remedies contemplated under § 2126 do not 

include relief sought against the United States: 
15

relief must look to either the Tucker Act or the Little Tucker Act for a waiver 

of sovereign immunity. The Little Tucker Act, however, allows the district 

court to award only up to $10,000 of monetary relief—which is less than the 

amount plaintiffs seek in this action. Thus, were plaintiffs to sue in district 

court, the district court would lack jurisdiction to grant the monetary relief 

that they seek. Defendant did not assert otherwise at oral argument, merely 

pointing to forms of equitable relief which the district court could have

granted had the plaintiffs brought their takings claim there earlier, such as 

declaring the enactment of PROMESA unconstitutional under the 

Declaratory Judgment Act or refusing to confirm the Plan. See Oral Arg. at 

7:00 to 9:50. 

Equitable relief, however, cannot replace monetary relief in takings

suits. As the Supreme Court has repeatedly held, equitable relief is “generally 

unavailable” for takings claims because “[a]s long as an adequate provision 

for obtaining just compensation exists, there is no basis to enjoin the 

government’s action effecting a taking.” See Knick v. Township of Scott, Pa., 

139 S. Ct. 2162, 2176 (2019); E. Enters. v. Apfel, 524 U.S. 498, 521 (1998) 

(“[T]he Declaratory Judgment Act allows individuals threatened with a 

taking to seek declaration of the constitutionality of the disputed government 

action before potentially uncompensable damages are sustained.”) (internal 

citation and quotation marks omitted) (emphasis added). Indeed, except 

where government action “fails to meet the ‘public use’ requirement” or “is 

so arbitrary as to violate due process,” the Takings Clause does not actually 

prohibit government interference with private property. See Lingle v. 

Chevron U.S.A., Inc., 544 U.S. 528, 543 (2005). The Takings Clause is 

“designed not to limit the governmental interference with property rights per 

se, but to secure compensation in the event of otherwise proper interference 

amounting to a taking.” Id. at 537 (internal citation and quotation marks 

omitted).

In the light of these principles, it is clear that monetary relief is the 

sole remedy that plaintiffs could in fact seek for the alleged taking. First,

plaintiffs lack a basis for injunctive or declaratory relief because they do not 

allege that PROMESA fails to meet the public use requirement or is so 

arbitrary as to violate due process. See Compl. ¶ 35 (acknowledging that 

Except with respect to any orders entered to remedy constitutional 

violations, no order of any court granting declaratory or injunctive 

relief against the Oversight Board, including relief permitting or 

requiring the obligation, borrowing, or expenditure of funds, shall 

take effect during the pendency of the action before such 

court . . . . §2126(c).
16

PROMESA was enacted for the “public purpose of ameliorating Puerto 

Rico’s financial crisis”). Moreover, the case that defendant cites as an 

example of the Title III court’s refusal to confirm a plan for violation of the 

Fifth Amendment is inapposite: there, “no one dispute[d] that [Puerto Rico] 

engaged in prepetition takings of some property.” In re Fin. Oversight & 

Mgmt. Bd., 41 F.4th 29, 43 (1st Cir. 2022). The debtor thus had an existing

obligation to pay just compensation and the question before the Title III court 

was whether the Fifth Amendment permitted the impairment of that 

obligation through bankruptcy. See id. at 46. Defendant does not cite, and we 

have not found, a case in which the Title III court refused to confirm a plan 

because the plan itself would effect an uncompensated taking.

