United States Court of Appeals 

For the First Circuit 

No. 18-2194 

IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO 

RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE 

FINANCIAL 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); THE FINANCIAL OVERSIGHT AND MANAGEMENT 

BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO 

SALES TAX FINANCING CORPORATION, a/k/a Cofina; THE FINANCIAL 

OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE FOR THE EMPLOYEES RETIREMENT SYSTEM OF THE 

GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO, 

Debtors, 

AUTONOMOUS MUNICIPALITY OF PONCE (AMP), 

Movant, Appellant, 

v. 

THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE 

FINANCIAL 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, Appellees, 

THE PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY, 

Movant, Appellee. 
APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

[Hon. Laura Taylor Swain,* U.S. District Judge] 

Before 

Lynch, Lipez, and Thompson, 

Circuit Judges. 

Carlos Fernandez-Nadal for appellant Autonomous Municipality 

of Ponce (AMP). 

 John E. Roberts, with whom Timothy W. Mungovan, Martin J. 

Bienenstock, Steven L. Ratner, Jeffrey W. Levitan, Mark D. Harris, 

and Proskauer Rose LLP were on brief for the Financial Oversight 

and Management Board for Puerto Rico, as Representative for the 

Commonwealth of Puerto Rico; the Financial 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). 

September 25, 2019 

 * Of the Southern District of New York, sitting by 

designation. 
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LYNCH, Circuit Judge. This appeal primarily concerns 

whether the Title III court abused its discretion in refusing to 

lift the automatic stay in PROMESA, 48 U.S.C. § 2161(a) 

(incorporating 11 U.S.C. § 362), to allow the Municipality of Ponce 

to secure specific performance by the Commonwealth of Puerto Rico 

of public works projects required under a Puerto Rico Commonwealth 

court judgment. The Title III court plainly did not abuse its 

discretion. In essence, Ponce seeks priority over the claims of 

other communities and creditors of the Commonwealth. Ponce has 

not shown cause why its claim warrants this priority. We affirm. 

I. 

We describe the relevant statutory context, the events 

surrounding Ponce's prepetition judgment, and facts of the instant 

case. 

A. PROMESA's Automatic Stay 

The Puerto Rico Oversight, Management, and Economic 

Stability Act ("PROMESA"), 48 U.S.C. §§ 2101–2241, created the 

Financial Oversight and Management Board ("FOMB") and, under its 

Title III, empowered the Board to restructure the debt of the 

Commonwealth of Puerto Rico through "quasi-bankruptcy 

proceedings." Assured Guaranty Corp. v. Fin. Oversight Mgmt. Bd. 

for P.R., 872 F.3d 57, 59 (1st Cir. 2017). PROMESA automatically 

stays any action to recover on a prepetition claim or "the 

enforcement, against the debtor or against property of the estate, 
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of a judgment obtained before the commencement of the [Title III 

case]." 48 U.S.C. § 2161(a) (incorporating 11 U.S.C. § 362(a)(1), 

(2)). PROMESA defines a "claim" in several ways, including as a 

"right to payment" and separately as a "right to an equitable 

remedy for breach of performance if such breach gives rise to a 

right to payment." Id. (incorporating 11 U.S.C. § 101(5)). 

B. Ponce's Prepetition Judgment It Now Seeks To Enforce 

On October 28, 1992, Ponce, the Commonwealth, the Puerto 

Rico Electric Power Authority ("PREPA"), and the Puerto Rico 

Highways and Transportation Authority ("PRHTA") agreed to develop 

municipal projects in Ponce. These projects included installing 

sewer and transmission lines, building various medical, police, 

and educational facilities, modernizing local housing, and 

improving several highways. Within a year, the Commonwealth, 

PREPA, and PRHTA ("the debtors") withdrew from the agreement. In 

response, Ponce brought suit in Commonwealth court on October 28, 

1993. The suit resulted in a June 24, 1996 judgment that required 

the debtors to fulfill their commitments under the original 

agreement and deferred determining monetary damages until after 

they completed the municipal projects. The Commonwealth court 

also appointed a monitor to supervise and audit the projects' 

progress. In December 2004, Ponce and the debtors settled the 

issue of damages for $34 million, of which a significant portion 
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remains unpaid. That portion is not at issue: The parties agree 

the stay applies to it.

