IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

IN RE: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO

AS REPRESENTATIVE OF 

THE COMMONWEALTH OF PUERTO 

RICO

DEBTOR

PROMESA

TITLE III

NO. 17 BK 3283-LTS

MOTION TO SET ASIDE DISHCARGE AND REQUESTING RELIEF OF 

STAY

TO THE HONORABLE COURT:

COMES NOW María De Los Ángeles Ortiz-Soto and Nilda 

Meléndez-Santana (“Movants”), through the undersigned 

counsel and very respectfully move the Court for an Order 

to set aside discharge and for relief of the stay, and in 

support of this motion, states and prays:

I. PROCEDURAL BACKGROUND

Movants, María De Los Ángeles Ortiz-Soto and Nilda 

Meléndez-Santana filed separate complaints against several 

parties, including the Commonwealth of Puerto Rico, 

alleging damages due to trips and falls occurred in a

government’s property. Said complaints were filed under 

Article 1802 of the Puerto Rico Civil Code of 1930, 31 

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L.P.R.A. 5141 and 32 L.P.R.A. 3077(a), Law of Claims and 

Suits against the Commonwealth-Authorization.

i. Maria De Los Angeles Ortiz-Soto

On February 11, 2021, movant María De Los Angeles 

Ortiz-Soto filed a Complaint against the Municipality of 

San Juan, captioned María De Los Angeles Ortiz Soto v. 

Municipality of San Juan, case number SJ2021cv00871, 

before the Puerto Rico Court of First Instance in San 

Juan, seeking monetary compensation for the damages 

suffered due to a fall she sustained on September 13, 

2020. In said complaint, movant alleged that while she 

was walking on a sidewalk property of the Municipality of 

San Juan, she had a fall when one of her feet went down 

through a hole, suffering multiple body traumas.

Eventually, with leave of court, on February 11, 

2022, an amended complaint was filed against the 

Commonwealth of Puerto Rico alleging that the Department 

of Transportation and Public Works had custody and control 

of the sidewalk where the fall occurred.

It was Ortiz-Soto’s contention that both, The 

Municipality of San Juan and The Commonwealth of Puerto 

Rico, were jointly liable for the damages she suffered.

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ii. Nilda Melendez Santana

On November 11, 2021, movant Nilda Melendez-Santana

filed a Complaint against the Municipality of Guaynabo and 

its insurance company and against the Commonwealth of 

Puerto Rico, captioned Nilda Meléndez-Santana v. 

Municipality of Guaynabo, et. al. case number 

BY2021cv04644, before the Puerto Rico Court of First 

Instance in Bayamón, seeking monetary compensation for the 

damages suffered due to a fall she sustained on August 21, 

2021. In said complaint, movant alleged that while she 

was crossing Carazo Street at the Municipality of 

Guaynabo, she had a fall when one of her feet tripped with 

an existing hole in the street, suffering multiple body 

traumas. 

It was Meléndez Santana’s contention that both, the 

Municipality of Guaynabo and The Commonwealth of Puerto 

Rico, were jointly liable for the damages she suffered.

II. Discussion

Although both complaints were filed for events that 

occurred after the enactment of “Puerto Rico Oversight, 

Management and Economic Stability Act” (“PROMESA”), 48 

U.S.C. sec. 2101 et. seq., on January 18, 2022, this 

Honorable Court entered “Order and Judgment Confirming 

Modified Eighth Amended Title III Joint Plan of Adjustment 

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of the Commonwealth of Puerto Rico, the Employees 

Retirement System of the Government of the Commonwealth of 

Puerto Rico, and the Puerto Rico Public Buildings 

Authority (“Confirmation Order”), which would be effective 

on March 15, 2022. (Docket Entry 19813). 

Particularly, subsection 59 of the Plan of Adjustment

states:

“59. Injunction on Claims. Except as otherwise 

expressly provided in section 92.11 of the Plan, this 

Confirmation Order, or such other Final Order of the 

Title III Court that is applicable, all Entities who 

have held, hold, or in the future hold Claims or any 

other debt or liability that is discharged or 

released pursuant to section 92.2 of the Plan or who 

have held, hold, or in the future hold Claims or any 

other debt or liability discharged or released 

pursuant to section 92.2 of the Plan are permanently 

enjoined, from and after the Effective Date, from (a) 

commencing or continuing, directly or indirectly, in 

any manner, any action or other proceeding 

(including, without limitation, any judicial, 

arbitral, administrative, or other proceeding) of any 

kind on any such Claim or other debt or liability 

discharged pursuant to the Plan against any of the 

Released Parties or any of their respective assets or 

property [...].”