Given the inadequacy of remedies available in district court for 

plaintiffs’ takings claim, we do not find in PROMESA unambiguous

congressional intent to displace this court’s Tucker Act jurisdiction. Indeed, 

this case is unlike those cases in which Tucker Act jurisdiction was displaced 

by a “specific and comprehensive scheme for administrative and judicial 

review” of the plaintiff’s takings claim. See Alpine PCS, Inc. v. United States, 

878 F.3d, 1086, 1092 (Fed. Cir. 2018). In such cases, two conditions were 

met: first, the alleged taking resulted from a federal agency’s action; second, 

Congress had created a statutory framework for both administrative and 

judicial review of that agency’s actions. See Alpine PCS, Inc., 878 F.3d at 

1097-98 (explaining how the Communications Act provides for 

administrative and judicial review of challenges to license cancellations, 

including claims that a cancellation effected a taking); Horne, 569 U.S. at 

527 (explaining how the Agricultural Marketing Agreement Act provides for 

administrative and judicial review of objections to marketing orders, 

including claims that a marketing order effected a taking); Vereda, Ltda. v. 

United States, 271 F.3d 1367, 1375 (Fed. Cir. 2001) (explaining how the 

Controlled Substance Act provides for administrative and judicial review of 

challenges to forfeitures of property, including claims that a forfeiture 

effected a taking). Neither of those conditions, however, are met here. 

Plaintiffs allege a taking effected by Congress’s enactment of PROMESA

itself, which is not a claim for which PROMESA provides a scheme of 

administrative and judicial review.10

10 Defendant’s reliance on Hinck v. United States, 550 US. 501 (2007) is also

misplaced because Hinck did not involve Tucker Act jurisdiction over 

takings claims. Instead, Hinck addressed whether 28 U.S.C. § 6404(h)(1) 

vests exclusive jurisdiction in the Tax Court to review § 6404(e)(1) 

determinations despite statutes granting jurisdiction to the district courts and 

the Court of Federal Claims to review tax refund actions. See Hinck, 550 U.S. 

at 507. And in answering that question in the affirmative, the Court relied not 
17

Because PROMESA does not reflect Congress’s unambiguous intent 

to displace Tucker Act jurisdiction, we retain jurisdiction over plaintiffs’ 

takings claim.

C. Exercising Jurisdiction over Plaintiffs’ Takings Claim Would 

Not Require Improper Review of the Title III Court’s 

Decision.

Next, defendant argues that even if PROMESA does not displace the 

Tucker Act, this court still lacks jurisdiction because “considering the merits 

of [plaintiffs’] claim would require this Court to review and find error in the 

decisions of the Title III court in adjudicating COFINA’s restructuring.” 

Def.’s Mot. to Dismiss at 18. Specifically, defendant points out that the Title 

III court already considered and “rejected claims from junior COFINA 

bondholders that the confirmation plan arising from PROMESA effected a 

Fifth Amendment taking of the bondholders’ liens on the SUT revenues.” Id. 

at 19.

As is well established, this court “has no jurisdiction to review the 

merits of a decision rendered by a federal district court.” Shinnecock Indian 

Nation v. United States, 782 F.3d 1345, 1352 (Fed. Cir. 2015); see also

Allustiarte v. United States, 256 F.3d 1349, 1352 (Fed. Cir. 2001) (holding 

that the Court of Federal Claims lacks jurisdiction to review the decision of 

bankruptcy courts). We thus lack jurisdiction to hear claims which amount 

to a collateral attack on the judgment of the district court, such as a claim in 

which the plaintiff alleges that the district court effected a taking by improper 

application of the law. See Shinnecock Indian Nation, 782 F.3d at 1353. 

But plaintiffs’ takings claim is not a collateral attack on the decision 

of the Title III court. According to plaintiffs, the confirmation of the Plan 

“simply describes part of the process that resulted in the taking of COFINA 

Bondholders’ property,” a process to which plaintiffs attribute no legal error. 

See Pls.’ Resp. at 11. Indeed, we have jurisdiction over plaintiffs’ takings 

claim because it does not require us to scrutinize the Title III court’s 

reasoning or result—the merits of plaintiffs’ claim do not depend on whether 

only on the principle that a “precisely drawn, detailed statute pre-empts more 

general remedies,” but also on the principle that “when Congress enacts a 

specific remedy when no remedy was previously recognized . . . the remedy 

provided is generally regarded as exclusive.” See id. at 506. The latter 

principle does not apply here because PROMESA did not create a previously 

unrecognized remedy for takings in violation of the Fifth Amendment. 
18

the Title III court properly confirmed the Plan. See Boise Cascade Corp. v.