On May 3, 2017, the Commonwealth filed a petition for 

debt adjustment relief under Title III of PROMESA.1 PRHTA and 

PREPA filed similar Title III petitions on May 21 and July 3, 2017, 

respectively. Filing these petitions initiated the automatic stay 

at issue here, see 11 U.S.C. § 362(a), and transferred exclusive 

jurisdiction over the debtors' property to the Title III court, 

see 48 U.S.C. § 2166(b).

The parties agree that most of the projects required by 

the 1992 Agreement have been completed and this case concerns a 

subset of uncompleted projects. As of September 2019, the two 

highway projects required by the judgment and funded by the Federal 

Highway Administration's Puerto Rico Highway Program, 23 U.S.C. 

§ 165(b), continued to progress, as they did not involve use of 

the debtors' property. Due to the stay however, the courtappointed monitor, who is paid out of the debtors' property, is 

not auditing these projects. So the projects are proceeding and 

Ponce is complaining only that its monitor is not monitoring the 

progress on these two projects.2 Ponce conceded that funding the 

 1 We note that the Title III court's order denying relief 

from the stay states that the Commonwealth filed for debt 

adjustment relief on May 9, 2017, but the correct date is May 3, 

2017. See Title III Petition, In re Commonwealth of P.R., 

Bankruptcy Case No. 17-BK-3283 (LTS) (D.P.R. May 3, 2017). 

2 This monitoring by the master would be in addition to 
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monitor for the two highway projects would cost the PRHTA between 

$90,000 and $150,000 per year.

As to another project, Ponce alleges PREPA could 

complete an outstanding project to replace overhead electrical 

lines with underground alternatives for only $700,000. PREPA has 

stated that its "resources are both extremely limited and fully 

committed to the restoration and repairs of its electric system." 

It further stated that its efforts focus on preparing the 

Commonwealth "for the uncertainty for another hurricane season."3 

Other outstanding projects covered by Ponce's request to 

lift the stay include channeling the Río Matilde in Ponce and 

rehabilitating a lighthouse -- a project which does not affect the 

safety of the surrounding navigable waters. 

 

federal oversight of highway funds. See 23 U.S.C. § 106(g) 

(requiring the Secretary of Transportation to establish oversight 

programs to monitor the use federal highway funds); 23 C.F.R. 

§ 1.36 (authorizing the Federal Highway Administrator to withhold 

federal funds, withhold project approval, or take other action if 

the recipient fails to comply with federal laws or Department of 

Transportation regulations). 

3 Over the past ten years, PREPA has faced issues stemming 

from a declining population, economic downturn, multiple 

hurricanes devastating its already underperforming electrical 

system, and, as of May 2017, $9.25 billion in unsustainable debt 

obligations ($4.5 billion of which PREPA must service over the 

next five years). Puerto Rico Electric Power Authority, 2019 

Fiscal Plan for the Puerto Rico Electric Power Authority 5, 103 

(2019). 
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C. Procedural History of Ponce's Motion 

On May 4, 2018, Ponce moved for relief from the automatic 

stay to compel the debtors to complete the municipal projects and 

to allow the Commonwealth court to assess their compliance with 

its judgment. Ponce argued that continuing the projects would not 

entail further litigation, and so it would not interfere with the 

Title III cases. Ponce also argued that the projects were close 

to completion and the litigants could complete them under the 

monitor's supervision, without significantly siphoning off time or 

resources from the Title III cases. 

The Commonwealth objected to this motion on July 5, 2018. 