Also, the Confirmation Order states on paragraph 44 that:

“Administrative Claim Bar Date. The last day to file 

proof of Administrative Expense Claims shall be 

ninety (90) days after the Effective Date, after 

which date, any Administrative Expense Claim, proof 

of which has not been filed, shall be deemed forever 

barred, and the Debtors and Reorganized Debtors shall 

have no obligation with respect thereto; provided, 

however, that no proof of Administrative Expense 

Claim shall be required to be filed if such 

Administrative Expense Claim (a) shall have been 

incurred (i) in accordance with an order of the Court 

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or (ii) with the written consent of the applicable 

Government Parties expressly granting such 

Administrative Expense Claim, (b) is a Professional 

Claim, (c) is an intergovernmental Claim, (d) is an 

Administrative Expense Claim of the IRS for the 

payment of taxes incurred by any of the Debtors 

during the period from and after the Commonwealth 

Petition Date, the ERS Petition Date, or the PBA 

Petition Date, as applicable, (e) relates to actions 

occurring in the ordinary course during the period 

from and after the respective Debtor’s petition date 

up to and including the Effective Date, (f) relates 

to a Claim that is subject to the provisions of the 

ACR Order, including, without limitation, “grievance 

claims” relating to any of the Debtor’s collective 

bargaining agreements, or (g) is the subject of a 

pending motion seeking allowance of an administrative 

expense pursuant to section 503(b) of the Bankruptcy 

Code as of the entry of this Confirmation Order; and, 

provided, further, that any such proof of 

Administrative Expense Claim by a governmental unit 

shall remain subject to the rights and interests of 

the Debtors and Reorganized Debtors, as the case may 

be, and any other party in interest to interpose an 

objection or other defense to the allowance or 

payment thereof.”

Pursuant to said Order and to the Plan of Adjustment, 

on April 5, 2022, the Commonwealth of Puerto Rico filed a 

Notice of Injunction in Ortiz’s case, while on April 11, 

2022, a Notice of Injunction was filed in Melendez’s case.

Both Injunctions were granted, thus the cases were

stayed.

On October 20, 2022, this Honorable Court entered 

“Order Extending Administrative Claim Bar Date for Certain 

Parties and Modifying Discharge Injunction” (Docket Entry

22650)

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Said order stated that “the requirement to file a 

proof of Administrative Expense Claim pursuant to decretal 

paragraph 44 of the Confirmation Order shall not apply to 

any of the following claims or causes of action arising 

from and after the applicable petition date with respect 

to the Commonwealth, ERS, and PBA and prior to the 

Effective Date: (i) Eminent Domain/Inverse Condemnation 

Claims, (ii) claims for property seized by the Debtors 

pursuant to the Uniform Forfeiture Act of 2021, 34 

L.P.R.A. 1724 et seq., (iii) claims for attorneys’ fees 

and costs pursuant to the Individuals with Disabilities 

Education Improvement Act, 20 U.S.C. 1400 et seq., (iv) 

tax refund claims, and (v) claims authorized to be 

asserted pursuant to 32 L.P.R.A. § 3077(a), to the extent 

the amount of such claim asserted is within such statutory 

limitation of $75,000 or $150,000, as applicable.”

Pursuant to said order, movants filed within each of 

their respective cases, motions to reopen their

litigation.

To each of the motions requesting the reopening, the 

Commonwealth of Puerto Rico filed its opposition on the 

grounds that both complaints demanded monetary 

compensation beyond the statutory limitation of $75,000 or 

$150,000, as applicable, contrary to the provisions of 

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subsection (v) of the October 20, 2022, Order. Thus, such 

cases continued stayed.

In both cases, movants alleged that the reason why 

both complaints demanded amounts of money beyond the 

statutory limits obeyed to the fact that other defendants

were named and/or involved in the lawsuits. Also, it was

expressly stated that, regardless of the amount of money 

demanded in the complaint, according to the Law of Claims 

and Suits against the Commonwealth, the Commonwealth was 

not obliged to pay any sum beyond the statutory limits in 

the event that a judgment be entered against it. (See, 32 

L.P.R.A. 3077(a))

The Commonwealth’s oppositions were granted, and the 

reopening of the proceedings were denied. Therefore, the

cases remained stayed.