United States, 296 F.3d 1339, 1345 (Fed. Cir. 2002) (holding that the Court 

of Federal Claims had jurisdiction over the plaintiffs’ takings claim because 

the claim was “not based on the propriety of the district court’s decision”).

Plaintiffs could succeed on the merits even if the Title III court’s decision 

was proper, because the theory of liability behind their takings claim is an 

attack on Congress’s enactment of PROMESA for authorizing the Title III 

process in the first place.

Moreover, the takings claim that the Title III court rejected is not the 

same takings claim plaintiffs bring here. That is, the Title III court only 

considered whether the Plan and Settlement Agreement submitted by the 

Oversight Board would take COFINA bondholders’ property without just 

compensation. See In re. Fin. Oversight, 361 F. Supp. 3d at 244 (“[T]he 

character of the governmental action strongly supports the Court’s 

conclusion that the Plan and Settlement Agreement do not result in an 

unconstitutional taking.”); id. at 245 (“The objections to the Plan and 

Settlement Agreement based upon the Takings Clause of the United States 

Constitution are therefore overruled.”). The Title III court did not address 

whether the United States could be held liable for a taking based specifically 

on Congress’s enactment of PROMESA. 

Because plaintiffs’ takings claim is not an improper collateral attack

on the decision of the Title III court, we retain jurisdiction over their claim. 

D. This Court Has Jurisdiction over the Claims of Plaintiffs 

Added in the Amended Complaints. 

Defendant’s final argument is that we lack jurisdiction over the claims 

of plaintiffs added in the amended complaints, because the amendments were 

filed outside of the six-year statute of limitations for this court. See 28 U.S.C. 

§ 2501 (“Every claim of which the United States Court of Federal claims has 

jurisdiction shall be barred unless the petition thereon is filed within six years 

after such claim first accrues.”). In making this argument, defendant 

asserts—based on the allegations of the complaint—that the underlying 

takings claim accrued on June 30, 2016, when PROMESA was enacted.

11 It 

11 Plaintiffs did not challenge this assumption about claim accrual in their 

response to defendant’s motion, even though they acknowledged at oral 

argument that their claim would not have been ripe in 2016. Notwithstanding 

the imprecision in plaintiffs’ takings claim, we take their allegations at face 

value for purposes of ruling on defendant’s jurisdictional arguments. 

Because plaintiffs allege that Congress’s enactment of PROMESA took their 
19

apparently concedes that the originally named plaintiffs filed timely claims, 

whereas the amended complaints untimely added the claims of eight other

plaintiffs. 

Defendant argues that we lack jurisdiction over the claims of untimely 

added plaintiffs because § 2501 may not be equitably tolled by the filing of 

a class action complaint. We need not address the availability of equitable 

tolling, however, because tolling is not the only way to add plaintiffs who 

might otherwise be barred by § 2501. RCFC 15(c)(1)(B) provides another 

avenue: the rule allows complaints to be amended outside the statute of 

limitations so long as the amendment “relates back” to the original pleading. 

See Big Oak Farms, Inc. v. United States, 141 Fed. Cl. 482, 489 (2019)

(identifying RCFC 15(c)(1)(B) and class action tolling as two different 

avenues for adding plaintiffs outside the statute of limitations); Barron 

Bancshares, Inc. v. United States, 366 F.3d 1360, 1370 (Fed. Cir. 2004) 

(holding that RCFC 15(c) “overcome[s]” jurisdictional challenges based on 

§ 2501). To determine whether the addition of plaintiffs sufficiently “relates 

back” under RCFC 15(c)(1)(B), this court weighs whether: “(1) the claim 

arose out of the ‘same conduct, transaction, or occurrence’ as the original 

complaint; (2) the new plaintiff shares an ‘identity of interest’ with the 

original complaint; (3) the defendant had ‘fair notice’ of the new plaintiff’s 

claim; and (4) the addition of the new plaintiff causes the defendant 

prejudice.” See Big Oak Farms, 141 Fed. Cl. at 489. 