The Puerto Rico Fiscal Agency and Financial Authority ("AAFAF") 

then filed joinders to the objection for PREPA and PRHTA on July 

5 and July 20, 2018, respectively. 

On August 3, 2018, Ponce moved for an evidentiary hearing 

to support its motion to lift the stay, which the debtors opposed. 

The parties submitted an October 4, 2018 joint report detailing 

their disputed and undisputed facts: Ponce asserted that 

completing the projects would cost only certain sums; the debtors 

said the figures were much higher. The details of the dispute are 

immaterial to our resolution given the Title III court's 

acceptance, arguendo, of Ponce's sums. On November 2, 2018, the 

Title III court denied Ponce's motions for the hearing and relief 

from the stay. This appeal followed. 
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II. 

 Ponce's first argument -- that the prepetition judgment 

is not a "claim" and so was never subject to the automatic 

stay -- turns on an interpretation of law, which we review de novo. 

Municipality of San Juan v. Puerto Rico, 919 F.3d 565, 576 (1st 

Cir. 2019). By contrast, review of the denial of motions for 

relief from an automatic stay and from the denial of an evidentiary 

hearing is for abuse of discretion. Mitsubishi Motors Corp. v. 

Soler Chrysler-Plymouth, Inc., 814 F.2d 844, 847 (1st Cir. 1987). 

The Title III court treated Ponce's version of alleged facts as 

undisputed and we do as well. 

We first address Ponce's newly raised argument that the 

prepetition judgment is not a "claim" subject to the automatic 

stay. We then turn to whether the Title III court abused its 

discretion both in denying stay relief and in doing so without 

holding an evidentiary hearing. 

A. Applicability of the Automatic Stay 

 Ponce argues that the prepetition judgment for specific 

performance, as an equitable remedy, is not a "claim" subject to 

the automatic stay under § 362 of the Bankruptcy Code. But Ponce 

failed to raise this argument in its motion for relief from the 

stay. And in doing so, Ponce has waived this argument on appeal. 

Alicea v. Machete Music, 744 F.3d 773, 780 (1st Cir. 2014). 
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Because the issue may arise again, we put aside Ponce's waivers4

and also hold that there is no merit to Ponce's argument, even if 

it had been properly raised, for at least two reasons. 

1. Ponce Seeks the Enforcement of a Judgment Obtained 

Before the Title III Case Commenced, Which Is Subject to 

the Automatic Stay 

Under 11 U.S.C. § 362(a)(2), an automatic stay applies 

to "the enforcement, against the debtor or against property of the 

estate, of a judgment obtained before the commencement of the 

[bankruptcy] case." The judgment at issue was obtained before the 

commencement of the Title III case. The plain meaning of § 362 

covers this prepetition Commonwealth court judgment against the 

debtors and their property for specific performance of the 

municipal projects. See Municipality of San Juan, 919 F.3d at 577 

(applying the automatic stay to an injunction and collecting cases 

that do the same). 

2. Even if § 362(a)(2) Does Not Apply, Ponce's Prepetition 

Judgment Is a Claim Subject to the Automatic Stay 

Even if we concluded that § 362(a)(2) does not apply 

here, the prepetition judgment is also a "claim" subject to the 

automatic stay under a different provision, 11 U.S.C. § 362(a)(1). 

A § 362(a)(1) "claim" comprises rights to equitable remedies for 

 4 Ponce also failed to address the issue of an exception 

to waiver in its initial appellate brief and so has waived any 

argument as to exceptions to waivers for that reason. See Pignons 

S.A. de Mecanique v. Polaroid Corp., 701 F.2d 1, 3 (1st Cir. 1983).

 
- 10 - 

breach of performance that "give[] rise to a right of payment," 

11 U.S.C. § 101(5)(B) -- i.e., "if a monetary payment is an 

alternative for the equitable remedy," Rederford v. U.S. Airways, 

Inc., 589 F.3d 30, 36 (1st Cir. 2009). 