Very respectfully, movants request from this 

Honorable Court to give a less restrictive interpretation

and a non-literal application of subsection (v) of the 

October 20, 2021, Order (Docket 22640), and consequently, 

set aside the discharge, enter a relief of stay and allow 

the reopening with respects to the cases of Ortiz and 

Meléndez, permitting the litigations to proceed.

Section 362 (d)(1) of the Bankruptcy Code, supra, 

states that:

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“On request of a party in interest and after notice 

and a hearing, the court shall grant relief from the 

stay provided under subsection (a) of this section, 

such as by terminating, annulling, modifying, or

conditioning such stay---

(1) for cause, including the lack of adequate 

protection of an interest in property of such party in 

interest.”

In Sonnax Indus., Inc. v. TriComponent Prods. Corp. 

(In re Sonnax Indus., Inc.), 907 F.2d 1280 (2d Cir. 1990), 

the Second Circuit Court of Appeals enumerated the factors 

that should be analyzed for purposes of evaluating relief 

from the automatic 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 the other proceeding involves the debtor 

as a fiduciary;

(4) Whether a specialized tribunal with the 

necessary expertise has been established to hear the cause 

of action;

(5) Whether the debtor’s insurer has assumed full 

responsibility for defending it;

(6) Whether the action primarily involves third 

parties;

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(7) Whether litigation in another forum would 

prejudice the interests of other creditors;

(8) Whether the judgment claim arising from the 

other action is subject to equitable subordination;

(9) Whether movant’s success in the other proceeding 

would result in a judicial lien avoidable by the debtor;

(10) The interests of judicial economy and the 

expeditious and economical resolution of litigation;

(11) Whether the parties are ready for trial in the 

other proceeding; and

(12) Impact of the stay on the parties and the 

balance of harms.

Under Sonnax, supra, both cases, Ortiz’s and 

Meléndez’s, meets at least two of the factors therein 

enumerated.

Taking into consideration the factor regarding the

balance of harm, the harm that would result to movants the 

continuation of the stay, would outweigh any harm that 

might be suffered by the Commonwealth of Puerto Rico if 

the discharge is set aside and the stay is lifted or 

modified.

Also, under Section 105 of the U.S. Bankruptcy Code 

and the Courts Equitable Powers, this Honorable Court can 

enter the relief herein requested.

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Section 105 (a) states:

“The court may issue any order, process, or judgment 

that is necessary or appropriate to carry out the 

provisions of this title. No provision of this title 

providing for the raising of an issue by a party in 

interest shall be construed to preclude the court 

from, sua sponte, taking any action or making any 

determination necessary or appropriate to enforce or 

implement court orders or rules, or to prevent an 

abuse of process.”

If upheld, the strict interpretation given by the 

Commonwealth, and the literal application of the

subsection(v) of the October 20, 2021, Order entered by 

this Honorable Court, will represent an unnecessary harm

to movants, since the outcome of their respective cases 

will not infringe the provisions of said order, much less 

the provisions of PROMESA Title III case.

Moreover, nothing prevents that this Honorable Court, 

after setting aside the discharge and lifting or modifying 

the stay, determine that the movants are not allowed to 

execute any judgment against the Commonwealth of Puerto 

Rico in excess of the statutory limits if a judgment is 

entered in their favor.

Allowing Maria Ortiz’s and Nilda Melendez’s

litigation to proceed would not interfere with PROMESA 

Title III case. Hence, the discharge of the debt of the 

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Commonwealth with respect to these two cases should be set 

aside.

Wherefore, it is respectfully requested from this 

Honorable Court, that the stay of captioned cases, María 

De Los Angeles Ortiz Soto v. Municipality of San Juan, 

case number SJ2021cv00871 and Nilda Meléndez-Santana v. 

Municipality of Guaynabo, et. al. case number 

BY2021cv04644, be lifted or modified, allowing the 

litigations to proceed.

I HEREBY CERTIFY that the forgoing document was filed 

with the Clerks of the Court using CM/ECF system, which 

will send notification of such filing to counsel of 

record.

RESPECTFULLY SUBMITTED, in San Juan, Puerto Rico this 

7th day of March, 2023.

 

s/ JUAN M. CANCIO-BIAGGI

JUAN M. CANCIO-BIAGGI

USDC-PR #229811

PMB 317

P.O. Box 70344

San Juan, P.R. 00936

Tel.: (787) 763-1211

Fax: (787) 763-1215

Email: jm@canciobiaggi.com

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