All four of these factors weigh in favor of finding that the addition of 

plaintiffs “relates back” to the original complaint. The additional plaintiffs 

allege, just like the original plaintiffs, that they are owners of a substantial 

quantity of First Subordinated Secured COFINA bonds and that their 

property interests as bondholders were taken without just compensation as 

the direct and intended result of Congress’s enactment of COFINA. See

Compl. ¶ 1-8. Moreover, whether the additional plaintiffs can establish a 

claim does not depend on factual circumstances unique to each plaintiff; 

whatever effect the enactment of PROMESA may have had on the value of 

COFINA bonds and the junior COFINA bondholders’ rate of recovery, the 

impact would have been the same. See Big Oak Farms, 141 Fed. Cl. at 490-

91 (finding no “identity of interest” or “fair notice” to the defendant because 

“the duration and severity of the flooding must be assessed on a case by case 

basis along with the character of the land at issue” for each plaintiff to 

establish a takings claim). Nor does the addition of eight plaintiffs cause 

property without just compensation, we construe June 30, 2016 to be the date 

of taking, which makes claims filed after July 1, 2022 untimely in the absence 

of tolling or RCFC 15(c)(1)(B). 
20

undue prejudice to defendant by significantly expanding discovery or 

unreasonably broadening the issues. See id. at 491 (“Increasing the number 

of plaintiffs by over 100 creates a clear litigation burden particularly given 

the years that have passed and the proof required to prove impacts to property 

more than seven years after the flooding in 2011.”). 

Because RCFC 15(c)(1)(B) allows the amendments that were made, 

we find that we have jurisdiction over the claims of all plaintiffs currently 

named in the second amended complaint. Having found no impediment to 

our jurisdiction over this action, we next address whether plaintiffs state a 

claim upon which relief could be granted. 

II. Plaintiffs Fail to State a Claim Under RCFC 12(b)(6). 

The court may grant a motion to dismiss for failure to state a claim 

when “a complaint does not allege facts that show the plaintiff is entitled to 

the legal remedy sought.” Steffen v. United States, 995 F.3d 1377, 1379 (Fed. 

Cir. 2021). Although the court is required to accept as true all factual 

allegations pleaded when ruling on a RCFC 12(b)(6) motion, the complaint 

must contain “enough facts to state a claim to relief that is plausible on its 

face” to survive dismissal. Frankel v. United States, 842 F.3d 1246, 1249 

(Fed. Cir. 2016) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 

(2007)). A claim is plausible on its face “when the plaintiff pleads factual 

content that allows the court to draw the reasonable inference that the 

defendant is liable for the misconduct alleged.” Id. (quoting Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009). Mere “labels and conclusions” or “a formulaic 

recitation of the elements of a cause of action” are not sufficient. Twombly, 

550 U.S. at 555. 

Defendant makes five arguments in support of its motion to dismiss 

under RCFC 12(b)(6): (1) plaintiffs do not plausibly allege cognizable 

property interests; (2) even if plaintiffs allege cognizable property interests, 

collateral estoppel bars the claim that such interests were taken; (3) there is 

no government action sufficient to establish a taking because Congress did 

not command or coerce the Oversight Board to restructure COFINA’s debts; 

(4) plaintiffs allege a mere frustration of contract rights by the government,

which is insufficient to constitute a taking; (5) plaintiffs fail to state a 

cognizable regulatory takings claim under Penn Central. As explained 

below, we reject the first two arguments but agree with defendant’s third 

argument that Congress’s enactment of PROMESA is not a sufficient basis 

to support a takings claim. Having concluded that plaintiffs fail to state a 

claim upon which relief could be granted, we do not find it necessary to 

decide defendant’s remaining two arguments. 
21

A. Plaintiffs’ Allegations Regarding Their Property Interests Do 

Not Warrant Dismissal. 