The parties agree that Ponce's judgment is an equitable 

remedy and is for breach of performance, but dispute whether it 

"gives rise to a right of payment." Ponce argues that its 

equitable remedy cannot be reduced to a monetary award because, 

even if Ponce recovered the cost of completing the projects, it 

lacks the debtors' expertise and authorization to "wire . . . 

underground power distributions" for a specific project. Ponce 

does not say whether these, or similar, impediments also affect 

the remaining projects. 

Regardless of whether and to what extent Ponce requires 

the debtors' assistance, its argument fails. Ponce assumes that 

monetary damages would only be the amount necessary to complete 

the projects and, without the debtors' assistance, it could not be 

made whole. But if the Commonwealth court could reduce the delay 

in project completion to monetary damages, then the Title III court 

could similarly reduce the projects' further delay or cancellation 

to monetary damages. 

This court, and others, have reduced other equitable 

judgments to money damages, despite the asserted inability of a 

damages remedy to "purchase" the performance of the underlying 
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contract. See Rederford, 589 F.3d at 37 (concluding that 

reinstatement following termination was a "claim," as money 

damages served as an alternate remedy); In re Nickels Midway Pier, 

LLC, 255 F. App'x 633, 637–38 (3d Cir. 2007) (reducing an action 

for specific performance of a contract for real property to money 

damages and classifying it as a "claim"); Vil v. Poteau, No. 11–

cv–11622–DJC, 2013 WL 3878741, at *8–9 (D. Mass. July 26, 2013) 

(classifying as a "claim" an injunction to cease copyright 

infringement); see also In re The Ground Round, Inc., 482 F.3d 15, 

20 (1st Cir. 2007) (dictum) (stating that 11 U.S.C. § 101(5) would 

classify as a claim a specific performance remedy for which money 

damages could substitute -- were the remedy not for the "return of 

specific property"); 2 Collier on Bankruptcy ¶ 101.05 [5] (16th 

ed. 2009) (stating that when a right to payment may satisfy a 

judgment for specific performance, the judgment is a "claim"). We 

add that the fact that the costs of compliance with the prepetition 

judgment may be difficult to estimate does not prevent the 

enforcement action from being a "claim." See Woburn Assocs. v. 

Kahn (In re Hemingway Transp., Inc.), 954 F.2d 1, 8 (1st Cir. 1992) 

(holding a "contingent, unliquidated, and unmatured" right to 

indemnification to be a "claim"). We conclude that the right to 

equitable remedies here gives rise to money damages under the 

meaning of § 362(a)(1). Independently, the stay applies for that 

reason. 
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B. Denial of Relief from the Automatic Stay 

 The Title III court properly looked to the Sonnax factors 

outlined by the Second Circuit as a helpful guide to granting or 

denying relief from a stay. See In re Fin. Oversight & Mgmt. Bd. 

for P.R., 899 F.3d 13, 23 (1st Cir. 2018) (citing Sonnax Indus. v. 

Tri Component Prods. Corp. (In re Sonnax Indus.), 907 F.2d 1280, 

1286 (2d Cir. 1990)). Of Sonnax's relevant factors under PROMESA,5

the Title III court analyzed the following factors, and found them 

to favor maintaining the stay: (1) "whether relief would result in 

a partial or complete resolution of the issues"; (2) "lack of any 

connection with or interference with the bankruptcy case"; (3) 

"whether litigation in another forum would prejudice the other 

creditors"; (4) "the interests of judicial economy and the 

expeditious and economical resolution of litigation"; and (5) the 

"impact of the stay on the parties and the balance of harms." 

Sonnax, 907 F.2d at 1286. The Title III court did not abuse its 

discretion in finding the factors favor maintaining the stay. 