When adjudicating a takings claim, the court must first determine 

whether the plaintiff has established a property interest cognizable under the 

Fifth Amendment. Huntleigh USA Corp. v. United States, 525 F.3d 1370, 

1377 (Fed. Cir. 2008). It is only after identifying a valid property interest that 

the court must determine “whether the government action at issue amounted 

to a compensable taking of that property interest.” Id. at 1378 (quoting Am. 

Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363, 1372 (Fed. Cir. 

2004)). 

The Fifth Amendment protects tangible property, such as real and 

personal property, as well as intangible property, such as contractual rights 

and rights to enforce a lien. Id. at 1377-78 (holding that the contract rights 

the plaintiff alleged were valid property interests under the Fifth 

Amendment); Armstrong v. United States, 364 U.S. 40, 44 (1960) (holding 

that the petitioners’ rights to enforce their asserted liens were compensable 

property interests under the Fifth Amendment). Because the Fifth 

Amendment does not itself create a property interest, however, “the existence 

of a property interest is determined by reference to existing rules or 

understandings stemming from an independent source such as state law.” 

Phillips v. Wash. Legal Found., 524 U.S. 156, 164 (1998) (citing Bd. of 

Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972)). When the asserted 

property interest arose is also critical, because “only persons with a valid 

property interest at the time of the taking are entitled to compensation.” 

Reoforce, Inc. v. United States, 853 F.3d 1249, 1263 (Fed. Cir.2017) (quoting 

Wyatt v. United States, 271 F.3d 1090, 1096 (Fed. Cir. 2001)); see also A&D 

Auto Sales, Inc. v. United States, 748 F.3d 1142, 1153 (Fed. Cir. 2014)

(holding that plaintiffs had valid and compensable property interests because 

“[t]he challenged government action did not predate the acquisition of the 

plaintiffs’ interests”). 

Plaintiffs allege in their complaint that they were “at all material times 

the owners of a substantial quantity of COFINA bonds,” from which two 

types of cognizable property interests arise: first, a contractual right to 

repayment of principal and interest on the bonds, and second, a lien on the 

DSTF and all COFINA revenues that could be enforced in the event of a 

default on that repayment.12 See Compl. ¶ 1-7. And as they clarify in their 

12 A valid security interest would be limited to a lien on SUT revenues 

already collected at the time of the alleged taking, because Puerto Rico law 
22

response to defendant’s motion, the reference to “material times” means the

date range from June 30, 2016, to February 5, 2019. See Pls.’ Resp. at 17. 

Defendant argues, however, that plaintiffs fail to plausibly allege cognizable 

property interests because their complaint contains no more than a 

“boilerplate allegation” later supplemented with attorney argument. See

Def.’s Reply at 12. 

Although we agree that the complaint lacks specific factual 

allegations regarding each plaintiff’s ownership of COFINA bonds, a right 

to repayment on the bonds as well as a lien on revenues are valid property 

interests, and there is no reason to believe that plaintiffs could not supply 

particularized allegations about when they acquired the bonds. See Steffen, 

995 F.3d at 1380 (finding that granting leave to amend the complaint would 

be futile because the plaintiffs could not establish one of the statutory 

requirements as a matter of law). As such, dismissal under RCFC 12(b)(6) is 

not the appropriate remedy for plaintiffs’ failure to include specific 

allegations establishing their bond ownership. See A&D Auto Sales, 748 F.3d 

at 1158-59 (“The plaintiffs have failed to properly allege economic loss, but 

at oral argument in this court they . . . made clear that they intended to 

establish loss of value. In this situation the appropriate remedy is to grant 

leave to amend to include specific allegations establishing loss of value.”). 

Indeed, defendant’s argument is belied by its next assertion, in which it 

contends that the Title III court already resolved the claim that plaintiffs’ 

property interests (presumably not illusory) were taken. 

B. Collateral Estoppel Does Not Bar Plaintiffs’ Claim. 

Collateral estoppel, or issue preclusion, “bar[s] the revisiting of issues 

that have already been litigated by the same parties or their privies based on 

the same cause of action.” Banner v. United States, 238 F.3d 1348, 1354 

(Fed. Cir. 2001). The four requirements of collateral estoppel are: “(1) the 

issues are identical to those in a prior proceeding, (2) the issues were actually 

litigated, (3) the determination of the issues was necessary to the resulting 

judgment, and (4) the party defending against preclusion had a full and fair 

opportunity to litigate the issues.” Id. As discussed above, however, the 

takings claim that the Title III court addressed is not the same claim that 

plaintiffs present here: the Title III court did not decide whether the United 

States was liable for a taking based on Congress’s enactment of PROMESA. 

does not recognize the mere expectancy of property as a property interest. 

See In re Fin. Oversight, 948 F.3d at 468 n.8 (“Puerto Rico law recognizes 

that the mere expectancy of property is not itself a property interest.”); id. at 

472 (“It is impossible to have a lien on something that does not exist.”). 
23

Accordingly, the issues here are not identical to those in a prior proceeding,

and collateral estoppel does not bar plaintiffs’ claim. 

C. Nevertheless, Regardless of Which Regulatory Takings Test Is 

Applied, Congress’s Enactment of PROMESA Does Not 

Amount to a Taking as a Matter of Law. 

Earlier, we rejected defendant’s argument that we lack jurisdiction 

because plaintiffs’ takings claim is necessarily predicated on the actions of 

the Oversight Board, a territorial entity. We took plaintiffs’ allegations in the 

complaint at face value for purposes of our jurisdictional inquiry and held 

that whether there was sufficient federal action to warrant liability in the 

United States went to the merits of plaintiffs’ claim, not to our jurisdiction. 

We now address that question on the merits. 

Although it is clear that plaintiffs assert a regulatory taking, the parties 

disagree about which type of test applies. Plaintiffs argue for application of 

a per se regulatory takings test; defendant argues that the more nuanced Penn 

Central test applies. The dispute turns out to be immaterial, however.

Irrespective of which test is applied, there is a fatal flaw in plaintiffs’ logic.

The United States has to have been responsible for the taking, yet, as we 

alluded to earlier, plaintiffs cannot complete their claim here without relying 

on what turn out to be the actions of independent actors. Indeed, it became 

clear at oral argument that plaintiffs recognize that nothing was taken from 

them by the mere passage of PROMESA—their property interests were 

impaired only after the Oversight Board, a non-federal entity, took a series 

of actions. Barring unusual circumstances not present here, however, a taking 

involving third parties is insufficient to amount to a compensable regulatory 

taking. See A&D Auto Sales, 748 F.3d at 1153. 

The Federal Circuit held in A&D Auto Sales that although “[t]here is 

no per se rule either precluding or imposing liability when the government 

instigates action by a third party,” there are “two broad principles” to guide 

the analysis. Id. First, “government action directed to a third party does not 

give rise to a taking if its effects on the plaintiff are merely unintended or 

collateral.” Id. Second, even if the effects on the plaintiff are direct and 

intended, takings liability is limited to circumstances in which “the third 

party is acting as the government’s agent or the government’s influence over 

the third party was coercive rather than merely persuasive.” See id. at 1154. 