 5 We reject Ponce's argument that the court-appointed 

monitor is a "special tribunal" that implicates the fourth Sonnax 

factor: "whether a specialized tribunal with the necessary 

expertise has been established to hear the cause of action." See 

Sonnax, 907 F.2d at 1286. The monitor can only "supervis[e] and 

audit[]"; he cannot "hear the cause of action" and so this factor 

is not at issue. See id. 
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1. Partial or Complete Resolution of the Issues and the 

Interests of Judicial Economy (Sonnax Factors 1 and 10) 

The Title III court may lift the stay when it would 

resolve "significant open issues in the [debtors'] bankruptcy 

case" efficiently -- not issues in Ponce's separate enforcement 

action. See In re Taub, 413 B.R. 55, 62 (Bankr. E.D.N.Y. 2009) 

(emphasis added). The Title III court found that relief would not 

efficiently resolve any open issues that would aid the Title III 

cases; rather, it would divert the debtors' resources to Ponce's 

projects and give Ponce an advantage. We agree. 

Further, to allow separate litigation over the debtors' 

compliance with the judgment, as Ponce seeks, would conflict with 

one of PROMESA's core purposes: "centraliz[ing] all disputes 

concerning property of the [Commonwealth's] estate so that 

reorganization can proceed efficiently, unimpeded by uncoordinated 

proceedings." Municipality of San Juan, 919 F.3d at 577 (applying 

the purposes of the Bankruptcy Code to PROMESA). To give one 

example, lifting the stay to allow the monitor to begin to oversee 

the federally financed highway projects could, as the Title III 

court stated, lead to "costly litigation in the Commonwealth Court 

concerning . . . the extent or quality of the work." Ponce has 

not shown that lifting the stay would allow the Commonwealth court 

to resolve significant open issues in the Title III case more 

efficiently than the Title III court could resolve them. 
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2. Interference with the Bankruptcy Case and Prejudice to 

Other Creditors (Sonnax Factors 2 and 7) 

The Title III court found that diverting funds from the 

debtors to Ponce and to potential litigation over compliance with 

the judgment would interfere with the bankruptcy cases and cause 

prejudice to the other creditors. Ponce argues that, because its 

judgment predates the debtors' bankruptcy, the stay should not 

apply (or instead, should be lifted). This argument lacks merit, 

as excluding prepetition claims and judgments -- even decades old 

ones -- contravenes the purpose of PROMESA's debt restructuring 

provisions. See Municipality of San Juan, 919 F.3d at 577 (stating 

that PROMESA's automatic stay provision should "protect[] the 

debtor's assets from disorderly, piecemeal dismemberment outside 

the bankruptcy proceedings" (alteration in original)). Ponce 

correctly, and to its credit, does not argue that granting its 

request for stay relief would not prejudice other creditors. 

Even taking Ponce's alleged facts as to the costs of 

compliance as setting a top line as the Title III court did, it is 

clear that lifting the stay would compel the debtors to spend at 

least $44 million. This sum would impede resolving other Title 

III claims and prejudice the other creditors to that amount. See, 

e.g., U.S. Bank Tr. Nat'l Ass'n v. AMR Corp. (In re AMR Corp.), 

730 F.3d 88, 112 (2d Cir. 2013) (finding no abuse of discretion in 

maintaining a stay to prevent diverting funds from other 
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creditors). And potential litigation over the debtors' compliance 

with project commitments could both interfere with resolving the 

Title III case and result in additional expenses to the prejudice 

of the other creditors. 

3. The Impact of the Stay on the Parties and the Balance of 

Harms (Sonnax Factor 12) 

For the final factor, the Title III court explicitly 

weighed how stay relief would lead to improvement for the people 

of Ponce's quality of life against how it would impact the debtors' 

overall fiscal health and ability to repair critical 

infrastructure throughout the Commonwealth. The Title III court 

expressed sympathy toward the people of Ponce and noted their long 

battle to compel the debtors to complete the projects, but in 

weighing the equities, the Title III court found that they favored 

maintaining the stay. The Title III court also noted that Ponce 

failed to show that any of the municipal projects "were related to 

any federally authorized or delegated program for the protection 

of health, safety, or the environment." (Emphasis added.) 

Despite its own expert witness assessing the projects' 

cost to the debtors at around $44 million, Ponce argues that 

lifting the stay would not "affect [the] debtors['] budgets" and 

we should not consider the Commonwealth's financial crisis. So, 

Ponce concludes, the balance of harms favor relief. We disagree. 
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The cost of the local projects and of likely attendant litigation 

weigh strongly against stay relief. 

At oral argument, Ponce focused on lifting the stay for 

the $700,000 electrification project and funding for the monitor 

to oversee the highway projects, arguing that the benefits of each 

dwarfed the costs to the Commonwealth. We reject characterizing 

these projects in this manner. Even if we were to consider the 

remaining cost of the electrification project to be relatively 

small, the Board and PREPA opposed stay relief noting PREPA's 

extremely limited resources and their view that at present those 

resources are best spent elsewhere. The record shows the rest of 

the cities and towns in the Commonwealth use the same above-ground 

electrical system that this project would replace. Given the 

critical infrastructure issues from which the Commonwealth suffers 

and the importance of prioritizing the most pressing issues, the 

debtors are correct that there is no basis to disturb the judgment 

of the Title III court. In effect, Ponce requests priority for 

its projects over the countless other projects needed by other 

communities in the Commonwealth. The Title III court clearly did 

not abuse its discretion in declining to give Ponce this priority.6 

Cf. Begier v. IRS, 496 U.S. 53, 58 (1990) ("Equality of 

 6 We note that denying relief from the stay does not deny 

Ponce the opportunity to press its claim for the projects in the 

future. Ponce may still later seek relief in the Title III 

proceedings. 
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distribution among creditors is a central policy of the Bankruptcy 

Code."). 

C. Declining to Hold an Evidentiary Hearing 

After moving for stay relief, Ponce requested an 

"evidentiary hearing to submit evidence even by testimonial of 

Monitor [sic] or documents of the reports made by the debtor[s'] 

attorneys." Ponce did not request the hearing for any nonevidentiary purpose. The Title III court accepted the costs 

alleged by Ponce as true and consequently found holding an 

evidentiary hearing unnecessary. Ponce does not allege that there 

is any additional material evidence that it would have submitted 

in the requested hearing. Without any disputed, material facts, 

the Title III court concluded that an evidentiary hearing was 

unnecessary. We agree. A Title III court need not always hold a 

hearing before granting or denying relief from a stay. Peaje Invs. 

LLC v. García-Padilla, 845 F.3d 505, 512 (1st Cir. 2017). A Title 

III court may proceed without an evidentiary hearing when the 

parties do not dispute any material facts. Id. 

In its brief on appeal, Ponce for the first time asserts 

that it would have argued at the hearing that the prepetition 

judgment, as an equitable remedy, was not a "claim" subject to the 

automatic stay (an argument we rejected earlier). Ponce did not 
- 18 - 

argue this in its motion to the Title III court.7 Regardless, the 

Title III court, having considered the parties' written arguments, 

reasonably concluded that Ponce had not shown cause to lift the 

stay and a hearing would provide no additional benefit. Cf. 

Mitsubishi Motors, 814 F.2d at 847 (affirming decision lifting 

stay without hearing when the court reviewed briefing by both 

parties and the debtor did not show "viable reasons for maintaining 

the stay"). Consequently, we hold that the Title III court did 

not abuse its discretion in declining to hold a hearing. 

III. 

We affirm the judgment of the Title III court. 

 7 Had Ponce wished to make this argument to the Title III 

court, it should have briefed the issue in its motion, requested 

a non-evidentiary hearing to argue the issue, or moved for 

reconsideration. See, e.g., 48 U.S.C. § 2170 (incorporating the 

Federal Rules of Bankruptcy Procedure into PROMESA Title III cases, 

including Fed. R. Bankr. P. 9024, which allows for a motion for 

reconsideration).