Thus, to be entitled to just compensation, plaintiffs would need to 

show that: (1) Congress enacted PROMESA with the intent to restructure 

COFINA’s debts and take plaintiffs’ property interests as COFINA 
24

bondholders; and (2) either the Oversight Board acted as an agent of the 

United States in filing a Title III petition for COFINA or the United States 

coerced the Oversight Board to do so. Yet, even if we assumed that Congress

intended the restructuring of COFINA’s debts—despite the fact that 

PROMESA does not once mention COFINA—plaintiffs could not get past 

the second hurdle. They in fact make no attempt to do so, alleging neither an 

agency relationship nor coercion. See Oral Arg. at 48:44 to 49:04 (“There 

wasn’t coercion. We’re not arguing that. What we are saying is there was 

only one reason why Congress passed PROMESA. And that was to get at the 

funds held by COFINA and a handful of other entities that had also issued 

bonds.”).

Indeed, it is clear that plaintiffs could not establish either an agency 

relationship or coercion in this case as a matter of law. Whereas “[a]n agency 

relationship may exist where the third party is hired or granted legal authority 

to carry out the government’s business,” A&D Auto Sales, 748 F.3d at 1154,

the Supreme Court has held that the Oversight Board is a territorial entity 

that “acts not on behalf of the United States, but on behalf of, and in the 

interests of, Puerto Rico” in a Title III proceeding. Fin. Oversight & Mgmt. 

Bd. for P.R. v. Aurelius Inv., LLC, 140 S. Ct. 1649, 1662 (2020). As such, the 

Oversight Board could not have acted as an agent of the United States in the 

Title III case for COFINA. See Altair II, 151 Fed. Cl. at 287 (“The acts of 

the [Oversight] Board are not attributable, directly or indirectly, to the United 

States in a manner needed to sustain liability under the fifth amendment for 

an alleged taking.”). Similarly, no reading of the language of PROMESA 

could support a finding that the United States required the Oversight Board 

to initiate Title III proceedings on behalf of COFINA. To the contrary, 

PROMESA expressly provided for the Oversight Board to act in its “sole 

discretion” at each of the step that was necessary for the restructuring of 

COFINA’s debts. 

Although plaintiffs cite a number of cases where mere “authorization” 

by the federal government was sufficient to constitute a taking, those cases 

are not apposite. See, e.g., Cedar Point Nursery v. Hassid, 141 S. Ct. 2063 

(2021); Preseault v. United States, 100 F.3d 1525 (Fed. Cir. 1996); Hendler 

v. United States, 952 F.2d 1364 (Fed. Cir. 1991). Whereas each of those cases 

involved authorization of physical takings, plaintiffs here do not and could 

not allege a physical appropriation of property. Such factual predicates, 

however, matter. Under the Supreme Court’s takings jurisprudence, the 

difference between physical and non-physical takings is significant enough 

that it is “inappropriate to treat cases involving physical takings as 

controlling precedents for the evaluation of a claim that there has been a 

‘regulatory taking,’ and vice versa.” See Tahoe-Sierra Pres. Council, Inc. v. 
25 

Tahoe Reg’l Plan. Agency, 535 U.S. 302, 323 (2002). Plaintiffs do not cite, 

and we have not found, any case in which mere authorization was sufficient 

to constitute a compensable taking when property was not physically 

appropriated. 

Because the mere enactment of PROMESA had no impact on 

plaintiffs’ property interests, plaintiffs cannot receive just compensation 

without showing that the Oversight Board acted either as an agent of the 

United States or under coercion of the United States. Plaintiffs, however, 

cannot show either. Accordingly, Congress’s enactment of PROMESA is not 

sufficient federal government action to constitute a taking. We therefore 

dismiss plaintiffs’ claim for failure to state a claim upon which relief can be 

granted. 

CONCLUSION 

For the foregoing reasons, defendant’s motion for dismissal under 

RCFC 12(b)(6) is GRANTED. The Clerk is directed to enter judgment 

accordingly. No costs. 

s/Eric G. Bruggink 

ERIC G. BRUGGINK 

Senior Judge